BRISTOL MYERS SQUIBB CO, 10-Q filed on 8/6/2020
Quarterly Report
v3.20.2
Document and Entity Information
6 Months Ended
Jun. 30, 2020
shares
Document Period End Date Jun. 30, 2020
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 2,253,934,635
Document Period End Date Jun. 30, 2020
Document Transition Report false
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q2
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, $0.10 Par Value
Trading Symbol BMY
Security Exchange Name NYSE
1.000% Notes due 2025 [Member]  
Title of 12(b) Security 1.000% Notes due 2025
Trading Symbol BMY25
Security Exchange Name NYSE
1.750% Notes due 2035 [Member]  
Title of 12(b) Security 1.750% Notes due 2035
Trading Symbol BMY35
Security Exchange Name NYSE
Bristol Myers Squibb Contingent Value Rights [Member]  
Title of 12(b) Security Bristol-Myers Squibb Contingent Value Rights
Trading Symbol BMY RT
Security Exchange Name NYSE
Celgene Contingent Value Rights [Member]  
Title of 12(b) Security Celgene Contingent Value Rights
Trading Symbol CELG RT
Security Exchange Name NYSE
v3.20.2
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Total Revenues $ 10,129 $ 6,273 $ 20,910 $ 12,193
Cost of products sold [1] 2,699 1,972 6,361 3,796
Marketing, selling and administrative 1,628 1,076 3,234 2,082
Research and development 2,522 1,325 4,894 2,673
Amortization of acquired intangible assets 2,389 24 4,671 48
Other (income)/expense, net (736) 100 427 (161)
Total Expenses 8,502 4,497 19,587 8,438
Earnings Before Income Taxes 1,627 1,776 1,323 3,755
Provision for Income Taxes 1,707 337 2,169 601
Net (Loss)/Earnings (80) 1,439 (846) 3,154
Noncontrolling Interest 5 7 14 12
Net (Loss)/Earnings Attributable to BMS $ (85) $ 1,432 $ (860) $ 3,142
Earnings Per Share, Basic $ (0.04) $ 0.88 $ (0.38) $ 1.92
Earnings Per Share, Diluted $ (0.04) $ 0.87 $ (0.38) $ 1.92
Net product sales [Member]        
Total Revenues $ 9,817 $ 6,031 $ 20,358 $ 11,744
Alliance and other revenues [Member]        
Total Revenues $ 312 $ 242 $ 552 $ 449
[1] Excludes amortization of acquired intangible assets
v3.20.2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Jun. 30, 2020
Jun. 30, 2019
Statement of Comprehensive Income [Abstract]        
Net (Loss)/Earnings $ (80) $ 1,439 $ (846) $ 3,154
Derivatives qualifying as cash flow hedges (59) (28) 11 (14)
Pension and postretirement benefits (7) 39 9 88
Available-for-sale debt securities 8 13 9 39
Foreign currency translation 51 (1) (65) 28
Other Comprehensive (Loss)/Income (7) 23 (36) 141
Comprehensive (Loss)/Income (87) 1,462 (882) 3,295
Comprehensive Income Attributable to Noncontrolling Interest 5 7 14 12
Comprehensive (Loss)/Income Attributable to BMS $ (92) $ 1,455 $ (896) $ 3,283
v3.20.2
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($)
$ in Millions
Jun. 30, 2020
Dec. 31, 2019
Current Assets:    
Cash and cash equivalents $ 19,934 $ 12,346
Marketable debt securities 1,724 3,047
Receivables 7,855 7,685
Inventories 2,384 4,293
Other current assets 2,446 1,983
Total current assets 34,343 29,354
Property, plant and equipment 5,777 6,252
Goodwill 20,578 22,488
Other intangible assets 59,171 63,969
Deferred income taxes 1,088 510
Marketable debt securities 523 767
Other non-current assets 6,596 6,604
Total Assets 128,076 129,944
Current Liabilities:    
Short-term debt obligations 4,819 3,346
Accounts payable 2,852 2,445
Other current liabilities 15,750 12,513
Total Current Liabilities 23,421 18,304
Deferred income taxes 6,157 6,454
Long-term debt 41,853 43,387
Other non-current liabilities 7,485 10,101
Total Liabilities 78,916 78,246
Bristol-Myers Squibb Company Shareholders' Equity:    
Preferred stock 0 0
Common stock 292 292
Capital in excess of par value of stock 44,444 43,709
Accumulated other comprehensive loss (1,556) (1,520)
Retained earnings 31,565 34,474
Less cost of treasury stock (25,651) (25,357)
Total Bristol-Myers Squibb Company Shareholders' Equity 49,094 51,598
Noncontrolling Interest 66 100
Total Equity 49,160 51,698
Total Liabilities and Equity $ 128,076 $ 129,944
v3.20.2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
$ in Millions
6 Months Ended
Jun. 30, 2020
Jun. 30, 2019
Cash Flows From Operating Activities:    
Net (Loss)/Earnings $ (846) $ 3,154
Adjustments to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities [Abstract]    
Depreciation and amortization, net 5,035 339
Deferred income taxes 1,365 (113)
Share-based compensation 423 101
Impairment charges 116 174
Pension settlements and amortization 22 126
Divestiture gains and royalties (295) (320)
Asset acquisition charges 100 25
Equity investment gains (479) (246)
Contingent consideration fair value adjustments 391 0
Other adjustments (92) (14)
Increase (Decrease) in Other Operating Assets and Liabilities, Net [Abstract]    
Receivables (197) 307
Inventories 2,090 28
Accounts payable 480 156
Income taxes payable 185 (39)
Other (135) (205)
Net Cash Provided by Operating Activities 8,163 3,473
Cash Flows From Investing Activities:    
Sale and maturities of marketable debt securities 3,537 2,149
Purchase of marketable debt securities (1,957) (437)
Capital expenditures (317) (395)
Divestiture and other proceeds 348 507
Acquisition and other payments, net of cash acquired (178) (49)
Net Cash Provided by Investing Activities 1,433 1,775
Cash Flows From Financing Activities:    
Short-term debt obligations, net (22) 84
Issuance of long-term debt 0 18,790
Repayments of Long-term Debt 0 (1,256)
Repurchase of common stock (81) 0
Dividends (2,038) (1,340)
Other 94 (39)
Net Cash (Used in)/Provided by Financing Activities (2,047) 16,239
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents (7) 6
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect 7,542 21,493
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 12,820 6,911
Cash, Cash Equivalents and Restricted Cash at End of Period $ 20,362 $ 28,404
v3.20.2
OTHER EXPENSE (INCOME), NET
6 Months Ended
Jun. 30, 2020
Other Nonoperating Income (Expense) [Abstract]  
Other (Income)/Expense [Text Block] OTHER (INCOME)/EXPENSE, NET
Three Months Ended June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Interest expense$357  $123  $719  $168  
Pension and postretirement(2) 26  (6) 70  
Royalties and licensing income(311) (303) (721) (611) 
Divestiture losses/(gains)  (7)  
Acquisition expenses—  303  —  468  
Contingent consideration(165) —  391  —  
Investment income(25) (119) (86) (175) 
Integration expenses166  106  340  128  
Provision for restructuring115  10  275  22  
Equity investment gains(818) (71) (479) (246) 
Litigation and other settlements(1) —  31   
Transition and other service fees(50) (2) (111) (4) 
Intangible asset impairment21  15  21  15  
Reversion excise tax—  —  76  —  
Other(32)  (16) (5) 
Other (income)/expense, net$(736) $100  $427  $(161) 
v3.20.2
BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS (Notes)
6 Months Ended
Jun. 30, 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 June 30, 2020 and December 31, 2019, the results of operations for the three and six months ended June 30, 2020 and 2019, and cash flows for the six months ended June 30, 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.
v3.20.2
REVENUE RECOGNITION Revenue Recognition (Notes)
6 Months Ended
Jun. 30, 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 June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Net product sales$9,817  $6,031  $20,358  $11,744  
Alliance revenues163  146  268  275  
Other revenues149  96  284  174  
Total Revenues$10,129  $6,273  $20,910  $12,193  

The following table summarizes GTN adjustments:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Gross product sales$13,788  $8,819  $28,474  $16,813  
GTN adjustments(a)
Charge-backs and cash discounts(1,292) (890) (2,632) (1,664) 
Medicaid and Medicare rebates(1,482) (1,090) (2,980) (1,890) 
Other rebates, returns, discounts and adjustments(1,197) (808) (2,504) (1,515) 
Total GTN adjustments(3,971) (2,788) (8,116) (5,069) 
Net product sales$9,817  $6,031  $20,358  $11,744  
(a) Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $44 million and $116 million for the three and six months ended June 30, 2020 and $49 million and $127 million for the three and six months ended June 30, 2019, respectively.

The following table summarizes the disaggregation of revenue by product and region:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Prioritized Brands
Revlimid$2,884  $—  $5,799  $—  
Eliquis2,163  2,042  4,804  3,967  
Opdivo1,653  1,823  3,419  3,624  
Orencia750  778  1,464  1,418  
Pomalyst/Imnovid745  —  1,458  —  
Sprycel511  544  1,032  1,003  
Yervoy369  367  765  751  
Abraxane308  —  608  —  
Empliciti97  91  194  174  
Reblozyl55  —  63  —  
Inrebic15  —  27  —  
Zeposia —   —  
Established Brands
Baraclude121  147  243  288  
Vidaza126  —  284  —  
Other Brands(a)
331  481  749  968  
Total Revenues$10,129  $6,273  $20,910  $12,193  
United States$6,487  $3,667  $13,253  $7,116  
Europe2,136  1,491  4,703  2,971  
Rest of the World1,334  988  2,669  1,862  
Other(b)
172  127  285  244  
Total Revenues$10,129  $6,273  $20,910  $12,193  
(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 $98 million and $228 million for the three and six months ended June 30, 2020 and $117 million and $264 million for the three and six months ended June 30, 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 June 30, 2020 and December 31, 2019.
v3.20.2
ALLIANCES
6 Months Ended
Jun. 30, 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 June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Revenues from alliances:
Net product sales$2,201  $2,570  $4,924  $4,948  
Alliance revenues163  146  268  275  
Total Revenues$2,364  $2,716  $5,192  $5,223  
Payments to/(from) alliance partners:
Cost of products sold$1,050  $1,080  $2,356  $2,099  
Marketing, selling and administrative(38) (32) (78) (60) 
Research and development233   279  21  
Other (income)/expense, net(16) (16) (31) (30) 
Dollars in MillionsJune 30,
2020
December 31,
2019
Selected Alliance Balance Sheet information:
Receivables – from alliance partners$354  $347  
Accounts payable – to alliance partners1,039  1,026  
Deferred income from alliances(a)
411  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 and six months ended June 30, 2020 are set forth below.

Otsuka

Effective January 1, 2020, Otsuka is no longer co-promoting Sprycel in the U.S. 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.
bluebird

BMS and bluebird jointly develop and commercialize novel disease-altering gene therapy product candidates targeting BCMA. The collaboration arrangement began in 2013 and included (i) a right for BMS to license any anti-BCMA products resulting from the collaboration, (ii) a right for bluebird to participate in the development and commercialization of any licensed products resulting from the collaboration through a 50/50 co-development and profit share in the U.S. in exchange for a reduction of milestone payments, and (iii) sales based milestones and royalties payable to bluebird upon the commercialization of any licensed products resulting from the collaboration if bluebird declined to exercise their co-development and profit sharing rights. The options to license ide-cel (bb2121) and bb21217 were exercised in 2016 and 2017, respectively.

BMS and bluebird share equally in all profits and losses relating to developing, commercializing and manufacturing ide-cel within the U.S. BMS is exclusively responsible for the development and commercialization of ide-cel outside the U.S.

BMS is responsible for the worldwide development, including related funding after the substantial completion by bluebird of the ongoing Phase I clinical trial, and commercialization of bb21217. bluebird has an option to co-develop, co-promote and share equally in all profits and losses in the U.S.

In the second quarter of 2020, BMS and bluebird amended their collaboration arrangement where, among other items, BMS is assuming the contract manufacturing agreements relating to ide-cel adherent lentiviral vector. Over time, BMS is assuming responsibility for manufacturing ide-cel suspension lentiviral vector outside of the U.S., with bluebird responsible for manufacturing ide-cel suspension lentiviral vector in the U.S. The parties were also released from future exclusivity related to BCMA-directed T cell therapies. In addition, BMS agreed to buy out its obligation to pay bluebird future ex-U.S. milestones and royalties on ide-cel and bb21217 for a payment of $200 million, which was included in Research and development expense.
v3.20.2
ACQUISITIONS, DIVESTITURES AND OTHER ARRANGEMENTS (Notes)
6 Months Ended
Jun. 30, 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 for income tax matters. 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.

The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of the acquisition date, as well as measurement period adjustments made year-to-date to the amounts initially recorded in 2019. The measurement period adjustments reflected in 2020 primarily resulted from completing valuations of real estate and personal property, revised future cash flow estimates for certain intangible assets, changes in the estimated tax basis of certain intangible assets based upon a tax ruling which reduced deferred income tax liabilities and other changes to certain equity investments, legal contingency and income tax liabilities. The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the acquisition date is immaterial to the consolidated financial statements.
Dollars in MillionsAmounts Recognized as of Acquisition Date
(as previously reported)
Measurement Period AdjustmentsAmounts Recognized as of Acquisition Date
(as adjusted)
Cash and cash equivalents$11,179  $—  $11,179  
Receivables2,652  —  2,652  
Inventories4,511  —  4,511  
Property, plant and equipment1,342  (277) 1,065  
Intangible assets64,027  (100) 63,927  
Otezla* assets held-for-sale
13,400  —  13,400  
Other assets3,408  57  3,465  
Accounts payable(363) —  (363) 
Income taxes payable(2,718) (27) (2,745) 
Deferred income tax liabilities(7,339) 2,242  (5,097) 
Debt(21,782) —  (21,782) 
Other liabilities(4,017) 15  (4,002) 
Identifiable net assets acquired64,300  1,910  66,210  
Goodwill15,969  (1,910) 14,059  
Total consideration transferred$80,269  $—  $80,269  

Asset Acquisitions

In the second quarter of 2020, a $100 million development milestone was paid to Cormorant as additional contingent consideration. The additional consideration was included in Research and development expense as the Cormorant acquisition in 2016 was accounted for as an asset acquisition.

Divestitures

The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, 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 June 30,
Net Proceeds(a)
Divestiture LossesRoyalty Income
Dollars in Millions202020192020201920202019
Diabetes Business$127  $164  $—  $—  $(129) $(161) 
Erbitux*  —  —  —  —  
Manufacturing Operations10   —  —  —  —  
Mature Brands and Other    (1) (1) 
Total$141  $170  $ $ $(130) $(162) 
Six Months Ended June 30,
Net Proceeds(a)
Divestiture (Gains)/LossesRoyalty Income
Dollars in Millions202020192020201920202019
Diabetes Business$280  $328  $—  $—  $(256) $(326) 
Erbitux*  —  —  —  —  
Manufacturing Operations10   (1) —  —  —  
Plavix* and Avapro*/Avalide*
 —  (12) —  —  —  
Mature Brands and Other32     (32) (2) 
Total$336  $341  $(7) $ $(288) $(328) 
(a) Includes royalties received subsequent to the related sale of the asset or business.

Manufacturing Operations

In the second quarter of 2019, BMS agreed to sell its manufacturing and packaging facility in Anagni, Italy to Catalent, Inc. The transaction was accounted for as the sale of a business and the sale was completed in the fourth quarter of 2019. The assets were reduced to their relative fair value after considering the purchase price resulting in an impairment charge of $109 million for the six months ended June 30, 2019 that was included in Cost of products sold.
v3.20.2
RESTRUCTURING
6 Months Ended
Jun. 30, 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 $2.5 billion to $3.0 billion. Cumulative charges of approximately $1.3 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 900 for the six months ended June 30, 2020.

The following tables summarize the charges and activity related to the Celgene acquisition:
Dollars in MillionsThree Months Ended
June 30, 2020
Six Months Ended
June 30, 2020
Employee termination costs$107  $253  
Other termination costs  
Provision for restructuring109  259  
Integration expenses166  340  
Asset impairments39  39  
Other  
Total charges$317  $641  
Dollars in MillionsThree Months Ended
June 30, 2020
Six Months Ended
June 30, 2020
Marketing, selling and administrative  
Research and development39  39  
Other (income)/expense, net277  601  
Total charges$317  $641  
Dollars in MillionsSix Months Ended
June 30, 2020
Liability at January 1$77  
Charges219  
Change in estimates(7) 
Provision for restructuring(a)
212  
Foreign currency translation and other 
Payments(157) 
Liability at June 30$133  
(a) Excludes $47 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 $1.5 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 June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Employee termination costs$—  $ $ $ 
Other termination costs  13  15  
Provision for restructuring 10  16  22  
Accelerated depreciation11  32  41  63  
Asset impairments—  109  42  110  
Other shutdown costs —   —  
Total charges$23  $151  $105  $195  
Three Months Ended June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Cost of products sold$11  $122  $27  $134  
Marketing, selling and administrative—  —  —   
Research and development—  19  56  38  
Other (income)/expense, net12  10  22  22  
Total charges$23  $151  $105  $195  
Six Months Ended June 30,
Dollars in Millions20202019
Liability at December 31$23  $99  
Cease-use liability reclassification—  (3) 
Liability at January 123  96  
Charges15  27  
Change in estimates (5) 
Provision for restructuring16  22  
Payments(31) (74) 
Liability at June 30$ $44  
v3.20.2
INCOME TAXES
6 Months Ended
Jun. 30, 2020
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block] INCOME TAXES
Three Months Ended June 30,Six Months Ended June 30,
Dollars in Millions2020201920202019
Earnings Before Income Taxes$1,627  $1,776  $1,323  $3,755  
Provision for Income Taxes1,707  337  2,169  601  
Effective Tax Rate104.9 %19.0 %163.9 %16.0 %
The tax impact attributed to specified items was primarily due to non-deductible contingent value rights charges and low jurisdictional tax rates attributed to inventory and intangible asset purchase price adjustments in the current periods. The second quarter 2020 includes an $853 million deferred tax charge resulting from an internal transfer of certain intangible assets to the U.S. and an additional $255 million GILTI tax charge upon finalization of the Otezla* divestiture tax consequences with tax authorities. 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 June 30, 2020 could decrease in the range of approximately $350 million to $390 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.
v3.20.2
EARNINGS PER SHARE
6 Months Ended
Jun. 30, 2020
Earnings Per Share [Abstract]  
Earnings Per Share [Text Block] EARNINGS PER SHARE
Three Months Ended June 30,Six Months Ended June 30,
Amounts in Millions, Except Per Share Data2020201920202019
Net (Loss)/Earnings Attributable to BMS Used for Basic and Diluted EPS Calculation$(85) $1,432  $(860) $3,142  
Weighted-Average Common Shares Outstanding – Basic2,263  1,636  2,261  1,635  
Incremental Shares Attributable to Share-Based Compensation Plans—   —   
Weighted-Average Common Shares Outstanding – Diluted2,263  1,637  2,261  1,637  
(Loss)/Earnings per Common Share
Basic$(0.04) $0.88  $(0.38) $1.92  
Diluted(0.04) 0.87  (0.38) 1.92  

The total number of potential shares of common stock excluded from the diluted EPS computation because of the antidilutive impact was 127 million for both the three and six months ended June 30, 2020 and was not material for the three and six months ended June 30, 2019.
v3.20.2
FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
6 Months Ended
Jun. 30, 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:
June 30, 2020December 31, 2019
Dollars in MillionsLevel 1Level 2Level 3Level 1Level 2Level 3
Cash and cash equivalents - money market and other securities$—  $17,680  $—  $—  $10,448  $—  
Marketable debt securities:
Certificates of deposit—  1,222  —  —  1,227  —  
Commercial paper—  100  —  —  1,093  —  
Corporate debt securities—  925  —  —  1,494  —  
Derivative assets—  121  —  —  140  —  
Equity investments2,665  187  —  2,020  175  —  
Derivative liabilities—  (25) —  —  (40) —  
Contingent consideration liability:
Contingent value rights2,692  —  —  2,275  —  —  
Other acquisition related contingent consideration—  —  71  —  —  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 June 30, 2020 was calculated using the following significant unobservable inputs:
Ranges (weighted average) utilized as of:
InputsJune 30, 2020
Discount rate2.2% to 2.7% (2.4%)
Probability of payment0% to 80% (2.6%)
Projected year of payment for development and regulatory milestones2020 to 2025 (2022)
Projected year of payment for sales-based milestones and other amounts calculated as a percentage of annual salesN/A

There were no transfers between levels 1, 2 and 3 during the six months ended June 30, 2020. The following table represents a roll-forward of the fair value of level 3 instruments:
Dollars in MillionsSix Months Ended June 30, 2020
Fair value as of January 1$106  
Changes in estimated fair value(36) 
Foreign exchange 
Fair value as of June 30$71  

Available-for-sale Debt Securities and Equity Investments

Changes in fair value of equity investments are included in Other (income)/expense, net. The following table summarizes available-for-sale debt securities and equity investments:
June 30, 2020December 31, 2019
Dollars in MillionsAmortized CostGross UnrealizedAmortized CostGross Unrealized
GainsLossesFair ValueGainsLossesFair Value
Certificates of deposit$1,222  $—  $—  $1,222  $1,227  $—  $—  $1,227  
Commercial paper100  —  —  100  1,093  —  —  1,093  
Corporate debt securities905  20  —  925  1,487   (1) 1,494  
Total available-for-sale debt securities(a)
$2,227  $20