SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
345 Park Avenue, New York, N.Y. 10154
(Address of principal executive offices)
Telephone: (212) 546-4000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
At June 30, 1995, there were 507,176,672 shares outstanding of the
Registrant's $.10 par value Common Stock.
BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
June 30, 1995
Page No.
--------
Part I - Financial Information:
Condensed Financial Statements (Unaudited):
Consolidated Balance Sheet - June 30, 1995
and December 31, 1994 2 - 3
Consolidated Statement of Earnings for the three
and six months ended June 30, 1995 and 1994 4
Consolidated Statement of Cash Flows for the six
months ended June 30, 1995 and 1994 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 12
Part II - Other Information 13 - 14
Signatures 15
- 1 -
BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET - ASSETS
(Unaudited, in millions of dollars except share amounts)
June 30, December 31,
1995 1994
-------- ------------
Current Assets:
Cash and cash equivalents $ 1,719 $ 1,642
Time deposits and marketable
securities 583 781
Receivables, net of allowances 2,234 2,043
Finished goods 914 781
Work in process 186 233
Raw and packaging materials 372 383
------- -------
Inventories 1,472 1,397
Prepaid expenses 882 847
------- -------
Total Current Assets 6,890 6,710
------- -------
Property, Plant and Equipment 6,073 5,836
Less: Accumulated depreciation 2,329 2,170
------- -------
3,744 3,666
------- -------
Insurance Recoverable 966 968
Excess of cost over net tangible assets
received in business acquisitions 1,201 939
Other Assets 778 627
------- -------
Total Assets $13,579 $12,910
======= =======
- 2 -
BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET -
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited, in millions of dollars except share amounts)
June 30, December 31,
1995 1994
-------- ------------
Current Liabilities:
Short-term borrowings $ 832 $ 725
Accounts payable 745 693
Accrued expenses 1,681 1,481
Product liability 435 635
U.S. and foreign income taxes
payable 706 740
------- -------
Total Current Liabilities 4,399 4,274
Product Liability 1,260 1,201
Other Liabilities 1,030 1,087
Long-Term Debt 679 644
------- -------
Total Liabilities 7,368 7,206
------- -------
Stockholders' Equity:
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued
and outstanding 20,182 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
540,180,753 in 1995 and 540,173,669
in 1994 54 54
Capital in excess of par value of
stock 386 397
Cumulative translation adjustments (286) (301)
Retained earnings 8,113 7,600
------- -------
8,267 7,750
Less cost of treasury stock -
33,004,081 common shares in
1995 and 32,887,848 in 1994 2,056 2,046
------- -------
Total Stockholders' Equity 6,211 5,704
------- -------
Total Liabilities and Stockholders'
Equity $13,579 $12,910
======= =======
- 3 -
BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(Unaudited, in millions of dollars except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
------ ------ ------ ------
Net Sales $3,445 $2,970 $6,746 $5,804
------ ------ ------ ------
Expenses:
Cost of products sold 909 742 1,786 1,486
Marketing, selling,
administrative and other 979 846 1,807 1,532
Advertising and product
promotion 401 339 776 654
Research and development 294 271 583 532
------ ------ ------ ------
2,583 2,198 4,952 4,204
------ ------ ------ ------
Earnings Before Income Taxes 862 772 1,794 1,600
Provision for income taxes 254 230 530 477
------ ------ ------ ------
Net Earnings $ 608 $ 542 $1,264 $1,123
====== ====== ====== ======
Earnings Per Common Share $ 1.20 $ 1.07 $ 2.49 $2.21
====== ====== ====== =====
Average Common Shares
Outstanding (in millions) 507 507 507 509
=== === === ===
Dividends Per Common Share $.74 $.73 $ 1.48 $1.46
==== ==== ====== =====
- 4 -
BRISTOL-MYERS SQUIBB COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, in millions of dollars)
Six Months Ended
June 30,
------------------
1995 1994
------ ------
Cash Flows From Operating Activities:
Net earnings $1,264 $1,123
Depreciation and amortization 172 160
Other operating items 32 (6)
Receivables (112) 2
Inventories (36) (84)
Prepaid expenses (85) (23)
Accounts payable 30 (21)
Accrued expenses 112 8
Product liability (141) (82)
Income taxes 44 101
Other liabilities (190) (16)
------ ------
Net Cash Provided by Operating Activities 1,090 1,162
------ ------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and
marketable securities 221 24
Purchases of time deposits and marketable
securities (23) (167)
Additions to fixed assets (210) (239)
Acquisition of business (262) -
Proceeds from sale of business - 83
Other, net (24) (12)
------ ------
Net Cash Used in Investing Activities (298) (311)
------ ------
Cash Flows From Financing Activities:
Short-term borrowings 59 40
Long-term debt (2) 37
Issuances of common stock under stock plans 30 14
Purchases of treasury stock (51) (409)
Dividends paid (751) (745)
------ ------
Net Cash Used in Financing Activities (715) (1,063)
------ ------
Effect of Exchange Rates on Cash - (9)
------ ------
Increase/(Decrease) in Cash and Cash Equivalents 77 (221)
Cash and Cash Equivalents at Beginning of
Period 1,642 2,421
------ ------
Cash and Cash Equivalents at End of Period $1,719 $2,200
- 5 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Basis of Presentation
---------------------
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments (consisting
only of normal adjustments) necessary for a fair presentation of the
financial position of Bristol-Myers Squibb Company (the "Company") at
June 30, 1995 and December 31, 1994, the results of operations for the
three and six months ended June 30, 1995 and 1994, and cash flows for
for the six months ended June 30, 1995 and 1994. These condensed
consolidated financial statements should be read in conjunction with
the consolidated financial statements and the related notes included
in the Company's 1994 Annual Report on Form 10-K. In general, the
business of the Company's industry segments is not seasonal.
Second Quarter Results of Operations
------------------------------------
Sales
-----
Worldwide sales for the second quarter of 1995 increased 16% over the
prior year to $3,445. The consolidated sales growth resulted from a
13% increase due to volume, a 3% increase due to the favorable effect
of foreign currency translation, and no effect due to changes in
selling prices. Domestic sales increased 6% and international sales
increased 30% (23% excluding the favorable effect of foreign currency
translation. All four of the Company's core businesses reported sales
increases in both domestic and international markets. The three
acquisitions made in the last year, Calgon Vestal Laboratories, Matrix
Essentials, Inc. and the UPSA Group, accounted for one-third of the
increase in the Company's sales growth. Worldwide sales for the
second quarter of 1994 increased 6% compared to the second quarter of
1993, reflecting a 6% increase due to volume, a 1% increase due to
changes in selling prices, offset in part by a 1% decrease due to the
unfavorable effect of foreign currency translation.
Industry Segments
-----------------
Net Sales % Change
------------------ ------------------
Three Months Ended Three Months Ended
------------------ ------------------
6/30/95 6/30/94 6/30/95 6/30/94
------- ------- ------- -------
Pharmaceutical Products $1,946 $1,756 11% 12%
Medical Devices 483 413 17% (3%)
Nonprescription
Health Products 598 473 26% -
Toiletries and Beauty Aids 418 328 27% (3%)
------ ------
Total Company $3,445 $2,970 16% 6%
====== ======
- 6 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Sales in the pharmaceutical products segment, which is the largest
segment at 56% of total company sales, increased 11% over the
second quarter of 1994 to $1,946. Sales growth resulted from a 7%
increase in volume and a 4% increase due to the favorable effect of
foreign currency translation. Changes in selling prices had no
effect on sales growth for the quarter. Sales of cardiovascular
drugs, the largest product group in the segment, increased 9% to
$758 from $694 in 1994. Sales of captopril, an angiotensin
converting enzyme (ACE) inhibitor sold primarily under the
trademark CAPOTEN* and the Company's largest selling product,
increased 7% to $408 from $381 in 1994. PRAVACHOL*, the Company's
cholesterol-lowering agent, and MONOPRIL*, a second generation ACE
inhibitor with once-a-day dosage, contributed to the increase in
cardiovascular sales. In the U.S., PRAVACHOL* benefited from a
change in the clinical pharmacology section of its labeling to
reflect a 67% reduction in the incidence of fatal and non-fatal
heart attacks in hypercholesterolemic patients. In Canada, this
data was added to PRAVACHOL'S* indications. Anti-infective drug
sales increased 14% to $412 compared to $360 in 1994 due to sales
of ZERIT*, an antiretroviral drug approved by the FDA in June 1994,
strong international sales of DURICEF*, an oral cephalosporin
antibiotic, and strong sales growth of broad spectrum penicillins.
In the Company's line of anti-cancer drugs, sales increased 8% to
$370. TAXOL* (paclitaxel), which continues to benefit from the
April 1994 approval for its use in the treatment of breast cancer
after failure of combination chemotherapy for metastatic disease or
relapse within six months of adjuvant chemotherapy, experienced
very strong growth. Sales of PARAPLATIN* increased in domestic and
international markets. During the quarter, the company entered
into an agreement with Taiho Pharmaceutical Co., Ltd. in which it
obtained the exclusive rights to the anti-cancer drug UFT (tegafur
and uracil) in most parts of the world. Sales of central nervous
system drugs increased due to introductory sales of SERZONE*, the
Company's newly launched antidepressant which offers a favorable
side effect profile, and increases in sales of BUSPAR*, the
Company's novel anti-anxiety agent and STADOL NS*, a prescription
nasal spray analgesic. Dermatological drug sales increased
primarily due to strong sales of DOVONEX*, a vitamin D3 analogue
for the treatment of moderate psoriasis. During the second
quarter, the Company began selling Glucophage, a new oral anti-
diabetes agent for Type II non-insulin dependent diabetes. For the
second quarter of 1994, sales of the pharmaceutical products
segment increased 12% over the second quarter of 1993 primarily as
a result of increases in sales of cardiovascular, anti-cancer,
central nervous system and dermatological drugs.
In the medical devices segment, sales increased 17% to $483. In
January 1995, the Company acquired Calgon Vestal Laboratories, a
skin care and infection control products business. Excluding the
effect of that acquisition and the divestiture of Xomed-Treace, Inc.
in April 1994, sales increased 10%, reflecting a 4% increase due to
volume and a 6% increase due to the favorable effect of foreign
currency translation. Changes in selling prices had no effect on
* Indicates brand names of products which are registered trademarks
owned by the Company.
- 7 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
sales growth for the quarter. Sales of ostomy care products
increased due to the growth of the ACTIVE LIFE/COLODRESS* and the
SUR-FIT/ COMBIHESIVE* product lines. Worldwide sales of prosthetic
implants increased 6% with growth of the Insall/Burstein II Modular
Total Knee System and the CENTRALIGN* Precoat Hip Prosthesis. The
NEXGEN* Complete Knee Solution, the Company's advanced knee
replacement system introduced in the first quarter, has received
strong initial acceptance. In the Company's line of wound care
products, sales increased reflecting volume growth of DUODERM*
products. For the second quarter of 1994, medical devices segment
sales decreased 3% over the prior year. Excluding the effect of
divested businesses, sales increased 4% primarily due to increased
sales of prosthetic implants, ostomy and wound care products.
Sales of the nonprescription health products segment increased 26%
to $598. In September 1994, the Company acquired the remaining
ownership interest of the UPSA Group, the leading maker and
marketer of analgesics in France and Belgium and a world leader in
effervescent technology. Excluding the acquisition of UPSA, sales
increased 10%, reflecting a 10% increase due to volume. Foreign
currency translation and changes in selling prices had no effect on
sales growth for the quarter. ENFAMIL* and PROSOBEE* infant
formula sales increased with the addition of new sole-source
contracts in late 1994 and early 1995 under the federal
government's Women, Infants and Children (WIC) program including
New York, Florida and Georgia. During the quarter, the company was
awarded the WIC contract for the Western States Alliance,
significantly increasing its overall participation in the federal
government's WIC program. Sales of LACTOFREE*, a milk-based,
lactose-free infant formula, and NUTRAMIGEN* infant formula also
increased, as did the Company's line of SUSTAGEN* products. Sales
of analgesics also grew well due to increases in the sales of
EXCEDRIN* in the U.S., BUFFERIN* in Japan and EFFERALGAN* in Europe.
For the second quarter of 1994, the nonprescription health products
segment sales remained at prior year levels as increases in sales of
LACTOFRR*, ENFAPRO* and analgesics were offset by decreases in sales
of ENFAMIL* and PROSOBEE*.
Sales of the toiletries and beauty aids segment increased 27% over
the prior year to $418. In August 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. Excluding the acquisition of Matrix, sales
increased 7%, reflecting a 3% increase due to volume, a 2%
increase due to selling prices, and a 2% increase due to the
favorable effect of foreign currency translation. Sales of the
company's haircoloring products increased primarily due to the
introductory sales of NATURAL INSTINCTS*, launched in the U.S. in
the latter part of 1994, and NICE 'N EASY*. Sales of hair care
products increased due to the launch of the HERBAL ESSENCES*
complete line of shampoos and conditioners, as well as the addition
of the SYSTEME BIOLAGE*, VAVOOM!* and MATRIX ESSENTIALS* lines from
Matrix. Skin care products sales increased primarily due to strong
international volume growth of SEA BREEZE*. For the second quarter
of 1994, sales of the toiletries and beauty aids segment were 3%
- 8 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
below the second quarter of the prior year. Excluding the sales of
the Clairol beauty appliance business, sales increased 1% as
increased sales of haircoloring and haircare products were
partially offset by decreased sales of anti-perspirants and skin
care products.
Cost of Products Sold and Operating Expenses
--------------------------------------------
Total costs and expenses for the quarters ended June 30, 1995 and
1994 as a percentage of sales were 75.0% and 74.0%, respectively,
increasing primarily due to the acquired businesses. Cost of
products sold increased to 26.4% of sales from 25.0% in 1994.
Marketing, selling, administrative and other expenses as a
percentage of sales were 28.4% in 1995 and 28.5% in 1994.
Expenditures for advertising and promotion in support of new and
existing products increased 18% to $401 from $339 in 1994.
Research and development expenses increased 8% to $294 from $271 in
1994, and as a percentage of sales were 8.5% compared to 9.1%.
Pharmaceutical research and development spending increased 7% over
the prior year and as a percentage of pharmaceutical sales, was
12.9% compared to 13.4% in 1994.
Earnings
--------
Earnings before income taxes for the second quarter increased 12%
to $862 from $772 in 1994. Net earnings increased 12% to $608 from
$542 and earnings per share increased 12% to $1.20 from $1.07 in
1994.
Year-to-Date Results of Operations
----------------------------------
Sales
-----
Worldwide sales for the first six months of 1995 increased 16% over
the prior year to $6,746. The consolidated sales growth resulted
from a 14% increase due to volume and a 2% increase due to the
favorable effect of foreign currency translation. Changes in
selling prices had no effect on sales growth. Domestic sales
increased 9%, and international sales increased 28% (22% excluding
the favorable effect of foreign currency translation). The three
acquisitions made during the last year accounted for one-third of
the increase in the Company's sales growth. Worldwide sales for
the first six months of 1994 increased 4% compared to the prior
year, reflecting a 4% increase due to volume, a 2% increase due to
selling prices, offset in part by a 2% decrease due to the
unfavorable effect of foreign currency translation.
- 9 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Industry Segments
-----------------
Net Sales % Change
------------------ ------------------
Six Months Ended Six Months Ended
------------------ ------------------
6/30/95 6/30/94 6/30/95 6/30/94
------- ------- ------- -------
Pharmaceutical Products $3,841 $3,432 12% 9%
Medical Devices 936 830 13% (1%)
Nonprescription
Health Products 1,178 933 26% (2%)
Toiletries and Beauty Aids 791 609 30% (3%)
------ ------
Total Company $6,746 $5,804 16% 4%
====== ======
Sales of the pharmaceutical products segment increased 12% to
$3,841, reflecting a 9% increase due to volume and a 3% increase
due to the favorable effect of foreign currency translation.
Domestic sales increased 5% and international sales increased 21%
(10% excluding acquisitions and the favorable effect of foreign
currency translation). Cardiovascular drug sales of $1,443 were 5%
above prior year levels. Sales of CAPOTEN* increased 3% to $780 as
the benefit from new indications for the treatment of diabetic
nephropathy and left ventricular dysfunction were partially offset
by increasing competition in the ACE inhibitor market. In the
U.S., the expiration date of the CAPOTEN* patent was redefined by
legislation implementing the GATT treaty to February 1996. Due to
questions surrounding the implementation of the GATT legislation,
the effect of the new patent expiration date on the Company's
overall performance is currently being evaluated. In Germany, the
patent expiration for CAPOTEN* occurred in February 1995.
PRAVACHOL* and MONOPRIL* also reported strong worldwide increases.
Sales of anti-infectives increased with the strong growth of
DURICEF* and CEFZIL*, particularly in international markets, and
the introductory sales of ZERIT*. Increases in sales of anti-
cancer drugs were very strong, primarily due to the continued
growth of TAXOL*, and the strong performance of PARAPLATIN* and
PLATINOL*. Sales of the Company's central nervous system drugs
increased, reflecting the introductory sales of SERZONE*, as well
as the strong growth of BUSPAR* and STADOL NS*. Dermatological
drug sales increased primarily due to strong sales of DOVONEX*.
For the first six months of 1994, sales of the pharmaceutical
products segment increased 9% over the first six months of the
prior year primarily as a result of increases in sales of
cardiovascular, anti-cancer and central nervous system drugs.
Sales of the medical devices segment increased 13% to $936.
Excluding the acquisition of Calgon Vestal and the sales of
divested businesses, sales increased 8%, with a 3% increase due to
volume and a 5% increase due to the favorable effect of foreign
currency translation. Domestic sales increased 10% (excluding
acquisitions and divestitures, sales remained at prior year levels)
and international sales increased 16% (5% excluding acquisitions,
divestitures and the favorable effect of foreign currency
- 10 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
translation). Increases in sales of the SUR-FIT/COMBIHESIVE* and
the ACTIVE LIFE/COLODRESS* product lines led to the increase in
sales of ostomy care products. Worldwide sales of prosthetic
implants increased due to growth overseas and continued success in
the U.S. of the Insall/Burstein II Modular Total Knee System and
the CENTRALIGN* Precoat Hip Prosthesis. Increased sales of wound
care products resulted from the success of the DUODERM* product
line. For the first six months of 1994, medical devices segment
sales decreased 1% over the prior year. Excluding the effect of
divested businesses, sales increased 5% primarily as a result of
sales growth in prosthetic implants, ostomy and wound care
products.
In the nonprescription health products segment, sales increased 26%
to $1,178. Excluding the acquisition of UPSA, sales increased 9%
reflecting a 7% increase due to volume, a 1% increase due to the
favorable effect of foreign currency translation and a 1% increase
due to selling prices. Domestic sales increased 5% and
international sales increased 63% (15% excluding acquisitions and
the favorable effect of foreign currency translation). Sales of
infant formulas increased primarily due to the Company's increased
participation in the federal government's WIC program. Sales of
analgesics were strong due to increased sales of EXCEDRIN* in the
U.S., BUFFERIN* in Japan and EFFERALGAN* in Europe. For the first
six months of 1994, nonprescription health products segment sales
decreased 2% over the first six months of the prior year primarily
due to decreased sales of analgesics and cough/cold remedies.
Sales of the toiletries and beauty aids segment increased 30% to
$791. Excluding the acquisition of Matrix, sales increased 9%
reflecting a 3% increase due to selling prices, a 6% increase due
to volume and no effect due to foreign currency translation.
Domestic sales increased 34% (6% excluding the effect of
acquisitions) and international sales increased 22% (13% excluding
acquisitions and the favorable effect of foreign currency
translation). Sales growth of the Company's haircoloring products
was led by NICE 'N EASY* and NATURAL INSTINCTS*. Increases in
sales of shampoos and conditioners benefited from the introduction
of HERBAL ESSENCES* as well as the addition of the SYSTEME
BIOLAGE*, VAVOOM!* and MATRIX ESSENTIALS* lines from Matrix. For
the first six months of 1994, sales of the toiletries and beauty
aids segment decreased 3% over the prior year. Excluding the sales
of the Clairol beauty appliance business, sales increased 2%
primarily due to increases in sales of NICE 'N EASY*, LASTING COLOR
BY LOVING CARE* and ULTRESS* haircoloring products and SEA BREEZE*
skin care products.
Cost of Product Sold and Operating Expenses
-------------------------------------------
Total costs and expenses for the six months ended June 30, 1995 as
a percentage of sales increased to 73.4% from 72.4% for the same
period of 1994 primarily as a result of acquired businesses. Cost
of products sold increased to 26.5% of sales from 25.6% in 1994.
Marketing, selling, administrative and other expenses, as a
percentage of sales, were 26.8% compared to 26.4% in 1994.
- 11 -
BRISTOL-MYERS SQUIBB COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in millions of dollars, except per share amounts)
Expenditures for advertising and promotion in support of new and
existing products were $776 compared to $654 in the prior year, an
increase of 19%. Research and development increased 10% to $583
compared to $532 in the prior year, and as a percentage of sales
were 8.6% in 1995 and 9.2% in 1994. Pharmaceutical research and
development spending increased 8% over prior year levels and as a
percentage of pharmaceutical sales was 13.0% compared to 13.4% in
1994.
Earnings
--------
Earnings before income taxes for the first six months increased 12%
to $1,794 from $1,600 in 1994, and pretax margins decreased to
26.6% from 27.6% primarily as a result of the acquired businesses.
Net earnings increased 13% to $1,264 from $1,123 and earnings per
share increased 13% to $2.49 from $2.21 in 1994.
Financial Position
------------------
The balance sheet at June 30, 1995 and the statement of cash flows
for the six months then ended reflect the Company's strong
financial position. The Company continues to maintain a high level
of working capital totaling $2,491 at June 30, 1995.
Internally generated funds continue to be the Company's primary
source for financing expenditures for new plant and equipment.
Additions to fixed assets for the six months ended June 30, 1995
were $210 compared to $239 during the same period of 1994.
During the six months ended June 30, 1995, the Company purchased
819,100 shares of its common stock.
Reference is made to Part II, Item 1 - Legal Proceedings in which
developments are described for various lawsuits, claims and
proceedings in which the Company is involved.
- 12 -
BRISTOL-MYERS SQUIBB COMPANY
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
--------------------------
Various lawsuits, claims and proceedings of a nature considered
normal to its business are pending against the Company and certain
of its subsidiaries. The most significant of these are reported in
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and material developments in such matters are
described in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, the Company's Reports on Form 8-K,
filed on May 3, 1995 and June 19, 1995, and below.
Breast Implant Litigation
-------------------------
On June 14, 1995, the Claims Administrator for the Federal Judge
overseeing the pending global settlement of the breast implant
litigation made another in a series of recorded telephone
statements to Claimants about its sampling of claims in which she
pointed out that, based on an analysis of about 3,000 of the
approximately 375,000 registrations filed by domestic class members
in respect of all defendants participating in the settlement, the
Court estimates that over 96,000 individuals timely submitted a
claim under the Current Disease Compensation Program with some
supporting medical documentation. The Court estimated that almost
20,000 of these claims would likely be approved and that an
additional 50,000 would be notified of only minor deficiencies and
given an opportunity to correct these deficiencies. The Court
concluded that a severe decrease in the amounts scheduled to be
paid for each claim in the settlement would occur under the present
criteria provided in the settlement if the Current Disease
Compensation Program remains at its present level ($1.2 billion).
At this funding level the Court estimated that actual payment
percentages for current claims would fall somewhere between 5% and
12-16% of the scheduled amounts provided for in the settlement,
depending on the disease and the severity level approved. This
would entail a second opportunity for Claimants to withdraw from
the settlement ("opt-out"). The Court also indicated that its
decision concerning the contents of a second opt-out notice (or,
indeed, whether the settlement should go forward at all) would be
made in the next several months, taking into account the results of
any settlement renegotiations, but without waiting for all claims
to be reviewed, since the Court does not expect the review process
to be completed until the first half of 1996.
The Company announced that it would participate in discussions
about a renegotiated settlement and would consider a reasonable
compromise, but will not provide more money to cover claims which
have no medical basis.
In late July, the Court reported that if the parties do not deliver
to the Court a signed statement of principle for a renegotiated
agreement by August 30, 1995, the Court will make the decision
referred to above. The Company continues to participate in
renegotiation discussions.
- 13 -
BRISTOL-MYERS SQUIBB COMPANY
PART II - OTHER INFORMATION
---------------------------
Infant Formula Matters
----------------------
The Company, one of its subsidiaries, and others are defendants in
25 antitrust actions in 19 states filed on behalf of purported
statewide classes of indirect purchasers of infant formula products
and by the Attorneys General of Louisiana, Minnesota, Mississippi
and Texas alleging a price fixing conspiracy and other violations
of state antitrust or deceptive trade practices laws and seeking
certification on statewide classes, damages, statutory and civil
penalties and other relief. The state courts in Colorado, Florida,
Nevada, North Carolina and Tennessee have dismissed the complaints,
but the plaintiffs have or are expected to appeal those dismissals.
On June 29, 1995, the Texas Supreme Court handed down a decision in
the Company's favor, holding that the plaintiffs, as indirect
purchasers, were barred from proceeding under the Texas Deceptive
Trade Practices-Consumer Protection Act. The civil and criminal
inquiries by the Canadian Bureau of Competition Policy into alleged
anticompetitive practices by the Company and certain other members
of the Canadian infant formula industry are ongoing.
Pharmaceutical Pricing Litigation
---------------------------------
The Company, along with more than 30 other pharmaceutical
manufacturers, drug wholesalers and pharmacy benefit managers, is a
defendant in over 100 actions brought by over 3000 plaintiffs in
various federal courts seeking damages and injunctive relief under
the federal antitrust laws for alleged antitrust violations in the
pricing and marketing of brand-name prescription drugs. The federal
actions have been transferred for pretrial purposes to the United
States District Court for the Northern District of Illinois, and
discovery is proceeding. Additional actions continue to be filed.
The Federal Court has denied a motion by the defendants to consolidate
for trial all of the conspiracy claims brought by the various
plaintiffs under the Sherman Antitrust Act. In the California state
court litigation, the Court has certified a class of independent
California retail pharmacies/pharmacists and a class of California
consumers who purchased brand-name prescription drugs from independent
California pharmacies. Additional actions claiming damages on behalf
of purported classes of consumers have been filed in state courts in
Colorado and New York.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits (listed by number corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
27. Bristol-Myers Squibb Company Financial Data Schedule. Page E-
1-1.
(b) Reports on Form 8-K.
Reports on Form 8-K were filed on May 3, 1995 and June 19, 1995,
covering Item 5 - Other Events, and Item 7 - Financial Statements
and Exhibits, relative to the Breast Implant Litigation.
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BRISTOL-MYERS SQUIBB COMPANY
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
----------------------------
(Registrant)
Date August 11, 1995 /s/ Harrison M. Bains, Jr.
---------------------------- -----------------------------
Harrison M. Bains, Jr.
Vice President and Treasurer
Date August 11, 1995 /s/ Frederick S. Schiff
---------------------------- -----------------------------
Frederick S. Schiff
Vice President and Controller
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