-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PcRivwoGdO3BjxwvkVmf/gTb5Lu+Z5nBN1qsEaA3xTWXBnqDtUeA0e8+WqTbwTUc 0U7Iwc6C0nJN+5EqJG8v7g== 0000014272-00-000002.txt : 20000331 0000014272-00-000002.hdr.sgml : 20000331 ACCESSION NUMBER: 0000014272-00-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL MYERS SQUIBB CO CENTRAL INDEX KEY: 0000014272 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 220790350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-01136 FILM NUMBER: 587420 BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2125464000 MAIL ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL MYERS CO DATE OF NAME CHANGE: 19891012 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 Commission File Number 1-1136 BRISTOL-MYERS SQUIBB COMPANY (Exact name of registrant as specified in its charter) Delaware 22-079-0350 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 345 Park Avenue, New York, N.Y. 10154 (Address of principal executive offices) Telephone: (212) 546-4000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered Common Stock,$.10 Par Value New York Stock Exchange Pacific Exchange, Inc. $2 Convertible Preferred Stock, $1 Par Value New York Stock Exchange Pacific Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The aggregate market value of voting stock held by non-affiliates of the registrant as of February 29, 2000 was $112,954,123,592. At February 29, 2000, there were 1,975,859,149 shares of common stock outstanding. Documents incorporated by reference Proxy Statement for Annual Meeting of Stockholders on May 2, 2000.Part III 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 pharmaceuticals, consumer medicines, nutritionals, medical devices and beauty care products. In general, the business of the Company's segments is not seasonal. BUSINESS SEGMENTS - ----------------- Reference is made to Note 2 Acquisitions and Divestitures and Note 12 Segment Information in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. DESCRIPTION OF SEGMENTS - ----------------------- MEDICINES: - ---------- This segment includes sales of pharmaceuticals and consumer medicines. Sales of selected products and product categories are as follows: 1999 1998 1997 ------ ------ ------ PRAVACHOL* $1,704 $1,643 $1.437 TAXOL* 1,481 1,206 941 GLUCOPHAGE 1,317 862 579 Oncology Therapeutics Network 894 657 480 BUSPAR* 605 531 443 ZERIT* 605 551 398 PARAPLATIN* 600 525 437 PLAVIX 547 144 - CAPOTEN*/CAPOZIDE* 484 636 795 MONOPRIL* 424 380 328 CEFZIL* 402 358 318 SERZONE* 332 257 185 AVAPRO 255 123 28 EXCEDRIN* 240 241 206 VIDEX* 205 162 152 1 PRAVACHOL* pravastatin sodium, an HMG Co-A reductase inhibitor indicated for primary hypercholestermia. Patents expire in the U.S. in October 2005 and in international markets from 2000 through 2010. TAXOL* paclitaxel, used in the treatment of refractory ovarian cancer, first-line treatment of ovarian cancer in combination with cisplatin, second-line treatment of AIDS-related Kaposi's Sarcoma, treatment of metastatic breast cancer after failure of combination chemotherapy, adjuvant treatment of node positive breast cancer and in the treatment of non- small cell lung carcinoma with cisplatin. Certain patent claims related to the three-hour method of administration patents expire in 2012 in the U.S. and 2013 outside the U.S. Reference is also made to Item 3 Legal Proceedings in Part 1 of this Form 10-K Annual Report and to Note 15 Litigation in Part 2, Item 8, of this Form 10-K Annual Report. Hatch- Waxman exclusivity for first-line ovarian cancer expires April 2001, for non-small cell lung cancer in January 2002 and for adjuvant breast cancer in October 2002. GLUCOPHAGE metformin, an oral anti-diabetes agent for type 2 non- insulin-dependent diabetes. Hatch-Waxman exclusivity expires in September 2000. Oncology Therapeutics Network a specialty distributor of anti-cancer medicines and related products. BUSPAR* buspirone, a novel anti-anxiety agent for persistent anxiety with or without accompanying depressive symptoms. U.S. anxiolytic use patent expires in May 2000. Other international patents expired in 1999. ZERIT* stavudine, used in the treatment of persons with advanced HIV disease. Patent expires in the U.S. in June 2008 and internationally from 2007 through 2008. PARAPLATIN* carboplatin, a chemotherapeutic agent used in the treatment of ovarian cancer. Patent expires in the U.S. in April 2004 and in France in June 2000. PLAVIX clopidogrel, a platelet inhibitor, co-developed and jointly marketed with Sanofi S.A. CAPOTEN*/CAPOZIDE* captopril, an angiotensin converting enzyme (ACE) inhibitor. Patents have expired in the U.S. and in all significant international markets. MONOPRIL* fosinopril sodium, a second-generation ACE inhibitor with once-a-day dosing indicated for the treatment of hypertension. U.S. patent expires in December 2002 and in international markets from 2001 through 2008. CEFZIL* cefprozil, an oral cephalosporin used in the treatment of respiratory infections and sinusitis. U.S. patent expires in December 2005 and in international markets from 2003 through 2009. * Indicates brand names of products which are registered trademarks owned by the Company. 2 SERZONE* nefazodone, an antidepressant treatment. Patent expires in the U.S. in March 2003 and internationally from 2002 through 2010. AVAPRO irbesartan, an angiotensin II receptor antagonist indicated for the treatment of hypertension, co- developed and jointly marketed with Sanofi S.A. EXCEDRIN* an analgesic with acetaminophen and caffeine. EXCEDRIN* Migraine is indicated for the treatment of the full migraine syndrome. VIDEX* didanosine, an antiretroviral drug used in the treatment of adult and pediatric patients with advanced human immunodeficiency virus (HIV) infection. Patent expires in the U.S. in August 2006 and internationally from 2006 through 2009. BEAUTY CARE: - ------------ This segment includes sales of haircoloring and hair care preparations and other beauty care products. 1999 1998 1997 ------ ------ ------ Hair care $1,250 $1,179 $794 Haircolor 905 894 841 The principal products in this segment are: NICE 'N EASY* haircolorings MISS CLAIROL* HYDRIENCE* NATURAL INSTINCTS* ULTRESS* LOVING CARE* REVITALIQUE* HERBAL ESSENCES* complete lines of shampoos and conditioners AUSSIE* INFUSIUM 23* DAILY DEFENSE* SYSTEME BIOLAGE* professional hair care products sold MATRIX ESSENTIALS* exclusively in beauty salons VITAL NUTRIENTS* VAVOOM* MUM* anti-perspirants and deodorants SEA BREEZE* skin care products 3 NUTRITIONALS: - ------------- This segment includes sales of infant formulas and other nutritional products. 1999 1998 1997 ------ ------ ------ Infant formulas $1,233 $1,203 $1,219 The principal products in this segment are: ENFAMIL*/ENFALAC* infant formula products PROSOBEE* NUTRAMIGEN* LACTOFREE* ENFAPRO* follow-up formula products for older babies NEXT STEP* ALACTA NF* ENFAGROW* SUSTAGEN* nutritional supplements and specialties CHOCO MILK* ISOCAL* SUSTACAL* NUTRAMENT* BOOST* VIACTIV* PLUSSSZ* vitamins POLY-VI-SOL* POLY-VI-FLOR* NATALINS* MEDICAL DEVICES: - ---------------- This segment includes sales of orthopaedic implants, ostomy and wound care products and other medical devices. 1999 1998 1997 ------ ------ ------ Orthopaedic implants $665 $596 $615 Ostomy 449 464 451 The principal products in this segment are: NEXGEN* Complete Knee Solution 4 VERSYS* Hip System CENTRALIGN* Precoat Hip Prosthesis orthopaedic implants ACTIVE LIFE/ ostomy care products COLODRESS* SUR-FIT/ COMBIHESIVE/SECURE* DUODERM* wound care products SOURCES AND AVAILABILITY OF RAW MATERIALS - ----------------------------------------- In general, Bristol-Myers Squibb purchases the principal raw materials and supplies used in each industry segment in the open market. Substantially all such materials are obtainable from a number of sources so that the loss of any one source of supply would not have a material adverse effect on the Company. PATENTS, TRADEMARKS AND LICENSES - -------------------------------- The Company owns or is licensed under a number of patents in the United States and foreign countries covering products, principally in the medicines and medical devices segments, and has also developed many brand names and trademarks for products in each industry segment. The Company considers the overall protection of its patent, trademark and license rights to be of material value and acts to protect these rights from infringement. In the years 2000 and 2001 exclusivity periods are scheduled to expire or have expired for GLUCOPHAGE, BUSPAR* and certain TAXOL* claims. The Company believes that no single patent or license is of material importance in relation to the business as a whole. COMPETITION, DISTRIBUTION AND CUSTOMERS - --------------------------------------- The markets in which Bristol-Myers Squibb competes are generally broad- based and highly competitive. The principal means of competition utilized to market the products of Bristol-Myers Squibb include quality, service, price and product performance. The pharmaceutical products of the Medicines segment and the products of the Medical Devices segment are promoted on a national and international basis in medical journals and directly to the medical profession. The Company is also utilizing direct-to-consumer advertising for a number of its pharmaceutical products. Most of the other products of Bristol-Myers Squibb are generally advertised and promoted on a national and international basis through the use of television, radio, print media, consumer offers, and window and in-store displays. Bristol- Myers Squibb's products are principally sold to the wholesale and retail trade both nationally and internationally. Certain products of the Medicines and Medical Devices segments are also sold to other drug manufacturers, hospitals and the medical profession. None of the segments is dependent upon a single customer, or a few customers, such that the loss of any one or more would have a material adverse effect on the segment. 5 RESEARCH AND DEVELOPMENT - ------------------------ Research and development is essential to Bristol-Myers Squibb's businesses, particularly to the Medicines Segment. Pharmaceutical research and development is carried out by the Bristol-Myers Squibb Pharmaceutical Research Institute which has major facilities in Princeton, Hopewell and New Brunswick, New Jersey; and Wallingford, Connecticut. Pharmaceutical research and development is also carried out at various other facilities in the United States and in Belgium, Canada, France, Italy, Japan, and the United Kingdom. Management continues to emphasize leadership, innovation and productivity as strategies for success in the Research Institute. Bristol-Myers Squibb spent $1,843 million in 1999, $1,577 million in 1998 and $1,385 million in 1997 on Company sponsored research and development activities. Pharmaceutical research and development spending, as a percentage of pharmaceutical sales, was 12.6% in 1999 compared to 12.4% in 1998 and 12.0% in 1997. REGULATION - ---------- Most aspects of the Company's business are subject to some degree of government regulation in the countries in which its operations are conducted. The Company's policy is to comply fully with all regulatory requirements applying to its products and operations. For some products, and in some countries, government regulation is significant and, in general, there is a trend to more stringent regulation. The Company devotes significant time, effort and expense addressing the extensive governmental regulatory requirements applicable to its business. Governmental regulatory actions can result in the recall or seizure of products, suspension or revocation of the authority necessary for the production or sale of a product, and other civil and criminal sanctions. In the United States, the drug, medical device, diagnostic, food and cosmetic industries in which the Company operates have long been subject to regulation by various federal, state and local agencies, primarily as to product manufacture, safety, efficacy, advertising and labeling. In addition, governmental bodies in the United States as well as other countries have expressed concern about costs relating to health care and, in some cases, have focused attention on the pricing of drugs and on appropriate drug utilization. Government regulation in these areas already exists in some countries and may be expanded significantly in the United States and other countries in the future. While the Company is unable to predict the extent to which its business may be affected by future regulatory developments, it believes that its substantial experience dealing with governmental regulatory requirements and restrictions on its operations throughout the world and its development of new and improved products should enable it to compete effectively within this environment. EMPLOYEES - --------- Bristol-Myers Squibb employed approximately 54,500 people at December 31, 1999. 6 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 460,500 square feet of floor space, approximately 206,300 square feet of which is sublet to others. The headquarters for the Company's segments are as follows: Medicines world headquarters is located in Princeton, New Jersey; Beauty Care in Stamford, Connecticut; Nutritionals in Evansville, Indiana; and Medical Devices in Warsaw, Indiana and Skillman, New Jersey. Bristol-Myers Squibb manufactures products at forty-two major worldwide locations with an aggregate floor space of approximately 13,300,000 square feet. All facilities are owned by Bristol-Myers Squibb. The following table illustrates the segment and geographic location of the Company's significant manufacturing facilities. Beauty Medical Medicines Care Nutritionals Devices Total -------------------------------------------------- United States 8 2 2 4 16 Europe, Mid East and Africa 7 1 1 1 10 Other Western Hemisphere 6 3 2 - 11 Pacific 4 - 1 - 5 ---- ---- ---- ---- ---- Total 25 6 6 5 42 ---- ---- ---- ---- ---- 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. 7 Item 3. LEGAL PROCEEDINGS. Various lawsuits, claims and proceedings of a nature considered normal to its businesses are pending against the Company and certain of its subsidiaries. The most significant of these are described below. Reference is made to Note 15 Litigation in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Report. Breast Implant Litigation - ------------------------- The Company, together with its subsidiary, Medical Engineering Corporation (MEC), and certain other companies, has been named as a defendant in a number of claims and lawsuits alleging damages for personal injuries of various types resulting from polyurethane-covered breast implants and smooth-walled breast implants formerly manufactured by MEC or a related Company. Of the more than 90,000 claims or potential claims against the Company in direct lawsuits or through registration in the nationwide class action settlement approved by the Federal District Court in Birmingham, Alabama (the "Revised Settlement"), most have been dealt with through the Revised Settlement, other settlements, or trial. As of December 31, 1999, the Company's contingent liability in respect of breast implant claims was limited to residual unpaid Revised Settlement obligations and to roughly 1,700 remaining opt-outs who have pursued or may pursue their claims in court. As of December 31, 1999, approximately 6,700 United States and 200 foreign breast implant recipients were plaintiffs in lawsuits pending in federal and state courts in the United States and certain courts in Canada and Australia. These figures include the claims of plaintiffs that are in the process of being settled and/or dismissed. In these lawsuits, about 3,660 U.S. and 49 foreign plaintiffs opted out of the Revised Settlement. The lawsuits of the 3,040 U.S. plaintiffs who did not opt out are expected to be dismissed since these plaintiffs are among the estimated 74,000 women with MEC implants who chose to participate in the nationwide settlement. Of the 3,660 opt-out plaintiffs, an estimated 1,960 have claims based upon products that were not manufactured or sold by MEC or that have been or are in the process of being settled and/or dismissed. Accordingly, the number of remaining plaintiffs who have pursued or may pursue their claims in court against the Company is roughly 1,700, as stated in the preceding paragraph. Under the terms of the Revised Settlement, additional opt-outs are expected to be minimal since the deadline for U.S. class members to opt out has passed. In addition, the Company's remaining obligations under the Revised Settlement Program are limited because most payments to "Current Claimants" have already been made, no additional "Current Claims" may be filed without court approval, and because payments of claims to so-called "Other Registrants" and "Late Registrants" are limited by the terms of the Revised Settlement. Separate class action settlements have been approved in the provincial courts of Ontario and Quebec, and an agreement has been reached under which other foreign breast implant recipients may settle their claims. The Company believes it will be able to address remaining opt-out claims as well as expected remaining obligations under the Revised Settlement Program within its reserves described below. Breast implants were manufactured by several companies, including MEC, which the Company acquired in 1982. Until 1991, MEC manufactured two types of breast implants, polyurethane-covered silicone breast implants and smooth-walled silicone breast implants. In these lawsuits, plaintiffs typically contend that silicone in breast implants causes systemic disease and/or local complications. Some plaintiffs with polyurethane-covered silicone breast implants contend that the polyurethane component causes injury, including cancer. Most of the disease claims involve non-specific complaints such as chronic fatigue, aches and pains and other symptoms that 8 commonly affect the population at large. Many women claim local complications such as rupture, hardening or contracture, and disfigurement or scarring. The plaintiffs typically seek compensatory damages for alleged medical conditions and emotional distress as well as punitive damages. The defendants have based their defense in part on the lack of credible scientific evidence that breast implants cause disease. Many large scale epidemiological studies have found no connection between breast implants and the alleged diseases. Defendants also contend that warnings set forth in the product literature adequately advised physicians and surgeons of the risks of local complications. The Company is a participant in the national class action Revised Settlement Program approved on December 22, 1995, by the Honorable Sam C. Pointer, Jr., formerly Chief Judge of the United States District Court for the Northern District of Alabama (Lindsey, et al., v. Dow Corning, et al., CV-94-P-11558-S), before whom all federal breast implant cases were consolidated for pretrial purposes. The Revised Settlement arises out of the class action settlement approved by the Court on September 1, 1994. All appeals from the Order approving the Revised Settlement have been dismissed. On January 16, 1996, the Company, Baxter Healthcare Corporation and Baxter International (collectively, Baxter), and Minnesota, Mining and Manufacturing Company (3M) (hereinafter, the Settling Defendants) each paid $125 million into a court-established fund as an initial reserve to pay claims under the Revised Settlement. The Company has made and will make additional contributions to the court-established fund. The fifteen-year Revised Settlement, which ends on December 15, 2010, provides benefits to those U.S. breast implant recipients who have had at least one breast implant manufactured by one of the Settling Defendants (or their related companies). For Current Claimants - those who submitted the proper documentation to the Claims Office in Houston by the 1994 deadline - benefits are payable regardless of the number of claimants seeking compensation, and regardless of the total dollar value of approved claims. For Other and Late Registrants - those who registered with the Claims Office after the Current Claimant deadline - benefits are subject to an aggregate $725 million limit for the three Settling Defendants over the fifteen-year life of the program. The Company's individual aggregate limit for such benefits is $400 million, $27.6 million annually for the first ten years, and $24.8 million annually for the last five years. Amounts unused in one year may be rolled over to pay claims in ensuing years. In the event the dollar value of the claims subject to these limits were to exceed the amounts available to pay claims, claimants may be afforded additional opt- out rights but without the right to assert punitive or other statutory multiple damage claims. The Company's obligations to make payments under the Revised Settlement are not affected by the number of class members electing to opt out of the settlement or the number of class members making claims under it except to the extent of the above-mentioned dollar limits. In addition to individual suits and the Lindsey class action, the Company is a defendant, together with other defendants, in a class action certified on April 11, 1996, in the Canadian province of British Columbia, on the single issue of whether silicone gel breast implants are reasonably fit for their intended purpose (Harrington v. Dow Corning Corporation et al., Supreme Court, British Columbia, C954330). A putative class action filed on behalf of children allegedly exposed to silicone in utero and through breast milk (Feuer, et al., v. McGhan, et al., U.S.D.C., E.D.N.Y., 93- 0146), which named all breast implant manufacturers and sought to establish a medical monitoring fund, has been dismissed. The Company entered into several other settlements of breast implant- related claims. In July of 1995, the Company entered into a $20.5 million (U.S. funds) class action settlement with plaintiff representatives in the provinces of Ontario and Quebec. The class includes persons who have or had MEC breast implants and who reside in Ontario and Quebec or who received their MEC implants there. The settlement, which had minimal opt-outs, has been approved by the provincial courts of Ontario and Quebec. In May of 1996, the Company, together with other Settling Defendants in the Revised Settlement Program, entered into a $50 million settlement of claims 9 asserted by certain health insurers based upon payments made or benefits provided by insurers and represented health plans to participating registrants that allegedly involve or relate to silicone gel breast implants. The Company has contributed $22.5 million to the settlement, which extinguishes the potential claims of the majority of the U.S. commercial and non-governmental health care insurer market against both the defendants and settlement class members. In November 1996, the benefits of the Revised Settlement were extended, with certain modifications, to foreign breast implant recipients. Pursuant to this settlement, the Settling Defendants paid (on an equal basis) an aggregate of $25 million into a court-approved settlement fund as an initial reserve for payment of foreign claims. On January 5, 2000, the Court advised the parties that the foreign settlement was overfunded, and directed the transfer of $13.4 million of the $25 million fund to the Revised Settlement. The Company's share of the $13.4 million transferred was approximately $3 million. The Company's insurers were notified of the breast implant claims and the Revised Settlement, and a number reserved their rights or declined coverage. The Company reached settlement with many of these insurers in connection with coverage litigation filed by it in state court in Texas. In 1993, the Company offset its breast implant product liability special charges by $1.0 billion of expected insurance proceeds (recorded as Insurance Recoverable). Because of its belief that additional amounts of insurance proceeds above that amount will be recovered, the Company recorded an additional Insurance Recoverable in the fourth quarter of 1998 of approximately $100 million. While there have been a few large judgments, defendants have won more trials than they have lost, and the Company's trial experience has been mostly favorable. The Company has maintained throughout this litigation that breast implants do not cause disease, and medical and scientific data support the Company's position. The Company's view has found support in the trial courts. Courts in several states have ruled to exclude the testimony of plaintiffs' experts concerning a causal link between silicone gel breast implants and systemic illness on the ground that it fails to satisfy standards for reliability under current U.S. Supreme Court guidelines. In 1998, a national science panel of four independent experts appointed by Judge Pointer issued its unanimous report, based on a comprehensive review of the medical and scientific literature, that there is no evidence linking silicone breast implants and systemic disease. Similarly, in 1999, the Institute of Medicine of the National Academy of Sciences - while commenting that the frequency of local injuries is greater than expected - concluded there is insufficient evidence to link silicone breast implants with disease. The Company intends to dispose of the claims of remaining opt- outs by continuing to implement its plan to settle cases at values it deems acceptable, and to wage a vigorous defense, including taking cases to trial, of those cases that do not settle at such values. In the fourth quarter of 1993, the Company recorded a charge of $500 million before taxes ($310 million after taxes) in respect of breast implant cases. The charge consisted of $1.5 billion for potential liabilities and expenses, offset by $1.0 billion of expected insurance proceeds. In the fourth quarters of 1994 and 1995, the Company recorded additional special charges of $750 million before taxes ($488 million after taxes) and $950 million before taxes ($590 million after taxes), respectively, related to breast implant product liability claims. In the fourth quarter of 1998, the Company recorded an additional special charge to earnings in the amount of $800 million before taxes and increased its insurance receivable in the amount of $100 million, resulting in a net charge to earnings of $433 million after taxes in respect of breast implant product liability claims. Prescription Drug Litigation - ---------------------------- The Company remains a defendant in several actions challenging pricing on brand name prescription drugs. These actions include several currently consolidated antitrust actions brought against the Company and more than thirty other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers by certain chain drugstores, supermarket chains and 10 independent drugstores; state pharmaceutical actions; and purported class actions on behalf of consumers. In the fourth quarter of 1998, the Company recorded a special charge to earnings in the amount of $100 million before taxes ($62 million after taxes) in respect of this prescription drug litigation. The Company will continue to defend vigorously its position in this ongoing litigation and believes it will be able to address all remaining claims within its reserves. Infant Formula Matters - ---------------------- The Company, one of its subsidiaries, and others have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. The Company has resolved all of these actions except for a purported statewide class action of indirect purchasers in Louisiana in which the plaintiffs filed a petition for certiorari in the United States Supreme Court on jurisdictional grounds following the United States Court of Appeals' affirmation of the district court's dismissal of such action. On November 29, 1999, the United States Supreme Court granted the plantiffs' petition. TAXOL* Litigation - ----------------- There is no composition of matter patent for paclitaxel (the active ingredient in TAXOL*). In the United States, the Company is presently the only manufacturer and marketer of a product containing paclitaxel. In 1997 and 1998, the Company filed several lawsuits alleging that a number of generic drug companies infringed its patents covering certain methods of administering paclitaxel when they filed abbreviated new drug applications seeking regulatory approval to sell paclitaxel. The generic drug company defendants are Boehringer Ingelheim Corp.; Ben Venue Laboratories, Inc.; Bedford Laboratories; Immunex Corporation; Zenith Goldline Pharmaceuticals, Inc.; Ivax Corporation; Mylan Pharmaceuticals, Inc.; Marsam Pharmaceuticals, Inc.; and Schien Pharmaceuticals, Inc. These actions were consolidated for discovery in the United States District Court for the District of New Jersey. The Company does not assert a monetary claim against any of the defendants, but seeks to prevent the defendants from marketing paclitaxel in a manner that violates the Company's patents. The defendants have asserted that they do not infringe the Company's patents and that these patents are invalid and unenforceable. Some defendants also asserted counterclaims seeking damages for alleged antitrust and unfair competition violations. On January 4, 2000, the District Court granted the Company's motion to dismiss certain of the antitrust and unfair competition counterclaims. The Company's motion for summary judgment on the remaining antitrust and unfair competition counterclaims was denied on March 17, 2000. On February 29, 2000, the District Court granted in part the generic companies' summary judgment motions for invalidity by finding all claims of the Company's patents in dispute invalid, except for claims limited to the treatment of ovarian cancer. As a result of this ruling, the generic companies may obtain U.S. Food and Drug Administration approval to market paclitaxel solely for treatment of metastatic breast cancer after failure of combination chemotherapy. The District Court's opinion left for determination at trial the validity of the claims of the Company's patents directed to the low dose, three-hour administration of paclitaxel for ovarian cancer and denied the generic companies' summary judgment motion arguing non-infringement of the Company's patents. The Company may pursue its appeal rights in the future. 11 The claims remaining in the lawsuits are currently scheduled for trial in May 2000. It is not possible at this time to make a reasonable assessment of the outcome of the remaining claims in these actions nor to reasonably estimate the impact on TAXOL* sales or the amount of damages were the Company not to prevail. Environmental Matters - --------------------- The Company, together with others, is a party to, or otherwise involved in, a number of proceedings brought by the Environmental Protection Agency or comparable state agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) or comparable state laws directed at the cleanup of hazardous waste sites. While it is not possible to predict with certainty the outcome of these cases, it is the opinion of management that they will not have a material adverse effect on the Company's operating results, liquidity or consolidated financial position. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 12 PART IA ------------ EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------ The following are the executive corporate officers and the other executive officers of the Company: Positions and Offices Presently Name Age Held with the Company - ---- ---- ----------------------------------- Charles A. Heimbold, Jr. 66 Chairman of the Board,Chief Executive Officer and Director Harrison M. Bains, Jr. 56 Treasurer and Vice President, Corporate Staff Peter R. Dolan 44 President and Director Donald J. Hayden, Jr. 44 Executive Vice President, E-Business and Strategy, Corporate Staff George P. Kooluris 55 Senior Vice President, Corporate Development, Corporate Staff Richard J. Lane 49 President, Worldwide Medicines Group Sandra Leung 39 Secretary and Head of Office of Corporate Conduct, Corporate Staff John L. McGoldrick 59 President, Medical Devices Group and Executive Vice President and General Counsel,Corporate Staff Michael F. Mee 57 Executive Vice President and Chief Financial Officer, Corporate Staff Christine A. Poon 47 President, International Medicines Peter S. Ringrose, Ph.D. 53 Chief Scientific Officer and President, Bristol-Myers Squibb Company Pharmaceutical Research Institute Stephen I. Sadove 48 President, Worldwide Beauty Care and Nutritionals and Senior Vice President, Corporate Staff Frederick S. Schiff 52 Controller and Senior Vice President, Financial Operations, Corporate Staff John L. Skule 56 Senior Vice President, Corporate and Environmental Affairs, Corporate Staff Charles G. Tharp, Ph.D. 48 Senior Vice President, Human Resources, Corporate Staff Kenneth E. Weg 61 Vice Chairman and Director 13 Persons who hold titles as elected corporate officers of the Company were last elected or reelected to the office held at the general election of officers by the Company's Board of Directors on May 4, 1999 unless otherwise indicated. Officers of the Company serve in such capacity at the pleasure of the Board of Directors of the Company. CHARLES A. HEIMBOLD, JR. - From 1992 to 1996, President of the Company. Mr. Heimbold has been a director of the Company since 1989, the Chief Executive Officer of the Company since 1994 and Chairman of the Board of Directors of the Company since 1995. HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice President, Corporate Staff of the Company since 1988. PETER R. DOLAN - From 1993 to 1995, President, Bristol-Myers Products, a division of the Company, from 1995 to 1996, President, Mead Johnson Nutritional Group, a division of the Company, from 1996 to 1997, President, Nutritionals and Medical Devices Group, a division of the Company and from 1997 to 1998, President, Pharmaceutical Group - Europe, a division of the Company, and from 1998 to 2000, Senior Vice President, Strategy and Organizational Effectiveness, Corporate Staff. Mr. Dolan has been President of the Company, a Director of the Company, a member of the Office of the Chairman and Chairman of the Corporate Operating Committee since January 2000. DONALD J. HAYDEN, JR. - From 1994 to 1995, Vice President & General Manager, Bristol-Myers Oncology/Immunology Division, a division of the Company, in 1995, President Oncology & Immunology, a division of the Company, from 1995 to 1997, Senior Vice President, Worldwide Franchise Management and Business Development, a division of the Company, in 1997, President, Intercontinental Pharmaceutical Group and Senior Vice President, Worldwide Business Development, Worldwide Medicines Group, a division of the Company, from 1997 to 1998, President, Intercontinental, Worldwide Medicines Group, a division of the Company from 1998-2000, President, Worldwide Medicines Group, a division of the Company. Mr. Hayden has been Executive Vice President of the Company and a member of the Office of the Chairman since January 2000. GEORGE P. KOOLURIS - Mr. Kooluris has been Senior Vice President, Corporate Development, Corporate Staff of the Company since 1994. RICHARD J. LANE - From 1994 to 1995, consultant Schering-Plough Corporation, a pharmaceutical company, in 1995, Senior Vice President Marketing Operations, Sandoz Pharmaceuticals, a pharmaceutical, nutritionals and chemicals company, from 1995 to 1997, Senior Vice President Marketing, U.S. Pharmaceuticals, a division of the Company, in 1997, President, U.S. Primary Care, a division of the Company, from 1997 to 1998, President, U.S. Pharmaceuticals, a division of the Company, and from 1998 to 2000, President, U.S. Medicines and Global Pharmaceutical Group, a division of the Company. Mr. Lane has been President, Worldwide Medicines Group, a division of the Company, and a member of the Office of the Chairman since January 2000. SANDRA LEUNG - From 1994 to 1996, Senior Staff Attorney, Corporate Staff, from 1996 to 1997, Assistant Counsel, Corporate Staff, from 1997 to 1999, Associate Counsel, 1999, Counsel, Corporate Staff. Ms. Leung has been Secretary, Corporate Staff, and Head of the Office of Corporate Conduct since 1999. Ms. Leung was elected to her current position on September 14, 1999. JOHN L. McGOLDRICK - From 1995 to 1997, General Counsel and Senior Vice President, Corporate Staff of the Company and from 1997 to 1998, General Counsel and Senior Vice President, Law and Strategic Planning, 14 Corporate Staff of the Company, and General Counsel and Senior Vice President, Corporate Staff of the Company and President, Medical Devices Group, a division of the Company, since 1998. Mr. McGoldrick has been Executive Vice President and General Counsel of the Company, President, Medical Devices Group, a division of the Company, and a member of the Office of the Chairman since January 2000. MICHAEL F. MEE - From 1994 to 2000, Chief Financial Officer and Senior Vice President, Corporate Staff of the Company. Mr. Mee has been Executive Vice President and Chief Financial Officer, Corporate Staff of the Company and a member of the Office of the Chairman since January 2000. CHRISTINE A. POON - From 1994 to 1995, President & General Manager - Canada, Pharmaceutical Group - Intercontinental, a division of the Company, in 1995 Vice President OPS-Planning - Intercontinental & President, Canada, a division of the Company, from 1995 to 1996, Vice President, Northern Region Latin America, Intercontinental, a division of the Company, from 1996 to 1997, Senior Vice President, Intercontinental Northern Region & Canada, a division of the Company, in 1997, President, Latin America and Canada, Worldwide Pharmaceutical Group, a division of the Company and President, Medical Devices Group, a division of the Company from 1997 to 1998. Ms. Poon has been President, Intercontinental Medicines Group, division of the Company since 1998. PETER S. RINGROSE, Ph.D. - From 1994 to 1996, Senior Vice President, Worldwide Discovery and Medicinal Research Development, Europe of Pfizer Inc., a health care company. From 1997-2000, President, Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the Company. Dr. Ringrose has been Chief Scientific Officer of the Company and a member of the Office of the Chairman since January 2000. STEPHEN I. SADOVE - From 1994 to 1996, President, Worldwide Clairol, a division of the Company, from 1996 to 1997, President, Worldwide Beauty Care, a division of the Company. Mr. Sadove has been President, Worldwide Beauty Care and Nutritionals, a division of the Company, since 1997 and Senior Vice President, Corporate Staff since 1998. Mr. Sadove has been a member of the Office of the Chairman since January 2000. FREDERICK S. SCHIFF - From 1990 to 1997, Controller and Vice President, Corporate Staff of the Company, from 1997 to 2000 Controller and Vice President, Financial Operations, Corporate Staff of the Company. Mr. Schiff has been Controller and Senior Vice President, Financial Operations, Corporate Staff of the Company since March 2000. JOHN L. SKULE - From 1993 to 1997, Vice President, Public Affairs, Corporate Staff of the Company. Mr. Skule has been Senior Vice President, Corporate and Environmental Affairs, Corporate Staff of the Company since 1998. CHARLES G. THARP, Ph.D. - Dr. Tharp has been Senior Vice President, Human Resources, Corporate Staff of the Company since 1993. KENNETH E. WEG - From 1993 to 1996, President, Bristol-Myers Squibb Pharmaceutical Group, a division of the Company, and from 1997 to 1998, President, Worldwide Medicines Group, a division of the Company, and Executive Vice President of the Company from 1995 to 1999. Mr. Weg has been a Director of the Company since 1995, a member of the Office of the Chairman since 1998 and Vice Chairman of the Company since 1999. In addition to the positions and offices heretofore listed, all of the foregoing executive corporate officers and other executive officers of the Company are directors and/or officers of one or more affiliates of the Company, with the exception of Mr. Skule and Dr. Tharp. 15 PART II ------------ Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS. MARKET PRICES - ------------- Bristol-Myers Squibb common and preferred stocks are traded on the New York Stock Exchange and the Pacific Exchange, Inc. (symbol: BMY). A quarterly summary of the high and low market prices is presented below: 1999 1998 ----------------- ------------------- High Low High Low Common: First Quarter $66 3/16 $58 1/2 $54 1/4 $44 29/32 Second Quarter 70 7/16 57 7/16 59 7/32 49 19/32 Third Quarter 75 15/16 64 5/8 62 19/32 48 15/16 Fourth Quarter 77 15/16 60 1/8 66 29/32 46 1/8 Preferred: There were no trades of the Company's preferred stock except in the first quarter of 1999 and 1998 when the stock traded at a price of $1,000 and $906, respectively. HOLDERS OF COMMON STOCK - ----------------------- The approximate number of record holders of common stock at December 31, 1999 was 120,358. The number of record holders is based upon the actual number of holders registered on the books of Bristol-Myers Squibb at such date and does not include holders of shares in "street names" or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies. 16 DIVIDENDS - ---------------- Dividend payments per share in 1999 and 1998 were: Common Preferred ------------------ ------------------ 1999 1998 1999 1998 -------- -------- -------- ------- First Quarter $.21 1/2 $.19 1/2 $.50 $.50 Second Quarter .21 1/2 .19 1/2 .50 .50 Third Quarter .21 1/2 .19 1/2 .50 .50 Fourth Quarter .21 1/2 .19 1/2 .50 .50 -------- -------- ----- ----- $.86 $.78 $2.00 $2.00 ===== ===== ===== ===== In December 1999, the Board of Directors of the Company declared a quarterly dividend of $.245 per share on the common stock of the Company, payable on February 1, 2000 to shareholders of record as of January 8, 2000. The 2000 indicated annual payment of $.98 per share represents the twenty-eighth consecutive year that the Company has raised the dividend on its common stock. 17 Item 6. SELECTED FINANCIAL DATA. FIVE-YEAR FINANCIAL SUMMARY OPERATING RESULTS - ----------------- (in millions, except per share amounts) 1999 1998 1997 1996 1995 Net Sales $20,222 $18,284 $16,701 $15,065 $13,767 ------- ------- ------- ------- ------- Expenses: Cost of products sold 5,539 4,856 4,464 3,965 3,637 Marketing, selling and 4,578 4,418 4,173 3,925 3,670 administrative Advertising and product 2,409 2,312 2,241 1,946 1,646 promotion Research and development 1,843 1,577 1,385 1,276 1,199 Other(*) 86 853 (44) (60) 1,213 ------- ------- ------- ------- ------- 14,455 14,016 12,219 11,052 11,365 ------- ------- ------- ------- ------- Earnings Before Income 5,767 4,268 4,482 4,013 2,402 Taxes(*) Provision for income taxes 1,600 1,127 1,277 1,163 590 ------- ------- ------- ------- ------- Net Earnings(*) $4,167 $3,141 $3,205 $2,850 $1,812 ===== ===== ===== ===== ===== Dividends paid on common and preferred stock $1,707 $1,551 $1,515 $1,507 $1,495 Earnings per common share - 2.10 1.58 1.61 1.42 .89 Basic(*) Earnings per common share - 2.06 1.55 1.57 1.40 .89 Diluted(*) Dividends per common share .86 .78 .76 .75 .74 (*) Includes a gain on the sale of a business of $201 million before taxes, $125 million after taxes, in 1998; and $225 million before taxes, $140 million after taxes, in 1997. Includes a special charge for prescription drug pricing litigation of $100 million before taxes, $62 million after taxes, or $.03 per common share, basic and diluted, in 1998. Includes a special charge for pending and future product liability claims of $700 million before taxes, $433 million after taxes, or $.22 per common share, basic, and $.21 per common share, diluted, in 1998; $950 million before taxes, $590 million after taxes, or $.29 per common share, basic and diluted in 1995. Includes a provision for restructuring of $201 million before taxes, $125 million after taxes, in 1998; $225 million before taxes, $140 million after taxes, in 1997; and $310 million before taxes, $198 million after taxes, in 1995. 18 Item 6. SELECTED FINANCIAL DATA. (Con't.) FIVE-YEAR FINANCIAL SUMMARY FINANCIAL POSITION AT DECEMBER 31 - --------------------------------- (in millions, except per share amounts) 1999 1998 1997 1996 1995 Current assets $9,267 $8,782 $7,736 $7,528 $7,018 Property, plant and equipment 4,621 4,429 4,156 3,964 3,760 Total assets 17,114 16,272 14,977 14,685 13,929 Current liabilities 5,537 5,791 5,032 5,050 4,806 Long-term debt 1,342 1,364 1,279 966 635 Total liabilities 8,469 8,696 7,758 8,115 8,107 Stockholders' equity $8,645 $7,576 $7,219 $6,570 $5,822 Average common shares 1,984 1,987 1,992 2,007 2,024 outstanding - Basic Average common shares outstanding - Diluted 2,027 2,031 2,042 2,035 2,032 Reference is made to Note 2 Acquisitions and Divestitures, Note 7 Property, Plant and Equipment and Note 15 Litigation, appearing in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report. 19 Item 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Summary In 1999, Bristol-Myers Squibb surpassed $20 billion in annual global sales and achieved record levels of sales and earnings. All four of the Company's business segments achieved record levels of sales, bringing the worldwide sales to $20.2 billion, an 11% increase over 1998. Domestic sales, representing 63% of worldwide sales, increased 15% to $12.8 billion, while international sales increased 3% to $7.4 billion. Sales growth resulted from a 9% increase due to volume and a 2% increase from changes in selling prices. Exchange rate fluctuations had no effect on worldwide sales, but did have an unfavorable effect of 2% on international sales, primarily due to Latin American and European currencies. The Company's most important product lines experienced double-digit sales increases on a worldwide basis. In fact, three products, PRAVACHOL*, TAXOL* (paclitaxel) and GLUCOPHAGE exceeded $1 billion in sales, while six additional products exceeded over one-half billion dollars in annual sales. Bristol-Myers Squibb had 64 product lines with more than $50 million in annual sales, including 35 with more than $100 million in annual sales. Earnings before income taxes, excluding the 1998 special charge described below, increased 14% to $5.8 billion in 1999. Net earnings, on this basis, increased 15% to $4.2 billion; basic and diluted earnings per share each increased 15% to $2.10 and $2.06, respectively. Over the past five years net earnings and diluted earnings per share, excluding special charges, have increased at compound annual growth rates of 12% and 13%, respectively. In 1999, the Company reported 15% diluted earnings per share growth over the prior year for each of the first three quarters and excluding the 1998 special charge, a 16% growth rate in the fourth quarter. In 1999, consistent with the mission of the Company to extend and enhance human life and develop the highest quality products, the Company invested more than $1.8 billion in research and development, a 17% growth over the prior year and growing at an annualized rate of 11% over the past five years. This continuing investment has led to the discovery of innovative new products and the development of new indications for existing products including: VANLEV* (omapatrilat), a novel cardiovascular compound for the treatment of hypertension, which is the first antihypertensive ever to receive priority review from the U.S. Food and Drug Administration (FDA) under the Prescription Drug User Fee Act; a GLUCOPHAGE/glyburide product and GLUCOPHAGE XR Extended Release Tablets, both for diabetes; VANIQA*, a topical treatment for excessive facial hair in women; TEQUIN*, an advanced antibiotic for the treatment of multiple common infections; an easier-to-digest, enteric-coated treatment form of VIDEX* for HIV/AIDS; and TAXOL*,for adjuvant treatment of node-positive breast cancer. Bristol-Myers Squibb's financial position remains strong. At December 31, 1999, the Company held almost $3.0 billion in cash, time deposits and marketable securities. Cash provided by operating activities reached $4.5 billion, the highest in the last 10 years. Returns to shareholders included dividend distributions of $1.7 billion and stock repurchases of $1.4 billion. Dividends per common share were $.86 in 1999, increasing from $.78 per share paid in 1998. The Company has continued to lower its dividend payout ratio, which represents cash dividends paid per common share divided by diluted earnings per common share, that amounted to 42%, 43% and 48% in 1999, 1998 and 1997, respectively, excluding the 1998 special charge. In December 1999, the Company announced a dividend increase, the 28th consecutive year that dividends have increased, and expanded the share repurchase program authorization by an additional $2 billion. The 2000 indicated annual payment is $.98 per common share, 20 a 14% increase over 1999, following a 10% dividend increase in 1999. As further evidence of its strong financial position, Bristol-Myers Squibb is one of only seven U.S. industrial companies to receive a triple-A credit rating from both Moody's and Standard & Poor's. Net Sales and Earnings Worldwide sales increased 11% in 1999 to $20.2 billion, compared with increases of 9% and 11% in 1998 and 1997, respectively. The consolidated sales growth in 1999 resulted from a 9% increase due to volume, a 2% increase due to changes in selling prices and no change due to foreign exchange rate fluctuations. In 1998, the 9% increase in sales reflected a 10% increase due to volume, a 3% decrease due to foreign exchange rate fluctuations and a 2% increase due to changes in selling prices. In 1997, the 11% increase in sales reflected a 14% increase due to volume, a 3% decrease due to foreign exchange rate fluctuations and no changes overall from pricing activity. Domestic sales increased 15% in both 1999 and 1998, and 14% in 1997, while international sales increased 3% in 1999 (5% excluding foreign exchange), 2% in 1998 (9% excluding foreign exchange) and 7% in 1997 (15% excluding foreign exchange). In general, the businesses of the Company's industry segments are not seasonal. Earnings before income taxes, excluding the 1998 charge described below, increased 14% to $5,767 million from $5,068 million in 1998. Net earnings on this basis increased 15% to $4,167 million compared to $3,636 million in 1998. Basic earnings per share increased 15% to $2.10 from $1.83 in the prior year and diluted earnings per share increased 15% to $2.06 from $1.79. Net earnings margins, excluding the 1998 special charge, increased to 20.6% in 1999 from 19.9% in 1998. As described in the notes to the financial statements, in the fourth quarter of 1998, the Company recorded a special charge of $800 million before taxes, $495 million after taxes, or $.24 per diluted share, to augment the reserve for breast implant liability and for prescription drug pricing litigation, offset by expected insurance recoveries. The breast implant component of the charge was $700 million before taxes ($800 million of liability offset by insurance receivables of $100 million), and the prescription drug pricing component was $100 million before taxes. As a result of the special charge, 1998 net earnings were $3,141 million, basic earnings per share were $1.58 and diluted earnings per share were $1.55. In 1998, net earnings, excluding the 1998 special charge, were $3,636 million, a 13% increase over 1997. Basic earnings per share were $1.83 and diluted earnings per share were $1.79, both increasing 14% over 1997. Net earnings margins, excluding the special charge, increased to 19.9% in 1998 from 19.2% in 1997. The effective income tax rate on earnings before income taxes was 27.7% in 1999, compared to 28.3% in 1998, excluding the special charge, and 28.5% in 1997. The effective income tax rate has decreased since 1997 due to increased income in lower tax rate jurisdictions. As described in Note 2 to the financial statements, in 1999, the Company acquired CAL-C-TOSE*, a leading nutritional milk modifier product in Mexico. In 1998, the Company acquired Redmond Products, Inc., a leading hair care manufacturer in the U.S. In 1998, the Company also acquired Phytoervas, a line of premium retail hair care products in Brazil, and Dong-A Biotech Co., Ltd., a marketer and distributor of pharmaceutical products in South Korea. In 1997, the Company acquired Abeefe S.A., Peru's largest pharmaceutical manufacturer and marketer. The Company also, in 1997, acquired CHOCO MILK*, Mexico's leading milk-based nutritional supplement, and SAL DE UVAS PICOT*, a leading effervescent antacid product in Mexico. As described in Note 2 to the financial statements, in the fourth quarter of 1999, the Company completed the sale of Laboratori Guieu, SpA, an Italian-based gynecological, pediatric and dermatological products business. In the first quarter of 1998, the Company divested its Ban brand of anti-perspirants and deodorants. In the second quarter of 1998, the Company divested A/S GEA, a Denmark-based generic drug business, and 21 Hexachimie, a specialty chemical manufacturer based in France. In the fourth quarter of 1997, the Company divested Linvatec Corporation, its arthroscopy and powered surgical instrument business. In January 2000, the Company announced its intention to sell its Matrix Essentials, Inc. subsidiary, a manufacturer of professional hair care products sold exclusively through beauty salons. Expenses Total costs and expenses, as a percentage of sales, improved over the last three years to 71.5% in 1999 compared with 72.3% in 1998, excluding the 1998 special charge, and 73.2% in 1997. As a percentage of sales, cost of products sold increased to 27.4% in 1999 compared to 26.6% in 1998, principally due to sales growth of lower margin products from the Oncology Therapeutics Network (OTN), a specialty distributor of anti-cancer medicines and related products. In 1998, cost of products sold as a percentage of sales remained at the prior year's level of 26.6% compared to 26.7% in 1997. Accordingly, the Company has maintained its cost of goods sold as a percentage of sales consistently over the last three years, excluding its oncology distribution business. Advertising and promotion expenses increased 4% over the prior year to $2,409 million in 1999, primarily due to the continued support of PRAVACHOL*, EXCEDRIN*, GLUCOPHAGE and PLAVIX in the Medicines segment and for promotional campaigns related to existing products and new product launches in the Beauty Care and Nutritional segments, including ENFAMIL*, BOOST*, ULTRESS*, VIACTIV* Soft Calcium Chews and AUSSIE LAND*. In 1998, advertising and promotion expenses increased 3% to $2,312 million from $2,241 million in 1997. As a percentage of sales, advertising and promotion expenses decreased to 11.9% in 1999 from 12.6% in 1998 and 13.4% in 1997, reflecting an improvement in the effectiveness of the advertising and promotion spending. This decreasing trend is primarily due to reductions in direct-to-consumer advertising and increases in medical education efforts in the Medicines segment. Marketing, selling and administrative expenses, as a percentage of sales, decreased to 22.6% in 1999 from 24.2% in 1998 and 25.0% in 1997. This decreasing trend is a result of slower rates of increase in marketing, sales force and general administrative expenses as compared to revenue increases in the same period. The Company's investment in research and development totaled $1,843 million in 1999, an increase of 17% over 1998, and an increase to 9.1% in 1999 as a percentage of sales, from 8.6% in 1998 and 8.3% in 1997. This spending level reflects the Company's commitment to research over a broad range of therapeutic areas and to clinical development of new products. Over the past five years, research and development expenses have increased at a compound annual growth rate of 11%. In 1999, research and development spending dedicated to pharmaceutical products increased 18%, and was 12.6% of pharmaceutical sales compared to 12.4% and 12.0% in 1998 and 1997, respectively. In 1999, eight regulatory approvals were obtained and 10 dossiers were filed in the U.S. Most notably, in December 1999, the Company received FDA approval for TEQUIN*, an advanced antibiotic for the treatment of multiple common infections, including those of the respiratory tract. The Company also received marketing clearance for new indications for several products, including: in October 1999, the use of TAXOL* by injection for adjuvant treatment of node-positive breast cancer following standard chemotherapy; and, in September 1999, ZERIT* and VIDEX* were approved for use as first-line components of a combination antiretroviral therapy regimen for HIV-infected patients. In January 2000, the Company submitted a New Drug Application (NDA) for VIDEX* (didanosine) a once-daily, easier- to-digest, enteric-coated form of VIDEX*. In December 1999, the Company 22 submitted a filing for VANLEV* (omapatrilat) in the U.S., European Union and Canada. VANLEV* is the most clinically developed member of a new class of cardiovascular compounds developed for the treatment of hypertension. In 1999, the Company also initiated filings to gain marketing approval for two antidiabetic drugs - a new oral antidiabetic combination drug that leverages the benefits of two widely prescribed oral antidiabetic medications, GLUCOPHAGE (metformin) and glyburide, a well-established sulfonylurea antidiabetic, and GLUCOPHAGE XR (metformin hydrochloride) Extended Release Tablets, a once-daily version of GLUCOPHAGE. A NDA for VANIQA*, a topical treatment for excessive facial hair in women, was filed in September 1999. In 1999, the Company announced a number of research alliances, collaborations and commercialization agreements with other companies, including a development, commercialization and collaboration agreement with Otsuka Pharmaceutical Co., Ltd., for aripiprazole, a novel drug under study in Phase III trials as a treatment for schizophrenia; an alliance with Millennium Predictive Medicine, Inc., a subsidiary of Millennium Pharmaceutical, Inc., in the emerging field of cancer pharmacogenomics; and a licensing agreement and research collaboration with OXiGENE, Inc., to develop and commercialize combretastatin anti-tumor vascular targeting agents. The Company recorded $201 million and $225 million in gains from the sale of businesses in 1998 and 1997, respectively. The Company also recorded restructuring charges of $201 million in 1998 and $225 million in 1997. These restructuring charges consisted primarily of asset write-downs and employee-related costs related to the consolidation and closure of plants and facilities. Business Segments All four of the Company's business segments - Medicines, Beauty Care, Medical Devices and Nutritionals - reported sales increases during the year. Sales in the Medicines segment (Pharmaceuticals and Consumer Medicines), which is Bristol-Myers Squibb's largest segment at 71% of the total Company, increased 14% to $14,309 million in 1999. Sales growth resulted from a 12% increase due to volume and a 3% increase from selling prices, offset by a 1% decrease due to the effect of foreign exchange rate fluctuations. Domestic sales increased 23% and international sales increased 5%, excluding foreign exchange, primarily due to volume growth. Sales of PRAVACHOL*, the Company's largest selling product, increased 4% to $1,704 million. International sales increased 8% (10% excluding foreign exchange) to $671 million. Domestic sales increased 1% to $1,033 million, reflecting intensifying competition. The product's U.S. market share leveled off at 15% for the year. In 1999, the results of the Prospective Pravastatin Pooling Project, the largest statin drug analysis, found that PRAVACHOL* consistently helps reduce the risk of recurrent coronary events in women, older patients and patients with diabetes. The Company also announced the launch of the Pravastatin or Atorvastatin Evaluation and Infection Therapy, or PROVE IT, trial, the first major clinical trial to compare the effects of PRAVACHOL* versus Lipitor in reducing the risk of heart attacks and other cardiac events. This clinical trial also seeks to further examine the role of infection in atherosclerosis. Sales of TAXOL*, the Company's leading anti-cancer agent, increased 23% to $1.5 billion as the product continued to benefit from increased use in ovarian, breast and non-small cell lung cancer following standard chemotherapy. In October 1999, the FDA approved the use of TAXOL* by injection for adjuvant treatment of node-positive breast cancer following standard chemotherapy. There is no composition of matter patent for paclitaxel (the active ingredient in TAXOL*). In the United States, the Company is presently the only manufacturer and marketer of a product containing paclitaxel. In 1997 and 1998, the Company filed several lawsuits alleging that a number of generic drug companies infringed its patents covering certain methods of administering paclitaxel when they 23 filed abbreviated new drug applications seeking regulatory approval to sell paclitaxel. The defendants have asserted that they do not infringe the Company's patents and that these patents are invalid and unenforceable. Some defendants also asserted counterclaims seeking damages for alleged antitrust and unfair competition violation. On January 4, 2000, the District Court granted the Company's motion to dismiss certain of the antitrust and unfair competition counterclaims. The Company's motion for summary judgment on the remaining antitrust and unfair competition counterclaims was denied on March 17, 2000. On February 29, 2000, the District Court granted in part the generic companies' summary judgment motions for invalidity by finding all claims of the Company's patents in dispute invalid, except for claims limited to the treatment of ovarian cancer. As a result of this ruling, the generic companies may obtain U.S. Food and Drug Administration approval to market paclitaxel solely for treatment of metastatic breast cancer after failure of combination chemotherapy. The District Court's opinion left for determination at trial the validity of the claims of the Company's patents directed to the low dose, three-hour administration of paclitaxel for ovarian cancer and denied the generic companies' summary judgment motion arguing non-infringement of the Company's patents. The Company may pursue its appeal rights in the future. The claims remaining in the lawsuits are currently scheduled for trial in May 2000. It is not possible at this time to make a reasonable assessment of the outcome of the remaining claims in these actions nor to reasonably estimate the impact on TAXOL* sales or the amount of damages were the Company not to prevail. GLUCOPHAGE sales increased 53% to $1,317 million. GLUCOPHAGE, the leading branded oral medication for treatment of non-insulin dependent (type 2) diabetes, had a 1999 market share of 31.3%, up from 26.9% in the prior year. In May 1999, the FDA approved AVANDIA in combination with GLUCOPHAGE for the treatment of type 2 diabetes. AVANDIA is a product of SmithKline Beecham, and is being co-promoted by Bristol-Myers Squibb in the U.S. The Hatch-Waxman legislation exclusivity for GLUCOPHAGE expires in September 2000. PLAVIX, a platelet aggregation inhibitor for the reduction of stroke, heart attack and vascular death in atherosclerotic patients, reached sales of $547 million for the year compared to $144 million in the prior year. Sales of AVAPRO, an angiotensin II receptor blocker for the treatment of hypertension, increased 107% to $255 million. AVAPRO and PLAVIX are cardiovascular products that were launched from the Bristol-Myers Squibb and Sanofi S.A. joint venture. Sales of ZERIT* and VIDEX*, the Company's two anti-retroviral agents, increased 10% to $605 million and 27% to $205 million, respectively. ZERIT* is the most commonly prescribed thymidine nucleoside reverse transcriptase inhibitor in HIV therapy in the U.S. In 1999, ZERIT* and VIDEX* received regulatory approvals for use as first-line components of a combination antiretroviral therapy regimen for HIV-infected patients. Also, in November, the FDA approved once-daily dosing for VIDEX*. Sales of BUSPAR*, the Company's novel anti-anxiety agent, increased 14% to $605 million, while sales of SERZONE*, a novel antidepressant, increased 29% to $332 million. The exclusivity period for BUSPAR* expires in May 2000. Sales of PARAPLATIN*, which is used in combination therapy for the treatment of ovarian cancer, increased 14% to $600 million. Sales of CEFZIL*, an oral cephalosporin used in the treatment of respiratory infections and sinusitis, increased 12% to $402 million. MONOPRIL*, a second-generation angiotensin converting enzyme (ACE) inhibitor with once-a-day dosing, had increased sales of 12% reaching $424 million. 24 Sales from the Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products, reached $894 million for the year, an increase of 36% over 1998. International sales of MAXIPIME*, a fourth-generation injectable cephalosporin, increased 28% to $133 million. Effective January 1, 1999, Dura Pharmaceuticals, Inc. was appointed the exclusive domestic distributor for MAXIPIME*. Sales of EXCEDRIN* remained at prior year levels of $240 million. In October 1999, the FDA expanded the EXCEDRIN* Migraine indication from the treatment of mild to moderate migraine pain to encompass the severe pain and associated symptoms of the full migraine syndrome. Sales of BUFFERIN* increased 18% to $147 million due to increased sales in Japan, while sales of EFFERALGAN*, an effervescent analgesic sold primarily in France, increased 9% to $166 million. Sales of captopril, an ACE inhibitor sold primarily under the trademark CAPOTEN*, declined 24% to $484 million due to the loss of patent exclusivity in international markets. In 1998, Medicines segment sales increased 12% over 1997 levels. Increases in sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*, BUSPAR*, CEFZIL*, GLUCOPHAGE, SERZONE*, VIDEX*, AVAPRO, PLAVIX and EXCEDRIN* were partially offset by decreases in sales of CAPOTEN*. The margin on earnings before taxes in the Medicines segment improved to 28.1% in 1999 from 27.1% in 1998, as reductions, as a percentage of sales, in sales force expenditures, advertising and promotion spending and general administrative expenses were partially offset by increases in cost of products sold. In 1998, the margin on earnings before taxes of 27.1% remained at the prior year level as increases in research and development and sales force expenditures were offset by decreases in advertising and promotional spending and general administrative expenses. Sales in the Beauty Care segment increased 3% in 1999 to $2,381 million, reflecting a 2% increase due to volume, a 2% increase due to pricing and a 1% decrease due to foreign exchange rate fluctuations. International sales increased 7% (9% excluding the effect of foreign exchange) and domestic sales increased 1%. A softening in market demand in combination with other operating factors, including the introduction of a new demand management manufacturing system, slowed domestic shipments during the year. The Company's Clairol division continues to be the number one hair products Company in the U.S. Hair care product sales increased 6% in 1999, primarily due to sales of the HERBAL ESSENCES* complete line of shampoos, conditioners, styling aids, body wash and facial care. Sales of the HERBAL ESSENCES* line increased 14% to $637 million due to the launch of the HERBAL ESSENCES* facial care line in the U.S. and the launch of the HERBAL ESSENCES* hair care line in Japan, Germany and Brazil. HERBAL ESSENCES* is the number three brand in the total shampoo and conditioner market in the U.S., and is number four in body wash. Sales of DAILY DEFENSE* increased 44% to $118 million following its launch into international markets. Sales of AUSSIE* products were $124 million, an increase of 15% over the prior year. Haircolor sales increased 1% with increases in NICE 'N EASY* of 3% to $187 million and NATURAL INSTINCTS* of 9% to $94 million, partially offset by a decrease of 8% in HYDRIENCE* to $92 million. In 1998, sales in the Beauty Care segment increased 22% from 1997 levels, primarily due to increased sales of hair care products, led by HERBAL ESSENCES*. The margin on earnings before taxes in the Beauty Care segment decreased to 10.4% in 1999, from 14.9% in 1998, primarily due to an increase, as a percentage of sales, in cost of products sold reflecting a change in 25 product mix, higher levels of operating costs, and slower product shipments compared to the prior year. Increased promotional expenditures for new product introductions and support for existing products, including ULTRESS* and AUSSIE LAND*, also contributed to the decline. In 1998, the margin on earnings before taxes improved to 14.9% from 14.2% in 1997 primarily due to higher volumes and manufacturing efficiencies, partially offset by investment spending behind new product introductions. Sales in the Medical Devices segment increased 4% to $1,682 million, excluding sales from a 1998 distribution agreement with the acquirer of Zimmer's divested arthroscopy and powered surgical instrument business. Including the sales from the 1998 distribution agreement, Medical Devices sales increased 2%, reflecting a 1% increase due to volume, a 1% increase due to the effect of foreign exchange and no effect from changes in selling prices. Domestic sales increased 2% and international sales increased 3% (1% excluding the effect of foreign exchange). Worldwide sales of knee prosthetic joint replacements in the Company's Zimmer division increased 11% and hip replacement sales increased 12%. The Company's ConvaTec division is the worldwide market share leader in ostomy and advanced wound care products. ConvaTec sales decreased 1% to $719 million while remaining at prior year levels excluding foreign exchange. Sales of ostomy products decreased 3% and sales of wound care products were slightly below prior year levels. In 1998, worldwide sales in the Medical Devices segment, excluding the December 1997 divestiture of Zimmer's arthroscopy and surgical powered instrument business, increased 7%. The margin on earnings before taxes in the Medical Devices segment improved to 21.7% in 1999 from 20.4% in 1998, primarily due to a decrease in cost of products sold as a result of improved manufacturing processes. The margin on earnings before taxes in the Medical Devices segment improved to 20.4% in 1998 from 19.1% in 1997, due to decreases, as a percentage of sales, in other marketing and general administrative expenses, partially offset by increases in cost of products sold due to higher costs for products sold under a distribution agreement with the acquirer of Linvatec. Sales in the Nutritionals segment increased 5% to $1,850 million, reflecting a 5% increase due to volume, a 1% decrease due to the effect of foreign exchange rate fluctuations primarily in Latin America and a 1% increase due to changes in selling prices. International sales increased 2% (5% excluding the effect of foreign exchange), and domestic sales increased 7%. Mead Johnson continues to be the leader in the worldwide and U.S. infant formula markets. Total infant formula sales increased 2% to $1,233 million (3% excluding foreign exchange). Sales of ENFAMIL*, the Company's largest selling infant formula, increased 9% to $735 million worldwide. Adult consumer nutritional sales increased 27% as a result of a 32% increase in sales of BOOST*, and $29 million in sales of VIACTIV* Soft Calcium Chews launched in December 1998. In 1998, worldwide sales of Nutritionals decreased 2% from 1997 levels, primarily due to decreases in infant formula sales partially offset by growth of NUTRAMIGEN*, LACTO FREE*, BOOST* and CHOCO MILK*. The margin on earnings before taxes in the Nutritionals segment decreased to 20.3% in 1999 from 21.1% in 1998, primarily due to increased advertising and promotion expenditures for ENFAMIL*, BOOST* and VIACTIV* Soft Calcium Chews. The margin on earnings before taxes in the Nutritionals segment improved to 21.1% in 1998 from 20.1% in 1997 due to decreases, as a percentage of sales, in cost of products sold, resulting from improved manufacturing efficiencies. Geographic Areas Bristol-Myers Squibb products are available in virtually every country in 26 the world; its largest markets are the U.S., France, Japan, Germany and Canada. Sales in the United States, net of inter-area sales, increased 15% in 1999. Sales in the Medicines and Beauty Care segments comprised 72% and 12%, respectively, of the region's sales. Products with strong growth in the region included GLUCOPHAGE, TAXOL*, ENFAMIL*, BUSPAR*, PLAVIX, PARAPLATIN* and AVAPRO. The margin on earnings before taxes decreased to 24.2% in 1999 from 25.3% in 1998 primarily due to increases, as a percentage of sales, in cost of products sold. In 1998, sales in the United States increased 15%, net of inter-area sales, primarily due to growth of products from the Medicines segment including GLUCOPHAGE, TAXOL*, PRAVACHOL* and hair care products from the Beauty Care segment. The margin on earnings before taxes increased to 25.3% in 1998 from 23.4% in 1997 primarily due to decreases, as a percentage of sales, in cost of products sold, advertising and general administrative expenses. Sales in Europe, Mid-East and Africa, net of inter-area sales, increased 2% (4% excluding foreign exchange). The Medicines segment comprised nearly 79% of sales in the region. Products with strong growth in the region included PRAVACHOL*, TAXOL*, PLAVIX, AVAPRO and DAILY DEFENSE*. Increases in sales of these products were partially offset by decreases in sales of ostomy supplies and of CAPOTEN*, due to the loss of exclusivity and generic competition. The margin on earnings before taxes increased to 25.2% in 1999 from 23.4% in 1998, primarily due to improved sales force effectiveness as evidenced by lower sales force expense, as a percentage of sales, and a decrease in promotional expenses. In 1998, sales in Europe, Mid-East and Africa, net of inter-area sales, increased 4% (6% excluding foreign exchange), due to sales growth of products, including TAXOL*, ZERIT*, PRAVACHOL* and HERBAL ESSENCES*. These increases were partially offset by decreases in sales of CAPOTEN* due to loss of exclusivity. The margin on earnings before taxes decreased to 23.4% in 1998 from 23.8% in 1997 due to increases, as a percentage of sales, in promotional expenses. Sales in Other Western Hemisphere countries, net of inter-area sales and excluding foreign exchange, increased 6% in 1999. The Medicines and Beauty Care segments comprised nearly 57% and 21%, respectively, of the region's sales. Including foreign exchange, sales decreased 5% primarily resulting from decreases in sales of CAPOTEN* and PRAVACHOL*, partially offset by growth in HERBAL ESSENCES*, ENFAMIL*, DAILY DEFENSE*, AVAPRO and PLAVIX. The margin on earnings before taxes decreased to 6.5% in 1999 from 12.8% in 1998 as a result of the currency devaluation in Brazil and regional economic downturns. In 1998, sales in Other Western Hemisphere countries, net of inter-area sales, increased 11% (20% excluding foreign exchange), due to the introduction of HERBAL ESSENCES* and CHOCO MILK* to the region. The margin on earnings before taxes decreased to 12.8% in 1998 from 14.2% in 1997, reflecting increases, as a percentage of sales, in cost of products sold. Sales in the Pacific region, net of inter-area sales, increased 17% in 1999 (8% excluding foreign exchange). The favorable effect from foreign exchange was primarily experienced in Japan. The Medicines and Nutritionals segments comprised 49% and 20%, respectively, of the region's sales. Products with strong growth included BUFFERIN*, TAXOL*, HERBAL ESSENCES* and PARAPLATIN*. TAXOL* sales improved 90% over the prior year following the Japanese Ministry of Health and Welfare clearance of new indications for TAXOL* as a treatment for breast and non-small cell lung cancers. In 1999, margin on earnings before taxes increased to 4.9% primarily due to a decrease, as a percentage of sales, in advertising and promotion spending. As a result of economic downturns and unfavorable fluctuations in exchange rates, earnings before taxes in the Pacific region were minimal in 1998 and sales, net of inter-area sales, decreased 11%. Excluding foreign exchange, sales in 1998 increased 5% as a result of increases in TAXOL* and HERBAL ESSENCES*, partly offset by decreases in infant formulas and CAPOTEN*. 27 Financial Instruments Cash and cash equivalents, time deposits and marketable securities totaled almost $3.0 billion at December 31, 1999, compared to $2.5 billion and $1.8 billion at December 31, 1998 and 1997, respectively. Working capital continued to improve in 1999 with $3.7 billion at December 31, 1999, compared to $3.0 billion and $2.7 billion at December 31, 1998 and 1997, respectively. Cash and cash equivalents, time deposits and marketable securities, and the conversion of other working capital items are expected to fund near-term operations of the Company. The Company is exposed to market risk due to changes in currency exchange rates. To reduce this risk, the Company enters into certain derivative financial instruments, where available on a cost-effective basis, to hedge its underlying economic exposure. These instruments also are managed on a consolidated basis to efficiently net exposures and thus take advantage of any natural offsets. It is the Company's policy to hedge certain underlying economic exposures to reduce foreign exchange risk. Derivative financial instruments are not used for trading purposes. Gains and losses on hedging transactions are offset by gains and losses on the underlying exposures being hedged. Foreign exchange option contracts and, to a lesser extent, forward contracts are used to hedge anticipated transactions. The Company's primary foreign currency exposures in relation to the U.S. dollar are the European currencies and the Japanese yen. The table below summarizes the Company's outstanding foreign exchange option contracts as of December 31, 1999. The fair value of option contracts, which will change over time, is estimated based on currency rates and other relevant market factors. The fair value of option contracts should be viewed in relation to the fair value of the underlying hedged transactions and the overall reduction in exposure to adverse fluctuations in foreign currency exchange rates. Weighted Average Dollars in Millions Strike Notional Carrying Fair Price Amount Value Value Maturity Option Contracts Purchased Right to Sell: Euro 1.07 $971 $10 $56 2000 Mexican Peso 11.16 212 6 - 2000 Canadian Dollar 1.48 111 1 - 2000 British Pound 1.64 66 1 2 2000 Brazilian Real 1.94 63 5 2 2000 Australian Dollar 0.65 53 1 1 2000 Greek Drachma 316.26 40 1 2 2000 Swiss Franc 1.48 28 - 2 2000 Other Currencies Various 77 3 4 2000 Right to buy: Japanese Yen 114.49 123 - 19 2000 British Pound 1.61 18 - 1 2000 ----- ---- ---- $1762 $28 $89 ===== ==== ==== 28 At December 31, 1998, the Company held right-to-sell option contracts with an aggregate notional amount, carrying value and fair value of $1,042 million, $22 million and $18 million, respectively. These contracts primarily related to option contracts with the right to sell French francs and Deutsche marks. Other contracts at December 31, 1998 included right-to- buy option contracts, primarily to buy Japanese yen for U.S. dollars and British pounds for Deutsche marks, as well as other option contracts, that include the right to buy and sell several currencies. These contracts had an aggregate notional amount, carrying value and fair value of $265 million, $5 million and $13 million, respectively. The Company maintains cash and cash equivalents, time deposits and marketable securities with various financial institutions. These financial institutions are located primarily in the U.S. and Europe. Company policy is designed to limit exposure to any one financial institution. Recently Issued Accounting Standards In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities - Deferral of the effective date of FASB Statement No. 133. This statement defers the effective date of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, to fiscal years beginning after June 15, 2000. This statement requires that companies recognize all derivatives as either assets or liabilities on the balance sheet and measure these instruments at fair value. The Company will adopt this statement on January 1, 2001 and is currently evaluating its impact on the Company's existing accounting policies and financial reporting disclosures. Euro Conversion On January 1, 1999, certain members of the European Union established fixed conversion rates between their existing currencies and the European Union's common currency, known as the euro. It is planned that by July 1, 2002, the participating countries will withdraw all currencies and exclusively use the euro. The Company has committed resources to conduct assessments and to take corrective actions to ensure it is prepared for the introduction of the euro. The Company is actively addressing the many areas involved with the introduction of the euro, including information management, finance, legal and tax. This review includes the conversion of information technology, business and financial systems, evaluating currency risk and the effect on the Company's financial instruments, as well as the impact on the pricing and distribution of Company products. The Company believes the effect of the introduction of the euro, as well as any related cost of conversion, will not have a material impact on the results of operations, financial condition and cash flows. Financial Position Cash and cash equivalents, time deposits and marketable securities at December 31, 1999 were denominated primarily in U.S. dollar instruments with near-term maturities. The average interest yield on cash and cash equivalents was 5.9% at December 31, 1999, while interest yields on time deposits and marketable securities averaged 4.8% at December 31, 1999. Short-term borrowings and long-term debt at December 31, 1999 are denominated primarily in U.S. dollars; however, the Company had $177 million of commercial paper outstanding at December 31, 1999. This 29 commercial paper has original maturities not exceeding 270 days and is denominated in Euros and U.S. dollars. Also included is Japanese yen long- term debt of $280 million. Internally generated cash provided by operations was $4.5 billion in 1999, $4.1 billion in 1998 and $2.5 billion in 1997. Cash provided by operations continued to be the Company's primary source of funds to finance operating needs and expenditures for new plants and equipment. As part of the Company's ongoing commitment to improve plant efficiency and maintain superior research facilities, the Company has invested $2.3 billion in capital expansion over the past three years. Cash flow from operations also included product liability payments, net of insurance recoverable receipts of $667 million in 1999, $519 million in 1998 and $561 million in 1997. Cash provided by operations also was used over the past three years to pay dividends of $4.8 billion, to finance $4.1 billion of the Company's share repurchase program and to fund business acquisitions at a cost of $613 million. The Company's share repurchase program authorizes the Company to purchase common stock from time to time in the open market or through private transactions as market conditions permit. During 1999, the Company purchased 22.3 million shares of common stock at a cost of $1.4 billion, bringing the total shares acquired since the program's inception to 299.6 million. In December 1999, the Company announced a $2 billion increase in the stock repurchase program authorization. During the past three years, the Company has repurchased 86.5 million shares at a cost of $4.1 billion. In May 1999, at the annual meeting of stockholders, the stockholders approved the increase in the number of shares of common stock authorized to 4.5 billion shares. Employment levels of 54,500 at December 1999 essentially remained at prior year levels of 54,700. Sales per employee improved to $371 thousand in 1999 from $335 thousand in 1998 and $310 thousand in 1997. Return on Stockholders' Equity improved over the last three years and was 51.4% in 1999, 49.2% in 1998, excluding the special charge, and 46.5% in 1997. Forward Looking Information Certain statements in this Form 10-K Annual Report may constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from expected and historical results. Certain factors that may affect the Company's operations and prospects are discussed in Exhibit 99 to this Form 10-K Annual Report. 30 Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF EARNINGS and COMPREHENSIVE INCOME (in millions, except per share amounts) Year Ended December 31, -------------------------- EARNINGS 1999 1998 1997 - --------------- ------- ------- ------ Net Sales $20,222 $18,284 $16,701 ------ ------- ------ Expenses: Cost of products sold 5,539 4,856 4,464 Marketing, selling, administrative and other 4,578 4,418 4,173 Advertising and product promotion 2,409 2,312 2,241 Research and development 1,843 1,577 1,385 Special Charge - 800 - Provision for restructuring - 201 225 Gain on sale of businesses - (201) (225) Other 86 53 (44) ------ ------- ----- 14,455 14,016 12,219 ------ ------- ----- Earnings Before Income Taxes 5,767 4,268 4,482 Provision for income taxes 1,600 1,127 1,277 ------ ------- ----- Net Earnings $4,167 $3,141 $3,205 ===== ===== ===== Earnings Per Common Share Basic $2.10 $1.58 $1.61 Diluted $2.06 $1.55 $1.57 Average Common Shares Outstanding Basic 1,984 1,987 1,992 Diluted 2,027 2,031 2,042 Dividends Per Common Share $.86 $.78 $.76 COMPREHENSIVE INCOME - -------------------- Net Earnings $4,167 $3,141 $3,205 Other Comprehensive Income: Foreign currency translation (212) (86) (195) Tax effect 18 (3) 23 ------ ------- ----- Total Other Comprehensive Income (194) (89) (172) ------- ------- ------ Comprehensive Income $3,973 $3,052 $3,033 ===== ===== ===== The accompanying notes are an integral part of these financial statements. 31 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF RETAINED EARNINGS (in millions) Year Ended December 31, -------------------------- 1999 1998 1997 ------ ------ ------ Retained Earnings, January 1 $12,540 $10,950 $9,260 Net earnings 4,167 3,141 3,205 ------ ------ ------ 16,707 14,091 12,465 Less dividends 1,707 1,551 1,515 ------- ------- ------- Retained Earnings, December 31 $15,000 $12,540 $10,950 ====== ====== ====== The accompanying notes are an integral part of these financial statements. 32 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET ASSETS (dollars in millions) December 31, ------------------------- 1999 1998 1997 ----- ----- ----- Current Assets: Cash and cash equivalents $2,720 $2,244 $1,456 Time deposits and marketable securities 237 285 338 Receivables, net of allowances 3,272 3,190 2,973 Inventories 2,126 1,873 1,799 Prepaid expenses 912 1,190 1,170 ------- ------- ------- Total Current Assets 9,267 8,782 7,736 ------- ------- ------- Property, Plant and Equipment, net 4,621 4,429 4,156 Insurance Recoverable 468 523 619 Excess of cost over net tangible assets received in business acquisitions 1,502 1,587 1,625 Other Assets 1,256 951 841 ------- ------- ------- Total Assets $17,114 $16,272 $14,977 ===== ===== ===== The accompanying notes are an integral part of these financial statements. 33 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET LIABILITIES AND STOCKHOLDERS' EQUITY (dollars in millions) December 31, ------------------------- 1999 1998 1997 LIABILITIES ------- ------- ------- - ----------- Current Liabilities: Short-term borrowings $432 $482 $543 Accounts payable 1,657 1,380 1,017 Accrued expenses 2,367 2,302 1,939 Product liability 287 877 865 U.S. and foreign income taxes payable 794 750 668 ------- ------ ------- Total Current Liabilities 5,537 5,791 5,032 Other Liabilities 1,590 1,541 1,447 Long-Term Debt 1,342 1,364 1,279 ------- ------ ------- Total Liabilities 8,469 8,696 7,758 ------- ------ ------- STOCKHOLDERS' EQUITY - -------------------- Preferred stock, $2 convertible series: Authorized 10 million shares; issued and outstanding 10,977 in 1999, 11,684 in 1998 and 12,936 in 1997, - - - liquidation value of $50 per share Common stock, par value of $.10 per share: Authorized 4.5 billion shares; issued 2,192,970,504 in 1999, 2,188,316,808 219 219 108 in 1998 and 1,083,253,703 in 1997 Capital in excess of par value of stock 1,533 1,075 544 Other Comprehensive Income (816) (622) (533) Retained earnings 15,000 12,540 10,950 ------- ------ ------- 15,936 13,212 11,069 Less cost of treasury stock - 212,164,851 common shares in 1999, 199,550,532 in 1998 7,291 5,636 3,850 and 90,069,383 in 1997 ------- ------ ------- Total Stockholders' Equity 8,645 7,576 7,219 ------- ------ ------- Total Liabilities and Stockholders' Equity $17,114 $16,272 $14,977 ====== ====== ====== The accompanying notes are an integral part of these financial statements. 34 BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in millions) Year Ended December 31, -------------------------- 1999 1998 1997 ------- ------- ------- Cash Flows From Operating Activities: Net earnings $4,167 $3,141 $3,205 Depreciation and amortization 678 625 591 Special Charge - 800 - Provision for restructuring - 201 225 Gain on sale of businesses - (201) (225) Other operating items (79) (1) 33 Receivables (176) (253) (479) Inventories (317) (139) (288) Accounts payable and accrued expenses 243 242 (179) Income taxes 738 414 318 Product liability (726) (715) (795) Insurance recoverable 59 196 234 Other assets and liabilities (117) (190) (164) -------- -------- ------- Net Cash Provided by Operating Activities 4,470 4,120 2,476 ------- ------- ------- Cash Flows From Investing Activities: Proceeds from sales of time deposits and 51 309 530 marketable securities Purchases of time deposits and marketable (4) (256) (363) securities Additions to fixed assets (709) (788) (767) Proceeds from sale of business 134 417 370 Acquisition of businesses (266) (93) (254) Other, net 35 65 (48) ------- ------- -------- Net Cash Used in Investing Activities (759) (346) (532) -------- -------- -------- Cash Flows From Financing Activities: Short-term borrowings (26) (81) 81 Long-term debt (54) 73 328 Issuances of common stock under stock plans 8 140 117 Purchases of treasury stock (1,419) (1,561) (1,162) Dividends paid (1,707) (1,551) (1,515) -------- -------- -------- Net Cash Used in Financing Activities (3,198) (2,980) (2,151) -------- ------- ------- Effect of Exchange Rates on Cash (37) (6) (18) ------- ------- ------- Increase (Decrease) in Cash and Cash 476 788 (225) Equivalents Cash and Cash Equivalents at Beginning of 2,244 1,456 1,681 Period ------- ------- ------- Cash and Cash Equivalents at End of Period $2,720 $2,244 $1,456 ===== ===== ===== The accompanying notes are an integral part of these financial statements. 35 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 1 ACCOUNTING POLICIES - --------------------------- Basis of Consolidation - The consolidated financial statements include the accounts of Bristol-Myers Squibb Company and all of its subsidiaries. Cash and Cash Equivalents - Cash and cash equivalents primarily include securities with a maturity of three months or less at the time of purchase, recorded at cost, which approximates market. Time Deposits and Marketable Securities - Time deposits and marketable securities are available for sale and are recorded at fair value, which approximates cost. Inventory Valuation - Inventories are generally stated at average cost, not in excess of market. Capital Assets and Depreciation - Expenditures for additions, renewals and betterments are capitalized at cost. Depreciation is generally computed by the straight-line method based on the estimated useful lives of the related assets. The estimated useful lives of the major classes of depreciable assets are 50 years for buildings and 3 to 40 years for machinery, equipment and fixtures. Excess of Cost over Net Tangible Assets - The excess of cost over net tangible assets received in business acquisitions is being amortized on a straight-line basis over periods not exceeding 40 years. The excess of cost over net tangible assets is periodically reviewed for impairment based on an assessment of future operations (including cash flows) to ensure that the excess of cost over net tangible assets is appropriately valued. Product Liability - Accruals for product liability are recorded, on an undiscounted basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on existing information. These accruals are adjusted periodically as assessment efforts progress or as additional information becomes available. Receivables for related insurance or other third party recoveries for product liabilities are recorded, on an undiscounted basis, when it is probable that a recovery will be realized. Insurance recoverable recorded on the balance sheet has, in general, payment terms of three years or less. Revenue Recognition - Revenue from product sales is recognized upon shipment to customers. Earnings Per Share - Basic earnings per common share are computed using the weighted average number of shares outstanding during the year. Diluted earnings per common share are computed using the weighted average number of shares outstanding during the year, plus the incremental shares outstanding assuming the exercise of dilutive stock options 36 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 2 ACQUISITIONS AND DIVESTITURES - ------------------------------------- In June 1999, the Company acquired Cal-C-Tose, a nutritional milk modifier. In September 1999, the Company entered into a development and commercialization agreement for aripiprazole, a novel drug under study in Phase III trials as a treatment for schizophrenia, with Otsuka Pharmaceutical Co., Ltd. In December 1999 the Company completed the sale of Laboratori Guieu, a gynecological, pediatric and dermatological products business headquartered in Milan Italy. The gain on the sale was not material. In 1998 the Company acquired Redmond Products, Inc., a leading hair care manufacturer in the United States, and Phytoervas, a line of premium retail shampoos and conditioners in Brazil. The Company also in 1998 acquired Dong-A-Biotech Co., Ltd., a marketer and distributor of pharmaceutical products in South Korea. In 1998, the Company divested its Ban brand of anti-perspirants and deodorants, A/S GEA, a Denmark-based generic drug business, and Hexachimie, a specialty chemical manufacturer based in France, resulting in a combined pretax gain of $201 million. In 1997, the Company completed the sale of Linvatec Corporation, its arthroscopy and surgical powered instrument business, resulting in a pretax gain of $225 million. The Company acquired Abeefe S.A., Peru's largest pharmaceutical manufacturer and marketer of a broad range of prescription and nonprescription anti-infective, respiratory, anti-inflammatory and dermatological products. The Company also acquired CHOCO MILK*, Mexico's leading milk-based nutritional supplement, and SAL DE UVAS PICOT*, a leading effervescent antacid product in Mexico. Note 3 EARNINGS PER SHARE - -------------------------- The computations for basic earnings per common share and diluted earnings per common share are as follows: Earnings per Common Share - Basic: - ----------------------------------- Year Ended December 31, ------------- Dollars in Millions (Except per Share 1999 1998 1997 Amounts) ------ ------ ------ - ------------------------------------- Net Earnings $4,167 $3,141 $3,205 ==== ==== ==== Average Common Shares Outstanding 1,984 1,987 1,992 ==== ==== ==== Earnings Per Common Share - Basic $2.10 $1.58 $1.61 ==== ==== ==== 37 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Earnings per Common Share - Diluted: - ------------------------------------ Year Ended December 31, ------------------------- Dollars in Millions (Except per Share 1999 1998 1997 Amounts) ------ ------ ------ - ------------------------------------- Net Earnings $4,167 $3,141 $3,205 ==== ==== ==== Average Common Shares Outstanding 1,984 1,987 1,992 Incremental Shares Outstanding Assuming the Exercise of Dilutive Stock Options 43 44 50 ----- ----- ----- Average Common Shares Outstanding 2,027 2,031 2,042 ===== ===== ===== Earnings Per Common Share - Diluted $2.06 $1.55 $1.57 ===== ===== ===== Note 4 OTHER INCOME AND EXPENSES - --------------------------------- Year Ended December 31, --------------------------- 1999 1998 1997 ------ ------ ------ Interest income $107 $87 $106 Interest expense (130) (154) (118) Other - net (63) 14 56 ----- ----- ----- $(86) $(53) $44 ==== ==== ==== Cash payments for interest were $119 million, $157 million and $110 million in 1999, 1998 and 1997, respectively. 38 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 5 PROVISION FOR INCOME TAXES - ---------------------------------- The components of earnings before income taxes were: December 31, --------------------------- 1999 1998 1997 ----- ----- ----- U.S. $3,644 $2,623 $2,858 Non-U.S. 2,123 1,645 1,624 ----- ------ ------ $5,767 $4,268 $4,482 ===== ===== ===== The provision for income taxes consisted of: December 31, --------------------------- 1999 1998 1997 ----- ----- ----- Current: U.S. $780 $827 $633 Non-U.S. 405 346 471 ----- ----- ----- 1,185 1,173 1,104 ===== ===== ===== The components of prepaid and deferred income taxes consisted of: December 31, --------------------------- 1999 1998 1997 ----- ----- ----- Deferred: U.S. 365 (64) 220 Non-U.S. 50 18 (47) ----- ------ ----- 415 (46) 173 ----- ------ ----- $1,600 $1,127 $1,277 ===== ===== ===== 39 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Income taxes paid during the year were $805 million, $654 million and $898 million in 1999, 1998 and 1997, respectively. The Company's provision for income taxes in 1999, 1998 and 1997 was different from the amount computed by applying the statutory United States Federal income tax rate to earnings before income taxes, as a result of the following: % of Earnings Before Income Taxes ---------------------- 1999 1998 1997 ----- ----- ----- U.S. statutory rate 35.0% 35.0% 35.0% Foreign (5.0) (4.4) (2.6) Effect of operations in Puerto Rico (1.8) (2.5) (2.9) Special charge - (.6) - State and local taxes .6 .6 .6 Other (1.1) (1.7) (1.6) ----- ----- ----- 27.7% 26.4% 28.5% ===== ===== ===== Prepaid taxes at December 31, 1999, 1998 and 1997 were $567 million, $809 million and $818 million, respectively. The deferred income tax liability, included in Other Liabilities, at December 31, 1999, 1998 and 1997 was $445 million, $277 million and $352 million, respectively. The components of prepaid and deferred income taxes consisted of: December 31, ---------------------- 1999 1998 1997 ----- ----- ----- Depreciation $(278) $(278) $(278) Postretirement and pension benefits 120 195 191 Product liability (13) 248 154 Restructuring 25 55 77 Other 268 312 322 ----- ----- ----- $122 $532 $466 ==== ==== ==== 40 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The Company has settled its United States Federal income tax returns with the Internal Revenue Service through 1991. United States Federal income taxes have not been provided on substantially all of the unremitted earnings of non-U.S. subsidiaries, since it is management's practice and intent to reinvest such earnings in the operations of these subsidiaries. The total amount of the net unremitted earnings of non-U.S. subsidiaries was approximately $4.4 billion at December 31, 1999. Note 6 INVENTORIES - ------------------- December 31, ---------------------- 1999 1998 1997 ------ ------ ------ Finished goods $1,472 $1,209 $1,153 Work in process 302 236 197 Raw and packaging materials 352 428 449 ----- ----- ----- $2,126 $1,873 $1,799 ===== ===== ===== Note 7 PROPERTY, PLANT AND EQUIPMENT - ------------------------------------- December 31, ---------------------- 1999 1998 1997 ----- ----- ----- Land $170 $176 $180 Buildings 3,096 2,875 2,631 Machinery, equipment and fixtures 4,093 3,885 3,646 Construction in progress 482 572 544 ----- ----- ----- 7,841 7,508 7,001 Less accumulated depreciation 3,220 3,079 2,845 ----- ----- ----- $4,621 $4,429 $4,156 ===== ===== ===== 41 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 8 SHORT-TERM BORROWINGS AND LONG-TERM DEBT - ------------------------------------------------ Included in short-term borrowings were amounts due to banks, primarily foreign banks, of $245 million, $272 million and $524 million at December 31, 1999, 1998 and 1997, respectively, and current installments of long-term debt of $10 million, $43 million and $19 million at December 31, 1999, 1998, and 1997, respectively. Also included in short-term borrowings at December 31, 1999 and 1998, was $177 million and $167 million, respectively, of commercial paper outstanding. This commercial paper has original maturities not exceeding 270 days and is denominated in euros and U.S. dollars. The average interest rate on short-term borrowings was 6.76% and on current installments of long-term debt was 6.81% at December 31, 1999. During 1999, the Company renewed two credit facilities, aggregating $500 million, with a syndicate of lenders as support for its commercial paper program. The credit facilities consist of a $250 million, 364-day credit facility, which may be renewed annually with the consent of the lenders for an additional 364-day period and a $250 million, four- and five-year credit facility, extendible at each anniversary date with the consent of the lenders. There were no borrowings outstanding under the credit facilities at December 31, 1999. In addition, the Company has unused short-term lines of credit with foreign banks of $420 million. The components of long-term debt were: December 31, ---------------------- 1999 1998 1997 ----- ----- ----- 6.80% Debentures, due in 2026 $345 $345 $344 7.15% Debentures, due in 2023 344 344 343 6.875% Debentures, due in 2097 296 296 296 Various Rate Yen Term Loans, due in 2003 71 71 70 2.14% Yen Notes, due in 2005 62 55 - 1.73% Yen Notes, due in 2003 62 54 - 3.51% Deutsche Mark Interest on Yen Principal Term Loan, due in 2005 57 50 49 5.75% Industrial Revenue Bonds, due in 2024 34 34 34 5.00% Yen Term Loan, paid in 1999 - 29 29 Various Rate Term Loans, paid in 1999 - - 26 2.83% Yen Term Loan, due in 2002 28 25 24 Capitalized Leases 22 29 26 Other, 4.30% to 10.25%,due in varying amounts through 2014 21 32 38 ------ ------- ------- $1,342 $1,364 $1,279 ===== ===== ===== 42 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 9 STOCKHOLDERS' EQUITY - ---------------------------- Changes in capital shares and capital in excess of par value of stock were: Shares of Common Stock Capital in ----------------------- Excess of Par Value of Stock (dollars in millions) Issued Treasury ---------- ----------- ------ Balance, December 31, 1996 1,082,496,016 81,806,550 $382 Issued pursuant to stock plans and options 738,151 (8,514,867) 162 Conversions of preferred stock 19,536 - - Purchases - 16,777,700 - ---------- ----------- ------ Balance, December 31, 1997 1,083,253,703 90,069,383 544 Effect of two-for-one stock split 1,083,253,703 90,069,383 (108) Issued pursuant to stock plans and options 16,931,302 (11,189,998) 700 Conversions of preferred stock 21,230 - - Purchases - 30,601,764 - Other 4,856,870 - (61) ---------- ----------- ------ Balance, December 31, 1998 2,188,316,808 199,550,532 1,075 Issued pursuant to stock plans and options 4,641,700 (9,694,871) 458 Conversions of preferred stock 11,996 - - Purchases - 22,309,190 - ---------- ----------- ------ Balance, December 31, 1999 2,192,970,504 212,164,851 $1,533 ============= =========== ====== Each share of the Company's preferred stock is convertible into 16.96 shares of common stock and is callable at the Company's option. The reductions in the number of issued shares of preferred stock in 1999, 1998 and 1997 were due to conversions into shares of common stock. Dividends per common share were $.86 in 1999, $.78 in 1998 and $.76 in 1997. 43 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Stock Compensation Plans - ------------------------ Under the Company's 1997 Stock Incentive Plan, officers, directors and key employees may be granted options to purchase the Company's common stock at no less than 100% of the market price on the date the option is granted. Options generally become exercisable in installments of 25% per year on each of the first through the fourth anniversaries of the grant date and have a maximum term of 10 years. Additionally, the plan provides for the granting of stock appreciation rights whereby the grantee may surrender exercisable options and receive common stock and/or cash measured by the excess of the market price of the common stock over the option exercise price. The plan also provides for the granting of performance-based stock options to certain key executives. Under the terms of the 1997 Stock Incentive Plan, as amended, additional shares are authorized in the amount of 0.9% of the outstanding shares per year through 2002. The plan incorporates the Company's long-term performance awards. In addition, the 1997 Stock Incentive Plan provides for the granting of up to 20,000,000 shares of common stock to key employees, subject to restrictions as to continuous employment except in the case of death or normal retirement. Restrictions generally expire over a five-year period from date of grant. Compensation expense is recognized over the restricted period. At December 31, 1999, a total of 2,135,524 restricted shares were outstanding under the plan. Under the TeamShare Stock Option Plan, all full-time employees, excluding key executives, meeting certain years of service requirements are granted options to purchase the Company's common stock at the market price on the date the options are granted. The Company has authorized 62,000,000 shares for issuance under the plan. As of December 31, 1999, a total of 23,579,400 shares have been exercised under the plan. The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans other than for restricted stock and performance-based awards. Had compensation cost for the Company's other stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the Company's net income and earnings per share would have been reduced by approximately $198 million, or $.10 per common share, basic and diluted, in 1999, $136 million, or $.07 per common share, basic and diluted, in 1998 and $85 million, or $.04 per common share, basic and diluted, in 1997. The fair value of the options granted during 1999, 1998 and 1997 was estimated as $17.37 per common share, $11.80 per common share and $6.41 per common share, respectively, on the date of grant using the Black-Scholes option-pricing model with the following assumptions: 44 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) 1999 1998 1997 ------ ------ ------ Dividend yield 2.4% 3.1% 4.3% Volatility 21.8% 18.2% 19.3% Risk-free interest rate 5.5% 6.3% 6.5% Assumed forfeiture rate 3.0% 3.0% 3.0% Expected life (years) 7 7 7 Stock option transactions were: Weighted Average Shares of Common Stock Exercise ----------------------- Price of Shares Under Plan Available Under for Option Plan ---------- ----------- ------ Balance, December 31, 1996 18,329,358 70,028,732 $34.27 Authorized 9,006,205 - - Granted (11,347,801) 11,347,801 65.77 Exercised - (12,787,811) 30.34 Lapsed 2,284,788 (2,287,820) 45.63 ---------- ----------- Balance, December 31, 1997 18,272,550 66,300,902 40.08 Effect of two-for-one stock split 18,272,550 66,300,902 - Authorized 17,877,318 - - Granted (35,498,350) 35,498,350 51.40 Exercised - (36,697,942) 16.30 Lapsed 2,382,746 (2,382,746) 34.27 ---------- ----------- Balance, December 31, 1998 21,306,814 129,019,466 29.47 Authorized 19,898,896 - - Granted (24,221,950) 24,221,950 65.39 Exercised - (20,425,070) 20.41 Lapsed 3,552,037 (3,552,037) 42.51 ---------- ----------- Balance, December 31, 1999 20,535,797 129,264,309 $37.27 ========== =========== 45 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The following table summarizes information concerning currently outstanding and exercisable options: Options Outstanding Options Exercisable ------------------------------------- ------------------------ Range of Number Weighted Weighted Number Weighted Exercise Outstanding Average Average Exercisable Average Prices Remaining Exercise Exercise Contractual Price Price Life $10 - $20 36,055,360 4.10 $15.61 36,050,360 $15.61 $20 - $30 23,777,750 6.29 24.32 19,415,975 24.57 $30 - $40 12,441,697 7.19 33.68 6,530,637 33.68 $40 - $50 4,319,338 8.09 45.70 158,263 44.10 $50 - $60 29,924,664 8.18 51.73 5,012,685 51.00 $60 - up 22,745,500 9.19 66.49 152,319 61.10 ----------- ---------- 129,264,309 67,320,239 =========== ========== At December 31, 1999, 204,705,699 shares of common stock were reserved for issuance pursuant to stock plans, options and conversions of preferred stock. Note 10 FINANCIAL INSTRUMENTS - ------------------------------ Foreign exchange option contracts and, to a lesser extent, forward contracts, are used to hedge anticipated foreign currency transactions, primarily intercompany inventory purchases expected to occur within the next year. The Company has exposures to net foreign currency denominated assets and liabilities, which approximated $2,179 million, $2,310 million and $2,070 million at December 31, 1999, 1998 and 1997, respectively, primarily in Europe, Japan and Canada. The Company mitigates the effect of these exposures through third-party borrowings. The risk of loss associated with the types of foreign exchange option contracts entered into by the Company is limited to premium amounts paid for the option contracts. Premiums are deferred in Prepaid Expenses and amortized in the consolidated statement of earnings (in the Other caption) over the time frame of the underlying hedged transaction. Gains related to the option contracts, which qualify as hedges of foreign currency anticipated transactions, are recognized in earnings when the hedged transactions are recognized. Gains and losses on foreign exchange forward contracts are recognized in the basis of the underlying transaction being hedged. 46 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The notional amounts of the Company's foreign exchange option contracts at December 31, 1999, 1998 and 1997 were $1,762 million, $1,307 million and $1,279 million, respectively. The Company does not anticipate any material adverse effect on its financial position resulting from its involvement in these instruments, nor does it anticipate non-performance by any of its counterparties. At December 31, 1999, 1998 and 1997, the carrying value of all financial instruments, both short- and long-term, approximated their fair values. Note 11 LEASES - --------------- Minimum rental commitments under all noncancelable operating leases, primarily real estate, in effect at December 31, 1999 were: Years Ending December 31, - ------------------------- 2000 $109 2001 97 2002 80 2003 60 2004 46 Later years 141 ------ Total minimum payments 533 Less total minimum sublease rentals 111 ------ Net minimum rental commitments $422 === Operating lease rental expense (net of sublease rental income of $24 million in 1999, $27 million in 1998 and $26 million in 1997) was $90 million in 1999, $105 million in 1998 and $124 million in 1997. 47 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 12 SEGMENT INFORMATION - ---------------------------- The major product categories for each business segment are as follows: Year Ended December 31, ---------------------- 1999 1998 1997 ------ ------ ------ Medicines PRAVACHOL* $1,704 $1,643 $1.437 TAXOL* 1,481 1,206 941 GLUCOPHAGE 1,317 862 579 Oncology Therapeutics Network 894 657 480 BUSPAR* 605 531 443 ZERIT* 605 551 398 PARAPLATIN* 600 525 437 PLAVIX 547 144 - Beauty Care Hair care 1,250 1,179 794 Haircolor 905 894 841 Nutritionals Infant formulas 1,233 1,203 1.219 Medical Devices Orthopaedic implants 665 596 615 Ostomy 449 464 451 Inter-area sales, which are usually billed at or above manufacturing costs, by geographic area, were: December 31, ---------------------- 1999 1998 1997 ------ ------ ------ United States $1,647 $1,434 $1,370 Europe, Mid-East and Africa 937 843 762 Other Western Hemisphere 46 29 32 Pacific 25 16 24 ------ ------- ------- Total inter-area eliminations $2,655 $2,322 $2,188 ===== ===== ===== The Medicines Segment represents pharmaceuticals and consumer medicines businesses. In addition, the segment information reflects certain internal organizational changes made in 1999. Prior year data has been restated accordingly. 48 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Included in earnings before taxes of each segment is a cost of capital charge. The offset to the cost of capital charge is included in Other. In addition, Other principally consists of interest income, interest expense, certain administrative expenses and allocations to the industry segments for certain corporate programs. In 1998, Other includes the gain on sale of businesses of $201 million and the provision for restructuring of $201 million. In 1997, Other includes the gain on sale of a business of $225 million and the provision for restructuring of $225 million. Other assets principally consist of cash and cash equivalents, time deposits and marketable securities, and certain other assets. BUSINESS SEGMENTS Net Sales Earnings Before Taxes - ----------------- ------------------------ ---------------------- 1999 1998 1997 1999 1998 1997 ----- ----- ----- ----- ----- ----- Medicines $14,309 $12,573 $11,211 $4,018 $3,402 $3,033 Beauty Care 2,381 2,305 1,895 247 343 269 Nutritionals 1,850 1,759 1,793 375 371 360 Medical Devices 1,682 1,647 1,802 365 336 345 ----- ----- ----- ----- ----- ----- Net sales and earnings before taxes $20,222 $18,284 $16,701 $5,005 $4,452 $4,007 ===== ===== ===== ===== ===== ===== GEOGRAPHIC AREAS Net Sales Earnings Before Taxes - ---------------- -------------------------- ----------------------- 1999 1998 1997 1999 1998 1997 ----- ----- ----- ----- ----- ----- United States $14,445 $12,527 $11,014 $3,491 $3,164 $2,581 Europe, Mid-East and Africa 5,040 4,873 4,653 1,268 1,139 1,109 Other Western Hemisphere 1,681 1,749 1,586 110 223 225 Pacific 1,711 1,457 1,636 83 2 52 Inter-area eliminations (2,655) (2,322) (2,188) 53 (76) 40 ----- ----- ----- ----- ----- ----- Net sales and earnings before taxes $20,222 $18,284 $16,701 5,005 4,452 4,007 ===== ===== ===== Special Charge - (800) - Other 762 616 475 ----- ----- ----- $5,767 $4,268 $4,482 ===== ===== ===== 49 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) BUSINESS SEGMENTS Year-End Assets - ----------------- ---------------------- 1999 1998 1997 ------ ------ ------ Medicines $8,769 $8,296 $7,964 Beauty Care 1,121 1,058 833 Nutritionals 1,190 1,094 1,113 Medical Devices 1,185 1,174 1,225 ------ ------- ------- Identifiable segment assets $12,265 $11,622 $11,135 ====== ====== ====== GEOGRAPHIC AREAS Year-End Assets - ---------------- ---------------------- 1999 1998 1997 ----- ------ ------ United States $6,989 $6,657 $6,417 Europe, Mid-East and Africa 3,622 3,533 3,426 Other Western Hemisphere 1,425 1,238 1,063 Pacific 943 942 989 Inter-area eliminations (714) (748) (760) ------ ------- ------- Identifiable geographic assets $12,265 $11,622 $11,135 Other assets 4,849 4,650 3,842 ------ ------- ------- $17,114 $16,272 $14,977 ====== ====== ====== BUSINESS SEGMENTS Capital Expenditures Depreciation - ----------------- -------------------------- ----------------- 1999 1998 1997 1999 1998 1997 --- ------ ----- ------ ----- ----- Medicines $457 $535 $524 $279 $272 $244 Beauty Care 58 71 58 35 29 22 Nutritionals 56 59 61 43 38 42 Medical Devices 44 33 24 32 36 46 --- ------ ----- ------ ----- ----- Business segment total 615 698 667 389 375 354 94 90 100 49 38 43 --- ------ ----- ------ ----- ----- $709 $788 $767 $438 $413 $397 === === === === === === 50 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Note 13 RETIREMENT PLANS - ------------------------- The Company and certain of its subsidiaries have defined benefit pension plans and defines contribution plans for regular full-time employees. The principal pension plan is the Bristol-Myers Squibb Retirement Income Plan. The Company's funding policy is to contribute amounts to provide for current service and to fund past service liability. Plan benefits are primarily based on years of credited service and on the participants' compensation. Plan assets principally consist of equity and fixed income securities. Cost for the Company's defined benefit plans included the following components: Year Ended December 31, ---------------------- 1999 1998 1997 ----- ------ ------ Service cost - benefits earned during the year $161 $132 $135 Interest cost on projected benefit obligation 217 207 203 obligation Expected earnings on plan assets (285) (258) (231) Net amortization and deferral 4 (1) 10 ---- ---- ---- Net pension expense $97 $80 $117 ==== ==== ==== The weighted average actuarial assumptions for the Company's pension plans were as follows: December 31, ------------------------- 1999 1998 1997 ------ ------ ------ Discount rate 7.8% 7.0% 7.5% Compensation increase 4.8% 4.3% 4.5% Long-term rate of return 10.0% 10.0% 10.0% 51 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) Changes in benefit obligation and plan assets were: Year Ended December 31, ---------------------- 1999 1998 1997 ---- ---- ---- Benefit obligation at beginning of year $3,216 $2,928 $2,734 Service cost - benefits earned during the year 161 132 135 year Interest cost on projected benefit obligation 217 207 203 Actuarial (gains) and losses (203) 160 45 Benefits paid (254) (211) (189) ----- ----- ----- Benefit obligation at end of year $3,137 $3,216 $2,928 ===== ===== ===== December 31, ---------------------- 1999 1998 1997 ----- ------ ------ Fair value of plan assets at beginning of year $3,137 $2,949 $2,596 Actual earnings on plan assets 561 359 504 Employer contribution 46 40 38 Benefits paid (254) (211) (189) ------ ------ ------ Fair value of plan assets at end of year $3,490 $3,137 $2,949 ===== ===== ===== December 31, ---------------------- 1999 1998 1997 ----- ----- ----- Plan assets in excess of (less than) projected benefit obligation $353 $(79) $21 Unamortized net assets at adoption (2) (33) (47) Unrecognized prior service cost 37 48 56 Unrecognized net (gains) and losses (385) 87 13 ----- ----- ----- Net amount recognized $3 $23 $43 ==== ==== ==== Amounts recognized in the consolidated balance sheet consist of: Prepaid benefit cost 181 187 194 Accrued benefit liability (190) (190) (173) Other asset 12 26 22 ----- ----- ----- Net amount recognized $3 $23 $43 ==== ==== ==== 52 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $319 million, $245 million and $56 million, respectively, as of December 31, 1999, $288 million, $230 million and $40 million, respectively, as of December 31, 1998 and $271 million, $208 million and $37 million, respectively, as of December 31, 1997. This is primarily attributable to an unfunded benefit equalization plan. The principal defined contribution plan is the Bristol-Myers Squibb Savings and Investment Program. The Company's contribution is based on employee contributions and the level of company match. Company contributions to the plan were $49 million in 1999, $45 million in 1998 and $40 million in 1997. Note 14 POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS - --------------------------------------------------------- The Company provides comprehensive medical and group life benefits to substantially all U.S. retirees who elect to participate in the Company's comprehensive medical and group life plans. The medical plan is contributory. Contributions are adjusted periodically and vary by date of retirement and the original retiring company. The life insurance plan is non-contributory. Plan assets principally consist of equity securities and fixed income securities. Cost for the Company's postretirement benefit plans included the following components: Year Ended December 31, ---------------------- 1999 1998 1997 ----- ----- ----- Service cost - benefits earned during the year $10 $8 $9 Interest cost on accumulated postretirement 36 35 36 benefit obligation Expected earnings on plan assets (13) (11) (9) Net amortization and deferral 1 (3) (2) ----- ----- ----- Net postretirement benefit expense $34 $29 $34 ==== ==== ==== 53 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) The weighted average actuarial assumptions for the Company's postretirement benefit plans were as follows: December 31, ---------------------- 1999 1998 1997 ------ ------ ------ Discount rate 7.8% 7.0% 7.5% Long-term rate of return 10.0% 10.0% 10.0% Changes in benefit obligation and plan assets were: Year Ended December 31, ----------------------- 1999 1998 1997 ----- ----- ----- Benefit obligation at beginning of year $507 $495 $482 Service cost - benefits earned during the year 10 8 9 Interest cost on accumulated post- retirement benefit obligation 36 35 36 Plan participants' contributions 2 2 2 Plan amendments (9) (1) - Actuarial (gains) and losses 16 6 (2) Benefits paid (41) (38) (32) ----- ----- ----- Benefit obligation at end of year $521 $507 $495 ==== ==== ==== December 31, ---------------------- 1999 1998 1997 ----- ------ ------ Fair value of plan assets at beginning of year $128 $113 $89 Actual earnings on plan assets 24 15 20 Employer contribution 39 36 34 Plan participants' contributions 2 2 2 Benefits paid (41) (38) (32) ----- ----- ------ Fair value of plan assets at end of year $152 $128 $113 ==== ==== ==== 54 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) December 31, ---------------------- 1999 1998 1997 ------ ------ ------ Accumulated postretirement benefit obligation in excess of plan assets $(369) $(379) $(382) Unrecognized prior service cost (6) 3 4 Unrecognized net earnings (55) (60) (65) ----- ----- ----- Accrued postretirement benefit expense $(430) $(436) $(443) ==== ==== ==== For measurement purposes, an annual rate of increase in the per capita cost of covered health care benefits of 7% for participants was assumed for 2000; the rate was assumed to decrease gradually to 5% in 2007 and to remain at that level thereafter. A one-percentage-point change in assumed health care cost trend rates would have the following effects: 1-Percentage- 1-Percentage- Point Point Increase Decrease ---------- ------------ Effect on the aggregate of the service and interest cost components of net postretirement benefit expense $1 $(1) Effect on the accumulated postretirement benefit obligation $21 $(19) Note 15 LITIGATION - ------------------- Various lawsuits, claims and proceedings of a nature considered normal to its businesses are pending against the Company and certain of its subsidiaries. The most significant of these are described below. Reference is made to Item 3 Legal Proceedings in Part 1 of this Form 10-K Annual Report. Breast Implant - -------------- The Company, together with its subsidiary, Medical Engineering Corporation (MEC), and certain other companies, has been named as a defendant in a number of claims and lawsuits alleging damages for personal injuries of various types resulting from polyurethane-covered breast implants and smooth-walled breast implants formerly manufactured by MEC or a related Company. Of the more than 90,000 claims or potential claims against the Company in direct lawsuits or through registration in the nationwide class action settlement approved by the Federal District Court in Birmingham, Alabama (the "Revised Settlement"), most have been dealt with through the Revised Settlement, other settlements, or trial. 55 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) As of December 31, 1999, the Company's contingent liability in respect of breast implant claims was limited to residual unpaid Revised Settlement obligations and to roughly 1,700 remaining opt-outs who have pursued or may pursue their claims in court. As of December 31, 1999, approximately 6,700 United States and 200 foreign breast implant recipients were plaintiffs in lawsuits pending in federal and state courts in the United States and certain courts in Canada and Australia. These figures include the claims of plaintiffs that are in the process of being settled and/or dismissed.In these lawsuits, about 3,660 U.S. and 49 foreign plaintiffs opted out of the Revised Settlement. The lawsuits of the 3,040 U.S. plaintiffs who did not opt out are expected to be dismissed since these plaintiffs are among the estimated 74,000 women with MEC implants who chose to participate in the nationwide settlement. Of the 3,660 opt-out plaintiffs, an estimated 1,960 have claims based upon products that were not manufactured or sold by MEC or that have been or are in the process of being settled and/or dismissed. Accordingly, the number of remaining plaintiffs who have pursued or may pursue their claims in court against the Company is roughly 1,700, as stated in the preceding paragraph. Under the terms of the Revised Settlement, additional opt-outs are expected to be minimal since the deadline for U.S. class members to opt out has passed. In addition, the Company's remaining obligations under the Revised Settlement Program are limited because most payments to "Current Claimants" have already been made, no additional "Current Claims" may be filed without court approval, and because payments of claims to so-called "Other Registrants" and "Late Registrants" are limited by the terms of the Revised Settlement. Separate class action settlements have been approved in the provincial courts of Ontario and Quebec, and an agreement has been reached under which other foreign breast implant recipients may settle their claims. The Company believes it will be able to address remaining opt-out claims as well as expected remaining obligations under the Revised Settlement program within its reserves described below. In the fourth quarter of 1993, the Company recorded a charge of $500 million before taxes ($310 million after taxes) in respect of breast implant cases. The charge consisted of $1.5 billion for potential liabilities and expenses, offset by $1.0 billion of expected insurance proceeds. In the fourth quarters of 1994 and 1995, the Company recorded additional special charges of $750 million before taxes ($488 million after taxes) and $950 million before taxes ($590 million after taxes), respectively, related to breast implant product liability claims. In the fourth quarter of 1998, the Company recorded an additional special charge to earnings in the amount of $800 million before taxes and increased its insurance receivable in the amount of $100 million, resulting in a net charge to earnings of $433 million after taxes in respect of breast implant product liability claims. During 1999, 1998 and 1997, cash payments, net of insurance receipts, of $631 million, $551 million and $549 million, respectively, were made related to the breast implant product liability claims. At December 31, 1999, $354 million was included in current and other liabilities for breast implant product liability claims. Prescription Drug - ----------------- As of December 31, 1999, the Company remains a defendant in several actions challenging pricing on brand name prescription drugs. These actions include several currently consolidated antitrust actions brought against the Company and more than 30 other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers by certain chain drugstores, supermarket chains and independent drugstores; state pharmaceutical actions; and purported class actions on behalf of consumers. In the fourth quarter of 1998, the Company recorded a special 56 BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions) charge to earnings in the amount of $100 million before taxes ($62 million after taxes) in respect of this prescription drug litigation. The Company will continue to defend vigorously its position in this ongoing litigation and believes it will be able to address all remaining claims within its reserves. During 1999, cash payments of $59 million were made related to the pricing litigation claims. TAXOL* - ------ There is no composition of matter patent for paclitaxel (the active ingredient in TAXOL*). In the United States, the Company is presently the only manufacturer and marketer of a product containing paclitaxel. In 1997 and 1998, the Company filed several lawsuits alleging that a number of generic drug companies infringed its patents covering certain methods of administering paclitaxel when they filed abbreviated new drug applications seeking regulatory approval to sell paclitaxel. These actions were consolidated for discovery in the United States District Court for the District of New Jersey. The Company does not assert a monetary claim against any of the defendants, but seeks to prevent the defendants from marketing paclitaxel in a manner that violates the Company's patents. The defendants have asserted that they do not infringe the Company's patents and that these patents are invalid and unenforceable. Some defendants also asserted counterclaims seeking damages for alleged antitrust and unfair competition violations. On January 4, 2000, the District Court granted the Company's motion to dismiss certain of the antitrust and unfair competition counterclaims. The Company's motion for summary judgment on the remaining antitrust and unfair competition counterclaims was denied on March 17, 2000. On February 29, 2000, the District Court granted in part the generic companies' summary judgment motions for invalidity by finding all claims of the Company's patents in dispute invalid, except for claims limited to the treatment of ovarian cancer. As a result of this ruling, the generic companies may obtain U.S. Food and Drug Administration approval to market paclitaxel solely for treatment of metastatic breast cancer after failure of combination chemotherapy. The District Court's opinion left for determination at trial the validity of the claims of the Company's patents directed to the low dose, three-hour administration of paclitaxel for ovarian cancer and denied the generic companies' summary judgment motion arguing non-infringement of the Company's patents. The Company may pursue its appeal rights in the future. The claims remaining in the lawsuits are currently scheduled for trial in May 2000. It is not possible at this time to make a reasonable assessment of the outcome of the remaining claims in these actions nor to reasonably estimate the impact on TAXOL* sales or the amount of damages were the Company not to prevail. While it is not possible to predict with certainty the outcome of these cases, it is the opinion of management that they will not have a material adverse effect on the Company's operating results, liquidity or consolidated financial position. 57 Note 16 SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) - ------------------------------------------------------ (in millions, except per share amounts) First Second Third Fourth Quarter Quarter Quarter Quarter Year 1999: ------- ------- ------- ------- ------- Net Sales $4,854 $4,920 $5,040 $5,408 $20,222 Gross Profit 3,549 3,559 3,638 3,937 14,683 Net Earnings 1,066 952 1,097 1,052 4,167 Earnings Per Common Share Basic .54 .48 .55 .53 2.10 Diluted .53 .47 .54 .52 2.06 1998: Net Sales $4,446 $4,430 $4,523 $4,885 $18,284 Gross Profit 3,294 3,224 3,332 3,578 13,428 Net Earnings 927 835 966 413 3,141 Earnings Per Common Share Basic .47 .42 .49 .21 1.58 Diluted .46 .41 .47 .20 1.55 * In 1998, the first quarter results included a gain on the sale of a business of $125 million ($78 million after taxes) and a provision for restructuring of $125 million ($78 million after taxes). The second quarter results included a gain on the sale of businesses of $76 million ($47 million after taxes) and a provision for restructuring of $76 million ($47 million after taxes). The fourth quarter results included a charge of $800 million ($495 million after taxes; or $.25 per common share - basic and $.24 per common share - diluted) for litigation of breast implant and prescription drug pricing cases, offset by expected insurance recoveries. 58 REPORT OF INDEPENDENT ACCOUNTANTS --------------------------------- To the Board of Directors and Stockholders of Bristol-Myers Squibb Company In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) on page 61 present fairly, in all material respects, the financial position of Bristol-Myers Squibb Company and its subsidiaries at December 31, 1999, 1998 and 1997, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 14(a)(2) on page 61 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP - ------------------------------ PRICEWATERHOUSECOOPERS LLP New York, New York January 24, 2000 59 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. PART III ------------ Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. (a) Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 2, 2000 with respect to the Directors of the Registrant which is incorporated herein by reference and made a part hereof in response to the information required by Item 10. (b) The information required by Item 10 with respect to the Executive Officers of the Registrant has been included in Part IA of this Form 10-K Annual Report in reliance on General Instruction G of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K. Item 11. EXECUTIVE COMPENSATION. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 2, 2000 with respect to Executive Compensation which is incorporated herein by reference and made a part hereof in response to the information required by Item 11. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 2, 2000 with respect to the security ownership of certain beneficial owners and management which is incorporated herein by reference and made a part hereof in response to information required by Item 12. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 2, 2000 with respect to certain relationships and related transactions which is incorporated herein by reference and made a part hereof in response to the information required by Item 13. 60 PART IV ------------- Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. Page Number ------ (a) 1. Financial Statements 31-35 Notes to Consolidated Financial Statements 36-58 Report of Independent Accountants 59 2. Financial Statement Schedules Schedule Page Number Number -------- ------ Valuation and qualifying accounts II S-1 All other schedules not included with this additional financial data are omitted because they are not applicable or the required information is included in the financial statements or notes thereto. 3. Exhibit List The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. Unless otherwise indicated, all Exhibits are part of Commission File Number 1- 1136. 3a. Restated Certificate of Incorporation of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4a to Registrant's Registration Statement on Form S-3, Registration Statement No. 33-33682, dated March 7, 1990, as amended through May 5, 1999 by Certificate of Amendment, filed herewith). 3b. Bylaws of Bristol-Myers Squibb Company, as amended through January 20, 2000, filed herewith. 4a. Letter of Agreement dated March 28, 1984 (incorporated herein by reference to Exhibit 4 to Form 10-K for the fiscal year ended December 31, 1983). 4b. Indenture, dated as of June 1, 1993, between Bristol-Myers Squibb Company and The Chase Manhattan Bank (National Association), as trustee (incorporated herein by reference to Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4.2 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 61 4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4e to the Form 10-K for the fiscal year ended December 31, 1996). 4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4f to the Form 10-Q for the quarterly period ended September 30, 1997). 4f. Five Year Competitive Advance and Revolving Credit Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 4f to the Form 10-K for the fiscal year ended December 31, 1997). 4g. 364-Day Competitive Advance and Revolving Credit Facility agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent (incorporated herein by reference to Exhibit 4g to the Form 10-K for the fiscal year ended December 31, 1997). **10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, effective as of May 6, 1997 and as amended effective November 3, 1998 (incorporated herein by reference to Exhibit 4g to the Form 10- K for the fiscal year ended December 31, 1998). **10b. Bristol-Myers Squibb Company Executive Performance Incentive Plan (incorporated herein by reference to Exhibit 10b to the Form 10- K for the fiscal year ended December 31, 1996). **10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as amended and restated as of January 1, 1997, as amended November 3, 1998 (incorporated herein by reference to Exhibit 4g to the Form 10-K for the fiscal year ended December 31, 1998). **10d. Squibb Corporation 1982 Option, Restricted Stock and Performance Unit Plan, as amended (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1993). **10e. Squibb Corporation 1986 Option, Restricted Stock and Performance Unit Plan, as amended (as adopted, incorporated herein by reference to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1988, File No. 1-5514; as amended effective July 1, 1993, and incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1993). **10f. Bristol-Myers Squibb Company Performance Incentive Plan, as amended (as adopted, incorporated herein by reference to Exhibit 2 to the Form 10-K for the fiscal year ended December 31, 1978; as amended as of January 8, 1990, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1990; as amended on April 2, 1991, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1991; as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1994). 62 **10g. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Retirement Income Plan or the Bristol- Myers Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as amended and restated as of January 1, 1993, as amended effective October 1, 1993, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective February 1, 1995, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1996). **10h. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Savings and Investment Program, as amended (as amended and restated as of May 1, 1990, incorporated herein by reference to Exhibit 19d to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19e to the Form 10- K for the fiscal year ended December 31, 1991, as amended as of October 1, 1994, incorporated herein by reference to Exhibit 10f to the Form 10-K for the fiscal year ended December 31, 1994). **10i. Squibb Corporation Supplementary Pension Plan, as amended (as previously amended and restated, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1991; as amended as of September 14, 1993, and incorporated herein by reference to Exhibit 10g to the Form 10-K for the fiscal year ended December 31, 1993). **10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as amended (as adopted on November 7, 1989, incorporated herein by reference to Exhibit 10t to the Form 10-K for the fiscal year ended December 31, 1989; as amended on December 4, 1990, incorporated herein by reference to Exhibit 19a to the Form 10-K for the fiscal year ended December 31, 1990; as amended effective July 1, 1993, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1993; as amended effective December 6, 1994, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1994). **10k. Bristol-Myers Squibb Company Retirement Income Plan for Non- Employee Directors, as amended to March 5, 1996 (incorporated herein by reference to Exhibit 10k to the Form 10-K for the fiscal year ended December 31, 1996). **10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for Non-Employee Directors, as amended to January 13, 1998, (incorporated herein by reference to Exhibit 10l to the Form 10-K for the fiscal year ended December 31, 1997). **10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock Option Plan, as amended (as approved by the Stockholders on May 1, 1990, incorporated herein by reference to Exhibit 28 to Registration Statement No. 33-38587 on Form S-8; as amended May 7, 1991, incorporated herein by reference to Exhibit 19c to the Form 10-K for the fiscal year ended December 31, 1991), as amended January 12, 1999 (incorporated herein by reference to Exhibit 4g to the Form 10- K for the fiscal year ended December 31, 1998). **10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, as amended (as adopted, incorporated herein by reference to Exhibit 10e to the Squibb Corporation Form 10-K for the fiscal year ended 63 December 31, 1987, File No. 1-5514; as amended effective December 31, 1991, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1992). **10o. Amendment to all of the Company's plans, agreements, legal documents and other writings, pursuant to action of the Board of Directors on October 3, 1989, to reflect the change of the Company's name to Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10v to the Form 10-K for the fiscal year ended December 31, 1989). **10p. Employment agreement of March 12, 1999 for Charles A. Heimbold, Jr. (incorporated herein by reference to Exhibit 4g to the Form 10-K for the fiscal year ended December 31, 1998). **10q. Form of Agreement, effective June 1, 1999, entered into between the Registrant and each of the following officers on the following dates: Peter R. Dolan, July 29, 1999; Donald J. Hayden, Jr., July 30, 1999; Richard J. Lane, August 6, 1999; John L. McGoldrick, August 10, 1999; Michael F. Mee, July 28, 1999; Christine A. Poon, July 29, 1999; Peter S. Ringrose, Ph.D., August 5, 1999; Stephen I. Sadove, July 29, 1999; Frederick S. Schiff, July 29, 1999; John L. Skule, August 5, 1999; Charles G. Tharp, Ph.D., July 28, 1999; and Kenneth E. Weg, July 29, 1999. (incorporated herein by reference to Exhibit 10q to the Form 10-Q for the quarterly period ended September 30, 1999). 21. Subsidiaries of the Registrant (filed herewith). 23. Consent of PricewaterhouseCoopers LLP(filed herewith). 27. Bristol-Myers Squibb Company Financial Data Schedule (filed herewith). 99. Additional Exhibit (filed herewith). (b) Reports on Form 8-K None. 64 SIGNATURES -------------------- Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. BRISTOL-MYERS SQUIBB COMPANY (Registrant) By /s/ Charles A. Heimbold, Jr. ---------------------------------- Charles A. Heimbold, Jr. Chairman of the Board and Chief Executive Officer March 30, 2000 ---------------------------------- Date Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date ------------ -------- ---- Chairman of the Board, Chief Executive Officer And Director (Principal /s/ Charles A. Heimbold, Jr. Executive Officer) March 30, 2000 - ------------------------------ (Charles A. Heimbold, Jr.) Chief Financial Officer and Executive Vice President Corporate Staff (Principal /s/ Michael F. Mee Financial Officer) March 30, 2000 - ------------------------------ (Michael F. Mee) Controller and Senior Vice President, Financial Operations, Corporate Staff (Principal /s/ Frederick S. Schiff Accounting Officer) March 30, 2000 - ------------------------------ (Frederick S. Schiff) 65 Signature Title Date - -------- ------ ---- /s/ Robert E. Allen Director March 30, 2000 - ----------------------------- (Robert E. Allen) /s/ Lewis B. Campbell Director March 30, 2000 - ----------------------------- (Lewis B. Campbell) /s/ Vance D. Coffman Director March 30, 2000 - ----------------------------- (Vance D. Coffman) /s/ Peter R. Dolan President and Director March 30, 2000 - ----------------------------- (Peter R. Dolan) /s/ Ellen V. Futter Director March 30, 2000 - ----------------------------- (Ellen V. Futter) /s/ Louis V. Gerstner, Jr. Director March 30, 2000 - ----------------------------- (Louis V. Gerstner, Jr.) /s/ Laurie H. Glimcher, M.D. Director March 30, 2000 - ----------------------------- (Laurie H. Glimcher, M.D.) /s/ Leif Johansson Director March 30, 2000 - ----------------------------- (Leif Johansson) /s/ James D. Robinson III Director March 30, 2000 - ----------------------------- (James D. Robinson III) /s/ Louis W. Sullivan, M.D. Director March 30, 2000 - ----------------------------- (Louis W. Sullivan, M.D.) Vice Chairman, /s/ Kenneth E. Weg and Director March 30, 2000 - ---------------------------- (Kenneth E. Weg) 66 EXHIBIT INDEX ----------------------- The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designed by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. An asterisk (*) in the Page column indicates that the Exhibit has been previously filed with the Commission and is incorporated herein by reference. Unless otherwise indicated, all Exhibits are part of Commission File Number 1-1136. Exhibit Number and Description Page ------------------------------ ----- 3a. Restated Certificate of Incorporation of Bristol-Myers Squibb E-1-1 Company (incorporated herein by reference to Exhibit 4a to Registration Statement No. 33-33682 on Form S-3, dated March 7, 1990, as amended through May 5, 1999 by Certificate of Amendment filed herewith). 3b. Bylaws of Bristol-Myers Squibb Company, as amended through E-2-1 January 20, 2000. 4a. Letter of Agreement dated March 28, 1984 (incorporated * herein by reference to Exhibit 4 to Form 10-K for the fiscal year ended December 31,1983). 4b. Indenture, dated as of June 1, 1993, between Bristol-Myers * Squibb Company and The Chase Manhattan Bank (National Association),as trustee (incorporated herein by reference to Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4c. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb * Company (incorporated herein by reference to Exhibit 4.2 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993). 4d. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb * Company (incorporated herein by reference to Exhibit 4e to the Form 10-K for the fiscal year ended December 31, 1996). 4e. Form of 6.875% Debenture Due 2097 of Bristol-Myers Squibb * Company (incorporated herein by reference to Exhibit 4f to the Form 10-Q for the quarterly period ended September 30, 1997). 67 Exhibit Number and Description Page ------------------------------ ------- 4f. Five Year Competitive Advance and Revolving Credit Facility * Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement), the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent. 4g. 364-Day Competitive Advance and Revolving Credit Facility Agreement dated as of March 17, 1998 among Bristol-Myers Squibb Company, the Borrowing Subsidiaries (as defined in the Agreement the Lenders listed in Schedule 2.1 to the Agreement, The Chase Manhattan Bank as Administrative Agent and Citibank, N.A., as Administrative Agent. ** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, * effective as of May 6, 1997 and as amended effective November 3, 1998 (incorporated herein by reference to Exhibit 10a to the Form 10-K for the fiscal year ended December 31, 1998). ** 10b. Bristol-Myers Squibb Company Executive Performance Incentive * Plan (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1996). ** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as * amended and restated as of January 1, 1997, as amended November 3, 1998 (incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1998). ** 10d. Squibb Corporation 1982 Option, Restricted Stock and * Performance Unit Plan, as amended (incorporated by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1993). ** 10e. Squibb Corporation 1986 Option, Restricted Stock and Performance * Unit Plan, as amended (as adopted, incorporated herein by reference to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1988, File No. 1-5514, as amended July 1, 1993, incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1993). 68 Exhibit Number and Description Page ------------------------------ ------ ** 10f. Bristol-Myers Squibb Company Performance Incentive Plan, as * amended (as adopted, incorporated herein by reference to Exhibit 2 to the Form 10-K for the fiscal year ended December 31, 1978; as amended as of January 8, 1990, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1990; as amended on April 2, 1991, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1991; as amended effective on January 1,1994, and incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1994). ** 10g. Benefit Equalization Plan of Bristol-Myers Squibb Company * and its Subsidiary or Affiliated corporations Participating in the Bristol-Myers Squibb Company Retirement Income Plan or the Bristol-Myers Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as amended and restated as of January 1, 1993, as amended effective October 1, 1993, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1993 and amended effective February 1, 1995, incorporated by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1995). ** 10h. Benefit Equalization Plan of Bristol-Myers Squibb Company * and its Subsidiary or Affiliated Corporation Participating in the Bristol-Myers Squibb Company Savings and Investment Program, as amended (as amended and restated as of May 1, 1990, incorporated herein by reference to Exhibit 19d to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19e to the Form 10- K for the fiscal year ended December 31, 1991; as amended as of October 1, 1994, incorporated herein by reference to Exhibit 10f of the Form 10-K for the fiscal year ended December 31, 1994). ** 10i. Squibb Corporation Supplementary Pension Plan, as amended (as * previously amended and restated, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1991; as amended on September 14, 1993, incorporated by reference to Exhibit 10g to the Form 10-K for the fiscal year ended December 31, 1993). 69 Exhibit Number and Description Page ------------------------------ ------ ** 10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as * amended (as adopted on November 7, 1989, incorporated herein by reference to Exhibit 10t to the Form 10-K for the fiscal year ended December 31, 1989; as amended on December 4, 1990, incorporated herein by reference to Exhibit 19a to the Form 10-K for the fiscal year ended December 31, 1990; as amended July 1, 1993, incorporated by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1993; as amended effective December 6, 1994, incorporated by reference to Exhibit 10h to the Form 10-K for the fiscal year Ended January 31, 1994). ** 10k. Bristol-Myers Squibb Company Retirement Income Plan for * Non-Employee Directors, as amended to March 5,1996 (incorporated herein by reference to Exhibit 10k to the Form 10-K for the fiscal year ended December 31, 1996). ** 10l. Bristol-Myers Squibb Company 1987 Deferred Compensation * Plan for Non-Employee Directors, as amended to January 13, 1998, (incorporated herein by reference to Exhibit 10l to the Form 10-K for the fiscal year ended December 31, 1997). ** 10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock * Option Plan, as amended (as approved by the Stockholders on May 1, 1990, incorporated herein by reference to Exhibit 28 to Registration Statement No. 33-38587 on Form S-8; as amended May 7, 1991, incorporated herein by reference to Exhibit 19c to the Form 10-K for the fiscal year ended December 31, 1991; as amended January 12, 1999, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1998). ** 10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, * as amended (as adopted, incorporated herein by reference to Exhibit 10e to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1987, File No. 1-5514; as amended effective December 31, 1991, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1992). 70 Exhibit Number and Description Page ------------------------------ ------ ** 10o. Amendment to all of the Company's plans, agreements, legal * documents and other writings, pursuant to action of the Board of Directors on October 3, 1989, to reflect the change of the Company's name to Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10v to the Form 10-K for the fiscal year ended December 31, 1989). ** 10p. Employment agreement of March 12, 1999 for Charles A. * Heimbold, Jr. (incorporated herein by reference to Exhibit 10p to the Form 10-K for the fiscal year ended December 31, 1998). ** 10q. Form of Agreement, effective June 1, 1999, entered into * between the Registrant and each of the following officers on the following dates: Peter R. Dolan, July 29, 1999; Donald J. Hayden, Jr., July 30, 1999; Richard J. Lane, August 6, 1999; John L. McGoldrick, August 10, 1999; Michael F. Mee, July 28, 1999; Christine A. Poon, July 29, 1999; Peter S. Ringrose, Ph.D., August 5, 1999; Stephen I. Sadove, July 29, 1999; Frederick S. Schiff, July 29, 1999; John L. Skule, August 5, 1999; Charles G. Tharp, Ph.D., July 28, 1999; and Kenneth E. Weg, July 29, 1999. (incorporated herein by reference to Exhibit 10q to the Form 10-Q for the quarterly period ended September 30, 1999). 21. Subsidiaries of the Registrant. E-3-1 23. Consent of PricewaterhouseCoopers LLP. E-4-1 27. Bristol-Myers Squibb Company Financial Data Schedule. E-5-1 99. Additional Exhibit E-6-1 71 SCHEDULE II --------------------- BRISTOL-MYERS SQUIBB COMPANY VALUATION AND QUALIFYING ACCOUNTS (dollars in millions) Additions Balance at charged to Deductions- Balance at beginning costs and bad debts end Description of period expenses written off of period - ----------- ----------- ---------- ------------ ----------- Allowances for discounts and doubtful accounts: For the year ended December 31, 1999 $147 $65 $44 $168 For the year ended December 31, 1998 $109 $57 $19 $147 For the year ended December 31, 1997 $107 $19 $17 $109 S-1 EX-3.A 2 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION * * * * * Bristol-Myers Squibb Company, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of December 1, 1998 resolutions were duly adopted setting forth a proposed amendment to the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, That the Certificate of Incorporation of this corporation be amended by changing the FOURTH Article thereof so that, as amended said Article shall be and read as follows: "FOURTH: the total number of shares of all classes of stock which the corporation shall have authority to issue is four billion, five-hundred ten million (4,510,000,000) shares consisting of: 1. 4,500,000,000 shares of Common Stock of the par value of Ten Cents ($0.10) per share, and 2. 10,000,000 shares of Preferred Stock of the par value of One Dollar ($1.00) per share." SECOND: That thereafter, pursuant to resolution of its Board of Directors, the Annual Meeting of Stockholders of said corporation was duly called and held May 4, 1999, upon notice in accordance with Section 222 of the General Corporation Law of the E-1-1 State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said corporation has caused this certificate to be signed by Alice C. Brennan, its Vice President and Secretary, this 5th day of May, 1999. By: /s/ Alice C. Brennan ______________________ Vice President & Secretary E-1-2 EX-3.B 3 -------------------------------------------------------------------------- BRISTOL-MYERS SQUIBB COMPANY --------------- BYLAWS As Adopted on November 1, 1965 And as Amended to January 20, 2000 --------------- -------------------------------------------------------------------------- E-2-1 INDEX BYLAW NO. SUBJECT Page No. 1. Principal Office E-2-5 2. Other Offices E-2-5 3. Seal E-2-5 4. Meetings of Shareholders -- Date and Time E-2-5 5. Meetings of Shareholders -- Place E-2-6 6. Meetings of Shareholders -- No Action By Written Consent, Call E-2-6 7. Meetings of Shareholders -- Notice E-2-6 8. Meetings of Shareholders -- Quorum E-2-6 9. Meetings of Shareholders -- Presiding Officer and Secretary E-2-7 10. Meetings of Shareholders -- Voting E-2-7 11. Meetings of Shareholders -- Voting List E-2-7 12. Annual Meeting of Shareholders -- Statement of Business and Condition of Company E-2-7 13. Meetings of Shareholders -- Inspectors of Election E-2-7 14. Board of Directors -- Powers E-2-8 15. Board of Directors -- Number, Election, Term, Resignation or Retirement, Removal and Filling Vanancies E-2-8 16. Board of Directors -- Location of Meetings and Books E-2-9 17. Board of Directors -- Scheduling of Regular Meetings E-2-9 18. Board of Directors -- Scheduling of Special Meetings E-2-9 E-2-2 BYLAW NO. SUBJECT Page No. 19. Board of Directors -- Waiver of Meeting Notice and Action by Consent E-2-9 20. Board of Directors -- Quorum for Meeting E-2-9 21. Board of Directors -- Meeting Procedure E-2-10 22. Board of Directors -- Fees E-2-10 23. Board of Directors -- Indemnification E-2-10 24. Committees of the Board -- Executive, Audit, Others E-2-11 25. Committees of the Board -- Minutes and Reports E-2-12 26. Officers E-2-12 27. Officers -- Election and Term E-2-12 28. Appointment of Other Officers, Committees or Agents E-2-13 29. Officers -- Removal E-2-13 30. Officers -- Resignation E-2-13 31. Officers -- Unable to Perform Duties E-2-13 32. Officers -- Vacancy E-2-13 33. The Chairman of the Board -- Powers and Duties E-2-13 34. Vice Chairman of the Board -- Powers and Duties E-2-13 35. Duties of President E-2-13 36. Vice Presidents -- Powers and Duties E-2-14 37. The Treasurer -- Powers and Duties E-2-14 E-2-3 BYLAW NO. SUBJECT Page No. 38. The Secretary -- Powers and Duties E-2-14 39. The Controller -- Powers and Duties E-2-14 40. Assistant Treasurers and Assistant Secretaries -- Powers and Duties E-2-14 41. Officers -- Compensation E-2-14 42. Contracts, Other Instruments, Authority to Enter Into or Execute E-2-15 43. Loans and Negotiable Paper E-2-15 44. Checks, Drafts, etc. E-2-15 45. Banks -- Deposit of Funds E-2-15 46. Stock Certificates -- Form, Issuance E-2-15 47. Stock -- Transfer E-2-15 48. Stock Certificates -- Loss, Replacement E-2-16 49. Record Dates E-2-16 50. Registered Shareholders E-2-16 51. Fiscal Year E-2-17 52. Notices E-2-17 53. Notices -- Waiver E-2-17 54. Amendments of Bylaws E-2-17 E-2-4 BYLAWS of BRISTOL-MYERS SQUIBB COMPANY OFFICES. 1. The registered office of the Company shall be in the City of Wilmington, County of New Castle, State of Delaware, and the name of the resident agent in charge thereof is The Corporation Trust Company. 2. The Company may also have offices at such place or places as the Board of Directors may from time to time appoint or the business of the Company may require. SEAL. 3. The corporate seal shall have inscribed thereon the name of the Company, the year of its organization and the words "Corporate Seal, Delaware." Said seal may be used in causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. MEETINGS OF SHAREHOLDERS. 4. The annual meeting of the shareholders for the election of directors and for the transaction of any other proper business shall be held at such time as the Board of Directors may determine. For nominations or other business to be properly brought before any annual meeting by a shareholder, a shareholder must give timely notice in writing thereof to the Secretary of the Company and, in the case of business other than nominations, such other business must be a proper matter for shareholder action. To be considered timely, a shareholder's notice must be received by the Secretary at the principal executive offices of the Company not less than 120 calendar days before the date of the Company's proxy statement released to shareholders in connection with the prior year's annual meeting. If the annual meeting for the election of directors is not held on the date designated therefor, the directors shall cause the meeting to be held as soon thereafter as convenient. A shareholder's notice shall set forth: (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made and (c) as to E-2-5 the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Company's books, and of such beneficial owner, (ii) the number of shares of stock held of record and beneficially by such shareholder and such beneficial owner, (iii) the name in which all such shares of stock are registered on the stock transfer books of the Company, (iv) a representation that the shareholder intends to appear at the meeting in person or by proxy to submit the business specified in such notice, (v) a brief description of the business desired to be submitted to the annual meeting, including the complete text of any resolutions intended to be presented at the annual meeting, and the reasons for conducting such business at the annual meeting, (vi) any personal or other material interest of the shareholder in the business to be submitted, and (vii) all other information relating to the proposed business which may be required to be disclosed under applicable law. In addition, a shareholder seeking to submit such business at the meeting shall promptly provide any other information reasonably requested by the Company. The chairman of the meeting shall determine all matters relating to the efficient conduct of the meeting, including, but not limited to, the items of business, as well as the maintenance of order and decorum. The chairman shall, if the facts warrant, determine and declare that any putative business was not properly brought before the meeting in accordance with the procedures prescribed by this bylaw, in which case such business shall not be transacted. Notwithstanding the foregoing provisions of this bylaw, a shareholder who seeks to have any proposal included in the Company's proxy materials shall comply with the requirements of Rule 14a-8 under Regulation 14A of the Securities Exchange Act of 1934. 5. Meetings of the shareholders may be held at such places either within or without the State of Delaware as the Board of Directors may determine. 6. Any action required or permitted to be taken by the stockholders of the Company must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing by such stockholders. Except as otherwise required by law and subject to the rights under Article FOURTH of the Certificate of Incorporation of the Company of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, special meetings of stockholders of the Company may be called only by the Chairman of the Board or by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. 7. Except as hereinafter provided or as may be otherwise required by law, notice of the place, date and hour of holding each annual and special meeting of the shareholders shall be in writing and shall be delivered personally or mailed in a postage prepaid envelope, not less than ten days before such meeting, to each person who appears on the books of the Company as a shareholder entitled to vote at such meeting, and to any shareholders who, by reason of any action proposed at such meeting, would be entitled to have their shares appraised if such action were taken. The notice of every special meeting, besides stating the time and place of such meeting, shall state briefly the purpose or purposes thereof; and no business other than that specified in such notice or germane thereto shall be transacted at the meeting, except with the unanimous consent in writing of the holders of record of all of the shares of the Company entitled to vote at such meeting. Notice of any meeting of shareholders shall not be required to be given to any shareholder entitled to participate in any action proposed to be taken at such meeting who shall attend such meeting in person or by proxy or who before or after any such meeting shall waive notice thereof in writing or by telegram, cable or wireless. Notice of any adjourned meeting need not be given. 8. At all meetings of shareholders of the Company, except as otherwise provided by law, the holders of a majority in number of the outstanding shares of the Company, present in person or by proxy and entitled to vote thereat, shall constitute a quorum for the transaction of business. In the absence of a quorum the holders of a majority in number of the shares of stock so present or represented and entitled to vote may adjourn the meeting from time to time until a quorum is present. At any such adjourned meeting at which a quorum is present any business may be transacted which might have been transacted at the meeting as originally called. E-2-6 9. The Chairman of the Board shall preside as chairman at every meeting of shareholders. The Chairman of the Board may designate another officer of the Company or any shareholder to preside as chairman of a meeting of shareholders in place of the Chairman of the Board and in the absence of the Chairman of the Board and an officer or shareholder designated by the Chairman of the Board to preside as chairman of the meeting, the Board of Directors may designate an officer or shareholder to preside as chairman of the meeting. In the event the Chairman of the Board and the Board of Directors fail to so designate a chairman of the meeting the shareholders may designate an officer or shareholder as chairman. The Secretary shall act as secretary of the meeting, or, in the absence of the Secretary, the presiding officer shall appoint a secretary of the meeting. 10. At each meeting of the shareholders every shareholder of record entitled to vote thereat shall be entitled to one vote for each share of the Company standing in that shareholder's name on the books of the Company provided that no share of stock shall be voted at any election of directors which shall have been transferred on the books of the Company later than the record date announced by the Board of Directors or fixed by operation of these bylaws The vote on shares may be given by the shareholder entitled thereto in person or by proxy duly appointed by an instrument in writing subscribed by such shareholder or that shareholder's duly authorized attorney (or in any other manner prescribed by the General Corporation Law of the State of Delaware), and delivered to the secretary of the meeting; provided, however, that no proxy shall be valid after the expiration of three years from the date of its execution unless the shareholder executing it shall have specified therein the length of time it is to continue in force, which shall be for some limited period. At all meetings of shareholders, a quorum being present, all matters, except as otherwise provided by law or by the Certificate of Incorporation of the Company or these bylaws, shall be decided by the holders of a majority in number of the shares of stock of the Company present in person or by proxy and entitled to vote. A share vote may be by ballot and each ballot shall state the name of the shareholder voting and the number of shares owned by that shareholder and shall be signed by such shareholder or by that shareholder's proxy. Except as otherwise required by law or by these bylaws all voting may be viva voce. 11. The Secretary or other officer in charge of the stock ledger of the Company shall prepare and make at least ten days before every meeting of shareholders a complete list of the shareholders entitled to vote at the meeting arranged in alphabetical order and showing the address of each shareholder and the number of shares registered in the name of each shareholder. Such list shall be open to the examination of any shareholder for any purpose germane to the meeting during ordinary business hours for a period of at least ten days prior to the meeting either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any shareholder who is present. The stock ledger shall be the only evidence as to who are the shareholders entitled to examine the stock ledger, the list required by this bylaw, or the books of the Company or to vote in person or by proxy at any meeting of shareholders. 12. The Board of Directors shall present at each annual meeting, and when called for by vote of the shareholders at any special meeting of the shareholders, a full and clear statement of the business and condition of the Company. 13. At all elections of directors and when otherwise required by law, the chairman of the meeting shall appoint two inspectors of election. The inspectors shall be responsible for receiving, tabulating and reporting the result of the votes taken. No director or candidate for the office of director shall be appointed such inspector. The chairman of the meeting shall open and close the polls. E-2-7 DIRECTORS. 14. The property, business and affairs of the Company shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Company and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these bylaws directed or required to be exercised or done by the shareholders. 15. (a) The Board of Directors shall consist of twelve directors. Directors need not be shareholders. The number of directors may be determined by a majority vote of the entire Board of Directors. (b) Except as otherwise provided by the Certificate of Incorporation, by these bylaws or by law, at each meeting of the shareholders for the election of directors at which a quorum shall be present, the persons receiving a plurality of the votes cast shall be directors. Such election shall be by ballot. (c) The directors, other than those who may be elected by the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, shall be classified, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as possible, as determined by the Board of Directors, one class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1985, another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1986, and another class to be originally elected for a term expiring at the annual meeting of stockholders to be held in 1987, with the directors of each class to hold office until their successors are elected and qualified. At each annual meeting of the stockholders, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. No decrease in the number of directors constituting the Board of Directors or change in the restrictions and qualifications for directors shall shorten the term of any incumbent director. (d) Except as otherwise provided in the Certificate of Incorporation or in these bylaws, each director shall continue in office until the expiration of his term of office and until a successor shall have been elected and shall have qualified, or until the director shall have resigned, or, in the case of a director who is an employee of the Company, until the director shall have resigned from employment with the Company or the director's employment shall have been terminated by the Company. In addition, a director who is not an employee of the Company or who is the Chief Executive Officer of the Company or a retired Chief Executive Officer of the Company shall retire from the position of director at the Annual Meeting following attainment of age 70; an employee who is a director of the Company (other than the Chief Executive Officer or a retired Chief Executive Officer) shall retire from the position of director on the effective date of the director's retirement as an employee of the Company. Any director of the Company may resign at any time by giving written notice to the Chairman of the Board or to the Secretary of the Company. Such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Exceptions to the requirements for the retirement of a director may be made by the Board of Directors. (e) Subject to the rights under Article FOURTH of the Certificate of Incorporation of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, any director or entire class of directors or the entire Board of Directors may be removed from office, with or without cause, only by the affirmative E-2-8 vote of the holders of at least 75% of the outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class. (f) Subject to the rights under Article FOURTH of the Certificate of Incorporation of the Company of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation to elect directors under specified circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting from death, resignation, retirement, disqualification, removal or other cause shall be filled only by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. 16. The directors may hold their meetings and keep the books of the Company at such place or places as they may from time to time determine. 17. Regular meetings of the Board of Directors may be held at such time as may be fixed from time to time by resolution of the Board of Directors. Unless required by said resolution, notice of any such meeting need not be given. 18. Special meetings of the Board of Directors shall be held whenever called by direction of the Chairman of the Board or any of three of the directors for the time being in office. Notice of each such special meeting shall be mailed, postage prepaid, to each director, addressed to the director at the director's residence or usual place of business, at least two days before the day on which the meeting is to be held, or shall be sent to the director at such place by telegraph, cable, or wireless, or be delivered personally or by telephone, not later than the day before the day on which the meeting is to be held. Every such notice shall state the time and place but, except as provided by these bylaws or by resolution of the Board of Directors, need not state the purposes of the meetings. 19. Anything in these bylaws or in any resolution adopted by the Board of Directors to the contrary notwithstanding, notice of any meeting of the Board of Directors need not be given to any director, if, before or after any such meeting, notice thereof shall be waived by such director in writing or by telegraph, cable or wireless. Any meeting of the Board of Directors shall be a legal meeting without any notice having been given or regardless of the giving of any notice or the adoption of any resolution in reference thereto, if all the directors shall be present thereat or shall have so waived notice thereof. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board and such written consent is filed with the minutes of proceedings of the Board of Directors. 20. Five of the directors in office at the time of any regular or special meeting of the Board of Directors shall constitute a quorum for the transaction of business at such meeting and except as may be otherwise specifically provided by statute or by the Certificate of Incorporation or by these bylaws, the act of a majority of the directors present at any such meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum a majority of the directors present may adjourn any meeting from time to time until a quorum is present. Notice of any adjourned meeting need not be given. The directors shall act only as a board and the individual directors shall have no power as such. E-2-9 21. At each meeting of the Board of Directors the Chairman of the Board shall preside. The Chairman of the Board may designate another member of the Board of Directors to preside as chairman of a meeting in place of the Chairman of the Board and in the absence of the Chairman of the Board and any member of the Board of Directors designated by the Chairman of the Board to preside as chairman of the meeting a majority of the directors present may designate a member of the Board of Directors as chairman to preside at the meeting. The Secretary of the Company or, in the absence of the Secretary, a person appointed by the chairman of the meeting, shall act as secretary of the Board of Directors. The Board of Directors may adopt such rules and regulations for the conduct of their meetings and the management of the affairs of the Company as they shall deem proper and not inconsistent with the law or with these bylaws. At all meetings of the Board of Directors business shall be transacted in such order as the Board of Directors may determine. 22. Each director shall be paid such fee, if any, for each meeting of the Board attended and/or such annual fee as shall be determined from time to time by resolution of the Board of Directors, provided that nothing herein contained shall be construed to prevent any director from serving the Company in any other capacity and receiving compensation therefor. 23. (a) Definitions. As used herein, the term "director" shall include each present and former director of the Company and the term "officer" shall include each present and former officer of the Company as such, and the terms "director" and "officer" shall also include each employee of the Company, who, at the Company's request, is serving or may have served as a director or officer of another corporation in which the Company owns directly or indirectly, shares of capital stock or of which it is a creditor. The term "officer" also includes each assistant or divisional officer. The term "expenses" shall include, but not be limited to, reasonable amounts for attorney's fees, costs, disbursements and other expenses and the amount or amounts of judgments, fines, penalties and other liabilities. (b) Indemnification Granted. Each director and officer shall be and hereby is indemnified by the Company, to the full extent permitted by law, against: (i) expenses incurred or paid by the director or officer in connection with any claim made against such director or officer, or any actual or threatened action, suit or proceeding (civil, criminal, administrative, investigative or other, including appeals and whether or not relating to a date prior to the adoption of this bylaw) in which such director or officer may be involved as a party or otherwise, by reason of being or having been a director or officer of the Company, or of serving or having served at the request of the Company as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action taken or not taken by such director or officer in such capacity, and (ii) the amount or amounts paid by the director or officer in settlement of any such claim, action, suit or proceeding or any judgment or order entered therein, however, notwithstanding anything to the contrary herein where a director or officer seeks indemnification in connection with a proceeding voluntarily initiated by such director or officer the right to indemnification granted hereunder shall be limited to proceedings where such director or officer has been wholly successful on the merits. E-2-10 (c)Miscellaneous. (i) Expenses incurred and amounts paid in settlement with respect to any claim, action, suit or proceeding of the character described in paragraph (b)(i) above may be advanced by the Company prior to the final disposition thereof upon receipt of an undertaking by or on behalf of the recipient to repay such amounts as shall not ultimately be determined to be payable to such recipient under this bylaw. (ii) The rights of indemnification herein provided for shall be severable, shall not be exclusive of other rights to which any director or officer now or hereafter may be entitled, shall continue as to a person who has ceased to be an indemnified person and shall inure to the benefit of the heirs, executors, administrators and other legal representatives of such a person. (iii) The provisions of this bylaw shall be deemed to be a contract between the Company and each director or officer who serves in such capacity at any time while such bylaw is in effect. (iv) The Board of Directors shall have power on behalf of the Company to grant indemnification to any person other than a director or officer to such extent as the Board in its discretion may from time to time determine. COMMITTEES OF THE BOARD. 24. (a) The Board of Directors may, by resolution or resolutions, passed by a majority of the whole Board of Directors, designate an Executive Committee (and may discontinue the same at any time) to consist of three or more of the Directors of the Company. The members shall be appointed by the Board of Directors and shall hold office during the pleasure of the Board of Directors; provided, however, that in the absence or disqualification of any member of the Executive Committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not the member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. The Executive Committee shall have and may exercise, during the intervals between the meetings of the Board of Directors, all of the powers of the Board of Directors in the management of the business and affairs of the Company (and shall have power to authorize the seal of the Company to be affixed to all papers which may require it), except that the Executive Committee shall have no power to (i) elect Directors to fill any vacancies or appoint any officers; (ii) fix the compensation of any officer or the compensation of any Director for serving on the Board of Directors or on any committee; (iii) declare any dividend or make any other distribution to the shareholders of the Company; (iv) submit to shareholders any action that needs shareholder authorization; (v) amend or repeal the bylaws or adopt any new bylaw; (vi) amend or repeal any resolution of the Board of Directors which by its terms shall not be so amendable or repealable; (vii) take any final action with respect to the acquisition or disposition of any business at a price in excess of $20,000,000. (b) The Board of Directors shall, by resolution or resolutions, passed by a majority of the whole Board of Directors designate an Audit Committee to consist of three or more non-employee directors of E-2-11 the Company free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment as a Committee member. Any director who is a former employee of the Company may not serve on the Audit Committee. The members of the Audit Committee shall be appointed by and hold office during the pleasure of the Board of Directors. A majority of the members of the Audit Committee will constitute a quorum for the transaction of business. It shall be the duty of the Audit Committee (i) to recommend to the Board of Directors a firm of independent accountants to perform the examination of the annual financial statements of the Company; (ii) to review with the independent accountants and with the Controller the proposed scope of the annual audit, past audit experience, the Company's internal audit program, recently completed internal audits and other matters bearing upon the scope of the audit; (iii) to review with the independent accountants and with the Controller significant matters revealed in the course of the audit of the annual financial statements of the Company; (iv) to review on a biennial basis that the Company's Standards of Business Conduct have been communicated by the Company to all key employees of the Company and its subsidiaries throughout the world with a direction that all such key employees certify that they have read, understand and are not aware of any violation of the Standards of Business Conduct; (v) to review with the Controller any suggestions and recommendations of the independent accountants concerning the internal control standards and the accounting procedures of the Company; (vi) to meet on a regular basis with a representative or representatives of the Internal Audit Department of the Company and to review the Internal Audit Department's Reports of Operations; (vii) to report its activities and actions to the Board of Directors at least once each fiscal year. (c) The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board of Directors, designate such other committees as may be deemed advisable (and may discontinue the same at any time), to consist of two or more of the directors of the Company. The members shall be appointed by and shall hold office during the pleasure of the Board of Directors, and the Board of Directors shall prescribe the name or names of such committees, the number of their members and their duties and powers. (d) Any action required or permitted to be taken at any meeting of any committee may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the committee and such written consent is filed with the minutes of proceedings of the committee. 25. All committees shall keep written minutes of their proceedings and report the same to the Board of Directors when required. OFFICERS. 26. The officers of the Company shall be a Chairman of the Board, a Vice Chairman of the Board, a President, two or more Vice Presidents (which shall include Senior Vice President, Executive Vice President and other Vice President titles), a Treasurer, a Secretary, a Controller, and such other officers as may be appointed in accordance with these bylaws. The Secretary and Treasurer may be the same person, or a Vice President may hold at the same time the office of Secretary, Treasurer, or Controller. 27. The officers of the Company shall be chosen by the Board of Directors. Each officer shall hold office until a successor shall have been duly chosen and shall have qualified or until the death or retirement of the officer or until the officer shall resign or shall have been removed in the manner hereinafter provided. The Chairman of the Board and the Vice Chairman of the Board shall be chosen from among the directors. E-2-12 28. The Board of Directors may appoint such other officers, committees or agents, as the business of the Company may require, including one or more Assistant Treasurers and one or more Assistant Secretaries, each of whom shall hold office for such period, and have such authority and perform such duties as are provided in these bylaws or as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer or committee the power to appoint and to remove any such subordinate officer or agent. 29. Subject to the provisions of any written agreement, any officer may be removed, either with or without cause, by a vote of the majority of the whole Board of Directors at a regular meeting or a special meeting called for the purpose. Any officer, except an officer elected by the Board of Directors, may also be removed, with or without cause, by any committee or superior officer upon whom such power of removal may be conferred by the Board of Directors. 30. Subject to the provisions of any written agreement, any officer may resign at any time by giving written notice to the Board of Directors, the Chairman of the Board or the Secretary of the Company. Any such resignation shall take effect at the time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 31. Except as otherwise provided in these bylaws, in the event any officer shall be unable to perform the duties of the office held, whether by reason of absence, disability or otherwise, the Chairman of the Board may designate another officer of the Company to assume the duties of the officer who is unable to carry out the duties of the office; in the event the Chairman of the Board shall be absent and unable to perform the duties of the office of Chairman of the Board, the Chairman of the Board shall designate another officer to assume the duties of the Chairman of the Board; if another officer has not been designated by the Chairman of the Board to assume the duties of the Chairman of the Board, then the Board of Directors shall designate another officer to assume the duties of the Chairman of the Board; in the event the Chairman of the Board shall be disabled and unable to perform the duties of the office of Chairman of the Board, then the Board of Directors shall designate another officer to assume the duties of the Chairman of the Board. Any officer designated to assume the duties of another officer shall have all the powers of and be subject to all the restrictions imposed upon the officer whose duties have been assumed. 32. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed by these bylaws for the regular appointment or election to such office. 33. The Chairman of the Board shall be the chief executive officer of the Company and shall have general supervision of the business and operations of the Company, subject, however, to the control of the Board of Directors. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. The Chairman of the Board shall perform all of the duties usually incumbent upon a chief executive officer of a corporation and incident to the office of the Chairman of the Board. The Chairman of the Board shall also have such powers and perform such duties as are assigned by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as may from time to time be assigned by the Board of Directors. 34. The Vice Chairman shall have such powers and perform such duties as are assigned by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time may be assigned by the Board of Directors or the Chairman of the Board. 35. The President shall have such powers and perform such duties as are assigned by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time E-2-13 may be assigned by the Board of Directors or the Chairman of the Board. 36. Each Vice President shall have such powers and perform such duties as are assigned by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time may be assigned by the Board of Directors or the Chairman of the Board. 37. The Treasurer shall have charge and custody of, and be responsible for, all funds of the Company. The Treasurer shall regularly enter or cause to be entered in books to be kept by the Treasurer or under the Treasurer's direction for this purpose full and adequate account of all moneys received or paid by the Treasurer for the account of the Company; the Treasurer shall exhibit such books of account and records to any of the directors of the Company at any time upon request at the office of the Company where such books and records shall be kept and shall render a detailed statement of these accounts and records to the Board of Directors as often as it shall require the same. The Treasurer shall also have such powers and perform such duties as are assigned the Treasurer by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time may be assigned by the Board of Directors. 38. It shall be the duty of the Secretary to act as Secretary of all meetings of the Board of Directors and of the shareholders of the Company, and to keep the minutes of all such meetings in the proper book or books to be provided for that purpose; the Secretary shall see that all notices required to be given by or for the Company or the Board of Directors or any committee are duly given and served; the Secretary shall be custodian of the seal of the Company and shall affix the seal, or cause it to be affixed, to all documents, the execution of which on behalf of the Company, under its seal shall have been duly authorized in accordance with the provisions of these bylaws. The Secretary shall have charge of the share records and also of the other books, records, and papers of the Company relating to its organization and management as a corporation and shall see that the reports, statements and other documents required by law are properly kept and filed; and shall in general perform all the duties usually incident to the office of Secretary. The Secretary shall also have such powers and perform such duties as are assigned by these bylaws, and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time may be assigned by the Board of Directors. 39. The Controller shall perform the usual duties pertaining to the office of the Controller. The Controller shall have charge of the supervision of the accounting system of the Company, including the preparation and filing of all reports required by law to be made to any public authorities and officials, and shall also have such powers and perform such duties, not inconsistent with these bylaws, as from time to time may be assigned by the Board of Directors. 40. The Assistant Treasurers and the Assistant Secretaries shall have such powers and perform such duties as are assigned to them by these bylaws and shall have such other powers and perform such other duties, not inconsistent with these bylaws, as from time to time may be assigned to them by the Treasurer or the Secretary, respectively, or by the Board of Directors. 41. The compensation of the Chairman of the Board, Vice Chairman of the Board, President, Vice President, Treasurer, Secretary and Controller shall be fixed by the Board of Directors. The compensation of such other officers as may be appointed in accordance with the provisions of these bylaws may be fixed by the Chairman of the Board. No officer shall be prevented from receiving such compensation by reason of also being a director of the Company. E-2-14 CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. 42. The Board of Directors except as in these bylaws otherwise provided, may authorize any officer or officers, agent or agents, in the name of and on behalf of the Company, to enter into any contract or execute and deliver any instrument, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or expressly authorized by these bylaws, no officer or agent or employee shall have any power or authority to bind the Company by any contract or engagement or to pledge its credit or to render it pecuniarily liable for any purpose or to any amount. 43. No loans shall be contracted on behalf of the Company and no negotiable paper shall be issued in its name unless authorized by resolution of the Board of Directors. When authorized by the Board of Directors, any officer or agent of the Company thereunto authorized may effect loans and advances at any time for the Company from any bank, trust company, or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds, or other certificates or evidences of indebtedness of the Company and, when authorized so to do, may pledge, hypothecate or transfer any securities or other property of the Company as security for any such loans or advances. Such authority may be general or confined to specified instances. 44. All checks, drafts and other orders for the payment of moneys out of the funds of the Company and all notes or other evidences of indebtedness of the Company shall be signed on behalf of the Company in such manner as shall from time to time be determined by resolution of the Board of Directors. 45. All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Company in such banks, trust companies or other depositories as the Board of Directors may select or as may be selected by any officer or officers, agent or agents of the Company to whom such power may from time to time be delegated by the Board of Directors; and for the purpose of such deposit, the Chairman of the Board, the Vice Chairman of the Board, the President, a Vice President, the Treasurer, the Controller, the Secretary or any other officer or agent or employee of the Company to whom such power may be delegated by the Board of Directors, may endorse, assign and deliver checks, drafts and other orders for the payment of moneys which are payable to the order of the Company. CERTIFICATES AND TRANSFERS OF SHARES. 46. The shares of the Company shall be represented by certificates or shall be uncertificated. Each registered holder of shares, upon request to the Company, shall be provided with a certificate of stock, representing the number of shares owned by such holder. Certificates for shares of the Company shall be in such form as shall be approved by the Board of Directors. Such certificates shall be numbered and registered in the order in which they are issued and shall be signed by the Chairman of the Board, the Vice Chairman of the Board, the President or a Vice President and the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Where any such certificate is countersigned by a transfer agent, other than the Company or its employee, or by a registrar, other than the Company or its employee, any other signature on such certificate may be a facsimile, engraved, stamped or printed. In the event that an officer whose facsimile signature appears on such certificate ceases for any reason to hold the office indicated and the Company or its transfer agent has on hand a supply of share certificates bearing such officer's facsimile signature, such certificates may continue to be issued and registered until such supply is exhausted. 47. Transfers of shares of the Company shall be made only on the books of the Company by the holder thereof, or by the holder's attorney thereunto duly authorized and on either the surrender of the certificate or certificates E-2-15 for such shares properly endorsed or upon receipt of proper transfer instructions from the registered owner of uncertificated shares. Every certificate surrendered to the Company shall be marked "Cancelled," with the date of cancellation, and no new certificate shall be issued in exchange therefor until the old certificate has been surrendered and cancelled, except as hereinafter provided. Uncertificated shares shall be cancelled and issuance of new equivalent uncertificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the Company. 48. The holder of any shares of the Company shall immediately notify the Company of any loss, destruction or mutilation of the certificate therefor and the Company may issue a new certificate in the place of any certificate theretofore issued by it alleged to have been lost, destroyed or mutilated. The Board of Directors may, in its discretion, as conditions to the issue of any such new certificate, require the owner of the lost or destroyed certificate or the owner's legal representatives to make proof satisfactory to the Board of Directors of the loss or destruction thereof and to give the Company a bond in such form, in such sum and with such surety or sureties as the Board of Directors may direct, to indemnify the Company against any claim that may be made against it on account of any such certificate so alleged to have been lost or destroyed. DETERMINATION OF RECORD DATE. 49. In order that the Company may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix in advance a record date which shall not be more than 60 nor less than 10 days before the date of such meeting nor more than 60 days prior to any other action. If no record date is fixed: (i) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. (ii) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED SHAREHOLDERS. 50. The Company shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of Delaware. E-2-16 FISCAL YEAR. 51. The fiscal year shall begin on the first day of January and end on the thirty-first day of December in each year. NOTICES. 52. Whenever under the provision of these bylaws notice is required to be given to any director or shareholder, it shall be construed to mean personal notice, but such notice may be given in writing, by mail, by depositing the same in a post office or letter box, in a postpaid sealed wrapper, addressed to such director or shareholder at such address as appears on the books of the Company, or, in default of other address, to such director or shareholder, at the General Post Office in the City of Wilmington, Delaware, and such notice shall be deemed to be given at the time when the same shall be thus mailed. 53. Any notice required to be given under these bylaws may be waived in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein. AMENDMENTS. 54. Except as otherwise provided in the Certificate of Incorporation of the Company and consistent therewith, these bylaws may be altered, amended or repealed or new bylaws may be made by the affirmative vote of the holders of record of a majority of the shares of the Company entitled to vote, at any annual or special meeting, provided that such proposed action shall be stated in the notice of such meeting, or, by a vote of the majority of the whole Board of Directors, at any regular meeting without notice, or at any special meeting provided that notice of such proposed action shall be stated in the notice of such special meeting. E-2-17 EX-21 4 EXHIBIT 21 ------------------- BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST 2309 Realty Corporation 3130827 CANADA INC. 345 Park Corporation 77 Wilson St., Corp. A.G. Medical Services, P.A. Alive & Well, Inc. Allard Laboratories, Inc. Allard Labs Acquisition LLC Apothecon BV Apothecon Farmaceutica Ltda. Apothecon, Inc. Apothecon, S.A. Astel Laboratoires S.A.R.L. B-MS Finance Limited B-MS GeneRx B-MSF SAS B. L. Pharmaceuticals (Proprietary) Limited Blisa Acquisition LLC Blisa, Inc. BMS Holdings BMS Investco SAS BMS Music Company BMS-Generiques SA BMSIC Pharma Handels GmbH & Co. KG BMSIC Pharma-Handels Verwaltungs GmbH Boclaro Inc. Bristol (Iran) S.A. Bristol Arzneimittel G.m.b.H. Bristol Caribbean, Inc. Bristol Foundation Bristol Iran Private Company Limited Bristol Laboratories Corporation Bristol Laboratories Inc. Bristol Laboratories International, S.A. Bristol Laboratories Medical Information Systems Inc. Bristol Pharmaceutical Information Center, S.A. Bristol-Myers (Bangladesh) Inc. Bristol-Myers (Japan) Limited Bristol-Myers (Private) Limited Bristol-Myers (Zaire) Ltd. E-3-1 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Bristol-Myers Award Superannuation Pty. Ltd. Bristol-Myers Barceloneta, Inc. Bristol-Myers Company Limited Bristol-Myers de Mexico, S. de R. L. de C.V. Bristol-Myers Ges.m.b.H. Bristol-Myers International s.r.l. Bristol-Myers Lion Ltd. Bristol-Myers Middle East S.A.L. Bristol-Myers Nederland Inc. Bristol-Myers Oncology Therapeutic Network, Inc. Bristol-Myers Overseas Corporation Bristol-Myers Overseas Corporation (Guam Branch) Bristol-Myers Overseas Corporation (Korea - Branch) Bristol-Myers Pakistan (Pvt.) Limited Bristol-Myers S.A. Bristol-Myers Squibb (China) Investment Co., Ltd. Bristol-Myers Squibb (Hong Kong) Limited Bristol-Myers Squibb (Israel) Limited Bristol-Myers Squibb (Malaysia) Sendirian Berhad Bristol-Myers Squibb (N.Z.) Limited Bristol-Myers Squibb (Phil.) Inc. Bristol-Myers Squibb (Proprietary) Limited Bristol-Myers Squibb (Russia) Bristol-Myers Squibb (Singapore) Pte. Limited Bristol-Myers Squibb (Taiwan) Ltd. Bristol-Myers Squibb (Thailand) Ltd. Bristol-Myers Squibb (West Indies) Ltd. Bristol-Myers Squibb A.E.B.E. Bristol-Myers Squibb A.G. Bristol-Myers Squibb Aktiebolag Bristol-Myers Squibb Argentina, S.A. Bristol-Myers Squibb Asia/Pacific, Inc. (Singapore - Branch) Bristol-Myers Squibb Auslandsbeteiligungs Holding, GmbH Bristol-Myers Squibb Australia Pty. Ltd. Bristol-Myers Squibb B.V. Bristol-Myers Squibb Belgium, S.A. Bristol-Myers Squibb Brasil, S.A. Bristol-Myers Squibb Bulgaria EOOD Bristol-Myers Squibb Business Services Limited Bristol-Myers Squibb Canada Inc. Bristol-Myers Squibb Caribbean Company Bristol-Myers Squibb Caribbean Holdings, L.L.C. E-3-2 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Bristol-Myers Squibb de Colombia S.A. Bristol-Myers Squibb de Costa Rica, S.A. Bristol-Myers Squibb de Guatemala, S. A. Bristol-Myers Squibb de Mexico, S de R.L. de C.V. Bristol-Myers Squibb de Venezuela, S.A. Bristol-Myers Squibb Delta Holdings, L.L.C. Bristol-Myers Squibb Dominicana, S.A. Bristol-Myers Squibb Ecuador C.A. Bristol-Myers Squibb Europa PLC Bristol-Myers Squibb Europe Headquarters SARL Bristol-Myers Squibb Export SA Bristol-Myers Squibb Farmaceutica Portuguesa Limitada Bristol-Myers Squibb Foreign Sales Corporation Bristol-Myers Squibb G.m.b.H. Bristol-Myers Squibb Ges. m.b.H. Bristol-Myers Squibb Global Properties Ltd. Bristol-Myers Squibb Holding Germany GMBH Bristol-Myers Squibb Holdings B.V. Bristol-Myers Squibb Holdings Limited Bristol-Myers Squibb Holdings Limited (Ireland - Branch) Bristol-Myers Squibb Holdings Limited (Kenya - Branch) Bristol-Myers Squibb Ilaclari Limited Sirketi Bristol-Myers Squibb Ilaclari, Inc. Bristol-Myers Squibb Ilaclari, Inc. (Turkey - Branch) Bristol-Myers Squibb International Company Bristol-Myers Squibb International Corporation Bristol-Myers Squibb International Corporation (Belgium - Branch) Bristol-Myers Squibb International Corporation (Egypt - Branch) Bristol-Myers Squibb International Corporation (Spain - Branch) Bristol-Myers Squibb International Insurance Company Bristol-Myers Squibb International Limited Bristol-Myers Squibb Investco, Inc. Bristol-Myers Squibb K.K. Bristol-Myers Squibb Korea Ltd. Bristol-Myers Squibb Laboratories Company Bristol-Myers Squibb Manufacturing Bristol-Myers Squibb MEA S.A. (Saudi Arabia - Branch) Bristol-Myers Squibb MEA S.A. (Switzerland) Bristol-Myers Squibb MEA S.A.(Egypt - Branch) Bristol-Myers Squibb Norway Ltd. Bristol-Myers Squibb Pakistan (Pvt.) Ltd. Bristol-Myers Squibb Peru S.A. E-3-3 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Bristol-Myers Squibb Pharmaceuticals Limited (England) Bristol-Myers Squibb Pharmaceuticals Limited (Ireland) Bristol-Myers Squibb Products S.A. Bristol-Myers Squibb Puerto Rico, Inc. Bristol-Myers Squibb Research Foundation Africa Bristol-Myers Squibb S.p.A. Bristol-Myers Squibb Service Ltd. Bristol-Myers Squibb Sp. z o.o. Bristol-Myers Squibb Spol. s r.o. Bristol-Myers Squibb Superannuation Plan Pty. Ltd. Bristol-Myers Squibb Zentrum Fuer Forschung Und Fortbildung Im Gesundheitswesen G.m.b.H. Bristol-Myers Squibb, S.A. Bristol-Myers Zimmer Award Superannuation Plan Cancer Research, Inc. Carboplant Spezialimplante GmbH CJG Partners, L.P. Clairol (China) Ltd. Clairol Brazil Ltda. Clairol GmbH. Clairol Incorporated Clairol International S.r.l. Clairol Limited Comercializadora RPM, S. De R.L. De C.V. Compania Bristol-Myers Squibb de Centro America (El Salvador Branch) Compania Bristol-Myers Squibb de Centro America (Honduras Branch) Compania Bristol-Myers Squibb de Centro America (Nicaragua Branch) Compania Bristol-Myers Squibb de Centro America (Panama Branch) Convatec Limited Convatec Spot s r.o. Convatec Vertriebs G.m.b.H. Convatec, S.A. CRBM GIE Delmed S.A. Dong-A-Biotech Co., Ltd. Duart Industries, Ltd. E. R. Squibb & Sons de Venezuela, C.A. E. R. Squibb & Sons Inter-American (Chile - Branch) E. R. Squibb & Sons Inter-American Corporation E. R. Squibb & Sons Inter-American Corporation (Colombia - Branch) E. R. Squibb & Sons Inter-American Corporation (PRico - Branch) E. R. Squibb & Sons Limited E-3-4 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST E. R. Squibb & Sons, Inc. E. R. Squibb & Sons, Inc. (England - Branch)* Elektrochemische Ges.Hirschfelde M.b.H. ESS Partners, L.P. EWI Corporation G.I.E. Centre de Recherche de Biologie Moleculaire G.I.E. Institut de Recherche Squibb Grove Insurance Company Ltd. Grove Limited Grove Products (Far East) Limited Grove Products (Far East) Limited (India - Branch) Heyden Farmaceutica Portugesa Limitada Iris Acquisition Corp. JG Partners, L.P. Kingsdown Medical Consultants Limited Laboratoire Oberlin Laboratoires Convatec S.A. Laboratoires Guieu France S.a.r.l. Laboratoires UPSA, SAS Lawrence Laboratories Linson Investments Limited Linson Pharma Inc. Listo B.V. Little Sycamore Limited Logics International, Inc. Matrix Essentials Itallia SRL Matrix Essentials, Inc. Mead Johnson & Company Mead Johnson (Guangzhou) Ltd. Mead Johnson (Manufacturing) Jamaica Limited Mead Johnson A.E.B.E. Mead Johnson B.V. Mead Johnson de Mexico, S. de R.L. de C.V. Mead Johnson Farmaceutica Limitada Mead Johnson International Limited (Argentine - Branch) Mead Johnson International Limited (Canada) Mead Johnson International Limited (Colombia - Branch) Mead Johnson Jamaica Ltd. Mead Johnson Limited Mead Johnson Nutritional GmbH Mead Johnson Pharmaceutical, Inc. Mead Johnson S.p.A. E-3-5 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST MEC Subsidiary Corporation Medical Engineering Corporation Monarch Crown Corporation Oncogen Limited Partnership Oncology Therapeutics Network Automated Technologies, Inc. Oncology Therapeutics Network Corporation Oncology Therapeutics Network Joint Venture, L.P. Orthoplant Endoprothetik GmbH Osmat S.A. OTN Funding Corp. OTN Online, Inc. OTN Parent Corp. Oy Bristol-Myers Squibb (Finland) AB P. T. Squibb Indonesia Pharmagen Pharmavit Rt. PRB Partners, L.P. Princeton Pharmaceuticals, S.A. Recherche et Propriete Industrielle Redmond Products de Mexico, S. De R.L. De C.V. Redmond Products Distributing, Inc. Redmond Products International, Inc. Redmond Products, Inc. Route 22 Real Estate Holding Corporation RPI Management, Inc. S+G Implants G.m.b.H. S.O.F.C.A. Salorpharma G.m.b.H. Sanofi Pharma Bristol-Myers Squibb SNC Schuppert Meubelen Holten B.V. Sino-American Shanghai Squibb Pharmaceuticals Limited Societe Francaise de Complements Alimentaires Squibb (Far East) Limited Squibb (Far East) Limited (Taiwan - Branch) Squibb (Nigeria) Limited Squibb (Thailand) Limited Squibb ApS Squibb Convatec Medical Products Co. Ltd. Squibb Development Limited Squibb Farmaceutica Portuguesa, Limitada Squibb Industria Farmaceutica, S.A. Squibb Manufacturing, Inc. E-3-6 BRISTOL-MYERS SQUIBB COMPANY SUBSIDIARY LIST Squibb Middle East S.A. (Egypt - Branch) Squibb Middle East S.A. (Jordan - Branch) Squibb Middle East S.A. (Panama) Squibb Overseas Investments, Inc. Squibb Pacific Limited Squibb Pharma G.m.b.H. Squibb Properties, Inc. Squibb Surgicare Limited Squibb-von Heyden G.m.b.H. Stamford Holdings B.V. Swords Holdings I, L.L.C. Swords Holdings II, L.L.C. Swords Laboratories T S V Corporation Tallosa, S.A. The B-M Group (Proprietary) Limited Unterstuetzungskasse Bristol-Myers Squibb G.m.b.H. Upsamedica LDA Upsamedica SA NV Upsamedica SpA Von Heyden Pharma G.m.b.H. Wallingford Research, Inc. Westwood-Intrafin, S.A. Westwood-Squibb Holdings, Inc. Westwood-Squibb Pharmaceuticals, Inc. Zimmer B.V. Zimmer Caribe, Inc. Zimmer Chirurgie G.m.b.H. Zimmer Europe Limited Zimmer Limited Zimmer New Zealand Limited Zimmer of Canada Limited Zimmer Pte. Ltd. Zimmer S. A. S.(France) Zimmer S.A. (Spain) Zimmer S.R.L. Zimmer SAS Zimmer, Inc. E-3-7 EX-23 5 Exhibit 23 ------------ CONSENT OF INDEPENDENT ACCOUNTANTS --------------------------------------------------------------------- We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33-30856, 33-38411, 33-38587, 33-44788, 333-47403, 33-52691, 33-58187 and 333-02873), Post-Effective Amendment No. 2 on Form S-8 (No. 33-30756-02) to Form S-4 (No. 333- 09519), Form S-3 (Nos. 33-33682 and 333-49227) and Pre-Effective Amendment No. 1 on Form S-3 (No. 33-62496) of Bristol-Myers Squibb Company of our report dated January 24, 2000 relating to the financial statements and the financial statement schedule, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP - -------------------------------------------- PRICEWATERHOUSECOOPERS LLP New York, New York March 30, 2000 E-4-1 EX-27 6
5 1,000,000 12-MOS DEC-31-1999 DEC-31-1999 2720 237 3440 168 2126 9267 7841 3220 17114 5537 1342 0 0 219 8426 17114 20222 20222 5539 5539 4252 0 130 5767 1600 4167 0 0 0 4167 2.10 2.06
EX-99 7 EXHIBIT 99.1 ------------------- CAUTIONARY STATEMENT PURSUANT TO PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 - "SAFE HARBOR" FOR FORWARD LOOKING STATEMENTS. The Company is hereby filing a cautionary statement identifying important factors that could cause the Company's actual results to differ materially from those projected in forward looking statements made by or on behalf of the Company. There are several communications made by or on behalf of the Company (including, but not limited to, the Annual Report to Stockholders, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings pursuant to the Securities Exchange Act of 1934, as amended, and any other public statements made by the Company) which contain statements relating to goals, plans and projections regarding its financial position, results of operations, market position and product development, among other things, which are based on current expectations that involve inherit risks and uncertainties, including factors that could delay, divert or change any of them in the next several years. These important factors include - New government laws and regulations, such as (i) health care initiatives, (ii) changes in the FDA and foreign regulatory approval processes which may cause delays in approving new products, and (iii) tax changes such as the phasing out of tax benefits heretofore available in the United States and certain foreign countries. Difficulties in developing new products; new products developed by competitors which have lower prices or superior performance features or which are otherwise competitive with the Company's current products; and generic competition as the Company's products lose patent protection, as well as possible issues with licensors. Legal difficulties including negative results relating to patents; adverse decisions in litigation including the breast implant cases and other product liability cases; the inability to obtain adequate insurance with respect to this type of liability; and recalls of pharmaceutical products or forced closing of manufacturing plants. Increasing pricing pressures worldwide from managed care buyers and institutional and governmental purchasers; and changes of business and economic conditions including, but not limited to, changes in interest rates and fluctuation of foreign currency exchange rates. No assurance can be given that any goal or plan set forth in forward looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The Company undertakes no obligation to release publicly any revisions to forward looking statements as a result of future events or developments. E-6-1 -----END PRIVACY-ENHANCED MESSAGE-----