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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 001-01136
___________________________
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
___________________________
Delaware 22-0790350
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S Employer
Identification No.)
Route 206 & Province Line Road, Princeton, New Jersey 08543
(Address of principal executive offices) (Zip Code)
(609252-4621
(Registrant’s telephone number, including area code)

___________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 Par ValueBMYNew York Stock Exchange
1.000% Notes due 2025BMY25New York Stock Exchange
1.750% Notes due 2035BMY35New York Stock Exchange
Celgene Contingent Value RightsCELG RTNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No  
APPLICABLE ONLY TO CORPORATE ISSUERS:
At July 20, 2023, there were 2,089,102,921 shares outstanding of the Registrant’s $0.10 par value common stock.






BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
June 30, 2023
PART I—FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
*    Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index at the end of this Quarterly Report on Form 10-Q.




PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
Dollars in millions, except per share data
(UNAUDITED)

 Three Months Ended June 30,Six Months Ended June 30,
EARNINGS2023202220232022
Net product sales$10,917 $11,485 $21,965 $22,793 
Alliance and other revenues309 402 598 742 
Total Revenues11,226 11,887 22,563 23,535 
Cost of products sold(a)
2,876 2,720 5,442 5,191 
Marketing, selling and administrative1,934 1,787 3,696 3,618 
Research and development2,258 2,321 4,579 4,581 
Acquired IPRD158 400 233 733 
Amortization of acquired intangible assets2,257 2,417 4,513 4,834 
Other (income)/expense, net(116)284 (529)933 
Total Expenses9,367 9,929 17,934 19,890 
Earnings before income taxes1,859 1,958 4,629 3,645 
Income tax (benefit)/provision(218)529 285 933 
Net earnings2,077 1,429 4,344 2,712 
Noncontrolling interest4 8 9 13 
Net earnings attributable to BMS$2,073 $1,421 $4,335 $2,699 
Earnings per common share:
Basic$0.99 $0.67 $2.07 $1.26 
Diluted0.99 0.66 2.06 1.25 
(a)    Excludes amortization of acquired intangible assets.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(UNAUDITED)
 Three Months Ended June 30,Six Months Ended June 30,
COMPREHENSIVE INCOME2023202220232022
Net earnings$2,077 $1,429 $4,344 $2,712 
Other comprehensive income, net of taxes and reclassifications to earnings:
Derivatives qualifying as cash flow hedges3 301 (121)332 
Pension and postretirement benefits(11)25 (11)46 
Marketable debt securities (1) (2)
Foreign currency translation(11)(88)26 (100)
Total Other comprehensive (loss)/income(19)237 (106)276 
Comprehensive income2,058 1,666 4,238 2,988 
Comprehensive income attributable to noncontrolling interest4 8 9 13 
Comprehensive income attributable to BMS$2,054 $1,658 $4,229 $2,975 
The accompanying notes are an integral part of these consolidated financial statements.

3


BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in millions
(UNAUDITED)
 
ASSETSJune 30,
2023
December 31,
2022
Current assets:
Cash and cash equivalents$8,372 $9,123 
Marketable debt securities358 130 
Receivables10,112 9,886 
Inventories2,364 2,339 
Other current assets6,868 5,795 
Total Current assets28,074 27,273 
Property, plant and equipment6,355 6,255 
Goodwill21,163 21,149 
Other intangible assets31,303 35,859 
Deferred income taxes1,572 1,344 
Other non-current assets5,022 4,940 
Total Assets$93,489 $96,820 
LIABILITIES
Current liabilities:
Short-term debt obligations$3,020 $4,264 
Accounts payable3,069 3,040 
Other current liabilities14,061 14,586 
Total Current liabilities20,150 21,890 
Deferred income taxes751 2,166 
Long-term debt34,656 35,056 
Other non-current liabilities5,902 6,590 
Total Liabilities61,459 65,702 
Commitments and Contingencies
EQUITY
BMS Shareholders’ equity:
Preferred stock  
Common stock292 292 
Capital in excess of par value of stock45,299 45,165 
Accumulated other comprehensive loss(1,387)(1,281)
Retained earnings27,449 25,503 
Less cost of treasury stock(39,680)(38,618)
Total BMS Shareholders’ equity31,973 31,061 
Noncontrolling interest57 57 
Total Equity32,030 31,118 
Total Liabilities and Equity$93,489 $96,820 
The accompanying notes are an integral part of these consolidated financial statements.
4


BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(UNAUDITED)
 Six Months Ended June 30,
 20232022
Cash Flows From Operating Activities:
Net earnings$4,344 $2,712 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization, net4,861 5,167 
Deferred income taxes(1,634)(1,469)
Stock-based compensation259 223 
Impairment charges67 83 
Divestiture gains and royalties(417)(612)
Acquired IPRD233 733 
Equity investment losses213 952 
Other adjustments(9)219 
Changes in operating assets and liabilities:
Receivables(240)117 
Inventories(298)(12)
Accounts payable22 4 
Rebates and discounts(418)(410)
Income taxes payable(1,235)(370)
Other(891)(1,264)
Net cash provided by operating activities4,857 6,073 
Cash Flows From Investing Activities:
Sale and maturities of marketable debt securities3273,788 
Purchase of marketable debt securities(555)(3,292)
Proceeds from sales of equity investment securities67 150 
Capital expenditures(537)(525)
Divestiture and other proceeds421 594 
Acquisition and other payments, net of cash acquired(262)(909)
Net cash used in investing activities(539)(194)
Cash Flows From Financing Activities:
Short-term debt obligations, net243 130 
Issuance of long-term debt 5,926 
Repayment of long-term debt(1,879)(8,646)
Repurchase of common stock(1,155)(5,000)
Dividends(2,393)(2,335)
Stock option proceeds and other, net(39)752 
Net cash used in financing activities(5,223)(9,173)
Effect of exchange rates on cash, cash equivalents and restricted cash5 (62)
Decrease in cash, cash equivalents and restricted cash(900)(3,356)
Cash, cash equivalents and restricted cash at beginning of period9,325 14,316 
Cash, cash equivalents and restricted cash at end of period$8,425 $10,960 
The accompanying notes are an integral part of these consolidated financial statements.

5


Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS

Basis of Consolidation

Bristol-Myers Squibb Company ("BMS", "we", "our", "us" or "the 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 of the Company as of June 30, 2023 and December 31, 2022, the results of operations for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. All intercompany balances and transactions have been eliminated. These consolidated financial statements and the related footnotes should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2022 included in the 2022 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 acquisitions; impairments of intangible assets; charge-backs, cash discounts, sales rebates, returns and other adjustments; legal contingencies; and income taxes. Actual results may differ from estimates.

Reclassifications

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

Recently Adopted Accounting Standards

Fair Value Measurements

In June 2022, the FASB issued amended guidance on measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendment requires the following disclosures for equity securities subject to contractual sale restrictions: the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; the nature and remaining duration of the restriction(s); and the circumstances that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early adoption is permitted. The guidance was adopted on January 1, 2023 and the adoption did not have an impact on our consolidated financial statements.

6


Business Combinations

In October 2021, the FASB issued amended guidance on accounting for contract assets and contract liabilities from contracts with customers in a business combination. The guidance is intended to address inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized. At the acquisition date, an entity should account for the related revenue contracts in accordance with existing revenue recognition guidance generally by assessing how the acquiree applied recognition and measurement in their financial statements. The guidance was adopted on January 1, 2023 and the adoption did not have an impact on our consolidated financial statements.

Note 2. REVENUE

The following table summarizes the disaggregation of revenue by nature:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Net product sales$10,917 $11,485 $21,965 $22,793 
Alliance revenues179 199 323 387 
Other revenues130 203 275 355 
Total Revenues$11,226 $11,887 $22,563 $23,535 

The following table summarizes GTN adjustments:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Gross product sales$18,111 $17,299 $35,399 $33,949 
GTN adjustments (a)
Charge-backs and cash discounts(2,279)(1,750)(4,370)(3,513)
Medicaid and Medicare rebates(3,143)(2,624)(5,625)(4,708)
Other rebates, returns, discounts and adjustments(1,772)(1,440)(3,439)(2,935)
Total GTN adjustments(7,194)(5,814)(13,434)(11,156)
Net product sales$10,917 $11,485 $21,965 $22,793 
(a)    Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $11 million and $98 million for the three and six months ended June 30, 2023 and $123 million and $197 million for the three and six months ended June 30, 2022, respectively.
7


The following table summarizes the disaggregation of revenue by product and region:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
In-Line Products
Eliquis$3,204 $3,235 6,627 6,446 
Opdivo2,145 2,063 4,347 3,986 
Pomalyst/Imnovid847 908 1,679 1,734 
Orencia927 876 1,691 1,668 
Sprycel458 544 887 1,027 
Yervoy585 525 1,093 1,040 
Mature and other products472 512 939 1,049 
Total In-Line Products 8,638 8,663 17,263 16,950 
New Product Portfolio
Reblozyl234 172 440 328 
Abecma132 89 279 156 
Opdualag154 58 271 64 
Zeposia100 66 178 102 
Breyanzi100 39 171 83 
Onureg44 32 78 55 
Inrebic27 23 52 41 
Camzyos46 3 75 3 
Sotyktu25  41  
Total New Product Portfolio862 482 1,585 832 
Total In-Line Products and New Product Portfolio9,500 9,145 18,848 17,782 
Recent LOE Products(a)
Revlimid1,468 2,501 3,218 5,298 
Abraxane258 241 497 455 
Total Recent LOE Products1,726 2,742 3,715 5,753 
Total revenues$11,226 $11,887 $22,563 $23,535 
United States$7,891 $8,268 $15,924 $15,962 
International3,160 3,427 6,309 7,154 
Other(b)
175 192 330 419 
Total revenues$11,226 $11,887 $22,563 $23,535 
(a)    Recent LOE Products include products with significant decline in revenue from the prior reporting period as a result of a loss of exclusivity.
(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 $75 million and $241 million for the three and six months ended June 30, 2023 and $184 million and $331 million for the three and six months ended June 30, 2022, respectively, consisting primarily of royalties for out-licensing arrangements and revised estimates for GTN adjustments related to prior period sales.

Note 3. 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 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.

8


Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Revenues from alliances
Net product sales$3,320 $3,273 6,852 $6,512 
Alliance revenues179 199 323 387 
Total alliance revenues$3,499 $3,472 7,175 $6,899 
To/(from) alliance partners
Cost of products sold$1,614 $1,572 $3,320 $3,128 
Marketing, selling and administrative(64)(53)(138)(107)
Research and development36 12 80 34 
Acquired IPRD 55 100 55 100 
Other (income)/expense, net(15)(11)(27)(23)

Dollars in millionsJune 30,
2023
December 31,
2022
Selected alliance balance sheet information
Receivables – from alliance partners$287 $317 
Accounts payable – to alliance partners1,613 1,249 
Deferred income – from alliances(a)
300 289 
(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 2022 Form 10-K. Significant developments and updates related to alliances during the six months ended June 30, 2023 and 2022 are set forth below.

BridgeBio

During the second quarter of 2022, BMS and BridgeBio commenced a collaboration to develop and commercialize BBP-398, a SHP2 inhibitor, in oncology. The transaction included an upfront payment of $90 million expensed to Acquired IPRD during the second quarter of 2022. BridgeBio is eligible to receive contingent development, regulatory and sales-based milestones up to $815 million, as well as royalties on global net sales, excluding certain markets. BridgeBio is responsible for funding and completing ongoing BBP-398 Phase I monotherapy and combination therapy trials. BMS will lead and fund all other development and commercial activities. BridgeBio has an option to co-develop BBP-398 and receive higher royalties in the U.S.

9


Note 4. DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS

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 were not material in all periods presented (excluding divestiture gains or losses).
Three Months Ended June 30,
Net ProceedsDivestiture (Gains)/LossesRoyalty Income
Dollars in millions202320222023202220232022
Diabetes business - royalties
$185 $185 $ $ $(218)$(220)
Mature products and other3 3    (1)
Total$188 $188 $ $ $(218)$(221)
Six Months Ended June 30,
Net ProceedsDivestiture (Gains)/LossesRoyalty Income
Dollars in Millions202320222023202220232022
Diabetes business - royalties$401 $357 $ $ $(406)$(390)
Mature products and other (a)
7 228  (211) (2)
Total$408 $585 $ $(211)$(406)$(392)
(a)    Includes cash proceeds of $221 million and a divestiture gain of $211 million related to the sale of several mature products to Cheplapharm in the first quarter of 2022.

Mature Products and Other

Manufacturing Operations

During the second quarter of 2022, BMS agreed to sell its manufacturing facility in Syracuse, New York to LOTTE Corporation and accounted for the business as held-for-sale resulting in a $63 million impairment charge recorded to Cost of products sold. Assets and liabilities reclassified to held-for-sale were included within Other current assets and Other current liabilities and were $172 million and $20 million, respectively, as of December 31, 2022. In January 2023, BMS completed the sale resulting in cash proceeds of $159 million, which was received in December 2022.

Licensing and Other Arrangements

The following table summarizes the financial impact of Keytruda* royalties, Tecentriq* royalties, upfront licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.

Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Keytruda* royalties
$(284)$(243)$(563)$(464)
Tecentriq* royalties
(24)(19)(54)(44)
Contingent milestone income(5)(5)(36)(46)
Amortization of deferred income(15)(11)(27)(23)
Other royalties and licensing income (12)(9)(23)(16)
Total$(340)$(287)$(703)$(593)

Keytruda* Patent License Agreement

In 2017, BMS and Ono entered a global patent license agreement with Merck related to Merck's PD-1 antibody Keytruda*. In accordance with the agreement, Merck is obligated to pay ongoing royalties on global sales of Keytruda* of 6.5% from January 1, 2017 through December 31, 2023, and 2.5% from January 1, 2024 through December 31, 2026. The companies also granted certain rights to each other under their respective patent portfolios pertaining to PD-1. Payments and royalties are shared between BMS and Ono on a 75/25 percent allocation, respectively after adjusting for each party's legal fees.

10


Immatics

During the first quarter of 2022, BMS obtained a global exclusive license to Immatics' TCR bispecific IMA401 program, which is being studied in oncology. BMS and Immatics collaborate on the development and BMS will be responsible for the commercialization of IMA401 worldwide, including strategic decisions, regulatory responsibilities, funding and manufacturing. Immatics has the option to co-fund U.S. development in exchange for enhanced U.S. royalty payments and/or to co-promote IMA401 in the U.S. The transaction included an upfront payment of $150 million which was expensed to Acquired IPRD in the first quarter of 2022. Immatics is eligible to receive contingent development, regulatory and sales-based milestones of up to $770 million as well as royalties on global net sales.

Dragonfly

During the first quarter of 2022, a Phase I development milestone for interleukin-12 ("IL-12") was achieved resulting in a $175 million payment to Dragonfly and an Acquired IPRD charge. During the first quarter of 2023, BMS notified Dragonfly of its termination of the global exclusive license related to Dragonfly’s IL-12. All rights to IL-12 were reverted back to Dragonfly effective April 18, 2023.

Other

Nimbus Change of Control Income

During the first quarter of 2022, BMS and Nimbus Therapeutics ("Nimbus") entered into a settlement resolving all legal claims and business interests pertaining to Nimbus' TYK2 inhibitor resulting in $40 million of income included in Other (income)/expense. The settlement also provides for BMS to receive additional amounts for contingent development, regulatory approval and sales-based milestones and 10% of any change in control proceeds received by Nimbus related to its TYK2 inhibitor. In February 2023, Takeda acquired 100% ownership of Nimbus' TYK2 inhibitor for approximately $4.0 billion in upfront proceeds plus contingent sales-based milestones aggregating up to $2.0 billion. As a result, $400 million of income related to the change of control provision was included in Other (income)/expense during the first quarter of 2023.

Royalty Extinguishment

During the second quarter of 2022, BMS amended the terms of a license arrangement and paid a third party $295 million, which was expensed to Acquired IPRD, to extinguish a future royalty obligation related to mavacamten prior to its FDA approval in April 2022.

Note 5. OTHER (INCOME)/EXPENSE, NET
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Interest expense (Note 10)$282 $313 $570 $639 
Royalty and licensing income (Note 4)(340)(287)(703)(593)
Royalty income - divestiture (Note 4)(218)(221)(406)(392)
Equity investment losses (Note 9)58 308 213 952 
Integration expenses (Note 6)59 124 126 229 
(Gain)/Loss on debt redemption (Note 10) (9) 266 
Divestiture gains (Note 4)   (211)
Litigation and other settlements (a)
(7)25 (332)(12)
Investment income(95)(27)(197)(37)
Provision for restructuring (Note 6)113 20 180 43 
Other32 38 20 49 
Other (income)/expense, net$(116)$284 $(529)$933 
(a)    Includes $400 million of income recorded in connection with Nimbus' TYK2 program change of control provision during the first quarter of 2023. Refer to "—Note 4. Divestitures, Licensing and Other Arrangements" for further information.

11


Note 6. RESTRUCTURING

2023 Restructuring Plan

In 2023, BMS commenced a restructuring plan to accelerate the delivery of medicines to patients by evolving and streamlining its enterprise operating model in key areas, such as R&D, manufacturing, commercial and other functions, to ensure its operating model supports and is appropriately aligned with the Company’s strategy to invest in key priorities. These changes primarily include (i) transforming R&D operations to accelerate pipeline delivery (ii) enhancing our commercial operating model, and (iii) establishing a more responsive manufacturing network and expansion of cell therapy manufacturing capabilities. Charges of approximately $1.0 billion are expected to be incurred through 2025, consisting primarily of employee termination costs and to a lesser extent site exit costs, including impairment and accelerated depreciation of property, plant and equipment.

Celgene and Other Acquisition Plans

Restructuring and integration plans were initiated to realize expected cost synergies resulting from cost savings and avoidance from the acquisition of Celgene (2019), MyoKardia (2020) and Turning Point (2022). As part of these plans, the Company expects to incur charges of approximately $3.8 billion. Cumulative charges of approximately $3.4 billion have been recognized to date 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. The remaining charges related to the acquisition of Celgene are primarily related to IT system integration which are expected to be incurred through 2024.

The following provides the charges related to restructuring initiatives by type of cost:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
2023 Restructuring Plan$170 $ $231 $ 
Celgene and Other Acquisition Plans64 148 138 278 
Total charges$234 $148 $369 $278 
Employee termination costs$109 $19 $174 $41 
Other termination costs4 1 6 2 
Provision for restructuring113 20 180 43 
Integration expenses59 124 126 229 
Accelerated depreciation12 4 13 6 
Asset impairments50  50  
Other shutdown costs    
Total charges$234 $148 $369 $278 
Cost of products sold$36 $ $37 $ 
Marketing, selling and administrative20 4 20 6 
Research and Development6  6  
Other (income)/expense, net172 144 306 272 
Total charges$234 $148 $369 $278 

The following summarizes the charges and spending related to restructuring plan activities:
Six Months Ended June 30,
Dollars in millions20232022
Beginning balance $47 $101 
Provision for restructuring(a)
180 43 
Foreign currency translation and other1 (6)
Payments(48)(67)
Ending balance$180 $71 
(a)    Includes a reduction of the liability resulting from changes in estimates of $4 million and $8 million for the six months ended June 30, 2023 and 2022, respectively.

12


Note 7. INCOME TAXES
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Earnings before income taxes$1,859 $1,958 $4,629 $3,645 
Income tax (benefit)/provision(218)529 285 933 
Effective tax rate(11.7)%27.0 %6.2 %25.6 %

Provision for income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The effective tax rate during the three and six months ended June 30, 2023 was primarily impacted by a $656 million deferred income tax benefit following the receipt of a non-U.S. tax ruling regarding the deductibility of a statutory impairment of subsidiary investments. In addition, the effective tax rate during the six months of 2023 was impacted by jurisdictional earnings mix resulting from amortization of acquired intangible assets, equity investment losses, litigation and other settlements, as well as releases of income tax reserves of $89 million related to the resolution of Celgene's 2009-2011 IRS audits, partially offset by the impact of changes in the Puerto Rico tax decree that eliminated a previously creditable excise tax. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code. Income tax payments were $3.1 billion and $2.7 billion for the six months ended June 30, 2023 and 2022, respectively.

BMS is currently under examination by a number of tax authorities that 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. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax issues for the 2008 to 2012 tax years. BMS disagrees with the IRS's positions and continues to work cooperatively with the IRS to resolve these issues. In the fourth quarter of 2022, BMS entered the IRS administrative appeals process to resolve these matters. Timing of the final resolution of these complex matters is uncertain and could have a material impact on BMS's consolidated financial statements.

It is reasonably possible that the amount of unrecognized tax benefits as of June 30, 2023 could decrease in the range of approximately $40 million to $60 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 jurisdiction.

Note 8. EARNINGS PER SHARE
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions, except per share data2023202220232022
Net earnings attributable to BMS $2,073 $1,421 $4,335 $2,699 
Weighted-average common shares outstanding – basic2,093 2,133 2,096 2,140 
Incremental shares attributable to share-based compensation plans9 16 11 17 
Weighted-average common shares outstanding – diluted2,102 2,149 2,107 2,157 
Earnings per common share
Basic$0.99 $0.67 $2.07 $1.26 
Diluted$0.99 0.66 $2.06 1.25 

The total number of potential shares of common stock excluded from the diluted earnings per common share computation because of the antidilutive impact was not material for the three and six months ended June 30, 2023 and 2022.

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Note 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
June 30, 2023December 31, 2022
Dollars in millionsLevel 1Level 2Level 3Level 1Level 2Level 3
Cash and cash equivalents
Money market and other securities$ $6,644 $ $ $7,770 $ 
Marketable debt securities
Certificates of deposit 358   32  
Commercial paper    98  
Derivative assets 357   305  
Equity investments336 512  424 680  
Derivative liabilities 180   213  
Contingent consideration liability
Contingent value rights5   5   
Other acquisition related contingent consideration  9   24 

As further described in "Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements" in the Company's 2022 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). The fair value of Level 2 equity investments is adjusted for characteristics specific to the security and is not adjusted for contractual sale restrictions. Equity investments subject to contractual sale restrictions were not material as of December 31, 2022 and the restrictions expired in April 2023.

Marketable Debt Securities

The following table summarizes marketable debt securities:
June 30, 2023December 31, 2022
Dollars in millionsAmortized CostGross UnrealizedAmortized CostGross Unrealized
GainsLossesFair ValueGainsLossesFair Value
Certificates of deposit$358 $ $ $358 $32 $ $ $32 
Commercial paper    98   98 
Total marketable debt securities(a)
$358 $ $ $358 $130 $ $ $130 
(a)    All marketable debt securities mature within one year as of June 30, 2023, and December 31, 2022.

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Equity Investments

The following summarizes the carrying amount of equity investments:
Dollars in millionsJune 30,
2023
December 31,
2022
Equity investments with readily determinable fair values$848 $1,104 
Equity investments without readily determinable fair values623 537 
Limited partnerships and other equity method investments520 546 
Total equity investments$1,991 $2,187 

The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Equity investments with readily determinable fair values
Net loss recognized47 254 188 852 
Less: net gain recognized on investments sold(11)(16)(12)(16)
Net unrealized loss recognized on investments still held58 270 200 868 
Equity investments without readily determinable fair values
Upward adjustments  (6)(6)
Impairments and downward adjustments   2 
Equity in net loss of affiliates11 54 31 104 
Total equity investment losses58 308 213 952 

Cumulative upwards adjustments and cumulative impairments and downward adjustments based on observable price changes in equity investments without readily determinable fair values still held as of June 30, 2023 were $186 million and $61 million, respectively.

Qualifying Hedges and Non-Qualifying Derivatives
Cash Flow Hedges

BMS enters into foreign currency forward and purchased local currency put option contracts (foreign exchange contracts) to hedge certain forecasted intercompany inventory sales and certain other foreign currency transactions. The objective of these foreign exchange contracts is to reduce variability caused by changes in foreign exchange rates that would affect the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro and Japanese yen. The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the consolidated balance sheets. Changes in fair value for these foreign exchange contracts, which are designated as cash flow hedges, are temporarily recorded in Accumulated other comprehensive loss ("AOCL") and reclassified to net earnings when the hedged item affects earnings (typically within the next 24 months). As of June 30, 2023, assuming market rates remain constant through contract maturities, we expect to reclassify pre-tax gains of $111 million into Cost of products sold for our foreign exchange contracts out of AOCL during the next 12 months. The notional amount of outstanding foreign currency exchange contracts was primarily $5.1 billion for the euro contracts and $1.2 billion for Japanese yen contracts as of June 30, 2023.

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BMS also enters into cross-currency swap contracts to hedge exposure to foreign currency exchange rate risk associated with its long-term debt denominated in euros. These contracts convert interest payments and principal repayment of the long-term debt to U.S. dollars from euros and are designated as cash flow hedges. The unrealized gains and losses on these contracts are reported in AOCL and reclassified to Other (income)/expense, net, in the same periods during which the hedged debt affects earnings. The notional amount of cross-currency swap contracts associated with long-term debt denominated in euros was $1.2 billion as of June 30, 2023.

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. The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not material during all periods presented. Foreign currency exchange contracts not designated as a cash flow hedge 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.

Net Investment Hedges

Cross-currency swap contracts of $1.7 billion as of June 30, 2023 are designated to hedge currency exposure of BMS's net investment in its foreign subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of AOCL with a related offset in derivative asset or liability in the consolidated balance sheets. The notional amount of outstanding cross-currency swap contracts was primarily attributed to the Japanese yen of $650 million and euro of $780 million as of June 30, 2023.

During the first quarter of 2023, the Company de-designated its remaining net investment hedge in debt denominated in euros of €375 million. The related net investment hedge was entered into to hedge euro currency exposures of the net investment in certain foreign affiliates and was recognized in Long-term debt. The effective portion of foreign exchange gain or loss on the remeasurement of debt denominated in euros was included in the foreign currency translation component of AOCL with the related offset in Long-term debt.

During the three and six months ended June 30, 2023, the amortization of gains related to the portion of our net investment hedges that was excluded from the assessment of effectiveness was not material.

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. 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 in the consolidated balance sheets. As a result, there was no net impact in earnings. If the underlying swap is terminated prior to maturity, then the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.

Derivative cash flows, with the exception of net investment hedges, are principally classified in the operating section of the consolidated statements of cash flows, consistent with the underlying hedged item. Cash flows related to net investment hedges are classified in investing activities.

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The following table summarizes the fair value and the notional values of outstanding derivatives:
 June 30, 2023December 31, 2022
Asset(a)
Liability(b)
Asset(a)
Liability(b)
Dollars in millionsNotionalFair ValueNotionalFair ValueNotionalFair ValueNotionalFair Value
Designated as cash flow hedges
Foreign currency exchange contracts
$5,831 $243 $1,656 $(79)$5,771 $271 $2,281 $(80)
Cross-currency swap contracts1,210 20     584 (7)
Designated as net investment hedges
Cross-currency swap contracts561 13 1,167 (48)72 1 1,157 (78)
Designated as fair value hedges
Interest rate swap contracts  3,755 (23)  255 (18)
Not designated as hedges
Foreign currency exchange contracts2,370 66 2,334 (30)1,564 33 1,703 (19)
Total return swap contracts (c)
374 15     322 (11)
(a)    Included in Other current assets and Other non-current assets.
(b)    Included in Other current liabilities and Other non-current liabilities.
(c)    Total return swap contracts hedge changes in fair value of certain deferred compensation liabilities.

The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedges:
Three Months Ended June 30, 2023Six Months Ended June 30, 2023
Dollars in millionsCost of products soldOther (income)/expense, netCost of products soldOther (income)/expense, net
Foreign currency exchange contracts$(90)$(44)$(210)$(60)
Cross-currency swap contracts (5) (28)
Interest rate swap contracts (4) (7)
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
Dollars in millionsCost of products soldOther (income)/expense, netCost of products soldOther (income)/expense, net
Foreign currency exchange contracts$(131)$(18)$(213)$(75)
Cross-currency swap contracts (4) (8)
Interest rate swap contracts (7) (18)

The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:
Three Months Ended June 30,Six Months Ended June 30,
Dollars in millions2023202220232022
Derivatives designated as cash flow hedges
Foreign exchange contracts gain/(loss):
Recognized in Other comprehensive income$60 $481 $53 $601 
Reclassified to Cost of products sold(90)(131)(210)(213)
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income34  28  
Reclassified to Other (income)/expense, net4  (9) 
Forward starting interest rate swap contract loss:
Reclassified to Other (income)/expense, net   (3)
Derivatives designated as net investment hedges
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income34 51 3564
Non-derivatives designated as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in Other comprehensive income 68