Document/Exhibit Description Pages Size
1: 10-K Form 10-K Fiscal Year Ended December 31, 1996 66 260K
2: EX-3.B Articles of Incorporation/Organization or By-Laws 18 78K
3: EX-4.B Instrument Defining the Rights of Security Holders 1 9K
4: EX-4.E Instrument Defining the Rights of Security Holders 5 26K
5: EX-10.A Material Contract 17 84K
6: EX-10.B Material Contract 7 34K
7: EX-10.C Material Contract 12 61K
8: EX-10.K Material Contract 4 16K
9: EX-10.L Material Contract 4 22K
10: EX-11 Statement re: Computation of Earnings Per Share 2 10K
11: EX-21 Subsidiaries of the Registrant 8 26K
12: EX-23 Consent of Experts or Counsel 1 8K
13: EX-27 Financial Data Schedule (Pre-XBRL) 1 9K
14: EX-99.1 Miscellaneous Exhibit 1 9K
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, 1996
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, N.Y. 10154
(Address of principal executive offices)
Telephone: (212) 546-4000
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 Stock Exchange
$2 Convertible Preferred Stock, New York Stock Exchange
$1 Par Value Pacific Stock Exchange
Preferred Stock Purchase Rights * New York Stock Exchange
Pacific Stock Exchange
* At the time of filing, the Rights were not traded separately from the Common
Stock. For additional information, see "Stockholders' Equity" in the Notes
to Consolidated Financial Statements, included in Part II, Item 8.
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 of 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 28, 1997 was $65,053,327,887. At February 28, 1997,
there were 1,000,142,148 shares of common stock outstanding.
Documents incorporated by reference
Proxy Statement for Annual Meeting of Stockholders on May 6, 1997. Part III
PART I
------
Item 1. BUSINESS.
DESCRIPTION OF BRISTOL-MYERS SQUIBB COMPANY
-------------------------------------------
General:
-------
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 pharmaceutical
products, nonprescription health products, medical devices and toiletries and
beauty aids. In general, the business of the Company's industry segments is
not seasonal.
INDUSTRY 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
-----------------------
Pharmaceutical Products:
-----------------------
This segment includes sales of prescription medicines, mainly cardiovascular,
anti-cancer and anti-infective drugs, which comprise about 30%, 25% and 20%,
respectively, in 1996, and 40%, 20% and 20%, respectively in both 1995 and
1994, of the segment's sales, central nervous system drugs and other
pharmaceutical products. Cardiovascular drugs include captopril, an
angiotensin converting enzyme (ACE) inhibitor sold primarily under the
trademarks CAPOTEN* and CAPOZIDE*; pravastatin sodium, an HMG Co-A reductase
inhibitor, sold primarily under the trademark PRAVACHOL*; fosinopril sodium,
a second-generation ACE inhibitor with convenient once-a-day dosage, sold
primarily under the trademark MONOPRIL*; cholestyramine, a cholesterol-
reducing agent, sold primarily under the trademark QUESTRAN*; nadolol, a
once-a-day beta blocker used in the treatment of hypertension and angina
pectoris, sold primarily under the trademarks CORGARD* and CORZIDE*; and
sotalol, a beta blocker with unique antiarrhythmic qualities, sold primarily
under the trademark SOTACOR*. Anti-cancer drugs include paclitaxel, used in
the treatment of refractory ovarian cancer, and in treatment of breast cancer
after failure of combination chemotherapy for metastatic disease or relapse
within six months of adjuvant chemotherapy sold under the trademark
TAXOL*(R)(with an exclusivity period, granted pursuant to the Hatch-Waxman Act
in the U.S., expiring in December 1997); carboplatin, a chemotherapeutic agent
used in the treatment of ovarian cancer, sold primarily under the trademark
* Indicates brand names of products which are registered trademarks owned
by the Company.
- 1 -
PARAPLATIN*; etoposide, used in the treatment of small cell lung cancer and
refractory testicular cancer, sold primarily under the trademark VEPESID*;
PLATINOL*, IFEX* and MEGACE*. Anti-infective drugs include cefadroxil
monohydrate, an oral cephalosporin, sold primarily under the trademark
DURICEF*; cefprozil, an oral cephalosporin used in the treatment of
respiratory infections, sold primarily under the trademark CEFZIL*;
cephradine, an oral cephalosporin sold primarily under the trademark VELOSEF*;
amikacin, an aminoglycoside sold primarily under the trademark AMIKIN*;
aztreonam, a monobactam antibiotic sold primarily under the trademark
AZACTAM*; didanosine, an antiretroviral drug used in the treatment of adult
and pediatric patients with advanced human immunodeficiency virus (HIV)
infection, sold under the trademark VIDEX*; stavudine, used in the treatment
of persons with advanced HIV disease, sold under the trademark ZERIT*;
amphotericin B, an anti-fungal sold primarily under the trademark FUNGIZONE*;
and cefepime, a fourth generation injectable cephalosporin introduced in
international markets in 1995 and approved for marketing in the U.S. in early
1996, sold primarily under the trademark, MAXIPIME*. Central nervous system
drugs include BUSPAR*, an anxiolytic; SERZONE*, an antidepressant; and STADOL
NS*, a prescription nasal spray analgesic. Dermatological drugs include
DOVONEX*, a vitamin D3 analog for the treatment of moderate psoriasis, and
LAC-HYDRIN*, used in the treatment of moderate to severe dry skin. Other
pharmaceutical products include Glucophage, a new oral anti-diabetes agent for
type II non-insulin dependent diabetes; OVCON*, an oral contraceptive; and
ESTRACE*, a low-dose estrogen replacement therapy.
In March 1996, the Company acquired Argentia SA, one of Argentina's largest
manufacturers and marketers of ethical pharmaceutical products. In October
1996, the Company completed the acquisition of Oncology Therapeutics Network,
a specialty distributor of anti-cancer medicines and related products.
Nonprescription Health Products:
-------------------------------
This segment includes sales of infant formulas and other nutritional products,
which comprise about 65% of the segment's sales, analgesics, cough/cold
remedies and skin care products. Some of the principal products in this
segment are ENFAMIL*, PROSOBEE*, NUTRAMIGEN*, and LACTOFREE*, infant formula
products; ENFAPRO*, NEXT STEP* and ALACTA NF*, follow-on formula products for
older babies; SUSTAGEN*, ISOCAL*, SUSTACAL*, NUTRAMENT* and BOOST*,
nutritional supplements and specialties; THERAGRAN*, VI-FLOR*, VI-SOL*,
NATALINS* and PLUSSSZ*, vitamins; EXCEDRIN*, BUFFERIN*, EFFERALGAN*, ASPIRINE
UPSA* and DAFALGAN*, analgesics; COMTREX*, a multi-symptom cold reliever; and
KERI*, a line of moisturizing body lotions and shower and bath oils.
Medical Devices:
---------------
This segment includes sales of orthopaedic implants, which comprise about 40%
of the segment's sales, ostomy and wound care products, surgical instruments,
arthroscopy products and other medical devices. Some of the principal
products in this segment are the NEXGEN* Complete Knee Solution, the
Insall/Burstein II Modular Total Knee System, the MGII* Total Knee System,
VERSYS* Hip System, and the CENTRALIGN* Precoat Hip Prosthesis orthopaedic
implants; the APEX* Universal Drive and Irrigation System; ACTIVE
LIFE/COLODRESS* and SUR-FIT/ COMBIHESIVE/SECURE* ostomy care products; and
DUODERM* wound care products.
- 2 -
Toiletries and Beauty Aids:
--------------------------
This segment includes sales of haircoloring and hair care preparations, which
comprise about 80% of the segment's sales in 1996 and 75% in 1995 and 1994,
deodorants, anti-perspirants and other toiletries and beauty aids. Among the
principal products in this segment are NICE 'N EASY*, MISS CLAIROL*, LOVING
CARE*, ULTRESS*, NATURAL INSTINCTS* and HYDRIENCE* haircolorings; HERBAL
ESSENCES* and INFUSIUM 23* complete lines of shampoos and conditioners, and
other shampoos and after-shampoo treatment products; SYSTEME BIOLAGE*, MATRIX
ESSENTIALS* and VAVOOM*, professional hair care products sold exclusively in
beauty salons; BAN* and MUM*, anti-perspirants and deodorants; and SEA BREEZE*
and MATRIX* skin care products.
SOURCES AND AVAILABILITY OF RAW MATERIALS
-----------------------------------------
Bristol-Myers Squibb, for the most part, 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
--------------------------------
The Company owns or is licensed under a number of patents in the United States
and foreign countries covering products, principally in the pharmaceutical
products 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. 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,
heavily competitive and include many competitors. The principal means of
competition utilized to market the products of Bristol-Myers Squibb include
quality, service, price and product performance. The products of the
pharmaceutical products segment and 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 pharmaceutical
products 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 not have a material adverse effect on the segment.
- 3 -
RESEARCH AND DEVELOPMENT
------------------------
Research and development is essential to Bristol-Myers Squibb's businesses,
particularly to the pharmaceutical products segment. Management continues to
place great emphasis on these activities. Pharmaceutical research and
development is carried out by the Bristol-Myers Squibb Pharmaceutical Research
Institute which has major facilities in Princeton and New Brunswick, New
Jersey, Wallingford, Connecticut and Seattle, Washington. Pharmaceutical
research and development is also carried out at various other facilities in
the United States and in Belgium, France, Germany, Italy, Japan, and the
United Kingdom.
Bristol-Myers Squibb spent $1,276 million in 1996, $1,199 million in 1995 and
$1,108 million in 1994 on company sponsored research and development
activities. Pharmaceutical research and development spending, as a percentage
of pharmaceutical sales, was 12.3% in 1996 compared to 12.9% in 1995 and 13.6%
in 1994.
REGULATION
----------
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. Assuring compliance
with appropriate laws and regulations requires increasing expenditures of time
and resources.
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.
- 4 -
EMPLOYEES
---------
Bristol-Myers Squibb employed approximately 51,200 people at December 31,
1996.
DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
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 841,800 square feet of floor
space, approximately 285,880 square feet of which is sublet to others. The
Company's pharmaceutical world headquarters is located in Princeton, New
Jersey. Other major domestic pharmaceutical facilities are located in
Evansville, Indiana; New Brunswick and Plainsboro, New Jersey; and Buffalo and
Syracuse, New York. The Company's major domestic medical devices facilities
are located in Warsaw, Indiana, St. Louis, Missouri, Skillman, New Jersey and
Greensboro, North Carolina.
Bristol-Myers Squibb manufactures products at forty-four major worldwide
locations with an aggregate floor space of approximately 13,052,000 square
feet. Forty-two facilities are owned by Bristol-Myers Squibb and two are
leased. The U.S. manufacturing facilities total sixteen, of which 50% and 25%
are used in the manufacture of pharmaceutical products and medical devices,
respectively. The non-U.S. operations include a total of twenty-eight major
manufacturing facilities, of which 71% and 4% are used in the manufacture of
pharmaceutical products and medical devices, respectively. These facilities
are located in Australia, Brazil, Canada, China, Colombia, France, Germany,
Ireland, Indonesia, Italy, Japan, Mexico, the Netherlands, the Philippines,
South Africa, Taiwan, the United Kingdom and Venezuela, and aggregate
approximately 6,341,300 square feet of space.
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.
Capital expenditures for the construction, expansion and modernization of
production, research and administrative facilities aggregated $607 million,
$517 million and $577 million in 1996, 1995 and 1994, respectively.
- 5 -
Item 3. LEGAL PROCEEDINGS.
Breast Implant Litigation
------------------------------
Reference is made to Note 15 Contingencies in the Notes to Consolidated
Financial Statements included in Part II, Item 8 of this Form 10-K Annual
Report.
As of December 31, 1996, approximately 22,000 plaintiffs had filed suit
against the Company, its subsidiary, Medical Engineering Corporation (MEC),
and certain other companies, in federal and state courts and in certain
Canadian provincial courts, alleging damages for personal injuries of various
types resulting from polyurethane covered breast implants and smooth walled
breast implants formerly manufactured by MEC or its predecessors. A number
of other manufacturers of breast implants, as well as suppliers of component
parts and other parties, are also defendants in many of these cases. The
plaintiffs typically seek compensatory damages for alleged medical conditions
and emotional distress as well as punitive damages. Some of these women have
sued numerous manufacturers without specifying the manufacturer of the
implants involved. The majority of the suits are presently stayed. Those
that are not stayed have been filed by plaintiffs who have opted out of the
Revised Settlement, which is described below.
In addition to individual suits, the Company has been named as a defendant,
together with other defendants, in a number of class action lawsuits,
including one pending in Louisiana entitled IN RE: LOUISIANA BREAST IMPLANT
CLASS ACTION (previously SPITZFADEN, ET AL. VS. DOW CORNING CORP., ET AL.),
No. 92-2589, purportedly consisting of all Louisiana residents who have opted
out of the Revised Settlement described below. The Company is also a
defendant in a purported class action brought 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. Dist. NY, 93-0146.) The suit, which has not been
certified as a class action, names all breast implant manufacturers as
defendants and seeks to establish a medical monitoring fund. On April 11,
1996, a class action on behalf of all women in the Canadian province of
British Columbia was certified in the provincial court 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).
The Company is a participant in a class action settlement approved by the
Honorable Sam C. Pointer, Jr., 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. On December 22, 1995, Judge Pointer
approved a revised settlement program (Revised Settlement) for resolution of
claims seeking damages for personal injuries from allegedly defective breast
implants. The Revised Settlement arises out of a settlement approved by the
Court on September 1, 1994. On January 16, 1996, the Company, Baxter
Healthcare Corporation and Baxter International (collectively, Baxter), and
Minnesota, Mining & 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.
- 6 -
The fifteen-year Revised Settlement generally provides benefits to those
breast implant recipients, other than foreign claimants, who have had at least
one breast implant manufactured by one of the Settling Defendants (or their
predecessors or subsidiaries). Several kinds of benefits are available for
eligible participants with breast implants made by companies affiliated with
Bristol-Myers Squibb, Baxter and 3M: (1) for current claimants, compensation
generally ranging from $10,000 to $50,000 based on disease and disability
definitions of the original settlement, plus supplemental benefits of an
additional $15,000 to $50,000 for claimants with ruptured implants; (2) for
current claimants seeking higher benefits and for other registrants,
compensation ranging from $75,000 to $250,000 based on new disease and
disability definitions (Long-Term Benefits); and (3) although the Settling
Defendants are not recommending removal of implants absent some specific
medical reason, a $3,000 payment for those class members (other than late
registrants) who seek removal of implants. In addition, current claimants are
eligible for an advance payment of $5,000, and other existing registrants are
eligible for an advance payment of $1,000. For certain current claimants,
benefits would be payable regardless of the number of claimants seeking
compensation, regardless of the total dollar value of approved claims, and
regardless of the outcome of appeals from the order approving the settlement.
For other claimants, benefits would be subject to an aggregate $755 million
limit for all participating companies over the fifteen year life of the
program. The Company's individual aggregate limit for such benefits is $400
million. In the event the dollar value of the future claims subject to the
limit exceeds this amount, 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.
However, the Company's obligations to fund Long-Term Benefits are cancelable
if certain provisions of the Revised Settlement are disapproved on appeal.
The Revised Settlement was the subject of an appeal filed by certain foreign
breast implant recipients. In November 1996, the Settling Defendants settled
that appeal, and the benefits of the Revised Settlement will be extended, with
certain modifications, to foreign breast implant recipients. Pursuant to the
settlement, the Settling Defendants each paid approximately $8.3 million into
a court-approved settlement fund as an initial reserve for payment of foreign
claims. Other appeals related to the Revised Settlement are pending.
In early 1996, notices describing the Revised Settlement were mailed to breast
implant recipients, including the approximately 380,000 domestic class members
(with implants of all manufacturers, not just Bristol-Myers Squibb, Baxter and
3M) who originally registered with the settlement. The claims office has
reported that as of December 16, 1996, approximately 122,000 of these
registrants had submitted proof of manufacturer documentation, which will
enable the claims office to determine whether they have a breast implant made
by a Settling Defendant. The claims office has further reported that, as of
December 16, 1996, over 52,000 of the 122,000 registrants who submitted proof
of manufacturer had been sent Notification of Status letters advising them of
their status in the settlement. Of the recipients of Notification of Status
letters, over 35,000 have established to the satisfaction of the claims office
that they have a Settling Defendant's implant and have chosen to participate
in the settlement, while approximately 3,300 opted out. The decisions of the
remaining recipients of Notification of Status letters were not reported as
- 7 -
of December 31, 1996.
The right of registered class members to opt-out terminates 45 days after the
date of such a class member's Notification of Status letter. The claims
office has been sending Notification of Status letters to class members on an
ongoing basis, and is expected to continue to do so during the first half of
1997. The claims office has reported that, as of December 16, 1996,
approximately 8,000 of the original 380,000 domestic registrants (with
implants of all manufacturers) opted out after receiving the initial notice
of the Revised Settlement in 1996. Based on all the information supplied to
the Company as of December 31, 1996, the Company has identified approximately
3,300 such opt-outs as plaintiffs in pending suits which name the Company as
a defendant. Many of these plaintiffs, however, have not yet affirmatively
identified the manufacturer of their implants, and the total number of
opt-outs with claims against the Company will not be known until the opt-out
period ends and complete information is made available. In addition,
approximately 7,100 domestic breast implant recipients with implants of all
manufacturers, including manufacturers not participating in the Revised
Settlement, had previously opted out in connection with the original 1994
approval of this class action settlement. Of this group, the Company has
identified approximately 2,300 domestic opt-outs, a large number of whom
reside in Texas, as allegedly having MEC implants and as having pending claims
against the Company. Because the opt-out period for most class members has
not expired, and because our information is incomplete, it is not reasonably
possible at this time to estimate on any reliable and precise basis either the
total number of women who will opt-out of the Revised Settlement or, of those
who opt-out, the number who will file lawsuits against the Company.
The cost of the settlement is dependent upon complex and varying factors,
including the number of class members that participate, the kinds of claims
asserted and approved under the settlement, and their dollar value. In light
of the continuing uncertainties attendant to these and other factors, it is
not possible to achieve any precision at this time in estimating the cost of
the settlement to the Company.
In May of 1996, the Company, together with other Settling Defendants, entered
into a $50 million settlement of claims 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 paid $20.2 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 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.
The Company's insurers have been notified of the breast implant claims and the
Revised Settlement, and generally have reserved their rights or declined to
confirm coverage. In 1993, the Company commenced litigation in state court,
Jefferson County, Texas, against most of the Company's insurers, seeking
- 8 -
damages and a declaration of coverage. In the litigation, the Company has
obtained favorable rulings on certain coverage issues which, in the Company's
judgment, make it probable that certain policies issued by insurers in the
1982-86 period will be held to respond to the claims. The Company has entered
into settlement agreements with certain insurers providing cash or confirming
coverage of a substantial amount of expected insurance proceeds. A trial of
the insurance coverage case currently is expected in the second quarter of
1997.
The cost to the Company of resolving opt-out claims is subject to a number of
complex uncertainties. Primary among them is the difficulty of estimating
with any precision the quantity and quality of such claims. While there have
been large judgments in some cases, defendants have won more trials than they
have lost, and in 1996, the Company's trial experience was generally
favorable. The Company has maintained throughout this litigation that breast
implants do not cause disease and recent medical and scientific information
continues to support the Company's position. The Company's view has found
strong support in the December 1996 decision of a federal judge in Oregon, who
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 Supreme Court
guidelines. In addition, a science panel appointed by Judge Pointer is in the
process of reviewing the scientific literature regarding any relation between
breast implants and disease, and is expected to report its findings in 1997.
The results of continuing medical research and a variety of additional
factors, including the success of other legal defenses and the success of the
Revised Settlement program, may substantially affect the cost of resolving
opt-out cases.
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 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. The Company views the Revised Settlement, litigation
results in 1996, and ongoing science and medicine about breast implants as
favorable developments. Nonetheless, since the ultimate effects of the
Revised Settlement and the ongoing litigation cannot at present be reasonably
predicted, after more information becomes available it is possible that an
additional charge to earnings might be required with respect to breast implant
litigation. In the opinion of the Company, such charge, if taken, should not
have a material adverse effect on the Company's liquidity or consolidated
financial position, although it is possible that it might have a material
adverse effect on the Company's results of operations for the period in which
the charge would be recorded.
Infant Formula Matters
---------------------------
The Company, one of its subsidiaries, and others are or 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
- 9 -
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. On June 7, 1996,
the Company reached a settlement covering all the then pending infant formula
indirect purchaser cases except the case in Massachusetts and the case brought
by the Louisiana Attorney General. On September 29, 1996, a federal district
court in Tallahassee, Florida, entered an order in favor of the defendants,
effectively dismissing the Louisiana Attorney General action. No appeal was
taken from that decision. In December 1996, the Company entered an agreement
in principle to settle the Massachusetts action. Final court approval of the
above settlements has been granted in every case except those pending in
Louisiana, Massachusetts, Michigan and Nevada. In Louisiana on January 21,
1997, the court entered an order disapproving the settlement. In the other
jurisdictions, joint motions for final approval of the settlement have either
not yet been filed (Massachusetts) or not yet been ruled upon (Michigan and
Nevada). The Company believes that these actions are without merit and that
their ultimate disposition will not have a material adverse effect on the
Company's results of operations, liquidity or consolidated financial position.
Prescription Drug Litigation
----------------------------
As of December 31, 1996, the Company is a defendant in over 100 actions
brought against the Company and more than 30 other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers in various
federal district courts by certain chain drugstores, supermarket chains and
independent drugstores, suing either individually or as a representative of
a nationwide class of retail pharmacies that has been certified. These cases,
which have been coordinated for pretrial purposes in the United States
District Court for the Northern District of Illinois, all seek treble damages
and injunctive relief on account of an alleged antitrust conspiracy concerning
the pricing and marketing of brand name prescription drugs; the plaintiffs who
are suing individually are also asserting claims of unlawful price
discrimination under the Robinson-Patman Act. Discovery has been completed
with respect to claims concerning the alleged antitrust conspiracy.
Completion of additional discovery with respect to Robinson-Patman Act claims
against the Company has been stayed. Plaintiffs in the class action have
indicated that they intend to claim damages, before trebling, ranging from 5%
to approximately 20% of the value of their purchases of brand name
prescription drugs from defendants since October 15, 1989. It is estimated
that the class members who have not opted out represent approximately
two-thirds of retail pharmacy purchases of brand name prescription drugs during
the alleged damages period. As of May 1, 1996, the Company, without admitting
any wrongdoing, reached an amended agreement to settle the class action. The
settlement, as amended, has been approved by the Court, and purported appeals
from that approval are pending. On April 4, 1996, the Court denied motions
for summary judgment brought by the drug manufacturer defendants, including
the Company, with respect to the conspiracy claims asserted by retail
pharmacies that have opted out of the class. The largest opt-out retailer
plaintiffs have purported to quantify their conspiracy damage claims against
the defendants, including the Company, asserting damages aggregating
approximately $2.4 billion before trebling. An interlocutory appeal by the
drug manufacturer defendants, including the Company, from an April 4, 1996
ruling by the District Court that denied their motions for summary judgment
- 10 -
as to damage claims based on retailers' purchases from wholesalers is pending
in the Court of Appeals. Class action cases brought by retail pharmacies in
state courts against a similar group of defendants and alleging similar
grounds under state law are proceeding in California, Alabama, Wisconsin and
Minnesota. The California court has certified a class of California retail
pharmacies. The Wisconsin court has certified a class of Wisconsin retail
pharmacies. Class action cases brought by consumers in state courts against
a similar group of defendants and alleging similar grounds under state law
have been brought in California, Washington, New York, Arizona, Maine,
Alabama, Michigan, Minnesota, the District of Columbia, Wisconsin, Kansas,
Florida and Tennessee. The consumer actions brought in Washington and New
York have been dismissed; appeals are pending in both states. The California
court has certified a class of California consumers. In the Alabama case, the
Alabama court had purported to certify a class consisting of consumers in
Alabama and other states, including the District of Columbia, Kansas, Maine,
Michigan, Minnesota, Mississippi, New Mexico and Wisconsin, but that order has
been vacated. A class of consumers has been certified in the District of
Columbia consumer case, while class certification has been denied in the
Minnesota consumer case. In July 1996, the Company received a subpoena from
the Federal Trade Commission in an investigation it is conducting to determine
whether U.S. pharmaceutical manufacturers have engaged in unfair methods of
competition by engaging in unlawful concerted activities on prices of
pharmaceutical products. The Company believes that these actions are without
merit and that their ultimate disposition will not have a material adverse
effect on the Company's results of operations, liquidity or consolidated
financial position.
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, the Company believes
that the ultimate disposition of these matters will not have a material
adverse effect on the Company's results of operations, liquidity or
consolidated financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
- 11 -
PART IA
-------
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
The following are the executive corporate officers and the other executive
officers of the Registrant:
Positions and Offices Presently
Name Age Held with the Registrant
------------------------ --- -------------------------------
Charles A. Heimbold, Jr. 63 Chairman of the Board, Chief Executive
Officer and Director
Michael E. Autera 58 Executive Vice President and Director
Harrison M. Bains, Jr. 53 Treasurer and Vice President,
Corporate Staff
Alice C. Brennan 44 Secretary and Vice President,
Corporate Staff
George P. Kooluris 52 Senior Vice President, Corporate
Development, Corporate Staff
John L. McGoldrick 56 General Counsel and Senior Vice President,
Corporate Staff
Michael F. Mee 54 Chief Financial Officer and Senior Vice
President, Corporate Staff
Peter S. Ringrose, Ph.D. 51 President, Bristol-Myers Squibb
Pharmaceutical Research Institute
Leon E. Rosenberg, M.D. 64 Senior Vice President,
Scientific Affairs
Frederick S. Schiff 49 Controller and Vice President,
Corporate Staff
Charles G. Tharp, Ph.D. 45 Senior Vice President, Human Resources,
Corporate Staff
Kenneth E. Weg 58 Executive Vice President, President,
Worldwide Medicines Group and Director
Persons who hold titles as elected corporate officers of the Registrant
were last elected or reelected to the office held at the general election of
officers by the Registrant's Board of Directors on May 7, 1996. Officers of
the Registrant serve in such capacity at the pleasure of the Board of
- 12 -
Directors of the Registrant.
CHARLES A. HEIMBOLD, JR. - From 1989 to 1992, Executive Vice President
of the Registrant. Mr. Heimbold has been a director of the Registrant since
1989, President of the Registrant from 1992 to 1996, the Chief Executive
Officer of the Registrant since 1994 and Chairman of the Board since 1995.
MICHAEL E. AUTERA - From 1977 to 1994, Chief Financial Officer of the
Registrant. Mr. Autera has been a director of the Registrant since 1991 and
Executive Vice President of the Registrant since 1989.
HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice President,
Corporate Staff of the Registrant since 1988.
ALICE C. BRENNAN - From 1988 to 1992, Manager, Agricultural Section-Patent
Law Department and from 1992 to 1994, Secretary of American Cyanamid Company,
a pharmaceutical and agricultural company. Ms. Brennan has been Secretary
and Vice President, Corporate Staff of the Registrant since 1994.
GEORGE P. KOOLURIS - From 1980 to 1993, Vice President, Corporate
Development, Corporate Staff of the Registrant. Mr. Kooluris has been Senior
Vice President, Corporate Development, Corporate Staff of the Registrant since
1994.
JOHN L. McGOLDRICK - From 1974 to 1994, Partner, McCarter & English. Mr.
McGoldrick has been General Counsel and Senior Vice President, Corporate Staff
of the Registrant since 1995.
MICHAEL F. MEE - From 1990 to 1992, Executive Vice President, Finance and
Chief Financial Officer, from 1990 to 1993, director and from 1992 to 1993,
Chairman of the Board and Chief Financial Officer of Wang Laboratories, Inc.,
a provider of computer-based information processing products and services. Mr.
Mee has been Chief Financial Officer and Senior Vice President, Corporate Staff
of the Registrant since 1994.
PETER S. RINGROSE, Ph.D. - From 1992 to 1994, Senior Vice President,
Medicinal Research & Development, Europe and from 1994 to 1996, Senior Vice
President, Worldwide Discovery and Medicinal Research & Development, Europe of
Pfizer Inc., a health care company. Dr. Ringrose has been President,
Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the
Registrant since January 1997.
LEON E. ROSENBERG, M.D. - From 1991 to 1996, President, Bristol-Myers
Squibb Pharmaceutical Research Institute, a division of the Registrant and
Senior Vice President, Scientific Affairs of the Registrant since January 1997.
FREDERICK S. SCHIFF - Mr. Schiff has been Controller and Vice President,
Corporate Staff of the Registrant since 1990.
CHARLES G. THARP, Ph.D. - From 1991 to 1993, Vice President, Compensation,
- 13 -
Benefits and Human Resource Development, Corporate Staff of the Registrant.
Dr. Tharp has been Senior Vice President, Human Resources, Corporate Staff of
the Registrant since 1993.
KENNETH E. WEG - From 1991 to 1993, President, Bristol-Myers Squibb
Pharmaceutical Operations, a division of the Registrant, and from 1993 to 1996,
President, Bristol-Myers Squibb Pharmaceutical Group, a division of the
Registrant. Mr. Weg has been President, Worldwide Medicines Group, a division
of the Registrant, since January 1997 and a director of the Registrant since
1995 and Executive Vice President of the Registrant since 1995.
In addition to the positions and offices heretofore listed, all of the
foregoing executive corporate officers and other executive officers of the
Registrant are directors and/or officers of one or more affiliates of the
Registrant, with the exception of Messrs. Autera and Tharp.
- 14 -
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 Stock Exchange (symbol: BMY). A quarterly
summary of the high and low market prices is presented below:
1996 1995
------------------ ---------------------
High Low High Low
-------- -------- --------- ---------
Common:
First Quarter $45 1/8 $40 9/16 $32 15/16 $28 7/8
Second Quarter 45 1/8 39 34 15/16 30 15/16
Third Quarter 49 41 1/2 37 7/16 33 1/4
Fourth Quarter 58 3/16 48 1/4 43 9/16 36
1996 1995
------------------ ---------------------
High Low High Low
-------- -------- --------- ---------
Preferred:
First Quarter No Trades $300 $230
Second Quarter $369 $350 1/2 325 225
Third Quarter 370 364 335 250
Fourth Quarter 450 450 359 1/2 330
HOLDERS OF COMMON STOCK
-----------------------
The approximate number of record holders of common stock at December 31, 1996
was 133,638.
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.
In March 1996, the Board of Directors of the Company authorized an increase in
the Company's current share repurchase program from 100 million shares to 150
million shares. Additional shares will be repurchased from time to time in the
open market or through private transactions, as market conditions permit.
- 15 -
DIVIDENDS
---------
Dividend payments per share in 1996 and 1995 were:
Common Preferred
------------------- ---------------
1996 1995 1996 1995
--------- ----- ----- -----
First Quarter $ .37 1/2 $ .37 $ .50 $ .50
Second Quarter .37 1/2 .37 .50 .50
Third Quarter .37 1/2 .37 .50 .50
Fourth Quarter .37 1/2 .37 .50 .50
--------- ----- ----- -----
Year $1.50 $1.48 $2.00 $2.00
========= ===== ===== =====
In December 1996, the Board of Directors of the Company declared a quarterly
dividend of $.38 per share on the common stock of the Company, payable on
February 1, 1997 to shareholders of record as of January 3, 1997. The 1997
indicated annual payment of $1.52 per share represents the twenty-fifth
consecutive year that the Company has raised the dividend on its common stock.
- 16 -
Item 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
OPERATING RESULTS
-----------------
(dollars in millions,
except per share amounts)
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
Net Sales $15,065 $13,767 $11,984 $11,413 $11,156
------- ------- ------- ------- -------
Expenses:
Cost of products sold 3,965 3,637 3,122 3,029 2,857
Marketing, selling and
administrative 3,925 3,670 3,166 3,098 3,075
Advertising and product
promotion 1,946 1,646 1,367 1,255 1,291
Research and development 1,276 1,199 1,108 1,128 1,083
Other (*) (60) 1,213 666 332 863
------- ------- ------- ------- -------
11,052 11,365 9,429 8,842 9,169
------- ------- ------- ------- -------
Earnings Before
Income Taxes (*) 4,013 2,402 2,555 2,571 1,987
Provision for income taxes 1,163 590 713 612 449
------- ------- ------- ------- -------
Net Earnings (*) $ 2,850 $ 1,812 $ 1,842 $ 1,959 $ 1,538
======= ======= ======= ======= =======
Dividends paid on common
and preferred stock $ 1,507 $ 1,495 $ 1,485 $ 1,485 $ 1,428
Earnings per
common share (*)/(**) 2.84 1.79 1.81 1.90 1.48
Dividends per
common share (**) 1.50 1.48 1.46 1.44 1.38
(*) Includes a special charge for pending and future product liability
claims of $950 million before taxes, $590 million after taxes, or $.58
per share, in 1995, $750 million before taxes, $488 million after taxes,
or $.48 per share, in 1994 and $500 million before taxes, $310 million
after taxes, or $.30 per share, in 1993. Includes a provision for
restructuring of $310 million before taxes, $198 million after taxes,
in 1995 and $890 million before taxes, $570 million after taxes, in
1992.
(**) Average common shares outstanding and per common share amounts have
been adjusted for the two-for-one stock split.
- 17 -
Item 6. SELECTED FINANCIAL DATA. (cont'd.)
FIVE-YEAR FINANCIAL SUMMARY
FINANCIAL POSITION AT DECEMBER 31
---------------------------------
(dollars in millions)
except per share amounts)
1996 1995 1994 1993 1992
------- ------- ------- ------ ------
Current assets $ 7,528 $ 7,018 $ 6,710 $ 6,570 $ 6,621
Property, plant and
equipment 3,964 3,760 3,666 3,374 3,141
Total assets 14,685 13,929 12,910 12,101 10,804
Current liabilities 5,050 4,806 4,274 3,065 3,300
Long-term debt 966 635 644 588 176
Total liabilities 8,115 8,107 7,206 6,161 4,784
Stockholders' equity 6,570 5,822 5,704 5,940 6,020
Average common shares
outstanding
(in millions) (**) 1,004 1,012 1,017 1,030 1,036
Book Value per common
share (**) $ 6.57 $ 5.67 $ 5.63 $ 5.81 $ 5.81
(**) Average common shares outstanding and per common share amounts have been
adjusted for the two-for-one stock split.
Reference is made to Note 2 Acquisitions and Divestitures, Note 7 Property,
Plant and Equipment and Note 15 Contingencies, appearing in the Notes to
Consolidated Financial Statements included in Part II, Item 8 of this Form
10-K Annual Report.
- 18 -
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Summary
Nineteen ninety-six marked another year of record growth in sales and earnings
for Bristol-Myers Squibb. Worldwide sales were $15.1 billion, a 9% increase
over 1995. Domestic sales increased 10% to $8.5 billion, while international
sales increased 9% to $6.6 billion. Exchange rate fluctuations had an
unfavorable effect of 2% on worldwide sales and 4% on international sales.
Sales growth resulted from an 11% increase due to volume with no changes
overall from pricing activity. In 1996, significant contributions to the
Company's sales growth were made by the thirty-six products, representing all
four business segments, with annual sales of at least $100 million. In fact,
sixteen of these products experienced double- digit sales growth or better.
Earnings before income taxes increased 10% to $4,013 million in 1996, net
earnings increased 10% to $2,850 million and earnings per share increased 11%
to $2.84, excluding the 1995 charges. Including these charges, earnings before
income taxes were $4,013 million in 1996 and $2,402 million in 1995, net
earnings were $2,850 million in 1996 and $1,812 million in 1995, and earnings
per share were $2.84 in 1996 and $1.79 in 1995.
Bristol-Myers Squibb's financial position remains strong. At December 31,
1996, the Company held $2.2 billion in cash, time deposits and marketable
securities. Cash provided by operating activities totaled $2.6 billion and
continued to be the primary source of funding to finance research, new product
development and introductions, capital spending and working capital needs. It
was also used to pay dividends of $1.5 billion in 1996. Dividends per common
share were $1.50 in 1996, increasing from $1.48 per share paid in 1995. In
December 1996, the Company announced an additional dividend increase, the
twenty-fifth consecutive year that dividends have increased. The 1997
indicated annual payment is $1.52 per share compared with the $1.50 per share
paid in 1996. With this 1997 annual payment, Bristol-Myers Squibb dividends
have increased at a compound annual growth rate of 8% over the past 10 years.
Bristol-Myers Squibb's strong financial position is evidenced further by its
triple-A credit rating from both Moody's and Standard & Poor's, making
Bristol-Myers Squibb one of only eight U.S. companies with this distinction.
Accordingly, the Company has substantial borrowing capacity at its disposal.
Total market capitalization was $54.5 billion as of December 31, 1996, a 25.7%
increase over last year. Total return to shareholders, capital appreciation
together with reinvested dividends, was 32.1% for 1996, which compares
favorably to the 23.0% return of the Standard & Poor's 500.
In March 1996, the Board of Directors extended the Company's share repurchase
program, increasing the program's authorization to 150 million shares. During
1996, the Company purchased 19 million shares of common stock at a cost of $852
million, bringing the total shares acquired since the program's inception to
107 million.
On December 3, 1996, the Company's Board of Directors declared a two-for-one
stock split of the common stock of the Company, effective February 1997. The
Board of Directors also recommended that an amendment be considered for
stockholder approval at the annual meeting of stockholders to increase the
number of authorized shares of common stock from 1.5 billion to 2.25 billion.
All share and per share information presented herein has been adjusted for the
effect of the stock split.
- 19 -
Net Sales and Earnings
Worldwide sales increased 9% in 1996 to $15.1 billion, compared with increases
of 15% and 5% in 1995 and 1994, respectively. The consolidated sales growth
resulted from an 11% increase due to volume, a 2% decrease due to unfavorable
foreign exchange rate fluctuations and no changes overall from pricing
activity. In 1995, the 15% increase in sales reflected a 13% increase due to
volume, while price increases and exchange rate fluctuations each contributed
1% to growth on a worldwide basis. In 1994, the 5% increase in sales reflected
a 4% increase due to volume, a 1% increase due to pricing and exchange rate
fluctuations had no effect. Domestic sales increased 10% in both 1996 and 1995
and 4% in 1994, while international sales increased 9% in 1996, 22% in 1995 and
7% in 1994. In general, the businesses of the Company's industry segments are
not seasonal.
The effective income tax rate on earnings before income taxes was 29.0% in 1996
compared to 24.6% and 27.9% in 1995 and 1994, respectively. Excluding the 1995
special charge and the provision for restructuring, the effective income tax
rate on earnings before income taxes was 29.0% in 1996 and 1995, and 29.5% in
1994. The lower 1996 and 1995 effective income tax rates compared to 1994
resulted from increased income in lower tax rate jurisdictions, partially
offset by reduced benefits from operations in Puerto Rico.
As described in the notes to the financial statements, the Company recorded
special charges to earnings of $950 million before taxes, $590 million after
taxes, or $.58 per share in the fourth quarter of 1995 and $750 million before
taxes, $488 million after taxes or $.48 per share, in the fourth quarter of
1994. Also, during the fourth quarter of 1995, the Company recorded a
provision for restructuring of $310 million before taxes, $198 million after
taxes, or $.20 per share.
Expenses
Total costs and expenses as a percentage of sales, excluding the 1995 special
charge and the provision for restructuring, were 73.4% in both 1996 and 1995
compared with 72.4% in 1994. In 1996, the increases in advertising and
promotion in support of new and existing products were offset by decreases in
marketing, selling and administrative expenses and research and development
spending. The increase in 1995 primarily resulted from increased advertising
and promotion expenditures in the nonprescription health products and
toiletries and beauty aids segments. In addition, gross margins in the
nonprescription health products segment were lower in 1995 than in the prior
year, due to the Company's expanded participation in the federal government's
Women, Infants and Children (WIC) program.
As a percentage of sales, cost of products sold remained relatively unchanged
at 26.3% in 1996 compared to 26.4% in 1995. Excluding 1996 acquisitions, cost
of products sold, as a percentage of sales, decreased to 25.5% due to a
favorable product mix, the introduction of a semi-synthetic material yielding
lower production costs for TAXOL*(R)(paclitaxel) and manufacturing efficiencies.
In 1995, cost of products sold as a percentage of sales increased to 26.4% from
26.1% in 1994 as a result of the increased participation in the WIC program and
lower gross margins in connection with acquisitions, offset by a favorable
product mix and improved manufacturing efficiencies.
- 20 -
Marketing, selling and administrative expenses, as a percentage of sales,
decreased to 26.1% in 1996 from 26.7% in 1995 and 26.4% in 1994. In 1996,
increases in marketing and selling expenses in the pharmaceutical segment were
more than offset by decreases in administrative costs.
Advertising and promotion expenses in support of new and existing products
increased 18% to $1,946 million in 1996 from $1,646 million in 1995,
principally due to incremental spending in the pharmaceutical and toiletries
and beauty aids segments, supporting direct-to-consumer campaigns and new
product launches, respectively. In 1995, advertising and promotion expenses
increased from 1994 levels primarily due to spending in support of new product
launches.
The Company's investment in research and development totaled $1,276 million in
1996, an increase of 6% over 1995. This spending level reflects the Company's
commitment to research over a broad range of therapeutic areas and clinical
development in support of new products. Over the past 10 years, research and
development expenses have increased at a compound annual growth rate of 11%.
In 1996, research and development spending dedicated to the discovery and
development of pharmaceutical products was 12.3% of pharmaceutical sales
compared to 12.9% and 13.6% in 1995 and 1994, respectively. During 1996 and
1995, the Company entered into a number of research alliances, licensing
agreements and biotechnology collaborations. These agreements are providing
important new products as well as early stage compounds for further development
and new processes that will help us screen for new drugs more effectively. Our
collaboration with Sanofi, a French pharmaceutical company, has resulted in the
worldwide filings in 1996 for irbesartan, a drug that represents an advanced
class of anti-hypertensive medicines.
Industry Segments
The Pharmaceutical Products Segment, which is the Company's largest segment at
58% of total Company sales, increased 11% to $8,702 million in 1996. Sales
growth resulted from a 13% increase in volume offset by a 2% decrease due to
the unfavorable effect of foreign exchange rate fluctuations. Changes in
selling prices had no effect on sales growth. Domestic and international sales
increased 13% and 10%, respectively, primarily due to volume growth. Excluding
CAPOTEN* sales (discussed below), pharmaceutical product sales increased 21%
(23% before the effect of foreign exchange).
Strong sales increases by established pharmaceutical products more than offset
a $377 million domestic decline, or 68%, and a $71 million international
decline, or 7%, in sales of captopril, an angiotensin converting enzyme (ACE)
inhibitor sold primarily under the trademark CAPOTEN*, due to the loss of its
patent exclusivity in the U.S. in February 1996. Worldwide CAPOTEN* sales were
$1.1 billion in 1996. During 1997, CAPOTEN* will lose its exclusivity in
several countries outside the U.S., which contributed $208 million of CAPOTEN*
sales in 1996.
Sales of cardiovascular drugs, the largest product group in the segment,
decreased 3% to $2,816 million. Excluding CAPOTEN* sales, cardiovascular drugs
increased 26%. Sales of PRAVACHOL*, a cholesterol-lowering agent, were $1.1
billion, an increase of 39%. PRAVACHOL* is the first and only cholesterol-
lowering drug of its kind proven to reduce the risk of a first heart attack.
This important claim is founded upon the results of studies that demonstrated
important clinical benefits, including the landmark five-year Pravastatin
Primary Prevention Study and the five-year Cholesterol and Recurrent Events
- 21 -
(CARE) trial. The U.S. Food and Drug Administration (FDA)in July granted
expanded labeling that cleared PRAVACHOL* for use with diet to help reduce the
risk of first heart attack in people who have elevated cholesterol but no
history of heart disease. With this indication, in September the Company
announced a nationwide program, the PRAVACHOL* Public Awareness Program on First
Heart Attack Prevention, to raise awareness about the risks of a first heart
attack and to help motivate people to take action with their physicians to
reduce their risks. The program focuses on the millions of Americans with high
cholesterol who are considered at risk of a first heart attack. MONOPRIL*, a
second generation ACE inhibitor with once-a-day dosage, also increased with
strong growth in both domestic and international markets.
Sales of anti-cancer drugs increased 23% to $1,971 million. Sales of TAXOL*
(with an exclusivity period in the U.S. expiring in December 1997), the
Company's leading anti-cancer agent, increased 40% to $813 million. In late
1992, TAXOL* was initially cleared in the U.S. and Canada for the treatment of
patients with ovarian cancer whose first-line or subsequent chemotherapy has
failed, and, during 1993 and 1994, TAXOL* received clearance for marketing in
a number of countries in Europe, Latin America and the Pacific area. In 1994,
TAXOL* received clearance in the U.S. for use in the treatment of breast cancer
after failure of combination chemotherapy for metastatic disease or after
relapse within six months of adjuvant chemotherapy. In October 1996, TAXOL* was
approved in the United Kingdom for first-line use in the treatment of ovarian
cancer. The Company announced in December 1996 an agreement with the National
Institutes of Health to continue and extend its collaborative research for the
development of TAXOL*. Sales of PARAPLATIN* (with an exclusivity period in the
U.S. expiring in April 2004), used in the treatment of ovarian cancer, also
increased 16%. These increases were partially offset by decreases in sales of
VEPESID* (the exclusivity for which expired in the U.S. in November 1993) and
PLATINOL*. In October 1996, the Company acquired Oncology Therapeutics Network,
a specialty distributor of anti-cancer medicines and related products.
Anti-infective drug sales were $1,856 million, an increase of 9% over the prior
year. Strong growth was recorded for ZERIT* and VIDEX*, the Company's two
antiretroviral agents, both of which benefited from positive regulatory agency
actions in the U.S., Canada and Europe, and from ongoing clinical trials
demonstrating efficacy in combination therapy. During the third quarter, VIDEX*
received clearance from the FDA to be used for first-line treatment of HIV.
In January 1997, a new oral solution of ZERIT*, representing a significant
addition to the limited therapeutic options available to treat HIV-infected
infants and children, was introduced. These actions are expanding markets for
both products. Sales of CEFZIL*, an oral cephalosporin used in the treatment
of respiratory infections, and MAXIPIME*, a fourth generation injectable
cephalosporin introduced in some international markets in 1995 and in the U.S.
in the third quarter of 1996, also contributed to the growth of anti-
infectives. In October 1996, CEFZIL* received clearance from the FDA for use
in the treatment of acute bacterial sinusitis in adult and pediatric patients.
Growth of these products was partially offset by sales decreases in DURICEF* and
AMIKIN* due to generic competition.
Sales of central nervous system drugs increased 26% to $760 million, due to the
strong growth of BUSPAR*, the Company's novel anti-anxiety agent; SERZONE*, an
antidepressant that offers a low incidence of side effects; and STADOL NS*, a
prescription nasal spray analgesic. Glucophage (the exclusivity period for
which expires in the U.S. in December 1999), an oral medication for non-insulin
dependent diabetes licensed from the French company Lipha for sale in the U.S.,
was launched in 1995. In 1996, Glucophage continued to experience
- 22 -
exceptionally strong growth, due to its rapid acceptance in the U.S. market.
Dermatological drug sales increased largely due to sales of DOVONEX*, a vitamin
D3 analog for the treatment of moderate psoriasis.
In 1995, pharmaceutical products segment sales increased 12%. Increases in
sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*, BUSPAR*, CEFZIL*,
and introductory sales of Glucophage, SERZONE* and MAXIPIME* were partially
offset by decreases in sales of AZACTAM*, VEPESID*, CORGARD*, ISOVUE* and
AMIKIN*. In 1994, sales in the segment increased 7% due to increased sales of
cardiovascular, anti-cancer and anti-infective drugs offset in part by
decreases in sales of diagnostic agents.
Operating profit margin was relatively constant at 33.0% in 1996, 33.3% in
1995, excluding the 1995 provision for restructuring, and 32.6% in 1994.
Sales in the Nonprescription Health Products Segment increased 10% to $2,750
million, reflecting a 12% increase due to volume and a 2% decrease due to the
unfavorable effect of foreign exchange rate fluctuations. International sales
increased 12% (16% excluding the unfavorable effect of foreign exchange), while
domestic sales increased 9%. Sales of the milk-based ENFAMIL*, the Company's
largest-selling infant formula, as well as NUTRAMIGEN* and LACTOFREE* special
infant formulas, performed well in both the U.S. and international markets.
Mead Johnson Nutritional Group's leadership in the WIC program allowed the
Company to maintain its position as the U.S. market leader, while also
increasing its share of the overall infant formula market. Contributing to
infant formula sales in the U.S. were several sole-source contracts awarded to
the Company during the past year under the WIC program as well as gains in
non-WIC segments. BOOST* and SUSTACAL* adult nutritional beverages, launched
directly to consumers in the fourth quarter of 1995, and ALACTA NF*, a
nutritious beverage for pre-school age children, sold outside the U.S., also
contributed to sales growth. Sales of analgesic products increased 7% (11%
excluding the effect of foreign exchange), due to volume growth from
EFFERALGAN*, DAFALGAN* and ASPIRINE UPSA*, from the UPSA Group, as well as
EXCEDRIN* and BUFFERIN*. The KERI* line of skin care products and COMTREX*
cough/cold remedies also performed well.
In 1995, worldwide sales of nonprescription health products increased 22% (an
increase of 11%, excluding the effect of the acquisition of the UPSA Group in
September 1994), primarily due to increased sales of infant formulas, adult
consumer nutritionals, EXCEDRIN*, BUFFERIN* and analgesics from the UPSA Group.
In 1994, sales increased 4%, primarily due to increased sales of infant
formulas and analgesics.
Operating profit margin improved to 19.9% in 1996, compared to 19.2% in 1995,
excluding the 1995 provision for restructuring, partially as a result of
improved manufacturing efficiencies. In 1995, operating profit margin,
excluding the 1995 provision for restructuring, decreased to 19.2% from 22.3%
in 1994, primarily due to lower margins on infant formula products and
increased advertising and marketing expenses.
In the Medical Devices Segment, sales of $1,860 million reflected a 2% decrease
over prior year levels. Volume gains of 3% were achieved despite a 3% decrease
due to changes in selling prices. Sales also were impacted by a 2% decrease
due to the unfavorable effect of foreign exchange. International sales
decreased 3%(excluding the unfavorable effect of foreign exchange, sales
increased 1%), while domestic sales decreased 1%. The Company's Zimmer division
continues to be the world market share leader in knee and hip replacements.
- 23 -
Worldwide sales of prosthetic implants increased 1%, excluding the unfavorable
effect of foreign exchange, led by strong growth of the NEXGEN* Complete Knee
Solution. The Company launched a major new hip replacement, the VERSYS* Hip
System, the most extensive component system on the market that features a
single set of instruments, in the fourth quarter of 1996. ConvaTec, a division
of the Company, is the worldwide market share leader in ostomy care products.
Sales of ostomy care products decreased over the prior year due to the overall
negative impact of foreign exchange, product rationalization and the
restructuring of distribution arrangements. Volume growth of the ACTIVE
LIFE/COLODRESS* product line was achieved in international markets. Sales of
wound care products decreased. ConvaTec continues to be the world market share
leader in modern wound care products.
In 1995, worldwide sales of medical devices increased 13%. Excluding the
acquisition of Calgon Vestal Laboratories, and a divestiture in 1994, sales
increased 7% as a result of increased sales of knee implants, ostomy and wound
care products. In 1994, medical device sales increased 6% due to volume growth
of prosthetic implants, ostomy and wound care products, offset in part by
declines in product lines divested in 1994 and 1993.
Operating profit margin in the medical devices segment increased to 30.2% in
1996 from 27.9% in 1995, excluding the 1995 provision for restructuring, due
to improved manufacturing efficiencies. In 1995, operating profit margin of
27.9%, excluding the 1995 provision for restructuring, decreased from 29.5% in
1994. The decrease in 1995 resulted from increased research and development
and sales force expenditures.
Sales in the Toiletries and Beauty Aids Segment increased 13% in 1996 to $1,753
million, reflecting a 14% increase due to volume, a 2% increase due to pricing
and a 3% decrease due to foreign exchange rate fluctuations. Excluding the
unfavorable effect of foreign exchange, international sales increased 19% over
1995, while domestic sales increased 13%. The Company's Clairol division
continued to maintain its market share leadership in the U.S. in haircolorings
and is the fastest growing hair care company in the U.S. Sales of the
Company's haircoloring products were strong, increasing 14%, primarily due to
the continued success of NATURAL INSTINCTS*, NICE 'N EASY*, ULTRESS*, LASTING
COLOR by LOVING CARE* and salon haircolorings and the introduction of CLAIROL
HYDRIENCE*, a unique, water-based permanent haircolor. Introduced in June 1996,
CLAIROL HYDRIENCE* is finding growing acceptance in the marketplace and is
contributing to the growth of the haircoloring segment. Hair care product
sales benefited from the strong sales of the HERBAL ESSENCES* complete line of
shampoos, conditioners and styling aids and INFUSIUM 23*, as well as the strong
performances from the SYSTEME BIOLAGE* and VAVOOM* hair care lines from Matrix
Essentials. The Company's skin care products, primarily the SEA BREEZE* and
KERI* skin care lines, and the BAN* line of anti-perspirants and deodorants,
also contributed to the segment's volume growth.
In 1995, sales in the toiletries and beauty aids segment increased 21%.
Excluding the acquisition of Matrix Essentials in 1994, sales increased 10%,
primarily due to increased sales of haircoloring, hair and skin care products,
anti-perspirants and deodorants. In 1994, sales in the segment increased 4%,
primarily due to increased sales of haircoloring, hair and skin care products,
partially offset by decreases in anti-perspirant and deodorant sales and the
1993 divestiture of the Clairol beauty appliance business.
Operating profit margin in 1996 was 13.7% compared to 10.7% in 1995, excluding
the 1995 provision for restructuring. The 1996 increase is primarily due to
- 24 -
increased gross margins. Operating profit margin, excluding the 1995 provision
for restructuring, in 1995 was 10.7%, compared with 13.1% in 1994, due to
higher costs of new product introductions and high costs from acquired
businesses.
Geographic Areas
Sales in the U.S., net of inter-area sales, increased 10% in 1996, primarily
due to anti-cancer and anti-infective drugs from the pharmaceutical segment,
infant formulas from the nonprescription health segment and haircoloring and
hair care products from the toiletries and beauty aids segment. Strong sales
increases were achieved despite a 68% decline in sales of CAPOTEN*. Excluding
the sales of CAPOTEN*, U.S. sales increased 16% compared to 1995. Operating
profit margin was 27.8% in 1996 and 28.4% in 1995, excluding the 1995 provision
for restructuring, primarily due to increased advertising and promotion
expenses. In 1995, sales in the U.S. increased 10% due to strong sales in the
pharmaceutical and nonprescription health segments, as well as introductory
sales of products from every segment. Excluding the 1995 provision for
restructuring, operating profit margin decreased to 28.4% in 1995 from 30.1%
in 1994, primarily as a result of lower gross margins on WIC sales and
increased advertising and promotion expenditures for new and existing products.
International sales increased 9% in 1996 and 22% in 1995. Excluding the effect
of foreign exchange rate fluctuations, international sales in 1996 and 1995
increased 13% and 19%, respectively.
Sales in Europe, Mid-East and Africa, net of inter-area sales, increased 8% due
to strong sales growth of products from the pharmaceutical segment including
anti-cancer and antiretroviral drugs, which were partially offset by decreases
in sales of CAPOTEN* and penicillins and from the medical devices segment,
including ostomy and wound care products. In the nonprescription health
segment, sales of PLUSSSZ*, vitamins from the 1996 acquisition of Pharmavit, and
analgesic products from the UPSA Group, contributed to sales growth in the
region. The operating profit margin was 25.4% in 1996, a slight decrease from
25.6% in 1995, excluding the 1995 provision for restructuring. In 1995, sales
in Europe, Mid-East and Africa increased 30%, primarily due to increased sales
of cardiovascular, anti-cancer and anti-infective drugs, and ostomy and wound
care products. Sales from the UPSA acquisition also contributed to sales
growth in the region. Excluding the 1995 provision for restructuring,
operating profit margin increased to 25.6% in 1995 from 21.5% in 1994,
primarily as a result of higher utilization of manufacturing facilities in
lower tax rate jurisdictions.
Sales in Other Western Hemisphere countries increased 19% in 1996, due to
increased sales of products from the pharmaceutical segment, including
cardiovascular, anti-cancer and anti-infective drugs; from the nonprescription
health segment, including infant formulas; and from the toiletries and beauty
aids segments, including haircoloring and hair care products. Sales of
pharmaceutical products from the 1996 acquisition of Argentia SA also
contributed to sales growth in the region. Operating profit margin decreased
to 14.8% from 15.2% in 1995, excluding the 1995 provision for restructuring.
In 1995, sales in Other Western Hemisphere countries, net of inter-area sales,
increased 5% due to strong sales of anti-cancer and cardiovascular drugs,
SERZONE* and ostomy products, offset by the unfavorable effect of foreign
exchange rate fluctuations. Excluding the 1995 provision for restructuring,
operating profit margin decreased to 15.2% in 1995 from 20.5% in 1994,
primarily as a result of lower foreign exchange gains.
- 25 -
Sales in the Pacific region, net of inter-area sales, increased 2% in 1996.
Excluding the effect of unfavorable foreign exchange, sales increased 10% as
a result of increased sales from the nonprescription health segment including
analgesics, infant formulas, school-age nutritional beverages and skin care
product lines and from the pharmaceutical segment, products including anti-
infective and cardiovascular drugs. Operating profit margin was 8.6% in 1996
compared to 10.8% in 1995, excluding the 1995 provision for restructuring,
primarily as a result of increases in advertising and promotion expenditures
in support of new and existing products and increased research and development
spending. In 1995, sales in the Pacific region, net of inter-area sales,
increased 16% as a result of increased sales of analgesics, infant formulas,
anti-infectives, cardiovascular drugs and skin care products. Operating profit
margin was 10.8% in 1995, excluding the 1995 provision for restructuring,
compared to 13.6% in 1994 due to increases in advertising and promotion
expenditures in support of new product launches.
Financial Position
The Company considers cash, time deposits and marketable securities as its
principal measures of liquidity. These items totaled $2.2 billion at December
31, 1996, compared to $2.2 billion and $2.4 billion at December 31, 1995 and
1994, respectively. Working capital levels remain high at $2.5 billion at
December 31, 1996, compared to $2.2 billion and $2.4 billion at December 31,
1995 and 1994, respectively. Cash, time deposits and marketable securities and
the conversion of other working capital items are expected to fund near-term
operations of the Company.
In November 1996, the Company issued $350 million principal amount of 6.80%
Debentures due November 15, 2026. Proceeds from the sale of these securities
will be used for general corporate purposes, which may include working capital,
capital expenditures, stock repurchase programs, repayment or refinancing of
borrowings and acquisitions.
In order to mitigate the effect of foreign currency risk, the Company engages
in hedging activities. The impact of such hedges on the Company's results of
operations and on its financial position is explained further in the notes to
the financial statements.
Internally generated cash provided by operations increased to $2.6 billion in
1996 from $2.5 billion in 1995 and $2.3 billion in 1994. Cash provided by
operations continued to be the Company's primary source of funds to finance
operating needs and expenditures for new plant and equipment. As part of the
Company's ongoing commitment to improve plant efficiency and maintain superior
research facilities, the Company has invested over $1.7 billion in capital
expansion over the past three years.
Cash provided by operations was also used to pay dividends of nearly $4.5
billion over the past three years, to fund acquisitions and to finance the
share repurchase program. The Company's share repurchase program authorizes
the purchase of common stock from time to time in the open market or through
private transactions as market conditions permit. During the past three years,
the Company has repurchased 51 million shares at a cost of $1.8 billion.
During 1996, the Company made a number of external investments to extend sales
and earnings growth and increase its global reach. Acquisitions included
Pharmavit, one of Hungary's leading manufacturers of over-the-counter
medicines, nutritional products and generic pharmaceuticals; Argentia SA, one
of Argentina's largest manufacturers and marketers of ethical pharmaceuticals;
- 26 -
Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines
and related products, and a number of smaller acquisitions. The Company also
divested several small business lines in 1996.
On December 3, 1996, the Company's Board of Directors declared a two-for-one
stock split of the common stock of the Company, effective February 1997. The
Board of Directors also recommended that an amendment be considered for
stockholder approval at the annual meeting of stockholders to increase the
number of authorized shares of common stock from 1.5 billion to 2.25 billion.
- 27 -
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(dollars in millions, except per share amounts)
Year Ended December 31,
EARNINGS ---------------------------
-------- 1996 1995 1994
------- ------- -------
Net Sales $15,065 $13,767 $11,984
------- ------- -------
Expenses:
Cost of products sold 3,965 3,637 3,122
Marketing, selling and administrative 3,925 3,670 3,166
Advertising and product promotion 1,946 1,646 1,367
Research and development 1,276 1,199 1,108
Special charge - 950 750
Provision for restructuring - 310 -
Other (60) (47) (84)
------- ------- -------
11,052 11,365 9,429
------- ------- -------
Earnings Before Income Taxes 4,013 2,402 2,555
Provision for income taxes 1,163 590 713
------- ------- -------
Net Earnings $ 2,850 $ 1,812 $ 1,842
======= ======= =======
Earnings Per Common Share $2.84 $1.79 $1.81
===== ===== =====
Average Common Shares
Outstanding (in millions) 1,004 1,012 1,017
===== ===== =====
Year Ended December 31,
RETAINED EARNINGS --------------------------
------------------ 1996 1995 1994
------ ------ ------
Retained Earnings, January 1 $7,917 $7,600 $7,243
Net earnings 2,850 1,812 1,842
------ ------ ------
10,767 9,412 9,085
Less dividends 1,507 1,495 1,485
------ ------ ------
Retained Earnings, December 31 $9,260 $7,917 $7,600
====== ====== ======
The accompanying notes are an integral part of these financial statements.
- 28 -
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(dollars in millions)
December 31,
---------------------------
1996 1995 1994
------- ------- -------
ASSETS
------
Current Assets:
Cash and cash equivalents $ 1,681 $ 1,645 $ 1,642
Time deposits and marketable securities 504 533 781
Receivables, net of allowances 2,651 2,356 2,043
Inventories 1,669 1,451 1,397
Prepaid expenses 1,023 1,033 847
------- ------- -------
Total Current Assets 7,528 7,018 6,710
Property, Plant and Equipment 3,964 3,760 3,666
Insurance Recoverable 853 959 968
Excess of cost over net tangible assets
received in business acquisitions 1,508 1,219 939
Other Assets 832 973 627
------- ------- -------
$14,685 $13,929 $12,910
======= ======= =======
The accompanying notes are an integral part of these financial statements.
- 29 -
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in millions)
December 31,
---------------------------
1996 1995 1994
------- ------- -------
LIABILITIES
-----------
Current Liabilities:
Short-term borrowings $ 513 $ 575 $ 725
Accounts payable 1,064 848 693
Accrued expenses 1,962 1,939 1,481
Product liability 800 700 635
U.S. and foreign income taxes payable 711 744 740
------- ------- -------
Total Current Liabilities 5,050 4,806 4,274
Product Liability 1,031 1,645 1,201
Other Liabilities 1,068 1,021 1,087
Long-Term Debt 966 635 644
------- ------- -------
Total Liabilities 8,115 8,107 7,206
------- ------- -------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued and
outstanding 15,245 in 1996, 19,023 in
1995 and 21,857 in 1994, liquidation
value of $50 per share - - -
Common stock, par value of $.10 per share:
Authorized 1.5 billion shares; issued
1,082,496,016 in 1996, 540,185,639 in 1995
and 540,173,669 in 1994 108 54 54
Capital in excess of par value of stock 382 375 397
Cumulative translation adjustments (361) (327) (301)
Retained earnings 9,260 7,917 7,600
------- ------- -------
9,389 8,019 7,750
Less cost of treasury stock - 81,806,550
common shares in 1996, 34,953,311 in 1995
and 32,887,848 in 1994 2,819 2,197 2,046
------- ------- -------
Total Stockholders' Equity 6,570 5,822 5,704
------- ------- -------
$14,685 $13,929 $12,910
======= ======= =======
The accompanying notes are an integral part of these financial statements.
- 30 -
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
---------------------------
1996 1995 1994
------- ------- -------
Cash Flows From Operating Activities:
Net Earnings $2,850 $1,812 $1,842
Depreciation and amortization 519 448 328
Special charge - 950 750
Provision for restructuring - 310 -
Other operating items (52) (34) 18
Receivables (262) (319) (63)
Inventories (227) (50) (36)
Accounts payable 177 155 (20)
Accrued expenses 42 166 (73)
Income taxes 250 (252) (8)
Product liability (514) (441) (384)
Other assets and liabilities (142) (246) (53)
------- ------- -------
Net Cash Provided by Operating Activities 2,641 2,499 2,301
------- ------- -------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and
marketable securities 406 349 35
Purchases of time deposits and marketable
securities (379) (80) (482)
Additions to fixed assets (601) (513) (573)
Proceeds from sales of businesses 213 - 285
Business acquisitions (316) (350) (667)
Other, net (40) (37) (22)
------- ------- -------
Net Cash Used in Investing Activities (717) (631) (1,424)
------- ------- -------
Cash Flows From Financing Activities:
Short-term borrowings (78) (181) 496
Long-term debt 346 (10) 27
Issuances of common stock under stock plans 206 71 24
Purchases of treasury stock (852) (244) (701)
Dividends paid (1,507) (1,495) (1,485)
------- ------- -------
Net Cash Used in Financing Activities (1,885) (1,859) (1,639)
------- ------- -------
Effect of Exchange Rates on Cash (3) (6) (17)
------- ------- -------
Increase (Decrease) in Cash and Cash
Equivalents 36 3 (779)
Cash and Cash Equivalents at Beginning
of Year 1,645 1,642 2,421
------- ------- -------
Cash and Cash Equivalents at End of Year $1,681 $1,645 $1,642
======= ======= =======
The accompanying notes are an integral part of these financial statements.
- 31 -
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 range of annual rates used in computing
provisions for depreciation is 2% to 20% for buildings and 5% to 33% for
equipment.
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.
Earnings Per Share - Earnings per common share are computed using the
weighted average number of shares outstanding during the year. The
effect of shares issuable under stock plans is not significant.
Note 2 ACQUISITIONS AND DIVESTITURES
-------------------------------------
In January 1996, the Company acquired Pharmavit Gyogyszer-es
Elelmiszeripari Reszvenytarsasag, one of Hungary's leading manufacturers
of over-the-counter medicines, nutritional products and generic
pharmaceuticals.
In March 1996, the Company acquired Argentia SA, one of Argentina's
largest manufacturers and marketers of ethical pharmaceuticals.
In October 1996, the Company completed the acquisition of Oncology
Therapeutics Network, a specialty distributor of anti-cancer medicines
and related products.
In 1995, the Company acquired A/S GEA Farmaceutisk Fabrik, a leading
manufacturer and marketer of branded generic pharmaceuticals for the
Scandinavian market, and completed the acquisition of Calgon Vestal
Laboratories, a wound and skin care and infection control products
business.
- 32 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
In 1994, the Company acquired Matrix Essentials, Inc., the leading
manufacturer in North America of professional hair care and beauty
products sold exclusively in beauty salons, and completed the
acquisition of the remaining interest in the UPSA Group, which develops
and markets a wide range of nonprescription health and pharmaceutical
products. The Company sold Squibb Diagnostics and completed the sale of
Xomed-Treace, Inc.
Note 3 OTHER INCOME AND EXPENSES
---------------------------------
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
Interest income $ 95 $139 $124
Interest expense (78) (97) (68)
Other - net 43 5 28
---- ---- ----
$ 60 $ 47 $ 84
==== ==== ====
Interest expense was reduced by $15 million in 1996, 1995 and 1994 due to
interest capitalized on major property, plant and equipment projects. Cash
payments for interest, net of amounts capitalized, were $61 million, $78
million and $62 million in 1996, 1995 and 1994, respectively.
Note 4 FOREIGN CURRENCY TRANSLATION
------------------------------------
Cumulative translation adjustments, which represent the effect of
translating assets and liabilities of the Company's non-U.S. entities,
except those in highly inflationary economies, were:
1996 1995 1994
---- ---- ----
Balance, January 1 $327 $301 $332
Effect of balance sheet translations:
Amount 38 21 (43)
Tax effect (4) 5 12
---- ---- ----
Balance, December 31 $361 $327 $301
==== ==== ====
Included in net earnings were losses of $19 million in 1996, $33 million in
1995 and $44 million in 1994 resulting from foreign currency transactions
and translation adjustments.
- 33 -
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:
Year Ended December 31,
------------------------
1996 1995 1994
------ ------ ------
U.S. $2,332 $1,195 $1,328
Non-U.S. 1,681 1,207 1,227
------ ------ ------
$4,013 $2,402 $2,555
====== ====== ======
The provision for income taxes consisted of:
Year Ended December 31,
------------------------
1996 1995 1994
------- ------ ------
Current:
U.S. $ 462 $466 $423
Non-U.S. 442 356 377
------- ----- -----
904 822 800
------- ----- -----
Deferred:
U.S. 232 (200) (92)
Non-U.S. 27 (32) 5
------- ----- -----
259 (232) (87)
------- ----- -----
$1,163 $590 $713
======= ===== =====
Income taxes paid during the year were $861 million, $856 million and $718
million in 1996, 1995 and 1994, respectively.
- 34 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company's provision for income taxes in 1996, 1995 and 1994 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
-------------------------
1996 1995 1994
----- ----- -----
U.S. statutory rate 35.0% 35.0% 35.0%
Effect of operations in
Puerto Rico and Ireland (5.5) (9.7) (9.4)
State and local taxes .6 .8 1.4
Other (1.1) (1.5) .9
----- ----- -----
29.0% 24.6% 27.9%
===== ===== =====
Prepaid taxes at December 31, 1996, 1995 and 1994 were $757 million, $786
million and $591 million, respectively. The deferred income tax liability,
included in Other Liabilities, at December 31, 1996 was $124 million. The
deferred income tax asset, included in Other Assets, at December 31, 1995 and
1994 was $130 million and $65 million, respectively.
The components of prepaid and deferred income taxes consisted of:
December 31,
-----------------------
1996 1995 1994
---- ---- ----
Product liability $383 $527 $304
Postretirement and pension benefits 129 163 247
Restructuring and integrating businesses 88 130 38
Depreciation (245) (210) (205)
Other 278 306 272
---- ---- ----
$633 $916 $656
==== ==== ====
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 $2,506 million at December 31, 1996.
- 35 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 6 INVENTORIES
-------------------
December 31,
--------------------------
1996 1995 1994
------ ------ ------
Finished goods $ 994 $ 892 $ 781
Work in process 223 180 233
Raw and packaging materials 452 379 383
------ ------ ------
$1,669 $1,451 $1,397
====== ====== ======
Note 7 PROPERTY, PLANT AND EQUIPMENT
-------------------------------------
December 31,
--------------------------
1996 1995 1994
------ ------ ------
Land $ 160 $ 160 $ 159
Buildings 2,427 2,296 2,103
Machinery, equipment and fixtures 3,626 3,403 3,061
Construction in progress 433 405 513
------ ------ ------
6,646 6,264 5,836
Less accumulated depreciation 2,682 2,504 2,170
------ ------ ------
$3,964 $3,760 $3,666
====== ====== ======
The Company recorded a $310 million restructuring charge, $198 million after
taxes, in the fourth quarter of 1995. The restructuring charge related to
the consolidation of plants and facilities, and related employee
terminations. The restructuring charge consisted of employee-related costs
of $190 million, $100 million of asset write-downs and $20 million of other
related expenses.
Note 8 SHORT-TERM BORROWINGS AND LONG-TERM DEBT
-------------------------------------------------
Short-term borrowings included amounts primarily due to banks of $440
million, $558 million and $704 million at December 31, 1996, 1995 and 1994,
respectively, and current installments of long-term debt of $73 million, $17
million and $21 million at December 31, 1996, 1995 and 1994, respectively.
The Company has short-term lines of credit with domestic and foreign banks.
At December 31, 1996, the unused portions of these lines of credit were
approximately $200 million and $578 million, respectively.
- 36 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The components of long-term debt were:
December 31,
------------------------
1996 1995 1994
---- ---- ----
6.80% Debentures, due in 2026 $344 - -
7.15% Debentures, due in 2023 343 $343 $343
3.51% Term Loan, due in 2005 53 59 -
5.75% Industrial Revenue Bonds, due in 2024 34 34 34
6.18% Term Loan, due in 1997 - 64 65
Other, 2.83% to 6.50%,
due in varying amounts through 2016 192 135 202
---- ---- ----
$966 $635 $644
==== ==== ====
Long-term debt at December 31, 1996 was payable:
Years Ending December 31,
-------------------------
1998 $ 18
1999 10
2000 38
2001 6
2002 32
2003 and later 862
----
$966
====
Note 9 STOCKHOLDERS' EQUITY
----------------------------
On December 3, 1996, the Company's Board of Directors authorized a two-for-one
split of its common stock, effective February 1997. Per common share
amounts in the accompanying consolidated financial statements give effect to
the stock split. The Board of Directors also recommended that an amendment
be considered for stockholder approval at the annual meeting of stockholders
to increase the number of authorized shares of common stock from 1.5 billion
shares to 2.25 billion shares.
- 37 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Changes in capital shares and capital in excess of par value of stock were:
Capital in
Shares of Common Stock Excess of
-------------------------- Par Value
Issued Treasury of Stock
------------- ---------- ----------
Balance, December 31, 1993 532,688,458 20,782,281 $353
Issued pursuant to stock plans,
options, rights and warrants 15,747 (518,733) (15)
Conversions of preferred stock 16,646 - -
Purchases - 12,624,300 -
Other 7,452,818 - 59
------------- ---------- ----
Balance, December 31, 1994 540,173,669 32,887,848 397
Issued pursuant to stock plans,
options and rights - (1,602,537) (22)
Conversions of preferred stock 11,970 - -
Purchases - 3,668,000 -
------------- ---------- ----
Balance, December 31, 1995 540,185,639 34,953,311 375
Effect of two-for-one
stock split 540,185,639 34,953,311 (54)
Issued pursuant to stock plans,
options and rights 221,032 (6,623,272) (25)
Conversions of preferred stock 31,960 - -
Purchases - 18,523,200 -
Other 1,871,746 - 86
------------- ---------- ----
Balance, December 31, 1996 1,082,496,016 81,806,550 $382
============= ========== ====
Each share of the Company's preferred stock is convertible into 8.48
shares of common stock and is callable at the Company's option. The
reductions in the number of issued shares of preferred stock in 1996, 1995
and 1994 were due to conversions into shares of common stock.
Dividends per common share were $1.50 in 1996, $1.48 in 1995 and $1.46 in
1994.
Stock Compensation Plans
------------------------
Under the Company's stock option plans, 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 plans provide
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 plans also provide for the granting of
performance-based stock options to certain key executives.
- 38 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Under the terms of the 1983 Stock Option Plan, as amended, additional
shares are authorized in the amount of 0.9% of the outstanding shares per
year through 2003 and incorporates the Company's long-term performance
award 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 30,000,000
shares for issuance under the plan. As of December 31, 1996, a total of
20,250,800 options were granted under the plan with 400 options granted
to each eligible employee. Individual grants generally become exercisable
on or after the third anniversary of the grant date.
The Company's restricted stock award plan provides for the granting of up
to 6,000,000 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, 1996, a total of 1,261,112 shares were
outstanding 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 $55 million,
or $.05 per share in 1996 and $35 million, or $.03 per share in 1995. The
fair value of the options granted during 1996 and 1995 was estimated as
$8.51 per share and $6.47 per share, respectively, on the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
1996 1995
----- -----
Dividend yield 4.3% 4.2%
Volatility 17.0% 18.2%
Risk-free interest rate 6.5% 6.9%
Assumed forfeiture rate 3.0% 3.0%
Expected life (years) 7 7
- 39 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Stock option and long-term performance award transactions were:
Weighted
Average of
Shares of Common Stock Exercise
---------------------------- Price
Available for Under of Shares
Option/Award Plan Under Plan
------------- ---------- ----------
Balance, December 31, 1993 4,245,513 18,364,163 $60.80
Authorized 4,607,156 - -
Granted (5,296,982) 5,296,982 51.93
Exercised - (686,507) 32.97
Lapsed 1,012,237 (1,027,651) 62.48
------------- ----------
Balance, December 31, 1994 4,567,924 21,946,987 56.99
Authorized 19,565,572 - -
Granted (13,449,952) 13,449,952 61.79
Exercised - (2,012,827) 40.96
Lapsed 1,129,560 (1,129,574) 61.92
------------- ----------
Balance, December 31, 1995 11,813,104 32,254,538 59.76
Effect of two-for-one
stock split 11,813,104 32,254,538 -
Authorized 9,094,182 - -
Granted (16,179,560) 16,179,560 46.92
Exercised - (8,863,078) 27.62
Lapsed 1,788,528 (1,796,826) 33.00
------------- ----------
Balance, December 31, 1996 18,329,358 70,028,732 $34.27
============= ==========
The following table summarizes information concerning currently outstanding
and exercisable options/awards:
Options/Awards Outstanding Options Exercisable
---------------------------------- ---------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
--------------- ----------- ----------- -------- ----------- --------
$10 - $20 781,054 1.60 $13.61 781,054 $13.61
$20 - $30 19,915,520 5.76 26.56 14,770,870 26.57
$30 - $40 33,445,632 7.24 33.20 12,712,644 36.60
$40 - $50 11,876,650 9.17 43.71 102,000 42.41
$50 - $60 4,009,876 9.29 57.55 - -
---------- ----------
70,028,732 28,366,568
========== ==========
- 40 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
At December 31, 1996, 104,976,640 shares of common stock were reserved
for issuance pursuant to stock plans, options and conversions of
preferred stock.
Attached to each outstanding share of the Company's common stock is one
half of a Right. The Rights will be exercisable if a person or group
acquires beneficial interest of 15% or more of the Company's
outstanding common stock, or commences a tender or exchange offer for
15% or more of the Company's outstanding common stock. Each one half
of a Right will entitle stockholders to buy one one-thousandth of a
share of a new series of participating preferred stock of the Company
at an exercise price of $200. The Rights will expire on December 18,
1997. In the event of certain merger, sale of assets or self-dealing
transactions, each one half of a Right will then entitle its holder to
acquire shares having a value of twice the Right's exercise price. The
Company may redeem the Rights at $.01 per one half of a Right at any
time until the 15th day following public announcement that a 15%
position has been acquired.
Note 10 FINANCIAL INSTRUMENTS
------------------------------
The Company enters into foreign exchange option and forward contracts
to manage its exposure to currency fluctuations.
The Company has exposures to net foreign currency denominated assets
and liabilities, which approximated $1,640 million, $1,385 million and
$1,117 million at December 31, 1996, 1995 and 1994, respectively,
primarily in Deutsche marks, French francs, Italian lira and Japanese
yen. The Company mitigates the effect of these exposures through
third party borrowings and foreign exchange forward contracts.
Foreign exchange option contracts, which typically expire within one
year, are used to hedge intercompany shipments expected to occur
during the next year. Gains on these contracts are deferred and are
recognized in the same period as the hedged transactions. Certain
foreign exchange forward contracts are used to minimize exposure of
foreign currency transactions and firm commitments to fluctuating
exchange rates. Gains or losses on these contracts are recognized in
the basis of the transaction being hedged. The notional amounts of
the Company's foreign exchange option and forward contracts at
December 31, 1996, 1995 and 1994 were $1,331 million, $1,377 million
and $1,200 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, 1996, 1995 and 1994, the carrying value of all
financial instruments, both short- and long-term, approximated their
fair values.
- 41 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 11 LEASES
---------------
Minimum rental commitments under all noncancelable operating leases,
primarily real estate, in effect at December 31, 1996 were:
Years Ending December 31,
-------------------------
1997 $121
1998 101
1999 80
2000 65
2001 61
Later years 212
----
Total minimum payments 640
Less total minimum sublease rentals 152
----
Net minimum rental commitments $488
====
Operating lease rental expense (net of sublease rental income of $27
million in 1996, $25 million in 1995 and $23 million in 1994) was $129
million in 1996, $135 million in 1995 and $136 million in 1994.
Note 12 SEGMENT INFORMATION
----------------------------
The Company's products are reported in four industry segments as
follows:
Pharmaceutical Products:
------------------------
Includes prescription medicines, mainly cardiovascular, anti-cancer
and anti-infective drugs, which comprise about 30%, 25% and 20%,
respectively, in 1996, and 40%, 20% and 20%, respectively, in both
1995 and 1994, of the segment's sales, central nervous system drugs
and other pharmaceutical products.
Nonprescription Health Products:
--------------------------------
Includes infant formulas and other nutritional products, which
comprise about 65% of the segment's sales, analgesics, cough/cold
remedies and skin care products.
- 42 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Medical Devices:
----------------
Includes orthopaedic implants, which comprise about 40% of the
segment's sales, ostomy and wound care products, surgical instruments
and other medical devices.
Toiletries and Beauty Aids:
---------------------------
Includes haircoloring and hair care preparations, which comprise about
80% of the segment's sales in 1996, and 75% in both 1995 and 1994, and
deodorants, anti-perspirants and other toiletries and beauty aids.
Unallocated expenses principally consist of general administrative
expenses and net interest income. Other assets are principally cash
and cash equivalents, time deposits and marketable securities and
insurance recoverable. Inter-area sales by geographic area for the
years ended December 31, 1996, 1995 and 1994, respectively, were:
United States - $1,210 million, $977 million and $867 million;
Europe, Mid-East and Africa - $692 million, $542 million and $428
million; Other Western Hemisphere - $59 million, $49 million and $37
million; and Pacific - $25 million, $21 million and $28 million.
These sales are usually billed at or above manufacturing costs.
Net assets relating to operations outside the United States amounted
to $3,057 million, $2,609 million and $2,286 million at December 31,
1996, 1995 and 1994, respectively.
- 43 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
INDUSTRY SEGMENTS Net Sales Profit(a)
----------------- ----------------------- ------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------ ------
Pharmaceutical Products $ 8,702 $ 7,810 $ 6,970 $2,871 $2,351 $2,270
Nonprescription
Health Products 2,750 2,495 2,043 548 471 456
Medical Devices 1,860 1,906 1,685 562 510 497
Toiletries & Beauty Aids 1,753 1,556 1,286 241 136 168
------- ------- ------- ------ ------ ------
Net sales and
operating profit $15,065 $13,767 $11,984 $4,222 $3,468 $3,391
======= ======= ======= ====== ====== ======
GEOGRAPHIC AREAS Net Sales Profit(b)
---------------- ----------------------- ------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------ ------
United States $ 9,661 $ 8,662 $ 7,846 $2,688 $2,392 $2,360
Europe, Mid-East and
Africa 4,520 4,074 3,139 1,147 833 675
Other Western Hemisphere 1,307 1,097 1,039 193 152 213
Pacific 1,563 1,523 1,320 135 147 179
Inter-area eliminations (1,986) (1,589) (1,360) 59 (56) (36)
------ ------- ------- ------ ------ ------
Net sales and
operating profit $15,065 $13,767 $11,984 4,222 3,468 3,391
======= ======= =======
Unallocated expenses(c) (209) (1,066) (836)
------ ------ ------
Earnings before
income taxes $4,013 $2,402 $2,555
====== ====== ======
(a) The 1995 operating profit of the Company's industry segments included
the provision for restructuring as follows: Pharmaceutical Products -
$252 million; Nonprescription Health Products - million; Medical
Devices - $22 million; and Toiletries and Beauty Aids - $30 million.
(b) The earnings before income taxes included the 1995 provision for
restructuring as follows: United States - $66 million; Europe, Mid-East
and Africa - $211 million; Other Western Hemisphere - $15 million; and
Pacific - $18 million.
(c) Unallocated expenses included a special charge for pending and future
product liability claims of $950 million and $750 million in 1995 and
1994, respectively.
- 44 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
INDUSTRY SEGMENTS Year-End Assets
----------------- ---------------------------
1996 1995 1994
------- ------ ------
Pharmaceutical Products $ 6,319 $5,497 $5,180
Nonprescription Health Products 1,992 1,800 1,635
Medical Devices 1,382 1,414 1,033
Toiletries and Beauty Aids 786 669 663
------- ------ ------
Identifiable segment assets $10,479 $9,380 $8,511
======= ====== ======
GEOGRAPHIC AREAS Year-End Assets
---------------- ---------------------------
1996 1995 1994
------- ------- -------
United States $ 5,948 $ 5,254 $ 4,669
Europe, Mid-East and Africa 3,344 3,157 2,894
Other Western Hemisphere 740 462 416
Pacific 1,026 1,032 949
Inter-area eliminations (579) (525) (417)
------- ------- -------
Identifiable geographic assets 10,479 9,380 8,511
Other assets(d) 4,206 4,549 4,399
------- ------- -------
Total assets $14,685 $13,929 $12,910
======= ======= =======
Capital
INDUSTRY SEGMENTS Expenditures Depreciation
----------------- ------------------ ----------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Pharmaceutical Products $408 $336 $379 $235 $228 $205
Nonprescription Health
Products 72 78 112 61 46 38
Medical Devices 36 47 37 43 42 38
Toiletries and Beauty Aids 70 33 26 27 26 23
---- ---- ---- ---- ---- ----
Identifiable industry
totals 586 494 554 366 342 304
Other 21 23 23 21 23 24
---- ---- ---- ---- ---- ----
Consolidated totals $607 $517 $577 $387 $365 $328
==== ==== ==== ==== ==== ====
(d) Other Assets included Insurance Recoverable related to the 1993
special charge of $853 million, $959 million and $968 million in
1996, 1995 and 1994, respectively.
- 45 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 13 RETIREMENT BENEFIT PLANS
---------------------------------
The Company and certain of its subsidiaries have defined benefit pension
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 participant's compensation. Plan assets principally
consist of equity securities and fixed income securities.
Cost for the Company's defined benefit plans included the following
components:
Year Ended December 31,
------------------------
1996 1995 1994
----- ----- -----
Service cost - benefits earned during the year $ 127 $ 101 $ 114
Interest cost on projected benefit obligation 191 183 166
Actual (earnings) losses on plan assets (359) (406) 11
Net amortization and deferral 171 213 (158)
----- ----- -----
Net pension expense $ 130 $ 91 $ 133
===== ===== =====
The weighted average actuarial assumptions for the Company's pension plans
were as follows:
December 31,
------------------------
1996 1995 1994
----- ----- -----
Discount rate 7.8% 7.3% 8.8%
Compensation increase 4.8% 4.5% 5.3%
Long-term rate of return 10.0% 10.0% 10.0%
- 46 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The funded status of the plans was as follows:
December 31,
----------------------------
1996 1995 1994
-------- ------- -------
Actuarial present value of
accumulated benefit obligation:
Vested $ (2,044) $(2,059) $(1,624)
Non-vested (252) (217) (178)
------- ------- -------
$ (2,296) $(2,276) $(1,802)
======= ======= =======
Total projected benefit obligation $ (2,734) $(2,689) $(2,138)
Plan assets at fair value 2,596 2,307 1,836
------- ------- -------
Plan assets less than projected benefit
obligation (138) (382) (302)
Unamortized net assets at adoption (62) (76) (90)
Unrecognized prior service cost 67 78 89
Unrecognized net losses 235 516 309
Adjustment required to recognize minimum
pension liability in Other Assets (26) (48) (23)
------- ------- -------
Prepaid (Accrued) pension expense $ 76 $ 88 $ (17)
======= ======= =======
Plan assets less than projected benefit obligation included $184 million,
$150 million and $120 million in an unfunded benefit equalization plan at
December 31, 1996, 1995 and 1994, respectively.
In 1995, the increase in total projected benefit obligation was due to a
lower discount rate and the increase in plan assets was due to
significantly higher earnings and cash contributions.
- 47 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
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.
Cost for the Company's postretirement benefit plans included the
following components:
Year Ended
December 31,
-------------------
1996 1995 1994
---- ---- ----
Service cost - benefits earned during the year $ 9 $ 8 $ 9
Interest cost on accumulated postretirement
benefit obligation 34 41 37
Actual earnings on plan assets (13) (11) -
Net amortization and deferral 6 7 (2)
---- ---- ----
Net postretirement benefit expense $ 36 $ 45 $ 44
==== ==== ====
The status of the plans was as follows:
December 31,
--------------------
1996 1995 1994
----- ----- -----
Accumulated postretirement benefit obligation:
Retirees $(347) $(403) $(386)
Fully eligible active plan participants (17) (17) (13)
Other active plan participants (147) (159) (118)
----- ----- -----
(511) (579) (517)
Plan assets at fair value 89 74 41
----- ----- -----
Accumulated postretirement benefit obligation
in excess of plan assets (422) (505) (476)
Unrecognized prior service cost 5 3 1
Unrecognized net (gain) losses (56) 38 10
----- ----- -----
Accrued postretirement benefit expense $(473) $(464) $(465)
===== ===== =====
- 48 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
For measurement purposes, an annual rate of increase in the per capita cost
of covered health care benefits of 8.4% for participants under age 65 and
7.4% for participants age 65 and over was assumed for 1997; the rate was
assumed to decrease gradually to 5.0% in 2007 and to remain at that level
thereafter. Increasing the assumed medical care cost trend rates by 1
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1996 by $25 million and the aggregate
of the service and interest cost components of net postretirement benefit
expense for the year then ended by $2 million. The weighted-average
discount rate used in determining the accumulated postretirement benefit
obligation was 7.8% in 1996, 7.3% in 1995 and 8.8% in 1994.
Plan assets principally consist of equity securities and fixed income
securities. The expected long-term rate of return on plan assets was 10.0%
in 1996, 1995 and 1994.
Note 15 CONTINGENCIES
----------------------
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.
Breast Implant Litigation
-------------------------
As of December 31, 1996, approximately 22,000 plaintiffs had filed suit
against the Company, its subsidiary, Medical Engineering Corporation (MEC),
and certain other subsidiaries, in federal and state courts and in certain
Canadian provincial courts, alleging damages for personal injuries of
various types resulting from polyurethane covered breast implants and smooth
walled breast implants. The Company, MEC and certain other defendants are
participants in a settlement program originally approved on September 1,
1994, and revised on December 22, 1995, by the Federal District Court in
Birmingham, Alabama. A number, yet unknown, of these plaintiffs have
participated or are expected to participate in the revised settlement, and
thereby discontinue their lawsuits. 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. Approximately 7,100 domestic class
members with implants of all manufacturers, including manufacturers not
participating in the revised settlement, opted out of the class action
settlement approved in 1994. Of this group, the Company has identified
approximately 2,300 domestic opt-outs with active claims based upon alleged
MEC implants. In connection with the revised settlement, the claims office
reports that, as of December 16, 1996, over 122,000 registered class members
have submitted proof of manufacturer documentation. The claims office also
reports that, as of December 16, 1996, over 52,000 of these registrants had
been sent Notification of Status letters advising them of their status in
the settlement. Of recipients of such letters, over 35,000 have proved that
they have an implant of one of three settling defendants (or their
subsidiaries or predecessor companies) and have chosen to participate in the
settlement, while approximately 3,300 opted out. The decisions of the
- 49 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
remaining recipients of Notification of Status letters were not reported as
of December 31, 1996. The claims office also reports that approximately
8,000 domestic class members (with implants of all manufacturers) opted out
after receiving the initial notice of the revised settlement in early 1996.
Because the opt-out period has not expired for most class members, and
because our information is incomplete, it is not possible at this time to
estimate with any reasonable precision the total number of women who will
opt out of the revised settlement.
The cost of the settlement is dependent upon complex and varying factors,
including the number of class members that participate in the settlement,
the kinds of claims approved and their dollar value. The cost to the
company of resolving opt-out claims is also subject to a number of complex
uncertainties in addition to the unknown quantity and quality of such
claims. In connection with breast implant product liability claims, the
company recorded special charges in 1993 of $500 million before taxes, $310
million after taxes, or $.30 per share, in 1994 of $750 million before
taxes, $488 million after taxes, or $.48 per share, and in 1995 of $950
million before taxes, $590 million after taxes, or $.58 per share. The 1993
special charge consisted of $1.5 billion (recorded as Product Liability),
offset by $1.0 billion of expected insurance proceeds (recorded as Insurance
Recoverable).
In light of the continuing uncertainties attendant to these and other
factors (including insurance recoveries), it is difficult at this time to
estimate with any precision the cost of the breast implant product liability
claims to the Company. An additional future charge to earnings might be
required as additional information relating to the revised settlement and
the litigation becomes known.
Other Actions
-------------
The Company, one of its subsidiaries, and others are or 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. On June 7, 1996, the Company reached a settlement covering
all the then pending infant formula indirect purchaser cases except the case
in Massachusetts and the case brought by the Louisiana Attorney General.
On September 29, 1996, a federal district court in Tallahassee, Florida,
entered an order in favor of the defendants, effectively dismissing the
Louisiana Attorney General action. No appeal was taken from that decision.
In December 1996, the company entered an agreement in principle to settle
the Massachusetts action. Final court approval of the above settlements has
been granted in every case except those pending in Louisiana, Massachusetts,
Michigan and Nevada. In Louisiana on January 21, 1997, the court entered
an order disapproving the settlement. In the other jurisdictions, joint
motions for final approval of the settlement have either not yet been filed
(Massachusetts) or not yet been ruled upon (Michigan and Nevada).
- 50 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
As of December 31, 1996, the Company is a defendant in over 100 actions
brought against the Company and more than 30 other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers in various
federal district courts by certain chain drugstores, supermarket chains and
independent drugstores, suing either individually or as representatives of
a nationwide class of retail pharmacies that has been certified. These
cases, which have been coordinated for pretrial purposes, all seek treble
damages and injunctive relief on account of alleged antitrust violations in
the pricing and marketing of brand name prescription drugs. Plaintiffs in
the class action have indicated that they intend to claim damages, before
trebling, ranging from 5% to approximately 20% of the value of their
purchases of brand name prescription drugs from defendants since October 15,
1989. It is estimated that the class represents approximately two-thirds
of retail pharmacy purchases of brand name prescription drugs during the
alleged damages period. The Company, without admitting any wrongdoing,
reached an amended agreement as of May 1, 1996, to settle the class action.
The settlement, as amended, has been approved by the court, and purported
appeals from that approval are pending. Federal cases brought by retail
pharmacies that have opted out of the class remain pending. The largest
opt-out retailer plaintiffs have purported to quantify their conspiracy
damage claims against the defendants, including the Company, asserting
damages aggregating approximately $2.4 billion before trebling. Cases
brought by retail pharmacies in state court under state law alleging similar
grounds are proceeding in California, Alabama, Wisconsin and Minnesota.
Cases brought by consumers in state court under state law alleging similar
grounds have been brought in California, Washington, Colorado, New York,
Arizona, Maine, Alabama, Michigan, Minnesota, Wisconsin, the District of
Columbia, Kansas and Florida.
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 these lawsuits, claims and
proceedings which are pending against the Company are without merit or will
not have a material adverse effect on the Company's operating results,
liquidity or consolidated financial position.
- 51 -
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts)
Note 18 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -------
1996:
Net Sales $3,669 $3,696 $3,745 $3,955 $15,065
Gross Profit 2,734 2,734 2,742 2,890 11,100
Net Earnings 726 655 753 716 2,850
Earnings Per Common Share .72 .65 .75 .71 2.84
1995:
Net Sales $3,301 $3,445 $3,413 $3,608 $13,767
Gross Profit 2,424 2,536 2,483 2,687 10,130
Net Earnings/(Loss)* 657 608 689 (142) 1,812
Earnings/(Loss) Per
Common Share* .65 .60 .68 (.14) 1.79
* In 1995, the fourth quarter and annual results included a charge of $950
million ($590 million after taxes, or $.58 per share) for pending and
future product liability claims, and a provision for restructuring of
$310 million ($198 million after taxes).
- 52 -
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) and (2) on page 55 present fairly,
in all material respects, the financial position of Bristol-Myers
Squibb Company and its subsidiaries at December 31, 1996, 1995 and
1994, and the results of their operations and their cash flows for the
years then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted
auditing standards 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/ Price Waterhouse LLP
------------------------
1177 Avenue of the Americas
New York, New York 10036
January 22, 1997
- 53 -
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 6, 1997 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 6, 1997 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 6, 1997 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 6, 1997 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.
- 54 -
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
Number
------
(a)
1. Financial Statements 28-31
Notes to Consolidated Financial Statements 32-52
Report of Independent Accountants 53
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
Registration Statement No. 33-33682 on Form S-3).
3b. Bylaws of Bristol-Myers Squibb Company, as amended through November
5, 1996, 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. Rights Agreement, dated as of December 4, 1987, between Bristol-Myers
Squibb Company and Manufacturers Hanover Trust Company, as
amended (incorporated herein by reference to Exhibit 1 to the Form
8-A dated December 10, 1987 and Exhibit 1 to the Form 8 dated July
27, 1989) and Rights Agreement Certificate, filed herewith.
4c. 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).
4d. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company
- 55 -
(incorporated herein by reference to Exhibit 4.2 to the Form 8-K
dated May 27, 1993, and filed on June 3, 1993).
4e. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company,
filed herewith.
**10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, filed
herewith.
**10b. Bristol-Myers Squibb Company Executive Performance Incentive Plan,
filed herewith.
**10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as Amended and
Restated as of September 10, 1996, filed herewith.
**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).
**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,
- 56 -
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, filed herewith.
**10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for
Non-Employee Directors, as amended to January 13, 1997, filed
herewith.
**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).
**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).
**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).
11. Computation of Per Share Earnings (filed herewith).
- 57 -
21. Subsidiaries of the Registrant (filed herewith).
23. Consent of Price Waterhouse 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.
- 58 -
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 31, 1997
----------------------------------
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 31, 1997
-----------------------------
(Charles A. Heimbold, Jr.)
Chief Financial Officer
and Senior Vice President
Corporate Staff(Principal
/s/ Michael F. Mee Financial Officer) March 31, 1997
-----------------------------
(Michael F. Mee)
Controller and Vice
President, Corporate
Staff(Principal
/s/ Frederick S. Schiff Accounting Officer) March 31, 1997
-----------------------------
(Frederick S. Schiff)
- 59 -
Signature Title Date
--------- ----- -------------
/s/ Robert E. Allen Director March 31, 1997
-----------------------------
(Robert E. Allen)
Executive Vice
/s/ Michael E. Autera President and Director March 31, 1997
-----------------------------
(Michael E. Autera)
/s/ Ellen V. Futter Director March 31, 1997
-----------------------------
(Ellen V. Futter)
/s/ Louis V. Gerstner, Jr. Director March 31, 1997
-----------------------------
(Louis V. Gerstner, Jr.)
/s/ John D. Macomber Director March 31, 1997
-----------------------------
(John D. Macomber)
/s/ James D. Robinson III Director March 31, 1997
-----------------------------
(James D. Robinson III)
/s/ Andrew C. Sigler Director March 31, 1997
-----------------------------
(Andrew C. Sigler)
/s/ Louis W. Sullivan, M.D. Director March 31, 1997
-----------------------------
(Louis W. Sullivan, M.D.)
Executive Vice President,
President Worldwide
Medicines Group and
/s/ Kenneth E. Weg Director March 31, 1997
----------------------------
(Kenneth E. Weg)
- 60 -
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 Company (incorporated herein by
reference to Exhibit 4a to Registration Statement
No. 33-33682 on Form S-3).
3b. Bylaws of Bristol-Myers Squibb Company, as amended E-1-1
through November 5, 1996.
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. Rights Agreement Certificate. E-2-1
4c. 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).
4d. 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).
4e. Form of 6.80% Debenture Due 2026 of Bristol-Myers E-3-1
Squibb Company.
- 61 -
Exhibit Number and Description Page
------------------------------ ----
** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive E-4-1
Plan.
** 10b. Bristol-Myers Squibb Company Executive Performance E-5-1
Incentive Plan.
** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, E-6-1
as Amended and Restated as of September 10, 1996.
** 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).
** 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).
- 62 -
Exhibit Number and Description Page
------------------------------ ----
** 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 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).
** 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 E-7-1
for Non-Employee Directors, as amended to March 5,1996.
** 10l. Bristol-Myers Squibb Company 1987 Deferred E-8-1
Compensation Plan for Non-Employee Directors,
as amended to January 13, 1997.
- 63 -
Exhibit Number and Description Page
------------------------------ ----
** 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).
** 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).
** 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).
11. Computation of Per Share Earnings. E-9-1
21. Subsidiaries of the Registrant. E-10-1
23. Consent of Price Waterhouse LLP. E-11-1
27. Bristol-Myers Squibb Company Financial E-12-1
Data Schedule
99. Additional Exhibit E-13-1
- 64 -
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, 1996 $100 $39 $32 $107
========== ========== ============ ===========
For the year ended
December 31, 1995 $77 $31 $8 $100
========== ========== ============ ===========
For the year ended
December 31, 1994 $80 $31 $34 $77
========== ========== ============ ===========
S-1
Dates Referenced Herein and Documents Incorporated by Reference
4 Subsequent Filings that Reference this Filing
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