SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
Commission File Number 1-1136
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
Delaware 22-079-0350
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $.10 Par Value New York Stock Exchange
Pacific Stock Exchange
$2 Convertible Preferred Stock, New York Stock Exchange
$1 Par Value Pacific Stock Exchange
Preferred Stock Purchase Rights * New York Stock Exchange
Pacific Stock Exchange
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* At the time of filing, the Rights were not traded separately from the Common Stock. For additional information, see "Stockholders' Equity" in the Notes to Consolidated Financial Statements, included in Part II, Item 8.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
The aggregate market value of voting stock held by non-affiliates of the registrant as of February 28, 1997 was $65,053,327,887. At February 28, 1997, there were 1,000,142,148 shares of common stock outstanding.
Documents incorporated by reference
Proxy Statement for Annual Meeting of Stockholders on May 6, 1997. Part III
Item 1. BUSINESS.
Bristol-Myers Squibb Company ("Bristol-Myers Squibb" or the "Company") was incorporated under the laws of the State of Delaware in August 1933 under the name Bristol-Myers Company as successor to a New York business started in 1887. In 1989, the Bristol-Myers Company changed its name to Bristol-Myers Squibb Company, as a result of a merger. The Company, through its divisions and subsidiaries, is a major producer and distributor of pharmaceutical products, nonprescription health products, medical devices and toiletries and beauty aids. In general, the business of the Company's industry segments is not seasonal.
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.
This segment includes sales of prescription medicines, mainly cardiovascular, anti-cancer and anti-infective drugs, which comprise about 30%, 25% and 20%, respectively, in 1996, and 40%, 20% and 20%, respectively in both 1995 and 1994, of the segment's sales, central nervous system drugs and other pharmaceutical products. Cardiovascular drugs include captopril, an angiotensin converting enzyme (ACE) inhibitor sold primarily under the trademarks CAPOTEN* and CAPOZIDE*; pravastatin sodium, an HMG Co-A reductase inhibitor, sold primarily under the trademark PRAVACHOL*; fosinopril sodium, a second-generation ACE inhibitor with convenient once-a-day dosage, sold primarily under the trademark MONOPRIL*; cholestyramine, a cholesterol- reducing agent, sold primarily under the trademark QUESTRAN*; nadolol, a once-a-day beta blocker used in the treatment of hypertension and angina pectoris, sold primarily under the trademarks CORGARD* and CORZIDE*; and sotalol, a beta blocker with unique antiarrhythmic qualities, sold primarily under the trademark SOTACOR*. Anti-cancer drugs include paclitaxel, used in the treatment of refractory ovarian cancer, and in treatment of breast cancer after failure of combination chemotherapy for metastatic disease or relapse within six months of adjuvant chemotherapy sold under the trademark TAXOL*(R)(with an exclusivity period, granted pursuant to the Hatch-Waxman Act in the U.S., expiring in December 1997); carboplatin, a chemotherapeutic agent used in the treatment of ovarian cancer, sold primarily under the trademark
* Indicates brand names of products which are registered trademarks owned by the Company.
PARAPLATIN*; etoposide, used in the treatment of small cell lung cancer and refractory testicular cancer, sold primarily under the trademark VEPESID*; PLATINOL*, IFEX* and MEGACE*. Anti-infective drugs include cefadroxil monohydrate, an oral cephalosporin, sold primarily under the trademark DURICEF*; cefprozil, an oral cephalosporin used in the treatment of respiratory infections, sold primarily under the trademark CEFZIL*; cephradine, an oral cephalosporin sold primarily under the trademark VELOSEF*; amikacin, an aminoglycoside sold primarily under the trademark AMIKIN*; aztreonam, a monobactam antibiotic sold primarily under the trademark AZACTAM*; didanosine, an antiretroviral drug used in the treatment of adult and pediatric patients with advanced human immunodeficiency virus (HIV) infection, sold under the trademark VIDEX*; stavudine, used in the treatment of persons with advanced HIV disease, sold under the trademark ZERIT*; amphotericin B, an anti-fungal sold primarily under the trademark FUNGIZONE*; and cefepime, a fourth generation injectable cephalosporin introduced in international markets in 1995 and approved for marketing in the U.S. in early 1996, sold primarily under the trademark, MAXIPIME*. Central nervous system drugs include BUSPAR*, an anxiolytic; SERZONE*, an antidepressant; and STADOL NS*, a prescription nasal spray analgesic. Dermatological drugs include DOVONEX*, a vitamin D3 analog for the treatment of moderate psoriasis, and LAC-HYDRIN*, used in the treatment of moderate to severe dry skin. Other pharmaceutical products include Glucophage, a new oral anti-diabetes agent for type II non-insulin dependent diabetes; OVCON*, an oral contraceptive; and ESTRACE*, a low-dose estrogen replacement therapy.
In March 1996, the Company acquired Argentia SA, one of Argentina's largest manufacturers and marketers of ethical pharmaceutical products. In October 1996, the Company completed the acquisition of Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products.
This segment includes sales of infant formulas and other nutritional products, which comprise about 65% of the segment's sales, analgesics, cough/cold remedies and skin care products. Some of the principal products in this segment are ENFAMIL*, PROSOBEE*, NUTRAMIGEN*, and LACTOFREE*, infant formula products; ENFAPRO*, NEXT STEP* and ALACTA NF*, follow-on formula products for older babies; SUSTAGEN*, ISOCAL*, SUSTACAL*, NUTRAMENT* and BOOST*, nutritional supplements and specialties; THERAGRAN*, VI-FLOR*, VI-SOL*, NATALINS* and PLUSSSZ*, vitamins; EXCEDRIN*, BUFFERIN*, EFFERALGAN*, ASPIRINE UPSA* and DAFALGAN*, analgesics; COMTREX*, a multi-symptom cold reliever; and KERI*, a line of moisturizing body lotions and shower and bath oils.
This segment includes sales of orthopaedic implants, which comprise about 40% of the segment's sales, ostomy and wound care products, surgical instruments, arthroscopy products and other medical devices. Some of the principal products in this segment are the NEXGEN* Complete Knee Solution, the Insall/Burstein II Modular Total Knee System, the MGII* Total Knee System, VERSYS* Hip System, and the CENTRALIGN* Precoat Hip Prosthesis orthopaedic implants; the APEX* Universal Drive and Irrigation System; ACTIVE LIFE/COLODRESS* and SUR-FIT/ COMBIHESIVE/SECURE* ostomy care products; and DUODERM* wound care products.
This segment includes sales of haircoloring and hair care preparations, which comprise about 80% of the segment's sales in 1996 and 75% in 1995 and 1994, deodorants, anti-perspirants and other toiletries and beauty aids. Among the principal products in this segment are NICE 'N EASY*, MISS CLAIROL*, LOVING CARE*, ULTRESS*, NATURAL INSTINCTS* and HYDRIENCE* haircolorings; HERBAL ESSENCES* and INFUSIUM 23* complete lines of shampoos and conditioners, and other shampoos and after-shampoo treatment products; SYSTEME BIOLAGE*, MATRIX ESSENTIALS* and VAVOOM*, professional hair care products sold exclusively in beauty salons; BAN* and MUM*, anti-perspirants and deodorants; and SEA BREEZE* and MATRIX* skin care products.
Bristol-Myers Squibb, for the most part, purchases the principal raw materials and supplies used in each industry segment in the open market. Substantially all such materials are obtainable from a number of sources so that the loss of any one source of supply would not have a material adverse effect on the Company.
The Company owns or is licensed under a number of patents in the United States and foreign countries covering products, principally in the pharmaceutical products and medical devices segments, and has also developed many brand names and trademarks for products in each industry segment. The Company considers the overall protection of its patent, trademark and license rights to be of material value and acts to protect these rights from infringement. The Company believes that no single patent or license is of material importance in relation to the business as a whole.
The markets in which Bristol-Myers Squibb competes are generally broad based, heavily competitive and include many competitors. The principal means of competition utilized to market the products of Bristol-Myers Squibb include quality, service, price and product performance. The products of the pharmaceutical products segment and the medical devices segment are promoted on a national and international basis in medical journals and directly to the medical profession. The Company is also utilizing direct-to-consumer advertising for a number of its pharmaceutical products. Most of the other products of Bristol-Myers Squibb are generally advertised and promoted on a national and international basis through the use of television, radio, print media, consumer offers, and window and in-store displays. Bristol-Myers Squibb's products are principally sold to the wholesale and retail trade both nationally and internationally. Certain products of the pharmaceutical products and medical devices segments are also sold to other drug manufacturers, hospitals and the medical profession. None of the segments is dependent upon a single customer, or a few customers, such that the loss of any one or more would not have a material adverse effect on the segment.
Research and development is essential to Bristol-Myers Squibb's businesses, particularly to the pharmaceutical products segment. Management continues to place great emphasis on these activities. Pharmaceutical research and development is carried out by the Bristol-Myers Squibb Pharmaceutical Research Institute which has major facilities in Princeton and New Brunswick, New Jersey, Wallingford, Connecticut and Seattle, Washington. Pharmaceutical research and development is also carried out at various other facilities in the United States and in Belgium, France, Germany, Italy, Japan, and the United Kingdom.
Bristol-Myers Squibb spent $1,276 million in 1996, $1,199 million in 1995 and $1,108 million in 1994 on company sponsored research and development activities. Pharmaceutical research and development spending, as a percentage of pharmaceutical sales, was 12.3% in 1996 compared to 12.9% in 1995 and 13.6% in 1994.
Most aspects of the Company's business are subject to some degree of government regulation in the countries in which its operations are conducted. The Company's policy is to comply fully with all regulatory requirements applying to its products and operations. For some products, and in some countries, government regulation is significant and, in general, there is a trend to more stringent regulation. The Company devotes significant time, effort and expense addressing the extensive governmental regulatory requirements applicable to its business. Governmental regulatory actions can result in the recall or seizure of products, suspension or revocation of the authority necessary for the production or sale of a product, and other civil and criminal sanctions.
In the United States, the drug, medical device, diagnostic, food and cosmetic industries in which the Company operates have long been subject to regulation by various federal, state and local agencies, primarily as to product manufacture, safety, efficacy, advertising and labeling. Assuring compliance with appropriate laws and regulations requires increasing expenditures of time and resources.
In addition, governmental bodies in the United States as well as other countries have expressed concern about costs relating to health care and, in some cases, have focused attention on the pricing of drugs and on appropriate drug utilization. Government regulation in these areas already exists in some countries and may be expanded significantly in the United States and other countries in the future.
While the Company is unable to predict the extent to which its business may be affected by future regulatory developments, it believes that its substantial experience dealing with governmental regulatory requirements and restrictions on its operations throughout the world and its development of new and improved products should enable it to compete effectively within this environment.
Bristol-Myers Squibb employed approximately 51,200 people at December 31, 1996.
Reference is made to Note 10 Financial Instruments, and Note 12 Segment Information in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report.
International operations are subject to certain risks which are inherent in conducting business abroad, including possible nationalization or expropriation, price and exchange controls, limitations on foreign participation in local enterprises and other restrictive governmental actions. In addition, changes in the relative value of currencies take place from time to time and their effects may be favorable or unfavorable on Bristol-Myers Squibb's operations. There are currency restrictions relating to repatriation of earnings in certain countries.
Item 2. PROPERTIES.
Bristol-Myers Squibb's world headquarters is located at 345 Park Avenue, New York, New York, where it leases approximately 841,800 square feet of floor space, approximately 285,880 square feet of which is sublet to others. The Company's pharmaceutical world headquarters is located in Princeton, New Jersey. Other major domestic pharmaceutical facilities are located in Evansville, Indiana; New Brunswick and Plainsboro, New Jersey; and Buffalo and Syracuse, New York. The Company's major domestic medical devices facilities are located in Warsaw, Indiana, St. Louis, Missouri, Skillman, New Jersey and Greensboro, North Carolina.
Bristol-Myers Squibb manufactures products at forty-four major worldwide locations with an aggregate floor space of approximately 13,052,000 square feet. Forty-two facilities are owned by Bristol-Myers Squibb and two are leased. The U.S. manufacturing facilities total sixteen, of which 50% and 25% are used in the manufacture of pharmaceutical products and medical devices, respectively. The non-U.S. operations include a total of twenty-eight major manufacturing facilities, of which 71% and 4% are used in the manufacture of pharmaceutical products and medical devices, respectively. These facilities are located in Australia, Brazil, Canada, China, Colombia, France, Germany, Ireland, Indonesia, Italy, Japan, Mexico, the Netherlands, the Philippines, South Africa, Taiwan, the United Kingdom and Venezuela, and aggregate approximately 6,341,300 square feet of space.
Portions of these facilities and other facilities owned or leased by Bristol-Myers Squibb in the United States and elsewhere are used for research, administration, storage and distribution. Bristol-Myers Squibb's facilities are well-maintained, adequately insured and in satisfactory condition.
Capital expenditures for the construction, expansion and modernization of production, research and administrative facilities aggregated $607 million, $517 million and $577 million in 1996, 1995 and 1994, respectively.
Item 3. LEGAL PROCEEDINGS.
Reference is made to Note 15 Contingencies in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report.
As of December 31, 1996, approximately 22,000 plaintiffs had filed suit against the Company, its subsidiary, Medical Engineering Corporation (MEC), and certain other companies, in federal and state courts and in certain Canadian provincial courts, alleging damages for personal injuries of various types resulting from polyurethane covered breast implants and smooth walled breast implants formerly manufactured by MEC or its predecessors. A number of other manufacturers of breast implants, as well as suppliers of component parts and other parties, are also defendants in many of these cases. The plaintiffs typically seek compensatory damages for alleged medical conditions and emotional distress as well as punitive damages. Some of these women have sued numerous manufacturers without specifying the manufacturer of the implants involved. The majority of the suits are presently stayed. Those that are not stayed have been filed by plaintiffs who have opted out of the Revised Settlement, which is described below.
In addition to individual suits, the Company has been named as a defendant, together with other defendants, in a number of class action lawsuits, including one pending in Louisiana entitled IN RE: LOUISIANA BREAST IMPLANT CLASS ACTION (previously SPITZFADEN, ET AL. VS. DOW CORNING CORP., ET AL.), No. 92-2589, purportedly consisting of all Louisiana residents who have opted out of the Revised Settlement described below. The Company is also a defendant in a purported class action brought on behalf of children allegedly exposed to silicone in utero and through breast milk. (FEUER, ET AL., V. MCGHAN, ET AL., U.S.D.C., E. Dist. NY, 93-0146.) The suit, which has not been certified as a class action, names all breast implant manufacturers as defendants and seeks to establish a medical monitoring fund. On April 11, 1996, a class action on behalf of all women in the Canadian province of British Columbia was certified in the provincial court of British Columbia on the single issue of whether silicone gel breast implants are reasonably fit for their intended purpose (HARRINGTON V. DOW CORNING CORPORATION ET AL., Supreme Court, British Columbia, C954330).
The Company is a participant in a class action settlement approved by the Honorable Sam C. Pointer, Jr., Chief Judge of the United States District Court for the Northern District of Alabama (LINDSEY, ET AL., V. DOW CORNING, ET AL., CV-94-P-11558-S), before whom all federal breast implant cases were consolidated for pretrial purposes. On December 22, 1995, Judge Pointer approved a revised settlement program (Revised Settlement) for resolution of claims seeking damages for personal injuries from allegedly defective breast implants. The Revised Settlement arises out of a settlement approved by the Court on September 1, 1994. On January 16, 1996, the Company, Baxter Healthcare Corporation and Baxter International (collectively, Baxter), and Minnesota, Mining & Manufacturing Company (3M) (hereinafter, the Settling Defendants) each paid $125 million into a court-established fund as an initial reserve to pay claims under the Revised Settlement.
The fifteen-year Revised Settlement generally provides benefits to those breast implant recipients, other than foreign claimants, who have had at least one breast implant manufactured by one of the Settling Defendants (or their predecessors or subsidiaries). Several kinds of benefits are available for eligible participants with breast implants made by companies affiliated with Bristol-Myers Squibb, Baxter and 3M: (1) for current claimants, compensation generally ranging from $10,000 to $50,000 based on disease and disability definitions of the original settlement, plus supplemental benefits of an additional $15,000 to $50,000 for claimants with ruptured implants; (2) for current claimants seeking higher benefits and for other registrants, compensation ranging from $75,000 to $250,000 based on new disease and disability definitions (Long-Term Benefits); and (3) although the Settling Defendants are not recommending removal of implants absent some specific medical reason, a $3,000 payment for those class members (other than late registrants) who seek removal of implants. In addition, current claimants are eligible for an advance payment of $5,000, and other existing registrants are eligible for an advance payment of $1,000. For certain current claimants, benefits would be payable regardless of the number of claimants seeking compensation, regardless of the total dollar value of approved claims, and regardless of the outcome of appeals from the order approving the settlement. For other claimants, benefits would be subject to an aggregate $755 million limit for all participating companies over the fifteen year life of the program. The Company's individual aggregate limit for such benefits is $400 million. In the event the dollar value of the future claims subject to the limit exceeds this amount, claimants may be afforded additional opt-out rights but without the right to assert punitive or other statutory multiple damage claims. The Company's obligations to make payments under the Revised Settlement are not affected by the number of class members electing to opt-out of the settlement or the number of class members making claims under it. However, the Company's obligations to fund Long-Term Benefits are cancelable if certain provisions of the Revised Settlement are disapproved on appeal.
The Revised Settlement was the subject of an appeal filed by certain foreign breast implant recipients. In November 1996, the Settling Defendants settled that appeal, and the benefits of the Revised Settlement will be extended, with certain modifications, to foreign breast implant recipients. Pursuant to the settlement, the Settling Defendants each paid approximately $8.3 million into a court-approved settlement fund as an initial reserve for payment of foreign claims. Other appeals related to the Revised Settlement are pending.
In early 1996, notices describing the Revised Settlement were mailed to breast
implant recipients, including the approximately 380,000 domestic class members
(with implants of all manufacturers, not just Bristol-Myers Squibb, Baxter and
3M) who originally registered with the settlement. The claims office has
reported that as of December 16, 1996, approximately 122,000 of these
registrants had submitted proof of manufacturer documentation, which will
enable the claims office to determine whether they have a breast implant made
by a Settling Defendant. The claims office has further reported that, as of
December 16, 1996, over 52,000 of the 122,000 registrants who submitted proof
of manufacturer had been sent Notification of Status letters advising them of
their status in the settlement. Of the recipients of Notification of Status
letters, over 35,000 have established to the satisfaction of the claims office
that they have a Settling Defendant's implant and have chosen to participate
in the settlement, while approximately 3,300 opted out. The decisions of the
remaining recipients of Notification of Status letters were not reported as
of December 31, 1996.
The right of registered class members to opt-out terminates 45 days after the date of such a class member's Notification of Status letter. The claims office has been sending Notification of Status letters to class members on an ongoing basis, and is expected to continue to do so during the first half of 1997. The claims office has reported that, as of December 16, 1996, approximately 8,000 of the original 380,000 domestic registrants (with implants of all manufacturers) opted out after receiving the initial notice of the Revised Settlement in 1996. Based on all the information supplied to the Company as of December 31, 1996, the Company has identified approximately 3,300 such opt-outs as plaintiffs in pending suits which name the Company as a defendant. Many of these plaintiffs, however, have not yet affirmatively identified the manufacturer of their implants, and the total number of opt-outs with claims against the Company will not be known until the opt-out period ends and complete information is made available. In addition, approximately 7,100 domestic breast implant recipients with implants of all manufacturers, including manufacturers not participating in the Revised Settlement, had previously opted out in connection with the original 1994 approval of this class action settlement. Of this group, the Company has identified approximately 2,300 domestic opt-outs, a large number of whom reside in Texas, as allegedly having MEC implants and as having pending claims against the Company. Because the opt-out period for most class members has not expired, and because our information is incomplete, it is not reasonably possible at this time to estimate on any reliable and precise basis either the total number of women who will opt-out of the Revised Settlement or, of those who opt-out, the number who will file lawsuits against the Company.
The cost of the settlement is dependent upon complex and varying factors, including the number of class members that participate, the kinds of claims asserted and approved under the settlement, and their dollar value. In light of the continuing uncertainties attendant to these and other factors, it is not possible to achieve any precision at this time in estimating the cost of the settlement to the Company.
In May of 1996, the Company, together with other Settling Defendants, entered into a $50 million settlement of claims asserted by certain health insurers based upon payments made or benefits provided by insurers and represented health plans to participating registrants that allegedly involve or relate to silicone gel breast implants. The Company has paid $20.2 million to the settlement, which extinguishes the potential claims of the majority of the U.S. commercial and non-governmental health care insurer market against both the defendants and settlement class members.
In July of 1995, the Company entered into a $20.5 million (U.S. funds) class action settlement with plaintiff representatives in the provinces of Ontario and Quebec. The class includes persons who have or had MEC breast implants and who reside in Ontario and Quebec or who received their MEC implants there. The settlement, which had minimal opt-outs, has been approved by the provincial courts of Ontario and Quebec.
The Company's insurers have been notified of the breast implant claims and the Revised Settlement, and generally have reserved their rights or declined to confirm coverage. In 1993, the Company commenced litigation in state court, Jefferson County, Texas, against most of the Company's insurers, seeking
damages and a declaration of coverage. In the litigation, the Company has obtained favorable rulings on certain coverage issues which, in the Company's judgment, make it probable that certain policies issued by insurers in the 1982-86 period will be held to respond to the claims. The Company has entered into settlement agreements with certain insurers providing cash or confirming coverage of a substantial amount of expected insurance proceeds. A trial of the insurance coverage case currently is expected in the second quarter of 1997.
The cost to the Company of resolving opt-out claims is subject to a number of complex uncertainties. Primary among them is the difficulty of estimating with any precision the quantity and quality of such claims. While there have been large judgments in some cases, defendants have won more trials than they have lost, and in 1996, the Company's trial experience was generally favorable. The Company has maintained throughout this litigation that breast implants do not cause disease and recent medical and scientific information continues to support the Company's position. The Company's view has found strong support in the December 1996 decision of a federal judge in Oregon, who ruled to exclude the testimony of plaintiffs' experts concerning a causal link between silicone gel breast implants and systemic illness on the ground that it fails to satisfy standards for reliability under current Supreme Court guidelines. In addition, a science panel appointed by Judge Pointer is in the process of reviewing the scientific literature regarding any relation between breast implants and disease, and is expected to report its findings in 1997. The results of continuing medical research and a variety of additional factors, including the success of other legal defenses and the success of the Revised Settlement program, may substantially affect the cost of resolving opt-out cases.
In the fourth quarter of 1993, the Company recorded a charge of $500 million before taxes ($310 million after taxes) in respect of breast implant cases. The charge consisted of $1.5 billion for potential liabilities and expenses, offset by $1 billion of expected insurance proceeds. In the fourth quarters of 1994 and 1995, the Company recorded additional special charges of $750 million before taxes ($488 million after taxes) and $950 million before taxes ($590 million after taxes), respectively, related to breast implant product liability claims. The Company views the Revised Settlement, litigation results in 1996, and ongoing science and medicine about breast implants as favorable developments. Nonetheless, since the ultimate effects of the Revised Settlement and the ongoing litigation cannot at present be reasonably predicted, after more information becomes available it is possible that an additional charge to earnings might be required with respect to breast implant litigation. In the opinion of the Company, such charge, if taken, should not have a material adverse effect on the Company's liquidity or consolidated financial position, although it is possible that it might have a material adverse effect on the Company's results of operations for the period in which the charge would be recorded.
The Company, one of its subsidiaries, and others are or have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products
and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. On June 7, 1996, the Company reached a settlement covering all the then pending infant formula indirect purchaser cases except the case in Massachusetts and the case brought by the Louisiana Attorney General. On September 29, 1996, a federal district court in Tallahassee, Florida, entered an order in favor of the defendants, effectively dismissing the Louisiana Attorney General action. No appeal was taken from that decision. In December 1996, the Company entered an agreement in principle to settle the Massachusetts action. Final court approval of the above settlements has been granted in every case except those pending in Louisiana, Massachusetts, Michigan and Nevada. In Louisiana on January 21, 1997, the court entered an order disapproving the settlement. In the other jurisdictions, joint motions for final approval of the settlement have either not yet been filed (Massachusetts) or not yet been ruled upon (Michigan and Nevada). The Company believes that these actions are without merit and that their ultimate disposition will not have a material adverse effect on the Company's results of operations, liquidity or consolidated financial position.
As of December 31, 1996, the Company is a defendant in over 100 actions brought against the Company and more than 30 other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers in various federal district courts by certain chain drugstores, supermarket chains and independent drugstores, suing either individually or as a representative of a nationwide class of retail pharmacies that has been certified. These cases, which have been coordinated for pretrial purposes in the United States District Court for the Northern District of Illinois, all seek treble damages and injunctive relief on account of an alleged antitrust conspiracy concerning the pricing and marketing of brand name prescription drugs; the plaintiffs who are suing individually are also asserting claims of unlawful price discrimination under the Robinson-Patman Act. Discovery has been completed with respect to claims concerning the alleged antitrust conspiracy. Completion of additional discovery with respect to Robinson-Patman Act claims against the Company has been stayed. Plaintiffs in the class action have indicated that they intend to claim damages, before trebling, ranging from 5% to approximately 20% of the value of their purchases of brand name prescription drugs from defendants since October 15, 1989. It is estimated that the class members who have not opted out represent approximately two-thirds of retail pharmacy purchases of brand name prescription drugs during the alleged damages period. As of May 1, 1996, the Company, without admitting any wrongdoing, reached an amended agreement to settle the class action. The settlement, as amended, has been approved by the Court, and purported appeals from that approval are pending. On April 4, 1996, the Court denied motions for summary judgment brought by the drug manufacturer defendants, including the Company, with respect to the conspiracy claims asserted by retail pharmacies that have opted out of the class. The largest opt-out retailer plaintiffs have purported to quantify their conspiracy damage claims against the defendants, including the Company, asserting damages aggregating approximately $2.4 billion before trebling. An interlocutory appeal by the drug manufacturer defendants, including the Company, from an April 4, 1996 ruling by the District Court that denied their motions for summary judgment
as to damage claims based on retailers' purchases from wholesalers is pending in the Court of Appeals. Class action cases brought by retail pharmacies in state courts against a similar group of defendants and alleging similar grounds under state law are proceeding in California, Alabama, Wisconsin and Minnesota. The California court has certified a class of California retail pharmacies. The Wisconsin court has certified a class of Wisconsin retail pharmacies. Class action cases brought by consumers in state courts against a similar group of defendants and alleging similar grounds under state law have been brought in California, Washington, New York, Arizona, Maine, Alabama, Michigan, Minnesota, the District of Columbia, Wisconsin, Kansas, Florida and Tennessee. The consumer actions brought in Washington and New York have been dismissed; appeals are pending in both states. The California court has certified a class of California consumers. In the Alabama case, the Alabama court had purported to certify a class consisting of consumers in Alabama and other states, including the District of Columbia, Kansas, Maine, Michigan, Minnesota, Mississippi, New Mexico and Wisconsin, but that order has been vacated. A class of consumers has been certified in the District of Columbia consumer case, while class certification has been denied in the Minnesota consumer case. In July 1996, the Company received a subpoena from the Federal Trade Commission in an investigation it is conducting to determine whether U.S. pharmaceutical manufacturers have engaged in unfair methods of competition by engaging in unlawful concerted activities on prices of pharmaceutical products. The Company believes that these actions are without merit and that their ultimate disposition will not have a material adverse effect on the Company's results of operations, liquidity or consolidated financial position.
The Company, together with others, is a party to, or otherwise involved in, a number of proceedings brought by the Environmental Protection Agency or comparable state agencies under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or Superfund) or comparable state laws directed at the cleanup of hazardous waste sites. While it is not possible to predict with certainty the outcome of these cases, the Company believes that the ultimate disposition of these matters will not have a material adverse effect on the Company's results of operations, liquidity or consolidated financial position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
Positions and Offices Presently
Name Age Held with the Registrant
- ------------------------ --- -------------------------------
Charles A. Heimbold, Jr. 63 Chairman of the Board, Chief Executive
Officer and Director
Michael E. Autera 58 Executive Vice President and Director
Harrison M. Bains, Jr. 53 Treasurer and Vice President,
Corporate Staff
Alice C. Brennan 44 Secretary and Vice President,
Corporate Staff
George P. Kooluris 52 Senior Vice President, Corporate
Development, Corporate Staff
John L. McGoldrick 56 General Counsel and Senior Vice President,
Corporate Staff
Michael F. Mee 54 Chief Financial Officer and Senior Vice
President, Corporate Staff
Peter S. Ringrose, Ph.D. 51 President, Bristol-Myers Squibb
Pharmaceutical Research Institute
Leon E. Rosenberg, M.D. 64 Senior Vice President,
Scientific Affairs
Frederick S. Schiff 49 Controller and Vice President,
Corporate Staff
Charles G. Tharp, Ph.D. 45 Senior Vice President, Human Resources,
Corporate Staff
Kenneth E. Weg 58 Executive Vice President, President,
Worldwide Medicines Group and Director
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Persons who hold titles as elected corporate officers of the Registrant were last elected or reelected to the office held at the general election of officers by the Registrant's Board of Directors on May 7, 1996. Officers of the Registrant serve in such capacity at the pleasure of the Board of
Directors of the Registrant.
CHARLES A. HEIMBOLD, JR. - From 1989 to 1992, Executive Vice President of the Registrant. Mr. Heimbold has been a director of the Registrant since 1989, President of the Registrant from 1992 to 1996, the Chief Executive Officer of the Registrant since 1994 and Chairman of the Board since 1995.
MICHAEL E. AUTERA - From 1977 to 1994, Chief Financial Officer of the Registrant. Mr. Autera has been a director of the Registrant since 1991 and Executive Vice President of the Registrant since 1989.
HARRISON M. BAINS, JR. - Mr. Bains has been Treasurer and Vice President, Corporate Staff of the Registrant since 1988.
ALICE C. BRENNAN - From 1988 to 1992, Manager, Agricultural Section-Patent Law Department and from 1992 to 1994, Secretary of American Cyanamid Company, a pharmaceutical and agricultural company. Ms. Brennan has been Secretary and Vice President, Corporate Staff of the Registrant since 1994.
GEORGE P. KOOLURIS - From 1980 to 1993, Vice President, Corporate Development, Corporate Staff of the Registrant. Mr. Kooluris has been Senior Vice President, Corporate Development, Corporate Staff of the Registrant since 1994.
JOHN L. McGOLDRICK - From 1974 to 1994, Partner, McCarter & English. Mr. McGoldrick has been General Counsel and Senior Vice President, Corporate Staff of the Registrant since 1995.
MICHAEL F. MEE - From 1990 to 1992, Executive Vice President, Finance and Chief Financial Officer, from 1990 to 1993, director and from 1992 to 1993, Chairman of the Board and Chief Financial Officer of Wang Laboratories, Inc., a provider of computer-based information processing products and services. Mr. Mee has been Chief Financial Officer and Senior Vice President, Corporate Staff of the Registrant since 1994.
PETER S. RINGROSE, Ph.D. - From 1992 to 1994, Senior Vice President, Medicinal Research & Development, Europe and from 1994 to 1996, Senior Vice President, Worldwide Discovery and Medicinal Research & Development, Europe of Pfizer Inc., a health care company. Dr. Ringrose has been President, Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the Registrant since January 1997.
LEON E. ROSENBERG, M.D. - From 1991 to 1996, President, Bristol-Myers Squibb Pharmaceutical Research Institute, a division of the Registrant and Senior Vice President, Scientific Affairs of the Registrant since January 1997.
FREDERICK S. SCHIFF - Mr. Schiff has been Controller and Vice President, Corporate Staff of the Registrant since 1990.
CHARLES G. THARP, Ph.D. - From 1991 to 1993, Vice President, Compensation,
Benefits and Human Resource Development, Corporate Staff of the Registrant. Dr. Tharp has been Senior Vice President, Human Resources, Corporate Staff of the Registrant since 1993.
KENNETH E. WEG - From 1991 to 1993, President, Bristol-Myers Squibb Pharmaceutical Operations, a division of the Registrant, and from 1993 to 1996, President, Bristol-Myers Squibb Pharmaceutical Group, a division of the Registrant. Mr. Weg has been President, Worldwide Medicines Group, a division of the Registrant, since January 1997 and a director of the Registrant since 1995 and Executive Vice President of the Registrant since 1995.
In addition to the positions and offices heretofore listed, all of the foregoing executive corporate officers and other executive officers of the Registrant are directors and/or officers of one or more affiliates of the Registrant, with the exception of Messrs. Autera and Tharp.
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
1996 1995
------------------ ---------------------
High Low High Low
-------- -------- --------- ---------
Common:
First Quarter $45 1/8 $40 9/16 $32 15/16 $28 7/8
Second Quarter 45 1/8 39 34 15/16 30 15/16
Third Quarter 49 41 1/2 37 7/16 33 1/4
Fourth Quarter 58 3/16 48 1/4 43 9/16 36
1996 1995
------------------ ---------------------
High Low High Low
-------- -------- --------- ---------
Preferred:
First Quarter No Trades $300 $230
Second Quarter $369 $350 1/2 325 225
Third Quarter 370 364 335 250
Fourth Quarter 450 450 359 1/2 330
HOLDERS OF COMMON STOCK
- -----------------------
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The approximate number of record holders of common stock at December 31, 1996 was 133,638.
The number of record holders is based upon the actual number of holders registered on the books of Bristol-Myers Squibb at such date and does not include holders of shares in "street names" or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies.
In March 1996, the Board of Directors of the Company authorized an increase in the Company's current share repurchase program from 100 million shares to 150 million shares. Additional shares will be repurchased from time to time in the open market or through private transactions, as market conditions permit.
Dividend payments per share in 1996 and 1995 were:
Common Preferred
------------------- ---------------
1996 1995 1996 1995
--------- ----- ----- -----
First Quarter $ .37 1/2 $ .37 $ .50 $ .50
Second Quarter .37 1/2 .37 .50 .50
Third Quarter .37 1/2 .37 .50 .50
Fourth Quarter .37 1/2 .37 .50 .50
--------- ----- ----- -----
Year $1.50 $1.48 $2.00 $2.00
========= ===== ===== =====
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In December 1996, the Board of Directors of the Company declared a quarterly dividend of $.38 per share on the common stock of the Company, payable on February 1, 1997 to shareholders of record as of January 3, 1997. The 1997 indicated annual payment of $1.52 per share represents the twenty-fifth consecutive year that the Company has raised the dividend on its common stock.
Item 6. SELECTED FINANCIAL DATA.
FIVE-YEAR FINANCIAL SUMMARY
OPERATING RESULTS
- -----------------
(dollars in millions,
except per share amounts)
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
Net Sales $15,065 $13,767 $11,984 $11,413 $11,156
------- ------- ------- ------- -------
Expenses:
Cost of products sold 3,965 3,637 3,122 3,029 2,857
Marketing, selling and
administrative 3,925 3,670 3,166 3,098 3,075
Advertising and product
promotion 1,946 1,646 1,367 1,255 1,291
Research and development 1,276 1,199 1,108 1,128 1,083
Other (*) (60) 1,213 666 332 863
------- ------- ------- ------- -------
11,052 11,365 9,429 8,842 9,169
------- ------- ------- ------- -------
Earnings Before
Income Taxes (*) 4,013 2,402 2,555 2,571 1,987
Provision for income taxes 1,163 590 713 612 449
------- ------- ------- ------- -------
Net Earnings (*) $ 2,850 $ 1,812 $ 1,842 $ 1,959 $ 1,538
======= ======= ======= ======= =======
Dividends paid on common
and preferred stock $ 1,507 $ 1,495 $ 1,485 $ 1,485 $ 1,428
Earnings per
common share (*)/(**) 2.84 1.79 1.81 1.90 1.48
Dividends per
common share (**) 1.50 1.48 1.46 1.44 1.38
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(*) Includes a special charge for pending and future product liability claims of $950 million before taxes, $590 million after taxes, or $.58 per share, in 1995, $750 million before taxes, $488 million after taxes, or $.48 per share, in 1994 and $500 million before taxes, $310 million after taxes, or $.30 per share, in 1993. Includes a provision for restructuring of $310 million before taxes, $198 million after taxes, in 1995 and $890 million before taxes, $570 million after taxes, in 1992.
(**) Average common shares outstanding and per common share amounts have been adjusted for the two-for-one stock split.
Item 6. SELECTED FINANCIAL DATA. (cont'd.)
FIVE-YEAR FINANCIAL SUMMARY
FINANCIAL POSITION AT DECEMBER 31
- ---------------------------------
(dollars in millions)
except per share amounts)
1996 1995 1994 1993 1992
------- ------- ------- ------ ------
Current assets $ 7,528 $ 7,018 $ 6,710 $ 6,570 $ 6,621
Property, plant and
equipment 3,964 3,760 3,666 3,374 3,141
Total assets 14,685 13,929 12,910 12,101 10,804
Current liabilities 5,050 4,806 4,274 3,065 3,300
Long-term debt 966 635 644 588 176
Total liabilities 8,115 8,107 7,206 6,161 4,784
Stockholders' equity 6,570 5,822 5,704 5,940 6,020
Average common shares
outstanding
(in millions) (**) 1,004 1,012 1,017 1,030 1,036
Book Value per common
share (**) $ 6.57 $ 5.67 $ 5.63 $ 5.81 $ 5.81
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(**) Average common shares outstanding and per common share amounts have been adjusted for the two-for-one stock split.
Reference is made to Note 2 Acquisitions and Divestitures, Note 7 Property, Plant and Equipment and Note 15 Contingencies, appearing in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K Annual Report.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Summary
Nineteen ninety-six marked another year of record growth in sales and earnings for Bristol-Myers Squibb. Worldwide sales were $15.1 billion, a 9% increase over 1995. Domestic sales increased 10% to $8.5 billion, while international sales increased 9% to $6.6 billion. Exchange rate fluctuations had an unfavorable effect of 2% on worldwide sales and 4% on international sales. Sales growth resulted from an 11% increase due to volume with no changes overall from pricing activity. In 1996, significant contributions to the Company's sales growth were made by the thirty-six products, representing all four business segments, with annual sales of at least $100 million. In fact, sixteen of these products experienced double- digit sales growth or better.
Earnings before income taxes increased 10% to $4,013 million in 1996, net earnings increased 10% to $2,850 million and earnings per share increased 11% to $2.84, excluding the 1995 charges. Including these charges, earnings before income taxes were $4,013 million in 1996 and $2,402 million in 1995, net earnings were $2,850 million in 1996 and $1,812 million in 1995, and earnings per share were $2.84 in 1996 and $1.79 in 1995.
Bristol-Myers Squibb's financial position remains strong. At December 31, 1996, the Company held $2.2 billion in cash, time deposits and marketable securities. Cash provided by operating activities totaled $2.6 billion and continued to be the primary source of funding to finance research, new product development and introductions, capital spending and working capital needs. It was also used to pay dividends of $1.5 billion in 1996. Dividends per common share were $1.50 in 1996, increasing from $1.48 per share paid in 1995. In December 1996, the Company announced an additional dividend increase, the twenty-fifth consecutive year that dividends have increased. The 1997 indicated annual payment is $1.52 per share compared with the $1.50 per share paid in 1996. With this 1997 annual payment, Bristol-Myers Squibb dividends have increased at a compound annual growth rate of 8% over the past 10 years. Bristol-Myers Squibb's strong financial position is evidenced further by its triple-A credit rating from both Moody's and Standard & Poor's, making Bristol-Myers Squibb one of only eight U.S. companies with this distinction. Accordingly, the Company has substantial borrowing capacity at its disposal.
Total market capitalization was $54.5 billion as of December 31, 1996, a 25.7% increase over last year. Total return to shareholders, capital appreciation together with reinvested dividends, was 32.1% for 1996, which compares favorably to the 23.0% return of the Standard & Poor's 500.
In March 1996, the Board of Directors extended the Company's share repurchase program, increasing the program's authorization to 150 million shares. During 1996, the Company purchased 19 million shares of common stock at a cost of $852 million, bringing the total shares acquired since the program's inception to 107 million.
On December 3, 1996, the Company's Board of Directors declared a two-for-one stock split of the common stock of the Company, effective February 1997. The Board of Directors also recommended that an amendment be considered for stockholder approval at the annual meeting of stockholders to increase the number of authorized shares of common stock from 1.5 billion to 2.25 billion. All share and per share information presented herein has been adjusted for the effect of the stock split.
Net Sales and Earnings
Worldwide sales increased 9% in 1996 to $15.1 billion, compared with increases of 15% and 5% in 1995 and 1994, respectively. The consolidated sales growth resulted from an 11% increase due to volume, a 2% decrease due to unfavorable foreign exchange rate fluctuations and no changes overall from pricing activity. In 1995, the 15% increase in sales reflected a 13% increase due to volume, while price increases and exchange rate fluctuations each contributed 1% to growth on a worldwide basis. In 1994, the 5% increase in sales reflected a 4% increase due to volume, a 1% increase due to pricing and exchange rate fluctuations had no effect. Domestic sales increased 10% in both 1996 and 1995 and 4% in 1994, while international sales increased 9% in 1996, 22% in 1995 and 7% in 1994. In general, the businesses of the Company's industry segments are not seasonal.
The effective income tax rate on earnings before income taxes was 29.0% in 1996 compared to 24.6% and 27.9% in 1995 and 1994, respectively. Excluding the 1995 special charge and the provision for restructuring, the effective income tax rate on earnings before income taxes was 29.0% in 1996 and 1995, and 29.5% in 1994. The lower 1996 and 1995 effective income tax rates compared to 1994 resulted from increased income in lower tax rate jurisdictions, partially offset by reduced benefits from operations in Puerto Rico.
As described in the notes to the financial statements, the Company recorded special charges to earnings of $950 million before taxes, $590 million after taxes, or $.58 per share in the fourth quarter of 1995 and $750 million before taxes, $488 million after taxes or $.48 per share, in the fourth quarter of 1994. Also, during the fourth quarter of 1995, the Company recorded a provision for restructuring of $310 million before taxes, $198 million after taxes, or $.20 per share.
Expenses
Total costs and expenses as a percentage of sales, excluding the 1995 special charge and the provision for restructuring, were 73.4% in both 1996 and 1995 compared with 72.4% in 1994. In 1996, the increases in advertising and promotion in support of new and existing products were offset by decreases in marketing, selling and administrative expenses and research and development spending. The increase in 1995 primarily resulted from increased advertising and promotion expenditures in the nonprescription health products and toiletries and beauty aids segments. In addition, gross margins in the nonprescription health products segment were lower in 1995 than in the prior year, due to the Company's expanded participation in the federal government's Women, Infants and Children (WIC) program.
As a percentage of sales, cost of products sold remained relatively unchanged at 26.3% in 1996 compared to 26.4% in 1995. Excluding 1996 acquisitions, cost of products sold, as a percentage of sales, decreased to 25.5% due to a favorable product mix, the introduction of a semi-synthetic material yielding lower production costs for TAXOL*(R)(paclitaxel) and manufacturing efficiencies. In 1995, cost of products sold as a percentage of sales increased to 26.4% from 26.1% in 1994 as a result of the increased participation in the WIC program and lower gross margins in connection with acquisitions, offset by a favorable product mix and improved manufacturing efficiencies.
Marketing, selling and administrative expenses, as a percentage of sales, decreased to 26.1% in 1996 from 26.7% in 1995 and 26.4% in 1994. In 1996, increases in marketing and selling expenses in the pharmaceutical segment were more than offset by decreases in administrative costs.
Advertising and promotion expenses in support of new and existing products increased 18% to $1,946 million in 1996 from $1,646 million in 1995, principally due to incremental spending in the pharmaceutical and toiletries and beauty aids segments, supporting direct-to-consumer campaigns and new product launches, respectively. In 1995, advertising and promotion expenses increased from 1994 levels primarily due to spending in support of new product launches.
The Company's investment in research and development totaled $1,276 million in 1996, an increase of 6% over 1995. This spending level reflects the Company's commitment to research over a broad range of therapeutic areas and clinical development in support of new products. Over the past 10 years, research and development expenses have increased at a compound annual growth rate of 11%. In 1996, research and development spending dedicated to the discovery and development of pharmaceutical products was 12.3% of pharmaceutical sales compared to 12.9% and 13.6% in 1995 and 1994, respectively. During 1996 and 1995, the Company entered into a number of research alliances, licensing agreements and biotechnology collaborations. These agreements are providing important new products as well as early stage compounds for further development and new processes that will help us screen for new drugs more effectively. Our collaboration with Sanofi, a French pharmaceutical company, has resulted in the worldwide filings in 1996 for irbesartan, a drug that represents an advanced class of anti-hypertensive medicines.
Industry Segments
The Pharmaceutical Products Segment, which is the Company's largest segment at 58% of total Company sales, increased 11% to $8,702 million in 1996. Sales growth resulted from a 13% increase in volume offset by a 2% decrease due to the unfavorable effect of foreign exchange rate fluctuations. Changes in selling prices had no effect on sales growth. Domestic and international sales increased 13% and 10%, respectively, primarily due to volume growth. Excluding CAPOTEN* sales (discussed below), pharmaceutical product sales increased 21% (23% before the effect of foreign exchange).
Strong sales increases by established pharmaceutical products more than offset a $377 million domestic decline, or 68%, and a $71 million international decline, or 7%, in sales of captopril, an angiotensin converting enzyme (ACE) inhibitor sold primarily under the trademark CAPOTEN*, due to the loss of its patent exclusivity in the U.S. in February 1996. Worldwide CAPOTEN* sales were $1.1 billion in 1996. During 1997, CAPOTEN* will lose its exclusivity in several countries outside the U.S., which contributed $208 million of CAPOTEN* sales in 1996.
Sales of cardiovascular drugs, the largest product group in the segment, decreased 3% to $2,816 million. Excluding CAPOTEN* sales, cardiovascular drugs increased 26%. Sales of PRAVACHOL*, a cholesterol-lowering agent, were $1.1 billion, an increase of 39%. PRAVACHOL* is the first and only cholesterol- lowering drug of its kind proven to reduce the risk of a first heart attack. This important claim is founded upon the results of studies that demonstrated important clinical benefits, including the landmark five-year Pravastatin Primary Prevention Study and the five-year Cholesterol and Recurrent Events
(CARE) trial. The U.S. Food and Drug Administration (FDA)in July granted expanded labeling that cleared PRAVACHOL* for use with diet to help reduce the risk of first heart attack in people who have elevated cholesterol but no history of heart disease. With this indication, in September the Company announced a nationwide program, the PRAVACHOL* Public Awareness Program on First Heart Attack Prevention, to raise awareness about the risks of a first heart attack and to help motivate people to take action with their physicians to reduce their risks. The program focuses on the millions of Americans with high cholesterol who are considered at risk of a first heart attack. MONOPRIL*, a second generation ACE inhibitor with once-a-day dosage, also increased with strong growth in both domestic and international markets.
Sales of anti-cancer drugs increased 23% to $1,971 million. Sales of TAXOL* (with an exclusivity period in the U.S. expiring in December 1997), the Company's leading anti-cancer agent, increased 40% to $813 million. In late 1992, TAXOL* was initially cleared in the U.S. and Canada for the treatment of patients with ovarian cancer whose first-line or subsequent chemotherapy has failed, and, during 1993 and 1994, TAXOL* received clearance for marketing in a number of countries in Europe, Latin America and the Pacific area. In 1994, TAXOL* received clearance in the U.S. for use in the treatment of breast cancer after failure of combination chemotherapy for metastatic disease or after relapse within six months of adjuvant chemotherapy. In October 1996, TAXOL* was approved in the United Kingdom for first-line use in the treatment of ovarian cancer. The Company announced in December 1996 an agreement with the National Institutes of Health to continue and extend its collaborative research for the development of TAXOL*. Sales of PARAPLATIN* (with an exclusivity period in the U.S. expiring in April 2004), used in the treatment of ovarian cancer, also increased 16%. These increases were partially offset by decreases in sales of VEPESID* (the exclusivity for which expired in the U.S. in November 1993) and PLATINOL*. In October 1996, the Company acquired Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products.
Anti-infective drug sales were $1,856 million, an increase of 9% over the prior year. Strong growth was recorded for ZERIT* and VIDEX*, the Company's two antiretroviral agents, both of which benefited from positive regulatory agency actions in the U.S., Canada and Europe, and from ongoing clinical trials demonstrating efficacy in combination therapy. During the third quarter, VIDEX* received clearance from the FDA to be used for first-line treatment of HIV. In January 1997, a new oral solution of ZERIT*, representing a significant addition to the limited therapeutic options available to treat HIV-infected infants and children, was introduced. These actions are expanding markets for both products. Sales of CEFZIL*, an oral cephalosporin used in the treatment of respiratory infections, and MAXIPIME*, a fourth generation injectable cephalosporin introduced in some international markets in 1995 and in the U.S. in the third quarter of 1996, also contributed to the growth of anti- infectives. In October 1996, CEFZIL* received clearance from the FDA for use in the treatment of acute bacterial sinusitis in adult and pediatric patients. Growth of these products was partially offset by sales decreases in DURICEF* and AMIKIN* due to generic competition.
Sales of central nervous system drugs increased 26% to $760 million, due to the strong growth of BUSPAR*, the Company's novel anti-anxiety agent; SERZONE*, an antidepressant that offers a low incidence of side effects; and STADOL NS*, a prescription nasal spray analgesic. Glucophage (the exclusivity period for which expires in the U.S. in December 1999), an oral medication for non-insulin dependent diabetes licensed from the French company Lipha for sale in the U.S., was launched in 1995. In 1996, Glucophage continued to experience
exceptionally strong growth, due to its rapid acceptance in the U.S. market. Dermatological drug sales increased largely due to sales of DOVONEX*, a vitamin D3 analog for the treatment of moderate psoriasis.
In 1995, pharmaceutical products segment sales increased 12%. Increases in sales of PRAVACHOL*, TAXOL*, PARAPLATIN*, ZERIT*, MONOPRIL*, BUSPAR*, CEFZIL*, and introductory sales of Glucophage, SERZONE* and MAXIPIME* were partially offset by decreases in sales of AZACTAM*, VEPESID*, CORGARD*, ISOVUE* and AMIKIN*. In 1994, sales in the segment increased 7% due to increased sales of cardiovascular, anti-cancer and anti-infective drugs offset in part by decreases in sales of diagnostic agents.
Operating profit margin was relatively constant at 33.0% in 1996, 33.3% in 1995, excluding the 1995 provision for restructuring, and 32.6% in 1994.
Sales in the Nonprescription Health Products Segment increased 10% to $2,750 million, reflecting a 12% increase due to volume and a 2% decrease due to the unfavorable effect of foreign exchange rate fluctuations. International sales increased 12% (16% excluding the unfavorable effect of foreign exchange), while domestic sales increased 9%. Sales of the milk-based ENFAMIL*, the Company's largest-selling infant formula, as well as NUTRAMIGEN* and LACTOFREE* special infant formulas, performed well in both the U.S. and international markets. Mead Johnson Nutritional Group's leadership in the WIC program allowed the Company to maintain its position as the U.S. market leader, while also increasing its share of the overall infant formula market. Contributing to infant formula sales in the U.S. were several sole-source contracts awarded to the Company during the past year under the WIC program as well as gains in non-WIC segments. BOOST* and SUSTACAL* adult nutritional beverages, launched directly to consumers in the fourth quarter of 1995, and ALACTA NF*, a nutritious beverage for pre-school age children, sold outside the U.S., also contributed to sales growth. Sales of analgesic products increased 7% (11% excluding the effect of foreign exchange), due to volume growth from EFFERALGAN*, DAFALGAN* and ASPIRINE UPSA*, from the UPSA Group, as well as EXCEDRIN* and BUFFERIN*. The KERI* line of skin care products and COMTREX* cough/cold remedies also performed well.
In 1995, worldwide sales of nonprescription health products increased 22% (an increase of 11%, excluding the effect of the acquisition of the UPSA Group in September 1994), primarily due to increased sales of infant formulas, adult consumer nutritionals, EXCEDRIN*, BUFFERIN* and analgesics from the UPSA Group. In 1994, sales increased 4%, primarily due to increased sales of infant formulas and analgesics.
Operating profit margin improved to 19.9% in 1996, compared to 19.2% in 1995, excluding the 1995 provision for restructuring, partially as a result of improved manufacturing efficiencies. In 1995, operating profit margin, excluding the 1995 provision for restructuring, decreased to 19.2% from 22.3% in 1994, primarily due to lower margins on infant formula products and increased advertising and marketing expenses.
In the Medical Devices Segment, sales of $1,860 million reflected a 2% decrease over prior year levels. Volume gains of 3% were achieved despite a 3% decrease due to changes in selling prices. Sales also were impacted by a 2% decrease due to the unfavorable effect of foreign exchange. International sales decreased 3%(excluding the unfavorable effect of foreign exchange, sales increased 1%), while domestic sales decreased 1%. The Company's Zimmer division continues to be the world market share leader in knee and hip replacements.
Worldwide sales of prosthetic implants increased 1%, excluding the unfavorable effect of foreign exchange, led by strong growth of the NEXGEN* Complete Knee Solution. The Company launched a major new hip replacement, the VERSYS* Hip System, the most extensive component system on the market that features a single set of instruments, in the fourth quarter of 1996. ConvaTec, a division of the Company, is the worldwide market share leader in ostomy care products. Sales of ostomy care products decreased over the prior year due to the overall negative impact of foreign exchange, product rationalization and the restructuring of distribution arrangements. Volume growth of the ACTIVE LIFE/COLODRESS* product line was achieved in international markets. Sales of wound care products decreased. ConvaTec continues to be the world market share leader in modern wound care products.
In 1995, worldwide sales of medical devices increased 13%. Excluding the acquisition of Calgon Vestal Laboratories, and a divestiture in 1994, sales increased 7% as a result of increased sales of knee implants, ostomy and wound care products. In 1994, medical device sales increased 6% due to volume growth of prosthetic implants, ostomy and wound care products, offset in part by declines in product lines divested in 1994 and 1993.
Operating profit margin in the medical devices segment increased to 30.2% in 1996 from 27.9% in 1995, excluding the 1995 provision for restructuring, due to improved manufacturing efficiencies. In 1995, operating profit margin of 27.9%, excluding the 1995 provision for restructuring, decreased from 29.5% in 1994. The decrease in 1995 resulted from increased research and development and sales force expenditures.
Sales in the Toiletries and Beauty Aids Segment increased 13% in 1996 to $1,753 million, reflecting a 14% increase due to volume, a 2% increase due to pricing and a 3% decrease due to foreign exchange rate fluctuations. Excluding the unfavorable effect of foreign exchange, international sales increased 19% over 1995, while domestic sales increased 13%. The Company's Clairol division continued to maintain its market share leadership in the U.S. in haircolorings and is the fastest growing hair care company in the U.S. Sales of the Company's haircoloring products were strong, increasing 14%, primarily due to the continued success of NATURAL INSTINCTS*, NICE 'N EASY*, ULTRESS*, LASTING COLOR by LOVING CARE* and salon haircolorings and the introduction of CLAIROL HYDRIENCE*, a unique, water-based permanent haircolor. Introduced in June 1996, CLAIROL HYDRIENCE* is finding growing acceptance in the marketplace and is contributing to the growth of the haircoloring segment. Hair care product sales benefited from the strong sales of the HERBAL ESSENCES* complete line of shampoos, conditioners and styling aids and INFUSIUM 23*, as well as the strong performances from the SYSTEME BIOLAGE* and VAVOOM* hair care lines from Matrix Essentials. The Company's skin care products, primarily the SEA BREEZE* and KERI* skin care lines, and the BAN* line of anti-perspirants and deodorants, also contributed to the segment's volume growth.
In 1995, sales in the toiletries and beauty aids segment increased 21%. Excluding the acquisition of Matrix Essentials in 1994, sales increased 10%, primarily due to increased sales of haircoloring, hair and skin care products, anti-perspirants and deodorants. In 1994, sales in the segment increased 4%, primarily due to increased sales of haircoloring, hair and skin care products, partially offset by decreases in anti-perspirant and deodorant sales and the 1993 divestiture of the Clairol beauty appliance business.
Operating profit margin in 1996 was 13.7% compared to 10.7% in 1995, excluding the 1995 provision for restructuring. The 1996 increase is primarily due to
increased gross margins. Operating profit margin, excluding the 1995 provision for restructuring, in 1995 was 10.7%, compared with 13.1% in 1994, due to higher costs of new product introductions and high costs from acquired businesses.
Geographic Areas
Sales in the U.S., net of inter-area sales, increased 10% in 1996, primarily due to anti-cancer and anti-infective drugs from the pharmaceutical segment, infant formulas from the nonprescription health segment and haircoloring and hair care products from the toiletries and beauty aids segment. Strong sales increases were achieved despite a 68% decline in sales of CAPOTEN*. Excluding the sales of CAPOTEN*, U.S. sales increased 16% compared to 1995. Operating profit margin was 27.8% in 1996 and 28.4% in 1995, excluding the 1995 provision for restructuring, primarily due to increased advertising and promotion expenses. In 1995, sales in the U.S. increased 10% due to strong sales in the pharmaceutical and nonprescription health segments, as well as introductory sales of products from every segment. Excluding the 1995 provision for restructuring, operating profit margin decreased to 28.4% in 1995 from 30.1% in 1994, primarily as a result of lower gross margins on WIC sales and increased advertising and promotion expenditures for new and existing products.
International sales increased 9% in 1996 and 22% in 1995. Excluding the effect of foreign exchange rate fluctuations, international sales in 1996 and 1995 increased 13% and 19%, respectively.
Sales in Europe, Mid-East and Africa, net of inter-area sales, increased 8% due to strong sales growth of products from the pharmaceutical segment including anti-cancer and antiretroviral drugs, which were partially offset by decreases in sales of CAPOTEN* and penicillins and from the medical devices segment, including ostomy and wound care products. In the nonprescription health segment, sales of PLUSSSZ*, vitamins from the 1996 acquisition of Pharmavit, and analgesic products from the UPSA Group, contributed to sales growth in the region. The operating profit margin was 25.4% in 1996, a slight decrease from 25.6% in 1995, excluding the 1995 provision for restructuring. In 1995, sales in Europe, Mid-East and Africa increased 30%, primarily due to increased sales of cardiovascular, anti-cancer and anti-infective drugs, and ostomy and wound care products. Sales from the UPSA acquisition also contributed to sales growth in the region. Excluding the 1995 provision for restructuring, operating profit margin increased to 25.6% in 1995 from 21.5% in 1994, primarily as a result of higher utilization of manufacturing facilities in lower tax rate jurisdictions.
Sales in Other Western Hemisphere countries increased 19% in 1996, due to increased sales of products from the pharmaceutical segment, including cardiovascular, anti-cancer and anti-infective drugs; from the nonprescription health segment, including infant formulas; and from the toiletries and beauty aids segments, including haircoloring and hair care products. Sales of pharmaceutical products from the 1996 acquisition of Argentia SA also contributed to sales growth in the region. Operating profit margin decreased to 14.8% from 15.2% in 1995, excluding the 1995 provision for restructuring. In 1995, sales in Other Western Hemisphere countries, net of inter-area sales, increased 5% due to strong sales of anti-cancer and cardiovascular drugs, SERZONE* and ostomy products, offset by the unfavorable effect of foreign exchange rate fluctuations. Excluding the 1995 provision for restructuring, operating profit margin decreased to 15.2% in 1995 from 20.5% in 1994, primarily as a result of lower foreign exchange gains.
Sales in the Pacific region, net of inter-area sales, increased 2% in 1996. Excluding the effect of unfavorable foreign exchange, sales increased 10% as a result of increased sales from the nonprescription health segment including analgesics, infant formulas, school-age nutritional beverages and skin care product lines and from the pharmaceutical segment, products including anti- infective and cardiovascular drugs. Operating profit margin was 8.6% in 1996 compared to 10.8% in 1995, excluding the 1995 provision for restructuring, primarily as a result of increases in advertising and promotion expenditures in support of new and existing products and increased research and development spending. In 1995, sales in the Pacific region, net of inter-area sales, increased 16% as a result of increased sales of analgesics, infant formulas, anti-infectives, cardiovascular drugs and skin care products. Operating profit margin was 10.8% in 1995, excluding the 1995 provision for restructuring, compared to 13.6% in 1994 due to increases in advertising and promotion expenditures in support of new product launches.
Financial Position
The Company considers cash, time deposits and marketable securities as its principal measures of liquidity. These items totaled $2.2 billion at December 31, 1996, compared to $2.2 billion and $2.4 billion at December 31, 1995 and 1994, respectively. Working capital levels remain high at $2.5 billion at December 31, 1996, compared to $2.2 billion and $2.4 billion at December 31, 1995 and 1994, respectively. Cash, time deposits and marketable securities and the conversion of other working capital items are expected to fund near-term operations of the Company.
In November 1996, the Company issued $350 million principal amount of 6.80% Debentures due November 15, 2026. Proceeds from the sale of these securities will be used for general corporate purposes, which may include working capital, capital expenditures, stock repurchase programs, repayment or refinancing of borrowings and acquisitions.
In order to mitigate the effect of foreign currency risk, the Company engages in hedging activities. The impact of such hedges on the Company's results of operations and on its financial position is explained further in the notes to the financial statements.
Internally generated cash provided by operations increased to $2.6 billion in 1996 from $2.5 billion in 1995 and $2.3 billion in 1994. Cash provided by operations continued to be the Company's primary source of funds to finance operating needs and expenditures for new plant and equipment. As part of the Company's ongoing commitment to improve plant efficiency and maintain superior research facilities, the Company has invested over $1.7 billion in capital expansion over the past three years.
Cash provided by operations was also used to pay dividends of nearly $4.5 billion over the past three years, to fund acquisitions and to finance the share repurchase program. The Company's share repurchase program authorizes the purchase of common stock from time to time in the open market or through private transactions as market conditions permit. During the past three years, the Company has repurchased 51 million shares at a cost of $1.8 billion.
During 1996, the Company made a number of external investments to extend sales and earnings growth and increase its global reach. Acquisitions included Pharmavit, one of Hungary's leading manufacturers of over-the-counter medicines, nutritional products and generic pharmaceuticals; Argentia SA, one of Argentina's largest manufacturers and marketers of ethical pharmaceuticals;
Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products, and a number of smaller acquisitions. The Company also divested several small business lines in 1996.
On December 3, 1996, the Company's Board of Directors declared a two-for-one stock split of the common stock of the Company, effective February 1997. The Board of Directors also recommended that an amendment be considered for stockholder approval at the annual meeting of stockholders to increase the number of authorized shares of common stock from 1.5 billion to 2.25 billion.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS
(dollars in millions, except per share amounts)
Year Ended December 31,
EARNINGS ---------------------------
- -------- 1996 1995 1994
------- ------- -------
Net Sales $15,065 $13,767 $11,984
------- ------- -------
Expenses:
Cost of products sold 3,965 3,637 3,122
Marketing, selling and administrative 3,925 3,670 3,166
Advertising and product promotion 1,946 1,646 1,367
Research and development 1,276 1,199 1,108
Special charge - 950 750
Provision for restructuring - 310 -
Other (60) (47) (84)
------- ------- -------
11,052 11,365 9,429
------- ------- -------
Earnings Before Income Taxes 4,013 2,402 2,555
Provision for income taxes 1,163 590 713
------- ------- -------
Net Earnings $ 2,850 $ 1,812 $ 1,842
======= ======= =======
Earnings Per Common Share $2.84 $1.79 $1.81
===== ===== =====
Average Common Shares
Outstanding (in millions) 1,004 1,012 1,017
===== ===== =====
|
Year Ended December 31,
RETAINED EARNINGS --------------------------
- ------------------ 1996 1995 1994
------ ------ ------
Retained Earnings, January 1 $7,917 $7,600 $7,243
Net earnings 2,850 1,812 1,842
------ ------ ------
10,767 9,412 9,085
Less dividends 1,507 1,495 1,485
------ ------ ------
Retained Earnings, December 31 $9,260 $7,917 $7,600
====== ====== ======
|
The accompanying notes are an integral part of these financial statements.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
ASSETS
(dollars in millions)
December 31,
---------------------------
1996 1995 1994
------- ------- -------
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 1,681 $ 1,645 $ 1,642
Time deposits and marketable securities 504 533 781
Receivables, net of allowances 2,651 2,356 2,043
Inventories 1,669 1,451 1,397
Prepaid expenses 1,023 1,033 847
------- ------- -------
Total Current Assets 7,528 7,018 6,710
Property, Plant and Equipment 3,964 3,760 3,666
Insurance Recoverable 853 959 968
Excess of cost over net tangible assets
received in business acquisitions 1,508 1,219 939
Other Assets 832 973 627
------- ------- -------
$14,685 $13,929 $12,910
======= ======= =======
|
The accompanying notes are an integral part of these financial statements.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
(dollars in millions)
December 31,
---------------------------
1996 1995 1994
------- ------- -------
LIABILITIES
- -----------
Current Liabilities:
Short-term borrowings $ 513 $ 575 $ 725
Accounts payable 1,064 848 693
Accrued expenses 1,962 1,939 1,481
Product liability 800 700 635
U.S. and foreign income taxes payable 711 744 740
------- ------- -------
Total Current Liabilities 5,050 4,806 4,274
Product Liability 1,031 1,645 1,201
Other Liabilities 1,068 1,021 1,087
Long-Term Debt 966 635 644
------- ------- -------
Total Liabilities 8,115 8,107 7,206
------- ------- -------
STOCKHOLDERS' EQUITY
- --------------------
Preferred stock, $2 convertible series:
Authorized 10 million shares; issued and
outstanding 15,245 in 1996, 19,023 in
1995 and 21,857 in 1994, liquidation
value of $50 per share - - -
Common stock, par value of $.10 per share:
Authorized 1.5 billion shares; issued
1,082,496,016 in 1996, 540,185,639 in 1995
and 540,173,669 in 1994 108 54 54
Capital in excess of par value of stock 382 375 397
Cumulative translation adjustments (361) (327) (301)
Retained earnings 9,260 7,917 7,600
------- ------- -------
9,389 8,019 7,750
Less cost of treasury stock - 81,806,550
common shares in 1996, 34,953,311 in 1995
and 32,887,848 in 1994 2,819 2,197 2,046
------- ------- -------
Total Stockholders' Equity 6,570 5,822 5,704
------- ------- -------
$14,685 $13,929 $12,910
======= ======= =======
|
The accompanying notes are an integral part of these financial statements.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in millions)
Year Ended December 31,
---------------------------
1996 1995 1994
------- ------- -------
Cash Flows From Operating Activities:
Net Earnings $2,850 $1,812 $1,842
Depreciation and amortization 519 448 328
Special charge - 950 750
Provision for restructuring - 310 -
Other operating items (52) (34) 18
Receivables (262) (319) (63)
Inventories (227) (50) (36)
Accounts payable 177 155 (20)
Accrued expenses 42 166 (73)
Income taxes 250 (252) (8)
Product liability (514) (441) (384)
Other assets and liabilities (142) (246) (53)
------- ------- -------
Net Cash Provided by Operating Activities 2,641 2,499 2,301
------- ------- -------
Cash Flows From Investing Activities:
Proceeds from sales of time deposits and
marketable securities 406 349 35
Purchases of time deposits and marketable
securities (379) (80) (482)
Additions to fixed assets (601) (513) (573)
Proceeds from sales of businesses 213 - 285
Business acquisitions (316) (350) (667)
Other, net (40) (37) (22)
------- ------- -------
Net Cash Used in Investing Activities (717) (631) (1,424)
------- ------- -------
Cash Flows From Financing Activities:
Short-term borrowings (78) (181) 496
Long-term debt 346 (10) 27
Issuances of common stock under stock plans 206 71 24
Purchases of treasury stock (852) (244) (701)
Dividends paid (1,507) (1,495) (1,485)
------- ------- -------
Net Cash Used in Financing Activities (1,885) (1,859) (1,639)
------- ------- -------
Effect of Exchange Rates on Cash (3) (6) (17)
------- ------- -------
Increase (Decrease) in Cash and Cash
Equivalents 36 3 (779)
Cash and Cash Equivalents at Beginning
of Year 1,645 1,642 2,421
------- ------- -------
Cash and Cash Equivalents at End of Year $1,681 $1,645 $1,642
======= ======= =======
|
The accompanying notes are an integral part of these financial statements.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Basis of Consolidation - The consolidated financial statements include the accounts of Bristol-Myers Squibb Company and all of its subsidiaries.
Cash and Cash Equivalents - Cash and cash equivalents primarily include securities with a maturity of three months or less at the time of purchase, recorded at cost, which approximates market.
Time Deposits and Marketable Securities - Time deposits and marketable securities are available for sale and are recorded at fair value, which approximates cost.
Inventory Valuation - Inventories are generally stated at average cost, not in excess of market.
Capital Assets and Depreciation - Expenditures for additions, renewals and betterments are capitalized at cost. Depreciation is generally computed by the straight-line method based on the estimated useful lives of the related assets. The range of annual rates used in computing provisions for depreciation is 2% to 20% for buildings and 5% to 33% for equipment.
Excess of Cost over Net Tangible Assets - The excess of cost over net tangible assets received in business acquisitions is being amortized on a straight-line basis over periods not exceeding 40 years.
Earnings Per Share - Earnings per common share are computed using the weighted average number of shares outstanding during the year. The effect of shares issuable under stock plans is not significant.
In January 1996, the Company acquired Pharmavit Gyogyszer-es Elelmiszeripari Reszvenytarsasag, one of Hungary's leading manufacturers of over-the-counter medicines, nutritional products and generic pharmaceuticals.
In March 1996, the Company acquired Argentia SA, one of Argentina's largest manufacturers and marketers of ethical pharmaceuticals.
In October 1996, the Company completed the acquisition of Oncology Therapeutics Network, a specialty distributor of anti-cancer medicines and related products.
In 1995, the Company acquired A/S GEA Farmaceutisk Fabrik, a leading manufacturer and marketer of branded generic pharmaceuticals for the Scandinavian market, and completed the acquisition of Calgon Vestal Laboratories, a wound and skin care and infection control products business.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
In 1994, the Company acquired Matrix Essentials, Inc., the leading manufacturer in North America of professional hair care and beauty products sold exclusively in beauty salons, and completed the acquisition of the remaining interest in the UPSA Group, which develops and markets a wide range of nonprescription health and pharmaceutical products. The Company sold Squibb Diagnostics and completed the sale of Xomed-Treace, Inc.
Note 3 OTHER INCOME AND EXPENSES
- ---------------------------------
Year Ended December 31,
-----------------------
1996 1995 1994
---- ---- ----
Interest income $ 95 $139 $124
Interest expense (78) (97) (68)
Other - net 43 5 28
---- ---- ----
$ 60 $ 47 $ 84
==== ==== ====
|
Interest expense was reduced by $15 million in 1996, 1995 and 1994 due to interest capitalized on major property, plant and equipment projects. Cash payments for interest, net of amounts capitalized, were $61 million, $78 million and $62 million in 1996, 1995 and 1994, respectively.
Cumulative translation adjustments, which represent the effect of translating assets and liabilities of the Company's non-U.S. entities, except those in highly inflationary economies, were:
1996 1995 1994
---- ---- ----
Balance, January 1 $327 $301 $332
Effect of balance sheet translations:
Amount 38 21 (43)
Tax effect (4) 5 12
---- ---- ----
Balance, December 31 $361 $327 $301
==== ==== ====
|
Included in net earnings were losses of $19 million in 1996, $33 million in 1995 and $44 million in 1994 resulting from foreign currency transactions and translation adjustments.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The components of earnings before income taxes were:
Year Ended December 31,
------------------------
1996 1995 1994
------ ------ ------
U.S. $2,332 $1,195 $1,328
Non-U.S. 1,681 1,207 1,227
------ ------ ------
$4,013 $2,402 $2,555
====== ====== ======
|
The provision for income taxes consisted of:
Year Ended December 31,
------------------------
1996 1995 1994
------- ------ ------
Current:
U.S. $ 462 $466 $423
Non-U.S. 442 356 377
------- ----- -----
904 822 800
------- ----- -----
Deferred:
U.S. 232 (200) (92)
Non-U.S. 27 (32) 5
------- ----- -----
259 (232) (87)
------- ----- -----
$1,163 $590 $713
======= ===== =====
|
Income taxes paid during the year were $861 million, $856 million and $718 million in 1996, 1995 and 1994, respectively.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company's provision for income taxes in 1996, 1995 and 1994 was different
from the amount computed by applying the statutory United States Federal
income tax rate to earnings before income taxes, as a result of the
following:
% of Earnings
Before Income Taxes
-------------------------
1996 1995 1994
----- ----- -----
U.S. statutory rate 35.0% 35.0% 35.0%
Effect of operations in
Puerto Rico and Ireland (5.5) (9.7) (9.4)
State and local taxes .6 .8 1.4
Other (1.1) (1.5) .9
----- ----- -----
29.0% 24.6% 27.9%
===== ===== =====
|
Prepaid taxes at December 31, 1996, 1995 and 1994 were $757 million, $786 million and $591 million, respectively. The deferred income tax liability, included in Other Liabilities, at December 31, 1996 was $124 million. The deferred income tax asset, included in Other Assets, at December 31, 1995 and 1994 was $130 million and $65 million, respectively.
The components of prepaid and deferred income taxes consisted of:
December 31,
-----------------------
1996 1995 1994
---- ---- ----
Product liability $383 $527 $304
Postretirement and pension benefits 129 163 247
Restructuring and integrating businesses 88 130 38
Depreciation (245) (210) (205)
Other 278 306 272
---- ---- ----
$633 $916 $656
==== ==== ====
|
The Company has settled its United States Federal income tax returns with the Internal Revenue Service through 1991.
United States Federal income taxes have not been provided on substantially all of the unremitted earnings of non-U.S. subsidiaries, since it is management's practice and intent to reinvest such earnings in the operations of these subsidiaries. The total amount of the net unremitted earnings of non-U.S. subsidiaries was approximately $2,506 million at December 31, 1996.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Note 6 INVENTORIES
- -------------------
December 31,
--------------------------
1996 1995 1994
------ ------ ------
Finished goods $ 994 $ 892 $ 781
Work in process 223 180 233
Raw and packaging materials 452 379 383
------ ------ ------
$1,669 $1,451 $1,397
====== ====== ======
Note 7 PROPERTY, PLANT AND EQUIPMENT
- -------------------------------------
December 31,
--------------------------
1996 1995 1994
------ ------ ------
Land $ 160 $ 160 $ 159
Buildings 2,427 2,296 2,103
Machinery, equipment and fixtures 3,626 3,403 3,061
Construction in progress 433 405 513
------ ------ ------
6,646 6,264 5,836
Less accumulated depreciation 2,682 2,504 2,170
------ ------ ------
$3,964 $3,760 $3,666
====== ====== ======
|
The Company recorded a $310 million restructuring charge, $198 million after taxes, in the fourth quarter of 1995. The restructuring charge related to the consolidation of plants and facilities, and related employee terminations. The restructuring charge consisted of employee-related costs of $190 million, $100 million of asset write-downs and $20 million of other related expenses.
Short-term borrowings included amounts primarily due to banks of $440 million, $558 million and $704 million at December 31, 1996, 1995 and 1994, respectively, and current installments of long-term debt of $73 million, $17 million and $21 million at December 31, 1996, 1995 and 1994, respectively.
The Company has short-term lines of credit with domestic and foreign banks. At December 31, 1996, the unused portions of these lines of credit were approximately $200 million and $578 million, respectively.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The components of long-term debt were:
December 31,
------------------------
1996 1995 1994
---- ---- ----
6.80% Debentures, due in 2026 $344 - -
7.15% Debentures, due in 2023 343 $343 $343
3.51% Term Loan, due in 2005 53 59 -
5.75% Industrial Revenue Bonds, due in 2024 34 34 34
6.18% Term Loan, due in 1997 - 64 65
Other, 2.83% to 6.50%,
due in varying amounts through 2016 192 135 202
---- ---- ----
$966 $635 $644
==== ==== ====
Long-term debt at December 31, 1996 was payable:
Years Ending December 31,
- -------------------------
1998 $ 18
1999 10
2000 38
2001 6
2002 32
2003 and later 862
----
$966
====
|
On December 3, 1996, the Company's Board of Directors authorized a two-for-one split of its common stock, effective February 1997. Per common share amounts in the accompanying consolidated financial statements give effect to the stock split. The Board of Directors also recommended that an amendment be considered for stockholder approval at the annual meeting of stockholders to increase the number of authorized shares of common stock from 1.5 billion shares to 2.25 billion shares.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Changes in capital shares and capital in excess of par value of stock were:
Capital in
Shares of Common Stock Excess of
-------------------------- Par Value
Issued Treasury of Stock
------------- ---------- ----------
Balance, December 31, 1993 532,688,458 20,782,281 $353
Issued pursuant to stock plans,
options, rights and warrants 15,747 (518,733) (15)
Conversions of preferred stock 16,646 - -
Purchases - 12,624,300 -
Other 7,452,818 - 59
------------- ---------- ----
Balance, December 31, 1994 540,173,669 32,887,848 397
Issued pursuant to stock plans,
options and rights - (1,602,537) (22)
Conversions of preferred stock 11,970 - -
Purchases - 3,668,000 -
------------- ---------- ----
Balance, December 31, 1995 540,185,639 34,953,311 375
Effect of two-for-one
stock split 540,185,639 34,953,311 (54)
Issued pursuant to stock plans,
options and rights 221,032 (6,623,272) (25)
Conversions of preferred stock 31,960 - -
Purchases - 18,523,200 -
Other 1,871,746 - 86
------------- ---------- ----
Balance, December 31, 1996 1,082,496,016 81,806,550 $382
============= ========== ====
|
Each share of the Company's preferred stock is convertible into 8.48 shares of common stock and is callable at the Company's option. The reductions in the number of issued shares of preferred stock in 1996, 1995 and 1994 were due to conversions into shares of common stock.
Dividends per common share were $1.50 in 1996, $1.48 in 1995 and $1.46 in 1994.
Under the Company's stock option plans, officers, directors and key employees may be granted options to purchase the Company's common stock at no less than 100% of the market price on the date the option is granted. Options generally become exercisable in installments of 25% per year on each of the first through the fourth anniversaries of the grant date and have a maximum term of 10 years. Additionally, the plans provide for the granting of stock appreciation rights whereby the grantee may surrender exercisable options and receive common stock and/or cash measured by the excess of the market price of the common stock over the option exercise price. The plans also provide for the granting of performance-based stock options to certain key executives.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Under the terms of the 1983 Stock Option Plan, as amended, additional shares are authorized in the amount of 0.9% of the outstanding shares per year through 2003 and incorporates the Company's long-term performance award plan.
Under the TeamShare Stock Option Plan, all full-time employees, excluding key executives, meeting certain years of service requirements are granted options to purchase the Company's common stock at the market price on the date the options are granted. The Company has authorized 30,000,000 shares for issuance under the plan. As of December 31, 1996, a total of 20,250,800 options were granted under the plan with 400 options granted to each eligible employee. Individual grants generally become exercisable on or after the third anniversary of the grant date.
The Company's restricted stock award plan provides for the granting of up to 6,000,000 shares of common stock to key employees, subject to restrictions as to continuous employment except in the case of death or normal retirement. Restrictions generally expire over a five-year period from date of grant. Compensation expense is recognized over the restricted period. At December 31, 1996, a total of 1,261,112 shares were outstanding under the plan.
The Company applies Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations in accounting for its plans. Accordingly, no compensation expense has been recognized for its stock-based compensation plans other than for restricted stock and performance-based awards. Had compensation cost for the Company's other stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, the Company's net income and earnings per share would have been reduced by approximately $55 million, or $.05 per share in 1996 and $35 million, or $.03 per share in 1995. The fair value of the options granted during 1996 and 1995 was estimated as $8.51 per share and $6.47 per share, respectively, on the date of grant using the Black-Scholes option-pricing model with the following assumptions:
1996 1995
----- -----
Dividend yield 4.3% 4.2%
Volatility 17.0% 18.2%
Risk-free interest rate 6.5% 6.9%
Assumed forfeiture rate 3.0% 3.0%
Expected life (years) 7 7
|
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Stock option and long-term performance award transactions were:
Weighted
Average of
Shares of Common Stock Exercise
---------------------------- Price
Available for Under of Shares
Option/Award Plan Under Plan
------------- ---------- ----------
Balance, December 31, 1993 4,245,513 18,364,163 $60.80
Authorized 4,607,156 - -
Granted (5,296,982) 5,296,982 51.93
Exercised - (686,507) 32.97
Lapsed 1,012,237 (1,027,651) 62.48
------------- ----------
Balance, December 31, 1994 4,567,924 21,946,987 56.99
Authorized 19,565,572 - -
Granted (13,449,952) 13,449,952 61.79
Exercised - (2,012,827) 40.96
Lapsed 1,129,560 (1,129,574) 61.92
------------- ----------
Balance, December 31, 1995 11,813,104 32,254,538 59.76
Effect of two-for-one
stock split 11,813,104 32,254,538 -
Authorized 9,094,182 - -
Granted (16,179,560) 16,179,560 46.92
Exercised - (8,863,078) 27.62
Lapsed 1,788,528 (1,796,826) 33.00
------------- ----------
Balance, December 31, 1996 18,329,358 70,028,732 $34.27
============= ==========
|
The following table summarizes information concerning currently outstanding and exercisable options/awards:
Options/Awards Outstanding Options Exercisable
---------------------------------- ---------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
- --------------- ----------- ----------- -------- ----------- --------
$10 - $20 781,054 1.60 $13.61 781,054 $13.61
$20 - $30 19,915,520 5.76 26.56 14,770,870 26.57
$30 - $40 33,445,632 7.24 33.20 12,712,644 36.60
$40 - $50 11,876,650 9.17 43.71 102,000 42.41
$50 - $60 4,009,876 9.29 57.55 - -
---------- ----------
70,028,732 28,366,568
========== ==========
|
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
At December 31, 1996, 104,976,640 shares of common stock were reserved for issuance pursuant to stock plans, options and conversions of preferred stock.
Attached to each outstanding share of the Company's common stock is one half of a Right. The Rights will be exercisable if a person or group acquires beneficial interest of 15% or more of the Company's outstanding common stock, or commences a tender or exchange offer for 15% or more of the Company's outstanding common stock. Each one half of a Right will entitle stockholders to buy one one-thousandth of a share of a new series of participating preferred stock of the Company at an exercise price of $200. The Rights will expire on December 18, 1997. In the event of certain merger, sale of assets or self-dealing transactions, each one half of a Right will then entitle its holder to acquire shares having a value of twice the Right's exercise price. The Company may redeem the Rights at $.01 per one half of a Right at any time until the 15th day following public announcement that a 15% position has been acquired.
The Company enters into foreign exchange option and forward contracts to manage its exposure to currency fluctuations.
The Company has exposures to net foreign currency denominated assets and liabilities, which approximated $1,640 million, $1,385 million and $1,117 million at December 31, 1996, 1995 and 1994, respectively, primarily in Deutsche marks, French francs, Italian lira and Japanese yen. The Company mitigates the effect of these exposures through third party borrowings and foreign exchange forward contracts.
Foreign exchange option contracts, which typically expire within one year, are used to hedge intercompany shipments expected to occur during the next year. Gains on these contracts are deferred and are recognized in the same period as the hedged transactions. Certain foreign exchange forward contracts are used to minimize exposure of foreign currency transactions and firm commitments to fluctuating exchange rates. Gains or losses on these contracts are recognized in the basis of the transaction being hedged. The notional amounts of the Company's foreign exchange option and forward contracts at December 31, 1996, 1995 and 1994 were $1,331 million, $1,377 million and $1,200 million, respectively.
The Company does not anticipate any material adverse effect on its financial position resulting from its involvement in these instruments, nor does it anticipate non-performance by any of its counterparties.
At December 31, 1996, 1995 and 1994, the carrying value of all financial instruments, both short- and long-term, approximated their fair values.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Minimum rental commitments under all noncancelable operating leases, primarily real estate, in effect at December 31, 1996 were:
Years Ending December 31,
- -------------------------
1997 $121
1998 101
1999 80
2000 65
2001 61
Later years 212
----
Total minimum payments 640
Less total minimum sublease rentals 152
----
Net minimum rental commitments $488
====
|
Operating lease rental expense (net of sublease rental income of $27 million in 1996, $25 million in 1995 and $23 million in 1994) was $129 million in 1996, $135 million in 1995 and $136 million in 1994.
The Company's products are reported in four industry segments as follows:
Includes prescription medicines, mainly cardiovascular, anti-cancer and anti-infective drugs, which comprise about 30%, 25% and 20%, respectively, in 1996, and 40%, 20% and 20%, respectively, in both 1995 and 1994, of the segment's sales, central nervous system drugs and other pharmaceutical products.
Includes infant formulas and other nutritional products, which comprise about 65% of the segment's sales, analgesics, cough/cold remedies and skin care products.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
Includes orthopaedic implants, which comprise about 40% of the segment's sales, ostomy and wound care products, surgical instruments and other medical devices.
Includes haircoloring and hair care preparations, which comprise about 80% of the segment's sales in 1996, and 75% in both 1995 and 1994, and deodorants, anti-perspirants and other toiletries and beauty aids.
Unallocated expenses principally consist of general administrative
expenses and net interest income. Other assets are principally cash
and cash equivalents, time deposits and marketable securities and
insurance recoverable. Inter-area sales by geographic area for the
years ended December 31, 1996, 1995 and 1994, respectively, were:
United States - $1,210 million, $977 million and $867 million;
Europe, Mid-East and Africa - $692 million, $542 million and $428
million; Other Western Hemisphere - $59 million, $49 million and $37
million; and Pacific - $25 million, $21 million and $28 million.
These sales are usually billed at or above manufacturing costs.
Net assets relating to operations outside the United States amounted to $3,057 million, $2,609 million and $2,286 million at December 31, 1996, 1995 and 1994, respectively.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
INDUSTRY SEGMENTS Net Sales Profit(a)
- ----------------- ----------------------- ------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------ ------
Pharmaceutical Products $ 8,702 $ 7,810 $ 6,970 $2,871 $2,351 $2,270
Nonprescription
Health Products 2,750 2,495 2,043 548 471 456
Medical Devices 1,860 1,906 1,685 562 510 497
Toiletries & Beauty Aids 1,753 1,556 1,286 241 136 168
------- ------- ------- ------ ------ ------
Net sales and
operating profit $15,065 $13,767 $11,984 $4,222 $3,468 $3,391
======= ======= ======= ====== ====== ======
GEOGRAPHIC AREAS Net Sales Profit(b)
- ---------------- ----------------------- ------------------------
1996 1995 1994 1996 1995 1994
------- ------- ------- ------ ------ ------
United States $ 9,661 $ 8,662 $ 7,846 $2,688 $2,392 $2,360
Europe, Mid-East and
Africa 4,520 4,074 3,139 1,147 833 675
Other Western Hemisphere 1,307 1,097 1,039 193 152 213
Pacific 1,563 1,523 1,320 135 147 179
Inter-area eliminations (1,986) (1,589) (1,360) 59 (56) (36)
------ ------- ------- ------ ------ ------
Net sales and
operating profit $15,065 $13,767 $11,984 4,222 3,468 3,391
======= ======= =======
Unallocated expenses(c) (209) (1,066) (836)
------ ------ ------
Earnings before
income taxes $4,013 $2,402 $2,555
====== ====== ======
|
(a) The 1995 operating profit of the Company's industry segments included the provision for restructuring as follows: Pharmaceutical Products - $252 million; Nonprescription Health Products - million; Medical Devices - $22 million; and Toiletries and Beauty Aids - $30 million.
(b) The earnings before income taxes included the 1995 provision for restructuring as follows: United States - $66 million; Europe, Mid-East and Africa - $211 million; Other Western Hemisphere - $15 million; and Pacific - $18 million.
(c) Unallocated expenses included a special charge for pending and future product liability claims of $950 million and $750 million in 1995 and 1994, respectively.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
INDUSTRY SEGMENTS Year-End Assets
- ----------------- ---------------------------
1996 1995 1994
------- ------ ------
Pharmaceutical Products $ 6,319 $5,497 $5,180
Nonprescription Health Products 1,992 1,800 1,635
Medical Devices 1,382 1,414 1,033
Toiletries and Beauty Aids 786 669 663
------- ------ ------
Identifiable segment assets $10,479 $9,380 $8,511
======= ====== ======
GEOGRAPHIC AREAS Year-End Assets
- ---------------- ---------------------------
1996 1995 1994
------- ------- -------
United States $ 5,948 $ 5,254 $ 4,669
Europe, Mid-East and Africa 3,344 3,157 2,894
Other Western Hemisphere 740 462 416
Pacific 1,026 1,032 949
Inter-area eliminations (579) (525) (417)
------- ------- -------
Identifiable geographic assets 10,479 9,380 8,511
Other assets(d) 4,206 4,549 4,399
------- ------- -------
Total assets $14,685 $13,929 $12,910
======= ======= =======
Capital
INDUSTRY SEGMENTS Expenditures Depreciation
- ----------------- ------------------ ----------------
1996 1995 1994 1996 1995 1994
---- ---- ---- ---- ---- ----
Pharmaceutical Products $408 $336 $379 $235 $228 $205
Nonprescription Health
Products 72 78 112 61 46 38
Medical Devices 36 47 37 43 42 38
Toiletries and Beauty Aids 70 33 26 27 26 23
---- ---- ---- ---- ---- ----
Identifiable industry
totals 586 494 554 366 342 304
Other 21 23 23 21 23 24
---- ---- ---- ---- ---- ----
Consolidated totals $607 $517 $577 $387 $365 $328
==== ==== ==== ==== ==== ====
|
(d) Other Assets included Insurance Recoverable related to the 1993 special charge of $853 million, $959 million and $968 million in 1996, 1995 and 1994, respectively.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company and certain of its subsidiaries have defined benefit pension plans for regular full-time employees. The principal pension plan is the Bristol-Myers Squibb Retirement Income Plan. The Company's funding policy is to contribute amounts to provide for current service and to fund past service liability. Plan benefits are primarily based on years of credited service and on participant's compensation. Plan assets principally consist of equity securities and fixed income securities.
Cost for the Company's defined benefit plans included the following components:
Year Ended December 31,
------------------------
1996 1995 1994
----- ----- -----
Service cost - benefits earned during the year $ 127 $ 101 $ 114
Interest cost on projected benefit obligation 191 183 166
Actual (earnings) losses on plan assets (359) (406) 11
Net amortization and deferral 171 213 (158)
----- ----- -----
Net pension expense $ 130 $ 91 $ 133
===== ===== =====
|
The weighted average actuarial assumptions for the Company's pension plans were as follows:
December 31,
------------------------
1996 1995 1994
----- ----- -----
Discount rate 7.8% 7.3% 8.8%
Compensation increase 4.8% 4.5% 5.3%
Long-term rate of return 10.0% 10.0% 10.0%
|
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The funded status of the plans was as follows:
December 31,
----------------------------
1996 1995 1994
-------- ------- -------
Actuarial present value of
accumulated benefit obligation:
Vested $ (2,044) $(2,059) $(1,624)
Non-vested (252) (217) (178)
------- ------- -------
$ (2,296) $(2,276) $(1,802)
======= ======= =======
Total projected benefit obligation $ (2,734) $(2,689) $(2,138)
Plan assets at fair value 2,596 2,307 1,836
------- ------- -------
Plan assets less than projected benefit
obligation (138) (382) (302)
Unamortized net assets at adoption (62) (76) (90)
Unrecognized prior service cost 67 78 89
Unrecognized net losses 235 516 309
Adjustment required to recognize minimum
pension liability in Other Assets (26) (48) (23)
------- ------- -------
Prepaid (Accrued) pension expense $ 76 $ 88 $ (17)
======= ======= =======
|
Plan assets less than projected benefit obligation included $184 million, $150 million and $120 million in an unfunded benefit equalization plan at December 31, 1996, 1995 and 1994, respectively.
In 1995, the increase in total projected benefit obligation was due to a lower discount rate and the increase in plan assets was due to significantly higher earnings and cash contributions.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
The Company provides comprehensive medical and group life benefits to substantially all U.S. retirees who elect to participate in the Company's comprehensive medical and group life plans. The medical plan is contributory. Contributions are adjusted periodically and vary by date of retirement and the original retiring company. The life insurance plan is non-contributory.
Cost for the Company's postretirement benefit plans included the following components:
Year Ended
December 31,
-------------------
1996 1995 1994
---- ---- ----
Service cost - benefits earned during the year $ 9 $ 8 $ 9
Interest cost on accumulated postretirement
benefit obligation 34 41 37
Actual earnings on plan assets (13) (11) -
Net amortization and deferral 6 7 (2)
---- ---- ----
Net postretirement benefit expense $ 36 $ 45 $ 44
==== ==== ====
The status of the plans was as follows:
December 31,
--------------------
1996 1995 1994
----- ----- -----
Accumulated postretirement benefit obligation:
Retirees $(347) $(403) $(386)
Fully eligible active plan participants (17) (17) (13)
Other active plan participants (147) (159) (118)
----- ----- -----
(511) (579) (517)
Plan assets at fair value 89 74 41
----- ----- -----
Accumulated postretirement benefit obligation
in excess of plan assets (422) (505) (476)
Unrecognized prior service cost 5 3 1
Unrecognized net (gain) losses (56) 38 10
----- ----- -----
Accrued postretirement benefit expense $(473) $(464) $(465)
===== ===== =====
|
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
For measurement purposes, an annual rate of increase in the per capita cost of covered health care benefits of 8.4% for participants under age 65 and 7.4% for participants age 65 and over was assumed for 1997; the rate was assumed to decrease gradually to 5.0% in 2007 and to remain at that level thereafter. Increasing the assumed medical care cost trend rates by 1 percentage point in each year would increase the accumulated postretirement benefit obligation as of December 31, 1996 by $25 million and the aggregate of the service and interest cost components of net postretirement benefit expense for the year then ended by $2 million. The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.8% in 1996, 7.3% in 1995 and 8.8% in 1994.
Plan assets principally consist of equity securities and fixed income securities. The expected long-term rate of return on plan assets was 10.0% in 1996, 1995 and 1994.
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.
As of December 31, 1996, approximately 22,000 plaintiffs had filed suit against the Company, its subsidiary, Medical Engineering Corporation (MEC), and certain other subsidiaries, in federal and state courts and in certain Canadian provincial courts, alleging damages for personal injuries of various types resulting from polyurethane covered breast implants and smooth walled breast implants. The Company, MEC and certain other defendants are participants in a settlement program originally approved on September 1, 1994, and revised on December 22, 1995, by the Federal District Court in Birmingham, Alabama. A number, yet unknown, of these plaintiffs have participated or are expected to participate in the revised settlement, and thereby discontinue their lawsuits. Separate class action settlements have been approved in the provincial courts of Ontario and Quebec, and an agreement has been reached under which other foreign breast implant recipients may settle their claims. Approximately 7,100 domestic class members with implants of all manufacturers, including manufacturers not participating in the revised settlement, opted out of the class action settlement approved in 1994. Of this group, the Company has identified approximately 2,300 domestic opt-outs with active claims based upon alleged MEC implants. In connection with the revised settlement, the claims office reports that, as of December 16, 1996, over 122,000 registered class members have submitted proof of manufacturer documentation. The claims office also reports that, as of December 16, 1996, over 52,000 of these registrants had been sent Notification of Status letters advising them of their status in the settlement. Of recipients of such letters, over 35,000 have proved that they have an implant of one of three settling defendants (or their subsidiaries or predecessor companies) and have chosen to participate in the settlement, while approximately 3,300 opted out. The decisions of the
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
remaining recipients of Notification of Status letters were not reported as of December 31, 1996. The claims office also reports that approximately 8,000 domestic class members (with implants of all manufacturers) opted out after receiving the initial notice of the revised settlement in early 1996. Because the opt-out period has not expired for most class members, and because our information is incomplete, it is not possible at this time to estimate with any reasonable precision the total number of women who will opt out of the revised settlement.
The cost of the settlement is dependent upon complex and varying factors, including the number of class members that participate in the settlement, the kinds of claims approved and their dollar value. The cost to the company of resolving opt-out claims is also subject to a number of complex uncertainties in addition to the unknown quantity and quality of such claims. In connection with breast implant product liability claims, the company recorded special charges in 1993 of $500 million before taxes, $310 million after taxes, or $.30 per share, in 1994 of $750 million before taxes, $488 million after taxes, or $.48 per share, and in 1995 of $950 million before taxes, $590 million after taxes, or $.58 per share. The 1993 special charge consisted of $1.5 billion (recorded as Product Liability), offset by $1.0 billion of expected insurance proceeds (recorded as Insurance Recoverable).
In light of the continuing uncertainties attendant to these and other factors (including insurance recoveries), it is difficult at this time to estimate with any precision the cost of the breast implant product liability claims to the Company. An additional future charge to earnings might be required as additional information relating to the revised settlement and the litigation becomes known.
The Company, one of its subsidiaries, and others are or have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. On June 7, 1996, the Company reached a settlement covering all the then pending infant formula indirect purchaser cases except the case in Massachusetts and the case brought by the Louisiana Attorney General. On September 29, 1996, a federal district court in Tallahassee, Florida, entered an order in favor of the defendants, effectively dismissing the Louisiana Attorney General action. No appeal was taken from that decision. In December 1996, the company entered an agreement in principle to settle the Massachusetts action. Final court approval of the above settlements has been granted in every case except those pending in Louisiana, Massachusetts, Michigan and Nevada. In Louisiana on January 21, 1997, the court entered an order disapproving the settlement. In the other jurisdictions, joint motions for final approval of the settlement have either not yet been filed (Massachusetts) or not yet been ruled upon (Michigan and Nevada).
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions)
As of December 31, 1996, the Company is a defendant in over 100 actions brought against the Company and more than 30 other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers in various federal district courts by certain chain drugstores, supermarket chains and independent drugstores, suing either individually or as representatives of a nationwide class of retail pharmacies that has been certified. These cases, which have been coordinated for pretrial purposes, all seek treble damages and injunctive relief on account of alleged antitrust violations in the pricing and marketing of brand name prescription drugs. Plaintiffs in the class action have indicated that they intend to claim damages, before trebling, ranging from 5% to approximately 20% of the value of their purchases of brand name prescription drugs from defendants since October 15, 1989. It is estimated that the class represents approximately two-thirds of retail pharmacy purchases of brand name prescription drugs during the alleged damages period. The Company, without admitting any wrongdoing, reached an amended agreement as of May 1, 1996, to settle the class action. The settlement, as amended, has been approved by the court, and purported appeals from that approval are pending. Federal cases brought by retail pharmacies that have opted out of the class remain pending. The largest opt-out retailer plaintiffs have purported to quantify their conspiracy damage claims against the defendants, including the Company, asserting damages aggregating approximately $2.4 billion before trebling. Cases brought by retail pharmacies in state court under state law alleging similar grounds are proceeding in California, Alabama, Wisconsin and Minnesota. Cases brought by consumers in state court under state law alleging similar grounds have been brought in California, Washington, Colorado, New York, Arizona, Maine, Alabama, Michigan, Minnesota, Wisconsin, the District of Columbia, Kansas and Florida.
The Company, together with others, is a party to, or otherwise involved in, a number of proceedings brought by the Environmental Protection Agency or comparable state agencies under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund) or comparable state laws directed at the cleanup of hazardous waste sites.
While it is not possible to predict with certainty the outcome of these cases, it is the opinion of management that these lawsuits, claims and proceedings which are pending against the Company are without merit or will not have a material adverse effect on the Company's operating results, liquidity or consolidated financial position.
BRISTOL-MYERS SQUIBB COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts)
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
------- ------- ------- ------- -------
1996:
Net Sales $3,669 $3,696 $3,745 $3,955 $15,065
Gross Profit 2,734 2,734 2,742 2,890 11,100
Net Earnings 726 655 753 716 2,850
Earnings Per Common Share .72 .65 .75 .71 2.84
1995:
Net Sales $3,301 $3,445 $3,413 $3,608 $13,767
Gross Profit 2,424 2,536 2,483 2,687 10,130
Net Earnings/(Loss)* 657 608 689 (142) 1,812
Earnings/(Loss) Per
Common Share* .65 .60 .68 (.14) 1.79
|
* In 1995, the fourth quarter and annual results included a charge of $950 million ($590 million after taxes, or $.58 per share) for pending and future product liability claims, and a provision for restructuring of $310 million ($198 million after taxes).
To the Board of Directors
and Stockholders of
Bristol-Myers Squibb Company
In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) and (2) on page 55 present fairly, in all material respects, the financial position of Bristol-Myers Squibb Company and its subsidiaries at December 31, 1996, 1995 and 1994, and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP - ------------------------ 1177 Avenue of the Americas New York, New York 10036 January 22, 1997 |
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
(a) Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 6, 1997 with respect to the Directors of the Registrant which is incorporated herein by reference and made a part hereof in response to the information required by Item 10.
(b) The information required by Item 10 with respect to the Executive Officers of the Registrant has been included in Part IA of this Form 10-K Annual Report in reliance on General Instruction G of Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K.
Item 11. EXECUTIVE COMPENSATION.
Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 6, 1997 with respect to Executive Compensation which is incorporated herein by reference and made a part hereof in response to the information required by Item 11.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 6, 1997 with respect to the security ownership of certain beneficial owners and management which is incorporated herein by reference and made a part hereof in response to information required by Item 12.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to the Proxy Statement for the Annual Meeting of Stockholders on May 6, 1997 with respect to certain relationships and related transactions which is incorporated herein by reference and made a part hereof in response to the information required by Item 13.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Page
Number
------
(a)
1. Financial Statements 28-31
Notes to Consolidated Financial Statements 32-52
Report of Independent Accountants 53
2. Financial Statement Schedules
Schedule Page
Number Number
-------- ------
Valuation and qualifying accounts II S-1
|
All other schedules not included with this additional financial data are omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
3. Exhibit List
The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. Unless otherwise indicated, all Exhibits are part of Commission File Number 1-1136.
3a. Restated Certificate of Incorporation of Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 4a to Registration Statement No. 33-33682 on Form S-3).
3b. Bylaws of Bristol-Myers Squibb Company, as amended through November 5, 1996, filed herewith.
4a. Letter of Agreement dated March 28, 1984 (incorporated herein by reference to Exhibit 4 to Form 10-K for the fiscal year ended December 31, 1983).
4b. Rights Agreement, dated as of December 4, 1987, between Bristol-Myers Squibb Company and Manufacturers Hanover Trust Company, as amended (incorporated herein by reference to Exhibit 1 to the Form 8-A dated December 10, 1987 and Exhibit 1 to the Form 8 dated July 27, 1989) and Rights Agreement Certificate, filed herewith.
4c. Indenture, dated as of June 1, 1993, between Bristol-Myers Squibb Company and The Chase Manhattan Bank (National Association), as trustee (incorporated herein by reference to Exhibit 4.1 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993).
4d. Form of 7.15% Debenture Due 2023 of Bristol-Myers Squibb Company
(incorporated herein by reference to Exhibit 4.2 to the Form 8-K dated May 27, 1993, and filed on June 3, 1993).
4e. Form of 6.80% Debenture Due 2026 of Bristol-Myers Squibb Company, filed herewith.
**10a. Bristol-Myers Squibb Company 1997 Stock Incentive Plan, filed herewith.
**10b. Bristol-Myers Squibb Company Executive Performance Incentive Plan, filed herewith.
**10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, as Amended and Restated as of September 10, 1996, filed herewith.
**10d. Squibb Corporation 1982 Option, Restricted Stock and Performance Unit Plan, as amended (incorporated herein by reference to Exhibit 10b to the Form 10-K for the fiscal year ended December 31, 1993).
**10e. Squibb Corporation 1986 Option, Restricted Stock and Performance Unit Plan, as amended (as adopted, incorporated herein by reference to Exhibit 10k to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1988, File No. 1-5514; as amended effective July 1, 1993, and incorporated herein by reference to Exhibit 10c to the Form 10-K for the fiscal year ended December 31, 1993).
**10f. Bristol-Myers Squibb Company Performance Incentive Plan, as amended (as adopted, incorporated herein by reference to Exhibit 2 to the Form 10-K for the fiscal year ended December 31, 1978; as amended as of January 8, 1990, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1990; as amended on April 2, 1991, incorporated herein by reference to Exhibit 19b to the Form 10-K for the fiscal year ended December 31, 1991; as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective January 1, 1994, incorporated herein by reference to Exhibit 10d to the Form 10-K for the fiscal year ended December 31, 1994).
**10g. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Retirement Income Plan or the Bristol-Myers Squibb Puerto Rico, Inc. Retirement Income Plan, as amended (as amended and restated as of January 1, 1993, as amended effective October 1, 1993, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1993; and as amended effective February 1, 1995, incorporated herein by reference to Exhibit 10e to the Form 10-K for the fiscal year ended December 31, 1996).
**10h. Benefit Equalization Plan of Bristol-Myers Squibb Company and its Subsidiary or Affiliated Corporations Participating in the Bristol-Myers Squibb Company Savings and Investment Program, as amended (as amended and restated as of May 1, 1990, incorporated herein by reference to Exhibit 19d to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991,
incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1990; as amended as of January 1, 1991, incorporated herein by reference to Exhibit 19e to the Form 10-K for the fiscal year ended December 31, 1991, as amended as of October 1, 1994, incorporated herein by reference to Exhibit 10f to the Form 10-K for the fiscal year ended December 31, 1994).
**10i. Squibb Corporation Supplementary Pension Plan, as amended (as previously amended and restated, incorporated herein by reference to Exhibit 19g to the Form 10-K for the fiscal year ended December 31, 1991; as amended as of September 14, 1993, and incorporated herein by reference to Exhibit 10g to the Form 10-K for the fiscal year ended December 31, 1993).
**10j. Bristol-Myers Squibb Company Restricted Stock Award Plan, as amended (as adopted on November 7, 1989, incorporated herein by reference to Exhibit 10t to the Form 10-K for the fiscal year ended December 31, 1989; as amended on December 4, 1990, incorporated herein by reference to Exhibit 19a to the Form 10-K for the fiscal year ended December 31, 1990; as amended effective July 1, 1993, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1993; as amended effective December 6, 1994, incorporated herein by reference to Exhibit 10h to the Form 10-K for the fiscal year ended December 31, 1994).
**10k. Bristol-Myers Squibb Company Retirement Income Plan for Non-Employee Directors, as amended to March 5, 1996, filed herewith.
**10l. Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for Non-Employee Directors, as amended to January 13, 1997, filed herewith.
**10m. Bristol-Myers Squibb Company Non-Employee Directors' Stock Option Plan, as amended (as approved by the Stockholders on May 1, 1990, incorporated herein by reference to Exhibit 28 to Registration Statement No. 33-38587 on Form S-8; as amended May 7, 1991, incorporated herein by reference to Exhibit 19c to the Form 10-K for the fiscal year ended December 31, 1991).
**10n. Squibb Corporation Deferral Plan for Fees of Outside Directors, as amended (as adopted, incorporated herein by reference to Exhibit 10e to the Squibb Corporation Form 10-K for the fiscal year ended December 31, 1987, File No. 1-5514; as amended effective December 31, 1991, incorporated herein by reference to Exhibit 10m to the Form 10-K for the fiscal year ended December 31, 1992).
**10o. Amendment to all of the Company's plans, agreements, legal documents and other writings, pursuant to action of the Board of Directors on October 3, 1989, to reflect the change of the Company's name to Bristol-Myers Squibb Company (incorporated herein by reference to Exhibit 10v to the Form 10-K for the fiscal year ended December 31, 1989).
11. Computation of Per Share Earnings (filed herewith).
21. Subsidiaries of the Registrant (filed herewith).
23. Consent of Price Waterhouse LLP(filed herewith).
27. Bristol-Myers Squibb Company Financial Data Schedule (filed herewith).
99. Additional Exhibit (filed herewith).
(b) Reports on Form 8-K
None.
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
BRISTOL-MYERS SQUIBB COMPANY
(Registrant)
By /s/ Charles A. Heimbold, Jr.
----------------------------------
Charles A. Heimbold, Jr.
Chairman of the Board and
Chief Executive Officer
March 31, 1997
----------------------------------
Date
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- --------------
Chairman of the Board,
Chief Executive Officer
and Director (Principal
/s/ Charles A. Heimbold, Jr. Executive Officer) March 31, 1997
- -----------------------------
(Charles A. Heimbold, Jr.)
Chief Financial Officer
and Senior Vice President
Corporate Staff(Principal
/s/ Michael F. Mee Financial Officer) March 31, 1997
- -----------------------------
(Michael F. Mee)
|
Controller and Vice President, Corporate Staff(Principal
/s/ Frederick S. Schiff Accounting Officer) March 31, 1997 - ----------------------------- (Frederick S. Schiff) |
Signature Title Date
--------- ----- -------------
/s/ Robert E. Allen Director March 31, 1997
- -----------------------------
(Robert E. Allen)
Executive Vice
/s/ Michael E. Autera President and Director March 31, 1997
- -----------------------------
(Michael E. Autera)
/s/ Ellen V. Futter Director March 31, 1997
- -----------------------------
(Ellen V. Futter)
/s/ Louis V. Gerstner, Jr. Director March 31, 1997
- -----------------------------
(Louis V. Gerstner, Jr.)
/s/ John D. Macomber Director March 31, 1997
- -----------------------------
(John D. Macomber)
/s/ James D. Robinson III Director March 31, 1997
- -----------------------------
(James D. Robinson III)
/s/ Andrew C. Sigler Director March 31, 1997
- -----------------------------
(Andrew C. Sigler)
/s/ Louis W. Sullivan, M.D. Director March 31, 1997
- -----------------------------
(Louis W. Sullivan, M.D.)
Executive Vice President,
President Worldwide
Medicines Group and
/s/ Kenneth E. Weg Director March 31, 1997
- ----------------------------
(Kenneth E. Weg)
|
The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designed by two asterisks (**) are management contracts or compensatory plans or arrangements required to be filed pursuant to this Item 14. An asterisk (*) in the Page column indicates that the Exhibit has been previously filed with the Commission and is incorporated herein by reference. Unless otherwise indicated, all Exhibits are part of Commission File Number 1-1136.
Exhibit Number and Description Page
------------------------------ ----
3a. Restated Certificate of Incorporation of Bristol- *
Myers Squibb Company (incorporated herein by
reference to Exhibit 4a to Registration Statement
No. 33-33682 on Form S-3).
3b. Bylaws of Bristol-Myers Squibb Company, as amended E-1-1
through November 5, 1996.
4a. Letter of Agreement dated March 28, 1984 *
(incorporated herein by reference to Exhibit 4 to
Form 10-K for the fiscal year ended December 31,1983).
4b. Rights Agreement Certificate. E-2-1
4c. Indenture, dated as of June 1, 1993, between *
Bristol-Myers Squibb Company and The Chase
Manhattan Bank (National Association), as trustee
(incorporated herein by reference to Exhibit 4.1
to the Form 8-K dated May 27, 1993, and filed on
June 3, 1993).
4d. Form of 7.15% Debenture Due 2023 of Bristol-Myers *
Squibb Company (incorporated herein by reference
to Exhibit 4.2 to the Form 8-K dated May 27, 1993,
and filed on June 3, 1993).
4e. Form of 6.80% Debenture Due 2026 of Bristol-Myers E-3-1
Squibb Company.
- 61 -
|
Exhibit Number and Description Page
------------------------------ ----
** 10a. Bristol-Myers Squibb Company 1997 Stock Incentive E-4-1
Plan.
** 10b. Bristol-Myers Squibb Company Executive Performance E-5-1
Incentive Plan.
** 10c. Bristol-Myers Squibb Company 1983 Stock Option Plan, E-6-1
as Amended and Restated as of September 10, 1996.
** 10d. Squibb Corporation 1982 Option, Restricted Stock *
and Performance Unit Plan, as amended (incorporated
by reference to Exhibit 10b to the Form 10-K for
the fiscal year ended December 31, 1993).
** 10e. Squibb Corporation 1986 Option, Restricted Stock *
and Performance Unit Plan, as amended (as adopted,
incorporated herein by reference to Exhibit 10k to
the Squibb Corporation Form 10-K for the fiscal
year ended December 31, 1988, File No. 1-5514, as
amended July 1, 1993, incorporated herein
by reference to Exhibit 10c to the Form 10-K for
the fiscal year ended December 31, 1993).
** 10f. Bristol-Myers Squibb Company Performance Incentive *
Plan, as amended (as adopted, incorporated herein
by reference to Exhibit 2 to the Form 10-K for the
fiscal year ended December 31, 1978; as amended as
of January 8, 1990, incorporated herein by reference
to Exhibit 19b to the Form 10-K for the fiscal year
ended December 31, 1990; as amended on April 2, 1991,
incorporated herein by reference to Exhibit 19b to
the Form 10-K for the fiscal year ended December 31,
1991; as amended effective on January 1, 1994, and
incorporated herein by reference to Exhibit 10d to the
Form 10-K for the fiscal year ended December 31, 1994).
** 10g. Benefit Equalization Plan of Bristol-Myers Squibb *
Company and its Subsidiary or Affiliated
Corporations Participating in the Bristol-Myers
Squibb Company Retirement Income Plan or the
Bristol-Myers Squibb Puerto Rico, Inc. Retirement
Income Plan, as amended (as amended and restated as
of January 1, 1993, as amended effective October 1,
1993, incorporated herein by reference to Exhibit
10e to the Form 10-K for the fiscal year ended
December 31, 1993 and amended effective February 1,
1995, incorporated by reference to Exhibit 10e
to the Form 10-K for the fiscal year ended
December 31, 1995).
- 62 -
|
Exhibit Number and Description Page
------------------------------ ----
** 10h. Benefit Equalization Plan of Bristol-Myers Squibb *
Company and its Subsidiary or Affiliated Corporations
Participating in the Bristol-Myers Squibb Company
Savings and Investment Program, as amended (as
amended and restated as of May 1, 1990, incorporated
herein by reference to Exhibit 19d to the Form 10-K
for the fiscal year ended December 31, 1990; as
amended as of January 1, 1991, incorporated herein
by reference to Exhibit 19g to the Form 10-K for the
fiscal year ended December 31, 1990; as amended as
of January 1, 1991, incorporated herein by reference
to Exhibit 19e to the Form 10-K for the fiscal year
ended December 31, 1991; as amended as of October 1,
1994, incorporated herein by reference to Exhibit
10f of the Form 10-K for the fiscal year ended
December 31, 1994).
** 10i. Squibb Corporation Supplementary Pension Plan, as *
amended (as previously amended and restated,
incorporated herein by reference to Exhibit 19g to
the Form 10-K for the fiscal year ended December 31,
1991; as amended on September 14, 1993, incorporated
by reference to Exhibit 10g to the Form 10-K for the
fiscal year ended December 31, 1993).
** 10j. Bristol-Myers Squibb Company Restricted Stock Award *
Plan, as amended (as adopted on November 7, 1989,
incorporated herein by reference to Exhibit 10t to
the Form 10-K for the fiscal year ended December 31,
1989; as amended on December 4, 1990, incorporated
herein by reference to Exhibit 19a to the Form 10-K
for the fiscal year ended December 31, 1990; as
amended July 1, 1993, incorporated by reference to
Exhibit 10h to the Form 10-K for the fiscal year
ended December 31, 1993; as amended effective
December 6, 1994, incorporated by reference to
Exhibit 10h to the Form 10-K for the fiscal year
Ended January 31, 1994).
** 10k. Bristol-Myers Squibb Company Retirement Income Plan E-7-1
for Non-Employee Directors, as amended to March 5,1996.
** 10l. Bristol-Myers Squibb Company 1987 Deferred E-8-1
Compensation Plan for Non-Employee Directors,
as amended to January 13, 1997.
- 63 -
|
Exhibit Number and Description Page
------------------------------ ----
** 10m. Bristol-Myers Squibb Company Non-Employee Directors' *
Stock Option Plan, as amended (as approved by the
Stockholders on May 1, 1990, incorporated herein by
reference to Exhibit 28 to Registration Statement
No. 33-38587 on Form S-8; as amended May 7, 1991,
incorporated herein by reference to Exhibit 19c to
the Form 10-K for the fiscal year ended December 31,
1991).
** 10n. Squibb Corporation Deferral Plan for Fees of Outside *
Directors, as amended (as adopted, incorporated
herein by reference to Exhibit 10e to the Squibb
Corporation Form 10-K for the fiscal year ended
December 31, 1987, File No. 1-5514; as amended
effective December 31, 1991, incorporated herein
by reference to Exhibit 10m to the Form 10-K for
the fiscal year ended December 31, 1992).
** 10o. Amendment to all of the Company's plans, agreements, *
legal documents and other writings, pursuant to
action of the Board of Directors on October 3,
1989, to reflect the change of the Company's name to
Bristol-Myers Squibb Company (incorporated herein by
reference to Exhibit 10v to the Form 10-K for the
fiscal year ended December 31, 1989).
11. Computation of Per Share Earnings. E-9-1
21. Subsidiaries of the Registrant. E-10-1
23. Consent of Price Waterhouse LLP. E-11-1
27. Bristol-Myers Squibb Company Financial E-12-1
Data Schedule
99. Additional Exhibit E-13-1
|
Additions
Balance at charged to Deductions- Balance at
beginning costs and bad debts end
Description of period expenses written off of period
- --------------- ---------- ---------- ------------ -----------
Allowances for
discounts and
doubtful accounts:
For the year ended
December 31, 1996 $100 $39 $32 $107
========== ========== ============ ===========
For the year ended
December 31, 1995 $77 $31 $8 $100
========== ========== ============ ===========
For the year ended
December 31, 1994 $80 $31 $34 $77
========== ========== ============ ===========
|
BRISTOL-MYERS SQUIBB COMPANY
BYLAWS
As Adopted on November 1, 1965
And as Amended to November 5, 1996
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I N D E X
BYLAW NO. SUBJECT Page No.
1. Principal Office . . . . . . . . . . . . . . . . . . . . . . . E-1-5
2. Other Offices. . . . . . . . . . . . . . . . . . . . . . . . . E-1-5
3. Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1-5
4. Meetings of Shareholders -- Date and Time. . . . . . . . . . . E-1-5
5. Meetings of Shareholders -- Place. . . . . . . . . . . . . . . E-1-5
6. Meetings of Shareholders -- No Action By Written Consent,
Call. . . . . . . . . . . . . . . . . . . . . . . . . . E-1-5
7. Meetings of Shareholders -- Notice . . . . . . . . . . . . . . E-1-6
8. Meetings of Shareholders -- Quorum . . . . . . . . . . . . . . E-1-6
9. Meetings of Shareholders -- Presiding Officer and Secretary. . E-1-6
10. Meetings of Shareholders -- Voting . . . . . . . . . . . . . . E-1-6
11. Meetings of Shareholders -- Voting List. . . . . . . . . . . . E-1-7
12. Annual Meeting of Shareholders -- Statement of Business and
Condition of Company. . . . . . . . . . . . . . . . . . E-1-7
13. Meetings of Shareholders -- Inspectors of Election . . . . . . E-1-7
14. Board of Directors -- Powers . . . . . . . . . . . . . . . . . E-1-7
15. Board of Directors -- Number, Election, Term, Resignation or
Retirement, Removal and Filling Vacancies . . . . . . . E-1-7
16. Board of Directors -- Location of Meetings and Books . . . . . E-1-9
17. Board of Directors -- Scheduling of Regular Meetings . . . . . E-1-9
18. Board of Directors -- Scheduling of Special Meetings . . . . . E-1-9
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|
LAW NO. SUBJECT Page No.
19. Board of Directors -- Waiver of Meeting Notice and Action by
Consent. . . . . . . . . . . . . . . . . . . . . . . . . E-1-9
20. Board of Directors -- Quorum for Meeting . . . . . . . . . . . E-1-9
21. Board of Directors -- Meeting Procedure. . . . . . . . . . . . E-1-10
22. Board of Directors -- Fees . . . . . . . . . . . . . . . . . . E-1-10
23. Board of Directors -- Indemnification. . . . . . . . . . . . . E-1-10
24. Committees of the Board -- Executive, Audit, Others. . . . . . E-1-11
25. Committees of the Board -- Minutes and Reports . . . . . . . . E-1-12
26. Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1-12
27. Officers -- Election and Term. . . . . . . . . . . . . . . . . E-1-12
28. Appointment of Other Officers, Committees or Agents. . . . . . E-1-13
29. Officers -- Removal. . . . . . . . . . . . . . . . . . . . . . E-1-13
30. Officers -- Resignation. . . . . . . . . . . . . . . . . . . . E-1-13
31. Officers -- Unable to Perform Duties . . . . . . . . . . . . . E-1-13
32. Officers -- Vacancy. . . . . . . . . . . . . . . . . . . . . . E-1-13
33. The Chairman of the Board -- Powers and Duties . . . . . . . . E-1-13
34. Vice Chairman of the Board -- Powers and Duties. . . . . . . . E-1-14
35. Duties of President. . . . . . . . . . . . . . . . . . . . . . E-1-14
36. Vice Presidents -- Powers and Duties . . . . . . . . . . . . . E-1-14
37. The Treasurer -- Powers and Duties . . . . . . . . . . . . . . E-1-14
E - 1 - 3
|
BYLAW NO. SUBJECT Page No.
38. The Secretary -- Powers and Duties . . . . . . . . . . . . . . E-1-14
39. The Controller -- Powers and Duties. . . . . . . . . . . . . . E-1-15
40. Assistant Treasurers and Assistant Secretaries -- Powers and
Duties. . . . . . . . . . . . . . . . . . . . . . . . . E-1-15
41. Officers -- Compensation . . . . . . . . . . . . . . . . . . . E-1-15
42. Contracts, Other Instruments, Authority to Enter Into or
Execute. . . . . . . . . . . . . . . . . . . . . . . . . E-1-15
43. Loans and Negotiable Paper . . . . . . . . . . . . . . . . . . E-1-15
44. Checks, Drafts, etc. . . . . . . . . . . . . . . . . . . . . . E-1-15
45. Banks -- Deposit of Funds. . . . . . . . . . . . . . . . . . . E-1-15
46. Stock Certificates -- Form, Issuance . . . . . . . . . . . . . E-1-16
47. Stock -- Transfer. . . . . . . . . . . . . . . . . . . . . . . E-1-16
48. Stock Certificates -- Loss, Replacement. . . . . . . . . . . . E-1-16
49. Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . E-1-17
50. Registered Shareholders. . . . . . . . . . . . . . . . . . . . E-1-17
51. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . E-1-17
52. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1-17
53. Notices -- Waiver. . . . . . . . . . . . . . . . . . . . . . . E-1-17
54. Amendments of Bylaws . . . . . . . . . . . . . . . . . . . . . E-1-18
E - 1 - 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, notice of which was given in the notice of meeting, shall be held at such time as the Board of Directors may determine. 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.
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.
E - 1 - 5
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.
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, and delivered to the secretary of the meeting; provided, however, that no proxy shall be valid after the expiration of
E - 1 - 6
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 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 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.
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 ten directors. Directors need not be shareholders. The number of directors may be determined by a majority vote of the entire Board of Directors.
E - 1 - 7
(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 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.
E - 1 - 8
(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.
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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.
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(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 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
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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.
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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
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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 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.
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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.
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
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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 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.
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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.
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.
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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.
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BRISTOL-MYERS SQUIBB COMPANY
RIGHTS AGREEMENT CERTIFICATE
The Rights Agreement, dated December 4, 1987, between Bristol-Myers Squibb Company and Manufacturers Hanover Trust Company, as amended, provides that a certificate be filed in certain situations. The certificate is as follows:
On December 4, 1996, the Board of Directors of Bristol-Myers Squibb Company (the "Company") declared a two-for-one split in the form of a stock dividend entitling the holders of record at the close of business on February 7, 1997, of the Company's Common Stock, par value $.10 per share ("Common Stock"), to an additional share of Common Stock for each share owned as of such date. This dividend became effective on February 7, 1997, and the distribution date for the new shares of Common Stock is February 28, 1997.
Pursuant to the Rights Agreement of the Company dated as of December 4, 1987, as amended, (the "Rights Agreement"), the Company had distributed a Right to the holder of each share of Common Stock. Each Right initially represents the right of the holder thereof to purchase one one-thousandth of a share of the Company's Series A Participating Preferred Stock, par value $1.00 per share. As a result of and subsequent to the special dividend described above, the holder of each share of Common Stock will be entitled to one-half of a Right, all as more fully described in the Rights Agreement. Until the occurrence of certain events (as described in the Rights Agreement) the Rights will be evidenced by the Common Stock certificates and will be transferred with and only with such Common Stock certificates.
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Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the issuer or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
BRISTOL-MYERS SQUIBB COMPANY
6.80% Debenture due November 15, 2026
REGISTERED CUSIP
No.
BRISTOL-MYERS SQUIBB COMPANY, a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of Three Hundred Fifty million dollars at the office or agency of the Company in New York, New York designated for such purpose by the Company (on the date hereof, the principal corporate Trust Office of the Trustee mentioned below, located at 450 West 33rd Street, 15th Floor, New York, New York 10001, in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal sum semiannually on May 15 and November 15 of each year, commencing May 15, 1997, at said office or agency (except as provided below), in like coin or currency, at the rate per annum specified in the title hereof, such interest to accrue from the date of this Debenture until payment of said principal sum has been made or duly provided for. The interest so payable, and punctually paid or duly provided for, on any May 15 or November 15 will, except as provided in the Indenture dated as of June 1, 1993 (herein called the "Indenture"; capitalized terms used and not defined herein shall have the meaning ascribed to such terms in the Indenture), duly executed and delivered by the Company to The Chase Manhattan Bank, as trustee (herein called the "Trustee"), be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on the next preceding May 1 or November 1, respectively (herein called the "Regular Record Date"), whether or not a Business Day, and may, at the option of the Company, be paid by check mailed to the registered address of such Person. Any such interest which is payable, but is not so punctually paid or duly provided for, shall forthwith cease to be payable to the registered Holder on such Regular Record Date and may be paid either to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders Debentures not less
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than 10 days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Debentures may be listed and upon such notice as may be required by such exchange, such manner of payment shall be deemed practical by the Trustee, all as more fully provided in the Indenture.
Initially, the Trustee will be the Paying Agent and the Security Registrar with respect to this Debenture. The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent or Security Registrar, to appoint additional or other Paying Agents and other Security Registrars and to approve any change in the office through which any Paying Agent or Security Registrar acts; provided that there will at all times be a Paying Agent in The City of New York.
This Debenture is one of the duly authorized issue of debt securities (hereinafter called the "Securities") of the Company, of the series hereinafter specified, all issued or to be issued under and pursuant to the Indenture, to which Indenture and all other indentures supplemental thereto reference is hereby made for a statement of the rights and limitations of rights, obligations, duties and immunities thereunder of the Trustee and any agent of the Trustee, any Paying Agent, the Company and the Holders of the Securities and the terms upon which the Securities are issued and are to be authenticated and delivered.
The Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest (if any) at different rates, may be subject to different redemption provisions (if any), may be subject to different sinking, purchase or analogous funds (if any), may be subject to different covenants and Events of Default and may otherwise vary as provided or permitted in the Indenture. This Debenture is one of the series of Securities of the Company issued pursuant to the Indenture designated as the 6.80% Debentures due November 15, 2026 (herein called the "Debentures"), limited in aggregate principal amount to $350,000,000.
The Debentures are not redeemable prior to the Stated Maturity of the principal hereof and will not be subject to any sinking fund.
If an Event of Default with respect to the Debentures shall occur and be continuing, the principal of all of the Debentures may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee to enter into supplemental indentures to the Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of modifying in any manner the rights of the Holders of the Securities of each series under the Indenture with the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series to be affected thereby on behalf of the Holders of all Securities of such series. The Indenture also permits the Holders of a majority in principal amount of the Securities at the time Outstanding of each series on behalf of the Holders of all Securities of such series, to waive compliance by the Company with
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certain provisions of the Indenture and certain past defaults and their consequences with respect to such series under the Indenture. Any such consent or waiver by the Holder of this Debenture shall be conclusive and binding upon such Holder and upon all future Holders of this Debenture and of any Debenture issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or waiver is made upon this Debenture or such other Debentures.
No reference herein to the Indenture and no provision of this Debenture or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and any premium and any interest on this Debenture at the place, rate and respective times and in the coin or currency herein and in the Indenture prescribed.
As provided in the Indenture and subject to the satisfaction of certain conditions therein set forth, including the deposit of certain trust funds in trust, at the Company's option, either the Company shall be deemed to have paid and discharged the entire indebtedness represented by, and the obligations under, the Securities of any series and to have satisfied all the obligations (with certain exceptions) under the Indenture relating to the Securities of such series or the Company shall cease to be under any obligation to comply with any term, provision or condition of certain restrictive covenants or provisions with respect to the Securities of such series.
The Debentures are issuable in registered form without coupons in denominations of $1,000 and any integral multiple of $1,000. Debentures may be exchanged for a like aggregate principal amount and Stated Maturity of Debentures of other authorized denominations at the office or agency of the Company in New York, New York, designated for such purpose by the Company (on the date hereof, the principal Corporate Trust Office of the Trustee, located at 450 West 33rd Street, 15th Floor, New York, New York 10001), and in the manner and subject to the limitations provided in the Indenture.
Upon due presentment for registration of transfer of this Debenture at the office or agency of the Company in New York, New York, designated for such purpose by the Company (on the date hereof, the principal Corporate Trust Office of the Trustee, located at 450 West 33rd Street, 15th Floor, New York, New York 10001), duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company, the Trustee and the Security Registrar duly executed by the Holder thereof or his attorney duly authorized in writing, a new Debenture or Debentures of authorized denominations for a like aggregate principal amount and Stated Maturity will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture.
No charge shall be made for any such transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith.
Prior to due presentment for registration of transfer of this Debenture, the Company, the Trustee and any agency Of the Company or the Trustee may treat the Person in whose name this Debenture is registered as the owner hereof for all purposes, whether or not this Debenture is overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
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This Debenture shall be construed in accordance with and governed by the laws of the State of New York.
Unless the certificate of authentication hereon has been manually executed by or on behalf of the Trustee under the Indenture, this Debenture shall not be entitled any benefits under the Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, BRISTOL-MYERS SQUIBB COMPANY has caused this
Debenture to be duly executed under its corporate seal.
Dated: BRISTOL-MYERS SQUIBB COMPANY,
by
-----------------------------
Name:
Title:
[Seal]
Attest:
- -------------------------
Name:
|
Title:
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK,
as Trustee,
by
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1. PURPOSE: The purpose of the 1997 Stock Incentive Plan is to secure for the Company and its stockholders the benefits of the incentive inherent in common stock ownership by the officers and key employees of the Company and its Subsidiaries and Affiliates who will be largely responsible for the Company's future growth and continued financial success and by providing long-term incentives in addition to current compensation to certain key executives of the Company and its Subsidiaries and Affiliates who contribute significantly to the long-term performance and growth of the Company and such Subsidiaries and Affiliates. It is intended that the former purpose will be effected through the granting of stock options, stock appreciation rights, dividend equivalents and/or restricted stock under the Plan and that the latter purpose will be effected through an award conditionally granting performance units or performance shares under the Plan, either independently or in conjunction with and related to a nonqualified stock option grant under the Plan.
2. DEFINITIONS: For purposes of this Plan:
(a) 'Affiliate' shall mean any entity in which the Company has an ownership interest of at least 20%.
(b) 'Code' shall mean the Internal Revenue Code of 1986, as amended.
(c) 'Common Stock' shall mean the Company's common stock (par value $.10 per share).
(d) 'Company' shall mean the Issuer (the Bristol-Myers Squibb Company), its Subsidiaries and Affiliates.
(e) 'Disability' or 'Disabled' shall mean qualifying for and receiving payments under a disability pay plan of the Company or any Subsidiary or Affiliate.
(f) 'Exchange Act' shall mean the Securities Exchange Act of 1934, as amended.
(g) 'Fair Market Value' shall mean the average of the high and low sale prices of a share of Common Stock on the New York Stock Exchange, Inc. composite tape on the date of measurement or on any date as determined by the Committee and if there were no trades on such date, on the day on which a trade occurred next preceding such date.
(h) 'Issuer' shall mean the Bristol-Myers Squibb Company
(i) 'Prior Plan' shall mean the Bristol-Myers Squibb Company 1983 Stock Option Plan as amended and restated effective as of September 10, 1996.
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(j) 'Retirement' shall mean termination of the employment of
an employee with the Company or a Subsidiary or Affiliate on or after
(i) the employee's 65th birthday or (ii) the employee's 55th birthday
if the employee has completed 10 years of service with the Company,
its Subsidiaries and/or its Affiliates. For purposes of this Section 2(j)
and all other purposes of this Plan, Retirement shall also mean termination
of employment of an employee with the Company or a Subsidiary or Affiliate
for any reason (other than the employee's death, disability, resignation,
willful misconduct or activity deemed detrimental to the interests of the
Company) where, on termination, the employee's age plus years of service
rounded up to the next higher whole number) equals at least 70 and the
employee has completed 10 years of service with the Company, its Subsidiaries
and/or its Affiliates.
Furthermore, an employee who makes an election to retire under Article 19 of the Bristol-Myers Squibb Company Retirement Income Plan (the 'Retirement Income Plan') shall have any additional years of age and service which are credited under Article 19 of the Retirement Income Plan taken into account when determining such employee's age and service under this Section 2(j). Such election shall be deemed a Retirement for purposes of this Section 2(j) and all other purposes of this Plan.
(k) 'Subsidiary' shall mean any corporation which at the time qualifies as a subsidiary of the Company under the definition of 'subsidiary corporation' in Section 424 of the Code.
3. AMOUNT OF STOCK: The amount of stock which may be made subject to
grants of options or awards of performance units under the Plan in
calendar year 1997 shall not exceed an amount equal to the amount of
shares available for, and not made subject to, grants of options or
awards under the Prior Plan as of February 28, 1997. With respect to
each succeeding year, the amount of stock which may be made subject to
grants of options or awards of performance units under the Plan shall
not exceed an amount equal to (i) 0.9% of the outstanding shares of the
Company's Common Stock on January 1 of such year plus, subject to this
Section 3,(ii) in any year the number of shares equal to the amount of
shares that were available for grants and awards in the prior year but
were not made subject to a grant or award in such prior year and (iii)
the number of shares that were subject to options or awards granted
hereunder or under the Prior Plan, which options or awards terminated
or expired in the prior year without being exercised. No individual
may be granted options or awards under Sections 6, 7 or 8 in the
aggregate, in respect of more than 1,500,000 shares of the Company's
Common Stock in a calendar year; upon a change in stock the maximum
number of shares shall be adjusted in number and kind pursuant to
Section 10. Aggregate shares issued under performance share awards
made pursuant to Section 7 and restricted stock awards made pursuant
to Section 8 may not exceed 10,000,000 shares over the life of the
Plan. Common Stock issued hereunder may be authorized and reissued
shares or issued shares acquired by the Company or its Subsidiaries on
the market or otherwise.
4. ADMINISTRATION: The Plan shall be administered under the supervision of the Board of Directors of the Company which shall exercise its powers, to the extent herein provided, through the agency of a Compensation and Management Development Committee (the 'Committee') which shall be appointed by the Board of Directors of the Company. The Committee shall consist of not less than three (3) members of the Board who meet the definition of 'outside director' under the provisions of
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Section 162(m)of the Code and the definition of 'non-employee directors' under the provisions of the Exchange Act or rules or regulations promulgated thereunder. No member of the Committee shall have been within one year prior to appointment to, or while serving on, the Committee granted or awarded equity securities of the Company pursuant to this or any other plan of the Company except to the extent that participation in any such plan or receipt of any such grant or award would not adversely affect the Committee member's status as a 'nonemployee director' or as an 'outside director'.
The Committee, from time to time, may adopt rules and regulations ('Regulations') for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. The interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board of Directors, be final and conclusive.
The Committee shall maintain a written record of its proceedings. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee.
5. ELIGIBILITY: Options and awards may be granted only to present or future officers and key employees of the Company and its Subsidiaries and Affiliates, including Subsidiaries and Affiliates which become such after the adoption of the Plan. Any officer or key employee of the Company or of any such Subsidiary or Affiliate shall be eligible to receive one or more options or awards under the Plan. Any director who is not an officer or employee of the Company or one of its Subsidiaries or Affiliates and any member of the Committee, during the time of the member's service as such or thereafter, shall be ineligible to receive an option or award under the Plan. The adoption of this Plan shall not be deemed to give any officer or employee any right to an award or to be granted an option to purchase Common Stock of the Company, except to the extent and upon such terms and conditions as may be determined by the Committee.
6. STOCK OPTIONS: Stock options under the Plan shall consist of incentive stock options under Section 422 of the Code or nonqualified stock options (options not intended to qualify as incentive stock options), as the Committee shall determine. In addition, the Committee may grant stock appreciation rights in conjunction with an option, as set forth in Section 6(b)(11), or may grant awards in conjunction with an option, as set forth in Section 6(b)(10) (an 'Associated Option').
Each option shall be subject to the following terms and conditions:
a) Grant of Options. The Committee shall (1) select the officers and key employees of the Company and its Subsidiaries and Affiliates to whom options may from time to time be granted,(2) determine whether incentive stock options or nonqualified stock options are to be granted, (3) determine the number of shares to be covered by each option so granted, (4) determine the terms and conditions (not inconsistent with the Plan) of any option granted hereunder (including but not limited to restrictions upon the options, conditions of their exercise, or on the shares of Common Stock issuable upon exercise thereof), (5)
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determine whether nonqualified stock options or incentive stock options
granted under the Plan shall include stock appreciation rights and,
if so, shall determine the terms and conditions thereof in accordance
with Section 6(b)(11) hereof, (6) determine whether any nonqualified
stock options granted under the Plan shall be Associated Options, and
(7) prescribe the form of the instruments necessary or advisable in the
administration of options.
(b) Terms and Conditions of Option. Any option granted under the Plan shall be evidenced by a Stock Option Agreement executed by the Company and the optionee, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan, and in the case of an incentive stock option not inconsistent with the provisions of the Code applicable to incentive stock options, as the Committee shall prescribe:
(1) Number of Shares Subject to an Option. The Stock Option Agreement shall specify the number of shares of Common Stock subject to the Agreement. If the option is an Associated Option, the number of shares of Common Stock subject to such Associated Option shall initially be equal to the number of performance units or performance shares subject to the award, but one share of Common Stock shall be canceled for each performance unit or performance share paid out under the award.
(2) Option Price. The purchase price per share of Common Stock purchasable under an option will be determined by the Committee but will be not less than the Fair Market Value of a share of Common Stock on the date of the grant of such option.
(3) Option Period. The period of each option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted.
(4) Consideration. Each optionee, as consideration for the grant of an option, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year from the date of the granting of such option, and no option shall be exercisable until after the completion of such one year period of employment by the optionee.
(5) Exercise of Option. An option may be exercised in whole or in
part from time to time during the option period (or, if determined by
the Committee, in specified installments during the option period) by
giving written notice of exercise to the Company specifying the number
of shares to be purchased, such notice to be accompanied by payment in
full of the purchase price and Withholding Taxes (as defined in Section
11 hereof), unless an election to defer receipt of shares is made under
Section 12, due either by certified or bank check, or in shares of Common
Stock of the Company owned by the optionee having a Fair Market Value at
the date of exercise equal to such purchase price, or in a combination
of the foregoing; provided, however, that payment in shares of Common
Stock of the Company will not be permitted unless at least 100 shares of
Common Stock are required and delivered for such purpose. No shares
shall be issued until full payment therefor has been made. An optionee
shall have the rights of a stockholder only with respect to shares of
stock for which certificates have been issued to the optionee.
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(6) Nontransferability of Options. No option or stock appreciation right granted under the Plan shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such option or stock appreciation right shall be exercisable, during the optionee's lifetime, only by the optionee. Notwithstanding the foregoing, the Committee may set forth in a Stock Option Agreement at the time of grant or thereafter, that the options (other than Incentive Stock Options) may be transferred to members of the optionee's immediate family, to trusts solely for the benefit of such immediate family members and to partnerships in which such family members and/or trusts are the only partners. For this purpose, immediate family means the optionee's spouse, parents, children, stepchildren, grandchildren and legal dependants. Any transfer of options made under this provision will not be effective until notice of such transfer is delivered to the Company.
(7) Retirement and Termination of Employment Other than by Death or Disability. If an optionee shall cease to be employed by the Company or any of its Subsidiaries or Affiliates for any reason (other than termination of employment by reason of death or Disability) after the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable only to the extent that the optionee was otherwise entitled to exercise it at the time of such cessation of employment with the Company, Subsidiary or Affiliate, but in no event after the expiration of the option period set forth therein except that in the case of cessation of employment other than by reason of Retirement or death, the option shall in no event be exercisable after the date three months next succeeding such cessation of employment. The Plan does not confer upon any optionee any right with respect to continuation of employment by the Company or any of its Subsidiaries or Affiliates.
(8) Disability of Optionee. An optionee who ceases to be employed by reason of Disability shall be treated as though the optionee remained in the employ of the Company or a Subsidiary or Affiliate until the earlier of (i) cessation of payments under a disability pay plan of the Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the optionee's 65th birthday.
(9) Death of Optionee. In the event of the death of the optionee
while in the employ of the Company or of any of its Subsidiaries or
Affiliates or within whichever period after Retirement or cessation of
employment of the optionee specified in subsection (7) or (8) is
applicable, and provided the optionee shall have been continuously so
employed for one year after the granting of the option, the option shall
be exercisable by the executors, administrators, legatees or
distributees of the optionee's estate, as the case may be, at any time
following death but in no event after the expiration of the option
period set forth therein and only to the extent that the optionee would
otherwise have been entitled to exercise it if the optionee were then
living, except that in the case of the death of an optionee after
Retirement or other cessation of employment, the option shall in no
event be exercisable after the later of (i) the date twelve months next
succeeding such death or (ii) the last day of the period after
Retirement or other cessation of employment of the optionee specified in
Section 6(b)(7). In the event any option is exercised by the executors,
administrators, legatees or distributees of the estate of a deceased
optionee, the Company shall be under no obligation to issue stock
thereunder unless and until the Company is satisfied that the person or
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persons exercising the option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof.
(10)Long-Term Performance Awards. The Committee may from time to time grant nonqualified stock options under the Plan in conjunction with and related to an award of performance units or performance shares made under a Long-Term Performance Award as set forth in Section 7(b)(11). In such event, notwithstanding any other provision hereof, (i) the number of shares to which the Associated Option applies shall initially be equal to the number of performance units or performance shares granted by the award, but such number of shares shall be reduced on a one-share-for-one unit or share basis to the extent that the Committee determines pursuant to the terms of the award, to pay to the optionee or the optionee's beneficiary the performance units or performance shares granted pursuant to such award; and (ii) such Associated Option shall be cancelable in the discretion of the Committee, without the consent of the optionee, under the conditions and to the extent specified in the award.
(11) Stock Appreciation Rights. In the case of any option granted under the Plan, either at the time of grant or by amendment of such option at any time after such grant there may be included a stock appreciation right which shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall impose, including the following:
(A) A stock appreciation right shall be exercisable to the extent, and only to the extent, that the option in which it is included is at the time exercisable, and may be exercised within such period only at such time or times as may be determined by the Committee;
(B) A stock appreciation right shall entitle the optionee (or any person entitled to act under the provisions of subsection (9) hereof) to surrender unexercised the option in which the stock appreciation right is included (or any portion of such option) to the Company and to receive from the Company in exchange therefor that number of shares having an aggregate value equal to (or, in the discretion of the Committee, less than) the excess of the value of one share (provided such value does not exceed such multiple of the option price per share as may be specified by the Committee) over the option price per share specified in such option times the number of shares called for by the option, or portion thereof, which is so surrendered. The Committee shall be entitled to cause the Company to settle its obligation, arising out of the exercise of a stock appreciation right, by the payment of cash equal to the aggregate value of the shares the Company would otherwise be obligated to deliver or partly by the payment of cash and partly by the delivery of shares. Any such election shall be made within 30 business days after the receipt by the Committee of written notice of the exercise of the stock appreciation right. The value of a share for this purpose shall be the Fair Market Value thereof on the last business day preceding the date of the election to exercise the stock appreciation right;
(C) No fractional shares shall be delivered under this subsection
(11) but in lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is exercised, such option shall be deemed to have been exercised to the
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extent of the number of shares called for by the option or portion thereof which is surrendered on exercise of the stock appreciation right and no new option may be granted covering such shares under this Plan; and
(E) If an option which includes a stock appreciation right is exercised, such stock appreciation right shall be deemed to have been canceled to the extent of the number of shares called for by the option or portion thereof is exercised and no new stock appreciation rights may be granted covering such shares under this Plan.
(12)Incentive Stock Options. In the case of any incentive stock option granted under the Plan, the aggregate Fair Market Value of the shares of Common Stock of the Company (determined at the time of grant of each option) with respect to which incentive stock options granted under the Plan and any other plan of the Company or its parent or a Subsidiary which are exercisable for the first time by an employee during any calendar year shall not exceed $100,000 or such other amount as may be required by the Code. In any year, the maximum number of shares with respect to which incentive stock options may be granted shall not exceed 4,000,000 shares.
(13)Rights of Transferee. Notwithstanding anything to the contrary
herein, if an option has been transferred in accordance with Section
6(b)(6), the option shall be exercisable solely by the transferee. The
option shall remain subject to the provisions of the Plan, including
that it will be exercisable only to the extent that the optionee or
optionee's estate would have been entitled to exercise it if the
optionee had not transferred the option. In the event of the death of
the transferee prior to the expiration of the right to exercise the
option, the option shall be exercisable by the executors,
administrators, legatees and distributees of the transferee's estate, as
the case may be for a period of one year following the date of the
transferee's death but in no event be exercisable after the expiration
of the option period set forth in the Stock Option Agreement. The option
shall be subject to such other rules as the Committee shall determine.
7. LONG-TERM PERFORMANCE AWARDS: Awards under the Plan shall consist of the conditional grant to the participants of a specified number of performance units or performance shares. The conditional grant of a performance unit to a participant will entitle the participant to receive a specified dollar value, variable under conditions specified in the award, if the performance objectives specified in the award are achieved and the other terms and conditions thereof are satisfied. The conditional grant of a performance share to a participant will entitle the participant to receive a specified number of shares of Common Stock of the Company, or the equivalent cash value, if the objective(s) specified in the award are achieved and the other terms and conditions thereof are satisfied.
Each award will be subject to the following terms and conditions:
(a) Grant of Awards. The Committee shall (1) select the officers and key executives of the Company and its Subsidiaries and Affiliates to whom awards may from time to time be granted, (2) determine the number of performance units or performance shares covered by each award, (3) determine the terms and conditions of each performance unit or performance share awarded and the award period and performance objectives with respect to each award, (4) determine the periods during
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which a participant may request the Committee to approve deferred
payment of a percentage (not less than 25%) of an award (the 'Deferred
Portion') and the interest or rate of return thereon or the basis on
which such interest or rate of return thereon is to be determined,
(5) determine whether payment with respect to the portion of an award
which has not been deferred (the 'Current Portion') and the payment with
respect to the Deferred Portion of an award shall be made entirely in
cash, entirely in Common Stock or partially in cash and partially in
Common Stock,(6) determine whether the award is to be made
independently of or in conjunction with a nonqualified stock option
granted under the Plan, and (7) prescribe the form of the instruments
necessary or advisable in the administration of the awards.
(b) Terms and Conditions of Award. Any award conditionally granting performance units or performance shares to a participant shall be evidenced by a Performance Unit Agreement or Performance Share Agreement, as applicable, executed by the Company and the participant, in such form as the Committee shall approve, which Agreement shall contain in substance the following terms and conditions applicable to the award and such additional terms and conditions as the Committee shall prescribe:
(1) Number and Value of Performance Units. The Performance Unit Agreement shall specify the number of performance units conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance units granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance unit shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised. The Performance Unit Agreement shall specify the threshold, target and maximum dollar values of each performance unit and corresponding performance objectives as provided under Section 6(b)(5). No payout under a performance unit award to an individual Participant may exceed 0.15% of the pre-tax earnings of the Company for the fiscal year which coincides with the final year of the performance unit period.
(2) Number and Value of Performance Shares. The Performance Share Agreement shall specify the number of performance shares conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance shares granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance share shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised. The Performance Share Agreement shall specify that each Performance Share will have a value equal to one (1) share of Common Stock of the Company.
(3) Award Periods. For each award, the Committee shall designate an award period with a duration to be determined by the Committee in its discretion but in no event less than three calendar years within which specified performance objectives are to be attained. There may be several award periods in existence at any one time and the duration of performance objectives may differ from each other.
(4) Consideration. Each participant, as consideration for the award
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of performance units or performance shares, shall remain in the continuous employ of the Company or of one of its Subsidiaries or affiliates for at least one year after the date of the making of such award, and no award shall be payable until after the completion of such one year of employment by the participant.
(5) Performance Objectives. The Committee shall establish performance objectives with respect to the Company for each award period on the basis of such criteria and to accomplish such objectives as the Committee may from time to time determine. Performance criteria for awards under the Plan may include one or more of the following measures of the operating performance:
a. Earnings
b. Revenue
c. Operating or net cash flows
d. Financial return ratios
e. Total Shareholder Return
f. Market share
The Committee shall establish the specific targets for the selected criteria. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. These targets may be based upon the total Company or upon a defined business unit which the executive has responsibility for or influence over.
(6) Determination and Payment of Performance Units or Performance Shares Earned. As soon as practicable after the end of an award period, the Committee shall determine the extent to which awards have been earned on the basis of the Company's actual performance in relation to the established performance objectives as set forth in the Performance Unit Agreement or Performance Share Agreement and certify these results in writing. The Performance Unit Agreement or Performance Share Agreement shall specify that as soon as practicable after the end of each award period, the Committee shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof have been met and, if so, shall ascertain the amount payable or shares which should be distributed to the participant in respect of the performance units or performance shares. As promptly as practicable after it has determined that an amount is payable or should be distributed in respect of an award, the Committee shall cause the Current Portion of such award to be paid or distributed to the participant or the participant's beneficiaries, as the case may be, in the Committee's discretion, either entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. The Deferred Portion of an award shall be contingently credited and payable to the participant over a deferred period and shall be credited with interest, rate of return, or other valuation as determined by the Committee. The Committee, in its discretion, shall determine the conditions upon, and method of, payment of such Deferred Portions and whether such payment will be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock.
In making the payment of an award in Common Stock hereunder, the cash equivalent of such Common Stock shall be determined by the Fair Market Value of the Common Stock on the day the Committee designates the performance units shall be payable.
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(7) Nontransferability of Awards and Designation of Beneficiaries. No award under this Section of the Plan shall be transferable by the participant other than by will or by the laws of descent and distribution, except that a participant may designate a beneficiary pursuant to the provisions hereof.
If any participant or the participant's beneficiary shall attempt to assign the participant's rights under the Plan in violation of the provisions thereof, the Company's obligation to make any further payments to such participant or the participant's beneficiaries shall forthwith terminate.
A participant may name one or more beneficiaries to receive any payment of an award to which the participant may be entitled under the Plan in the event of the participant's death, on a form to be provided by the Committee. A participant may change the participant's beneficiary designation from time to time in the same manner.
If no designated beneficiary is living on the date on which any payment becomes payable to a participant's beneficiary, or if no beneficiary has been specified by the participant, such payment will be payable to the person or persons in the first of the following classes of successive preference:
(i) Widow or widower, if then living,
(ii) Surviving children, equally,
(iii)Surviving parents, equally,
(iv) Surviving brothers and sisters, equally,
(v) Executors or administrators
and the term 'beneficiary' as used in the Plan shall include such person or persons.
(8) Retirement and Termination of Employment Other Than by Death or Disability. In the event of the Retirement prior to the end of an award period of a participant who has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to Retirement, the participant, or his estate, shall be entitled to a payment of such award at the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement or Performance Share Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit or share) of the value of the performance units or performance shares granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's Retirement occurs, bears to the total number of months in the award period, subject to the attainment of performance objectives associated with the award as certified by the Committee. The participant's right to receive any remaining performance units or performance shares shall be canceled and forfeited.
Subject to Section 7(b)(6) hereof, the Performance Unit Agreement or Performance Share Agreement shall specify that the right to receive
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the performance units or performance shares granted to such participant shall be conditional and shall be canceled, forfeited and surrendered if the participant's continuous employment with the Company and its Subsidiaries and Affiliates shall terminate for any reason, other than the participant's death, Disability or Retirement prior to the end of the award period.
(9) Disability of Participant. For the purposes of any award a participant who becomes Disabled shall be deemed to have suspended active employment by reason of Disability commencing on the date the participant becomes entitled to receive payments under a disability pay plan of the Company or any Subsidiary or Affiliate and continuing until the date the participant is no longer entitled to receive such payments. In the event a participant becomes Disabled during an award period but only if the participant has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to becoming Disabled, upon the determination by the Committee of the extent to which an award has been earned pursuant to Section 7(b)(6) the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participants under such award as the number of months of the award period in which the participant was not Disabled bears to the total number of months in the award period subject to the attainment of the performance objectives associated with the award as certified by the Committee. The participant's right to receive any remaining performance units shall be canceled and forfeited.
(10) Death of Participant. In the event of the death prior to the end of an award period of a participant who has satisfied the one year employment requirement with respect to an award prior to the date of death, the participant's beneficiaries or estate, as the case may be, shall be entitled to a payment of such award upon the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement or Performance Share Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit or share) of the value of the performance units or performance shares granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's death occurs, bears to the total number of months in the award period. The participant's right to receive any remaining performance units or performance shares shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units or performance shares.
(11) Grant of Associated Option. If the Committee determines that the conditional grant of performance units or performance shares under the Plan is to be made to a participant in conjunction with the grant of a nonqualified stock option under the Plan, the Committee shall grant the participant an Associated Option under the Plan subject to the terms and conditions of this subsection (11). In such event, such award under the Plan shall be contingent upon the participant's being granted such an Associated Option pursuant to which: (i) the number of shares the optionee may purchase shall initially be equal to the number of performance units or performance shares conditionally granted by the
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award, (ii) such number of shares shall be reduced on a
one-share-for-one-unit or share basis to the extent that the Committee
determines, pursuant to Section 7(b)(6) hereof, to pay to the
participant or the participant's beneficiaries the performance units or
performance shares conditionally granted pursuant to the award, and
(iii) the Associated Option shall be cancelable in the discretion of the
Committee, without the consent of the participant, under the conditions
and to the extent specified herein and in Section 7(b)(6) hereof.
If no amount is payable in respect of the conditionally granted performance units or performance shares, the award and such performance units or performance shares shall be deemed to have been canceled, forfeited and surrendered, and the Associated Option, if any, shall continue in effect in accordance with its terms. If any amount is payable in respect of the performance units or performance shares and such units or shares were granted in conjunction with an Associated Option, the Committee shall, within 30 days after the determination of the Committee referred to in the first sentence of Section 7(b)(6), determine, in its sole discretion, either:
(a) to cancel in full the Associated Option, in which event the value of the performance units or performance shares payable pursuant to Sections 7(b)(5) and (6) shall be paid or the performance shares shall be distributed;
(b) to cancel in full the performance units or performance shares, in which event no amount shall be paid to the participant in respect thereof and no shares shall be distributed but the Associated Option shall continue in effect in accordance with its terms; or
(c) to cancel some, but not all, of the performance units or performance shares, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) which have not been canceled shall be paid and/or the performance shares shall be distributed and the Associated Option shall be canceled with respect to that number of shares equal to the number of conditionally granted performance units or performance shares that remain payable.
Any action taken by the Committee pursuant to the preceding
sentence shall be uniform with respect to all awards having the same
award period. If the Committee takes no such action, it shall be deemed
to have determined to cancel in full the award in accordance with clause
(b) above.
8. RESTRICTED STOCK: Restricted stock awards under the Plan shall consist of grants of shares of Common Stock of the Issuer subject to the terms and conditions hereinafter provided.
(a) Grant of Awards: The Committee shall (i) select the officers and key employees to whom Restricted Stock may from time to time be granted, (ii) determine the number of shares to be covered by each award granted, (iii) determine the terms and conditions (not inconsistent with the Plan) of any award granted hereunder, and (iv) prescribe the form of the agreement, legend or other instrument necessary or advisable in the administration of awards under the Plan.
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(b) Terms and Conditions of Awards: Any restricted stock award granted under the Plan shall be evidenced by a Restricted Stock Agreement executed by the Issuer and the recipient, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan as the Committee shall prescribe:
(1) Number of Shares Subject to an Award: The Restricted Stock Agreement shall specify the number of shares of Common Stock subject to the Award.
(2) Restriction Period: The period of restriction applicable to each Award shall be established by the Committee but may not be less than one year. The Restriction Period applicable to each Award shall commence on the Award Date.
(3) Consideration: Each recipient, as consideration for the grant of an award, shall remain in the continuous employ of the Company for at least one year from the date of the granting of such award, and any shares covered by such an award shall lapse if the recipient does not remain in the continuous employ of the Company for at least one year from the date of the granting of the award.
(4) Restriction Criteria: The Committee shall establish the criteria upon which the restriction period shall be based. Restrictions may be based upon either the continued employment of the recipient or upon the attainment by the Company of one or more of the following measures of the operating performance:
a. Earnings
b. Revenue
c. Operating or net cash flows
d. Financial return ratios
e. Total Shareholder Return
f. Market share
The Committee shall establish the specific targets for the selected criteria. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index. Performance objectives may be established in combination with restrictions based upon the continued employment of the recipient. These targets may be based upon the total Company or upon a defined business unit which the executive has responsibility for or influence over.
In cases where objective performance criteria are established, the Committee shall determine the extent to which the criteria have been achieved and the corresponding level to which restrictions will be removed from the Award or the extent to which a participant's right to receive an Award should be lapsed in cases where the performance criteria have not been met and shall certify these determinations in writing. The Committee may provide for the determination of the attainment of such restrictions in installments where deemed appropriate.
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(c) Terms and Conditions of Restrictions and Forfeitures: The shares of Common Stock awarded pursuant to the Plan shall be subject to the following restrictions and conditions:
(1) During the Restriction Period, the participant will not be permitted to sell, transfer, pledge or assign Restricted Stock awarded under this Plan.
(2) Except as provided in Section 8(c)(i), or as the Committee may otherwise determine, the participant shall have all of the rights of a stockholder of the Issuer, including the right to vote the shares and receive dividends and other distributions provided that distributions in the form of stock shall be subject to the same restrictions as the underlying Restricted Stock.
(3) In the event of a participant's retirement, death or disability prior to the end of the Restriction Period for a participant who has satisfied the one year employment requirement of Section 7(c)(iii) with respect to an award prior to Retirement, death or Disability, the participant, or his/her estate, shall be entitled to receive that proportion (to the nearest whole share) of the number of shares subject to the Award granted as the number of months of the Restriction Period which have elapsed since the Award date to the date at which the participant's retirement, death or disability occurs, bears to the total number of months in the Restriction Period. The participant's right to receive any remaining shares shall be canceled and forfeited and the shares will be deemed to be reacquired by the Issuer.
(4) In the event of a participant's retirement, death, disability or in cases of special circumstances as determined by the Committee, the Committee may, in its sole discretion when it finds that such an action would be in the best interests of the Company, accelerate or waive in whole or in part any or all remaining time based restrictions with respect to all or part of such participant's Restricted Stock.
(5) Upon termination of employment for any reason during the restriction period, subject to the provisions of paragraph (iii) above or in the event that the participant fails promptly to pay or make satisfactory arrangements as to the withholding taxes as provided in the following paragraph, all shares still subject to restriction shall be forfeited by the participant and will be deemed to be reacquired by the Company.
(6) A participant may, at any time prior to the expiration of the Restriction Period, waive all right to receive all or some of the shares of a Restricted Stock Award by delivering to the Company a written notice of such waiver.
(7) Notwithstanding the other provisions of this Section 7, the Committee may adopt rules which would permit a gift by a participant of restricted shares to members of his/her immediate family (spouse, parents, children, stepchildren, grandchildren or legal dependants) or to a Trust whose beneficiary or beneficiaries shall be either such a person or persons or the participant.
(8) Any attempt to dispose of Restricted Stock in a manner contrary to the restrictions shall be ineffective.
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9. DETERMINATION OF BREACH OF CONDITIONS: The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company's obligations in accordance with the provisions of the Plan shall be conclusive.
10. ADJUSTMENT IN THE EVENT OF CHANGE IN STOCK: In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number and class of shares available under the Plan, and the number, class and the price of shares subject to outstanding options and/or awards and the number of performance units and/or the dollar value of each unit shall be appropriately adjusted by the Committee, whose determination shall be conclusive.
11. TAXES: Each participant shall, no later than the Tax Date (as defined below), pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Withholding Tax (as defined below) with respect to an Option or Award, and the Company shall, to the extent permitted by law, have the right to deduct such amount from any payment of any kind otherwise due to the participant. The Company shall also have the right to retain or sell without notice, or to demand surrender of, shares of Common Stock in value sufficient to cover the amount of any Withholding Tax (that is that portion of any Applicable Tax, as defined below, required by any governmental entity to be withheld or otherwise deducted and paid with respect to such Award), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Withholding Tax, remitting any balance to the participant. For purposes of the paragraph, the value of shares of Common Stock so retained or surrendered shall be the average of the high and low sales prices per share on the New York Stock Exchange composite tape on the date that the amount of the Withholding Tax is to be determined (the 'Tax Date') and the value of shares of Common Stock so sold shall be the actual net sale price per share (after deduction of commissions) received by the Company.
Notwithstanding the foregoing, the participant shall be entitled to
satisfy the obligation to pay any Withholding Tax or to satisfy the
obligation to pay any tax to any governmental entity in respect of
such Award, including any Federal, state or local income tax up to an
amount determined on the basis of the highest marginal tax rate
applicable to such participant, Federal Insurance Contribution Act
taxes or other governmental impost or levy (an 'Applicable Tax'), in
whole or in part, by providing the Company with funds sufficient to
enable the Company to pay such Withholding Tax or Applicable Tax or by
requiring the Company to retain or to accept upon delivery thereof by
the participant shares of Common Stock having a Fair Market Value
sufficient to cover the amount of such Withholding Tax or Applicable Tax
or in a greater amount as deemed appropriate by the Company. Each
election by a participant to have shares retained or to deliver shares
for this purpose shall be subject to the following restrictions: (i) the
election must be in writing and be made on or prior to the Tax Date;
(ii) the election must be irrevocable; (iii) the election shall be
subject to the disapproval of the Committee.
12. DEFERRAL ELECTION: Notwithstanding the provisions of Section 11, any optionee or participant may elect, with the concurrence of the Committee and consistent with any rules and regulations established by the Committee, to defer the delivery of the proceeds of the exercise of
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any stock option not transferred under the provisions of Section 6(b)(6) or stock appreciation rights.
(a) Election Timing: The election to defer the delivery of the proceeds from any eligible award must be made at least six months prior to the date such award is exercised or at such other time as the Committee may specify. Deferrals will only be allowed for exercises which occur while the optionee or participant is an active employee of the Company. Any election to defer the delivery of proceeds from an eligible award shall be irrevocable as long as the optionee or participant remains an employee of the Company.
(b) Stock Option Deferral: The deferral of the proceeds of stock options may be elected by an optionee subject to the Regulations established by the Committee. The proceeds from such an exercise shall be credited to the optionee's deferred stock option account as the number of deferred share units equivalent in value to those proceeds. Deferred share units shall be valued at the Fair Market Value on the date of exercise. Subsequent to exercise, the deferred share units shall be valued at the Fair Market Value of Common Stock of the Company. Deferred share units shall accrue dividends at the rate paid upon the Company's Common Stock credited in the form of additional deferred share units. Deferred share units shall be distributed in shares of Company Stock upon the termination of employment of the participant or at such other date as may be approved by the Committee over a period of no more than 10 years.
(c) Stock Appreciation Right Deferral: Upon such exercise, the Company will credit the optionee's deferred stock option account with the number of deferred share units equivalent in value to the difference between the Fair Market Value of a share of Common Stock on the exercise date and the exercise price of the Stock Appreciation Right multiplied by the number of shares exercised. Deferred share units shall be valued at the Fair Market Value on the date of exercise. Subsequent to exercise, the deferred share units shall be valued at the Fair Market Value of Common Stock of the Company. Deferred share units shall accrue dividends at the rate paid upon the Company's Common Stock credited in the form of additional deferred share units. Deferred share units shall be distributed in shares of Common Stock upon the termination of employment of the participant or at such other date as may be approved by the Committee over a period of no more than 10 years.
(d) Accelerated Distributions: The Committee may, at its sole discretion, allow for the early payment of an optionee's or participant's deferred share units account in the event of an 'unforeseeable emergency' or in the event of the death or disability of the optionee or participant. An 'unforeseeable emergency' is defined as an unanticipated emergency caused by an event beyond the control of the optionee or participant that would result in severe financial hardship if the distribution were not permitted. Such distributions shall be limited to the amount necessary to sufficiently address the financial hardship. Any distributions under this provision shall be consistent with the Regulations established under the Code. Additionally, the Committee may use its discretion to cause deferred share unit accounts to be distributed when continuing the Program is no longer in the best interest of the Company.
(e) Assignability: No rights to deferred share unit accounts may be assigned or subject to any encumbrance, pledge or charge of any nature except that an optionee or participant may designate a beneficiary pursuant to any rules established by the Committee.
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13. AMENDMENT OF THE PLAN: The Board of Directors may amend or suspend
the Plan at any time and from time to time. No such amendment of the
Plan may, however, increase the maximum number of shares to be offered
under options or awards, or change the manner of determining the option
price, or change the designation of employees or class of employees
eligible to receive options or awards, or permit the transfer or issue
of stock before payment therefor in full, or, without the written consent
of the optionee or participant, alter or impair any option or award
previously granted under the Plan or Prior Plan. Notwithstanding the
foregoing, if an option has been transferred in accordance with Section
6(b)(6), written consent of the transferee (and not the optionee) shall
be necessary to alter or impair any option or award previously granted
under the Plan.
14. MISCELLANEOUS:
(a) By accepting any benefits under the Plan, each optionee or participant and each person claiming under or through such optionee or participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other Committee appointed by the Board.
(b) No participant or any person claiming under or through him shall have any right or interest, whether vested or otherwise, in the Plan or in any option, or stock appreciation right or award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Agreement that affect such participant or such other person shall have been complied with.
(c) Nothing contained in the Plan or in any Agreement shall require the Company to segregate or earmark any cash or other property.
(d) Neither the adoption of the Plan nor its operation shall in any way affect the rights and powers of the Company or any of its Subsidiaries or Affiliates to dismiss and/or discharge any employee at any time.
(e) Notwithstanding anything to the contrary in the Plan, neither the Board nor the Committee shall have any authority to take any action under the Plan where such action would affect the Company's ability to account for any business combination as a 'pooling of interests.'
15. TERM OF THE PLAN: The Plan, if approved by stockholders, will be effective May 6, 1997. The Plan shall expire on May 31, 2002 unless suspended or discontinued by action of the Board of Directors. The expiration of the Plan, however, shall not affect the rights of Optionees under options theretofore granted to them or the rights of participants under awards theretofore granted to them, and all unexpired options and awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions.
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BRISTOL-MYERS SQUIBB COMPANY
EXECUTIVE PERFORMANCE INCENTIVE PLAN
1. PURPOSE: The purpose of the Executive Performance Incentive Plan (the 'Plan') is to promote the interests of the Bristol-Myers Squibb Company (the 'Company') and its stockholders by providing additional compensation as incentive to certain key executives of the Company and its Subsidiaries and Affiliates who contribute materially to the success of the Company and such Subsidiaries and Affiliates.
2. DEFINITIONS: The following terms when used in the Plan shall, for the purposes of the Plan, have the following meanings:
(a)'Affiliate' shall mean any entity in which the Company has an ownership interest of at least 20%.
(b) 'Code' shall mean the Internal Revenue Code of 1986, as amended.
(c) 'Company' shall mean the Bristol-Myers Squibb Company, its subsidiaries and affiliates.
(d) 'Exchange Act' shall mean the Securities Exchange Act of 1934, as amended.
(e) 'Retirement' shall mean termination of the employment of an employee with the Company or a Subsidiary or Affiliate on or after (i)the employee's 65th birthday or (ii) the employee's 55th birthday having completed 10 years of service with the Company.
(f) 'Subsidiary' shall mean any corporation which at the time qualifies as a subsidiary of the Company under the definition of 'subsidiary corporation' in Section 424 of the Code.
3. ADMINISTRATION: The Plan shall be administered under the supervision of the Board of Directors of the Company (the 'Board') which shall exercise its powers, to the extent herein provided, through the agency of a Compensation and Management Development Committee (the 'Committee') which shall be appointed by the Board. The Committee shall consist of not less than three (3) members of the Board who meet the definition of 'outside directors' under the provisions of Section 162(m) of the Code and the definition of 'non-employee directors' under the provisions of the Exchange Act or the regulations or rules promulgated hereunder.
The Committee, from time to time, may adopt rules and regulations ('Regulations') for carrying out the provisions and purposes of the Plan and make such determinations, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. The Committee may alter, amend or revoke any Regulation adopted. The interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board, be final and conclusive.
The Committee may delegate its responsibilities for administering the Plan to a committee of key executives as the Committee deems necessary. Any awards under the Plan to members of this committee and to such other of the Participants as may be determined from time to time by the Board or the
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Committee shall be referred to the Committee or Board for approval. However, the Committee may not delegate its responsibilities under the Plan relating to any executive who is subject to the provisions of Section 162(m) of the Code or in regard to the issuance of any stock under Section 6(c).
4. PARTICIPATION: 'Participants' in the Plan shall be such key executives of the Company as may be designated by the Committee to participate in the Plan with respect to each fiscal year.
5. PERFORMANCE INCENTIVE AWARDS:
(a) For each fiscal year of the Company, the Committee shall determine:
(i) The Company, Subsidiaries and/or Affiliates to participate in the Plan for such fiscal year.
(ii) The names of those key executives whom it considers should participate in the Plan for such fiscal year.
(iii)The basis(es) for determining the amount of the Awards to such Participants, including the extent, if any, to which payment of all or part of an Award will be dependent upon the attainment by the Company or any Subsidiary or Affiliate or subdivision thereof of any specified performance goal or objective. Performance criteria for Awards under the Plan may include one or more of the following operating performance measures:
a. Earnings
b. Revenue
c. Operating or net cash flows
d. Financial return ratios
e. Total Shareholder Return
f. Market share
g. For any Participant not subject to Section 162(m) of the Code, other performance measures or objectives, whether quantitative or qualitative, may be established.
The Committee shall establish the specific targets for the selected measures. These targets may be set at a specific level or may be expressed as relative to the comparable measure at comparison companies or a defined index.
(iv) If a percentage of an Award shall be deferred or if a Participant
may request the Committee to approve deferred payment of a percentage (not
less than 25%) of an Award (the 'Deferred Portion'). Any Award or portion of
Award which the Committee does not require deferral of or the Participant
does not request deferral of shall be paid subject to the provisions of
Section 6 (the 'Current Portion'). Any Award which includes a Deferred Portion
shall be subject to the terms and conditions stated in Section 10 and in any
Regulations established by the Committee.
(b) At any time after the commencement of a fiscal year for which Awards have been determined, but prior to the close thereof, the Committee may, in its discretion, eliminate or add Participants, or increase or decrease the Award of any Participant; but the Committee may not alter any election made relative to establishing a Deferred Portion of an Award or which would cause any Award to lose deductibility under Section 162(m) of the Code. Any changes or additions with respect to Awards of members of any committee established to oversee the Plan shall be referred to the Board or Committee, as appropriate, for approval.
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6. PAYMENT OF CURRENT PORTION OF PERFORMANCE INCENTIVE AWARDS:
(a) Subject to such forfeitures of Awards and other conditions as are provided in the Plan, the Awards made to Participants shall be paid to them or their beneficiaries as follows:
(i) As soon as practicable after the end of the fiscal year, the Committee shall determine the extent to which Awards have been earned on the basis of the actual performance in relation to the established performance objectives as established for that fiscal year. Such Awards are only payable to the extent that the Participant has performed their duties to the satisfaction of the Committee.
(ii) While no Participant has an enforceable right to receive a Current Portion until the end of the fiscal year as outlined in (i) above, payments on account of the Current Portion may be provisionally made in accordance with the Regulations, based on tentative estimates of the amount of the Award. A Participant shall be required to refund any portion or all of such payments in order that the total payments may not exceed the Current Portion as finally determined, or if the Participant shall forfeit their Award for any reason during the fiscal year. However, any Participant subject to Section 162(m) of the Code may not receive such provisional payments.
(b) There shall be deducted from all payments of Awards any taxes required to be withheld by any government entity and paid over to any such government in respect of any such payment. Unless otherwise elected by the Participant, such deductions shall be at the established Withholding Tax Rate. Participants may elect to have the deduction of taxes cover the amount of any Applicable Tax (the amount of Withholding Tax plus the incremental amount determined on the basis of the highest marginal tax rate applicable to such Participant).
(c) Form of Payment. The Committee shall determine whether payment with respect to the Current Portion of an Award, or to the payment of a Deferred Portion made under the provisions of Section 10, shall be made entirely in cash, entirely in Common Stock of the Company, or partially in cash and partially in Common Stock. Further, if the Committee determines that payment should be made in the form of Restricted Shares of Common Stock of the Company, the Committee shall designate the restrictions which will be placed upon the Common Stock and the duration of those restrictions. For any fiscal year, the Committee may not cause Awards to be made under this provision which would result in the issuance, either on a current or restricted basis, of more than two-tenths of one percent of the number of shares of Common Stock of the Company issued and outstanding as of January 1 of the fiscal year relating to the payment.
7. MAXIMUM PAYMENTS UNDER THE PLAN: Payments under the Plan shall be subject to the following maximum levels.
(a) Total Payments. The total amount of Awards paid under the Plan relating to fiscal year may not exceed two percent of the operating pretax earnings for the Company in that fiscal year.
(b) Maximum Individual Award. The maximum amount which any individual Participant may receive relating to any fiscal year may not exceed 0.15 percent of the operating pretax earnings for the Company in that fiscal year.
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8. CONDITIONS IMPOSED ON PAYMENT OF AWARDS: Payment of each Award to a Participant or to the Participant's beneficiary shall be subject to the following provisions and conditions:
(a) Rights to Awards. No Participant or any person claiming under or through the Participant shall have any right or interest, whether vested or otherwise, in the Plan or in any Award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan, and the Regulations that effect such Participant or such other person shall have been complied with. Nothing contained in the Plan or in the Regulations shall require the Company to segregate or earmark any cash, shares or stock or other property. Neither the adoption of the Plan nor its operation shall in any way affect the rights and power of the Company or of any Subsidiary or Affiliate to dismiss and/or discharge any employee at any time.
(b) Assignment or Pledge of Rights of Participant. No rights under the Plan, contingent or otherwise, shall be assignable or subject to any encumbrance, pledge or charge of any nature except that a Participant may designate a beneficiary pursuant to the provisions of Section 9 hereof.
(c) Rights to Payments. No absolute right to any Award shall be considered as having accrued to any Participant prior to the close of the fiscal year with respect to which an Award is made and then such right shall be absolute only with respect to any Current Portion thereof; the Deferred Portion will continue to be forfeitable and subject to all of the conditions of the Plan. No Participant shall have any enforceable right to receive any Award made with respect to a fiscal year or to retain any payment made with respect thereto if for any reason (death included) the Participant, during such entire fiscal year, has not performed their duties to the satisfaction of the Company.
9. DESIGNATION OF BENEFICIARY: A Participant may name a beneficiary to receive any payment to which the Participant may be entitled under the Plan in the event of their death, on a form to be provided by the Committee. A Participant may change their beneficiary from time to time in the same manner.
If no designated beneficiary is living on the date on which any payment becomes payable to a Participant's beneficiary, such payment will be payable to the person or persons in the first of the following classes of successive preference:
(a) Widow or Widower, if then living
(b) Surviving children, equally
(c) Surviving parents, equally
(d) Surviving brothers and sisters, equally
(e) Executors or administrators
and the term 'beneficiary' as used in the Plan shall include such person or persons.
10. DEFERRAL OF PAYMENTS: Any portion of an Award deemed the Deferred Portion under Section 5(a)(iv) shall be subject to the following:
(a) The Committee will, in its sole discretion, determine whether or not a Deferred Portion may be elected by the Participant under an Award or if a Deferred Portion shall be required. If a Deferred Portion election is permitted for an Award, the Committee will establish guidelines regarding the
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date by which such deferral election by the Participant must be made in order to be effective.
(b) Concurrent with the establishment of a Deferred Portion for any Award, the Participant shall determine, subject to the approval of the Committee, the portion of any Participant's Deferred Portion that is to be valued by reference to the Performance Incentive Fixed Income Fund (hereinafter referred to as the 'Fixed Income Fund'), the portion that is to be valued by reference to the Performance Incentive Equity Fund (hereinafter referred to as the 'Equity Fund'), the portion that is to be valued by reference to the Performance Incentive Company Stock Fund (hereinafter referred to as the 'Stock Fund') and the portion that shall be valued by reference to any other fund(s) which may be established by the Committee for this purpose.
(c) Prior to the beginning of each fiscal year, the Committee shall determine if the Fund(s) used to value the account of any Participant may be changed from the Fund currently used to any other Fund established for use under this Plan. Any such determination relating to a member of the Committee shall be referred to the Board (or such Committee of the Board as may be designated by the Board) for approval.
(d) Payment of the total amount of a Participant's Deferred Portions shall be made to the Participant, or, in case of the death of the Participant prior to the commencement of payments on account of such total amount, to the Participant's beneficiary, in installments commencing as soon as practical after the Participant shall cease, by reason of death or otherwise, to be an employee of the Company. In case of the death of any Participant after the commencement of payments on account of the total of the Deferred Portions, the then remaining unpaid balance thereof shall continue to be paid in installments, at such times and in such manner as if such Participant were living, to the beneficiary(ies) of the Participant. However, the Committee shall possess absolute discretion to accelerate the time of payment of any remaining unpaid balance of the Deferred Portions to any extent that it shall deem equitable and desirable under circumstances where the Participant at the time of payment shall no longer be an employee of the Company or shall have died.
(e) Conduct of Participant Following Termination of Employment. If, following the date on which a Participant shall cease to be an employee of the Company, the Participant shall at any time either discloses to unauthorized persons confidential information relative to the business of any of the Company or otherwise act or conduct themselves in a manner which the Committee shall determine is inimical or contrary to the best interest of the Company, the Company's obligation to make any further payment on account of the Deferred Portions of such Participant shall forthwith terminate.
(f) Assignment of Rights by Participant or Beneficiary. If any Participant or beneficiary of a Participant shall attempt to assign their rights under the Plan in violation of the provisions thereof, the Company's obligation to make any further payments to such Participant or beneficiary shall forthwith terminate.
(g) Determination of Breach of Conditions. The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company's obligation in accordance with the foregoing provisions of this paragraph 10 shall be conclusive.
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(h) Fund Composition and Valuation. Deferred Portions of Awards under the Plan shall be valued and maintained as follows:
(i) In accordance with the provisions, and subject to the conditions, of the Plan and the Regulations, the Deferred Portion as established by the Committee shall be valued in reference to the Participants' account(s) in the Equity Fund, in the Fixed Income Fund, in the Company Stock Fund, and in any other Fund established under this Plan. Account balances shall be maintained as dollar values, units or share equivalents as appropriate based upon the nature of the fund. For unit or share-based funds, the number of units or shares credited shall be based upon the established unit or share value as of the last day of the quarter preceding the crediting of the Deferred Portion.
(ii) Investment income credited to Participants' accounts under the Fixed Income Fund shall be determined by the Committee based upon the prevailing rates of return experienced by the Company. The investment income credited to participants under the Equity Fund shall be established based upon an established market index reflecting the rate of return on equity investments. The Company shall advise Participants of the specific measures used and the current valuations of these Funds as appropriate to facilitate deferral decisions, investment choices and to communicate payout levels. The Company Stock Fund shall consist of units valued as one share of Common Stock of the Company (par value $.10).
(iii) Nothing contained in the Fund definitions in subparagraphs 10(h)(i) and 10(h)(ii) above shall require the Company to segregate or earmark any cash, shares, stock or other property to determine Fund values or maintain Participant account levels.
(iv) Alternative Funds. The establishment of the 'Fixed Income Fund',
the 'Equity Fund' and the 'Stock Fund' as detailed in subparagraphs (i)and
(ii) of this paragraph shall not preclude the right of the Committee to direct
the establishment of additional investment funds ('Funds').
In establishing such Funds, the Committee shall determine the criteria to be used for determining the value of such Funds.
(i) Accelerated Distributions. The Committee may, at its sole discretion allow for the early payment of a Participant's Deferred Portion(s) in the event of an 'unforeseeable emergency'. An 'unforeseeable emergency' is defined as an unanticipated emergency caused by an event beyond the control of the Participant that would result in severe financial hardship if the distribution were not permitted. Such distributions shall be limited to the amount necessary to sufficiently address the financial hardship. Any distributions under this provision shall be consistent with all rules and regulations established under the Code.
11. MISCELLANEOUS:
(a) By accepting any benefits under the Plan, each Participant and each person claiming under or through him shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other committee appointed by the Board.
(b) Any action taken or decision made by the Company, the Board, the Committee, or any other committee appointed by the Board arising out of or in connection with the construction, administration, interpretation or effect of
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the Plan or of the Regulations shall lie within its absolute discretion, as the case may be, and shall be conclusive and binding upon all Participants and all persons claiming under or through any Participation.
(c) No member of the Board, the Committee, or any other committee appointed by the Board shall be liable for any act or failure to act of any other member, or of any officer, agent or employee of such Board or Committee, as the case may be, or for any act or failure to act, except on account of their own acts done in bad faith. The fact that a member of the Board shall then be, shall theretofore have been or thereafter may be a Participant in the Plan shall not disqualify them from voting at any time as a director with regard to any matter concerning the Awards, or in favor of or against any amendment or alteration of the Plan, provided that such amendment or alteration shall provide no benefit for directors as such and provided that such amendment or alteration shall be of general application.
(d) The Board, the Committee, or any other committee appointed by the Board may rely upon any information supplied to them by any officer of the Company or any Subsidiary and may rely upon the advice of counsel in connection with the administration of the Plan and shall be fully protected in relying upon information or advice.
(e) Notwithstanding anything to the contrary in the Plan, neither the Board nor the Committee shall have any authority to take any action under the Plan where such action would affect the Company's ability to account for any business combination as a 'pooling of interests.'
12. AMENDMENT OR DISCONTINUANCE: The Board may alter, amend, suspend or discontinue the Plan, but may not, without approval of the holders of a majority Company's Common Stock ($0.10 par value) and $2.00 Convertible Preferred Stock ($1 par value) make any alteration or amendment thereof which would permit the total payments under the Plan for any year to exceed the limitations provided in paragraph 7 hereof or to allow for the issuance of Company Common Stock in excess of the limitation provided in paragraph 6(c).
13. EFFECTIVE DATE: The Plan will be effective for all fiscal years beginning with 1997 by action of the Board of Directors conditioned on and subject to approval of the Plan, by a vote of the holders of a majority of the shares of Common Stock and $2.00 Convertible Preferred Stock of the Company present in person or by proxy at a duly held stockholders meeting at which a quorum representing a majority of all outstanding voting stock is present.
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BRISTOL-MYERS SQUIBB COMPANY
1983 STOCK OPTION PLAN
(as amended and restated effective as of September 10, 1996)
i. Purpose: The purpose of the 1983 Stock Option Plan (as amended and
restated effective as of September 10, 1996) (the "Plan") is to secure for the
Company and its stockholders the benefits of the incentive inherent in common
stock ownership by the officers and key employees of the Company and its
Subsidiaries and Affiliates who will be largely responsible for the Company's
future growth and continued financial success and by providing long-term
incentives in addition to current compensation to certain key executives of
the Company and its Subsidiaries and Affiliates who contribute significantly
to the long-term performance and growth of the Company and such Subsidiaries
and Affiliates. It is intended that the former purpose will be effected
through the grant of stock options and stock appreciation rights under the
Plan and that the latter purpose will be effected through an award
conditionally granting performance units under the Plan, either independently
or in conjunction with and related to a nonqualified stock option grant under
the Plan. The Bristol-Myers Squibb Company Long-Term Performance Award Plan
(as amended to January 17, 1983 and in effect as of December 31, 1992)
("LTPAP") has been merged into and consolidated with the Plan as of
January 1, 1993. As used herein, the term "Prior Plan" shall mean the
Bristol-Myers Squibb Company 1983 Stock Option Plan (as amended through
May 1, 1991 and in effect as of December 31, 1992) prior to its amendment and
restatement as of January 1, 1993.
ii. Definitions: For purposes of this Plan:
"Affiliate" shall mean any entity in which the Company has an ownership interest of at least 20%.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the Company's common stock (par value $.10 per share).
"Company" shall mean Bristol-Myers Squibb Company.
"Disability" or "Disabled" shall mean qualifying for and receiving payments under a disability pay plan of the Company or any Subsidiary or Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the average of the high and low sale prices of a share of Common Stock on the New York Stock Exchange, Inc. composite tape on the date of measurement or on any date as determined by the Committee and if there were no trades on such date, on the day on which a trade occurred next preceding such date.
"Retirement" shall mean termination of the employment of an employee with the Company or a Subsidiary or Affiliate on or after (i) the employee's 65th birthday or (ii) the employee's 55th birthday if the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates. For purposes of this Section 2(h) and all other purposes of this Plan, Retirement shall also mean termination of employment of an employee with the Company or a Subsidiary or Affiliate for any reason (other than the employee's death, disability, resignation, willful misconduct or activity deemed detrimental to
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the interests of the Company) where, on termination, the employee's age plus years of service (rounded up to the next higher whole number) equals at least 70 and the employee has completed 10 years of service with the Company, its Subsidiaries and/or its Affiliates.
Furthermore, an employee who makes an election to retire under Article 19 of the Bristol-Myers Squibb Company Retirement Income Plan (the "Retirement Income Plan") shall have any additional years of age and service which are credited under Article 19 of the Retirement Income Plan taken into account when determining such employee's age and service under this Section 2(h). Such election shall be deemed a Retirement for purposes of this Section 2(h) and all other purposes of this Plan.
"Subsidiary" shall mean any corporation which at the time qualifies as a
subsidiary of the Company under the definition of "subsidiary corporation" in
Section 424 of the Code.
iii. Amount of Stock: The amount of stock which may be made subject to grants
of options or awards of performance units under the Plan in calendar year 1993
shall not exceed an amount equal to (i) 0.9% of the outstanding shares of the
Company's Common Stock on January 1, 1993, plus (ii) the amount of shares
available for, and not made subject to, grants of options under the Prior Plan
as of January 1, 1993, less (iii) the number of shares subject to options
granted in 1993 under the Prior Plan and (iv) the number of shares
corresponding to awards of performance units outstanding under the LTPAP on
the date the Plan is approved by the stockholders of the Company. With
respect to each succeeding year, the amount of stock which may be made
subject to grants of options or awards of performance units under the Plan
shall not exceed an amount equal to (i) 0.9% of the outstanding shares of the
Company's Common Stock on January 1 of such year plus, subject to this
Section 3, (ii) in any year the number of shares equal to the amount of shares
that were available for grants and awards in the prior year but were not made
subject to a grant or award in such prior year and (iii) the number of shares
that were subject to options or awards granted hereunder or under the Prior
Plan, which options or awards terminated or expired in the prior year without
being exercised. Common Stock issued hereunder may be authorized and reissued
shares or issued shares acquired by the Company or its Subsidiaries on the
market or otherwise.
iv. Administration: The Plan shall be administered under the supervision of the Board of Directors of the Company which shall exercise its powers, to the extent herein provided, through the agency of a Compensation and Management Development Committee (the "Committee") which shall be appointed by the Board of Directors of the Company and shall consist of not less than three directors who shall serve at the pleasure of the Board. No member of the Committee shall have been within one year prior to appointment to, or while serving on, the Committee granted or awarded equity securities of the Company pursuant to this or any other plan of the Company or its Subsidiaries or Affiliates except to the extent that participation in any such plan or receipt of any such grant or award would not adversely affect the Committee member's status as a non-employee director for purposes of Rule 16b-3 under the Exchange Act.
The Committee, from time to time, may adopt rules and regulations for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. The interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board of Directors, be final and conclusive.
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The Committee shall maintain a written record of its proceedings. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of the Committee.
v. Eligibility: Options and awards may be granted only to present or future officers and key employees of the Company and its Subsidiaries and Affiliates, including Subsidiaries and Affiliates which become such after the adoption of the Plan. Any officer or key employee of the Company or of any such Subsidiary or Affiliate shall be eligible to receive one or more options or awards under the Plan. Any director who is not an officer or employee of the Company or one of its Subsidiaries or Affiliates and any member of the Committee, during the time of the member's service as such or thereafter, shall be ineligible to receive an option or award under the Plan. The adoption of this Plan shall not be deemed to give any officer or employee any right to an award or to be granted an option to purchase Common Stock of the Company, except to the extent and upon such terms and conditions as may be determined by the Committee.
vi. Stock Options: Stock options under the Plan shall consist of incentive stock options under Section 422 of the Code or nonqualified stock options (options not intended to qualify as incentive stock options), as the Committee shall determine. In addition, the Committee may grant stock appreciation rights in conjunction with an option, as set forth in Section 6(b)(11), or may grant awards in conjunction with an option, as set forth in Section 6(b)(10) (an "Associated Option").
Each option shall be subject to the following terms and conditions:
(i) Grant of Options. The Committee shall (1) select the officers and key employees of the Company and its Subsidiaries and Affiliates to whom options may from time to time be granted, (2) determine whether incentive stock options or nonqualified stock options, are to be granted, (3) determine the number of shares to be covered by each option so granted, (4) determine the terms and conditions (not inconsistent with the Plan) of any option granted hereunder (including but not limited to restrictions upon the options, conditions of their exercise, or on the shares of Common Stock issuable upon exercise thereof), (5) determine whether nonqualified stock options or incentive stock options granted under the Plan shall include stock appreciation rights and, if so, shall determine the terms and conditions thereof in accordance with Section 6(b)(11) hereof, (6) determine whether any nonqualified stock options granted under the Plan shall be Associated Options, and (7) prescribe the form of the instruments necessary or advisable in the administration of options.
(ii) Terms and Conditions of Option. Any option granted under the Plan shall be evidenced by a Stock Option Agreement executed by the Company and the optionee, in such form as the Committee shall approve, which agreement shall be subject to the following terms and conditions and shall contain such additional terms and conditions not inconsistent with the Plan, and in the case of an incentive stock option not inconsistent with the provisions of the Code applicable to incentive stock options, as the Committee shall prescribe:
(1) Number of Shares Subject to an Option. The Stock Option Agreement shall specify the number of shares of Common Stock subject to the Agreement. If the option is an Associated Option, the number of shares of Common Stock subject to such Associated Option shall initially be equal to the number of performance units subject to the award, but one share of Common Stock shall be canceled for each performance unit paid out under the award.
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(2) Option Price. The purchase price per share of Common Stock purchasable under an option will be determined by the Committee but will be not less than the Fair Market Value of a share of Common Stock on the date of the grant of such option.
(3) Option Period. The period of each option shall be fixed by the Committee, but no option shall be exercisable after the expiration of ten years from the date the option is granted.
(4) Consideration. Each optionee, as consideration for the grant of an option, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year from the date of the granting of such option, and no option shall be exercisable until after the completion of such one year period of employment by the optionee.
(5) Exercise of Option. An option may be exercised in whole or in part from time to time during the option period (or, if determined by the Committee, in specified installments during the option period) by giving written notice of exercise to the Company specifying the number of shares to be purchased, such notice to be accompanied by payment in full of the purchase price and Withholding Taxes (as defined in Section 10 hereof) due either by certified or bank check, or in shares of Common Stock of the Company owned by the optionee having a Fair Market Value at the date of exercise equal to such purchase price and Withholding Taxes due, or in a combination of the foregoing; provided, however, that payment in shares of Common Stock of the Company will not be permitted unless at least 100 shares of Common Stock are required and delivered for such purpose. No shares shall be issued until full payment therefor has been made. An optionee shall have the rights of a stockholder only with respect to shares of stock for which certificates have been issued to the optionee.
(6) Nontransferability of Options. No option or stock appreciation right granted under the Plan shall be transferable by the optionee otherwise than by will or by the laws of descent and distribution, and such option or stock appreciation right shall be exercisable, during the optionee's lifetime, only by the optionee.
(7) Retirement and Termination of Employment Other than by Death or Disability. If an optionee shall cease to be employed by the Company or any of its Subsidiaries or Affiliates for any reason (other than termination of employment by reason of death or Disability) after the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable only to the extent that the optionee was otherwise entitled to exercise it at the time of such cessation of employment with the Company, Subsidiary or Affiliate, but in no event after the expiration of the option period set forth therein except that in the case of cessation of employment other than by reason of Retirement or death, the option shall in no event be exercisable after the date three months next succeeding such cessation of employment. The Plan does not confer upon any optionee any right with respect to continuation of employment by the Company or any of its Subsidiaries or Affiliates.
(8) Disability of Optionee. An optionee who ceases to be employed by reason of Disability shall be treated as though the optionee remained in the employ of the Company or a Subsidiary or Affiliate until the earlier of (i) cessation of payments under a disability pay plan of the Company, Subsidiary or Affiliate, (ii) the optionee's death, or (iii) the optionee's 65th birthday.
(9) Death of Optionee. In the event of the death of the optionee while in the employ of the Company or of any of its Subsidiaries or Affiliates or within
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whichever period after Retirement or cessation of employment of the optionee specified in subsection (7) or (8) is applicable, and provided the optionee shall have been continuously so employed for one year after the granting of the option, the option shall be exercisable by the executors, administrators, legatees or distributees of the optionee's estate, as the case may be, at any time following death but in no event after the expiration of the option period set forth therein and only to the extent that the optionee would otherwise have been entitled to exercise it if the optionee were then living, except that in the case of the death of an optionee after Retirement or other cessation of employment, the option shall in no event be exercisable after the later of (i) the date twelve months next succeeding such death or (ii) the last day of the period after Retirement or other cessation of employment of the optionee specified in Section 6(b)(7). In the event any option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased optionee, the Company shall be under no obligation to issue stock thereunder unless and until the Company is satisfied that the person or persons exercising the option are the duly appointed legal representatives of the deceased optionee's estate or the proper legatees or distributees thereof.
(10)Long Term Performance Awards. The Committee may from time to time grant nonqualified stock options under the Plan in conjunction with and related to an award of performance units made under a Long Term Performance Award as set forth in Section 7(b)(11). In such event, notwithstanding any other provision hereof, (i) the number of shares to which the Associated Option applies shall initially be equal to the number of performance units granted by the award, but such number of shares shall be reduced on a one share-for-one unit basis to the extent that the Committee determines pursuant to the terms of the award, to pay to the optionee or the optionee's beneficiary the performance units granted pursuant to such award; and (ii) such Associated Option shall be cancelable in the discretion of the Committee, without the consent of the optionee, under the conditions and to the extent specified in the award.
(11)Stock Appreciation Rights. In the case of any option granted under the Plan, either at the time of grant or by amendment of such option at any time after such grant there may be included a stock appreciation right which shall be subject to such terms and conditions, not inconsistent with the Plan, as the Committee shall impose, including the following:
(A) A stock appreciation right shall be exercisable to the extent, and only to the extent, that the option in which it is included is at the time exercisable, and may be exercised within such period only at such time or times as may be determined by the Committee;
(B) A stock appreciation right shall entitle the optionee (or any person entitled to act under the provisions of subsection (9) hereof) to surrender unexercised the option in which the stock appreciation right is included (or any portion of such option) to the Company and to receive from the Company in exchange therefor that number of shares having an aggregate value equal to (or, in the discretion of the Committee, less than) the excess of the value of one share (provided such value does not exceed such multiple of the option price per share as may be specified by the Committee) over the option price per share specified in such option times the number of shares called for by the option, or portion thereof, which is so surrendered. The Committee shall be entitled to cause the Company to settle its obligation, arising out of the exercise of a stock appreciation right, by the payment of cash equal to the aggregate value of the shares the Company would otherwise be obligated to deliver or partly by the payment of cash and partly by the delivery of shares. Any such election shall be
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made within 30 business days after the receipt by the Committee of written notice of the exercise of the stock appreciation right. The value of a share for this purpose shall be the Fair Market Value thereof on the last business day preceding the date of the election to exercise the stock appreciation right;
(C) No fractional shares shall be delivered under this subsection
(11) but in lieu thereof a cash adjustment shall be made;
(D) If a stock appreciation right included in an option is exercised, such option shall be deemed to have been exercised to the extent of the number of shares called for by the option or portion thereof which is surrendered on exercise of the stock appreciation right and no new option may be granted covering such shares under this Plan; and
(E) If an option which includes a stock appreciation right is exercised, such stock appreciation right shall be deemed to have been canceled to the extent of the number of shares called for by the option or portion thereof is exercised and no new stock appreciation rights may be granted covering such shares under this Plan.
(12)Incentive Stock Options. In the case of any incentive stock option granted under the Plan, the aggregate Fair Market Value of the shares of Common Stock of the Company (determined at the time of grant of each option) with respect to which incentive stock options granted under the Plan and any other plan of the Company or its parent or a Subsidiary which are exercisable for the first time by an employee during any calendar year shall not exceed $100,000 or such other amount as may be required by the Code. In any year, the maximum number of shares with respect to which incentive stock options may be granted shall not exceed 4,000,000 shares.
vii. Long-term Performance Awards: Awards under the Plan shall consist of the conditional grant to the participants of a specified number of performance units. The conditional grant of a performance unit to a participant will entitle the participant to receive a specified dollar value, variable under conditions specified in the award, if the performance objectives specified in the award are achieved and the other terms and conditions thereof are satisfied.
Each award will be subject to the following terms and conditions:
(a) Grant of Awards. The Committee shall (1) select the officers and key executives of the Company and its Subsidiaries and Affiliates to whom awards may from time to time be granted, (2) determine the number of performance units covered by each award, (3) determine the terms and conditions of each performance unit awarded and the award period and performance objectives with respect to each award, (4) determine the periods during which a participant may request the Committee to approve deferred payment of a percentage (50% or 100%) of an award (the "Deferred Portion") and the interest or rate of return thereon or the basis on which such interest or rate of return thereon is to be determined, (5) determine whether payment with respect to the portion of an award which has not been deferred (the "Current Portion") and the payment with respect to the Deferred Portion of an award shall be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock, (6) determine whether the award is to be made independently of or in conjunction with a nonqualified stock option granted under the Plan, and (7) prescribe the form of the instruments necessary or advisable in the administration of the awards.
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(b) Terms and Conditions of Award. Any award conditionally granting performance units to a participant shall be evidenced by a Performance Unit Agreement executed by the Company and the participant, in such form as the Committee shall approve, which Agreement shall contain in substance the following terms and conditions and such additional terms and conditions as the Committee shall prescribe:
(1) Number of Performance Units. The Performance Unit Agreement shall specify the number of performance units conditionally granted to the participant. If the award has been made in conjunction with the grant of an Associated Option, the number of performance units granted shall initially be equal to the number of shares which the participant is granted the right to purchase pursuant to the Associated Option, but one performance unit shall be canceled for each share of the Company's Common Stock purchased upon exercise of the Associated Option or for each stock appreciation right included in such option that has been exercised.
(2) Value of Performance Units. The Performance Unit Agreement shall specify the threshold, target and maximum dollar values of each performance unit and corresponding performance objectives as provided under Section 7(b)(5).
(3) Award Periods. For each award, the Committee shall designate an award period with a duration to be determined by the Committee in its discretion but in no event less than three calendar years within which specified performance objectives are to be attained. There may be several award periods in existence at any one time and the duration of performance objectives may differ from each other.
(4) Consideration. Each participant, as consideration for the award of performance units, shall remain in the continuous employ of the Company or of one of its Subsidiaries or Affiliates for at least one year after the date of the making of such award, and no award shall be payable until after the completion of such one year of employment by the participant.
(5) Performance Objectives. The Committee shall establish performance objectives with respect to the Company for each award period on the basis of such criteria and to accomplish such objectives as the Committee may from time to time determine. Performance objectives may include objective and subjective criteria. During any award period, the Committee may adjust the performance objectives for such award period as it deems equitable in recognition of unusual or nonrecurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine.
(6) Determination and Payment of Performance Units Earned. As soon as practicable after the end of an award period, the Committee shall determine the extent to which awards have been earned on the basis of the Company's actual performance in relation to the established performance objectives as set forth in the Performance Unit Agreement. The Performance Unit Agreement shall specify that as soon as practicable after the end of each award period, the Committee shall determine whether the conditions of Sections 7(b)(4) and 7(b)(5) hereof have been met and, if so, shall ascertain the amount payable to the participant in respect of the performance units. As promptly as practicable after it has determined that an amount is payable in respect of an award, the Committee shall cause the Current Portion of such award to be paid to the participant or the participant's beneficiaries, as the case may be, in the Committee's discretion, either entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock. The Deferred Portion of an award shall be contingently credited and payable to the participant over a deferred period and shall be credited with interest or a rate of return, as determined by the
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Committee. The Committee, in its discretion, shall determine the conditions upon, and method of, payment of such deferred portions and whether such payment will be made entirely in cash, entirely in Common Stock or partially in cash and partially in Common Stock.
In making the payment of an award in Common Stock hereunder, the cash equivalent of such Common Stock shall be determined by the Fair Market Value of the Common Stock on the day the Committee designates the performance units shall be paid.
(7) Nontransferability of Awards and Designation of Beneficiaries. No award under the Plan shall be transferable by the participant other than by will or by the laws of descent and distribution, except that a participant may designate a beneficiary pursuant to the provisions hereof.
If any participant or the participant's beneficiary shall attempt to assign the participant's rights under the Plan in violation of the provisions thereof, the Company's obligation to make any further payments to such participant or the participant's beneficiaries shall forthwith terminate.
A participant may name one or more beneficiaries to receive any payment of an award to which the participant may be entitled under the Plan in the event of the participant's death, on a form to be provided by the Committee. A participant may change the participant's beneficiary designation from time to time in the same manner.
If no designated beneficiary is living on the date on which any payment becomes payable to a participant's beneficiary, such payment will be payable to the person or persons in the first of the following classes of successive preference:
(i) Widow or widower, if then living,
(ii) Surviving children, equally,
(iii) Surviving parents, equally,
(iv) Surviving brothers and sisters, equally,
(v) Executors or administrators
and the term "beneficiary" as used in the Plan shall include such person or persons.
(8) Retirement and Termination of Employment Other Than by Death or
Disability. In the event of the Retirement prior to the end of an award period
of a participant who has satisfied the one year employment requirement of
Section 7(b)(4) with respect to an award prior to Retirement, the participant,
or his estate, shall be entitled to a payment of such award at the end of the
award period, pursuant to the terms of the Plan and the participant's
Performance Unit Agreement, provided, however, that the participant shall be
deemed to have earned that proportion (to the nearest whole unit) of the value
of the performance units granted to the participant under such award as the
number of months of the award period which have elapsed since the first day of
the calendar year in which the award was made to the end of the month in which
the participant's Retirement occurs, bears to the total number of months in the
award period. The participant's rights in any remaining performance units shall
be canceled and forfeited.
Subject to Section 7(b)(6) hereof, the Performance Unit Agreement shall specify that the rights of the participant in the performance units granted to such participant shall be conditional and shall be canceled, forfeited and
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surrendered if the participant's continuous employment with the Company and its Subsidiaries and Affiliates shall terminate for any reason, other than the participant's death, Disability or Retirement prior to the end of the award period.
The Committee may, in its discretion, waive, in whole or in part, the cancellation, forfeiture and surrender of any performance units.
(9) Disability of Participant. For the purposes of any award a participant who becomes Disabled shall be deemed to have suspended active employment by reason of Disability commencing on the date the participant becomes entitled to receive payments under a disability pay plan of the Company or any Subsidiary or Affiliate and continuing until the date the participant is no longer entitled to receive such payments. In the event a participant becomes Disabled during an award period but only if the participant has satisfied the one year employment requirement of Section 7(b)(4) with respect to an award prior to becoming Disabled, upon the determination by the Committee of the extent to which an award has been earned pursuant to Section 7(b)(6) the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participants under such award as the number of months of the award period in which the participant was not Disabled bears to the total number of months of the award period. The participant's rights in any remaining performance units shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units.
(10) Death of Participant. In the event of the death prior to the end of an award period of a participant who has satisfied the one year employment requirement with respect to an award prior to the date of death, the participant's beneficiaries or estate, as the case may be, shall be entitled to a payment of such award upon the end of the award period, pursuant to the terms of the Plan and the participant's Performance Unit Agreement, provided, however, that the participant shall be deemed to have earned that proportion (to the nearest whole unit) of the value of the performance units granted to the participant under such award as the number of months of the award period which have elapsed since the first day of the calendar year in which the award was made to the end of the month in which the participant's death occurs, bears to the total number of months in the award period. The participant's rights in any remaining performance units shall be canceled and forfeited.
The Committee may, in its discretion, waive, in whole or in part, such cancellation and forfeiture of any performance units.
(11) Grant of Associated Option. If the Committee determines that the conditional grant of performance units under the Plan is to be made to a participant in conjunction with the grant of a nonqualified stock option under the Plan, the Committee shall grant the participant an Associated Option under the Plan subject to the terms and conditions of this subsection (11). In such event, such award under the Plan shall be contingent upon the participant's being granted such an Associated Option pursuant to which: (i) the number of shares the optionee may purchase shall initially be equal to the number of performance units conditionally granted by the award, (ii) such number of shares shall be reduced on a one share-for-one unit basis to the extent that the Committee determines, pursuant to Section 7(b)(6) hereof, to pay to the participant or the participant's beneficiaries the performance units conditionally granted pursuant to the award, and (iii) the Associated Option shall be cancelable in the discretion of the Committee, without the consent of
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the participant, under the conditions and to the extent specified herein and in
Section 7(b)(6) hereof.
If no amount is payable in respect of the conditionally granted performance
units, the award and such performance units shall be deemed to have been
canceled, forfeited and surrendered, and the Associated Option, if any, shall
continue in effect in accordance with its terms. If any amount is payable in
respect of the performance units and such units were granted in conjunction with
an Associated Option, the Committee shall, within 30 days after the
determination of the Committee referred to in the first sentence of Section
7(b)(6), determine, in its sole discretion, either:
(A) to cancel in full the Associated Option, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) shall be paid;
(B) to cancel in full the performance units, in which event no amount shall be paid to the participant in respect thereof but the Associated Option shall continue in effect in accordance with its terms; or
(C) to cancel some, but not all, of the performance units, in which event the value of the performance units payable pursuant to Sections 7(b)(5) and (6) which have not been canceled shall be paid and the Associated Option shall be canceled with respect to that number of shares equal to the number of conditionally granted performance units that remain payable.
Any action taken by the Committee pursuant to the preceding sentence shall be uniform with respect to all awards having the same award period. If the Committee takes no such action, it shall be deemed to have determined to cancel in full the award in accordance with clause (B) above.
i. Determination of Breach of Conditions: The determination of the Committee as to whether an event has occurred resulting in a forfeiture or a termination or reduction of the Company's obligations in accordance with the provisions of the Plan shall be conclusive.
i. Adjustment in the Event of Change in Stock: In the event of changes in the outstanding Common Stock of the Company by reason of stock dividends, recapitalization, mergers, consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number and class of shares available under the Plan, and the number, class and the price of shares subject to outstanding options and/or awards and the number of performance units and/or the dollar value of each unit shall be appropriately adjusted by the Committee, whose determination shall be conclusive.
ii. Taxes: In connection with the transfer of shares of Common Stock to an optionee, subject to Section 16 of the Exchange Act, as the result of the exercise of a nonqualified stock option or a stock appreciation right, or to a participant subject to Section 16 of the Exchange Act, upon payment of an award, the Company shall have the right to retain or sell without notice, or to demand surrender of, shares of Common Stock having a Fair Market Value (taking into account any commissions or other expenses the Company may incur upon the sale of such shares) on the date that the amount required by any governmental entity to be withheld
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or otherwise deducted and paid with respect to such transfer ("Withholding Tax") is to be determined (the "Tax Date") sufficient to cover the amount of any Applicable Tax (the amount of Withholding Tax plus the incremental amount determined on the basis of the highest marginal tax rate applicable to such optionee or participant, Federal Insurance Contribution Act taxes or other governmental impost or levy), and to make payment (or to reimburse itself for payment made) to the appropriate taxing authority of an amount in cash equal to the amount of such Applicable Tax, remitting any balance to the optionee or participant.
An optionee or participant who is not an executive officer of the Company
subject to Section 16 of the Exchange Act shall be entitled to satisfy the
obligation to pay any Withholding Tax or Applicable Tax, by providing the
Company with funds sufficient to enable the Company to pay such Withholding Tax
or Applicable Tax or by requiring the Company to retain or to accept upon
delivery thereof by the optionee or participant shares of Common Stock
sufficient in value (determined in accordance with the last sentence of the
preceding paragraph), to cover the amount of such Withholding Tax or Applicable
Tax. Each election by an optionee or participant to have shares retained or to
deliver shares for this purpose shall be subject to the following restrictions:
(i) the election must be in writing and be made on or prior to the Tax Date;
(ii) the election must be irrevocable; (iii) the election shall be subject to
the disapproval of the Committee.
iii. Amendment of the Plan: The Board of Directors may amend or suspend the Plan at any time and from time to time. No such amendment of the Plan may, however, increase the maximum number of shares to be offered under options or awards, or change the manner of determining the option price, or change the designation of employees or class of employees eligible to receive options or awards, or permit the transfer or issue of stock before payment therefor in full, or, without the written consent of the optionee or participant, alter or impair any option or award previously granted under the Plan, Prior Plan or LTPAP.
iv. Amendment of Options Outstanding Under the Prior Plan: The Prior Plan and certain nonqualified options granted and outstanding thereunder are hereby amended to provide that any nonqualified option which is outstanding on the date this Plan is adopted by a vote of the holders of a majority of the shares of the Company's Common Stock and $2.00 Convertible Preferred Stock present in person or by proxy at a duly held shareholders meeting at which a quorum representing a majority of all outstanding voting stock is present shall be exercisable in accordance with Sections 6(b)(7) and 6(b)(9), except that for the purpose of such options "Retirement" shall additionally mean termination of the employment of an employee after completing 35 years of service with the Company or its Subsidiaries.
Furthermore, an employee who makes an election to retire under Article 19 of the Retirement Income Plan shall have any additional years of age and service which are credited under Article 19 of the Retirement Income Plan taken into account when determining such employee's age and years of service with the Company or its Subsidiaries under this Section 12. Such election shall be
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deemed a Retirement for purposes of this Section 12 and all other purposes of this Plan.
v. Miscellaneous: By accepting any benefits under the Plan, each optionee or participant and each person claiming under or through such optionee or participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or made to be taken or made under the Plan by the Company, the Board, the Committee or any other Committee appointed by the Board. No participant or any person claiming under or through him shall have any right or interest, whether vested or otherwise, in the Plan or in any option, or stock appreciation right or award thereunder, contingent or otherwise, unless and until all of the terms, conditions and provisions of the Plan and the Agreement that affect such participant or such other person shall have been complied with. Nothing contained in the Plan or in any Agreement shall require the Company to segregate or earmark any cash or other property. Neither the adoption of the Plan nor its operation shall in any way affect the rights and powers of the Company or any of its Subsidiaries or Affiliates to dismiss and/or discharge any employee at any time.
vi. Term of the Plan: The Plan shall become effective as of January 1, 1993 by action of the Board of Directors conditioned on and subject to approval of the Plan, by a vote of the holders of a majority of the shares of Common Stock and $2.00 Convertible Preferred Stock of the Company present in person or by proxy at a duly held shareholders meeting at which a quorum representing a majority of all outstanding voting stock is present. The Plan shall terminate on December 31, 2002, or at such earlier date as may be determined by the Board of Directors. Termination of the Plan, however, shall not affect the rights of optionees under options theretofore granted to them or the rights of participants under awards theretofore granted to them, and all unexpired options and awards shall continue in force and operation after termination of the Plan except as they may lapse or be terminated by their own terms and conditions.
E - 6 - 12
BRISTOL-MYERS SQUIBB COMPANY
RETIREMENT PLAN
FOR NON-EMPLOYEE DIRECTORS
Adopted Effective As of January 1, 1985
Amended Effective March 5, 1996
I. PURPOSE
This plan shall be known as the Bristol-Myers Squibb Company Retirement Plan for Non-Employee Directors (the "Plan"). The Plan shall be maintained by Bristol-Myers Squibb Company (the "Company") solely for the purpose of providing retirement benefits to Eligible Directors as defined in the Plan.
II. PAYMENTS
The benefits payable under the Plan will be paid from the Company's general revenues as payments become due under the Plan, will not be funded in advance through as IRS qualified trust arrangement or through insurance annuity contracts, and will not be guaranteed by the Pension Benefit Guaranty Corporation.
III. ELIGIBLE DIRECTORS
The persons who are eligible to receive benefits under the Plan ("Eligible Directors") are persons who serve as directors of the Company after the effective date of the Plan and:
(a) who are not current or former "employees" of the Company or its subsidiaries (as the term "employee" is defined under the employee Retirement Income Security Act of 1974) and
(b) who are not eligible for retirement benefits under another retirement plan sponsored by the Company or under a contractual arrangement with the Company.
E - 7 - 1
IV. YEARS OF SERVICE
Service as a director of the Company from one Annual Meeting to the next subsequent Annual Meeting shall constitute one Year of Service. In addition, service as a director prior to initial election as a director at an Annual Meeting and subsequent Annual Meeting shall constitute one Year of Service provided the total period of such prior and subsequent service is six (6) months or more. For the purpose of this Plan, service as a director of Squibb Corporation prior to its merger with Bristol-Myers Company shall constitute service as a director of the Company.
V. TOTAL AVERAGE COMPENSATION
An Eligible Director's Total Average Compensation shall be the total of:
(a) The amount of the annual Board retainer which is payable to Company directors for the year in which the Eligible Director's retirement occurs;
(b) One-third of the total of the Board Meeting fees paid to the Eligible Director during the three calendar year period preceding the effective date of retirement; and
(c) One-third of the total of the Committee Meeting fees paid to the Eligible Director during the three calendar year period preceding the effective date of retirement.
VI. RETIREMENT BENEFITS
An Eligible Director who retires from the Company with five (5) years of service shall have a vested right to receive an annual benefit equal to 50% of the Eligible Director's Total Average Compensation. For each year of service in excess of five (5), the Eligible Director shall have a vested right to receive an additional benefit equal to 2% of the Eligible Director's Total Average Compensation up to a total annual benefit equal to 80% of the Eligible Director's Total Average Compensation for twenty (20) Years of Service.
E - 7 - 2
VII. FORMS OF PAYMENT OF RETIREMENT BENEFITS
(A) The retirement benefit shall be payable to the Eligible Director as a life annuity on a monthly basis starting with the month following actual retirement and ending with the month in which death occurs, unless a different form of retirement benefit payment is elected as set forth below.
(B) Other forms of retirement benefit payments shall be available under the Plan (including actuarially-equivalent Joint and Survivor Benefit options) as set forth in the provisions of the Bristol-Myers Squibb Company Retirement Income Plan in effect at the time of the Eligible Director's actual retirement under this Plan except that no lump-sum benefit shall be available. An Eligible Director may elect one of these optional forms of benefits by delivering a written notice of election to the Plan Administrator at any time before payment of benefits begins under the Plan. In the event an Eligible Director who is married and has at least ten (10) years of service as a director dies prior to retirement from the Company, the Eligible Director's spouse shall receive a 50% joint and survivor benefit in monthly lifetime payments based on the retirement benefit the Eligible Director would have received if retirement from the Company had taken place on the day preceding the date of death.
VIII. SPECIAL RETIREMENT BENEFITS
The Board of Directors, upon recommendation of the Committee on Directors and
Corporate Governance of the Company's Board of Directors, or a successor
committee (the "Committee"), shall have the right in its sole discretion to
(1) grant retirement benefits to any Eligible Director who is otherwise not
entitled to a retirement benefit under this Plan, in any amount which it
shall deem appropriate at the time of such Eligible Director's retirement
from the Company and prior to ten (10) Years of Service.
IX. BENEFIT NOT ASSIGNABLE
An Eligible Director's rights under the Plan shall not be subject to assignment, encumbrance, garnishment, attachment or charge, whether voluntary or involuntary, and in the event of any such assignment, action or proceeding, any benefit otherwise payable under the Plan shall be deemed terminated and forfeited.
E - 7 - 3
X. EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN
The Plan is effective January 1, 1985. The Company reserves the right to amend, modify, or terminate the Plan at any time by action of its Board of Directors, provided that such action shall not adversely affect any Eligible Director's right to a benefit which accrued pursuant to the provisions of the Plan prior to such action. No new retirement benefits will be credited under the Plan effective March 5, 1996. All Eligible Directors, regardless of their years of service, shall have a vested right to receive retirement benefits which accrued pursuant to the provisions of the Plan prior to March 5, 1996.
XI. ADMINISTRATION OF PLAN
The Plan shall be administered by the Senior Vice President - Human Resources of the Company (the "Administrator"). All decisions which are made by the Administrator with respect to interpretation of the terms of the Plan, with respect to the amount of benefits payable under the Plan, and with respect to any questions or disputes arising under the Plan, shall be final and binding on the Company and the Eligible Directors and their heirs or beneficiaries.
E - 7 - 4
BRISTOL-MYERS SQUIBB COMPANY
1987 DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
AMENDED EFFECTIVE JANUARY 13, 1997
Section 1. Effective Date.
The effective date of this Bristol-Myers Squibb Company 1987 Deferred Compensation Plan for Non-Employee Directors (the "Plan") is January 20, 1987.
Section 2. Eligibility.
Any Director of Bristol-Myers Squibb Company (the "Company") who is not an Officer or employee of the Company or a subsidiary thereof is eligible to participate in the Plan.
Section 3. Deferred Compensation Account.
There shall be established on the books of the Company for each participant a deferred compensation account in the participant's name.
Section 4. Amount of Deferral.
Two hundred fifty (250) Share Units payable each year, as of the date of the Annual Meeting of Stockholders, to the participant for membership on the Board of Directors shall be deferred and credited to such participant's deferred compensation account as Share Units equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred, determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral until the cessation of the participant's service as a Director. Twenty-five (25) percent of the basic fee payable to the participant for membership on the Board of Directors shall be deferred and credited to such participant's deferred compensation account as Share Units equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred, determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral until such time as the participant meets a guideline level of Share Unit or Company common stock ownership established by the Executive Compensation Committee of the Company. A participant may elect, by filing the appropriate form pursuant to Section 9, to defer receipt for any calendar year of either (1) all of the compensation payable to the participant for serving on the Board of Directors and any committee thereof, (2) only the basic fee payable to the participant for membership on the Board of Directors, or (3) any percentage, in excess of twenty-five percent of the basic fee, specified by the participant of the compensation payable to the participant specified in clause (1) hereof.
E - 8 - 1
Section 5. Form and Computation of Deferred Amounts.
Effective with respect to amounts deferred after the Effective Date of the Plan and subject to Section 4, a participant, at the time he elects to participate in the Plan, shall elect to have the amounts deferred credited to such participant's deferred compensation account as Treasury Units or Dollar Units each equal to the number of shares of the Company's common stock which could have been purchased with the amounts deferred determined by dividing the dollar value of the amounts deferred by the fair market value of a share of the Company's common share as reported in The Wall Street Journal on the effective date of such deferral. Such deferrals shall be allocated to Treasury Units, Dollar Units and/or Share Units in increments of 0%, 33 1/3%, 50%, 66 2/3% or 100%. The amount credited to a participant's deferred compensation account as Treasury Units shall be credited with interest at a rate to be set by the Executive Compensation Committee of the Company in January of each year after a review of the six-month United States Treasury bill discount rates for the preceding year. The amount credited to a participant's deferred compensation account as Dollar Units shall be credited with interest at a rate to be set by the Executive Compensation Committee in January of each year after a review of investment return on the invested cash of the Company. Upon payment by the Company of dividends on its common stock, the amount credited to a participant's deferred compensation account as Share Units shall be credited with an amount equal to the number of Share Units multiplied by a fraction the numerator of which is the amount of such dividend and the denominator of which is the fair market value of a Share of the Company's common stock as reported in The Wall Street Journal on the day such dividend is payable. The amount of Share Units credited to a participant's deferred compensation account shall be adjusted in the discretion of the Executive Compensation Committee to take into account a merger, consolidation, reorganization, recapitalization, stock split or other change in corporate structure of capitalization affecting the Company's common stock.
Section 6. Period of Deferral.
Subject to Section 4, a participant may elect to defer receipt of compensation either (1) until a specified year in the future, (2) until the cessation of the participant's service as a Director or (3) until the end of the calendar year in which the cessation of the participant's service as a Director occurs. If alternative (1) is elected, payment will be made or will commence within sixty days after the beginning of the year specified; if alternative (2) is elected, payment will be made or will commence within sixty days after the cessation of the participant's service as a Director; and if alternative (3) is elected, payment will be made or will commence within sixty days after the end of the calendar year in which the cessation of the participant's service as a Director occurs.
Section 7. Form of Payment.
A participant may elect to receive the compensation deferred under the Plan in either (1) a lump sum in cash or (2) a number of installments in cash, not more than ten, as specified by the participant. If installment payments are elected, the amount of each installment shall be equal to the balance in the participant's deferred compensation account divided by the number of installments remaining to be paid (including the installment in question).
E - 8 - 2
Section 8. Death Prior to Receipt.
A participant may elect that, in the event he or she dies prior to
receipt of any or all of the amounts payable pursuant to this Plan, any
amounts remaining in the participant's deferred compensation account shall
be paid to the participant's estate in cash in either (1) a lump sum within
sixty days following notification to the Company of the participant's death or
(2) a number of annual installments, not more than ten, as specified by the
participant. If alternative (2) is elected and payment to the participant
pursuant to clause (2) of Section 7 has not commenced prior to death, the
initial installment payment hereunder shall be made sixty days after
notification to the Company of the participant's death, and the amount of each
such installment shall be determined as provided in the last sentence of
Section 7. If alternative (2) is elected and payment to the participant
pursuant to clause (2) of Section 7 had commenced prior to death, the
installment payments to the participant's estate shall be made at the same time
and in the same amount as such payments would have been made to the participant
had he or she survived. For purposes of this Section 8, any amounts deferred
as Share Units shall be converted to Dollar Units by multiplying the number of
Share Units credited to a participant's deferred compensation account on the
date of his death by the fair market value of a share of the Company's common
stock on such date as reported in The Wall Street Journal.
Section 9. Time of Election of Deferral.
An election to defer compensation may be made by (i) a nominee for
election as a Director prior to his/her election for the calendar year in
which he/she is being elected (except that a person elected a Director
by the Board of Directors may make an election to defer compensation within 30
days after his/her election as a Director, in which event such election to
defer compensation shall be effective only with respect to compensation paid
after the election to defer compensation is made) and (ii) a person then
currently serving as a Director for the next succeeding calendar year no later
than the preceding December 31. This election will be deemed to be an election
to defer compensation under this Plan for each succeeding calendar year, unless
(1) the participant elects, in accordance with Section 12, to discontinue the
deferral, (2) the Company discontinues the Plan, or (3) the election is stated,
in writing, to apply only to the current calendar year.
Section 10. Status of Previous Deferrals.
Any deferral election made under the Bristol-Myers Squibb Company Amended and Restated Deferred Compensation Plan for Non-Employee Directors (the "Prior Plan") shall be subject to and governed by the terms of the Prior Plan.
Section 11. Manner of Electing Deferral.
A participant may elect to defer compensation by giving written notice to the Executive Compensation Committee of the Company on a form provided by the Company, which notice shall include the amount to be deferred, the form in which the amount deferred is to be credited, the period of deferral, the form of payment, including the number of installments, if any.
E - 8 - 3
Section 12. Effect of Election.
An election to defer compensation including the form of deferral shall be irrevocable by the participant once the calendar year to which it applies has commenced. An election may be discontinued or modified by the participant with respect to calendar years not yet begun by notifying the Executive Compensation Committee of the Company in writing no later than November 30th of the preceding year.
Section 13. Further Election.
Prior to the commencement of the year in which a participant has elected to commence receipt of payment of amounts deferred, the participant shall have the one-time right with regard to funds previously deferred to elect a further deferral of the payment of such funds by delivering to the committee a written statement in a form provided by the Company specifying the further period of deferral and the form of payment, including the number of installments, if any.
In the event, however, there is a final determination by a court of appropriate jurisdiction that the further deferral was ineffective for the purpose of deferring tax obligations on the deferred amounts, then all amounts on which the further deferral was determined to be ineffective shall be paid to the participant within 15 days of such final determination being made, such payment to be made pursuant to the previously elected deferral.
Section 14. Participant's Rights Unsecured.
The right of any participant to receive future payments under the provisions of the Plan shall be an unsecured claim against the general assets of the Company.
Section 15. Statement of Account.
A statement will be sent to each participant each year as to the value of his/her deferred compensation account as of the end of the preceding year.
Section 16. Assignability.
No right to receive payments hereunder shall be transferable or assignable by a participant, except by will or under the laws of descent and distribution.
Section 17. Administration.
This Plan will be administered by the Executive Compensation Committee of the Company, which shall have the authority to adopt rules and regulations to carry out the Plan and to interpret, construe and implement the provisions of the Plan.
Section 18. Amendment.
This Plan may at any time or from time to time be amended, modified or terminated by the Company. No amendment, modification or termination shall, without the consent of the participant, adversely affect such participant's accruals in his/her deferred compensation account of the date of amendment, modification or termination.
E - 8 - 4
EFFECT OF EXERCISE OF STOCK OPTIONS AND WARRANTS ON PRIMARY EARNINGS PER
SHARE:
- -------------------------------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
(1)Average market price of Common
Stock during year $46.05 $34.445 $27.945
(2)Number of shares under option
and warrant at year-end for which
exercise price is below (1) 65,756,856 53,489,758 23,269,782
(3)Aggregate proceeds to be
received upon exercise of shares
in (2) $2,452,537,830 $1,616,061,831 $570,433,755
(4)Shares deemed repurchased under
treasury stock method (3) divided
by (1) 53,258,150 46,917,167 20,412,730
(5)Additional shares deemed
outstanding (2) - (4) 12,498,706 6,572,591 2,857,052
(6)(5) as a percentage of number of
shares used in computing earnings
per share 1.25% .65% .28%
|
In view of the above percentages, the effect of assumed exercise of stock options and warrants was considered not dilutive in accordance with Footnote 2 to paragraph 14 of APB Opinion #15.
E - 9 - 1
BRISTOL-MYERS SQUIBB COMPANY
Exhibit With Respect to Omission of Dilutive Elements
In Primary and Fully Diluted Earnings Per Share
1996 1995 1994
------------- ------------- -------------
Restatement of Shares:
(1) Shares used in computing earnings
per share 1,003,746,162 1,012,140,314 1,017,444,798
(2) Additional shares deemed
outstanding:
(a) Upon issuance pursuant to stock
plans, options, rights and warrants
after assumed repurchase of shares 17,985,314 13,678,552 4,778,406
(b) Upon conversion of preferred
stock outstanding at conversion
rate of 848/100 per common share 129,278 161,316 185,348
------------- ------------- -------------
(3) Shares assumed to be outstanding
for fully diluted computation 1,021,860,754 1,025,980,182 1,022,408,552
============= ============= =============
Restatement of Earnings:
(4) Net earnings applicable to $2,849,506,000 $1,811,562,000 $1,842,446,000
Common Stock:
(5) Dividends on Preferred Stock 33,000 41,000 48,000
-------------- -------------- -------------
(6) Pro forma earnings applicable
to Common Stock $2,849,539,000 $1,811,603,000 $1,842,494,000
============== ============== ==============
(7) Pro forma fully diluted
earnings per share: $2.79 $1.765 $1.80
(8) Reported per share: $2.84 $1.79 $1.81
(9) Dilution: 1.76% 1.40% .55%
|
In view of the above percentages, the effect of assumed issuance pursuant to stock plans, options, rights and warrants and conversions of Preferred Stock was considered not dilutive in accordance with Footnote 2 to paragraph 14 of APB Opinion #15.
E - 9 - 2
2309 Realty Corporation
345 Park Corporation
77 Wilson St., Corp.
A.G. Medical Services, P.A.
A/S GEA Farmaceutisk Fabrik
Agit Ges. fuer Informationssysteme und Techniken m.b.H.
Alive & Well, Inc.
Allard Laboratories, Inc.
Apothecon BV
Apothecon Farmaceutica Ltda.
Apothecon, Inc.
Apothecon, S.A.
Astel Laboratoires S.A.R.L.
B-MS GeneRx
B. L. Pharmaceuticals (Proprietary) Limited
Blisa, Inc.
BMS Holdings
BMS Music Company
Boclaro Inc.
Bristol (Iran) S.A.
Bristol Arzneimittel G.m.b.H.
Bristol Caribbean, Inc.
Bristol Farmaceutica Portuguesa Limitada
Bristol Foundation
Bristol Iran Private Company Limited
Bristol Laboratorier Aktiebolag
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.
Bristol-Myers Barceloneta, Inc.
E - 10 - 1
Bristol-Myers Company Limited
Bristol-Myers de Mexico, S.A. de C.V.
Bristol-Myers Ecuatoriana S.A.
Bristol-Myers Foreign Sales Corporation
Bristol-Myers Ges.m.b.H.
Bristol-Myers Industrial (Dominicana), Inc.
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 (Guangzhou) Ltd.
Bristol-Myers Squibb (Hong Kong) 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.
Bristol-Myers Squibb Asia/Pacific, Inc. (Singapore - Branch)
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 Business Services Limited
E - 10 - 2
Bristol-Myers Squibb Canada Inc.
Bristol-Myers Squibb Company
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.A. de C.V.
Bristol-Myers Squibb de Venezuela, S.A.
Bristol-Myers Squibb del Ecuador, C.A.
Bristol-Myers Squibb Dominicana, S.A.
Bristol-Myers Squibb Export SA
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 Limited
Bristol-Myers Squibb Investco, Inc.
Bristol-Myers Squibb K.K.
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.
Bristol-Myers Squibb Pharmaceuticals Limited (England)
Bristol-Myers Squibb Pharmaceuticals Limited (Ireland)
Bristol-Myers Squibb Products S.A.
E - 10 - 3
Bristol-Myers Squibb Puerto Rico, Inc.
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 Limited
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
Bristol-Salor Pharma G.m.b.H.
Cancer Research, Inc.
Carboplant Spezialimplante GmbH
CJG Partners, L.P.
Clairol de Mexico, S.A. de C.V.
Clairol Incorporated
Clairol International S.r.l.
Clairol Limited
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 Sp. z o.o.
Convatec Spot s r.o.
Convatec Vertriebs G.m.b.H.
Convatec, S.A.
Delmed S.A.
Dermogroup S.R.L.
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. R. Squibb & Sons, Inc.
E - 10 - 4
E. R. Squibb & Sons, Inc.
E. R. Squibb & Sons, Inc. (England - Branch)*
Elektrochemische Ges.Hirschfelde M.b.H.
Envision Medical Corporation
ESS Partners, L.P.
F.A.I.R. Laboratories Limited
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)
Hexachimie
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
Laboratori Guieu S.p.A.
Laboratorios Industriales Grove S.A.
Lawrence Laboratories Limited
Linson Investments Limited
Linson Pharma Inc.
Linvatec Corporation
Listo B.V.
Logics International, Inc.
Matrix Essentials, Inc.
Mead Johnson & Company
Mead Johnson (Guangzhou) Ltd.
Mead Johnson (Manufacturing) Jamaica Limited
Mead Johnson B.V.
Mead Johnson de Mexico, S.A. de C.V.
Mead Johnson Ecuador S.A.
Mead Johnson Farmaceutica Limitada
Mead Johnson International Limited (Argentina - Branch)
E - 10 - 5
Mead Johnson International Limited (Canada)
Mead Johnson International Limited (Colombia - Branch)
Mead Johnson International Limited (HongKong - Branch)
Mead Johnson Jamaica Ltd.
Mead Johnson Limited
Mead Johnson Pharmaceutical, Inc.
Mead Johnson S.p.A.
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 Online, Inc.
OTN Parent Corp.
Oy Bristol-Myers Squibb (Finland) AB
P. T. Squibb Indonesia
Pharmagen
Pharmavit Rt.
PRB Partners, L.P.
Recherche et Propriete Industrielle
Route 22 Real Estate Holding Corporation
S+G Implants G.m.b.H.
Salorpharma G.m.b.H.
Schuppert Meubelen Holten B.V.
Seabrook Medical Systems, Inc.
Selecciones Mercantiles, S.A. de C.V.
Servicios Administrativos Bristol-Myers, S.A.
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
E - 10 - 6
Squibb ApS
Squibb Convatec Medical Products Co. Ltd.
Squibb Corporation
Squibb Development Limited
Squibb Farmaceutica Portuguesa, Limitada
Squibb Industria Farmaceutica, S.A.
Squibb Manufacturing, Inc.
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 Laboratories Limited
Synbiotics Limited
Tallosa, S.A.
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 Co-Ordination Centre N.V.
Zimmer Europe Limited
Zimmer Korea Co., Ltd.
Zimmer Limited
Zimmer New Zealand Limited
Zimmer of Canada Limited
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Zimmer Pte. Ltd.
Zimmer S. A. (France)
Zimmer S.A. (Spain)
Zimmer S.R.L.
Zimmer, Inc.
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We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-8 (Nos. 33-30856, 33-31055, 33-35586, 33-38411, 33-38587, 33-44788, 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 33-61147) and Pre-Effective Amendment No. 1 on Form S-3 (Nos. 33-62496 and 33-61147) of Bristol-Myers Squibb Company of our report dated January 22, 1997 appearing on page 53 of this Form 10-K.
/s/ Price Waterhouse LLP - ------------------------ |
PRICE WATERHOUSE LLP
New York, New York
March 31, 1997
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| ARTICLE5 |
| Exhibit 27 for Bristol-Myers Squibb year ended 12/31/96 |
| MULTIPLIER:1000000 |
| PERIOD TYPE | YEAR |
| FISCAL YEAR END | Dec 31 1996 |
| PERIOD END | Dec 31 1996 1 |
| CASH | 1,681 |
| SECURITIES | 504 |
| RECEIVABLES | 2,758 |
| ALLOWANCES | 107 |
| INVENTORY | 1,669 |
| CURRENT ASSETS | 7,528 |
| PP&E | 6,646 |
| DEPRECIATION | 2,682 |
| TOTAL ASSETS | 14,685 |
| CURRENT LIABILITIES | 5,050 |
| BONDS | 966 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 108 |
| OTHER SE | 6,462 |
| TOTAL LIABILITY AND EQUITY | 14,685 |
| SALES | 15,065 |
| TOTAL REVENUES | 15,065 |
| CGS | 3,965 |
| TOTAL COSTS | 3,965 |
| OTHER EXPENSES | 3,222 |
| LOSS PROVISION | 0 |
| INTEREST EXPENSE | 78 |
| INCOME PRETAX | 4,013 |
| INCOME TAX | 1,163 |
| INCOME CONTINUING | 2,850 |
| DISCONTINUED | 0 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 2,850 |
| EPS PRIMARY | 2.84 |
| EPS DILUTED | 2.79 |
| 1 | Items reported as "zero" are not applicable or are immaterial to the consolidated financial position of the Company. |
Cautionary statement regarding forward looking statements made by the Company, intended to have the benefit of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995.
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 the Company's Annual Report to Stockholders and Form 10-K) 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 would delay, divert or change one 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, (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 go off patent, as well as possible problems 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; recalls of pharmaceutical products or forced closings of manufacturing plants.
Increasing pricing pressures worldwide from managed care buyers and institutional and governmental purchasers; changes of business conditions including renewed inflation, higher 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.
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