Bristol-Myers Revenues Face InquiryOct 10, 2002 | AP
The U.S. Attorney's Office in New Jersey has launched a probe into whether Bristol-Myers Squibb Co. improperly inflated its revenues last year, the company said Wednesday.
The Securities and Exchange Commission began a similar inquiry last April, which became a formal investigation two months ago. A formal investigation means the staff has found enough evidence to show that laws may have been violated and gives SEC staff the power to issue subpoenas.
Bristol-Myers said it is cooperating with U.S. Attorney and will provide information it has already shared with the SEC.
"As far as we know the (U.S. Attorney probe) is recent and in its preliminary stages," said Bristol-Myers spokesman, Bonnie Jacobs.
The issue is whether Bristol-Myers' sales incentives to wholesalers in 2001 inflated revenues so that the company would meet earnings projections. Bristol-Myers has said the inventory glut will cost the company between $800 million and $1 billion and will slash its earnings this year by up to 50 percent.
In the past, Bristol-Myers has said its accounting treatment of the inventory was appropriate.
The U.S. Attorney's office didn't have an immediate comment.
Bristol-Myers stock fell 3.1 percent, or 70 cents a share, to close Wednesday at $21.63 a share on the New York Stock Exchange.
Over the past year, the company's pipeline has failed to produce new blockbusters while several of its key drugs have lost patent protection. It agreed to invest up to $2 billion in ImClone Systems Inc., but has had to write off $732 million of that because the biotech company's stock imploded because of regulatory problems.