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BMS to restate $2bn earnings

Published on 08/10/03 at 10:37am

Bristol-Myers Squibb has been forced to restate more than $2 billion of earnings as a result of what it terms a "wholesaler inventory build-up situation"

Prior to the restatement, this year third quarter net earnings fell by 75% to $314 million, after being hit by continued generic competition for some of the company's biggest products and comparison with previous years' inflated figures.

The company said the restatement would lower previously announced earnings for 2000 and 2001, when the inventory build-up occurred, and raise earnings for this year.

BMS has been accused of inflating stock levels held by its US distributors when it was under increasing pressure to hit earnings targets at times when key products faced generic competition.

The company said that it had taken the decision to restate its earnings after reviewing its previous accounting position and taking advice from it auditors, PricewaterhouseCoopers.

Peter Dolan, Chairman and Chief Executive, said: "Restating will help put the inventory issue behind us as soon as possible and allow us to move forward."

With over 75% of the work already done, Mr Dolan said that he expected to see more than 90% of the work completed by the end of the year.

The Justice Department is currently probing BMS in relation to its drug sales to wholesalers and the company is also under investigation by the Securities and Exchange Commission over a separate matter.

After delaying its third-quarter figures, BMS has now had to issue them without taking into account the efforts of restating its earnings.

BMS's US pharmaceutical sales fell by 32% to $1.9 billion before the restatement, as generic competition for Glucophage IR, Taxol and BuSpar continued to bite.

Outside of the US the company fared better with international pharmaceutical sales increasing by 16% to $1.2 billion, led by strong growth in European sales, which showed a rise of 23%.

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