-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vp732q4sCELAHFYom7AhEJm4lr8kj5OOuutnK663M8NOdBdwr3UOQpZY8/WidWz8 oGb4JX71ht1hLG8KCgY/9w== 0000014272-99-000015.txt : 19991115 0000014272-99-000015.hdr.sgml : 19991115 ACCESSION NUMBER: 0000014272-99-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRISTOL MYERS SQUIBB CO CENTRAL INDEX KEY: 0000014272 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 220790350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-01136 FILM NUMBER: 99747435 BUSINESS ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 2125464000 MAIL ADDRESS: STREET 1: 345 PARK AVE CITY: NEW YORK STATE: NY ZIP: 10154 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL MYERS CO DATE OF NAME CHANGE: 19891012 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999 Commission File Number 1-1136 BRISTOL-MYERS SQUIBB COMPANY (Exact name of registrant as specified in its charter) Delaware 22-079-0350 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 345 Park Avenue, New York, N.Y. 10154 (Address of principal executive offices) Telephone: (212) 546-4000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] At September 30, 1999, there were 1,983,692,284 shares outstanding of the Registrant's $.10 par value Common Stock. BRISTOL-MYERS SQUIBB COMPANY INDEX TO FORM 10-Q September 30, 1999 Part I - Financial Information: Page Item 1. Financial Statements (Unaudited): Consolidated Balance Sheet - September 30, 1999 and December 2 - 3 31, 1998 Consolidated Statement of Earnings and Comprehensive Income for the three and nine months ended September 30, 1999 and 4 1998 Consolidated Statement of Cash Flows for the nine months ended September 30, 1999 and 1998 5 Notes to Condensed Consolidated Financial Statements 6 - 7 Report of Independent Accountants 8 Item 2. Management's Discussion and Analysis of Financial 9 - 17 Condition and Results of Operations Part II - Other Information Item 1. Legal Proceedings 18 - 19 Item 6. Exhibits and Reports on Form 8-K 20 Signatures 21 PART I FINANCIAL INFORMATION - ------------------------------ Item 1. Financial Statements - ----------------------------- BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET - ASSETS (Unaudited, in millions except share amounts) September December 30, 1999 31, 1998 ---------- ---------- Current Assets: Cash and cash equivalents $2,455 $2,244 Time deposits and marketable securities 235 285 Receivables, net of allowances 3,306 3,190 Inventories 2,052 1,873 Prepaid expenses 909 1,190 --------- --------- Total Current Assets 8,957 8,782 --------- --------- Property, Plant and Equipment, net 4,489 4,429 Insurance Recoverable 466 523 Excess of cost over net tangible assets arising from business acquisitions 1,550 1,587 Other Assets 1,150 951 --------- --------- Total Assets $16,612 $16,272 ========= ========= -2- BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED BALANCE SHEET - LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited, in millions except share amounts) September December 30, 1999 31, 1998 --------- --------- Current Liabilities: Short-term borrowings $ 512 $ 482 Accounts payable 1,506 1,380 Accrued expenses 2,309 2,302 Product liability 378 877 U.S. and foreign income taxes payable 696 750 ------ -------- Total Current Liabilities 5,401 5,791 Other Liabilities 1,439 1,541 Long-Term Debt 1,331 1,364 ------ -------- Total Liabilities 8,171 8,696 ------ -------- Stockholders' Equity: Preferred stock, $2 convertible series: Authorized 10 million shares; issued and outstanding 11,153 in 1999 and 11,684 in - - 1998, liquidation value of $50 per share Common stock, par value of $.10 per share: Authorized 4.5 billion shares; issued 2,190,910,985 in 1999 and 2,188,316,808 in 219 219 1998 Capital in excess of par value of stock 1,394 1,075 Other Comprehensive Income (796) (622) Retained earnings 14,374 12,540 ------ -------- 15,191 13,212 Less cost of treasury stock - 207,218,701 common shares in 1999 and 199,550,532 in 1998 6,750 5,636 ------ -------- Total Stockholders' Equity 8,441 7,576 ------ -------- Total Liabilities and Stockholders' Equity $16,612 $16,272 ======= ======= -3- BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited, in millions except per share amounts) Three Months Nine Months Ended Ended September 30, September 30, ----------------- ---------------- EARNINGS 1999 1998 1999 1998 - -------- ------- ------- ------- ------- Net Sales $5,040 $4,523 $14,814 $13,399 ------ ------ ------- ------- Expenses: Cost of products sold 1,402 1,191 4,068 3,549 Marketing,selling, administrative 1,095 1,034 3,338 3,116 and other Advertising and product promotion 573 554 1,768 1,767 Research and development 452 398 1,328 1,165 Provision for restructuring - - - 201 Gain on sale of businesses - - - (201) ------ ------ ------- ------- 3,522 3,177 10,502 9,597 ------ ------ ------- ------- Earnings Before Income Taxes 1,518 1,346 4,312 3,802 Provision for income taxes 421 380 1,197 1,074 ------ ------ ------- ------- Net Earnings $1,097 $966 $3,115 $2,728 ====== ====== ====== ====== Earnings Per Common Share Basic $.55 $.49 $1.57 $1.37 Diluted $.54 $.47 $1.54 $1.34 Average Common Shares Oustanding Basic 1,984 1,988 1,985 1,987 Diluted 2,028 2,030 2,027 2,032 Dividends Per Common Share $.215 $.195 $.645 $.585 COMPREHENSIVE INCOME - -------------------- Net Earnings $1,097 $966 $3,115 $2,728 Other Comprehensive Income: Foreign currency translation (18) (68) (187) (155) Tax effect 5 6 13 11 ------ ------ ------- ------- Total Other Comprehensive Income (13) (62) (174) (144) ------- ------- ------- ------- Comprehensive Income $1,084 $904 $2,941 $2,584 ====== ====== ====== ====== -4- BRISTOL-MYERS SQUIBB COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in millions) Nine Months Ended September 30, ----------------- 1999 1998 ------ ------ Cash Flows From Operating Activities: Net earnings $3,115 $2,728 Depreciation and amortization 489 457 Provision for restructuring - 201 Gain on sale of businesses - (201) Other operating items (59) 27 Receivables (208) (262) Inventories (245) (81) Accounts payable (21) 89 Accrued expenses (53) (242) Product liability (622) (493) Insurance recoverable 57 89 Income taxes 478 468 Other assets and liabilities (79) (103) --------- --------- Net Cash Provided by Operating Activities 2,852 2,677 --------- --------- Cash Flows From Investing Activities: Proceeds from sales of time deposits and 51 225 marketable securities Purchases of time deposits and marketable (1) (195) securities Additions to fixed assets (455) (537) Proceeds from sale of business - 413 Acquisition of businesses - (67) Other, net (9) 10 --------- --------- Net Cash Used in Investing Activities (414) (151) --------- --------- Cash Flows From Financing Activities: Short-term borrowings 27 (30) Long-term debt (12) 69 Issuances of common stock under stock plans (7) 129 Purchases of treasury stock (915) (1,448) Dividends paid (1,281) (1,163) --------- --------- Net Cash Used in Financing Activities (2,188) (2,443) --------- --------- Effect of Exchange Rates on Cash (39) (8) --------- --------- Increase in Cash and Cash Equivalents 211 75 Cash and Cash Equivalents at Beginning of 2,244 1,456 Period --------- --------- Cash and Cash Equivalents at End of Period $2,455 $1,531 ========= ========= -5- BRISTOL-MYERS SQUIBB COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, in millions except per share amounts) Note 1: Basis of Presentation - ------------------------------- In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal adjustments) necessary for a fair presentation of the financial position of Bristol-Myers Squibb Company (the "Company") at September 30, 1999 and December 31, 1998, the results of operations for the three and nine months ended September 30, 1999 and 1998, and cash flows for the nine months ended September 30, 1999 and 1998. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company's 1998 Annual Report on Form 10-K. PricewaterhouseCoopers LLP, the Company's independent auditors, have performed a review of the unaudited consolidated financial statements included herein, and their review report thereon accompanies this filing. Note 2: Accounting Policies - ----------------------------- Basis of Consolidation - The consolidated financial statements include the accounts of Bristol-Myers Squibb Company and all of its subsidiaries. Cash and Cash Equivalents - Cash and cash equivalents primarily include securities with a maturity of three months or less at the time of purchase, recorded at cost, which approximates market. Time Deposits and Marketable Securities - Time deposits and marketable securities are available for sale and are recorded at fair value, which approximates cost. Inventory Valuation - Inventories are generally stated at average cost, not in excess of market. As of September 30, 1999, the amounts of finished goods, work in process, and raw and packaging materials were $1,362, $340 and $350, respectively. These amounts as of December 31, 1998 were $1,209, $236 and $428, respectively. Capital Assets and Depreciation - Expenditures for additions, renewals and betterments are capitalized at cost. Depreciation is generally computed by the straight-line method based on the estimated useful lives of the related assets. The estimated useful lives of the major classes of depreciable assets are 50 years for buildings and 3 to 40 years for machinery, equipment and fixtures. Accumulated depreciation as of September 30, 1999 and December 31, 1998 amounted to $3,234 and $3,079, respectively. Excess of Cost over Net Tangible Assets - The excess of cost over net tangible assets arising from business acquisitions is amortized on a straight-line basis over periods ranging from 15 to 40 years. The excess of cost over net tangible assets is periodically reviewed for impairment based on an assessment of future operations (including cash flows) to ensure the excess of cost over net tangible assets is appropriately valued. -6- Product Liability - Accruals for product liability are recorded, on an undiscounted basis, when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on existing information. These accruals are adjusted periodically as assessment efforts progress or as additional information becomes available. Receivables for related insurance or other third party recoveries for product liabilities are recorded, on an undiscounted basis, when it is probable that a recovery will be realized. Insurance recoverable recorded on the balance sheet has, in general, payment terms of three years or less. Revenue Recognition - Revenue from product sales is recognized upon shipment to customers. Note 3: Earnings Per Share - -------------------------- Basic earnings per common share are computed using the weighted average number of shares outstanding during the year. Diluted earnings per common share are computed using the weighted average number of shares outstanding during the year, plus the incremental shares outstanding assuming the exercise of dilutive stock options. The computations for basic earnings per common share and diluted earnings per common share are as follows: Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------ 1999 1998 1999 1998 ------- ------- ------- ------- Earnings per Common Share - Basic: Net Earnings $1,097 $ 966 $3,115 $2,728 Average Common Shares 1,984 1,988 1,985 1,987 Outstanding Earnings Per Common Share - Basic $ 0.55 $ 0.49 $ 1.57 $ 1.37 Three Months Ended Nine Months Ended September 30, September 30, -------------------- ------------------ 1999 1998 1999 1998 ------- ------- ------- ------- Earnings per Common Share - Diluted: Net Earnings $1,097 $ 966 $3,115 $2,728 Average Common Shares 1,984 1,988 1,985 1,987 Outstanding Incremental Shares Outstanding Assuming the Exercise of 44 42 42 45 Dilutive Stock Options Average Common Shares 2,028 2,030 2,027 2,032 Outstanding Earnings Per Common Share - Diluted $ 0.54 $ 0.47 $ 1.54 $ 1.34 -7- Report of Independent Accountants To the Board of Directors and Stockholders of Bristol-Myers Squibb Company We have reviewed the accompanying consolidated balance sheet of Bristol-Myers Squibb Company and its subsidiaries as of September 30, 1999, and the related consolidated statement of earnings and comprehensive income for each of the three-month and nine-month periods ended September 30, 1999 and 1998 and the consolidated statement of cash flows for the nine-month periods ended September 30, 1999 and 1998. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with generally accepted accounting principles. We previously audited in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1998, and the related consolidated statements of earnings, comprehensive income and retained earnings and of cash flows for the year then ended (not presented herein), and in our report dated January 20, 1999 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1998 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. PricewaterhouseCoopers LLP New York, New York November 9, 1999 -8- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Third Quarter Results of Operations - ----------------------------------- Worldwide sales for the third quarter of 1999 increased 11% over the prior year to $5,040 million. The consolidated sales growth resulted from a 10% increase due to volume, a 2% increase due to changes in selling prices and a 1% decrease due to foreign exchange rate fluctuations. U.S. sales increased 15% and international sales increased 5% (7% excluding the effect of foreign exchange). Sales in the medicines products segment, which is the largest segment at 70% of total Company sales, increased 14% over the third quarter of 1998 to $3,548 million. Sales growth resulted from a 13% increase in volume, a 3% increase in selling prices and a 2% decrease due to foreign exchange rate fluctuations. Worldwide pharmaceutical sales increased 15% with U.S. pharmaceutical sales up 22% over the prior year. Sales of cardiovascular drugs increased 12% to $871 million (14% excluding foreign exchange). Sales of PRAVACHOL*, the Company's largest selling product, decreased 1% to $386 million. Sales of the anti-hypertensive MONOPRIL*, a second generation angiotensin converting enzyme (ACE) inhibitor, increased 9% to $94 million. PLAVIX(R), a platelet aggregation inhibitor for the reduction of stroke, heart attack and vascular death in atherosclerotic patients with recent stroke, heart attack or peripheral arterial disease, had sales of $148 million compared to $45 million for the same quarter last year. AVAPRO(r), an angiotensin II receptor blocker for the treatment of hypertension, increased 55% to $62 million. AVAPRO(r) and PLAVIX(r) are cardiovascular products that were launched from the Bristol-Myers Squibb and Sanofi S.A. joint venture. Sales growth for these cardiovascular products was partially offset by a 23% decline in CAPOTEN* sales due to the loss of patent exclusivity in international markets. Sales of anti-cancer drugs, the largest product group in the segment, increased 16% to $898 million. Sales of TAXOL* (paclitaxel), the Company's leading anti-cancer agent, increased 23% to $375 million as the product continues to benefit from increased use in ovarian, breast and non-small cell lung cancer. Sales from Oncology Therapeutics Network (OTN), a specialty distributor of anti-cancer medicines and related products, increased 38% to $236 million. Anti-infective drug sales of $602 million increased 3% over the prior year. Sales of ZERIT* and VIDEX*, the Company's two anti- retroviral agents, increased 17% to $155 million and 14% to $49 million, respectively. International sales of MAXIPIME*, a fourth generation injectable cephalosporin, increased 35% to $31 million in the quarter. Central nervous system drug sales of $314 million increased 16% with sales of BUSPAR*, an anti-anxiety agent, and SERZONE*, a novel anti-depressant, increasing 12% to $155 million, and 41% to $86 million, respectively. * Indicates brand names of products which are trademarks of the Company. -9- GLUCOPHAGE(r), the leading branded oral medication for the treatment of non-insulin dependent (type 2) diabetes, continued its strong growth rate with sales increasing 57% to $349 million. Analgesic sales increased 11% to $180 million. EXCEDRIN* sales increased 5% to $61 million, BUFFERIN* sales increased 19% to $32 million and sales of EFFERALGAN*, an effervescent analgesic sold primarily in France, increased 3% to $33 million. In October 1999, the U.S. Food and Drug Administration expanded the EXCEDRIN* migraine indication from just the treatment of mild to moderate migraine pain to encompass even the severe pain and associated symptoms of the full migraine syndrome. Also in October, the Company introduced THERAGRAN HEART RIGHT*, a complete multivitamin with a formula specially created to help support a healthy heart. Earnings before taxes for the medicines products segment increased 20% to $1,049 million in 1999. As a percentage of sales, earnings before taxes for this segment improved to 29.6% in 1999 from 28.2% in 1998. Advertising and promotion, sales force and general administrative expenses improved, as a percentage of sales, partially offset by increases in cost of goods sold, as a percentage of sales. Sales in the beauty care products segment increased 5% (4% excluding the effect of foreign exchange) to $624 million. Sales growth resulted from a 2% increase in volume, a 2% increase in selling prices and a 1% increase due to foreign exchange rate fluctuations. Clairol continues to be the number one hair products company in the U.S. The introduction of a demand management manufacturing system slowed shipments during the quarter. HERBAL ESSENCES*, the number two brand in the U.S. shampoo/conditioner category and number three in the body wash category, continued its strong growth, increasing 6% to $163 million. AUSSIE* products contributed $32 million to third quarter sales, an increase of 7%. Sales of DAILY DEFENSE* increased 12% to $29 million, following its launch into international markets. Haircolor sales increased 12% due to increases in NICE 'N EASY* of 24% to $56 million and NATURAL INSTINCTS* of 24% to $26 million. Earnings before taxes for the beauty care products segment decreased to $92 million in 1999 from $96 million in 1998, primarily due to the introduction of a demand management manufacturing system. Sales in the nutritional products segment increased 6% to $466 million. Sales growth resulted from an 8% increase in volume, a 2% decrease in selling prices and no effect due to foreign exchange rate fluctuations. The Company's Mead Johnson subsidiary continues to build on its U.S. and worldwide leadership position in the infant formula market. ENFAMIL*, the Company's largest-selling infant formula, recorded sales of $176 million, an increase of 1% over the prior year. BOOST*, an adult nutritional supplement, also contributed to sales growth, increasing 38% to $33 million and sales of VIACTIV* Calcium Chews reached $10 million. Earnings before taxes for the nutritional segment increased to $96 million in 1999 from $91 million in 1998, and as a percentage of sales, remained at prior year levels of approximately 20.6%. Sales force and general administrative expenses improved as a percentage of sales, offset by increases in cost of goods sold and advertising and promotion expenses, as a percentage of sales. -10- Medical device segment sales increased 4% to $402 million, due to volume increases of 3% and increases due to changes in selling prices of 1%. Fluctuations in foreign exchange had no effect on medical devices sales. Zimmer sales increased 8% to $226 million (5% excluding foreign exchange). Knee joint replacement sales increased 13% to $88 million and hip replacement sales increased 14% to $67 million. ConvaTec sales remained at prior year levels at $176 million (a 1% increase excluding foreign exchange). Sales of modern wound care products increased 5% to $62 million while sales of ostomy products decreased 11% to $100 million. Earnings before taxes for the medical device segment increased 15% to $91 million in 1999 from $79 million in 1998 and, as a percentage of sales, increased to 22.6% in 1999 from 20.5% in 1998, primarily due to improved manufacturing processes. Operating Expenses - ------------------ Total expenses, as a percentage of sales, decreased to 69.9% from 70.2% in 1998. Cost of products sold, as a percentage of sales, increased to 27.8% from 26.3% in 1998 due to revenue growth of Oncology Therapeutics Network (OTN) which carries significantly lower margins. Excluding OTN, cost of products sold, as a percentage of sales, increased to 24.5% in 1999 from 23.6% in 1998 due primarily to decreased sales of CAPOTEN* and a product mix shift to lower margin pharmaceutical products. Expenditures for advertising and promotion in support of new and existing products increased 3% to $573 million from $554 million. Marketing, selling administrative and other expenses, as a percentage of sales, decreased to 21.7% in the third quarter of 1999 from 22.9% in the third quarter of 1998, primarily due to sales force effectiveness and reductions in general administrative expenses as a percentage of sales. Research and development expenditures increased 14% to $452 million from $398 million in 1998. Pharmaceutical research and development spending increased 13% over the prior year, and as a percentage of pharmaceutical sales, was 12.5% in the third quarter of 1999 and 12.6% in the third quarter of 1998. In research and development highlights this quarter, the Company and Otsuka Pharmaceutical Co., Ltd., announced a development, commercialization and collaboration agreement for aripiprazole, a novel drug under study in Phase III trials as a treatment for schizophrenia. This new compound has a unique mechanism of action and has the potential to expand the options for safely and effectively treating schizophrenia and, possibly, other forms of mental illness. In October, the U.S. Food and Drug Administration (FDA) approved the use of TAXOL* injection for adjuvant treatment of node-positive breast cancer. In September, the Oncologic Drugs Advisory Committee recommended that the FDA approve UFT(r) capsules in combination with leucovorin calcium tablets for treatment of metastatic colorectal cancer. Also in September, ZERIT* and VIDEX* were both approved by the FDA for use as a first-line component of a combination antiretroviral therapy regimen for HIV-infected patients. The Company also submitted a regulatory application to the FDA in September to gain marketing approval for a new oral antidiabetic combination drug. The new drug, which is the first fixed combination product of its kind to be developed in the United States, leverages the benefits of two widely prescribed oral antidiabetic medications, GLUCOPHAGE(r) (metformin) and glyburide, a well established sulfonylurea antidiabetic. A regulatory application was filed with the FDA in September to gain marketing approval for VANIQA*, a topical treatment for excessive facial hair in women. -11- The Company is awaiting marketing approval from the FDA for TEQUIN* (gatifloxacin), a broad-spectrum quinolone antibiotic for the treatment of multiple common infections, including those of the respiratory tract. The Company also plans to file for regulatory approval with the FDA for a new hypertension drug, VANLEV*, by the end of the year with worldwide regulatory filings to follow. A research agreement between the Company and Exelixis Pharmaceuticals was recently announced to identify novel, validated targets for new medicines using the genetics of yeast, worms and fruit flies. Earnings - -------- Earnings before income taxes increased 13% to $1,518 million from $1,346 million in 1998. The effective tax rate on earnings before income taxes decreased to 27.7% in 1999 from 28.2% in 1998. The decrease in the effective tax rate is due to increased earnings from lower tax rate jurisdictions. Net earnings increased 14% to $1,097 million from $966 million in 1998. Basic earnings per share increased 12% to $.55 from $.49 in 1998 and diluted earnings per share increased 15% to $.54 from $.47 in 1998. Nine Months Results of Operations - --------------------------------- Worldwide sales for the first nine months of 1999 increased 11% over the prior year to $14,814 million. The consolidated sales growth resulted from a 9% increase due to volume and a 2% increase due to changes in selling prices. Foreign exchange had no effect on sales for the nine months. U.S. sales increased 16% and international sales increased 3% (4% excluding the effect of foreign exchange). Sales in the medicines products segment increased 14% over the prior year to $10,413 million. Sales growth for the nine months resulted from a 13% increase in volume, a 2% increase in selling prices and a 1% decrease due to foreign exchange rate fluctuations. Worldwide pharmaceutical sales increased 15% with U.S. pharmaceutical sales up 23% over the prior year. Cardiovascular drug sales of $2,673 million increased 15% from the prior year. PRAVACHOL* increased 5% to $1,252 million and MONOPRIL* increased 10% to $316 million. PLAVIX(r) had sales of $364 million for the nine months and AVAPRO(r) had sales of $176 million. Sales growth for these products was partially offset by a 22% decline in CAPOTEN* sales, due to the loss of patent exclusivity in international markets. Sales of anti-cancer drugs increased 21% to $2,585 million due to strong sales of TAXOL* and OTN which increased 24% to $1,067 million and 41% to $656 million, respectively. Anti-infective drug sales increased 4% to $1,819 million as ZERIT* and VIDEX* recorded gains of 17% to $458 million and 26% to $148 million, respectively. International sales of MAXIPIME* increased 26% to $92 million for the nine months and sales of CEFZIL* increased 11% to $329 million. Sales of central nervous system drugs increased 13% to $888 million as BUSPAR* and SERZONE* increased 14% to $418 million and 19% to $233 million, respectively. GLUCOPHAGE(r) continued its strong growth and increased 53% to $980 million. Analgesic sales of $540 million increased 6% primarily due to increases in EFFERALGAN* of 9% to $118 million and BUFFERIN* of 14% to $97 million. Sales of EXCEDRIN* decreased 1% to $173 million, coming off significant increases in 1998 due to the launch of EXCEDRIN MIGRAINE*. -12- Earnings before taxes for the medicines products segment increased 17% to $2,943 million in 1999. As a percentage of sales, earnings before taxes for this segment improved to 28.3% in 1999 from 27.5% in 1998. Advertising and promotion, sales force and general administrative expenses improved, as a percentage of sales, partially offset by an increase in cost of goods sold, as a percentage of sales. Sales in the beauty care products segment increased 5% (6% excluding the effect of foreign exchange) to $1,822 million. Sales growth resulted from a 4% increase in volume, a 2% increase in selling prices and a 1% decrease due to foreign exchange rate fluctuations. HERBAL ESSENCES* continued its strong growth, increasing 16% to $486 million. HERBAL ESSENCES FACIAL CARE* contributed $15 million in nine month sales. AUSSIE* products contributed $93 million, an increase of 15%, and sales of DAILY DEFENSE* increased 60% to $93 million for the nine months. Earnings before taxes for the beauty care segment decreased to $202 million in 1999 from $257 million in 1998, primarily due to the introduction of a demand management manufacturing system. Sales in the nutritional products segment increased 3% to $1,354 million (4% excluding the effect of foreign exchange). Sales growth for the nine months resulted from a 4% increase in volume, and a 1% decrease due to foreign exchange rate fluctuations. Changes in selling prices had no effect on sales for the nine months. Total infant formula sales of $896 million were at prior year levels. ENFAMIL* recorded sales of $525 million, a 4% increase over the prior year. BOOST*, an adult nutritional supplement, increased 29% to $84 million. Nine month sales of VIACTIV* were $19 million. Earnings before taxes for the nutritional products segment were $268 million in 1999 compared to $260 million in 1998 and, as a percentage of sales, earnings before taxes were 19.8% in both 1999 and 1998. Increases, as a percentage of sales, in cost of products sold and advertising and promotion expenses were offset by decreases, as a percentage of sales, in sales force and general and administrative expenses. Medical device segment sales increased 4% to $1,225 million, excluding sales from a 1998 distribution agreement with the acquirer of Zimmer's divested arthroscopy and powered surgical instrument business. On this basis, medical device sales increased 3% due to volume and 1% due to foreign exchange with no effect from price changes. Zimmer sales on the same basis increased 7% to $704 million. Knee joint replacement sales increased 11% to $277 million and hip replacement sales increased 9% to $209 million. ConvaTec remained at prior year levels of $521 million as sales of ostomy products decreased 2% to $324 million and wound care products increased 1% to $173 million. Earnings before taxes for the medical devices segment increased 11% to $253 million in 1999 from $227 million in 1998 and, as a percentage of sales, improved to 20.7% in 1999 from 18.8% in 1998, resulting from a decrease, as a percentage of sales, in cost of products sold. -13- Operating Expenses - ------------------ Total expenses for the nine months ended September 30, 1999, as a percentage of sales, decreased to 70.9% from 71.6% in 1998. Cost of products sold increased to 27.5% of sales from 26.5% in 1998 primarily due to revenue growth of OTN which carries significantly lower margins. Excluding OTN, cost of products sold, as a percentage of sales, increased to 24.3% in 1999 from 24.0% in 1998 due to decreased sales of CAPOTEN*. Expenditures for advertising and promotion in support of new and existing products remained at prior year levels of $1,768 million. Marketing, selling, administrative and other expenses increased 7% to $3,338 million from $3,116 million in 1998. Research and development expenditures increased 14% to $1,328 million from $1,165 million in 1998. Pharmaceutical research and development spending increased 14% over the prior year, and as a percentage of pharmaceutical sales, was 12.4% compared to 12.6% in the same period of 1998. Earnings - -------- Earnings before income taxes for the nine months increased 13% to $4,312 million from $3,802 million in 1998. The effective tax rate on earnings before income taxes decreased to 27.8% in 1999 from 28.2% in 1998. Net earnings increased 14% to $3,115 million from $2,728 million in 1998. Basic earnings per share increased 15% to $1.57 from $1.37 in 1998 and diluted earnings per share increased 15% to $1.54 from $1.34 in 1998. Financial Position - ------------------ The balance sheet at September 30, 1999 and the statement of cash flows for the nine months then ended reflect the Company's strong financial position. The Company continues to maintain a high level of working capital, increasing to $3.6 billion at September 30, 1999, from $3.0 billion at December 31, 1998. Long-Term Debt decreased to $1,331 million from $1,364 million at December 1998. Internally generated funds continue to be the Company's primary source for financing expenditures for new plant and equipment. Net Cash Provided by Operating Activities increased 7% to $2,852 million in 1999. Additions to fixed assets for the nine months ended September 30, 1999 were $455 million compared to $537 million during the same period of 1998. During the nine months ended September 30, 1999, the Company purchased 15.2 million shares of its common stock. The Company is exposed to market risk, including changes in currency exchange rates. To reduce these risks, the Company enters into certain derivative financial instruments where available on a cost-effective basis to hedge its underlying economic exposure. These instruments also are managed on a consolidated basis to efficiently net exposures and thus take advantage of any natural offsets. -14- It is the Company's policy to hedge certain underlying economic exposures to reduce foreign exchange risk. Derivative financial instruments are not used for trading purposes. Gains and losses on hedging transactions are offset by gains and losses on the underlying exposures being hedged. Foreign exchange option contracts and, to a lesser extent, forward contracts are used to hedge anticipated transactions. During the first quarter of 1998, the Company divested its BANr brand of anti-perspirants and deodorants for $165 million, resulting in a gain of $125 million before taxes. During the second quarter, the Company divested A/S GEA, a Denmark-based generic drug business, and Hexachimie, a fine chemical manufacturer based in France, resulting in a combined gain of $76 million before taxes. The Company recorded provisions for restructuring of $201 million before taxes in the first nine months of 1998. Business Segments - ----------------- Three Months Ended September 30, ------------------------------------------ Earnings Net Sales Before Taxes -------------------- ------------------- 1999 1998 1999 1998 --------- --------- --------- --------- (in millions) Medicines Products $3,548 $3,101 $1,049 $ 873 Beauty Care Products 624 597 92 96 Nutritional Products 466 440 96 91 Medical Devices 402 385 91 79 Other - - 190 207 --------- --------- --------- --------- Total Company $5,040 $4,523 $1,518 $1,346 ========= ========= ========= ========= Nine Months Ended September 30, ------------------------------------------ Earnings Net Sales Before Taxes -------------------- ------------------- 1999 1998 1999 1998 --------- --------- --------- --------- (in millions) Medicines Products $10,413 $ 9,145 $2,943 $2,519 Beauty Care Products 1,822 1,733 202 257 Nutritional Products 1,354 1,311 268 260 Medical Devices 1,225 1,210 253 227 Other - - 646 539 -------- --------- --------- --------- Total Company $14,814 $13,399 $4,312 $3,802 ======== ========= ========= ========= -15- Included in earnings before taxes of each segment is a cost of capital charge. The offset to the cost of capital charge is included in Other. In addition, Other principally consists of interest income, interest expense, certain administrative expenses and allocations to the industry segments for certain corporate programs. For the first nine months of 1998, Other also includes the gain on sale of businesses of $201 million and a provision for restructuring of $201 million. In addition, the segment information reflects certain internal organizational changes made in 1999. Prior year data have been restated accordingly. Year 2000 - --------- The Company has reviewed its information, manufacturing, and research and development systems for Year 2000 compliance. The Year 2000 problem arises because many computer systems use only two digits to represent the year. These programs may not process dates beyond 1999, which may cause miscalculations or system failures. The Company has completed a comprehensive compliance program used to assess the Year 2000 problem in the processing of data in the Company's information technology (IT) and non-IT systems, including manufacturing, and research and development systems. This program was executed in five phases which included: Assessment, Planning, Execution, Testing and Certification, and Implementation. In connection with this compliance program, the Company also has asked critically important vendors, customers, suppliers, governmental regulatory authorities and financial institutions, whose incomplete or untimely resolution of the Year 2000 problem could potentially have a significant impact on the Company's operations, to assess their Year 2000 readiness. This assessment has been completed. The follow-up phase of this work (which includes ongoing monitoring of Year 2000 readiness of the third parties and developing contingency plans relating to those third parties whose responses raise issues or who did not respond) is being undertaken by the business continuity and contingency planning committees referred to below. Contingency plans are in place to minimize any significant exposures from the failures of third parties to be Year 2000 compliant. The contingency plans include backup procedures, identification of alternate suppliers, and increases in inventory levels where appropriate. The contingency plans are complete and will continue to be tested during the rest of the year. In addition, the Company has formed business steering committees to monitor contingency planning activities at various business-unit and corporate levels. These committees proactively monitor critical internal systems as well as the external environment. The Company has set up procedures to receive relevant information regarding any Year 2000 related events from all of the markets during the year-end change. This information will be collected by these committees, who will initiate the implementation of contingency plans in a timely manner, as necessary. -16- As a result of the comprehensive compliance program, information received from critically important third parties regarding their Year 2000 readiness, and the contingency plans in place, the Company does not expect the Year 2000 problem, as well as the cost of the compliance program, to have a material impact on the Company's results of operations, financial condition or cash flows. However, there can be no assurance that third parties will convert their systems in a timely manner and in a way that is compatible with the Company's systems. Reference is made to Part II, Item 1 - Legal Proceedings in which developments are described for various lawsuits, claims and proceedings in which the Company is involved. -17- PART II - OTHER INFORMATION - --------------------------- Item 1. Legal Proceedings - -------------------------- Various lawsuits, claims and proceedings of a nature considered normal to its business are pending against the Company and certain of its subsidiaries. The most significant of these are reported in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and any subsequent material developments in such matters are described below. Breast Implant Litigation - ------------------------- As previously reported in the Company's Annual Report on Form 10- K for the fiscal year ended December 31, 1998, the Company, together with its subsidiary, Medical Engineering Corporation (MEC), and certain other companies, has been named as a defendant in a number of claims and lawsuits alleging damages for personal injuries of various types resulting from breast implants formerly manufactured by MEC or a related company. Of the more than 90,000 claims or potential claims against the Company in direct lawsuits or through registration in the national class action Revised Settlement Program, most have been dealt with through the Revised Settlement, other settlements, or trial. Since December 31, 1998, the Company has settled, reached agreements to settle, or otherwise disposed of large numbers of claims of persons with breast implants made by MEC. As of November 1, 1999, the Company's contingent liability in respect of breast implant claims was limited to residual unpaid Revised Settlement Program obligations and to roughly 2,200 remaining opt- outs who have pursued or may pursue their claims in court. As of November 1, 1999, approximately 7,400 United States and 200 foreign breast implant recipients were plaintiffs in lawsuits pending in federal and state courts in the United States and in certain courts in Canada and Australia. These figures include the claims of plaintiffs that are in the process of being settled and/or dismissed. In these lawsuits, about 4,200 U.S. plaintiffs and 50 foreign plaintiffs opted out of the Revised Settlement. The lawsuits of approximately 3,200 U.S. plaintiffs who did not opt out are expected to be dismissed as these plaintiffs are among the estimated 74,000 women with MEC implants who chose to participate in the nationwide settlement. Of the 4,200 opt-out plaintiffs, an estimated 2,000 plaintiffs have claims based upon products that were not manufactured and sold by MEC or that have been or are in the process of being settled and/or dismissed. Accordingly, the number of remaining plaintiffs who have pursued or may pursue their claims in court against the Company is roughly 2,200 as stated in the preceding paragraph. Under the terms of the Revised Settlement Program, additional opt- outs are expected to be minimal since the deadline for U.S. class members to opt out has passed. In addition, the Company's remaining obligations under the Revised Settlement Program are limited because most payments to "Current Claimants" have already been made, no additional "Current Claims" may be filed without court approval, and because payments of claims to so-called "Other Registrants" and "Late Registrants" are limited by the terms of the Revised Settlement Program. The Company believes it will be able to address remaining opt-out claims as well as remaining obligations under the Revised Settlement Program within its reserves as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. -18- Prescription Drug Litigation - ---------------------------- The Company remains a defendant in several actions challenging pricing on brand name prescription drugs. These actions include several currently consolidated antitrust actions brought against the Company and more than thirty other pharmaceutical manufacturers, drug wholesalers and pharmacy benefit managers by certain chain drugstores, supermarket chains and independent drugstores; state pharmaceutical actions; and purported class actions on behalf of consumers. The Company will continue to defend vigorously its position in this ongoing litigation and believes it will be able to address all remaining claims within its reserves as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. Infant Formula Matters - ---------------------- As previously reported in the Company's Annual Report on Form 10- K for the fiscal year ended December 31, 1998, the Company, one of its subsidiaries, and others have been defendants in a number of antitrust actions in various states filed on behalf of purported statewide classes of indirect purchasers of infant formula products and by the Attorneys General of Louisiana, Minnesota and Mississippi, alleging a price fixing conspiracy and other violations of state antitrust or deceptive trade practice laws and seeking penalties and other relief. The Company has resolved all of these actions except for a purported statewide class action of indirect purchasers in Louisiana in which the plaintiffs filed a petition for certiorari in the United States Supreme Court on jurisdictional grounds following the United States Court of Appeals' affirmation of the district court's dismissal of such action. -19- Item 6. Exhibits and Reports on Form 8-K - ----------------------------------------- a) Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K). Exhibit Number and Description Page - ------------------------------- -------- 10q. Form of Agreement, effective June 1, 1999, entered into between the Registrant and each E-10q-1 of the following officers on the following dates: Hamed M. Abdou, Ph.D., August 9, 1999; Peter R. Dolan, July 29, 1999; Donald J. Hayden, Jr., July 30, 1999; Richard J. Lane, August 6, 1999; John L. McGoldrick, August 10, 1999; Michael F. Mee, July 28, 1999; Christine A. Poon, July 29, 1999; Peter S. Ringrose, Ph.D., August 5, 1999; Stephen I. Sadove, July 29, 1999; Frederick S. Schiff, July 29, 1999; John L. Skule, August 5, 1999; Charles G. Tharp, Ph.D., July 28, 1999; and Kenneth E. Weg, July 29, 1999. 15. Independent Accountants' Awareness Letter E-15-1 27. Bristol-Myers Squibb Company Financial Data Schedule E-27-1 b) Reports on Form 8-K. The Registrant did not file any reports on Form 8-K during the quarter ended September 30, 1999. -20- SIGNATURES ---------------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BRISTOL-MYERS SQUIBB COMPANY (Registrant) Date: November 12, 1999 By: /s/ Harrison M. Bains, Jr. --------------------------- Harrison M. Bains, Jr. Vice President and Treasurer Date: November 12, 1999 By: /s/ Frederick S. Schiff --------------------------- Frederick S. Schiff Vice President - Financial Operations and Controller -21- EX-10 2 THIS AGREEMENT dated as of June 1, 1999, is made by and between BRISTOL- MYERS SQUIBB COMPANY, a Delaware corporation (the "Company"), (the "Executive"). WHEREAS the Company considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel; WHEREAS the Board of Directors of the Company (the "Board") recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control (as defined in the last Section hereof) exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and WHEREAS the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows: ARTICLE I Defined Terms The definition of capitalized terms used in this Agreement is provided in the last Article hereof. ARTICLE II Term of Agreement This Agreement shall commence on the date hereof and shall continue in effect through December 31, 2002; provided, however, that commencing on January 1, 2003 and each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year unless the Company or the Executive shall have given at least 30 days' prior notice not to extend this Agreement or a Change in Control shall have occurred prior to such January 1; provided, however, if a Change in Control shall have occurred during the term of this Agreement, this Agreement shall continue in effect for a period of not less than 36 months beyond the month in which such Change in Control occurred. Notwithstanding the foregoing provisions of this Article, this Agreement shall terminate upon the Executive's attaining his Retirement Date. ARTICLE III Company's Covenants Summarized In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive's covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the "Severance Payments" described in Section 6.01 hereof and the other payments and benefits described herein in the event the Executive's employment with the Company is terminated following a Change in Control and during the term of this Agreement. No amount or benefit shall be payable under this Agreement unless there shall have been (or, under the terms hereof, there shall be deemed to have been) a termination of the Executive's employment with the Company following a Change in Control. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company. E-10Q-1 ARTICLE IV The Executive's Covenants The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the term of this Agreement, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive's employment for Good Reason (determined by treating the Potential Change in Control as a Change in Control in applying the definition of Good Reason) or by reason of death or (iv) the termination by the Company of the Executive's employment for any reason. ARTICLE V Compensation other than Severance Payments SECTION 5.01. Following a Change in Control and during the term of this Agreement, during any period that the Executive fails to perform the Executive's full-time duties with the Company as a result of Disability, the Executive shall be compensated as provided pursuant to the terms of the Company's short- and long-term disability plans as in effect immediately prior to the Change in Control together with all other compensation and benefits payable to the Executive pursuant to the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. SECTION 5.02. If the Executive's employment shall be terminated for any reason following a Change in Control and during the term of this Agreement, the Company shall pay the Executive's full salary to the Executive through the Date of Termination at the rate in effect at the time the Notice of Termination is given, together with all other compensation and benefits payable to the Executive through the Date of Termination (including, without limitation, all incentive compensation amounts owed the Executive for a completed calendar year to the extent not yet then paid) under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period. SECTION 5.03. If the Executive's employment shall be terminated for any reason following a Change in Control and during the term of this Agreement, the Company shall pay the Executive such normal post-termination compensation and benefits to the Executive as may be provided by the Company's retirement, insurance and other compensation or benefit plans, programs and arrangements, as in effect immediately prior to a Change in Control. E-10Q-2 ARTICLE VI Severance Payments SECTION 6.01. In lieu of any other severance compensation or benefits to which the Executive may otherwise be entitled under any plan, program, policy or arrangement of the Company (and which the Executive hereby expressly waives), the Company shall pay the Executive the payments described in this Section 6.01 (the "Severance Payments") upon the termination of the Executive's employment following a Change in Control and during the term of this Agreement in addition to the payments and benefits described in Article V hereof, unless such termination is (i) by the Company for Cause, (ii) by reason of death, or (iii) by the Executive without Good Reason. The Executive's employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason if the Executive's employment is terminated prior to a Change in Control without Cause at the direction of a Person who has entered into an agreement with the Company the consummation of which will constitute a Change in Control or if the Executive terminates his employment with Good Reason prior to a Change in Control (determined by treating a Potential Change in Control as a Change in Control in applying the definition of Good Reason) if the circumstance or event which constitutes Good Reason occurs at the direction of such Person. (a) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to three or, if less, the number of years, including fractions, from the Date of Termination until the Executive reaches his Retirement Date, times the sum of (i) the higher of the Executive's annual base salary in effect immediately prior to the occurrence of the event or circumstance upon which the Notice of Termination is based or in effect immediately prior to the Change in Control, and (ii) the aggregate amount of the Executive's target annual bonus entitlement under the Incentive Plan (or any other bonus plan of the Company then in effect) as in effect immediately prior to the occurrence of the circumstances giving rise to the Notice of Termination given in respect thereof (provided that if it is not practicable to determine the amount that the Executive's aggregate target bonus would have been for the year in which the Notice of Termination was given, then, for purposes of this paragraph (a), the Executive's target annual bonus entitlement shall be the amount of the largest aggregate annual bonus paid to him with respect to the five years immediately prior to the year in which the Notice of Termination was given). (b) Notwithstanding any provision of the Incentive Plan or any other compensation or incentive plans of the Company, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any incentive compensation which has been allocated or awarded to the Executive for a completed calendar year or other measuring period preceding the Date of Termination but has not yet been paid (pursuant to Section 5.02 hereof or otherwise), and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for the current calendar year or other measuring period under the Incentive Plan, the Award Plan or any other compensation or incentive plans of the Company, calculated as to each such award on a basis which assumes that at least 100% of any performance target or goal was achieved, and otherwise on a basis on which the Executive will receive a pro rata portion (based on elapsed time) of the amounts he would have been entitled to receive if he had continued to be employed by the Company throughout the period contemplated with respect to such award and if all other conditions for receiving the maximum amount with respect to all such awards had been met. E-10Q-3 (c) All outstanding Options shall become immediately vested and exercisable (to the extent not then vested and exercisable). To the extent not otherwise provided under the written agreement evidencing the grant of any restricted Shares to the Executive, all outstanding Shares which have been granted to the Executive subject to restrictions which, as of the Date of Termination, have not then lapsed shall lapse automatically upon the Date of Termination and the Executive shall own such Shares free and clear of all such restrictions. (d) In addition to the retirement benefits to which the Executive is entitled under the Retirement Plan and BEP, or any successor plans thereto, the Company shall pay the Executive an additional amount equal to the excess of (x) the retirement pension (determined as a straight life annuity commencing at Retirement Date) which the Executive would have accrued under the terms of the Retirement Plan and BEP (without regard to any amendment to the Retirement Plan or BEP made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of retirement benefits thereunder), determined as if the Executive (i) were fully vested thereunder, and (ii) had accumulated (after the Date of Termination) 36 additional months of age and service credit thereunder at the Executive's highest annual rate of compensation during the 12 months immediately preceding the Date of Termination (but in no event shall the Executive be deemed to have accumulated additional service credit in excess of that provided pursuant to the Retirement Plan and BEP) and (y) the retirement pension (determined as a straight life annuity commencing at the Executive's Retirement Date) which the Executive had then accrued pursuant to the respective provisions of the Retirement Plan and BEP, such additional amount to be paid, except as provided in the last sentence of this Section 6.01(d), at such time or times as the relevant benefits are payable to the Executive under the Retirement Plan and BEP, respectively, or any successor plans thereto; provided, however, that if the transaction constituting the Change in Control has not been approved by the Board prior to the consummation thereof, the actuarial equivalent of such additional benefits under this Section 6.01(d) shall be paid in a cash lump sum. If the Executive has not attained age 55 with ten years of service credit as of the Date of Termination, the Executive may nevertheless elect to receive (x) his vested benefit (after giving effect to the 36 months of additional age and service credit provided in the first sentence of this Section 6.01(d)) under the BEP (notwithstanding any provision of the BEP to the contrary) and (y) the incremental vested benefit which would be accrued under the Retirement Plan (after giving effect to the 36 months of additional age and service credit provided in the first sentence of this Section 6.01(d)) over the Executive's actual accrued benefit thereunder (without giving effect to such additional credit), such amounts under clauses (x) and (y) to be paid under the BEP either (i) in an annuity (in the form provided under the BEP) commencing E-10Q-4 immediately following the Date of Termination, or (ii) in a lump sum payment, the amount of which in either case shall be the actuarial equivalent of the vested annual benefit payable to the Executive assuming that the Executive had attained age 55 with ten years of service credit as of the Date of Termination (i.e., without actuarial reduction to reflect the fact that the Executive has not attained age 55 with ten years of service as of the Date of Termination). For purposes of this Section 6.01(d), "actuarial equivalent" shall be determined using the same methods and assumptions utilized under the Retirement Plan immediately prior to the Date of Termination. (e) For a 36-month period after the Date of Termination, the Company shall arrange to provide the Executive with life and health (including medical and dental) insurance benefits and perquisites substantially similar to those which the Executive is receiving immediately prior to the Notice of Termination (without giving effect to any reduction in such benefits subsequent to a Change in Control). Benefits and perquisites otherwise receivable by the Executive pursuant to this Section 6.01(e) shall be reduced to the extent comparable benefits are actually received by or made available to the Executive without greater cost to him than as provided by the Company during the 36-month period following the Executive's termination of employment (and any such benefits actually received by the Executive shall be reported to the Company by the Executive). (f) Following the 36-month period described in the first sentence of Section 6.01(e), the Executive shall be immediately eligible to participate (although the Executive may elect to defer commencement of such participation to such later date as the Executive shall determine) in the Company's retiree medical and dental plans, whether or not the Executive has satisfied any age and service requirements then applicable. For purposes of determining the level of the Executive's participation thereunder, the Executive shall be deemed to have accumulated 36 months of additional age and service credit; it being understood that if the Executive's age and service credit (as augmented hereunder) do not satisfy the minimum requirements for eligibility, the Executive shall be eligible to participate at the level requiring the maximum contribution requirement by an eligible retiree. (g) In addition to the vested amounts, if any, to which the Executive is entitled under the Savings Plan as of the Date of Termination, the Company shall pay the Executive a lump sum amount equal to the value of the unvested portion, if any, of the employer matching contributions credited to the Executive under the Savings Plan. (h) The Company shall provide the Executive with reasonable outplacement services consistent with past practices of the Company prior to the Change in Control. SECTION 6.02. Subject to the immediately following paragraph of this Section 6.02, in the event that the Executive becomes entitled to the Severance Payments, if any of the Severance Payments or any other portion of the Total Payments (as defined below) will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of any Excise Tax on the Severance Payments and such other Total Payments and any Federal, state and local income tax (taking into account the loss of itemized deductions) and employment tax and Excise Tax upon the payment provided for by this E-10Q-5 Section 6.02, shall be equal to the present value of the Severance Payments and such other Total Payments. For purposes of determining whether any of the Severance Payments or other Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) any other payments or benefits received or to be received by the Executive in connection with a Change in Control or the Executive's termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a change in control or any Person affiliated with the Company or such Person (together with the Severance Payments, the "Total Payments"), shall be treated as "parachute payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax, unless, in the opinion of tax counsel selected by the Company's independent auditors and reasonably acceptable to the Executive (the "Tax Counsel"), such other payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, (ii) the amount of the Severance Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Severance Payments and other Total Payments or (B) the amount of excess parachute payments within the meaning of Section 280G(b)(l) of the Code (after applying clause (i), above), and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Company's independent auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay Federal income taxes at the highest marginal rate of Federal income taxation (taking into account the loss of itemized deductions) in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the Date of Termination, net of the maximum reduction in Federal income taxes which could be obtained from deduction of such state and local taxes. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of the Executive's employment, the Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross- Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and Federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive to the extent that such repayment results in a reduction in Excise Tax and/or a Federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time of the termination of the Executive's employment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) at the time that the amount of such excess is finally determined. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Severance Payments and other Total Payments. E-10Q-6 Notwithstanding the provisions of the first paragraph of this Section 6.02, (i) the Company shall have no obligation to make the Gross-Up Payment unless the value of the Total Payments for purposes of Section 280G of the Code (and the regulations thereunder) equals or exceeds 110% of the maximum amount of parachute payments which could be paid to the Executive without any imposition of golden parachute excise taxes under Sections 280G and 4999 of the Code (the "110% Amount"), and (ii) if (x) any portion of the Total Payments would be subject to the imposition of golden parachute excise taxes under Sections 280G and 4999 of the Code and (y) the value of the Total Payments is less than the 110% Amount, then, to the extent necessary to make such portion of the Total Payments not subject to such golden parachute excise taxes (and after taking into account any reduction in the Total Payments provided by reason of Section 280G of the Code in any other plan, arrangement or agreement), (A) the cash Severance Payments shall first be reduced (if necessary, to zero), and (B) all other non-cash Severance Payments shall next be reduced (if necessary, to zero). For purposes of the limitation described in clause (ii) of the preceding sentence, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have effectively waived in writing prior to the Date of Termination shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of the Tax Counsel, does not constitute a "parachute payment" within the meaning of section 280G(b)(2) of the Code, including by reason of section 280(b)(4)(A) of the Code, (iii) the Severance Payments shall be reduced only to the extent necessary so that the Total Payments (other than those referred to in clauses (i) or (ii) of this sentence) in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Tax Counsel; and (iv) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Company's independent auditors in accordance with the principles of sections 280G(d)(3) and (4) of the Code. If it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that, notwithstanding the good faith of the Executive and the Company in applying the terms of the limitation described in clause (ii) of the first sentence of the preceding paragraph of this Section 6.02, the aggregate "parachute payments" paid to or for the Executive's benefit are in an amount that would result in any portion of such "parachute payments" not being deductible by reason of section 280G of the Code, then the Executive shall have an obligation to pay the Company upon demand an amount equal to the sum of (i) the excess of the aggregate "parachute payments" paid to or for the Executive's benefit over the aggregate "parachute payments" that could have been paid to or for the Executive's benefit without any portion of such "parachute payments" not being deductible by reason of section 280G of the Code; and (ii) interest on the amount set forth in clause (i) of this sentence at the rate provided in section 1274(b)(2)(B) of the Code from the date of the Executive's receipt of such excess until the date of such payment. E-10Q-7 SECTION 6.03. The payments provided for in Section 6.01 (other than Section 6.01(e)) and 6.02 hereof shall be made not later than the fifth day following the Date of Termination; provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the 30th day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). At the time that payments are made under this Section, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from outside counsel, auditors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). SECTION 6.04. The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive as a result of a termination which entitles the Executive to the Severance Payments (including all such fees and expenses, if any, incurred in disputing any such termination or in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of Section 4999 of the Code to any payment or benefit provided hereunder and including, but not limited to, auditors' fees incurred in connection therewith). Such payments shall be made within five business days after delivery of the Executive's written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. ARTICLE VII Termination Procedures and Compensation During Dispute SECTION 7.01. Notice of Termination. After a Change in Control and during the term of this Agreement, any purported termination of the Executive's employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Article X hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive's counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. SECTION 7.02. Date of Termination. "Date of Termination", with respect to any purported termination of the Executive's employment after a Change in Control and during the term of this Agreement, shall mean (i) if the Executive's employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive's duties during such 30 day period), and (ii) if the Executive's employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than 30 days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than 15 days nor more than 60 days, respectively, from the date such Notice of Termination is given). E-10Q-8 SECTION 7.03. Dispute Concerning Termination. If within 15 days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.03), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. SECTION 7.04. Compensation During Dispute. If a purported termination occurs following a Change in Control and during the term of this Agreement, and such termination is disputed in accordance with Section 7.03 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) or, if greater, the full compensation in effect immediately prior to the Change in Control, and continue the Executive as a participant (on a basis at least as favorable to the Executive as in effect immediately prior to the Change in Control) in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with Section 7.03 hereof. Amounts paid under this Section 7.04 are in addition to all other amounts due under this Agreement (other than those due under Section 5.02 hereof) and shall not be offset against or reduce any other amounts due under this Agreement. ARTICLE VIII No Mitigation The Company agrees that, if the Executive's employment by the Company is terminated during the term of this Agreement, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 or Section 7.04. Further, the amount of any payment or benefit provided for in Article VI (other than Section 6.01(e)) or Section 7.04 shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise. ARTICLE IX Noncompetition In consideration for the payments and benefits provided by the Company under this Agreement, the Executive shall execute, concurrent with the execution of this Agreement, a noncompetition agreement in the form attached hereto as Exhibit A, which agreement provides that, for a one-year period following the Executive termination of employment with the Company or any of its subsidiaries or affiliates, the Executive shall not engage in any competitive activity with the Company or any of its subsidiaries or affiliates. E-10Q-9 ARTICLE X Successors; Binding Agreement SECTION 10.01. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive's employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. SECTION 10.02. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive's estate. ARTICLE XI Notices For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt: To the Company: Bristol-Myers Squibb Company 345 Park Avenue New York, NY 10154 Attention: Senior Vice President, Human Resources To the Executive: [name] [address] E-10Q-10 ARTICLE XII Miscellaneous No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under Federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under Articles VI and VII shall survive the expiration of the term of this Agreement. ARTICLE XIII Validity/Pooling The invalidity or unenforceability or any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. If (i) the Board approves a merger or consolidation of the Company which is intended by the Board to satisfy the accounting rules related to the pooling of interest method of accounting (the "Pooling Rules") and (ii) any provision of this Agreement would violate the Pooling Rules, then such provision shall be null and void ab initio. In such event, the Company and Executive shall negotiate, in good faith, a replacement provision of equivalent value which does not cause such a violation, provided, and to the extent, that the Company's outside auditors determine that any such replacement provision is permissible without violating the Pooling Rules. ARTICLE XIV Counterparts This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. ARTICLE XV Settlement of Disputes; Arbitration All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within 60 days after notification by the Board that the Executive's claim has been denied. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in New York, New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of the Executive's right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. E-10Q-11 ARTICLE XVI Definitions For purposes of this Agreement, the following terms shall have the meanings indicated below: (a) "Award Plan" shall mean the 1983 Bristol-Myers Squibb Stock Option Plan and the 1997 Stock Incentive Plan. (b) "Base Amount" shall have the meaning defined in Section 280G(b)(3) of the Code. (c) "Beneficial Owner" shall have the meaning defined in Rule 13d-3 under the Exchange Act. (d) "BEP" shall mean the Bristol-Myers Squibb Company Benefit Equalization Plan for the Retirement Income Plan. (e) "Board" shall mean the Board of Directors of the Company. (f) "Cause" for termination by the Company of the Executive's employment, after any Change in Control, shall mean (i) the wilful and continued failure by the Executive to substantially perform the Executive's duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.01) for a period of at least 30 consecutive days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties, (ii) the wilful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise, or (iii) the Executive is convicted of, or has entered a plea of no lo contendere to, a felony. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive's part shall be deemed "wilful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's act, or failure to act, was in the best interest of the Company. (g) A "Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 20% or more of the combined voting power of the Company's then outstanding securities; or (ii) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director (other than a director designated by a Person who has entered into an agreement with the Company to effect a transaction described in clause (i), (iii) or (iv) of this paragraph whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company, at least 75% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 50% of the combined voting power of the Company's then outstanding securities; or (iv) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. E-10Q-12 Notwithstanding the foregoing, a Change in Control shall not include any event, circumstance or transaction occurring during the six-month period following a Potential Change in Control which results from the action of any entity or group which includes, is affiliated with or is wholly or partly controlled by the Executive; provided, further, that such action shall not be taken into account for this purpose if it occurs within a six-month period following a Potential Change in Control resulting from the action of any entity or group which does not include the Executive. (h) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. (i) "Company" shall mean Bristol-Myers Squibb Company, a Delaware corporation, and any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise (except in determining, under Article XVI(e) hereof, whether or not any Change in Control of the Company has occurred in connection with such succession). (j) "Company Shares" shall mean shares of common stock of the Company or any equity securities into which such shares have been converted. (k) "Date of Termination" shall have the meaning stated in Section 7.02 hereof. (l) "Disability" shall have the meaning stated in the Company's short- and long-term disability plans as in effect immediately prior to a Change in Control. (m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. (n) "Excise Tax" shall mean any excise tax imposed under Section 4999 of the Code. (o) "Executive" shall mean the individual named in the first paragraph of this Agreement. (p) "Good Reason" for termination by the Executive of the Executive's employment shall mean the occurrence (without the Executive's express written consent) of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (i), (v), (vi), (vii), or (viii) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof: (i) the assignment to the Executive of any duties inconsistent with the Executive's status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive's responsibilities from those in effect immediately prior to the Change in Control; (ii) a reduction by the Company in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time and/or the level of the Executive's entitlement under the Incentive Plan as in effect on the date hereof or as the same may be increased from time to time; (iii) the Company's requiring the Executive to be based more than 50 miles from the Company's offices at which the Executive is based immediately prior to a Change in Control except for required travel on the Company's business to an extent substantially consistent with the Executive's business travel obligations immediately prior to a Change in Control, or, in the event the Executive consents to any such relocation of his offices, the failure by the Company to provide the Executive with all of the benefits of the Company's relocation policy as in operation immediately prior to a Change in Control; (iv) the failure by the Company, without the Executive's consent, to pay to the Executive any portion of the Executive's current compensation (for purposes of this paragraph (d), "current compensation" shall mean the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time and the awards earned pursuant to the Incentive Plan) or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven days of the date such compensation is due; E-10Q-13 (v) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive's total compensation, including, but not limited to, the Incentive Plan, the Award Plan and the Bristol-Myers Squibb Restricted Stock Plan (the "Stock Option Plans") or any substitute plans adopted prior to the Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive's participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of benefits provided and the level of the Executive's participation relative to other participants as existed at the time of the Change in Control; (vi) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company's pension (including, without limitation, the Company's Retirement Plan, BEP and the Company's Savings and Investment Program, including the Company's Benefit Equalization Plan for the Savings and Investment Program), life insurance, medical, health and accident, or disability plans in which the Executive was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Company in accordance with the Company's normal vacation policy in effect at the time of the Change in Control; or (vii) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.01; for purposes of this Agreement, no such purported termination shall be effective. The Executive's right to terminate the Executive's employment for Good Reason shall not be affected by the Executive's incapacity due to physical or mental illness. The Executive's continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. Notwithstanding the foregoing, the occurrence of an event that would otherwise constitute Good Reason hereunder shall cease to be an event constituting Good Reason if Notice of Termination is not timely provided to the Company by the Executive within 120 days of the date that the Executive first becomes aware (or reasonably should have become aware) of the occurrence of such event. (q) "Gross-Up Payment" shall have the meaning given in Section 6.02 hereof. (r) "Incentive Plan" shall mean the Company's Executive Performance Incentive Plan. (s) "Notice of Termination" shall have the meaning stated in Section 7.01 hereof. (t) "Options" shall mean options for Company Shares granted to the Executive under the Company's Stock Option Plans. (u) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; however, a Person shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. E-10Q-14 (v) "Potential Change in Control" shall be deemed to have occurred if the conditions set forth in any one of the following paragraphs shall have been satisfied: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control; (ii) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control; (iii) any Person who is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 10% or more of the combined voting power of the Company's then outstanding securities, increases such Person's beneficial ownership of such securities by 5% or more over the percentage so owned by such Person on the date hereof; or (iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred. (w) "Retirement Date" shall mean the later of (i) the Executive's normal retirement date under the Retirement Plan and (ii) such other date for retirement by the Executive which has been approved by the Board at any time prior to a Change in Control. (x) "Retirement Plan" shall mean the Bristol- Myers Squibb Company Retirement Income Plan. (y) "Savings Plan" shall mean the Bristol-Myers Squibb Company Savings and Investment Program and which, for purposes of this Agreement, shall include the Company's Benefit Equalization Plan for the Savings and Investment Program. (z) "Severance Payments" shall mean those payments described in Section 6.01 hereof. (aa) "Shares" shall mean shares of the common stock, $0.10 par value, of the Company. (bb) "Total Payments" shall mean those payments described in Section 6.02 hereof. BRISTOL-MYERS SQUIBB COMPANY, by [Name] [Title] [Name of Executive] E-10Q-15 Schedule A Non-Compete/Non Solicitation Agreement and General Release Bristol-Myers Squibb Company has offered me an Executive Severance Agreement. In consideration of the above-referenced Executive Severance Agreement, I agree as follows: 1. For a one-year period commencing upon my termination, I will not in any way, directly or indirectly, own, manage, operate, control, accept employment or a consulting position with or otherwise advise or assist or be actively connected with, or have any financial interest in, directly or indirectly, any enterprise which engages in, or otherwise carries on, any business activity in competition with the businesses of Bristol-Myers Squibb Company and its subsidiaries and affiliates (referred to collectively as the "Company"), in any geographic area in which it engages in such business (including, without limitation, the United States and each county in the State of California in which the Company from time to time sells or offers its products for sale), without the prior written consent of the Company. I recognize that the Company's business is worldwide in scope in that it directly advertises and solicits business from customers wherever they may be found. It is understood that ownership of not more than one percent (1%) of the equity securities of a public company shall in no way be prohibited pursuant to the foregoing provisions. I further agree that I shall not take any action which might divert from the Company or any of its successors or assigns any opportunity which would be within the scope of its or their respective present or future operations or business. I understand that this paragraph supersedes the Non- competition provision set forth in my Restricted Stock Award Agreement, however in no way modifies the other provisions of that agreement which remain in full force and effect. 2. For a one-year period commencing upon my termination, I will not in any way, directly or indirectly, employ, solicit for employment, or advise or recommend to any other person that they employ or solicit for employment, any person employed at the time by the Company. 3. I hereby waive any and all rights to sue the Company and its past, present and future officers, directors, employees and agents (referred to collectively as the "Released Parties") based upon any act or event occurring prior to my signing this Agreement. Without limitation, I specifically release the Released Parties from any and all claims arising out of my employment and separation from the Company, including claims based on discrimination under federal anti-discrimination laws such as Title VII of the Civil Rights Act, Age Discrimination in Employment Act, The Americans with Disabilities Act, claims for interference E-10Q-16 Agreement and Release with my rights to benefits under section 510 of the Employee Retirement Income Security Act and any and all federal, state and local laws. However, I am not giving up my right to appeal a denial of a claim for benefits submitted under my medical or dental coverage, life insurance or disability income program maintained by the Company. Further, I am not giving up my right to file for unemployment insurance benefits at the appropriate time if I so choose, and my signing of this release will not affect my rights, if any, to coverage by Workers' Compensation insurance. Nothing herein shall affect any benefits to which I am entitled under the terms of the Executive Severance Agreement or any claim arising out of the enforcement of the Executive Severance Agreement. 4. I acknowledge that I have been given at least twenty- one (21) days to consider and sign this release. I further acknowledge that it will not be effective for a period of seven (7) days, during which time I can change my mind and revoke my signature. To revoke my signature, I must notify the Company in writing, within seven days of the date I signed this release. In the event that I revoke my signature I will not be entitled to the consideration described above. Finally, I acknowledge the continuing nature of my obligation to maintain in confidence and not to make use of confidential information concerning the Company's business or affairs of any nature that is not otherwise a matter of public record. This obligation continues after the termination of my employment. MY SIGNATURE BELOW ACKNOWLEDGES THAT I HAVE READ THE ABOVE, UNDERSTAND WHAT I AM SIGNING, AND AM ACTING OF MY OWN FREE WILL. I UNDERSTAND THAT IF ANY PROVISION OF THIS AGREEMENT IS FOUND TO BE INVALID OR UNENFORCEABLE, IT WILL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION. I FURTHER AGREE THAT THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE COMPANY HAS ADVISED ME TO CONSULT WITH AN ATTORNEY, AND I HAVE DONE SO, PRIOR TO SIGNING THIS DOCUMENT. SIGNATURE_____________________________ DATE__________________ E-10Q-17 EX-15 3 Exhibit No. 15 November 9, 1999 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Commissioners: We are aware that our report dated November 9, 1999 on our review of interim financial information of Bristol-Myers Squibb Company for the period ended September 30, 1999 and included in the Company's quarterly report on Form 10-Q for the quarter then ended is incorporated by reference in the Registration Statements on Form S-8 (Nos. 33-30856, 33-38411, 33-38587, 33-44788, 333-47403, 33-52691, 33-58187, 333-02873 and 33-30756-02), Form S-4 (No. 333-09519), and Form S-3 (Nos. 33-33682, 333-49227 and 33-62496). Such report is not a "report" or "part" of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the independent accountants' liability under Section 11 does not extend to such report. Yours very truly, PricewaterhouseCoopers LLP E-15-1 EX-27 4
5 Exhibit 27 for Bristol-Myers Squibb Company for the period ended 9/30/99 1,000,000 9-MOS DEC-31-1999 SEP-30-1999 2455 235 3306 0 2052 8957 7723 3234 16612 5401 1331 0 0 219 8222 16612 14814 14814 4068 4068 3096 0 95 4312 1197 3115 0 0 0 3115 1.57 1.54 Items reported as "zero" are not applicable or are immaterial to the consolidated financial position of the Company. Receivables are reported net of allowances for doubtful accounts.
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