Bristol-Myers Squibb lost ground on the New York Stock Exchange yesterday after revealing it had revised downwards its first quarter earnings because of additional reserves put aside for litigation.
B-MS says it has put a further $110 million into the litigation pot since unveiling its first quarter results at the end of April [[29/04/05c]], which will hit its earnings from continuing operations to the tune of $88 million – sending the figure down from $626 million to $538 million. It had originally set aside just $14 million in legal reserves for the quarter.
The litigation fund now totals $140 million dollars and suggests that B-MS could be nearing pay-off time for matters relating to its wholesaler and accounting scandal. B-MS was accused of having falsely enhanced its sales between 1999 and 2001, to the tune of $2.5 billion, by encouraging wholesalers to purchase products in large quantities so that it could meet its quarterly sales projections. The claim triggered an investigation by the US Securities and Exchange Commission [[12/07/02a]], and culminated in a $150 million dollar fine for B-MS last year [[05/08/04a]].
Last month, it also revealed that it had reached an agreement to settle shareholder lawsuits brought against the company following accusations of accounting misdemeanors [[28/04/05e]]. The final settlement hearing is scheduled for mid-May in a US court.