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BristolMyers Squibb Company Reports Operating Results (10-Q)

October 24, 2012 | About:

BristolMyers Squibb Company (NYSE:BMY) filed Quarterly Report for the period ended 2012-09-30.

Bristol Myers Squibb Co. has a market cap of $56.77 billion; its shares were traded at around $32.91 with a P/E ratio of 15 and P/S ratio of 2.7. The dividend yield of Bristol Myers Squibb Co. stocks is 4%. Bristol Myers Squibb Co. had an annual average earning growth of 2.2% over the past 10 years.

Highlight of Business Operations:

Net sales of key products represent 83% and 86% of total net sales for the three months ended September 30, 2012 and 2011, respectively, and 85% and 86% of total net sales for the nine months ended September 30, 2012 and 2011, respectively. The following table presents U.S. and international net sales by key product, the percentage change from the prior period and the foreign exchange impact when compared to the prior period. Commentary detailing the reasons for significant variances for key products is provided below:

U.S. net sales decreased as fluctuations in retail buying patterns and the reduction in our contractual share of net sales recognized from 53.5% in 2011 to 51.5% in 2012 more than offset higher average net selling prices. Estimated total U.S. prescription demand decreased 1% for the three months ended September 30, 2012 and increased 1% for the nine months ended September 30, 2012.

Cost of products sold decreased primarily due to lower sales volume following the loss of exclusivity of Plavix* and Avapro*/Avalide* which resulted in lower royalties in connection with our Sanofi alliance and favorable foreign exchange partially offset by impairment charges in the second quarter of 2012 and higher amortization costs resulting from the Amylin acquisition (net of the amortization of Amylin collaboration proceeds). Cost of products sold as a percentage of net sales was 26.4% and 26.3% in the three months ended September 30, 2012 and 2011, respectively, and 26.3% and 26.8% in the nine months ended September 30, 2012 and 2011.

The effective tax benefit rate was 43.4% on the pretax loss during the third quarter of 2012 compared to an effective tax rate of 26.0% on pretax earnings during the third quarter of 2011. The effective income tax rates were 13.7% and 25.2% during the nine months ended September 30, 2012 and 2011, respectively. The overall tax benefit rate of 43.4% attributed to the pretax loss in the current quarter was due to the mix of earnings in low tax jurisdictions and pretax loss in the higher U.S. tax jurisdiction resulting from a $1.8 billion intangible asset impairment charge. The impact of the impairment charge reduced the effective tax rate by 11 percentage points during the nine months ended September 30, 2012. The effective tax rate is typically lower than the U.S. statutory rate of 35% due to our decision to indefinitely reinvest the earnings for certain of our manufacturing operations in Ireland and Puerto Rico. See Item 1. Financial StatementsNote 6. Income Taxes for further discussion.

The reduction in net cash and working capital during 2012 resulted primarily from net cash used in connection with the acquisitions of Amylin and Inhibitex. Cash, cash equivalents and marketable securities held in the U.S. were approximately $2.0 billion at September 30, 2012. Most of the remaining $4.6 billion is held primarily in low-tax jurisdictions and is attributable to earnings that are expected to be indefinitely reinvested offshore. Cash repatriations are subject to restrictions in certain jurisdictions and may be subject to withholding and additional U.S. income taxes. During the third quarter of 2012, we began to issue commercial paper to meet near-term domestic liquidity requirements following the Amylin acquisition. The average commercial paper outstanding during the three months ended September 30, 2012 was $526 million with a weighted-average interest rate of 0.15%. There were no month-end commercial paper borrowings outstanding during the third quarter of 2012. We may continue to issue commercial paper to meet domestic liquidity requirements in the future.

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