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Bristol-Myers restates revenues for 1999-2001

Bristol-Myers Squibb Co. wiped away $900-million in profits and $2.5-billion in revenues reported from 1999 through 2001 to correct for an artificial boost from aggressive sales incentives that created a massive inventory glut.

Bristol-Myers also reported 2002 earnings Monday that were down sharply from the previous year and reaffirmed its earnings guidance for this year.

"Completing this restatement is another important step in focusing the company on delivering our 2003 results," chief financial officer Andrew Bonfield said during a conference call to discuss the restatement of results from 1999 and continuing through this year.

Analysts said Bristol-Myers' future prospects aren't as clear they had hoped they would be after the restatement, which they have awaited since the fall. They say Bristol-Myers failed to give them adequate information on earnings, product sales or how the inventory glut will affect the first few quarters of this year.

Without such information, analysts said it was difficult to determine how Bristol-Myers would meet its projected 2003 earnings.

"Even with the restatement we seem to have more questions than answers," said David Moskowitz, an analyst with Friedman, Billings, Ramsey, who added that Monday morning's conference call to discuss the restatement seemed "rushed and disorganized."

Bristol-Myers shares fell 29 cents to close at $22.51 on the New York Stock Exchange.

The revision reduced profit from continuing operations by $900-million and sales by $2.5-billion for the years 1999, 2000 and 2001. But it raised profit by $200-million and sales by $653-million for the first six months of 2002.

For all of 2002, Bristol-Myers earned $1.9-billion, or 98 cents a share, from $4.9-billion, or $2.51 a share, in 2001. Sales edged up to $18.1-billion from $17.99-billion in 2001.

Bristol-Myers wouldn't specify what earnings would have been before one-time items and revenue lost as wholesalers worked down inventory.

The company said it still expected 2003 earnings of $1.60 to $1.65 a share.

"I think it is a positive that Bristol-Myers released the numbers, but the prospects for its future are still muddy," said Standard & Poor's analyst Arthur Wong.

Patent issues led to the restatement and will continue to be a problem for the company.

Wong said that over the next two years, Bristol-Myers is slated to lose patents on several important drugs that account for $1.5-billion in sales.

Bristol-Myers does have some promising new drugs, including the anti-psychotic Abilify which it launched in late 2002 and an AIDS medicine it hopes to introduce later this year.

But, Wong said, "Abilify will take a few years to establish," Wong said. "Patent expiration fallout is practically immediate."

Bristol-Myers moved aggressively to pump up sales because it knew in 2000 and 2001 it was losing market exclusivity for three of its best-selling products: cancer drug Taxol, diabetes treatment Glucophage and anti-anxiety medication BuSpar.

The inventory glut was created when Bristol-Myers used low prices to induce wholesalers to buy more drugs than they immediately could use because the drugmaker wanted to meet sales projections and increase sales ahead of the patent expirations.

Bristol-Myers disclosed the glut last April and initially resisted restating sales and earnings. Last October, Bristol-Myers said it would revise its financial reports on the advice of its accountant.

The Securities and Exchange Commission and the U.S. Attorney General in New Jersey are investigating.