Company Lowers GAAP 2006 Earnings Guidance and Reaffirms non-GAAP 2006
Earnings Guidance
NEW YORK, Dec. 21 /PRNewswire-FirstCall/ -- Bristol-Myers Squibb
Company (NYSE: BMY) ("the Company"), the United States Department of
Justice, and the Office of the United States Attorney for the District of
Massachusetts have reached an agreement in principle, subject to approval
by the U.S. Department of Justice (DOJ), to settle several investigations
involving the Company's drug pricing, and sales and marketing activities.
The investigations began several years ago.
The agreement in principle provides for a civil resolution and an
expected payment of $499 million. There would be no criminal charges
against the Company. The agreement in principle also provides for the
Company to enter into a corporate integrity agreement with the Office of
Inspector General (OIG) of the U.S. Department of Health and Human Services
(HHS). The settlement is contingent upon the parties' agreement to the
terms of a final settlement agreement, including on the terms of the
corporate integrity agreement, and approval by the DOJ. There can be no
assurance that the settlement will be finalized.
As a result of the agreement in principle, the Company has increased
its reserves related to these investigations by $353 million, bringing the
aggregate reserves for these matters to $499 million. The increased reserve
will be recorded in the fourth quarter of 2006. The aggregate reserves
reflect the Company's estimate of the expected probable loss with respect
to these matters, assuming the settlement is finalized. If the settlement
is not finalized, the amount reserved may not reflect eventual losses.
In addition, the Company will record an estimated pre-tax charge of
$220 million for the previously disclosed debt restructuring completed in
the fourth quarter. This charge is unrelated to the agreement in principle.
The two charges discussed above were not reflected in the Company's
previously issued 2006 earnings guidance. Accordingly, the Company is
lowering its 2006 full-year earnings guidance for fully diluted earnings
per share from continuing operations on a GAAP basis to between $0.72 and
$0.77, from $0.97 and $1.02 as previously provided at the end of the third
quarter of 2006. The Company's revised GAAP guidance is based on the
assumption that none of the expected payment under the settlement agreement
will be tax deductible. The Company's previous accrual of $146 million in
connection with the matter also was recorded on the assumption that there
would not be any tax benefit associated with the charge. The Company
expects that a portion but not all of the expected $499 million settlement
payment will be tax deductible, although the amount of the tax benefit
cannot be reasonably estimated at this time.
The Company reaffirms its 2006 full-year earnings guidance of between
$1.02 and $1.07 on a non-GAAP basis, with the expectation that its
full-year non-GAAP earnings will be in the upper end of that range. The
Company's non- GAAP earnings guidance excludes "specified items" as
discussed under "Use of Non-GAAP Financial Information," below. Details
reconciling adjusted non-GAAP amounts with the amounts reflecting specified
items are also provided below. The non-GAAP guidance provided above does
not include other specified items, which may occur during the remainder of
the year, such as milestone payments in connection with previously
announced external development, copromotion or alliance charges and
payments for in-process research and development, gains or losses from
asset disposals, charges related to new transactions, charges and
recoveries relating to significant legal proceedings, and restructuring
activities.
For additional discussion of the investigations referenced above, see
"Item 1. Financial Statements Note 18. Legal Proceedings and
Contingencies," in the company's Form 10-Q Quarterly Report for the period
ending September 30, 2006.
Bristol-Myers Squibb is a global pharmaceutical and related health care
products Company whose mission is to extend and enhance human life.
Use of Non-GAAP Financial Information
This press release contains non-GAAP earnings per share information
adjusted to exclude certain costs, expenses, gains and losses and other
specified items. Among the items in GAAP earnings but excluded for purposes
of determining adjusted earnings are: gains or losses from sale of
businesses and product lines; from sale or write-down of equity investments
and from discontinuations of operations; restructuring items that meet the
requirements of SFAS 112 for severance and SFAS 146 for other exit costs;
accelerated depreciation charges under SFAS 144 related to restructuring
items described above; asset impairments; charges and recoveries relating
to significant legal proceedings; upfront and milestone payments for
in-licensing of products that have not achieved regulatory approval that
are immediately expensed; copromotion or alliance charges and payments for
in-process research and development which under GAAP are immediately
expensed rather than amortized over the life of the agreement; income from
upfront and milestone payments that is immediately recognized for
out-licensing of products, including deferred income recognized upon
termination; costs of early debt retirement; and significant tax events,
including the repatriation of special dividends pursuant to the AJCA. This
information is intended to enhance an investor's overall understanding of
the company's past financial performance and prospects for the future. For
example, non-GAAP earnings per share information is an indication of the
company's baseline performance before items that are considered by the
Company to be not reflective of the company's operational results. In
addition, this information is among the primary indicators the Company uses
as a basis for evaluating company performance, allocating resources,
setting incentive compensation targets, and planning and forecasting of
future periods. This information is not intended to be considered in
isolation or as a substitute for diluted earnings per share prepared in
accordance with GAAP.
BRISTOL-MYERS SQUIBB COMPANY
2006 FULL YEAR PROJECTED DILUTED EPS FROM CONTINUING OPERATIONS
IMPACT OF PROJECTED SPECIFIED ITEMS
Full Year 2006
Projected Diluted Earnings per Common
Share from Continuing Operations $0.72 to $0.77
Projected Specified Items:
Litigation matters 0.18*
Downsizing and streamlining of
worldwide operations 0.08
Debt restructuring 0.07**
Licensing and milestone payments 0.02
Gain on sale of product asset (0.06)
Insurance recoveries (0.01)
Change in estimates for taxes on prior year items 0.02
Total 0.30
Projected Diluted Earnings per Common Share
from Continuing Operations Excluding
Specified Items $1.02 to $1.07
* Includes the litigation settlement matter discussed in the press
release
** Reflects the debt restructuring matter discussed in the press release
Bristol-Myers Squibb Forward-Looking Statement
This press release contains "forward-looking statements" as that term
is defined in the Private Securities Litigation Reform Act of 1995,
regarding the prospective settlement of a litigation matter. Such
forward-looking statements are based on current expectations and involve
inherent risks and uncertainties, including factors that could delay,
divert or change any of them, and could cause actual outcomes and results
to differ materially from current expectations. No forward-looking
statement can be guaranteed. Among other risks, there can be no guarantee
that the settlement will be finalized and receive required approval from
the U.S. Department of Justice. If the settlement is not finalized, there
is no guarantee that claims would not be made against the company, and that
there would not be a material financial impact. Forward-looking statements
in the press release should be evaluated together with the many
uncertainties that affect Bristol-Myers Squibb's business, particularly
those identified in the cautionary factors discussion in Bristol-Myers
Squibb's Annual Report on Form 10-K for the year ended December 31, 2005,
its Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
Bristol-Myers Squibb undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
events, or otherwise.
SOURCE Bristol-Myers Squibb Company
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Related links:
http://www.bms.com
CONTACT:
Media, Jeff Macdonald, Communications,
+1-212-546-4824, jeffrey.macdonald@bms.com, Laura Hortas,
laura.hortas@bms.com, +1-609-252-4587, or, Investors, John
Elicker, Investor Relations, +1-212-546-3775,
john.elicker@bms.com, or Blaine Davis, Investor Relations,
+1-212-546-4631, blaine.davis@bms.com, all of Bristol-Myers
Squibb Company
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