RESTRUCTURING

6 Months Ended

Jun. 30, 2020

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 Millions	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Employee termination costs	$	107	$	253
Other termination costs	2		6
Provision for restructuring	109		259
Integration expenses	166		340

Asset impairments	39		39
Other	3		3
Total charges	$	317	$	641


Dollars in Millions	Three Months Ended June 30, 2020		Six Months Ended June 30, 2020

Marketing, selling and administrative	1		1
Research and development	39		39
Other (income)/expense, net	277		601
Total charges	$	317	$	641


Dollars in Millions	Six Months Ended June 30, 2020
Liability at January 1	$	77
Charges	219
Change in estimates	(7)
Provision for restructuring^(a)	212
Foreign currency translation and other	1
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 Millions	2020		2019		2020		2019
Employee termination costs	$	—	$	3	$	3	$	7
Other termination costs	6		7		13		15
Provision for restructuring	6		10		16		22
Accelerated depreciation	11		32		41		63
Asset impairments	—		109		42		110
Other shutdown costs	6		—		6		—
Total charges	$	23	$	151	$	105	$	195


	Three Months Ended June 30,						Six Months Ended June 30,
Dollars in Millions	2020		2019		2020		2019
Cost of products sold	$	11	$	122	$	27	$	134
Marketing, selling and administrative	—		—		—		1
Research and development	—		19		56		38
Other (income)/expense, net	12		10		22		22
Total charges	$	23	$	151	$	105	$	195


	Six Months Ended June 30,
Dollars in Millions	2020		2019
Liability at December 31	$	23	$	99
Cease-use liability reclassification	—		(3)
Liability at January 1	23		96
Charges	15		27
Change in estimates	1		(5)
Provision for restructuring	16		22

Payments	(31)		(74)
Liability at June 30	$	8	$	44