BRISTOL MYERS SQUIBB CO, 10-Q filed on 5/7/2020
Quarterly Report
v3.20.1
Document and Entity Information
3 Months Ended
Mar. 31, 2020
shares
Entity Incorporation, State or Country Code DE
Document Type 10-Q
Document Quarterly Report true
Entity File Number 001-01136
Entity Registrant Name BRISTOL MYERS SQUIBB CO
Entity Address, Address Line One 430 E. 29th Street, 14FL
Entity Address, City or Town New York
Entity Address, State or Province NY
Entity Address, Postal Zip Code 10016
City Area Code 212
Local Phone Number 546-4000
Entity Central Index Key 0000014272
Entity Tax Identification Number 22-0790350
Entity Current Reporting Status Yes
Entity Interactive Data Current Yes
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 2,262,689,755
Document Period End Date Mar. 31, 2020
Document Transition Report false
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q1
Current Fiscal Year End Date --12-31
Amendment Flag false
Entity Small Business false
Entity Shell Company false
Entity Emerging Growth Company false
Common Stock $0.10 Par Value [Member]  
Title of 12(b) Security Common Stock, $0.10 Par Value
Trading Symbol BMY
Security Exchange Name NYSE
1.000% Notes due 2025 [Member]  
Title of 12(b) Security 1.000% Notes due 2025
Trading Symbol BMY25
Security Exchange Name NYSE
1.750% Notes due 2035 [Member]  
Title of 12(b) Security 1.750% Notes due 2035
Trading Symbol BMY35
Security Exchange Name NYSE
Bristol Myers Squibb Contingent Value Rights [Member]  
Title of 12(b) Security Bristol-Myers Squibb Contingent Value Rights
Trading Symbol BMY RT
Security Exchange Name NYSE
Celgene Contingent Value Rights [Member]  
Title of 12(b) Security Celgene Contingent Value Rights
Trading Symbol CELG RT
Security Exchange Name NYSE
v3.20.1
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Revenues $ 10,781 $ 5,920
Cost of Goods and Services Sold [1] 3,662 1,824
Selling, General and Administrative Expense 1,606 1,006
Research and Development Expense 2,372 1,348
Amortization of Acquired Intangible Assets 2,282 24
Other Nonoperating (Income) Expense 1,163 (261)
Costs and Expenses 11,085 3,941
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest (304) 1,979
Income Tax Expense (Benefit) 462 264
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest (766) 1,715
Net Income (Loss) Attributable to Noncontrolling Interest 9 5
Net Income (Loss) Attributable to Parent $ (775) $ 1,710
Earnings Per Share, Basic $ (0.34) $ 1.05
Earnings Per Share, Diluted $ (0.34) $ 1.04
Net product sales [Member]    
Revenues $ 10,541 $ 5,713
Alliance and other revenues [Member]    
Revenues $ 240 $ 207
[1] Excludes amortization of acquired intangible assets
v3.20.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Statement of Comprehensive Income [Abstract]    
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest $ (766) $ 1,715
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification and Tax 70 14
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax 16 49
Other Comprehensive Income (Loss), Securities, Available-for-sale, Adjustment, after Tax 1 26
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax (116) 29
Other Comprehensive Income/(Loss) (29) 118
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest (795) 1,833
Net Income (Loss) Attributable to Noncontrolling Interest 9 5
Comprehensive Income (Loss), Net of Tax, Attributable to Parent $ (804) $ 1,828
v3.20.1
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Millions
Mar. 31, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 15,817 $ 12,346
Marketable debt securities 2,505 3,047
Receivables 8,290 7,685
Inventories 2,836 4,293
Other current assets 2,405 1,983
Total current assets 31,853 29,354
Property, plant and equipment 6,112 6,252
Goodwill 22,452 22,488
Other intangible assets 61,666 63,969
Deferred income taxes 605 510
Marketable debt securities 651 767
Other non-current assets 5,946 6,604
Total Assets 129,285 129,944
Current Liabilities:    
Short-term debt obligations 3,862 3,346
Accounts payable 3,069 2,445
Other current liabilities 12,301 12,513
Total Current Liabilities 19,232 18,304
Accrued Income Taxes, Noncurrent 6,531 6,454
Other non-current liabilities 10,701 10,101
Long-term debt 42,844 43,387
Total Liabilities 79,308 78,246
Bristol-Myers Squibb Company Shareholders' Equity:    
Preferred stock 0 0
Common stock 292 292
Capital in excess of par value of stock 43,254 43,709
Accumulated other comprehensive loss (1,549) (1,520)
Retained earnings 32,671 34,474
Less cost of treasury stock (24,757) (25,357)
Total Bristol-Myers Squibb Company Shareholders' Equity 49,911 51,598
Stockholders' Equity Attributable to Noncontrolling Interest 66 100
Total Equity 49,977 51,698
Total Liabilities and Equity $ 129,285 $ 129,944
v3.20.1
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Cash Flows From Operating Activities:    
Net Earnings $ (766) $ 1,715
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]    
Depreciation, Depletion and Amortization 2,477 170
Deferred Income Tax Expense (Benefit) (53) 78
Share-based Payment Arrangement, Noncash Expense 210 53
Impairment of Long-Lived Assets to be Disposed of 53 45
Pension settlements and amortization 11 66
Divestiture gains and royalties (173) (166)
Equity investment, (gain) loss 339 (175)
Business Combination, Contingent Consideration Arrangements, Change in Amount of Contingent Consideration, Liability 556 0
Other Noncash Income (Expense) (42) (6)
Increase (Decrease) in Other Operating Assets and Liabilities, Net [Abstract]    
Increase (Decrease) in Receivables (743) 236
Increase (Decrease) in Inventories 1,448 35
Increase (Decrease) in Accounts Payable 703 136
Increase (Decrease) in Income Taxes Payable 229 120
Increase (Decrease) in Other Operating Assets and Liabilities, Net (355) (917)
Net Cash Provided by (Used in) Operating Activities 3,894 1,390
Cash Flows From Investing Activities:    
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale 1,394 1,211
Payments to Acquire Marketable Debt Securities (735) (242)
Payments to Acquire Property, Plant, and Equipment (186) (204)
Divestiture and other proceeds 205 310
Payments to Acquire Businesses, Net of Cash Acquired (25) (15)
Net Cash Provided by (Used in) Investing Activities 653 1,060
Cash Flows From Financing Activities:    
Proceeds from (Repayments of) Short-term Debt 26 (73)
Repayments of Long-term Debt 0 (1,250)
Payments for Repurchase of Common Stock (81) 0
Payments of Dividends (1,017) (669)
Proceeds from (Payments for) Other Financing Activities 18 (37)
Net Cash Provided by (Used in) Financing Activities (1,054) (2,029)
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents (67) 3
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect 3,426 424
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 12,820 6,911
Cash, Cash Equivalents and Restricted Cash at End of Period $ 16,246 $ 7,335
v3.20.1
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS (Notes)
3 Months Ended
Mar. 31, 2020
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS [Abstract]  
Basis of Presentation and Recently Issued Accounting Standards [Text Block]
Basis of Consolidation

Bristol-Myers Squibb Company prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position at March 31, 2020 and December 31, 2019 and the results of operations and cash flows for the three months ended March 31, 2020 and 2019. All intercompany balances and transactions have been eliminated. BMS's consolidated financial statements include the assets, liabilities, operating results and cash flows of Celgene from the date of acquisition on November 20, 2019. These financial statements and the related notes should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019 included in the 2019 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

Business Segment Information

BMS operates in a single segment engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative medicines that help patients prevail over serious diseases. A global research and development organization and supply chain organization are responsible for the discovery, development, manufacturing and supply of products. Regional commercial organizations market, distribute and sell the products. The business is also supported by global corporate staff functions. Consistent with BMS's operational structure, the Chief Executive Officer (“CEO”), as the chief operating decision maker, manages and allocates resources at the global corporate level. Managing and allocating resources at the global corporate level enables the CEO to assess both the overall level of resources available and how to best deploy these resources across functions, therapeutic areas, regional commercial organizations and research and development projects in line with our overarching long-term corporate-wide strategic goals, rather than on a product or franchise basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CEO for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional revenue, see “—Note 2. Revenue.”

Use of Estimates and Judgments

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results and trends in these unaudited consolidated financial statements may not be indicative of full year operating results. The preparation of financial statements requires the use of management estimates, judgments and assumptions. The most significant assumptions are estimates used in determining accounting for business combinations; impairments of intangible assets; sales rebate and return accruals; legal contingencies; and income taxes. Actual results may differ from estimates.

Reclassifications

Certain reclassifications were made to conform the prior period interim consolidated financial statements to the current period presentation.

Recently Adopted Accounting Standards

Financial Instruments - Measurement of Credit Losses

In June 2016, the FASB issued amended guidance for the measurement of credit losses on financial instruments. Entities will be required to use a forward-looking estimated loss model. Available-for-sale debt security credit losses will be recognized as allowances rather than a reduction in amortized cost. BMS adopted the amended guidance on a modified retrospective approach on January 1, 2020. The amended guidance did not impact BMS’s results of operations.
v3.20.1
REVENUE RECOGNITION Revenue Recognition (Notes)
3 Months Ended
Mar. 31, 2020
Revenue Recognition [Abstract]  
Revenue from Contract with Customer [Text Block] REVENUE

The following table summarizes the disaggregation of revenue by nature:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Net product sales
$
10,541

 
$
5,713

Alliance revenues
105

 
129

Other revenues
135

 
78

Total Revenues
$
10,781

 
$
5,920


The following table summarizes GTN adjustments:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Gross product sales
$
14,686

 
$
7,994

GTN adjustments(a)
 
 
 
Charge-backs and cash discounts
(1,340
)
 
(774
)
Medicaid and Medicare rebates
(1,498
)
 
(800
)
Other rebates, returns, discounts and adjustments
(1,307
)
 
(707
)
Total GTN adjustments
(4,145
)
 
(2,281
)
Net product sales
$
10,541

 
$
5,713


(a)
Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $72 million and $78 million for the three months ended March 31, 2020 and 2019, respectively.

The following table summarizes the disaggregation of revenue by product and region:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Prioritized Brands
 
 
 
Revlimid
$
2,915

 
$

Eliquis
2,641

 
1,925

Opdivo
1,766

 
1,801

Orencia
714

 
640

Pomalyst/Imnovid
713

 

Sprycel
521

 
459

Yervoy
396

 
384

Abraxane
300

 

Empliciti
97

 
83

Reblozyl
8

 

Inrebic
12

 

 
 
 
 
Established Brands
 
 
 
Baraclude
122

 
141

Vidaza
158

 

Other Brands(a)
418

 
487

Total Revenues
$
10,781

 
$
5,920

 
 
 
 
United States
$
6,766

 
$
3,449

Europe
2,567

 
1,480

Rest of the World
1,335

 
874

Other(b)
113

 
117

Total Revenues
$
10,781

 
$
5,920


(a)
Includes BMS and Celgene products in 2020.
(b)
Other revenues include royalties and alliance-related revenues for products not sold by BMS's regional commercial organizations.

Revenue recognized from performance obligations satisfied in prior periods was $130 million and $147 million for the three months ended March 31, 2020 and 2019, respectively, consisting primarily of royalties for out-licensing arrangements and revised estimates for GTN adjustments related to prior period sales. Contract assets were not material at March 31, 2020 and December 31, 2019.
v3.20.1
ALLIANCES
3 Months Ended
Mar. 31, 2020
ALLIANCES [Abstract]  
Collaborative Arrangement Disclosure [Text Block] ALLIANCES

BMS enters into collaboration arrangements with third parties for the development and commercialization of certain products. Although each of these arrangements is unique in nature, both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. BMS may either in-license intellectual property owned by the other party or out-license its intellectual property to the other party. These arrangements also typically include research, development, manufacturing, and/or commercial activities and can cover a single investigational compound or commercial product or multiple compounds and/or products in various life cycle stages. The rights and obligations of the parties can be global or limited to geographic regions. BMS refers to these collaborations as alliances and its partners as alliance partners.
Selected financial information pertaining to alliances was as follows, including net product sales when BMS is the principal in the third-party customer sale for products subject to the alliance. Expenses summarized below do not include all amounts attributed to the activities for the products in the alliance, but only the payments between the alliance partners or the related amortization if the payments were deferred or capitalized.
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Revenues from alliances:
 
 
 
Net product sales
$
2,723

 
$
2,378

Alliance revenues
105

 
129

Total Revenues
$
2,828

 
$
2,507

 
 
 
 
Payments to/(from) alliance partners:
 
 
 
Cost of products sold
$
1,306

 
$
1,019

Marketing, selling and administrative
(40
)
 
(28
)
Research and development
46

 
14

Other expense/(income), net
(15
)
 
(14
)
Dollars in Millions
March 31,
2020
 
December 31,
2019
Selected Alliance Balance Sheet information:
 
 
 
Receivables – from alliance partners
$
309

 
$
347

Accounts payable – to alliance partners
1,284

 
1,026

Deferred income from alliances(a)
432

 
431

(a)
Includes unamortized upfront and milestone payments.

The nature, purpose, significant rights and obligations of the parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 2019 Form 10-K. Significant developments and updates related to alliances during the three months ended March 31, 2020 are set forth below.

Otsuka

Otsuka is no longer co-promoting Sprycel in the U.S. and the EU in 2020 and as a result, this arrangement is no longer considered a collaboration under ASC 808. Revenues earned and fees paid to Otsuka in the Oncology Territory in 2020 are not included in the table above.
v3.20.1
ACQUISITIONS, DIVESTITURES AND OTHER ARRANGEMENTS (Notes)
3 Months Ended
Mar. 31, 2020
Acquisitions, Divestitures and Other Arrangements [Abstract]  
Mergers, Acquisitions and Dispositions Disclosures [Text Block] ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS

Acquisitions

Business Combination

Celgene

On November 20, 2019, BMS completed the Celgene acquisition. The acquisition is expected to further position BMS as a leading biopharmaceutical company for sustained innovation and long-term growth and to address the needs of patients with cancer, inflammatory, immunologic or cardiovascular diseases through high-value innovative medicines and leading scientific capabilities. The transaction was accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date. The purchase price allocation is preliminary and subject to change, including the valuation of inventory, property, plant and equipment, intangible assets, income taxes and legal contingencies among other items. The amounts recognized will be finalized as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. Measurement period adjustments increased goodwill by $22 million in the first quarter of 2020 due to purchase price allocation increases of $58 million to equity investments and $30 million to legal contingency liabilities, net of deferred income taxes.

Divestitures

The following table summarizes the financial impact of divestitures including royalties, which are included in Other expense/(income), net. Revenue and pretax earnings related to all divestitures and assets held-for-sale were not material in all periods presented (excluding divestiture gains or losses).
 
Three Months Ended March 31,
 
Net Proceeds(a)
 
Divestiture Gains
 
Royalty Income
Dollars in Millions
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Diabetes Business
$
153

 
$
164

 
$

 
$

 
$
(127
)
 
$
(165
)
Erbitux*
4

 
5

 

 

 

 

Manufacturing Operations

 
2

 
(1
)
 

 

 

Plavix* and Avapro*/Avalide*
7

 

 
(12
)
 

 

 

Mature Brands and Other
31

 

 
(3
)
 

 
(31
)
 
(1
)
Total
$
195

 
$
171

 
$
(16
)
 
$

 
$
(158
)
 
$
(166
)
(a)
Includes royalties received subsequent to the related sale of the asset or business.
v3.20.1
OTHER EXPENSE (INCOME), NET
3 Months Ended
Mar. 31, 2020
Other Nonoperating Income (Expense) [Abstract]  
Other (Income)/Expense [Text Block] OTHER EXPENSE/(INCOME), NET
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Interest expense
$
362

 
$
45

Pension and postretirement
(4
)
 
44

Royalties and licensing income
(410
)
 
(308
)
Divestiture gains
(16
)
 

Acquisition expenses

 
165

Contingent consideration
556

 

Investment income
(61
)
 
(56
)
Integration expenses
174

 
22

Provision for restructuring
160

 
12

Equity investment losses/(gains)
339

 
(175
)
Litigation and other settlements
32

 
1

Transition and other service fees
(61
)
 
(2
)
Reversion excise tax
76

 

Other
16

 
(9
)
Other expense/(income), net
$
1,163

 
$
(261
)

v3.20.1
RESTRUCTURING
3 Months Ended
Mar. 31, 2020
Restructuring Charges [Abstract]  
Restructuring and Related Activities Disclosure [Text Block] RESTRUCTURING

A restructuring and integration plan is being implemented as an initiative to realize $2.5 billion of sustainable run-rate synergies resulting from cost savings and avoidance from the Celgene acquisition. The synergies are expected to be realized in Cost of products sold (10%), Marketing, selling and administrative expenses (55%) and Research and development expenses (35%). The majority of charges are expected to be incurred through 2022, and range between $2.8 billion to $3.0 billion. Cumulative charges of approximately $1.0 billion have been recognized including integration planning and execution expenses, employee termination benefit costs and accelerated stock-based compensation, contract termination costs and other shutdown costs associated with site exits. Cash outlays in connection with these actions are expected to be approximately $2.5 billion. Employee workforce reductions were approximately 600 for the three months ended March 31, 2020.

The following tables summarize the charges and activity related to the Celgene acquisition:
Dollars in Millions
Three Months Ended
March 31, 2020
Employee termination costs
$
146

Other termination costs
4

Provision for restructuring
150

Integration expenses
174

Total charges(a)
$
324

(a)
Included in Other expense/(income), net.
Dollars in Millions
Three Months Ended
March 31, 2020
Liability at January 1
$
77

Charges
131

Change in estimates
1

Provision for restructuring(a)
132

Foreign currency translation and other
6

Payments
(91
)
Liability at March 31
$
124

(a)
Excludes $18 million of accelerated stock-based compensation.

In October 2016, a restructuring plan was announced to evolve and streamline BMS's operating model. The majority of charges are expected to be incurred through 2020, range between $1.6 billion to $2.0 billion. Cumulative charges of approximately $1.5 billion have been recognized including employee termination benefit costs, contract termination costs, accelerated depreciation and impairment charges and other costs associated with manufacturing and R&D site exits. The remaining charges are expected to result from additional site exit costs. Cash outlays in connection with these actions are expected to be approximately 40% to 50% of the total charges.

The following tables summarize the charges and activity related to the Company transformation:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Employee termination costs
$
3

 
$
4

Other termination costs
7

 
8

Provision for restructuring
10

 
12

Accelerated depreciation
30

 
31

Asset impairments
42

 
1

Total charges
$
82

 
$
44

 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Cost of products sold
$
16

 
$
12

Marketing, selling and administrative

 
1

Research and development
56

 
19

Other expense/(income), net
10

 
12

Total charges
$
82

 
$
44


 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Liability at December 31
$
23

 
$
99

Cease-use liability reclassification

 
(3
)
Liability at January 1
23

 
96

Charges
7

 
15

Change in estimates
3

 
(3
)
Provision for restructuring
10

 
12

Payments
(16
)
 
(45
)
Liability at March 31
$
17

 
$
63


v3.20.1
INCOME TAXES
3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block] INCOME TAXES
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
(Loss)/Earnings Before Income Taxes
$
(304
)
 
$
1,979

Provision for Income Taxes
462

 
264

Effective Tax Rate
(152.0
)%
 
13.3
%


The tax impact attributed to specified items was primarily due to non-deductible contingent value rights charges, valuation allowance on equity investment fair value adjustments and low jurisdictional tax rates attributed to inventory and intangible asset purchase price adjustments in the three months ended March 31, 2020. The tax impact of these discrete items are reflected immediately and are not considered in estimating the annual effective tax rate. Additional changes to the effective tax rate may occur in future periods due to various reasons including pretax earnings mix, tax reserves, cash repatriations and revised interpretations of the relevant tax code.

BMS is currently under examination by a number of tax authorities, which have proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. It is reasonably possible that new issues will be raised by tax authorities, which may require adjustments to the amount of unrecognized tax benefits; however, an estimate of such adjustments cannot reasonably be made at this time.

It is also reasonably possible that the total amount of unrecognized tax benefits at March 31, 2020 could decrease in the range of approximately $290 million to $330 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.
v3.20.1
EARNINGS PER SHARE
3 Months Ended
Mar. 31, 2020
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block] (LOSS)/EARNINGS PER SHARE
 
Three Months Ended March 31,
Amounts in Millions, Except Per Share Data
2020
 
2019
Net (Loss)/Earnings Attributable to BMS Used for Basic and Diluted EPS Calculation
$
(775
)
 
$
1,710

 
 
 
 
Weighted-Average Common Shares Outstanding – Basic
2,258

 
1,634

Incremental Shares Attributable to Share-Based Compensation Plans

 
3

Weighted-Average Common Shares Outstanding – Diluted
2,258

 
1,637

 
 
 
 
(Loss)/Earnings per Common Share
 
 
 
Basic
$
(0.34
)
 
$
1.05

Diluted
(0.34
)
 
1.04



The total number of potential shares of common stock excluded from the diluted EPS computation because of the antidilutive impact was 138 million for the three months ended March 31, 2020.
v3.20.1
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
3 Months Ended
Mar. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block] FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
 
March 31, 2020
 
December 31, 2019
Dollars in Millions
Level 1
 
Level 2
 
Level 3
 
Level 1
 
Level 2
 
Level 3
Cash and cash equivalents - money market and other securities
$

 
$
13,528

 
$

 
$

 
$
10,448

 
$

Marketable debt securities:
 
 
 
 
 
 
 
 
 
 
 
Certificates of deposit

 
1,062

 

 

 
1,227

 

Commercial paper

 
869

 

 

 
1,093

 

Corporate debt securities

 
1,225

 

 

 
1,494

 

Derivative assets

 
202

 

 

 
140

 

Equity investments
1,822

 
145

 

 
2,020

 
175

 

Derivative liabilities

 
(29
)
 

 

 
(40
)
 

Contingent consideration liability:
 
 
 
 
 
 
 
 
 
 
 
Contingent value rights
2,862

 

 

 
2,275

 

 

Other acquisition related contingent consideration

 

 
69

 

 

 
106


As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company's 2019 Form 10-K, the Company's fair value estimates use inputs that are either (1) quoted prices for identical assets or liabilities in active markets (Level 1 inputs); (2) observable prices for similar assets or liabilities in active markets or for identical or similar assets or liabilities in markets that are not active (Level 2 inputs); or (3) unobservable inputs (Level 3 inputs).

Contingent consideration obligations are recorded at their estimated fair values and these obligations are revalued each reporting period until the related contingencies are resolved. The contingent value rights are adjusted to fair value using the traded price of the securities at the end of each reporting period. The fair value measurements for other contingent consideration liabilities are estimated using probability-weighted discounted cash flow approaches that are based on significant unobservable inputs related to product candidates acquired in business combinations and are reviewed quarterly. These inputs include, as applicable, estimated probabilities and timing of achieving specified development and regulatory milestones, estimated annual sales and the discount rate used to calculate the present value of estimated future payments. Significant changes which increase or decrease the probabilities of achieving the related development and regulatory events, shorten or lengthen the time required to achieve such events, or increase or decrease estimated annual sales would result in corresponding increases or decreases in the fair values of these obligations. The fair value of our contingent consideration as of March 31, 2020 was calculated using the following significant unobservable inputs:
 
Ranges (weighted average) utilized as of:
Inputs
March 31, 2020
Discount rate
2.2% to 2.7% (2.4%)
Probability of payment
0% to 80% (2.6%)
Projected year of payment for development and regulatory milestones
2020 to 2029 (2022)
Projected year of payment for sales-based milestones and other amounts calculated as a percentage of annual sales
N/A


There were no transfers between levels 1, 2 and 3 during the three months ended March 31, 2020. The following table represents a roll-forward of the fair value of level 3 instruments:
Dollars in Millions
Three Months Ended March 31, 2020
Fair value as of January 1
$
106

Changes in estimated fair value
(36
)
Foreign exchange
(1
)
Fair value as of March 31
$
69



Available-for-sale Debt Securities and Equity Investments

Changes in fair value of equity investments are included in Other expense/(income), net. The following table summarizes available-for-sale debt securities and equity investments:
 
March 31, 2020
 
December 31, 2019
Dollars in Millions
Amortized Cost
 
Gross Unrealized
 
 
 
Amortized Cost
 
Gross Unrealized
 
 
 
Gains
 
Losses
 
Fair Value
 
 
Gains
 
Losses
 
Fair Value
Certificates of deposit
$
1,062

 
$

 
$

 
$
1,062

 
$
1,227

 
$

 
$

 
$
1,227

Commercial paper
869

 

 

 
869

 
1,093

 

 

 
1,093

Corporate debt securities
1,216

 
11

 
(2
)
 
1,225

 
1,487

 
8

 
(1
)
 
1,494

 
$
3,147

 
$
11

 
$
(2
)
 
3,156

 
$
3,807

 
$
8

 
$
(1
)
 
3,814

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity investments
 
 
 
 
 
 
1,967

 
 
 
 
 
 
 
2,195

Total
 
 
 
 
 
 
$
5,123

 
 
 
 
 
 
 
$
6,009


Dollars in Millions
March 31,
2020
 
December 31,
2019
Marketable debt securities - current
$
2,505

 
$
3,047

Marketable debt securities - non-current(a)
651

 
767

Other non-current assets
1,967

 
2,195

Total
$
5,123

 
$
6,009

(a)
All non-current marketable debt securities mature within five years as of March 31, 2020 and December 31, 2019.

Equity investments not measured at fair value and excluded from the above fair value table were limited partnerships and other equity method investments of $424 million at March 31, 2020 and $429 million at December 31, 2019 and other equity investments without readily determinable fair values of $754 million at March 31, 2020 and $781 million at December 31, 2019. These amounts are included in Other non-current assets. Upward adjustments to equity investments without readily determinable fair values for the three months ended March 31, 2020 were $75 million resulting from observable price changes for similar securities for the same issuer and were recorded in Other expense/(income), net. Downward adjustments to equity investments without readily determinable fair values for the three months ended March 31, 2020 were $188 million due to the significant adverse change in the global economy during the period primarily caused by the COVID-19 pandemic.

The following table summarizes the net (loss)/gain recorded for equity investments with readily determinable fair values held as of March 31, 2020 and 2019:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Net (loss)/gain recognized
$
(228
)
 
$
95

Less: Net gain recognized for equity investments sold

 
14

Net unrealized (loss)/gain on equity investments held
$
(228
)
 
$
81



Qualifying Hedges and Non-Qualifying Derivatives

Cash Flow Hedges — Foreign currency forward contracts are used to hedge certain forecasted intercompany inventory purchases and sales transactions and certain foreign currency transactions. The fair value for contracts designated as cash flow hedges are temporarily reported in Accumulated other comprehensive loss and included in earnings when the hedged item affects earnings. The net gain or loss on foreign currency forward contracts is expected to be reclassified to net earnings (primarily included in Cost of products sold and Other expense/(income), net) within the next 12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $1.7 billion and Japanese yen of $1.2 billion at March 31, 2020.

The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not material during all periods presented. Cash flow hedge accounting is discontinued when the forecasted transaction is no longer probable of occurring within 60 days after the originally forecasted date or when the hedge is no longer effective. Assessments to determine whether derivatives designated as qualifying hedges are highly effective in offsetting changes in the cash flows of hedged items are performed at inception and on a quarterly basis. Foreign currency forward contracts not designated as hedging instruments are used to offset exposures in certain foreign currency denominated assets, liabilities and earnings. Changes in the fair value of these derivatives are recognized in earnings as they occur.

BMS may hedge a portion of its future foreign currency exposure by utilizing a strategy that involves both a purchased local currency put option and a written local currency call option that are accounted for as hedges of future sales denominated in that local currency. Specifically, BMS sells (or writes) a local currency call option and purchases a local currency put option with the same expiration dates and local currency notional amounts but with different strike prices. The premium collected from the sale of the call option is equal to the premium paid for the purchased put option, resulting in no net premium being paid. This combination of transactions is generally referred to as a “zero-cost collar.” The expiration dates and notional amounts correspond to the amount and timing of forecasted foreign currency sales. The foreign currency zero-cost collar contracts outstanding as of March 31, 2020 had settlement dates within 12 months. If the U.S. Dollar weakens relative to the currency of the hedged anticipated sales, the purchased put option value reduces to zero and we benefit from the increase in the U.S. Dollar equivalent value of our anticipated foreign currency cash flows; however, this benefit would be capped at the strike level of the written call, which forms the upper end of the collar.

Net Investment Hedges — Non-U.S. dollar borrowings of €950 million ($1.0 billion) at March 31, 2020 are designated as net investment hedges to hedge euro currency exposures of the net investment in certain foreign affiliates and are recognized in long-term debt. The effective portion of foreign exchange gain on the remeasurement of euro debt was included in the foreign currency translation component of Accumulated other comprehensive loss with the related offset in long-term debt. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive (Loss)/Income with a related offset in Other non-current assets or Other non-current liabilities.

Cross-currency interest rate swap contracts of $400 million at March 31, 2020 are designated to hedge Japanese yen currency exposure of BMS's net investment in its Japan subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive (Loss)/Income with a related offset in Other non-current assets or Other non-current liabilities.

Fair Value Hedges — Fixed to floating interest rate swap contracts are designated as fair value hedges and used as an interest rate risk management strategy to create an appropriate balance of fixed and floating rate debt. The contracts and underlying debt for the hedged benchmark risk are recorded at fair value. The effective interest rate for the contracts is one-month LIBOR (1.0% as of March 31, 2020) plus an interest rate spread of 4.6%. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to align with the debt being hedged, all changes in fair value of the swap are recorded in interest expense with an associated offset to the derivative asset or liability on the consolidated balance sheet. As a result, there was no net impact in earnings. When the underlying swap is terminated prior to maturity, the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.

The following table summarizes the fair value of outstanding derivatives:
 
March 31, 2020
 
December 31, 2019
 
Asset(a)
 
Liability(b)
 
Asset(a)
 
Liability(b)
Dollars in Millions
Notional
 
Fair Value
 
Notional
 
Fair Value
 
Notional
 
Fair Value
 
Notional
 
Fair Value
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap contracts
$
255

 
$
25

 
$

 
$

 
$
255

 
$
6

 
$

 
$

Cross-currency interest rate swap contracts
400

 
7

 

 

 
175

 
2

 
125

 
(1
)
Foreign currency forward contracts
2,383

 
75

 
301

 
(2
)
 
766

 
27

 
980

 
(20
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency forward contracts
1,177

 
73

 
772

 
(19
)
 
2,342

 
91

 
1,173

 
(10
)
Foreign currency zero-cost collar contracts
1,522

 
22

 
1,597

 
(8
)
 
2,482

 
14

 
2,235

 
(9
)
(a)
Included in Other current assets and Other non-current assets.
(b)
Included in Other current liabilities and Other non-current liabilities.

The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedging instruments:
 
Three Months Ended March 31, 2020
Dollars in Millions
Cost of products sold
 
Other expense/(income), net
Interest rate swap contracts
$

 
$
(7
)
Cross-currency interest rate swap contracts

 
(2
)
Foreign currency forward contracts
(23
)
 
(76
)
Foreign currency zero-cost collar contracts

 
(9
)

 
Three Months Ended March 31, 2019
Dollars in Millions
Cost of products sold
 
Other expense/(income), net
Interest rate swap contracts
$

 
$
(5
)
Cross-currency interest rate swap contracts

 
(2
)
Foreign currency forward contracts
(30
)
 
9

Forward starting interest rate swap options

 
35



The following table summarizes the effect of derivative and non-derivative instruments designated as hedging instruments in Other Comprehensive (Loss)/Income:
 
Three Months Ended March 31,
Dollars in Millions
2020
 
2019
Derivatives qualifying as cash flow hedges
 
 
 
Foreign currency forward contracts gain/(loss):
 
 
 
Recognized in Other Comprehensive (Loss)/Income(a)
$
97

 
$
45

Reclassified to Cost of products sold
(20
)
 
(30
)
 
 
 
 
Derivatives qualifying as net investment hedges
 
 
 
Cross-currency interest rate swap contracts gain:
 
 
 
Recognized in Other Comprehensive (Loss)/Income
6

 
6

 
 
 
 
Non-derivatives qualifying as net investment hedges
 
 
 
Non-U.S. dollar borrowings gain:
 
 
 
Recognized in Other Comprehensive (Loss)/Income
20

 
8

(a)
The amount is expected to be reclassified into earnings in the next 12 months.

Debt Obligations

Short-term debt obligations include:
Dollars in Millions
March 31,
2020
 
December 31,
2019
Non-U.S. short-term borrowings
$
345

 
$
351

Current portion of long-term debt
3,261

 
2,763

Other
256

 
232

Total
$
3,862

 
$
3,346



Long-term debt and the current portion of long-term debt include:
Dollars in Millions
March 31,
2020
 
December 31,
2019
Principal Value
$
44,310

 
$
44,335

 
 
 
 
Adjustments to Principal Value:
 
 
 
Fair value of interest rate swap contracts
25

 
6

Unamortized basis adjustment from swap terminations
168

 
175

Unamortized bond discounts and issuance costs
(271
)
 
(280
)
Unamortized purchase price adjustments of Celgene debt
1,873

 
1,914

Total
$
46,105

 
$
46,150

 
 
 
 
Current portion of long-term debt
$
3,261

 
$
2,763

Long-term debt
42,844

 
43,387

Total
$
46,105

 
$
46,150



The fair value of long-term debt was $51.9 billion at March 31, 2020 and $50.7 billion at December 31, 2019 valued using Level 2 inputs, which are based upon the quoted market prices for the same or similar debt instruments. The fair value of short-term borrowings approximates the carrying value due to the short maturities of the debt instruments. Interest payments were $491 million and $57 million for the three months ended March 31, 2020 and 2019, respectively, net of amounts related to interest rate swap contracts.

During the first quarter of 2019, the $750 million 1.600% Notes and the $500 million 1.750% Notes matured and were repaid.

As of March 31, 2020, BMS had four separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiring in January 2021, a $1.0 billion facility that was renewed to January 2022 and two five-year $1.5 billion facilities that were extended to September 2023 and July 2024, respectively. The facilities provide for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for BMS's commercial paper borrowings. BMS's $1.0 billion facility and its two $1.5 billion revolving facilities are extendable annually by one year on the anniversary date with the consent of the lenders. BMS's 364-day $2.0 billion facility can be renewed for one year on each anniversary date, subject to certain terms and conditions. No borrowings were outstanding under revolving credit facilities at March 31, 2020 or December 31, 2019.
v3.20.1
RECEIVABLES
3 Months Ended
Mar. 31, 2020
Accounts Receivable, after Allowance for Credit Loss [Abstract]  
Receivables [Text Block] RECEIVABLES
Dollars in Millions
March 31,
2020
 
December 31,
2019
Trade receivables
$
7,660

 
$
6,888

Less charge-backs and cash discounts
(437
)
 
(391
)
Less bad debt allowances
(23
)
 
(21
)
Net trade receivables
7,200

 
6,476

Alliance, royalties, VAT and other
1,090

 
1,209

Receivables
$
8,290

 
$
7,685



Non-U.S. receivables sold on a nonrecourse basis were $180 million and $174 million for the three months ended March 31, 2020 and 2019, respectively. Receivables from the three largest customers in the U.S. represented approximately 55% and 50% of total trade receivables at March 31, 2020 and December 31, 2019, respectively.
v3.20.1
INVENTORIES
3 Months Ended
Mar. 31, 2020
Inventory, Net [Abstract]  
Inventories [Text Block] INVENTORIES
Dollars in Millions
March 31,
2020
 
December 31,
2019
Finished goods
$
1,283

 
$
2,227

Work in process
2,651

 
3,267

Raw and packaging materials
164

 
172

Total inventories
$
4,098

 
$
5,666

 
 
 
 
Inventories
$
2,836

 
$
4,293

Other non-current assets
1,262

 
1,373



Total inventories include fair value adjustments resulting from the Celgene acquisition of $2.1 billion at March 31, 2020 and $3.5 billion at December 31, 2019. Other non-current assets include inventory expected to remain on hand beyond one year in both periods.
v3.20.1
PROPERTY, PLANT AND EQUIPMENT
3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment [Text Block] PROPERTY, PLANT AND EQUIPMENT
Dollars in Millions
March 31,
2020
 
December 31,
2019
Land
$
194

 
$
187

Buildings
5,848

 
6,336

Machinery, equipment and fixtures
3,055

 
3,157

Construction in progress
456

 
527

Gross property, plant and equipment
9,553

 
10,207

Less accumulated depreciation
(3,441
)
 
(3,955
)
Property, plant and equipment
$
6,112

 
$
6,252



Depreciation expense was $170 million and $133 million for the three months ended March 31, 2020 and 2019, respectively.
v3.20.1
GOODWILL AND OTHER INTANGIBLE ASSETS
3 Months Ended
Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block] GOODWILL AND OTHER INTANGIBLE ASSETS
Dollars in Millions
Estimated Useful Lives
 
March 31,
2020
 
December 31,
2019
Goodwill(a)
 
 
$
22,452

 
$
22,488

 
 
 
 
 
 
Other intangible assets:
 
 
 
 
 
Licenses
5 – 15 years
 
482

 
482

Acquired developed product rights
3 – 15 years
 
50,427

 
46,827

Capitalized software
3 – 10 years
 
1,263

 
1,297

IPRD
 
 
15,900

 
19,500

Gross other intangible assets
 
 
68,072

 
68,106

Less accumulated amortization
 
 
(6,406
)
 
(4,137
)
Other intangible assets
 
 
$
61,666

 
$
63,969


(a)
Includes measurement period adjustments. Refer to “—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for more information.

In March 2020, $3.6 billion of IPRD was reclassified to acquired developed product rights upon approval of Zeposia in the U.S. In April 2020, the FDA approved Reblozyl to treat Anemia in adults with lower-risk MDS. As a result, $7.5 billion of IPRD will be reclassed to acquired developed products rights in the second quarter of 2020. Amortization expense of other intangible assets was $2.3 billion and $53 million for the three months ended March 31, 2020 and 2019, respectively.
v3.20.1
SUPPLEMENTAL FINANCIAL INFORMATION
3 Months Ended
Mar. 31, 2020
Supplemental Financial Information [Abstract]  
Additional Financial Information Disclosure [Text Block] SUPPLEMENTAL FINANCIAL INFORMATION
Dollars in Millions
March 31,
2020
 
December 31, 2019
Prepaid and refundable income taxes
$
999

 
$
754

Research and development
445

 
410

Other
961

 
819

Other current assets
$
2,405

 
$
1,983


Dollars in Millions
March 31,
2020
 
December 31, 2019
Equity investments
$
3,144

 
$
3,405

Inventories
1,262

 
1,373

Operating leases
724

 
704

Pension and postretirement
189

 
456

Restricted cash(a)
342

 
390

Other
285

 
276

Other non-current assets
$
5,946

 
$
6,604

(a)
Restricted cash consists of escrow for litigation settlements and funds restricted for annual Company contributions to the defined contribution plan in the U.S. Restricted cash of $429 million was included in cash, cash equivalents and restricted cash at March 31, 2020 in the consolidated statements of cash flows.
Dollars in Millions
March 31,
2020
 
December 31, 2019
Rebates and returns
$
4,407

 
$
4,275

Income taxes payable
1,996

 
1,517

Employee compensation and benefits
678

 
1,457

Research and development
1,308

 
1,324

Dividends
1,037

 
1,025

Interest
393

 
493

Royalties
328

 
418

Operating leases
136

 
133

Other
2,018

 
1,871

Other current liabilities
$
12,301

 
$
12,513


Dollars in Millions
March 31,
2020
 
December 31, 2019
Income taxes payable
$
5,364

 
$
5,368

Contingent value rights
2,862

 
2,275

Pension and postretirement
841

 
725

Operating leases
688

 
672

Deferred income
394

 
424

Deferred compensation
254

 
287

Other
298

 
350

Other non-current liabilities
$
10,701

 
$
10,101


v3.20.1
EQUITY
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Stockholders' Equity Note Disclosure [Text Block] EQUITY

The following table summarizes changes in equity for the three months ended March 31, 2020:
 
Common Stock
 
Capital in Excess of Par Value of Stock
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Treasury Stock
 
Noncontrolling Interest
Dollars and Shares in Millions
Shares
 
Par Value
 
Shares
 
Cost
 
Balance at December 31, 2019
2,923

 
$
292

 
$
43,709

 
$
(1,520
)
 
$
34,474

 
672

 
$
(25,357
)
 
$
100

Net loss

 

 

 

 
(775
)
 

 

 
9

Other Comprehensive Loss

 

 

 
(29
)
 

 

 

 

Cash dividends declared(a)

 

 

 

 
(1,028
)
 

 

 

Share repurchase program

 

 

 

 

 
1

 
(81
)
 

Stock compensation

 

 
(455
)
 

 

 
(13
)
 
681

 

Distributions

 

 

 

 

 

 

 
(43
)
Balance at March 31, 2020
2,923

 
$
292

 
$
43,254

 
$
(1,549
)
 
$
32,671

 
660

 
$
(24,757
)
 
$
66

(a)
Cash dividends declared per common share were $0.45 for the three months ended March 31, 2020.

The following table summarizes changes in equity for the three months ended March 31, 2019:
 
Common Stock
 
Capital in Excess of Par Value of Stock
 
Accumulated Other Comprehensive Loss
 
Retained Earnings
 
Treasury Stock
 
Noncontrolling Interest
Dollars and Shares in Millions
Shares
 
Par Value
 
Shares
 
Cost
 
Balance at December 31, 2018
2,208

 
$
221

 
$
2,081

 
$
(2,762
)
 
$
34,065

 
576

 
$
(19,574
)
 
$
96

Accounting change - cumulative effect(a)

 

 

 

 
5

 

 

 

Adjusted balance at January 1, 2019
2,208

 
221