RESTRUCTURING

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities Disclosure [Text Block]

RESTRUCTURINGA 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 $1.7 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 1,400 for the nine months ended September 30, 2020.

The following tables summarize the charges and activity related to the Celgene acquisition:


Dollars in Millions	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Employee termination costs	$	133	$	386
Other termination costs	36		42
Provision for restructuring	169		428
Integration expenses	195		535
Accelerated depreciation	6		6
Asset impairments	3		42
Other	—		3
Total charges	$	373	$	1,014


Dollars in Millions	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020

Marketing, selling and administrative	$	6	$	7
Research and development	3		42
Other (income)/expense, net	364		965
Total charges	$	373	$	1,014


Dollars in Millions	Nine Months Ended September 30, 2020
Liability at January 1	$	77
Charges	372
Change in estimates	(8)
Provision for restructuring(a)	364
Foreign currency translation and other	2
Payments	(255)
Liability at September 30	$	188

(a) Excludes $64 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 September 30,				Nine Months Ended September 30,
Dollars in Millions	2020		2019		2020		2019
Employee termination costs	$	—	$	4	$	3	$	11
Other termination costs	7		6		20		21
Provision for restructuring	7		10		23		32
Accelerated depreciation	1		33		42		96
Asset impairments	2		9		44		119
Other shutdown costs	—		—		6		—
Total charges	$	10	$	52	$	115	$	247


	Three Months Ended September 30,				Nine Months Ended September 30,
Dollars in Millions	2020		2019		2020		2019
Cost of products sold	$	3	$	22	$	30	$	156
Marketing, selling and administrative	—		—		—		1
Research and development	—		20		56		58
Other (income)/expense, net	7		10		29		32
Total charges	$	10	$	52	$	115	$	247


	Nine Months Ended September 30,
Dollars in Millions	2020		2019
Liability at December 31	$	23	$	99
Cease-use liability reclassification	—		(3)
Liability at January 1	23		96
Charges	22		36
Change in estimates	1		(4)
Provision for restructuring	23		32
Foreign currency translation and other	—		(1)
Payments	(40)		(98)
Liability at September 30	$	6	$	29