Bristol-Myers Squibb to Transfer $3.8 billion in U.S. Pension Liabilities

December 3, 2018 |

7 min read

Plan has sufficient assets to satisfy all transaction obligations; no Company cash contribution expected

Dec. 3, 2018 22:00 UTC

Plan has sufficient assets to satisfy all transaction obligations; no Company cash contribution expected
Benefits to be distributed through a combination of lump sum payments and the purchase of a group annuity contract from Athene, whose core business is the long-term management and administration of retirement benefits

NEW YORK--(BUSINESS WIRE)-- Bristol-Myers Squibb Company (NYSE: BMY) today announced it will transfer $3.8 billion of U.S. pension obligations through a full termination of its U.S. Retirement Income Plan (the “Plan”). The obligations will be distributed through a combination of lump sums to Plan participants who elect such payments, and the purchase of a group annuity contract from Athene Annuity and Life Company (“Athene”), a wholly-owned insurance subsidiary of Athene Holding, Ltd (NYSE: ATH), for all remaining liabilities.

This transaction continues the Company’s pension de-risking strategy and actions, which began with the freezing of the Company’s U.S. Plan in 2009. This transaction reduces Bristol-Myers Squibb’s future risk and administrative costs while entrusting the pensions of Plan participants and their beneficiaries to a highly rated financial institution with expertise in the long-term management of retirement benefits.

The Plan includes approximately 4,800 active employees, 1,400 retirees and their beneficiaries receiving benefits, and 18,000 prior Bristol-Myers Squibb employees who have not yet initiated their benefits. Current Plan provisions, benefit payment options and in-pay benefits will remain available for all participants. Plan participants have received information packages with further details.

Additional Details About the Transaction

As the largest full plan termination to date that primarily includes terminated vested and active participants, the Company partnered with Athene on a first-of-its-kind plan termination solution, where Athene agreed in advance to provide an annuity contract covering all obligations not paid via lump sums. Morgan Stanley & Co. LLC served as financial advisor to the Company on the transaction.

Bristol-Myers Squibb is committed to ensuring that its Plan participants’ benefits are preserved. The Company’s Pension Committee engaged State Street Global Advisors Trust Company, a leading independent fiduciary services firm, to represent the interests of Plan participants with respect to the choice of insurer, negotiation of terms and conditions of a group annuity contract, as well as the compliance of the transaction with applicable federal pension law and guidance. State Street Global Advisors Trust Company selected an Athene group annuity contract that provides an additional safeguard by segregating assets in a separate account dedicated to the payment of benefits to Plan participants and their beneficiaries.

This transaction provides a special election window for active Bristol-Myers Squibb employees who are participants in the Plan, during which they may elect to commence their pension benefits while remaining actively employed with Bristol-Myers Squibb. The Plan will terminate on February 1, 2019, lump sums will be distributed in July 2019, and the transfer to Athene is expected to occur in August 2019, subject to satisfaction of closing conditions. Upon completion of the transfer, Athene will provide irrevocable commitments to all remaining participants and will assume full financial responsibility, including required administration, for annuity and lump sum payments.

Upon closing of this transaction in the third quarter of 2019, the Company expects a non-cash pre-tax pension settlement charge of approximately $1.5 billion - $2 billion, which will be excluded from its non-GAAP results. Non-GAAP pension related income contributing approximately $0.05 EPS in 2018 is not expected to be recognized in 2019.

About Bristol-Myers Squibb

Bristol-Myers Squibb is a global biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. For more information about Bristol-Myers Squibb, visit us at BMS.com or follow us on LinkedIn, Twitter, YouTube and Facebook.

About Athene Holding Ltd.

Athene Holding Ltd., through its subsidiaries, is a leading retirement services company that issues, reinsures and acquires retirement savings products designed for the increasing number of individuals and institutions seeking to fund retirement needs. The products offered by Athene Holding Ltd. include:

Retail fixed and fixed indexed annuity products;
Reinsurance arrangements with third-party annuity providers; and
Institutional products, such as funding agreements and group annuity contracts related to pension risk transfers.

Athene Holding Ltd. had total assets of $118.2 billion as of September 30, 2018. Athene Holding Ltd.'s principal subsidiaries include Athene Annuity & Life Assurance Company, a Delaware-domiciled insurance company, Athene Annuity and Life Company, an Iowa-domiciled insurance company, Athene Annuity & Life Assurance Company of New York, a New York-domiciled insurance company and Athene Life Re Ltd., a Bermuda-domiciled reinsurer.

Further information about Athene Holding Ltd. and its subsidiaries can be found at www.athene.com.

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP earnings-per-share (EPS) information, that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges in connection with the acquisition or licensing of third party intellectual property rights, divestiture and equity investment gains or losses, upfront payments from out-licensed assets, pension charges, legal and other contractual settlements and debt redemption gains or losses, among other items. Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for diluted EPS prepared in accordance with GAAP.

Bristol-Myers Squibb Forward-Looking Statement

This press release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. No forward-looking statement can be guaranteed. Among other risks, there is no guarantee that the transaction will occur on the terms or within the time frame described in this release. Forward-looking statements in this press release should be evaluated together with the many risks and uncertainties that affect Bristol-Myers Squibb’s business, including those identified in Bristol-Myers Squibb’s Annual Report on Form 10-K for the year ended December 31, 2017, in our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Bristol-Myers Squibb undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.