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To: Jorj X Mckie who wrote (2801)	7/12/2002 12:10:08 AM
From: John Pitera	Respond to of 2850

Indeed he did -vbg-..... BMY creating their own revenues SEC Is Probing Bristol-Myers Over Sales-Incentive Accounting By GARDINER HARRIS Staff Reporter of THE WALL STREET JOURNAL In another setback for the beleaguered drug maker, Bristol-Myers Squibb Co. confirmed that the Securities and Exchange Commission has opened an inquiry into whether it improperly inflated revenue last year by as much as $1 billion through use of sales incentives. Bristol-Myers, of New York, said it is cooperating fully with the inquiry. An SEC spokesman declined to comment. On the news, Bristol-Myers shares were down $1.04 to $22.11 as of 4 p.m. Thursday in New York Stock Exchange composite trading. While the outline of the revenue problem has been known for months, the SEC's involvement ratchets up the pressure on the company, and on Peter Dolan, its chairman and chief executive. Moreover, the news poses a hurdle for any potential partner who might otherwise help Bristol-Myers navigate its current difficulties. In April, Bristol-Myers disclosed that it had heavily oversold many of its drugs to wholesalers. As a result of that and other problems, the company said earnings this year may be just half those of 2001, as wholesalers work down inventories. So far, the company hasn't restated its sales and earnings from 2000 and 2001, when the practice was at its peak. The company says it continues to believe its accounting treatment of the domestic-wholesaler inventory buildup has been completely appropriate. But Steven Tighe, an analyst with Merrill Lynch, said the SEC inquiry raises "the distinct risk" that Bristol-Myers may be forced to restate its earlier results. Drug makers, like many other manufacturers, can boost near-term sales by extending lower prices to wholesalers, encouraging them to load up. But such "channel-stuffing" hurts later sales. Mr. Dolan finally admitted to the problem in early April, but he underestimated its scope and later restated its effect on earnings twice. Bristol-Myers has suffered several recent setbacks that have cut the once-mighty drug maker's share price by nearly two-thirds. Top-selling drugs have gone off patent; hypertension drug Vanlev reported disappointing clinical trials; and the company's investment in ImClone Systems Inc. was damaged when regulators rejected the initial application for ImClone's cancer drug, Erbitux. News of the SEC investigation was reported by the Financial Times. It is unlikely that Mr. Dolan or any of his executives will face a criminal probe from the SEC, said John Coffee, a professor of law at Columbia University. "We're talking about fairly classic earnings management and the premature recognition of income by stuffing the pipeline." The most likely outcome, he said, is an agreement by Bristol-Myers never to do anything similar again. Write to Gardiner Harris at gardiner.harris@wsj.com