UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~Washington, D.C. 20549

___________________________

FORM 10-Q

~~(Mark One)~~



	x	~~QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018~~



	¨	~~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:~~x ~~1-1136~~QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

¨ 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 1-1136

___________________________

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.~~I.R.S Employer Identification No.)

430 E. 29th Street, 14FL, New York, N.Y. 10016

(Address of principal executive offices) ~~(Zip Code)~~

(212) 546-4000

(Registrant’s telephone number, including area ~~code)~~code)

___________________________

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

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes x 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 ~~“accelerated filer”,~~ “large accelerated ~~filer”~~filer,” “accelerated filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	~~Large accelerated filer~~ x ~~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 x

APPLICABLE ONLY TO CORPORATE ISSUERS:

At ~~June 30, 2018,~~March 31, 2019, there were ~~1,631,876,909~~1,635,705,782 shares outstanding of the Registrant’s $0.10 par value common stock.

BRISTOL-MYERS SQUIBB COMPANY

INDEX TO FORM 10-Q

~~JUNE 30, 2018~~

March 31, 2019




PART I—FINANCIAL INFORMATION

Item 1.
Financial Statements:
Consolidated Statements of Earnings and Comprehensive Income	3
Consolidated Balance Sheets	4
Consolidated Statements of Cash Flows	5
Notes to Consolidated Financial Statements	6

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.
Quantitative and Qualitative Disclosure About Market Risk	3839

Item 4.
Controls and Procedures	3839

PART II—OTHER INFORMATION

Item 1.
Legal Proceedings	3839

Item 1A.
Risk Factors	3839

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 6.
Exhibits	3940

Summary of Abbreviated Terms	4041
Signatures	4142

* Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index.


*	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,						Three Months Ended March 31,
EARNINGS	2018			2017			2018			2017			2019			2018
Net product sales	$	5,461		$	4,770		$	10,433		$	9,350		$	5,713		$	4,972
Alliance and other revenues	243			374			464			723			207			221
Total Revenues	5,704			5,144			10,897			10,073			5,920			5,193

Cost of products sold	1,625			1,569			3,209			2,834			1,844			1,584
Marketing, selling and administrative	1,131			1,187			2,111			2,272			1,006			980
Research and development	2,435			1,679			3,685			2,982			1,351			1,250
Other income (net)	(4		)	(586		)	(404		)	(1,265		)	(260		)	(400		)
Total Expenses	5,187			3,849			8,601			6,823			3,941			3,414

Earnings Before Income Taxes	517			1,295			2,296			3,250			1,979			1,779
Provision for Income Taxes	135			373			419			802			264			284
Net Earnings	382			922			1,877			2,448			1,715			1,495
Noncontrolling Interest	9			6			18			(42		)	5			9
Net Earnings Attributable to BMS	$	373		$	916		$	1,859		$	2,490		$	1,710		$	1,486

Earnings per Common Share
Basic	$	0.23		$	0.56		$	1.14		$	1.51		$	1.05		$	0.91
Diluted	0.23			0.56			1.13			1.50			1.04			0.91

Cash dividends declared per common share	$	0.40		$	0.39		$	0.80		$	0.78

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dollars in Millions

(UNAUDITED)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
COMPREHENSIVE INCOME	2018			2017			2018			2017			2019		2018
Net Earnings	$	382		$	922		$	1,877		$	2,448		$	1,715	$	1,495
Other Comprehensive Income/(Loss), net of taxes and reclassifications to earnings:
Derivatives qualifying as cash flow hedges	85			(31		)	66			(60		)	14		(19		)
Pension and postretirement benefits	43			(27		)	172			56			49		129
Available-for-sale securities	(7		)	13			(33		)	19			26		(26		)
Foreign currency translation	(221		)	(8		)	(216		)	21			29		5
Other Comprehensive Income	(100		)	(53		)	(11		)	36
Other Comprehensive Income/(Loss)													118		89

Comprehensive Income	282			869			1,866			2,484			1,833		1,584
Noncontrolling Interest	9			6			18			(42		)
Comprehensive Income Attributable to Noncontrolling Interest													5		9
Comprehensive Income Attributable to BMS	$	273		$	863		$	1,848		$	2,526		$	1,828	$	1,575

The accompanying notes are an integral part of these consolidated financial statements.

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED BALANCE SHEETS

Dollars in Millions

(UNAUDITED)


ASSETS	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Current Assets:
Cash and cash equivalents	$	4,999		$	5,421		$	7,335		$	6,911
Marketable securities	1,076			1,391			1,429			1,973
Receivables	5,559			6,300			5,704			5,965
Inventories	1,242			1,166			1,283			1,195
Prepaid expenses and other	998			576			1,342			1,116
Total Current Assets	13,874			14,854			17,093			17,160
Property, plant and equipment	5,080			5,001			4,985			5,027
Goodwill	6,683			6,863			6,536			6,538
Other intangible assets	1,090			1,210			1,026			1,091
Deferred income taxes	1,517			1,610			1,380			1,371
Marketable securities	2,117			2,480			1,233			1,775
Other assets	2,280			1,533			2,581			2,024
Total Assets	$	32,641		$	33,551		$	34,834		$	34,986

LIABILITIES
Current Liabilities:
Short-term debt obligations	$	1,716		$	987		$	381		$	1,703
Accounts payable	1,873			2,248			1,976			1,892
Accrued liabilities	5,828			6,014			5,856			6,489
Deferred income	88			83			103			172
Income taxes payable	373			231			525			398
Total Current Liabilities	9,878			9,563			8,841			10,654
Deferred income	501			454			448			468
Income taxes payable	3,107			3,548			3,084			3,043
Pension and other liabilities	1,066			1,164			1,509			1,048
Long-term debt	5,671			6,975			5,635			5,646
Total Liabilities	20,223			21,704			19,517			20,859

Commitments and contingencies

EQUITY
Bristol-Myers Squibb Company Shareholders’ Equity:
Preferred stock	—			—			—			—
Common stock	221			221			221			221
Capital in excess of par value of stock	1,966			1,898			2,103			2,081
Accumulated other comprehensive loss	(2,334		)	(2,289		)	(2,644		)	(2,762		)
Retained earnings	32,044			31,160			35,109			34,065
Less cost of treasury stock	(19,580		)	(19,249		)	(19,571		)	(19,574		)
Total Bristol-Myers Squibb Company Shareholders’ Equity	12,317			11,741			15,218			14,031
Noncontrolling interest	101			106			99			96
Total Equity	12,418			11,847			15,317			14,127
Total Liabilities and Equity	$	32,641		$	33,551		$	34,834		$	34,986

The accompanying notes are an integral part of these consolidated financial statements.

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dollars in Millions

(UNAUDITED)


	Six Months Ended June 30,						Three Months Ended March 31,
	2018			2017			2019			2018
Cash Flows From Operating Activities:
Net earnings	$	1,877		$	2,448		$	1,715		$	1,495
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization, net	300			404			170			143
Deferred income taxes	(37		)	21			2			160
Stock-based compensation	106			99			53			55
Impairment charges	104			219			45			80
Pension settlements and amortization	104			107			66			50
Divestiture gains and royalties	(497		)	(411		)	(166		)	(255		)
Asset acquisition charges	85			200			—			60
Loss/(gain) on equity investments	341			(12		)
Equity investment gains							(175		)	(15		)
Other adjustments	(27		)	111			(6		)	(14		)
Changes in operating assets and liabilities:
Receivables	112			(454		)	236			219
Inventories	(122		)	(58		)	35			(4		)
Accounts payable	(101		)	(85		)	136			(241		)
Deferred income	92			(2		)	15			23
Income taxes payable	216			465			196			114
Other	(321		)	(607		)	(932		)	(695		)
Net Cash Provided by Operating Activities	2,232			2,445			1,390			1,175
Cash Flows From Investing Activities:
Sale and maturities of marketable securities	1,080			2,283			1,350			442
Purchase of marketable securities	(447		)	(3,041		)	(242		)	(285		)
Capital expenditures	(437		)	(539		)	(204		)	(239		)
Divestiture and other proceeds	583			389			171			375
Acquisition and other payments	(1,170		)	(319		)	(15		)	(336		)
Net Cash Used in Investing Activities	(391		)	(1,227		)
Net Cash Provided by/(Used in) Investing Activities							1,060			(43		)
Cash Flows From Financing Activities:
Short-term debt obligations, net	(546		)	300			(73		)	(344		)
Issuance of long-term debt	—			1,488
Repayment of long-term debt	(5		)	(474		)	(1,250		)	—
Repurchase of common stock	(320		)	(2,000		)	—			(167		)
Dividends	(1,307		)	(1,298		)	(669		)	(653		)
Other	(59		)	(35		)	(37		)	(58		)
Net Cash Used in Financing Activities	(2,237		)	(2,019		)	(2,029		)	(1,222		)
Effect of Exchange Rates on Cash and Cash Equivalents	(26		)	34			3			11
Decrease in Cash and Cash Equivalents	(422		)	(767		)
Net Increase/(Decrease) in Cash and Cash Equivalents							424			(79		)
Cash and Cash Equivalents at Beginning of Period	5,421			4,237			6,911			5,421
Cash and Cash Equivalents at End of Period	$	4,999		$	3,470		$	7,335		$	5,342

The accompanying notes are an integral part of these consolidated financial statements.

Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS

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, 2018~~March 31, 2019 and December 31, ~~2017,~~2018 and the results of operations ~~for the three and six months ended June 30, 2018 and 2017,~~ and cash flows for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017.~~2018. All intercompany balances and transactions have been eliminated. These financial statements and the related notes should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2017~~2018 included in the ~~2017~~2018 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.

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 sales rebate and return accruals; legal contingencies; income taxes; determining if an acquisition or divestiture is a business or an asset; and pension and postretirement benefits. Actual results may differ from estimates.

Certain prior period amounts were reclassified to conform to the current period presentation. Loss/(gain) on equity investments previously presented in Other adjustments in the consolidated statements of cash flows is now presented separately. The reclassification provides a more detailed financial statement presentation.

~~Recently Adopted Accounting Standards~~

~~Revenue from Contracts with Customers~~

Amended guidance for revenue recognition was adopted in the first quarter of 2018 using the modified retrospective method with the cumulative effect of the change recognized in Retained earnings. The new guidance, referred to as ASC 606, requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers and replaces most of the existing revenue recognition standards in U.S. GAAP. A five-step model is utilized to achieve the core principle: (1) identify the customer contract; (2) identify the contract’s performance obligation; (3) determine the transaction price; (4) allocate the transaction price to the performance obligation; and (5) recognize revenue when or as a performance obligation is satisfied.Business Segment Information

The timing of recognizing revenue for typical net product sales to our customers did not significantly change. However, transaction prices are no longer required to be fixed or determinable and certain variable consideration might be recognized prior to the occurrence or resolution of the contingent event. As a result, certain revenue previously deferred under the prior standard because the transaction price was not fixed or determinable is now accounted for as variable consideration and might be recognized earlier provided such terms are sufficient to reliably estimate the ultimate price expected to be realized.

Estimated future royalties and contingent fees related to certain alliance arrangements are now recognized prior to the third party sale or event occurring to the extent it is probable that a significant reversal in the amount of estimated cumulative revenue will not occur. The new guidance pertaining to the separation of licensing rights and related fee recognition did not significantly change the timing of recognizing revenue in our existing alliance arrangements that are currently generating revenue. The timing of royalties, sales-based milestones and other forms of contingent consideration resulting from the divestiture of businesses as well as royalties and sales-based milestones from licensing arrangements did not change.

The cumulative effect of the accounting change resulted in recognizing contract assets of $214 million and a $168 million increase in Retained earnings net of tax. The cumulative effect was primarily attributed to royalties and licensing rights reacquired by alliance partners that are expected to be received in the future and are not eligible for the licensing exclusion. As a result of the new guidance and cumulative effect adjustment, revenue was approximately $57 million and $118 million lower in the three and six months ended June 30, 2018, respectively, compared to what would have been reported under the previous guidance. Refer to "—Note 3. Revenue Recognition" for further information.

~~Gains and Losses from the Derecognition of Nonfinancial Assets~~

Amended guidance for gains and losses from the derecognition of nonfinancial assets (ASC 610) was adopted in the first quarter of 2018 using the modified retrospective method. The amendments clarify the scope of asset derecognition guidance, add guidance for partial sales of nonfinancial assets and clarify recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. Certain transactions such as the sale or out-licensing of product rights that do not constitute a business will require accounting similar to ASC 606 including the potential recognition of variable consideration. The amended guidance may result in earlier recognition of variable consideration depending on the facts and circumstances of each transaction.

The cumulative effect of the accounting change resulted in recognizing contract assets of $167 million and a $130 million increase in Retained earnings net of tax. The cumulative effect was primarily attributed to royalties and termination fees for licensing rights reacquired by third parties that are expected to be received in the future and are not eligible for the licensing exclusion. As a result of the new guidance and cumulative effect adjustment, Other income (net) was approximately $5 million and $12 million lower in the three and six months ended June 30, 2018, respectively, compared to what would have been reported under the previous guidance.

~~Presentation of Net Periodic Pension and Postretirement Benefits~~

Amended guidance requiring all net periodic benefit components for defined benefit pension and other postretirement plans other than service costs to be recorded outside of income from operations (other income) was adopted in the first quarter of 2018 on a retrospective basis. Cost of products sold; Marketing, selling and administrative; and Research and development expenses increased in the aggregate with a corresponding offset in Other income (net).

~~As adjusted amounts upon adoption of the new guidance are as follows:~~

Three Months Ended June 30, 2017 Six Months Ended June 30, 2017
Dollars in Millions As Previously Reported As Adjusted As Previously Reported As Adjusted
Cost of products sold $ 1,562
$ 1,569
$ 2,821
$ 2,834
Marketing, selling and administrative 1,167
1,187
2,241
2,272
Research and development 1,659
1,679
2,947
2,982
Other income (net) (539 ) (586 ) (1,186 ) (1,265 )

~~Definition of a Business~~

Amended guidance which revises the definition of a business was adopted prospectively in the first quarter of 2018. The amendment provides an initial screen that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, an integrated set of assets and activities would not represent a business. If the screen is not met, the set must include an input and a substantive process that together significantly contributes to the ability to create outputs for the set to represent a business. The amendment also narrows the definition of the term "output" and requires the transfer of an organized work force when outputs do not exist. The amended guidance may result in more transactions being accounted for as assets in the future with the impact to our results of operations dependent on the individual facts and circumstances of each transaction.

~~Recognition and Measurement of Financial Assets and Liabilities~~

Amended guidance for the recognition, measurement, presentation and disclosure of financial instruments was adopted using the modified retrospective method in the first quarter of 2018. The new guidance requires that fair value adjustments for equity investments with readily determinable fair values be reported through earnings. The new guidance also requires a qualitative impairment assessment for equity investments without a readily determinable fair value based upon observable price changes and a charge through earnings if an impairment exists. The cumulative effect of the accounting change resulted in a $36 million reduction to Other Comprehensive Income and a corresponding increase to Retained earnings ($34 million net of tax). Losses related to equity investment fair value adjustments of $356 million and $341 million were recorded in Other income (net) for the three and six months ended June 30, 2018, respectively, and additional volatility is expected in future results of operations.

~~Accounting for Hedging Activities~~

Amended guidance for derivatives and hedging was adopted using the modified retrospective method in the first quarter of 2018. The amended guidance revises and expands items eligible for hedge accounting, simplifies hedge effectiveness testing and changes the timing of recognition and presentation for certain hedged items. Certain disclosure requirements were also modified for hedging activities on a prospective basis. The adoption of the amended standard did not have a material impact on the Company's results of operations.

~~Recently Issued Accounting Standards Not Yet Adopted~~

~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

In February 2018, the FASB issued amended guidance on income tax accounting. The amended guidance permits the reclassification of the income tax effect on amounts recorded within Other Comprehensive Income impacted by the Tax Cuts and Jobs Act into Retained earnings. The amended guidance is effective for periods ending after December 15, 2018 and applies only to those amounts remaining in Other Comprehensive Income at the date of enactment of the Act. The amended guidance may be adopted on either a retrospective basis or at the beginning of the period of adoption. The Company ~~is assessing the potential impact of the amended standard.~~

~~In addition, the following recently issued accounting standards have not been adopted. Refer to the 2017 Form 10-K for additional information and their potential impacts.~~



~~Accounting Standard Update~~	~~Effective Date~~
~~Leases~~	~~January 1, 2019~~
~~Financial Instruments - Measurement of Credit Losses~~	~~January 1, 2020~~
~~Goodwill Impairment Testing~~	~~January 1, 2020~~

~~Note 2. 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. The determination of a single segment is consistent with the financial information regularly reviewed by the chief executive officer for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional ~~revenues,~~revenue, see "—“—Note ~~3. Revenue Recognition."~~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 sales rebate and return accruals; legal contingencies; income taxes; and pension and postretirement benefits. Actual results may differ from estimates.

Reclassification

Certain prior period amounts were reclassified to conform to the current period presentation. Equity investment gains previously presented in Other adjustments in the consolidated statements of cash flows is now presented separately.

Recently Adopted Accounting Standards

Leases

Amended guidance for lease accounting was adopted on January 1, 2019 using the modified retrospective method with the cumulative effect of the change recognized in retained earnings in the period of adoption. The new guidance requires an entity to recognize a right-of-use asset and a lease liability initially measured at the present value of future lease payments. The cumulative effect of the accounting change was not material. The Company elected the package of practical expedients upon adoption, and will apply the practical expedient not to separate lease and non-lease components for new and modified leases commencing after adoption. In addition, the Company applied the short-term lease recognition exemption for leases with terms at inception not greater than 12 months. The amended guidance does not materially impact the Company’s results of operations other than recognition of the operating lease right-of-use asset and lease liability.

Goodwill Impairment Testing

Amended guidance that simplifies the recognition and measurement of a goodwill impairment loss by eliminating Step 2 of the quantitative goodwill impairment test was adopted prospectively in the first quarter of 2019. Under the amended guidance, a goodwill impairment loss is recognized for the amount by which the reporting units carrying amount, including goodwill, exceeds its fair value up to the amount of its allocated goodwill. The adoption of the amended guidance did not have an impact on the Company’s results of operations.

Recently Issued Accounting Standards Not Yet Adopted

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. The guidance is effective January 1, 2020 with early adoption permitted in 2019 on a modified retrospective approach. The amended guidance is not expected to materially impact the Company’s results of operations.

Note 3.2. REVENUE ~~RECOGNITION~~

The following table summarizes the disaggregation of revenue by nature:

Three Months Ended June 30, Six Months Ended June 30,
Dollars in Millions 2018 2017 2018 2017
Net product sales $ 5,461
$ 4,770
$ 10,433
$ 9,350
Alliance revenues 154
237
306
461
Other revenues 89
137
158
262
Total Revenues $ 5,704
$ 5,144
$ 10,897
$ 10,073

Net product sales represent more than 90% of the Company’s total revenue during the three and six months ended June 30, 2018 and 2017. Products are sold principally to wholesalers or distributors and to a lesser extent, directly to retailers, hospitals, clinics, government agencies and pharmacies. Customer orders are generally fulfilled within a few days of receipt resulting in minimal order backlog. Contractual performance obligations are usually limited to transfer of control of the product to the customer. The transfer occurs either upon shipment or upon receipt of the product in certain non-U.S. countries after considering when the customer obtains legal title to the product and when the Company obtains a right of payment. At these points, customers are able to direct the use of and obtain substantially all of the remaining benefits of the product.

Wholesalers are initially invoiced at contractual list prices. Payment terms are typically 30 to 90 days based on customary practices in each country with the exception of certain biologic products in the U.S., including ~~Opdivo~~, ~~Yervoy~~ ~~and~~ ~~Empliciti~~ (90 days to 120 days). Revenue is reduced from wholesaler list price at the time of recognition for expected charge-backs, discounts, rebates, sales allowances and product returns, which are referred to as gross-to-net (GTN) adjustments. These reductions are attributed to various commercial arrangements, managed healthcare organizations and government programs such as Medicare, Medicaid and the 340B Drug Pricing Program containing various pricing implications such as mandatory discounts, pricing protection below wholesaler list price or other discounts when Medicare Part D beneficiaries are in the coverage gap. In addition, non-U.S. government programs include different pricing schemes such as cost caps, volume discounts, outcome-based pricing and pricing claw-backs determined on sales of individual companies or an aggregation of companies participating in a specific market. Charge-backs and cash discounts are reflected as a reduction to receivables and settled through the issuance of credits to the customer, typically within one month. All other rebates, discounts and adjustments, including Medicaid and Medicare, are reflected as a liability and settled through cash payments to the customer, typically within various time periods ranging from a few months to one year.

Significant judgment is required in estimating GTN adjustments considering legal interpretations of applicable laws and regulations, historical experience, payer channel mix, current contract prices under applicable programs, unbilled claims, processing time lags and inventory levels in the distribution channel.



	Three Months Ended March 31,
Dollars in Millions	2019		2018
Net product sales	$	5,713	$	4,972
Alliance revenues	129		152
Other revenues	78		69
Total Revenues	$	5,920	$	5,193

The following table summarizes GTN adjustments:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Gross product sales	$	7,509		$	6,306		$	14,210		$	12,168		$	7,994		$	6,701
GTN adjustments^(a)
Charge-backs and cash discounts	(663		)	(500		)	(1,246		)	(938		)	(774		)	(583		)
Medicaid and Medicare rebates	(765		)	(517		)	(1,322		)	(901		)	(800		)	(557		)
Other rebates, returns, discounts and adjustments	(620		)	(519		)	(1,209		)	(979		)	(707		)	(589		)
Total GTN adjustments	(2,048		)	(1,536		)	(3,777		)	(2,818		)	(2,281		)	(1,729		)
Net product sales	$	5,461		$	4,770		$	10,433		$	9,350		$	5,713		$	4,972


(a)	Includes ~~reductions~~adjustments to provisions for product sales made in prior periods resulting from changes in estimates of ~~$60~~$78 million and $5$50 million in the three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017 and $110 million and $54 million in the six months ended June 30, 2018 and 2017,~~ respectively.

Alliance and other revenues consist primarily of amounts related to collaborations and out-licensing arrangements. Such arrangements may include the transfer of certain rights to develop or commercialize investigational compounds or products and joint obligations to provide development, distribution, promotion, sales and marketing services and clinical or commercial product supply. Each of these arrangements are evaluated for whether they represent contracts that are within the scope of the revenue recognition guidance in their entirety or contain aspects that are within the scope of the guidance, either directly or by reference based upon the application of the guidance related to the derecognition of nonfinancial assets (ASC 610). Performance obligations are identified and separated when the other party can benefit directly from the rights, goods or services either on their own or together with other readily available resources and when the rights, goods or services are not highly interdependent or interrelated.

Transaction prices for these arrangements may include fixed up-front amounts as well as variable consideration such as contingent development and regulatory milestones, sales-based milestones and royalties. The most likely amount method is used to estimate contingent development, regulatory and sales-based milestones because the ultimate outcomes are binary in nature. The expected value method is used to estimate royalties because a broad range of potential outcomes exist, except for instances in which such royalties relate to a license. Variable consideration is included in the transaction price only to the extent a significant reversal in the amount of cumulative revenue recognized is not probable of occurring when the uncertainty associated with the variable consideration is subsequently resolved. Significant judgment is required in estimating the amount of variable consideration to recognize when assessing factors outside of BMS’s influence such as likelihood of regulatory success, limited availability of third party information, expected duration of time until resolution, lack of relevant past experience, historical practice of offering fee concessions and a large number and broad range of possible amounts. To the extent arrangements include multiple performance obligations that are separable, the transaction price assigned to each distinct performance obligation is reflective of the relative stand-alone selling price and recognized at a point in time upon the transfer of control.

We have three types of out-licensing arrangements: 1) straight license arrangements, when we out-license intellectual property to another party and have no further performance obligations; 2) arrangements that include a license and an additional performance obligation to supply product upon the request of the third party; and 3) collaboration arrangements, which include transferring a license to a third party to jointly develop and commercialize a product.

Most of our out-licensing arrangements have a single performance obligation satisfied upon the rights transferred to a third party with no additional continuing involvement. In arrangements that include a license plus a contingent supply obligation, the items are not combined into a single performance obligation. Transfer of control for the license occurs upon execution of the agreement. Contingent development and regulatory milestones are allocated to the license and recognized upon transfer of control subject to the constraint discussed above. Sales-based milestones and royalties are allocated to the license and recognized when the milestone is achieved or the subsequent sales occur. Consideration is received for the supply under "cost plus" arrangements, which approximate stand alone selling prices. Royalties are presented in Alliance and other revenues (excluding those related to divestitures) and contingent milestones are presented in Other income (net). Supply sales to other parties in which product rights have been transferred to the counterparty are typically distinct and are recognized at a point in time upon transfer of control and included in Alliance and other revenues.

Amounts received from collaboration partners related to upfront fees or contingent development or regulatory milestones are recognized ratably over time as the license is combined with other performance obligations such as development and commercial activities and included in Other income (net). Profit sharing amounts payable to BMS by collaboration partners are recognized in Alliance and other revenues once earned as such amounts are related to third-party sales. Supply sales to alliance partners in which product rights have been transferred to the counterparty are typically distinct and are recognized at a point in time upon transfer of control. Refer to "-Note 4. Alliances" for further information.

The following table summarizes the disaggregation of revenue by product and region:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Dollars in Millions	2018		2017		2018		2017		2019		2018
Prioritized Brands
Opdivo	$	1,627	$	1,195	$	3,138	$	2,322	$	1,801	$	1,511
Eliquis	1,650		1,176		3,156		2,277		1,925		1,506
Orencia	711		650		1,304		1,185		640		593
Sprycel	535		506		973		969		459		438
Yervoy	315		322		564		652		384		249
Empliciti	64		55		119		108		83		55

Established Brands
Baraclude	179		273		404		555		141		225
Sustiva Franchise	73		188		157		372
Reyataz Franchise	117		188		241		381
Hepatitis C Franchise	12		112		15		274
Other Brands	421		479		826		978		487		616
Total Revenues	$	5,704	$	5,144	$	10,897	$	10,073	$	5,920	$	5,193

United States	$	3,230	$	2,865	$	6,008	$	5,603	$	3,449	$	2,778
Europe	1,408		1,188		2,814		2,334		1,480		1,406
Rest of World	923		963		1,796		1,888
Other	143		128		279		248
Rest of the World									874		873
Other^(a)									117		136
Total Revenues	$	5,704	$	5,144	$	10,897	$	10,073	$	5,920	$	5,193


(a)	Other revenues include royalties and alliance-related revenues for products not sold by the Company's regional commercial organizations.

The following table summarizes contract assets as of ~~June 30, 2018~~March 31, 2019 and ~~January 1,~~December 31, 2018:


Dollars in Millions	June 30, 2018		January 1, 2018		March 31, 2019		December 31, 2018
Prepaid expenses and other	$	247	$	349	$	51	$	35
Other assets	28		32		16		19
Total Contract Assets	$	275	$	381
Total contract assets					$	67	$	54

Contract assets are primarily estimated future royalties and termination fees not eligible for the licensing exclusion and therefore recognized upon the adoption of ASC 606 and ASC 610. Contract assets are reduced and receivables are increased in the period the underlying sales occur. Contingent development and regulatory milestones from out-licensing arrangements of $1.3 billion were constrained and not recognized after considering the likelihood of a significant reversal of cumulative amount of revenue occurring. Cumulative catch-up adjustments to revenue affecting contract assets or contract liabilities were not material during the three and six months ended June 30, 2018. Revenue recognized from performance obligations satisfied in prior periods was ~~approximately~~$147 million and $150 million ~~and $300 million in~~for the three ~~and six~~ months ended ~~June 30,~~March 31, 2019 and 2018, respectively, consisting primarily of royalties for out-licensing arrangements and revised estimates for gross-to-net adjustments related to prior period sales.

~~Sales commissions and other incremental costs of obtaining customer contracts are expensed as incurred as the amortization periods would be less than one year.~~

Note 4.3. ALLIANCES

BMS enters into collaboration arrangements with third parties for the research, development, ~~and~~manufacturing and/or 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 ~~are~~ 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. ~~We refer~~BMS refers to these collaborations as alliances and ~~our~~its partners as alliance partners. ~~Products sold through alliance arrangements in certain markets include prioritized products and certain other brands.~~

Selected financial information pertaining to ~~our~~BMS 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. ~~Certain prior period amounts included below were revised to exclude amounts for arrangements that no longer meet the criteria for collaboration arrangements.~~


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Revenues from alliances:
Net product sales	$	2,178		$	1,699		$	4,098		$	3,263		$	2,378		$	1,920
Alliance revenues	154			237			306			461			129			152
Total Revenues	$	2,332		$	1,936		$	4,404		$	3,724		$	2,507		$	2,072

Payments to/(from) alliance partners:
Cost of products sold	$	891		$	666		$	1,690		$	1,287		$	1,019		$	799
Marketing, selling and administrative	(28		)	(14		)	(50		)	(24		)	(28		)	(22		)
Research and development	1,057			(1		)	1,062			(1		)	14			5
Other income (net)	(16		)	(9		)	(30		)	(20		)	(14		)	(14		)


Selected Alliance Balance Sheet information:
Dollars in Millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Receivables - from alliance partners	$	364	$	322	$	334	$	395
Accounts payable - to alliance partners	921		875		1,004		904
Deferred income from alliances^(a)	531		467		487		491


(a)	Includes unamortized upfront and milestone ~~and other licensing proceeds. Amortization of deferred income (primarily related to alliances) was $32 million and~~ ~~$39 million~~ ~~for the six months ended June 30, 2018 and 2017, respectively.~~ payments.

The nature and purpose, significant rights and obligations of the parties and specific accounting policy elections for each of ~~our~~the Company's significant alliances are discussed in ~~our 2017~~the Company's 2018 Form 10-K. ~~Significant~~There were no significant developments and updates related to alliances during ~~2018 are set forth below.~~2019.

~~Nektar~~

In the second quarter of 2018, BMS and Nektar commenced a worldwide license and collaboration for the development and commercialization of NKTR-214, Nektar’s investigational immuno-stimulatory therapy designed to selectively expand specific cancer-fighting T cells and natural killer cells directly in the tumor micro-environment. The ~~Opdivo~~ and NKTR-214 combination therapy is currently in Phase II clinical studies. A joint development plan agreed by the parties contemplates development in various indications and tumor types with each party responsible for the supply of their own product. BMS’s share of the development costs associated with therapies comprising a BMS medicine used in combination with NKTR-214 is 67.5%, subject to certain cost caps for Nektar. The parties will also jointly commercialize the therapies, subject to regulatory approval. BMS's share of global NKTR-214 profits and losses will be 35% subject to certain annual loss caps for Nektar.

118

BMS paid Nektar $1.85 billion for the rights discussed above and 8.3 million shares of Nektar common stock representing a 4.8% ownership interest. BMS’s equity ownership is subject to certain lock-up, standstill and voting provisions for a five-year period. The amount of the up-front payment allocated to the equity investment was $800 million after considering Nektar’s stock price on the date of closing and current limitations on trading the securities. The remaining $1.05 billion of the upfront payment was allocated to the rights discussed above and included in research and development expense in the second quarter of 2018. BMS will also pay up to $1.8 billion upon the achievement of contingent development, regulatory and sales-based milestones over the life of the collaboration period.

Note 5.4. DIVESTITURES AND ~~LICENSING~~OTHER ARRANGEMENTS

Divestitures

The following table summarizes proceeds, gains and royalty income resulting from divestitures. Revenue and pretax earnings related to all divestitures and assets held-for-sale were not material in all periods presented (excluding divestiture gains).


	Three Months Ended June 30,																Three Months Ended March 31,
	Proceeds^(a)				Divestiture Gains						Royalty Income						Proceeds^(a)				Divestiture Gains					Royalty Income
Dollars in Millions	2018		2017		2018			2017			2018			2017			2019		2018		2019		2018			2019			2018
Manufacturing Operations	$	1	$	—	$	—		$	—		$	—		$	—
Diabetes Business	155		95		—			—			(165		)	(80		)	$	164	$	88	$	—	$	—		$	(165	)	$	(162	)
Erbitux* Business	50		53		—			—			(50		)	(54		)	5		59		—		—			—			(47		)
Other	2		—		(25		)	—			(2		)	(1		)
	$	208	$	148	$	(25	)	$	—		$	(217	)	$	(135	)

	Six Months Ended June 30,
	Proceeds^(a)				Divestiture Gains						Royalty Income
Dollars in Millions	2018		2017		2018			2017			2018			2017
Manufacturing Operations	$	159	$	—	$	—		$	—		$	—		$	—		2		158		—		—			—			—
Diabetes Business	243		251		—			(100		)	(327		)	(174		)
Erbitux* Business	109		108		—			—			(97		)	(108		)
Other	72		30		(70		)	(27		)	(3		)	(2		)
	$	583	$	389	$	(70	)	$	(127	)	$	(427	)	$	(284	)
Mature Brands and Other																	—		70		—		(45		)	(1		)	(1		)
Total																	$	171	$	375	$	—	$	(45	)	$	(166	)	$	(210	)


(a)	Includes royalties received subsequent to the related sale of the asset or business.

Manufacturing Operations

In ~~the fourth quarter of~~ 2017, BMS sold its small molecule active pharmaceutical ingredient manufacturing operations in Swords, Ireland to SK Biotek for approximately $165 million, subject to certain adjustments. The transaction was accounted for as ~~the~~a sale of a business and initial proceeds of ~~$159~~$158 million were received in the first quarter of 2018. SK Biotek will provide certain manufacturing services for BMS through 2022.

~~Diabetes Business~~

In the first quarter of 2017, BMS received $100 million from AstraZeneca as additional contingent consideration for the diabetes business divestiture upon achievement of a regulatory approval milestone, which was included in Other income (net).

~~Other Divestitures~~

Other divestitures include proceeds, gains and royalty income from the sale of certain mature brands. Revenues and pretax earnings related to all divestitures were not material in all periods presented.Assets Held-For-Sale

~~Licensing Arrangements~~In 2018, BMS agreed to sell its UPSA consumer health business for $1.6 billion. The transaction is expected to close in July 2019 and will be accounted for as a sale of a business. Assets were reclassified to assets held-for-sale and included within Prepaid expenses and other and liabilities were reclassified to liabilities related to assets held-for-sale and included within Accrued liabilities. The following table summarizes the net assets held-for-sale as of March 31, 2019 and December 31, 2018.

~~Biogen~~

In the second quarter of 2017, BMS out-licensed to Biogen exclusive rights to develop and commercialize BMS-986168, an anti-eTau compound in development for Progressive Supranuclear Palsy. Biogen paid $300 million to BMS which was included in Other income (net). BMS is also entitled to contingent development, regulatory and sales-based milestone payments of up to $410 million if achieved and future royalties. BMS originally acquired the rights to this compound in 2014 through its acquisition of iPierian. Biogen assumed all of BMS’s remaining obligations to the former stockholders of iPierian.

~~Roche~~

In the second quarter of 2017, BMS out-licensed to Roche exclusive rights to develop and commercialize BMS-986089, an anti-myostatin adnectin in development for Duchenne Muscular Dystrophy. Roche paid $170 million to BMS which was included in Other income (net). BMS is also entitled to contingent development and regulatory milestone payments of up to $205 million if achieved and future royalties.



Dollars in Millions	March 31, 2019		December 31, 2018
Receivables	$	73	$	79
Inventories	87		81
Property, plant and equipment	190		187
Goodwill	127		127
Others	6		5
Assets held-for-sale	$	483	$	479

Accounts payable	$	38	$	35
Accrued liabilities	59		78
Deferred income taxes	24		25
Other liabilities	23		14
Liabilities related to assets held-for-sale	$	144	$	152

Net assets held-for-sale	$	339	$	327

129

Note 6.5. OTHER INCOME (NET)

Three Months Ended June 30, Six Months Ended June 30,
Dollars in Millions 2018 2017 2018 2017
Interest expense $ 45
$ 52
$ 91
$ 97
Investment income (38 ) (29 ) (74 ) (55 )
Loss/(gain) on equity investments 356
(5 ) 341
(12 )
Provision for restructuring 37
15
57
179
Litigation and other settlements (1 ) (5 ) (1 ) (489 )
Equity in net income of affiliates (27 ) (20 ) (51 ) (38 )
Divestiture gains (25 ) —
(70 ) (127 )
Royalties and licensing income (353 ) (685 ) (720 ) (884 )
Transition and other service fees (1 ) (13 ) (5 ) (20 )
Pension and postretirement (19 ) (11 ) (30 ) (10 )
Intangible asset impairment —
—
64
—
Loss on debt redemption —
109
—
109
Other 22
6
(6 ) (15 )
Other income (net) $ (4 ) $ (586 ) $ (404 ) $ (1,265 )

~~Loss/(gain) on equity investments includes a $407 million fair market value adjustment related to the equity investment in Nektar in the second quarter of 2018.~~

~~Litigation and other settlements includes BMS's share of a patent-infringement litigation settlement of $481 million related to Merck's PD-1 antibody~~ Keytruda* ~~in the first quarter of 2017.~~

~~Royalties and licensing income includes upfront licensing fees of $470 million from Biogen and Roche in the second quarter of 2017.~~



	Three Months Ended March 31,
Dollars in Millions	2019			2018
Interest expense	$	45		$	46
Investment income	(56		)	(36		)
Equity investment gains	(175		)	(15		)
Provision for restructuring	12			20
Acquisition and integration expenses	187			—
Litigation and other settlements	1			—
Equity in net income of affiliates	—			(24		)
Divestiture gains	—			(45		)
Royalties and licensing income	(308		)	(367		)
Transition and other service fees	(2		)	(4		)
Pension and postretirement	44			(11		)
Intangible asset impairment	—			64
Other	(8		)	(28		)
Other income (net)	$	(260	)	$	(400	)

Note 7.6. RESTRUCTURING

In October 2016, the Company announced a restructuring plan to evolve and streamline its operating model. The majority of the charges are expected to be incurred through 2020, range between $1.5 billion to $2.0 billion and consist of employee termination benefit costs, contract termination costs, plant and equipment accelerated depreciation and impairment charges and other shutdown costs associated with early manufacturing and R&D site exits. Cash outlays in connection with these actions are expected to be approximately 40% to 50% of the total charges. Charges of approximately ~~$922 million~~$1.1 billion have been recognized for these actions since the ~~announcement ($124 million and $452 million for the six months ended June 30, 2018 and 2017, respectively).~~announcement. Restructuring charges are recognized upon meeting certain criteria, including finalization of committed plans, reliable estimates and discussions with local works councils in certain markets.

Employee workforce reductions were approximately ~~300~~50 and ~~1,000~~100 for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

The following tables summarize the charges and activity related to the restructuring actions:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Dollars in Millions	2018		2017		2018		2017		2019		2018
Employee termination costs	$	26	$	11	$	35	$	172	$	4	$	9
Other termination costs	11		4		22		7		8		11
Provision for restructuring	37		15		57		179		12		20
Accelerated depreciation	31		82		52		152		31		21
Asset impairments	—		141		10		143		1		10
Other shutdown costs	2		3		5		3		—		3
Total charges	$	70	$	241	$	124	$	477	$	44	$	54



	Three Months Ended March 31,
Dollars in Millions	2019		2018
Cost of products sold	$	12	$	13
Marketing, selling and administrative	1		1
Research and development	19		20
Other income (net)	12		20
Total charges	$	44	$	54

1310

Three Months Ended June 30, Six Months Ended June 30,
Dollars in Millions 2018 2017 2018 2017
Cost of products sold $ 14
$ 130
$ 27
$ 130
Marketing, selling and administrative —
—
1
—
Research and development 19
96
39
168
Other income (net) 37
15
57
179
Total charges $ 70
$ 241
$ 124
$ 477


	Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2019			2018
Liability at December 31							$	99		$	186
Cease-use lease liability reclassification							(3		)	—
Liability at January 1	$	186		$	114		96			186

Charges	61			198			15			20
Change in estimates	(4		)	(19		)	(3		)	—
Provision for restructuring	57			179			12			20
Foreign currency translation	1			10			—			5
Payments	(129		)	(105		)	(45		)	(75		)
Liability at June 30	$	115		$	198
Liability at March 31							$	63		$	136

Note 8.7. INCOME TAXES

Three Months Ended June 30, Six Months Ended June 30,
Dollars in Millions 2018 2017 2018 2017
Earnings Before Income Taxes $ 517
$ 1,295
$ 2,296
$ 3,250
Provision for Income Taxes 135
373
419
802
Effective Tax Rate 26.1 % 28.8 % 18.2 % 24.7 %

New tax reform legislation in the U.S. was enacted on December 22, 2017 known as the Tax Cuts and Jobs Act of 2017 (the Act). The Act moves from a worldwide tax system to a quasi-territorial tax system and comprises broad and complex changes to the U.S. tax code including, but not limited to, (1) reducing the U.S. tax rate from 35% to 21%; (2) adding a deemed repatriation transition tax on certain foreign earnings and profits; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) including certain income of controlled foreign companies in U.S. taxable income; (5) creating a new minimum tax referred to as a base erosion anti-abuse income tax; (6) limiting certain research-based credits; and (7) eliminating the domestic manufacturing deduction.

Although many aspects of the Act were not effective until 2018, additional tax expense of $2.9 billion was recognized in the fourth quarter of 2017 upon its enactment, including a $2.6 billion one-time deemed repatriation transition tax on previously untaxed post-1986 foreign earnings and profits (including related tax reserves). The accounting for the $2.6 billion was and continues to be incomplete as we do not have all of the necessary information available, prepared and analyzed to complete the accounting. However, a reasonable estimate of this tax was recorded as a provisional amount. The provisional amount was reduced by $29 million in 2018, and may continue to change until completed in 2018 upon finalizing the 2017 taxable income, untaxed post-1986 foreign earnings and profits and related cash and certain eligible assets of the specified foreign corporations or if additional interpretations of the relevant tax code are released.



	Three Months Ended March 31,
Dollars in Millions	2019			2018
Earnings Before Income Taxes	$	1,979		$	1,779
Provision for Income Taxes	264			284
Effective Tax Rate	13.3		%	16.0		%

The ~~provisional adjustment discussed above, jurisdictional~~reduction in the effective tax rate was primarily due to the recognition of prior period tax credits in 2019. Jurisdictional tax rates and other tax impacts attributed to non-deductible R&D charges, ~~Nektar~~ equity investment ~~losses~~fair value adjustments and other specified items ~~increased~~decreased the effective tax rate by ~~0.9%~~1.2% in the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 and ~~3.5% in the six months ended June 30, 2017. These items increased the effective tax rate by 8.6% in the second quarter of 2018 and by 6.4% in the second quarter of 2017.~~2018. The tax impact of these discrete items are reflected immediately and are not considered in estimating the annual effective tax rate. ~~Excluding the impact of these items, the reduction in the effective tax rate from the prior year was due primarily to the impact of U.S. tax reform discussed above partially offset by earnings mix.~~ Additional changes to the effective tax rate may occur ~~throughout the year~~in future periods due to various reasons including ~~further changes to the provisional repatriation tax,~~ 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, 2018~~March 31, 2019 could decrease in the range of approximately ~~$350~~$355 million to ~~$400~~$395 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.

Note 9.8. EARNINGS PER SHARE


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Amounts in Millions, Except Per Share Data	2018		2017		2018		2017		2019		2018
Net Earnings Attributable to BMS used for Basic and Diluted EPS Calculation	$	373	$	916	$	1,859	$	2,490	$	1,710	$	1,486

Weighted-average common shares outstanding - basic	1,633		1,644		1,633		1,653		1,634		1,633
Incremental shares attributable to share-based compensation plans	3		6		5		7		3		7
Weighted-average common shares outstanding - diluted	1,636		1,650		1,638		1,660		1,637		1,640

Earnings per share - basic	$	0.23	$	0.56	$	1.14	$	1.51	$	1.05	$	0.91
Earnings per share - diluted	0.23		0.56		1.13		1.50		1.04		0.91

Note ~~10.~~9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:


	June 30, 2018					December 31, 2017					March 31, 2019					December 31, 2018
Dollars in Millions	Level 1		Level 2			Level 1		Level 2			Level 1		Level 2			Level 1		Level 2
Cash and cash equivalents - money market and other investments	$	—	$	4,387		$	—	$	4,728		$	—	$	6,741		$	—	$	6,173
Marketable securities
Certificates of deposit	—		196			—		141			—		658			—		971
Commercial paper	—		—			—		50			—		139			—		273
Corporate debt securities	—		2,861			—		3,548			—		1,865			—		2,379
Equity investments	—		136			—		132			—		—			—		125
Derivative assets	—		55			—		13			—		63			—		44
Equity investments	112		393			67		—			164		272			88		266
Derivative liabilities	—		(27		)	—		(52		)	—		(10		)	—		(31		)

As further described in "—“Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value ~~Measurements"~~Measurements” in ~~our 2017~~the Company's 2018 Form 10-K, ~~our~~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). There were no Level 3 financial assets or liabilities as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Available-for-sale Debt Securities and Equity Investments

Changes in fair value of equity investments are included in Other income (net). The following table summarizes ~~available-for-sale securities:~~the Company's debt and equity securities, classified as available-for-sale:

June 30, 2018 December 31, 2017
Dollars in Millions Amortized Cost Gross Unrealized Amortized Cost Gross Unrealized
Gains Losses Fair Value Gains Losses Fair Value
Certificates of deposit $ 196
$ —
$ —
$ 196
$ 141
$ —
$ —
$ 141
Commercial paper —
—
—
—
50
—
—
50
Corporate debt securities 2,908
—
(47 ) 2,861
3,555
3
(10 ) 3,548
Equity investments^(a)
—
—
—
—
31
37
(1 ) 67
$ 3,104
$ —
$ (47 ) $ 3,057
$ 3,777
$ 40
$ (11 ) $ 3,806

Equity investments^(b)
641
132
Total $ 3,698
$ 3,938



	March 31, 2019									December 31, 2018
Dollars in Millions	Amortized Cost		Gross Unrealized							Amortized Cost		Gross Unrealized
Dollars in Millions	Amortized Cost		Gains		Losses			Fair Value		Amortized Cost		Gains		Losses			Fair Value
Certificates of deposit	$	658	$	—	$	—		$	658	$	971	$	—	$	—		$	971
Commercial paper	139		—		—			139		273		—		—			273
Corporate debt securities	1,876		—		(11		)	1,865		2,416		—		(37		)	2,379
	$	2,673	$	—	$	(11	)	$	2,662	$	3,660	$	—	$	(37	)	$	3,623

Equity investments								436									479
Total								$	3,098								$	4,102


Dollars in Millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Current marketable securities	$	1,076	$	1,391	$	1,429	$	1,973
Non-current marketable securities^(c)(a)	2,117		2,480		1,233		1,775
Other assets^(a)	505		67		436		354
Total	$	3,698	$	3,938	$	3,098	$	4,102


(a)	~~Includes equity investments with readily determinable fair values not measured using the fair value option as of December 31, 2017.~~


~~(b)~~	~~Includes equity and fixed income funds measured using the fair value option at December 31, 2017. Refer to "~~—~~Note.1 Basis of Presentation and Recently Issued Accounting Standards" for more information.~~


~~(c)~~	All non-current marketable securities mature within five years as of ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

Equity investments not measured at fair value and excluded from the above table were limited partnerships and other equity method investments of ~~$95~~$126 million at ~~June 30, 2018~~March 31, 2019 and ~~$66~~$114 million at December 31, ~~2017~~2018 and other equity investments without readily determinable fair values of ~~$183~~$208 million at ~~June 30, 2018~~March 31, 2019 and ~~$152~~$206 million at December 31, ~~2017.~~2018. These amounts are included in Other assets. Adjustments to equity investments without readily determinable fair values for the three and six months ended June 30, 2018 were $18 million resulting from observable price changes for similar securities of the same issuer and were recorded in Other income (net).

The following table summarizes the net ~~loss~~gain recorded for equity investments with readily determinable fair values held as of ~~June 30,~~March 31, 2019 and 2018:

Dollars in Millions Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
Net loss recognized $ (374 ) $ (359 )
Less: Net loss recognized for equity investments sold —
—
Net unrealized loss on equity investments held $ (374 ) $ (359 )



	Three Months Ended March 31,
Dollars in Millions	2019		2018
Net gain/(loss) recognized	$	95	$	15
Less: Net gain/(loss) recognized for equity investments sold	14		—
Net unrealized gain/(loss) on equity investments held	$	81	$	15

Qualifying Hedges and Non-Qualifying Derivatives

~~The following table summarizes the fair value of outstanding derivatives:~~

June 30, 2018 December 31, 2017

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 $ —
$ —
$ 755
$ (17 ) $ —
$ —
$ 755
$ (6 )
Cross-currency interest rate swap contracts —
—
300
(4 ) —
—
—
—
Foreign currency forward contracts 1,186
48
—
—
944
12
489
(9 )

Derivatives not designated as hedging instruments:
Foreign currency forward contracts 529
7
168
(6 ) 206
1
1,369
(37 )


~~(a)~~	~~Included in prepaid expenses and other and other assets.~~


~~(b)~~	~~Included in accrued liabilities and pension and other liabilities.~~

~~The following table summarizes the financial statement classification and amount of gain/(loss) recognized on hedging instruments:~~

Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
Dollars in Millions Cost of products sold Other income (net) Cost of products sold Other income (net)
Interest rate swap contracts $ —
$ 6
$ —
$ 13
Cross-currency interest rate swap contracts —
2
—
4
Foreign currency forward contracts (13 ) 16
(33 ) 7

Three Months Ended June 30, 2017 Six Months Ended June 30, 2017
Dollars in Millions Cost of products sold Other income (net) Cost of products sold Other income (net)
Interest rate swap contracts $ —
$ 8
$ —
$ 16
Cross-currency interest rate swap contracts —
—
—
—
Foreign currency forward contracts 15
(5 ) 35
(23 )

~~The following table summarizes the effect of derivative and non-derivative instruments designated as hedging instruments in other comprehensive loss:~~

Dollars in Millions Three Months Ended June 30, 2018 Six Months Ended June 30, 2018
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in other comprehensive loss^(a)
$ 83
$ 45
Reclassified to cost of products sold 13
33

Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain/(loss):
Recognized in other comprehensive loss 12
(4 )

Non-derivatives qualifying as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in other comprehensive loss 62
16


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

Cash Flow Hedges — Foreign currency forward contracts are used to hedge certain forecasted intercompany inventory ~~purchase~~purchases and sales transactions and certain foreign currency transactions. The fair value for contracts designated as cash flow hedges ~~are~~is temporarily reported in Accumulated other comprehensive ~~income or~~ loss and included in earnings when the hedged item affects earnings. Upon adoption of the amended guidance for derivatives and hedging, the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the derivatives qualifying as cash flow hedges component of ~~other comprehensive loss.~~Other Comprehensive (Loss)/Income. The net gain or loss on foreign currency forward contracts ~~are~~is expected to be reclassified to net earnings (primarily included in ~~cost~~Cost of products sold) within the next ~~twelve~~12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro ~~($825 million)~~of $1.0 billion and Japanese yen ~~($278 million)~~of $508 million at ~~June 30, 2018.~~March 31, 2019.

The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not significant 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.

Net Investment Hedges — Non-U.S. dollar borrowings of €950 million ($1.1 billion) at March 31, 2019 are designated to hedge euro currency exposures of the net investment in certain foreign affiliates. These borrowings are designated as net investment hedges and recognized in long-term debt. The effective portion of foreign exchange gain or loss on the remeasurement of euro debt was ~~$16~~$8 million gain in 2019 and ~~$70~~$46 million ~~for~~loss in 2018 ~~and 2017, respectively,~~ and were recorded in the foreign currency translation component of Accumulated other comprehensive loss with athe related offset in long-term debt.

In January 2018, BMS entered into $300 million of cross-currency interest rate swap contracts maturing in December 2022 designated to hedge Japanese yen currency exposures of the Company's net investment in its Japan subsidiary. Contract fair value changes are recorded in the foreign currency translation component of ~~other comprehensive loss~~Other Comprehensive Income/(Loss) with a related offset in Other assets or Pension and other 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 (2.5% as of March 31, 2019) 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 match those of 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.

Following the announcement of our pending acquisition of Celgene, the Company entered into forward starting interest rate swap option contracts, with a total notional value of $7.6 billion, to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the acquisition. A fair value loss adjustment of $35 million was recognized in the first quarter of 2019 and was included in Other income (net).

In April 2019, the Company entered into deal contingent forward starting interest rate swap contracts, with an aggregate notional principal amount of $10.4 billion, to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the planned Celgene acquisition. The option contracts that the Company entered into following the announcement of the planned acquisition of Celgene were terminated contemporaneously with the Company's entry into the deal contingent contracts.

1713

The following table summarizes the fair value of outstanding derivatives:



	March 31, 2019									December 31, 2018
	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	$	(3	)	$	—	$	—	$	755	$	(10	)
Cross-currency interest rate swap contracts	175		2		125		(1		)	50		—		250		(5		)
Foreign currency forward contracts	1,642		58		302		(4		)	1,503		44		496		(10		)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	532		3		69		(2		)	54		—		600		(6		)
Forward starting interest rate swap options	7,600		—		—		—			—		—		—		—


(a)	Included in prepaid expenses and other and other assets.


(b)	Included in accrued liabilities and pension and other liabilities.

The following table summarizes the financial statement classification and amount of gain/(loss) recognized on hedging instruments:



	Three Months Ended March 31,
	2019					2018
Dollars in Millions	Cost of products sold		Other income (net)			Cost of products sold			Other income (net)
Interest rate swap contracts	$	—	$	5		$	—		$	7
Cross-currency interest rate swap contracts	—		2			—			2
Foreign currency forward contracts	30		(9		)	(20		)	(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 Income/(Loss):



	Three Months Ended March 31,
Dollars in Millions	2019			2018
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)^(a)	$	45		$	(38	)
Reclassified to Cost of products sold	(30		)	20

Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	6			(16		)

Non-derivatives qualifying as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	8			(46		)


(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	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Commercial paper	$	—	$	299
Non-U.S. short-term borrowings	352		512		$	321	$	320
Current portion of long-term debt	1,261		—		—		1,249
Other	103		176		60		134
Total	$	1,716	$	987	$	381	$	1,703

The average amount of commercial paper outstanding was $38 million at a weighted-average rate of 1.3% during 2018. The maximum amount of commercial paper outstanding was $300 million with no outstanding balance at June 30, 2018.

Long-term debt and the current portion of long-term debt include:


Dollars in Millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Principal Value	$	6,812		$	6,835		$	5,513		$	6,776
Adjustments to Principal Value
Fair value of interest rate swap contracts	(17		)	(6		)	(3		)	(10		)
Unamortized basis adjustment from swap terminations	214			227			194			201
Unamortized bond discounts and issuance costs	(77		)	(81		)	(69		)	(72		)
Total	$	6,932		$	6,975		$	5,635		$	6,895

Current portion of long-term debt	$	1,261		$	—		$	—		$	1,249
Long-term debt	5,671			6,975			5,635			5,646

~~In February 2017, BMS issued $1.5 billion in senior unsecured notes in a registered public offering. Proceeds, net of discount and deferred loan issuance costs, were $1.49 billion.~~ The fair value of long-term debt was ~~$7.2~~$5.9 billion at ~~June 30, 2018~~March 31, 2019 and ~~$7.5~~$7.1 billion at December 31, ~~2017~~2018 valued using Level 2 inputs. Interest payments were ~~$117~~$57 million and ~~$114~~$59 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively, net of amounts related to interest rate swap contracts.

During the ~~second~~first quarter of ~~2017,~~2019, the $750 million 1.600% Notes and the $500 million 1.750% Notes matured and were repaid.

As of March 31, 2019, the Company ~~repurchased certain long-term~~had four revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiring in January 2020, two five-year $1.5 billion facilities that were extended to September 2022 and July 2023, respectively, and a $1.0 billion facility expiring in January 2022. All of these facilities provide for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for the Company's commercial paper borrowings. The Company's $1.0 billion facility and the Company's two $1.5 billion revolving facilities are extendable annually by one year on the anniversary date with the consent of the lenders. No borrowings were outstanding under any revolving credit facility at March 31, 2019 or December 31, 2018.

In connection with the Company's pending acquisition of Celgene, in January 2019 the Company entered into a bridge commitment letter that provides for up to $33.5 billion in a 364-day senior unsecured bridge facility. The Company also entered into an $8.0 billion term loan credit agreement consisting of a $1.0 billion 364-day tranche, a $4.0 billion three-year tranche and a $3.0 billion five-year tranche. The term loan reduced the commitments under the bridge facility to $25.5 billion. If the Company obtains additional funding by issuing securities or obtaining other loans, the amount of the bridge facility will be correspondingly reduced. The bridge facility and the term loan are subject to customary terms and conditions and do not have any financial covenants. No amounts will be borrowed under either the bridge facility or the term loan prior to the closing of the pending acquisition of Celgene. If drawn upon, the proceeds under the bridge facility and the term loan will be used solely to fund a portion of the cash to be paid in the pending acquisition of Celgene, the anticipated refinancing of debt ~~obligations with interest rates ranging from 5.875% to 6.875%. The following summarizes~~of Celgene and the ~~debt repurchase activity:~~payment of related fees and expenses.

Dollars in Millions 2017
Principal amount $ 337
Carrying value 366
Debt redemption price 474
Loss on debt redemption^(a)
109


~~(a)~~	~~Including acceleration of debt issuance costs, gain on previously terminated interest rate swap contracts and other related fees.~~

Note 11.10. RECEIVABLES


Dollars in Millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Trade receivables	$	4,579		$	4,599		$	4,873		$	4,914
Less charge-backs and cash discounts	(222		)	(209		)	(241		)	(245		)
Less bad debt allowances	(34		)	(43		)	(38		)	(33		)
Net trade receivables	4,323			4,347			4,594			4,636
Prepaid and refundable income taxes	170			691			158			218
Alliance, royalties, VAT and other	1,066			1,262			952			1,111
Receivables	$	5,559		$	6,300		$	5,704		$	5,965

Non-U.S. receivables sold on a nonrecourse basis were ~~$397~~$174 million and ~~$287~~$203 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and~~ ~~2017~~, respectively. Receivables from ~~our~~the Company's three largest pharmaceutical wholesalers in the U.S. represented ~~67% and 65%~~70% of total trade receivables at ~~June 30, 2018~~March 31, 2019 and December 31, ~~2017, respectively.~~2018.

Note 12.11. INVENTORIES


Dollars in Millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Finished goods	$	425	$	384	$	448	$	396
Work in process	982		931		934		1,026
Raw and packaging materials	275		273		214		202
Total inventories	$	1,682	$	1,588	$	1,596	$	1,624

Inventories	$	1,242	$	1,166	$	1,283	$	1,195
Other assets	440		422		313		429

Other assets include inventory expected to remain on hand beyond one year in both periods.

Note 13.12. PROPERTY, PLANT AND EQUIPMENT


Dollars in Millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Land	$	100		$	100		$	105		$	104
Buildings	4,938			4,848			5,286			5,231
Machinery, equipment and fixtures	3,053			3,059			3,043			2,962
Construction in progress	1,020			980			477			548
Gross property, plant and equipment	9,111			8,987			8,911			8,845
Less accumulated depreciation	(4,031		)	(3,986		)	(3,926		)	(3,818		)
Property, plant and equipment	$	5,080		$	5,001		$	4,985		$	5,027

Depreciation expense was ~~$239~~$133 million and ~~$349~~$113 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

Note 13. LEASES

The Company leases facilities for office, research and development, and storage and distribution purposes, comprising approximately 90% of the total lease obligation. Lease terms vary based on the nature of operations and the market dynamics in each country; however, all leased facilities are classified as operating leases with remaining lease terms between one and 20 years. Most leases contain specific renewal options for periods ranging between one and 10 years where notice to renew must be provided in advance of lease expiration or automatic renewals where no advance notice is required. Periods covered by an option to extend the lease were included in the non-cancellable lease term when exercise of the option was determined to be reasonably certain. Certain leases also contain termination options that provide the flexibility to terminate the lease ahead of its expiration with sufficient advance notice. Periods covered by an option to terminate the lease were included in the non-cancellable lease term when exercise of the option was determined not to be reasonably certain. Judgment is required in assessing whether renewal and termination options are reasonably certain to be exercised. The Company considers factors such as contractual terms compared to current market rates, leasehold improvements expected to have significant value, costs to terminate a lease and the importance of the facility to the Company’s operations. Costs determined to be variable and not based on an index or rate were not included in the measurement of real estate lease liabilities. As most leases do not provide an implicit rate, the Company's incremental borrowing rate was applied on a portfolio approach to discount its real estate lease liabilities.

The remaining 10% of the Company’s total lease obligation is comprised of vehicles used primarily by the Company’s salesforce, and an R&D facility operated by a third party under BMS direction. Vehicle lease terms vary by country with terms generally between one and four years.

The following table summarizes the components of lease expense for the three months ended March 31, 2019:



Dollars in Millions	2019
Operating lease cost	$	27
Variable lease cost	6
Short-term lease cost	5
Sublease income	—
Total operating lease expense	$	38

Operating lease right-of-use assets and liabilities were as follows as of March 31, 2019 and January 1, 2019:



Dollars in Millions	March 31, 2019		January 1, 2019
Other assets	$	527	$	543

Accrued liabilities	40		40
Pension and other liabilities	529		548
Total liabilities	$	569	$	588

As of December 31, 2018, annual minimum rental commitments for non-cancellable operating leases were approximately $100 million in each of the next five years and an aggregate $200 million thereafter.

Future lease payments for non-cancellable operating leases as of March 31, 2019 were as follow:



Dollars in Millions	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	35
2020	86
2021	76
2022	70
2023	62
Thereafter	395
Total future lease payments	724

Less imputed interest	155
Total lease liability	$	569

Right-of-use assets obtained in exchange for new operating lease obligations were not material for the three months ended March 31, 2019. Other information related to operating leases for the three months ended March 31, 2019 was as follows:



Dollars in Millions, except lease term and discount rate
Cash paid for amounts included in the measurement of operating lease liabilities	$	29
Weighted-average remaining lease term (in years)	11
Weighted-average discount rate	4		%

Note 14. GOODWILL AND OTHER INTANGIBLE ASSETS

Dollars in Millions Estimated Useful Lives June 30,
2018 December 31,
2017
Goodwill $ 6,683
$ 6,863

Other intangible assets:
Licenses 5 – 15 years $ 537
$ 567
Developed technology rights 9 – 15 years 2,357
2,357
Capitalized software 3 – 10 years 1,382
1,381
IPRD 32
32
Gross other intangible assets 4,308
4,337
Less accumulated amortization (3,218 ) (3,127 )
Other intangible assets $ 1,090
$ 1,210

An out of period adjustment was included in the three and six months ended June 30, 2018 to reduce Goodwill and increase Accumulated other comprehensive loss by $180 million attributed to goodwill from prior acquisitions of foreign entities previously not recorded in the correct local currency. The adjustment did not impact the consolidated results of operations and was not material to previously reported balance sheets.



Dollars in Millions	Estimated Useful Lives	March 31, 2019			December 31, 2018
Goodwill		$	6,536		$	6,538

Other intangible assets:
Licenses	5 – 15 years	$	497		$	510
Developed technology rights	9 – 15 years	2,357			2,357
Capitalized software	3 – 10 years	1,166			1,156
IPRD		—			32
Gross other intangible assets		4,020			4,055
Less accumulated amortization		(2,994		)	(2,964		)
Other intangible assets		$	1,026		$	1,091

Amortization expense was ~~$93~~$53 million and ~~$94~~$46 million for the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively.

In the first quarter of 2019, a $32 million IPRD impairment charge was recorded in Research and development following our decision to discontinue development of an investigational compound obtained in the acquisition of Medarex. In the first quarter of 2018, a $64 million impairment charge was recorded in Other income (net) for an out-licensed asset obtained in the 2010 acquisition of ZymoGenetics, Inc., which did not meet its primary endpoint in a Phase II clinical study.

1917

Note 15. ACCRUED LIABILITIES


Dollars in Millions	June 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Rebates and returns	$	2,281	$	2,024	$	2,404	$	2,417
Employee compensation and benefits	566		869		352		848
Research and development	760		783		861		805
Dividends	653		654		671		669
Royalties	313		285		300		391
Branded Prescription Drug Fee	360		303		214		188
Liabilities related to assets held-for-sale					144		152
Litigation and other settlements					79		118
Operating lease liabilities					40		—
Restructuring	79		155		53		85
Pension and postretirement benefits	40		40
Litigation and other settlements	31		38
Pension and postretirement benefit					35		35
Other	745		863		703		781
Accrued liabilities	$	5,828	$	6,014	$	5,856	$	6,489

Note 16.16. EQUITY

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, 2016 2,208
$ 221
$ 1,725
$ (2,503 ) $ 33,513
536
$ (16,779 ) $ 170
Accounting change - cumulative effect (787 )
Adjusted balance at January 1, 2017 2,208
$ 221
$ 1,725
$ (2,503 ) $ 32,726
536
$ (16,779 ) $ 170
Net earnings —
—
—
—
2,490
—
—
17
Other comprehensive income —
—
—
36
—
—
—
—
Cash dividends declared —
—
—
—
(1,282 ) —
—
—
Stock repurchase program —
—
—
—
—
36
(2,000 ) —
Stock compensation —
—
69
—
—
(4 ) (4 ) —
Variable interest entity —
—
—
—
—
—
—
(59 )
Distributions —
—
—
—
—
—
—
(6 )
Balance at June 30, 2017 2,208
$ 221
$ 1,794
$ (2,467 ) $ 33,934
568
$ (18,783 ) $ 122

Balance at December 31, 2017 2,208
$ 221
$ 1,898
$ (2,289 ) $ 31,160
575
$ (19,249 ) $ 106
Accounting change - cumulative effect^(a)
—
—
—
(34 ) 332
—
—
—
Adjusted balance at January 1, 2018 2,208
$ 221
$ 1,898
$ (2,323 ) $ 31,492
575
$ (19,249 ) $ 106
Net earnings —
—
—
—
1,859
—
—
18
Other comprehensive income —
—
—
(11 ) —
—
—
—
Cash dividends declared —
—
—
—
(1,307 ) —
—
—
Stock repurchase program —
—
—
—
—
5
(313 ) —
Stock compensation —
—
68
—
—
(4 ) (18 ) —
Distributions —
—
—
—
—
—
—
(23 )
Balance at June 30, 2018 2,208
$ 221
$ 1,966
$ (2,334 ) $ 32,044
576
$ (19,580 ) $ 101



	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		Capital in Excess of Par Value of Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Shares		Cost			Noncontrolling Interest
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		2,081		(2,762		)	34,070			576		(19,574		)	96
Net earnings	—	—		—		—			1,710			—		—			5
Other Comprehensive Income/(Loss)	—	—		—		118			—			—		—			—
Cash dividends declared^(b)	—	—		—		—			(671		)	—		—			—
Stock compensation	—	—		22		—			—			(4	)	3			—
Distributions	—	—		—		—			—			—		—			(2		)
Balance at March 31, 2019	2,208	$	221	$	2,103	$	(2,644	)	$	35,109		572		$	(19,571	)	$	99


(a)	Refer to "—“—Note 1. Basis of Presentation and Recently Issued Accounting ~~Standards"~~Standards” for additional information.


(b)	Cash dividends declared per common share were $0.41 for the three months ended March 31, 2019.

The following table summarizes changes in equity for the three months ended March 31, 2018:



	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		Capital in Excess of Par Value of Stock		Accumulated Other Comprehensive Loss			Retained Earnings			Shares		Cost			Noncontrolling Interest
Balance at December 31, 2017	2,208	$	221	$	1,898	$	(2,289	)	$	31,160		575		$	(19,249	)	$	106
Accounting change - cumulative effect^(a)	—	—		—		(34		)	332			—		—			—
Adjusted balance at January 1, 2018	2,208	$	221	$	1,898	$	(2,323	)	$	31,492		575		$	(19,249	)	$	106
Net earnings	—	—		—		—			1,486			—		—			9
Other Comprehensive Income/(Loss)	—	—		—		89			—			—		—			—
Cash dividends declared^(b)	—	—		—		—			(655		)	—		—			—
Stock repurchase program	—	—		—		—			—			3		(166		)	—
Stock compensation	—	—		18		—			—			(4	)	(18		)	—
Distributions	—	—		—		—			—			—		—			(2		)
Balance at March 31, 2018	2,208	$	221	$	1,916	$	(2,234	)	$	32,323		574		$	(19,433	)	$	113


(a)	Refer to “—Note 1. Accounting Policies and Recently Issued Accounting Standards” in the Company's 2018 Form 10-K for additional information.


(b)	Cash dividends declared per common share were $0.40 for the three months ended March 31, 2018.

BMS has a stock repurchase program authorized by its Board of Directors allowing for repurchases in the open market or through private transactions, including plans established in accordance with Rule 10b5-1 under the Securities Exchange Act of ~~1934.~~1934, as amended (the Exchange Act). The stock repurchase program does not have an expiration date and may be suspended or discontinued at any time. Treasury stock is recognized at the cost to reacquire the shares. Shares issued from treasury are recognized utilizing the first-in first-out method.

~~BMS repurchased $2 billion of its common stock in 2017 through accelerated share repurchase agreements. The agreements were funded through a combination of debt and cash.~~

The components of Other Comprehensive Income/(Loss) were as ~~follows:~~follows in the three months ended March 31:


	2018									2017									2019									2018
	Pretax			Tax			After tax			Pretax			Tax			After tax
Three Months Ended June 30,
Dollars in Millions																			Pretax			Tax			After tax			Pretax			Tax			After tax
Derivatives qualifying as cash flow hedges:
Unrealized gains/(losses)	$	83		$	(10	)	$	73		$	(35	)	$	12		$	(23	)	$	45		$	(5	)	$	40		$	(38	)	$	6		$	(32	)
Reclassified to net earnings^(a)	13			(1		)	12			(10		)	2			(8		)	(30		)	4			(26		)	20			(7		)	13
Derivatives qualifying as cash flow hedges	96			(11		)	85			(45		)	14			(31		)	15			(1		)	14			(18		)	(1		)	(19		)

Pension and postretirement benefits:																						��
Actuarial gains/(losses)	—			—			—			(93		)	33			(60		)
Actuarial (losses)/gains																			(2		)	—			(2		)	112			(24		)	88
Amortization^(b)	16			(3		)	13			19			(14		)	5			17			(4		)	13			20			(3		)	17
Settlements^(b)	38			(8		)	30			42			(14		)	28			49			(11		)	38			31			(7		)	24
Pension and postretirement benefits	54			(11		)	43			(32		)	5			(27		)	64			(15		)	49			163			(34		)	129

Available-for-sale securities:
Unrealized gains/(losses)	(8		)	1			(7		)	12			1			13			23			—			23			(32		)	6			(26		)
Realized (gains)/losses																			3			—			3			—			—			—
Available-for-sale securities																			26			—			26			(32		)	6			(26		)

Foreign currency translation	(204		)	(17		)	(221		)	(19		)	11			(8		)	32			(3		)	29			(7		)	12			5

Total Other Comprehensive Income/(Loss)	$	(62	)	$	(38	)	$	(100	)	$	(84	)	$	31		$	(53	)	$	137		$	(19	)	$	118		$	106		$	(17	)	$	89

Six Months Ended June 30,
Derivatives qualifying as cash flow hedges:
Unrealized gains/(losses)	$	45		$	(4	)	$	41		$	(53	)	$	19		$	(34	)
Reclassified to net earnings^(a)	33			(8		)	25			(32		)	6			(26		)
Derivatives qualifying as cash flow hedges	78			(12		)	66			(85		)	25			(60		)

Pension and postretirement benefits:
Actuarial gains/(losses)	112			(24		)	88			(35		)	15			(20		)
Amortization^(b)	36			(6		)	30			38			(11		)	27
Settlements^(b)	69			(15		)	54			75			(26		)	49
Pension and postretirement benefits	217			(45		)	172			78			(22		)	56

Available-for-sale securities:
Unrealized gains/(losses)	(40		)	7			(33		)	21			(2		)	19

Foreign currency translation	(211		)	(5		)	(216		)	2			19			21

Total Other Comprehensive Income/(Loss)	$	44		$	(55	)	$	(11	)	$	16		$	20		$	36


(a)	Included in Cost of products sold.


(b)	Included in Other income (net).

The accumulated balances related to each component of ~~other comprehensive loss,~~Other Comprehensive Income/(Loss), net of taxes, were as follows:


Dollars in Millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Derivatives qualifying as cash flow hedges	$	47		$	(19	)	$	65		$	51
Pension and postretirement benefits	(1,711		)	(1,883		)	(2,053		)	(2,102		)
Available-for-sale securities	(35		)	32			(4		)	(30		)
Foreign currency translation	(635		)	(419		)	(652		)	(681		)
Accumulated other comprehensive loss	$	(2,334	)	$	(2,289	)	$	(2,644	)	$	(2,762	)

Note 17. RETIREMENT BENEFITS

BMS sponsors defined benefit pension plans, defined contribution plans and termination indemnity plans for regular full-time employees. The principal defined benefit pension plan is the Bristol-Myers Squibb Retirement Income Plan (the Plan), covering most U.S. employees and representing approximately 66% of the consolidated pension plan assets and 60% of the obligations. Future benefits related to service for this plan were eliminated in 2009. BMS contributes at least the minimum amount required by the ERISA. Plan benefits are based primarily on the participant’s years of credited service and final average compensation. As of March 31, 2019, Plan assets consist primarily of fixed-income securities.

2119

~~Note~~ 17~~. RETIREMENT BENEFITS~~In December 2018, BMS announced plans to fully terminate the Plan. Pension obligations related to the Plan of $3.7 billion will be distributed through a combination of lump sum payments to eligible Plan participants who elect such payments and through the purchase of a group annuity contract from Athene Annuity and Life Company (Athene), a wholly-owned insurance subsidiary of Athene Holding Ltd. The benefit obligation for the Plan as of March 31, 2019 was therefore determined on a plan termination basis for which it is assumed that a portion of eligible active and deferred vested participants will elect lump sum payments. The remaining obligation expected to be transferred to Athene includes an annuity purchase price premium. The Plan has sufficient assets to satisfy all transaction obligations. The transaction is expected to close in the third quarter of 2019 at which time the Company expects to record a total non-cash pre-tax pension settlement charge of approximately $1.5 billion to $2.0 billion.

The net periodic benefit cost/(credit) of defined benefit pension plans includes:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Service cost – benefits earned during the year	$	7		$	6		$	14		$	12		$	7		$	7
Interest cost on projected benefit obligation	50			46			96			94			44			46
Expected return on plan assets	(109		)	(101		)	(218		)	(204		)	(64		)	(109		)
Amortization of prior service credits	(1		)	(1		)	(2		)	(2		)	(1		)	(1		)
Amortization of net actuarial loss	19			20			40			41			18			21
Curtailments and settlements	38			36			69			69			49			31
Net periodic pension benefit cost/(credit)	$	4		$	6		$	(1	)	$	10		$	53		$	(5	)

Pension settlement charges were recognized after determining that the annual lump sum payments will likely exceed the annual interest and service costs for the primary and certain other U.S. and international pension plans. The charges included the acceleration of a portion of unrecognized actuarial losses. Non-current pension liabilities were ~~$403~~$423 million at ~~June 30, 2018~~March 31, 2019 and ~~$456~~$427 million at December 31, ~~2017.~~2018. Defined contribution plan expense in the U.S. was ~~$47 million and $52~~approximately $40 million for the three months ended ~~June 30, 2018~~March 31, 2019 and ~~2017, respectively.~~2018. Comprehensive medical and group life benefits are provided for substantially all U.S. retirees electing to participate in comprehensive medical and group life plans and to a lesser extent certain benefits for non-U.S. employees. The net periodic benefit credits were not material in both periods.

Note 18. LEGAL PROCEEDINGS AND CONTINGENCIES

The Company and certain of its subsidiaries are involved in various lawsuits, claims, government investigations and other legal proceedings that arise in the ordinary course of business. These claims or proceedings can involve various types of parties, including governments, competitors, customers, suppliers, service providers, licensees, employees, or shareholders, among others. The resolution of these matters often develops over a long period of time and expectations can change as a result of new findings, rulings, appeals or settlement arrangements. The Company recognizes accruals for such contingencies when it is probable that a liability will be incurred and the amount of loss can be reasonably estimated. These matters involve patent infringement, antitrust, securities, pricing, sales and marketing practices, environmental, commercial, contractual rights, licensing obligations, health and safety matters, consumer fraud, employment matters, product liability and insurance coverage. Legal proceedings that are material or that the Company believes could become material are described below.

Although the Company believes it has substantial defenses in these matters, there can be no assurance that there will not be an increase in the scope of pending matters or that any future lawsuits, claims, government investigations or other legal proceedings will not be material. Unless otherwise noted, the Company is unable to assess the outcome of the respective litigation nor is it able to provide an estimated range of potential loss. Furthermore, failure to enforce ~~our~~the Company's patent rights would likely result in substantial decreases in the respective product revenues from generic competition.

INTELLECTUAL PROPERTY

Plavix* - Australia

As previously disclosed, Sanofi was notified that, in August 2007, GenRx Proprietary Limited (GenRx) obtained regulatory approval of an application for clopidogrel bisulfate 75mg tablets in Australia. GenRx, formerly a subsidiary of Apotex Inc. (Apotex), has since changed its name to Apotex. In August 2007, Apotex filed an application in the Federal Court of Australia (the Federal Court) seeking revocation of Sanofi’s Australian Patent No. 597784 (Case No. NSD 1639 of 2007). Sanofi filed counterclaims of infringement and sought an injunction. On September 21, 2007, the Federal Court granted Sanofi’s injunction. A subsidiary of the Company was subsequently added as a party to the proceedings. In February 2008, a second company, Spirit Pharmaceuticals Pty. Ltd., also filed a revocation suit against the same patent. This case was consolidated with the Apotex case, and a trial occurred in April 2008. On August 12, 2008, the Federal Court of Australia held that claims of Patent No. 597784 covering clopidogrel bisulfate, hydrochloride, hydrobromide, and taurocholate salts were valid. The Federal Court also held that the process claims, pharmaceutical composition claims, and claim directed to clopidogrel and its pharmaceutically acceptable salts were invalid. The Company and Sanofi filed notices of appeal in the Full Court of the Federal Court of Australia (Full Court) appealing the holding of invalidity of the claim covering clopidogrel and its pharmaceutically acceptable salts, process claims, and pharmaceutical composition claims which have stayed the Federal Court’s ruling. Apotex filed a notice of appeal appealing the holding of validity of the clopidogrel bisulfate, hydrochloride, hydrobromide, and taurocholate claims. A hearing on the appeals occurred in February 2009. On September 29, 2009, the Full Court held all of the claims of Patent No. 597784 invalid. In November 2009, the Company and Sanofi applied to the High Court of Australia (High Court) for special leave to appeal the judgment of the Full Court. In March 2010, the High Court denied the Company and Sanofi’s request to hear the appeal of the Full Court decision. The case was remanded to the Federal Court for further proceedings related to damages sought by Apotex. The Company and Apotex have settled the Apotex case, and the case was dismissed. The Australian government has intervened in this matter and is seeking maximum damages up to 449 million AUD ($~~333~~319 million), plus interest, which would be split between the Company and Sanofi, for alleged losses experienced for paying a higher price for branded Plavix* during the period when the injunction was in place. The Company and Sanofi have disputed that the Australian government is entitled to any damages and the Australian government's claim is still pending and a trial was concluded in September 2017. The Company is expecting a decision in ~~2018.~~2019.

Sprycel - Europe

In May 2013, Apotex, Actavis Group PTC ehf, Generics [UK] Limited (Mylan) and an unnamed company filed oppositions in the EPO seeking revocation of European Patent No. 1169038 (the ‘038 patent) covering dasatinib, the active ingredient in Sprycel. ~~The ‘038 patent is scheduled to expire in April 2020 (excluding potential term extensions).~~ On January 20, 2016, the Opposition Division of the EPO revoked the ‘038 patent. In May 2016, the Company appealed the EPO’s decision to the EPO Board of Appeal. In February 2017, the EPO Board of Appeal upheld the Opposition ~~Division's~~Division’s decision, and revoked the ‘038 patent. Orphan drug exclusivity and data exclusivity for Sprycel in the EU expired in November 2016. The EPO Board of ~~Appeal's~~Appeal’s decision does not affect the validity of ~~our~~the Company's other Sprycel patents within and outside Europe, including different patents that cover the monohydrate form of dasatinib and the use of dasatinib to treat CML. Additionally, in February 2017, the EPO Board of Appeal reversed and remanded an invalidity decision on European Patent No. 1610780 and its claim to the use of dasatinib to treat CML, which the ~~EPO's~~EPO’s Opposition Division had revoked in October 2012. In December 2018, the EPO’s Opposition Division upheld the validity of the patent directed to the use of dasatinib to treat CML, which expires in 2024. The Company intends to take appropriate legal actions to protect Sprycel. Generics have been approved in certain EU markets. We may experience a decline in European revenues in the event that generic dasatinib product enters the market.

Anti-PD-1 Antibody Patent Oppositions and Litigation

In September 2015, Dana-Farber Cancer Institute (Dana-Farber) filed a complaint in Massachusetts federal court seeking to correct the inventorship on up to five related U.S. patents directed to methods of treating cancer using PD-1 and PD-L1 antibodies. Specifically, Dana-Farber is seeking to add two scientists as inventors to these patents. In October 2017, Pfizer was allowed to intervene in this case alleging that one of the scientists identified by Dana-Farber was employed by a company eventually acquired by Pfizer during the relevant period. ~~While an adverse decision in this litigation would not result in monetary liability for~~In February 2019, the Company ~~it could decrease potential future licensing revenue from these patents.~~settled the lawsuit with Pfizer. A bench trial ~~has been scheduled for December 2018.~~in the lawsuit with Dana-Farber began on February 4, 2019. A decision is expected in 2019.

Eliquis Patent Litigation - U.S.

In 2017, twenty-five generic companies sent the Company Paragraph-IV certification letters informing the Company that they had filed ~~abbreviated new drug applications (aNDAs)~~aNDAs seeking approval of generic versions of Eliquis. As a result, two Eliquis patents listed in the FDA Orange Book are being challenged: the composition of matter patent claiming apixaban specifically and a formulation patent. In April 2017, the Company, along with its partner Pfizer, initiated patent lawsuits under the Hatch-Waxman Act against all generic filers in federal district courts in Delaware and West Virginia. In August 2017, the ~~United States~~U.S. Patent and Trademark Office granted patent term restoration to the composition of matter patent, thereby restoring the term of the Eliquis composition of matter patent, which is the Company’s basis for projected LOE, from February 2023 to November 2026. The Company has settled lawsuits with a number of aNDA filers through ~~July 2018.~~March 2019. The settlements do not affect the Company’s projected LOE for Eliquis. A trial with the remaining aNDA filers is scheduled for October 2019 in the U.S. District Court for the District of Delaware.

PRICING, SALES AND PROMOTIONAL PRACTICES LITIGATION

Plavix* State Attorneys General Lawsuits

The Company and certain affiliates of Sanofi are defendants in consumer protection and/or false advertising actions brought by ~~several states~~the attorneys general of Hawaii and New Mexico relating to the sales and promotion of Plavix*.

PRODUCT LIABILITY LITIGATION

The Company is a party to various product liability lawsuits. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. As previously disclosed, in addition to lawsuits, the Company also faces unfiled claims involving its products.

Plavix*

As previously disclosed, the Company and certain affiliates of Sanofi are defendants in a number of individual lawsuits in various state and federal courts claiming personal injury damage allegedly sustained after using Plavix*. Over 5,000 claims involving injury plaintiffs as well as claims by spouses and/or other beneficiaries have been filed in state and federal courts in various states including California, New Jersey, Delaware and New York. In February 2013, the Judicial Panel on Multidistrict Litigation granted the Company and Sanofi’s motion to establish a multi-district litigation (MDL) to coordinate Federal pretrial proceedings in Plavix* product liability and related cases in New Jersey Federal Court. Following the United States Supreme Court’s June 2017 reversal of a California Supreme Court decision that had held that the California state courts can exercise personal jurisdiction over the claims of non-California residents, over 3,300 out-of-state resident plaintiffs' claims (including spouses and beneficiaries) previously pending in the California state court have been dismissed. Some number of these California non-resident plaintiffs’ claims may be re-filed in federal court. After the Company filed summary judgment motions in all of the remaining cases, law firms representing virtually all of the remaining cases represented to the various courts that they will withdraw from or discontinue all or most of their cases. This effectively concludes the ~~Plavix~~* product liability litigation.

Byetta*

Amylin, a former subsidiary of the Company, and Lilly are co-defendants in product liability litigation related to Byetta*. To date, there are over ~~530~~500 separate lawsuits pending on behalf of approximately ~~2,100~~2,000 active plaintiffs (including pending settlements), which include injury plaintiffs as well as claims by spouses and/or other beneficiaries, in various courts in the U.S. The majority of these cases have been brought by individuals who allege personal injury sustained after using Byetta*, primarily pancreatic cancer, and, in some cases, claiming alleged wrongful death. The majority of cases are pending in Federal Court in San Diego in an MDL or in a coordinated proceeding in California Superior Court in Los Angeles (JCCP). In November 2015, the defendants' motion for summary judgment based on federal preemption was granted in both the MDL and the JCCP. ~~The plaintiffs in the MDL appealed to the U.S. Court of Appeals for the Ninth Circuit.~~ In November 2017, the Ninth Circuit reversed the MDL summary judgment order and remanded the case ~~for further proceedings. The JCCP plaintiffs have appealed~~ to the MDL. In November 2018, the California Court of Appeal reversed the state court dismissal and ~~their appeal remains pending.~~the state court cases were remanded to the JCCP for further proceedings. Amylin has product liability insurance covering a substantial number of claims involving Byetta* and any additional liability to Amylin with respect to Byetta* is expected to be shared between the Company and AstraZeneca.

Abilify*

The Company and Otsuka are co-defendants in product liability litigation related to Abilify*. Plaintiffs allege Abilify* caused them to engage in compulsive gambling and other impulse control disorders. There have been over ~~900~~2,000 cases filed in state and federal courts and ~~several~~ additional cases are pending in Canada. The Judicial Panel on Multidistrict Litigation ~~has~~ consolidated the federal court cases for pretrial purposes in the United States District Court for the Northern District of Florida. ~~In April 2018,~~On February 15, 2019, the ~~parties reached~~Company and Otsuka entered into a master settlement agreement establishing a proposed settlement program to resolve ~~the first three cases~~all Abilify* compulsivity claims filed as of January 28, 2019 in the MDL ~~that had been set for trial. Discovery is stayed until September 1, 2018.~~as well as the various state courts, including California and New Jersey.

Eliquis

The Company and Pfizer are co-defendants in product liability litigation related to Eliquis. Plaintiffs assert claims, including claims for wrongful death, as a result of bleeding they allege was caused by their use of Eliquis. ~~The~~As of April 2019, no claims ~~are~~remain pending in anthe MDL in the ~~United States~~U.S District Court for the Southern District of New York ~~and~~or in state ~~courts. As of July 2018, there are over 45 cases pending in the MDL and state courts in the United States and one~~court. One case remains pending in Canada. Over 200 cases have been dismissed with prejudice byin the MDL. ~~Plaintiffs have~~The claims of 23 plaintiffs were appealed ~~some of the dismissed cases~~ to the Second Circuit Court of ~~Appeals.~~Appeals which, in March 2019, affirmed the MDL's dismissals. There were several additional appeals that were stayed pending the outcome of the Second Circuit's decision. These stays have been lifted.

Onglyza*

The Company and AstraZeneca are co-defendants in product liability litigation related to Onglyza*. Plaintiffs assert claims, including claims for wrongful death, as a result of heart failure or other cardiovascular injuries they allege were caused by their use of Onglyza*. As of ~~July 2018,~~March 2019, claims are pending in state and federal court on behalf of ~~over 200~~approximately 275 individuals who allege they ingested the product and suffered an injury. ~~A significant majority of these claims are pending in federal courts.~~ In February 2018, the Judicial Panel on Multidistrict Litigation ordered all federal cases to be transferred to an MDL in the ~~United States~~U.S. District Court for the Eastern District of Kentucky. A significant majority of the claims are pending in the MDL. As part of the Company’s global diabetes business divestiture, the Company sold Onglyza* to AstraZeneca in February 2014 and any potential liability with respect to Onglyza* is expected to be shared with AstraZeneca.

SHAREHOLDER DERIVATIVE LITIGATION

Since December 2015, three shareholder derivative lawsuits were filed in New York state court against certain officers and directors of the Company. The plaintiffs allege, among other things, breaches of fiduciary duty surrounding the Company’s previously disclosed October 2015 civil settlement with the ~~Securities and Exchange Commission~~SEC of alleged ~~Foreign Corrupt Practices Act~~FCPA violations in China in which the Company agreed to a payment of approximately $14.7 million in disgorgement, penalties and interest. ~~As of October 2017, all~~All three of the lawsuits ~~have been~~were dismissed. The Company received a notice of appeal as to one of the dismissed ~~lawsuits.~~lawsuits and in March 2019, the Appellate Division of the Supreme Court of New York affirmed the trial court's dismissal. This litigation is now concluded.

SECURITIES LITIGATION

Since February 2018, two separate putative class action complaints were filed in the U.S. District for the Northern District of California and in the U.S. District Court for the Southern District of New York against the Company, the Company’s Chief Executive Officer, Giovanni Caforio, the Company’s Chief Financial Officer, Charles A. Bancroft and certain former and current executives of the Company. The case in California has been voluntarily dismissed. The remaining complaint alleges violations of securities laws for the Company’s disclosures related to the ~~CheckMate -026~~CheckMate-026 clinical trial in lung cancer. A fully briefed motion to dismiss is pending before the court. The Company intends to defend itself vigorously in this litigation.

OTHER LITIGATION

Acquisition of Celgene Litigation

Following the announcement of the Company's planned acquisition of Celgene, thirteen complaints were filed by Celgene shareholders in the U.S. District Court for the District of Delaware, U.S. District Court for the District of New Jersey, the U.S. District Court for the Southern District of New York and the Court of Chancery of the State of Delaware seeking to enjoin the Company's planned acquisition of Celgene. The complaints in these actions name as defendants Celgene and the members of Celgene's Board of Directors. Five of these complaints also name the Company and Burgundy Merger Sub, Inc., a wholly-owned subsidiary of the Company that was formed solely for the purpose of completing the pending acquisition of Celgene and will be merged with and into Celgene upon the completion of the acquisition, as defendants. Of the complaints naming the Company as a defendant, four are styled as putative class actions. The plaintiffs allege violations of various federal securities laws and breaches of fiduciary duties in connection with the acquisition of Celgene by the Company. Two of these complaints were voluntarily dismissed in April 2019.

Separately, a fourteenth complaint styled as a putative class action was filed in the Court of Chancery of the State of Delaware on behalf of the Company's shareholders naming members of the Company's Board of Directors as defendants. This complaint alleges that each of the members of the Company's Board of Directors breached his or her fiduciary duties to the Company and its shareholders by failing to disclose material information about the pending acquisition. The lawsuit was voluntarily dismissed in April 2019.

The Company expects the remaining lawsuits to be dismissed shortly.

Acquisition of Flexus Litigation

In February 2015, the Company acquired Flexus including rights to its IDO-1 inhibitor. In September 2015, Incyte Corporation (“Incyte”) sued Flexus and Flexus's founders (“Flexus Defendants”) in the Superior Court of the State of Delaware. In its initial and subsequent amended complaints, Incyte alleged claims against the Flexus Defendants, among others, for the misappropriation of various trade secrets relating to the research and development of Incyte's IDO-1 inhibitor. In November 2018, following a two and a-half week trial on trade secrets, a jury in the Superior Court of Delaware returned a defense verdict on behalf of the Flexus Defendants. Incyte may appeal the decision.

Average Manufacturer Price Litigation

The Company is a defendant in a qui tam (whistleblower) lawsuit in the U.S. District Court for the Eastern District of Pennsylvania, in which the U.S. Government declined to intervene. The complaint alleges that the Company inaccurately reported its average manufacturer prices to the Centers for Medicare and Medicaid Services to lower what it owed. Similar claims have been filed against other companies.

GOVERNMENT INVESTIGATIONS

Like other pharmaceutical companies, the Company and certain of its subsidiaries are subject to extensive regulation by national, state and local government agencies in the U.S. and other countries in which BMS operates. As a result, the Company, from time to time, is subject to various governmental inquiries and investigations. It is possible that criminal charges, substantial fines and/or civil penalties, could result from government investigations.

ENVIRONMENTAL PROCEEDINGS

As previously reported, the Company is a party to several environmental proceedings and other matters, and is responsible under various state, federal and foreign laws, including CERCLA, for certain costs of investigating and/or remediating contamination resulting from past industrial activity at the Company’s current or former sites or at waste disposal or reprocessing facilities operated by third parties.

CERCLA Matters

With respect to CERCLA matters for which the Company is responsible under various state, federal and foreign laws, the Company typically estimates potential costs based on information obtained from the U.S. Environmental Protection Agency, or counterpart state or foreign agency and/or studies prepared by independent consultants, including the total estimated costs for the site and the expected cost-sharing, if any, with other “potentially responsible parties,” and the Company accrues liabilities when they are probable and reasonably estimable. The Company estimated its share of future costs for these sites to be $65 million at ~~June 30, 2018,~~March 31, 2019, which represents the sum of best estimates or, where no best estimate can reasonably be made, estimates of the minimal probable amount among a range of such costs (without taking into account any potential recoveries from other parties). The amount includes the estimated costs for any additional probable loss associated with the previously disclosed North Brunswick Township High School Remediation Site.

NOTE 19. PLANNED CELGENE ACQUISITION

On January 3, 2019, the Company announced that it has entered into a definitive merger agreement under which it will acquire Celgene. Under the terms of the agreement, which has been approved by the Board of Directors of the Company and Celgene, if the merger is completed, Celgene shareholders will receive one share of the Company common stock and $50.00 in cash for each share of Celgene common stock held by them. Celgene shareholders will also receive one tradeable contingent value right for each share of Celgene representing the right to receive $9.00 in cash, which is subject to the achievement of future regulatory milestones. Based on the closing price of a share of the Company common stock on January 2, 2019, the most recent trading day prior to the date of the announcement, the merger consideration represented approximately $74 billion. The amount of consideration to be received by Celgene shareholders will fluctuate with changes in the price of the shares of the Company common stock.

On April 17, 2019, the Company commenced an exchange offer for any and all outstanding notes issued by Celgene for up to $19.85 billion aggregate principal amount of new notes to be issued by the Company and cash, which is conditioned upon the closing of the pending acquisition of Celgene. The Company expects to fund the approximately $36 billion that the Company anticipates will be required to pay the aggregate cash portion of the merger consideration to Celgene shareholders through a combination of cash on hand and, subject to market conditions, short-term borrowings and long-term debt. The Company expects to enter into an accelerated share repurchase program of approximately $5.0 billion, which is subject to Board of Directors’ approval. The ultimate amount of shares to be repurchased may change based on company and market factors. See "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Position, Liquidity and Capital Resources" for a discussion of the Company's financing arrangements in connection with the planned acquisition.

The acquisition was approved by the Company’s and Celgene’s shareholders on April 12, 2019, but the consummation of the planned acquisition remains subject to the satisfaction of customary closing conditions and regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and approvals under the antitrust laws of other jurisdictions. With respect to the review of the planned acquisition pursuant to the HSR Act, the Company and Celgene on March 25, 2019 each received a request for additional information and documentary materials (also known as a "second request") from the U.S. Federal Trade Commission in connection with its review. The Company expects the planned acquisition will close in the third quarter of 2019.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of results of operations and financial condition is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.

EXECUTIVE SUMMARY

Bristol-Myers Squibb Company is a global specialty biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. Our strategy is to combine the resources, scale and capability of a pharmaceutical company with the speed and focus on innovation of the biotech industry. Our focus as a specialty biopharmaceutical company is on discovering, developing and delivering transformational medicines for patients facing serious diseases. Our four strategic priorities are to drive business performance, continue to further build a ~~strong~~leading franchise in IO, maintain a diversified portfolio both within and outside of IO, and continue our disciplined approach to capital allocation, including establishing partnerships, collaborations and ~~collaborations~~in-licensing or acquiring investigational compounds as an essential component of successfully delivering transformational medicines to patients. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

On January 3, 2019, we announced that we have entered into a definitive merger agreement to acquire Celgene, which will require approximately $74 billion in consideration, based on the closing price of a share of our common stock on January 2, 2019. The acquisition was approved by the Company’s and Celgene’s shareholders on April 12, 2019. We expect that the planned acquisition will enable us to create a leading focused specialty biopharmaceutical company that is well positioned to address the needs of patients with cancer, inflammatory, immunologic or cardiovascular diseases through high-value innovation medicines and leading scientific capabilities. The transaction remains subject to the satisfaction of customary closing conditions and regulatory approvals, but is expected to close in the third quarter of 2019. Refer to “Item 1. Financial Statements—Note 4. Divestitures and Other Arrangements” and “—Note 19. Planned Celgene Acquisition” for further discussion on our pending acquisition of Celgene. Refer to “—Financial Position, Liquidity and Capital Resources” for a discussion of our financing arrangements in connection with the planned acquisition.

Our revenues increased by 8%14% for the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 as a result of higher demand for ~~our prioritized brands including~~ ~~Opdivo~~ ~~and~~ Eliquis and ~~a favorable foreign exchange impact of 3% partially offset by increased competition for established brands.~~Opdivo. The ~~$0.37 decrease~~$0.13 increase in GAAP EPS primarily resulted from higher license and asset acquisition charges related to the Nektar collaboration and equity investment losses in the second quarter of 2018 in conjunction with lower litigation settlement, royalties and licensing income,revenues partially offset by higher ~~revenues~~R&D costs and lower ~~restructuring and site exit costs.~~other income. After adjusting for specified items, non-GAAP EPS increased ~~$0.37 due to higher revenues and royalties and licensing income.~~$0.16. Cost savings resulting from our transformation initiatives continue to be redeployed in R&D and other areas of higher priorities.


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Dollars in Millions, except per share data	2018		2017		2018		2017		2019		2018
Total Revenues	$	5,704	$	5,144	$	10,897	$	10,073	$	5,920	$	5,193

Diluted Earnings Per Share
GAAP	$	0.23	$	0.56	$	1.13	$	1.50	$	1.04	$	0.91
Non-GAAP	1.01		0.74		1.95		1.58		1.10		0.94

Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items which represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For a detailed listing of all specified items and further information and reconciliations of non-GAAP financial measures refer to “—Non-GAAP Financial Measures.”

Significant Product and Pipeline Approvals

~~The following is a summary of significant approvals received in 2018:~~



Product	Date	Approval



~~Opdivo~~	~~June 2018~~	~~Approval in China for the treatment of locally advanced or metastatic NSCLC after prior platinum-based chemotherapy in adult patients without EGFR or ALK genomic tumor aberrations.~~



Opdivo+Yervoy	~~July 2018~~January 2019	~~FDA~~Announced the EC approval of Opdivo plus low-dose Yervoy ~~for the treatment of adult and pediatric patients 12 years and older with MSI-H or dMMR mCRC that has progressed following treatment with fluoropyrimidine, oxaliplatin and irinotecan.~~
	~~May 2018~~	~~Approval in Japan of~~ ~~Opdivo~~+~~Yervoy~~ ~~combination for previously untreated patients with unresectable melanoma.~~
	~~April 2018~~	~~FDA approval of~~ ~~Opdivo~~+~~Yervoy~~ ~~combination~~ for previously untreated patients with intermediate and poor-risk advanced RCC.



~~Orencia~~Sprycel	February ~~2018~~	~~Approval in Japan for an intravenously administered treatment of moderate to severe polyarticular JIA in patients two years of age and older.~~



~~Sprycel~~	~~July 2018~~2019	Announced the EC ~~expanded the indication for~~approval of Sprycel ~~to include~~, in both tablet and powder for oral suspension formulations, in combination with chemotherapy for the treatment of ~~children and adolescents aged 1 year to 18 years~~pediatric patients with ~~chronic phase~~newly diagnosed Philadelphia ~~chromosome positive CML and to include a powder for oral suspension.~~chromosome-positive ALL.



~~Yervoy~~	~~January 2018~~	~~EC approval of advanced (unresectable or metastatic) melanoma in pediatric patients 12 years of age and older.~~

Refer to "—“—Product and Pipeline ~~Developments"~~Developments” for all of the developments in our marketed products and late-stage pipeline in ~~2018.~~2019.

~~Acquisition,~~

Acquisitions, Divestitures, Licensing and Collaboration Arrangements

~~Acquisition,~~

Acquisitions, divestitures, licensing and collaboration arrangements allow us to focus our resources behind our growth opportunities that drive the greatest long-term value. We are focused on the following core therapeutic areas: oncology, including IO, immunoscience, cardiovascular and fibrosis. ~~Significant transactions entered into in 2018 are summarized below.~~ Refer to ~~"Item~~“Item 1. Financial Statements—Note 3. Alliances,” “—Note 4. ~~Alliances"~~Divestitures and Other Arrangements” and “—Note 19. Planned Celgene Acquisition” for further ~~information.~~

~~Nektar: In~~discussion on our pending acquisition of Celgene. Refer to “—Financial Position, Liquidity and Capital Resources” for a discussion of our financing arrangements in connection with the ~~second quarter of 2018, BMS and Nektar commenced a worldwide license and collaboration for the development and commercialization of NKTR-214, Nektar’s investigational immuno-stimulatory therapy.~~

~~Janssen~~: In the second quarter of 2018, BMS and Janssen Pharmaceuticals, Inc., commenced a worldwide collaboration for the development and commercialization of a Factor XIa program including BMS’s Factor XIa inhibitor, BMS-986177, an investigational anticoagulant compound being studied for the prevention and treatment of major thrombotic conditions.planned acquisition.

RESULTS OF OPERATIONS

Regional Revenues


	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended March 31,
	Total Revenues				2018 vs. 2017				Total Revenues				2018 vs. 2017				Total Revenues				2019 vs. 2018
Dollars in Millions	2018		2017		% Change		Foreign Exchange^(b)		2018		2017		% Change		Foreign Exchange^(b)		2019		2018		% Change		Foreign Exchange^(b)
United States	$	3,230	$	2,865	13	%	—		$	6,008	$	5,603	7	%	—		$	3,449	$	2,778	24	%	—
Europe	1,408		1,188		19	%	9	%	2,814		2,334		21	%	12	%	1,480		1,406		5	%	(9	)%
Rest of the World	923		963		(4	)%	1	%	1,796		1,888		(5	)%	2	%	874		873		—		(8	)%
Other^(a)	143		128		12	%	N/A		279		248		13	%	N/A		117		136		(14	)%	N/A
Total	$	5,704	$	5,144	11	%	2	%	$	10,897	$	10,073	8	%	3	%	$	5,920	$	5,193	14	%	(4	)%


(a)	Other revenues include royalties and alliance-related revenues for products not sold by our regional commercial organizations.


(b)	Foreign exchange impacts were derived by applying the prior period average currency rates to the current period sales.

U.S. revenues increased due to higher demand for Eliquis, Opdivo and ~~Eliquis~~Yervoy ~~partially offset by lower demand for established brands.~~. Average U.S. net selling prices were approximately 1%2% higher after discounts, charge-backs and rebates in the three months ended ~~June 30, 2018~~March 31, 2019 and ~~unchanged in the six months ended June 30, 2018 as additional discounts, charge-backs and rebates offset list price increases compared~~are expected to ~~the prior~~be roughly flat on a full year ~~periods. Refer to “—Product Revenues” below for additional information.~~basis.

Europe revenues increased due to higher demand for Opdivo and Eliquis~~and favorable foreign exchange~~, partially offset by unfavorable foreign exchange and lower ~~demand for established brands due to increased competition~~average net selling prices..

Rest of the World revenues ~~decreased due to lower demand for established brands due to increased competition and lower average net selling prices partially offset by~~remained unchanged as higher demand for Opdivo, Eliquis and ~~favorable~~Yervoy wasoffset by unfavorable foreign ~~exchange.~~exchange and lower demand for established brands.

No single country outside the U.S. contributed more than 10% of total revenues during the ~~six~~three months ended ~~June 30, 2018~~March 31, 2019 or ~~2017.~~2018. Our business is typically not seasonal.

GTN Adjustments

The reconciliation of gross product sales to net product sales by each significant category of GTN adjustments was as follows:


	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended March 31,
Dollars in Millions	2018			2017			% Change		2018			2017			% Change		2019			2018			% Change
Gross product sales	$	7,509		$	6,306		19	%	$	14,210		$	12,168		17	%	$	7,994		$	6,701		19	%
GTN adjustments
Charge-backs and cash discounts	(663		)	(500		)	33	%	(1,246		)	(938		)	33	%	(774		)	(583		)	33	%
Medicaid and Medicare rebates	(765		)	(517		)	48	%	(1,322		)	(901		)	47	%	(800		)	(557		)	44	%
Other rebates, returns, discounts and adjustments	(620		)	(519		)	19	%	(1,209		)	(979		)	23	%	(707		)	(589		)	20	%
Total GTN adjustments	(2,048		)	(1,536		)	33	%	(3,777		)	(2,818		)	34	%	(2,281		)	(1,729		)	32	%
Net product sales	$	5,461		$	4,770		14	%	$	10,433		$	9,350		12	%	$	5,713		$	4,972		15	%

GTN adjustments percentage	27		%	24		%	3	%	27		%	23		%	4	%	28		%	26		%	2	%
U.S.	35		%	31		%	4	%	34		%	29		%	5	%	36		%	34		%	2	%
Non-U.S.	13		%	13		%	—		12		%	13		%	(1	)%	13		%	13		%	—	%

Reductions to provisions for product sales made in prior periods resulting from changes in estimates were ~~$110~~$78 million and ~~$54~~$50 million in the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. GTN adjustments are primarily a function of product sales volume, regional and payer channel mix, contractual or legislative discounts and rebates. GTN adjustments are increasing at a higher rate than gross product sales due to higher U.S. Eliquis gross product sales, which has a relatively high GTN adjustment percentage as a result of competitive pressures to maintain its position on healthcare payer formularies allowing patients continued access through their medical plans.

Product Revenues


	Three Months Ended June 30,							Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017		% Change		2018		2017		% Change		2019		2018		% Change
Prioritized Brands
Opdivo	$	1,627		$	1,195	36	%	$	3,138	$	2,322	35	%	$	1,801	$	1,511	19	%
U.S.	1,024			768		33	%	1,962		1,529		28	%	1,124		938		20	%
Non-U.S.	603			427		41	%	1,176		793		48	%	677		573		18	%

Eliquis	1,650			1,176		40	%	3,156		2,277		39	%	1,925		1,506		28	%
U.S.	979			703		39	%	1,864		1,402		33	%	1,206		885		36	%
Non-U.S.	671			473		42	%	1,292		875		48	%	719		621		16	%

Orencia	711			650		9	%	1,304		1,185		10	%	640		593		8	%
U.S.	501			449		12	%	886		811		9	%	449		385		17	%
Non-U.S.	210			201		4	%	418		374		12	%	191		208		(8	)%

Sprycel	535			506		6	%	973		969		—		459		438		5	%
U.S.	310			281		10	%	524		528		(1	)%	240		214		12	%
Non-U.S.	225			225		—		449		441		2	%	219		224		(2	)%

Yervoy	315			322		(2	)%	564		652		(13	)%	384		249		54	%
U.S.	228			245		(7	)%	390		488		(20	)%	275		162		70	%
Non-U.S.	87			77		13	%	174		164		6	%	109		87		25	%

Empliciti	64			55		16	%	119		108		10	%	83		55		51	%
U.S.	41			37		11	%	78		73		7	%	58		37		57	%
Non-U.S.	23			18		28	%	41		35		17	%	25		18		39	%

Established Brands
Baraclude	179			273		(34	)%	404		555		(27	)%	141		225		(37	)%
U.S.	9			12		(25	)%	19		26		(27	)%	7		10		(30	)%
Non-U.S.	170			261		(35	)%	385		529		(27	)%	134		215		(38	)%

Sustiva Franchise	73			188		(61	)%	157		372		(58	)%
U.S.	8			161		(95	)%	18		314		(94	)%
Non-U.S.	65			27		**		139		58		**

Reyataz Franchise	117			188		(38	)%	241		381		(37	)%
U.S.	54			87		(38	)%	105		175		(40	)%
Non-U.S.	63			101		(38	)%	136		206		(34	)%

Hepatitis C Franchise	12			112		(89	)%	15		274		(95	)%
U.S.	(2		)	30		**		3		72		(96	)%
Non-U.S.	14			82		(83	)%	12		202		(94	)%

Other Brands	421			479		(12	)%	826		978		(16	)%	487		616		(21	)%
U.S.	78			92		(15	)%	159		185		(14	)%	90		147		(39	)%
Non-U.S.	343			387		(11	)%	667		793		(16	)%	397		469		(15	)%

Total Revenues	5,704			5,144		11	%	10,897		10,073		8	%	5,920		5,193		14	%
U.S.	3,230			2,865		13	%	6,008		5,603		7	%	3,449		2,778		24	%
Non-U.S.	2,474			2,279		9	%	4,889		4,470		9	%	2,471		2,415		2	%

** Change in excess of 100%

Opdivo (nivolumab) — a fully human monoclonal antibody that binds to the PD-1 on T and NKT cells that has been approved for several anti-cancer indications including bladder, blood, colon, head and neck, kidney, liver, lung, melanoma and stomach and continues to be investigated across other tumor types and disease areas.

U.S. revenues increased due to higher demand ~~for~~resulting from the ~~treatment~~second quarter 2018 approval of ~~adjuvant melanoma, liver cancer, and~~ the Opdivo+Yervoy combination for kidney cancer and increased use in adjuvant melanoma, partially offset by ~~increased competition for~~a decline in previously-treated advanced lung cancer.

International revenues increased due to higher demand as a result of approvals for additional indications and launches in new countries. ~~Foreign~~Excluding foreign exchange ~~contributed 9% to 2018 year-to-date revenue growth.~~impacts, revenues increased by 29% in the first quarter.

Eliquis (apixaban) — an oral Factor Xa inhibitor, targeted at stroke prevention in adult patients with ~~non-valvular atrial fibrillation~~NVAF and the prevention and treatment of ~~venous thromboembolic~~VTE disorders.

U.S. revenues increased due to ~~higher demand resulting from increased commercial acceptance of novel oral anticoagulants and~~ market share gains ~~partially offset by lower average net selling prices.~~within the oral anticoagulants market.

International revenues increased due to higher demand ~~resulting from increased commercial acceptance of novel~~attributed to both oral ~~anticoagulants~~anticoagulant market growth and market share gains. ~~Foreign~~Excluding foreign exchange ~~contributed 12% to 2018 year-to-date revenue growth.~~impacts, revenues increased by 23% in the first quarter.

Orencia (abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and PsA and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular ~~juvenile idiopathic arthritis.~~JIA.

U.S. revenues increased due to demand and higher average net selling prices.

International revenues ~~increased~~decreased due to ~~higher demand. Foreign exchange contributed 6% to 2018 year-to-date revenue growth.~~foreign exchange.

Sprycel (dasatinib) — an oral inhibitor of multiple tyrosine kinase indicated for the first-line treatment of patients with Philadelphia chromosome-positive ~~chronic myeloid leukemia~~CML in chronic phase and the treatment of adults with chronic, accelerated, or myeloid or lymphoid blast phase CML with resistance or intolerance to prior therapy, including Gleevec* (imatinib meslylate).

U.S. revenues increased ~~in the second quarter 2018~~ due to higher average net selling prices and demand.

International revenues ~~increased 4% and 6% from~~decreased due to foreign exchange. Excluding foreign exchange impacts, revenues increased by 4% in the ~~three and six months ended June 30, 2018, respectively, offset by lower demand in both periods.~~first quarter.

Yervoy (ipilimumab) — a monoclonal antibody for the treatment of patients with unresectable or metastatic melanoma.

U.S. revenues ~~decreased~~increased due to ~~lower~~higher demand ~~primarily~~resulting from the ~~introduction~~second quarter 2018 approval of the Opdivo+Yervoy combination for kidney cancer.

International revenues increased due to higher demand resulting from approval of the Opdivo+Yervoy combination for melanoma in Japan. Excluding foreign exchange impacts, revenues increased by 36% in the first quarter.

Empliciti (elotuzumab) — a humanized monoclonal antibody for the treatment of ~~adjuvant melanoma, partially offset by~~multiple myeloma.

U.S. revenues increased due to the ~~launch~~fourth quarter 2018 approval of ~~the~~ ~~Opdivo+Yervoy~~Empliciti in combination ~~therapy~~with pomalidomide and dexamethasone for ~~kidney cancer.~~relapsed or refractory multiple myeloma.

~~International revenues increased primarily due to foreign exchange.~~

Baraclude (entecavir) — an oral antiviral agent for the treatment of chronic hepatitis B.

International revenues continued to decrease due to lower demand resulting from increased generic competition.

~~Sustiva (efavirenz)Franchise~~Other Brands — ~~a non-nucleoside reverse transcriptase inhibitor for the treatment of HIV, which~~ includes Sustiva, ~~an antiretroviral drug, and bulk efavirenz, which is also included in the combination therapy,~~ ~~Atripla*.~~

~~The LOE for~~ ~~Sustiva~~ ~~in the U.S. occurred in December 2017. Gilead terminated BMS's participation in the U.S. and Canada joint venture following the launch of a generic version of~~ ~~Sustiva~~ ~~in the U.S. As a result, BMS's share of~~ ~~Atripla~~* revenues will further decline during the next three years.

~~International revenues for 2018 include $53 million quarter-to-date and $105 million year-to-date of U.S.~~ ~~Atripla~~* royalty revenue.

~~Reyataz (atazanavir sulfate) Franchise~~ ~~— Includes~~ Reyataz ~~- a protease inhibitor for the treatment of HIV and~~, ~~Evotaz~~ ~~(atazanavir 300 mg and cobicistat 150 mg) - a combination therapy containing~~ ~~Reyataz~~Daklinza andTybost* ~~(cobicistat).~~

~~The LOE for~~ ~~Reyataz~~ ~~in the U.S. occurred in December 2017.~~

~~International revenues continued to decrease due to lower demand.~~

~~Hepatitis C Franchise —~~ ~~Daklinza~~ ~~(daclatasvir) - an NS5A replication complex inhibitor;~~ ~~Sunvepra~~ ~~(asunaprevir) - an NS3 protease inhibitor; and beclabuvir - an NS5B inhibitor.~~

~~U.S. and international revenues decreased due to lower demand resulting from increased competition.~~

~~Other Brands — includes~~ all other products ~~including those which have~~that lost exclusivity in major markets, OTC brands and royalty revenue.

International revenues decreased primarily due to ~~lower~~ Plavix* ~~royalties as a result~~divestiture of ~~the adoption of amended revenue guidance in 2018, the December 2017 expiration of rights to~~ Abilify* ~~in Canada~~certain other brands and continued generic ~~erosion for other brands.~~

erosion.

Estimated End-User Demand

Pursuant to the SEC Consent Order described in our ~~2017 Annual Report on~~2018 Form 10-K, we monitor inventory levels on hand in the U.S. wholesaler distribution channel and outside of the U.S. in the direct customer distribution channel. We are obligated to disclose products with levels of inventory in excess of one month on hand or expected demand, subject to a de minimis exception. Estimated levels of inventory in the distribution channel in excess of one month on hand for the following products were not material to our results of operations as of the dates indicated. ~~At June 30, 2018,~~ ~~Daklinza~~ ~~had 2.8 months of inventory on hand in the U.S. as a result of minimum required stock levels to support patient demand. We expect inventory on hand levels of~~ ~~Daklinza~~ ~~to exceed one month over the near term.~~ Below are international products that had estimated levels of inventory in the distribution channel in excess of one month at ~~March~~December 31, 2018.

Dafalgan, an analgesic product sold principally in Europe, had 1.1 months of inventory on hand internationally at direct customers compared to ~~1.3~~1.2 months of inventory on hand at ~~December 31, 2017.~~September 30, 2018. The level of inventory on hand was primarily due to the ordering patterns of pharmacists in France.

Efferalgan, an analgesic product sold principally in Europe, had 1.4 months of inventory on hand internationally at direct customers compared to ~~1.5~~also 1.7 months of inventory on hand at ~~December 31, 2017.~~September 30, 2018. The level of inventory on hand was primarily due to the ordering patterns of pharmacists in France.

Fervex, a cold and flu product, had ~~2.0~~2.5 months of inventory on hand at direct customers compared to 2.1 months of inventory on hand at ~~December 31, 2017.~~September 30, 2018. The level of inventory on hand was ~~attributable~~primarily due to ~~France to support product seasonality.~~the ordering patterns of pharmacists in France.

Daklinza, a Hepatitis C product, had ~~1.7~~1.6 months of inventory on hand internationally at direct customers compared to ~~1.4~~1.2 months of inventory on hand at ~~December 31, 2017.~~September 30, 2018. The level of inventory on hand was attributable to a patent infringement in Saudi Arabia.

Perfalgan, an analgesic product, had 1.6 months of inventory on hand internationally at direct customers compared to 1.3 months of inventory on hand at September 30, 2018. The level of inventory on hand was primarily in the Gulf Countries due to extended delivery lead time.

Sustiva, an HIV product, had 2.1 months of inventory on hand internationally at direct customers compared to 1.1 months of inventory on hand at September 30, 2018. The level of inventory on hand was attributable to ~~an approved transaction executed~~low volume in-market sales in ~~Thailand for the sale of inventory with superseded packaging to the distributor for further in-market resale.~~Canada

In the U.S., we generally determine our months on hand estimates using inventory levels of product on hand and the amount of out-movement provided by our three largest wholesalers, ~~and our distributors. Our three largest wholesalers~~which account for approximately ~~95%~~97% of total gross sales of U.S. products. Factors that may influence our estimates include generic competition, seasonality of products, wholesaler purchases in light of increases in wholesaler list prices, new product launches, new warehouse openings by wholesalers and new customer stockings by wholesalers. In addition, these estimates are calculated using third-party data, which may be impacted by their recordkeeping processes.

Our non-U.S. businesses have significantly more direct customers. Information on available direct customer product level inventory and corresponding out-movement information and the reliability of third-party demand information varies widely. We limit our direct customer sales channel inventory reporting to where we can influence demand. When this information does not exist or is otherwise not available, we have developed a variety of methodologies to estimate such data, including using historical sales made to direct customers and third-party market research data related to prescription trends and end-user demand. Given the difficulties inherent in estimating third-party demand information, we evaluate our methodologies to estimate direct customer product level inventory and to calculate months on hand on an ongoing basis and make changes as necessary. Factors that may affect our estimates include generic competition, seasonality of products, price increases, new product launches, new warehouse openings by direct customers, new customer stockings by direct customers and expected direct customer purchases for governmental bidding situations. As ~~a result,~~such, all of the information required to estimate months on hand in the direct customer distribution channel for non-U.S. ~~businesses~~business for the quarter ended ~~June 30, 2018~~March 31, 2019 is not available prior to the filing of this ~~quarterly report~~Quarterly Report on Form 10-Q. We will disclose any product with inventory levels in excess of one month on hand or expected demand for the current quarter, subject to a de minimis exception, in the next quarterly report on Form 10-Q.

Expenses


	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended March 31,
Dollars in Millions	2018			2017			% Change		2018			2017			% Change		2019			2018			% Change
Cost of products sold	$	1,625		$	1,569		4	%	$	3,209		$	2,834		13	%	$	1,844		$	1,584		16	%
Marketing, selling and administrative	1,131			1,187			(5	)%	2,111			2,272			(7	)%	1,006			980			3	%
Research and development	2,435			1,679			45	%	3,685			2,982			24	%	1,351			1,250			8	%
Other income (net)	(4		)	(586		)	(99	)%	(404		)	(1,265		)	(68	)%	(260		)	(400		)	(35	)%
Total Expenses	$	5,187		$	3,849		35	%	$	8,601		$	6,823		26	%	$	3,941		$	3,414		15	%

Cost of products sold increased ~~in both periods~~ due to higher royalties andprofit sharing ~~($274~~of $231 million ~~and $495 million in the three and six months ended June 30, 2018, respectively)~~ resulting primarily from higher Eliquis sales and to a lesser extent higher Puerto Rico excise tax, partially offset by a $127 million impairment charge to reduce the carrying value of assets held-for-sale to their estimated fair value in the second quarter of 2017 and lower product costs partially due to foreign currency.hedging gains.

Marketing, selling and administrative expenses ~~decreased in both periods~~increased due to ~~lower advertising, promotion,~~timing of certain expenses and ~~marketing expenses, lower~~higher branded prescription drug fee, partially offset by foreign currency impact.

Research and ~~lower costs attributed~~development expense increased due to ~~transformation initiatives.~~continued expansion of IO and other immunoscience development programs.

Significant charges included in Research and development were as follows:



	Three Months Ended March 31,
Dollars in Millions	2019		2018
Cormorant	$	—	$	60	^(a)
License and asset acquisition charges	—		60

IPRD impairments	32		—
Site exit costs	19		20
Research and development significant charges	$	51	$	80


(a)	Milestone payment

IPRD impairment charge resulted from the decision to discontinue development of an investigational compound obtained in the acquisition of Medarex.

3031

Research and development increased in both periods due to the impact of the Nektar upfront payment and other significant charges listed below and higher costs of clinical development and medical support of marketed products.

~~Significant charges included in R&D expense were as follows:~~

Three Months Ended June 30, Six Months Ended June 30,
Dollars in Millions 2018 2017 2018 2017
Nektar $ 1,050
^(a)
—
$ 1,050
^(a)
$ —

IFM 25
^(b)
—
25
^(b)
—

Cormorant —
—
60
^(b)
—

CytomX —
200
^(a)
—
200
^(a)
Flexus —
93
^(b)
—
93
^(b)
Cardioxyl —
100
^(b)
—
100
^(b)
PsiOxus —
—
—
50
^(a)
License and asset acquisition charges 1,075
393
1,135
443

IPRD impairments —
—
—
75

Site exit costs and other 19
96
39
168


~~(a)~~	~~Upfront payment~~


~~(b)~~	~~Milestone payment~~

~~License and asset acquisition charges resulted from strategic transactions to acquire or license certain investigational therapies and compounds.~~

~~IPRD impairment charges were related to the discontinued development of an investigational compound in the six months ended June 30, 2017, which was part of our alliance with F-Star Alpha Ltd.~~

Site exit costs and other charges resulted from the expected exit of R&D sites in the U.S. through 2020 primarily due to the reduction in the estimated useful lives of the related assets for each site.

Other income (net) decreased ~~in both periods~~ due to ~~a patent litigation settlement in 2017, higher loss on equity investments~~Celgene acquisition and integration expenses, lower pension income, royalties and licensing ~~income.~~income and divestiture gains, partially offset by higher equity investment gains and lower intangible asset impairments.

Items included in Other income (net) were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Interest expense	$	45		$	52		$	91		$	97		$	45		$	46
Investment income	(38		)	(29		)	(74		)	(55		)	(56		)	(36		)
Loss/(gain) on equity investments	356			(5		)	341			(12		)
Equity investment gains													(175		)	(15		)
Provision for restructuring	37			15			57			179			12			20
Acquisition and integration expenses													187			—
Litigation and other settlements	(1		)	(5		)	(1		)	(489		)	1			—
Equity in net income of affiliates	(27		)	(20		)	(51		)	(38		)	—			(24		)
Divestiture gains	(25		)	—			(70		)	(127		)	—			(45		)
Royalties and licensing income	(353		)	(685		)	(720		)	(884		)	(308		)	(367		)
Transition and other service fees	(1		)	(13		)	(5		)	(20		)	(2		)	(4		)
Pension and postretirement	(19		)	(11		)	(30		)	(10		)	44			(11		)
Intangible asset impairment	—			—			64			—			—			64
Loss on debt redemption	—			109			—			109
Other	22			6			(6		)	(15		)	(8		)	(28		)
Other income (net)	$	(4	)	$	(586	)	$	(404	)	$	(1,265	)	$	(260	)	$	(400	)

~~Loss/(gain) on equity investments in the three and six months ended June 30, 2018~~Equity investment gains includes ~~all~~a fair value ~~adjustments due~~adjustment of $74 million related to the ~~adoption~~Company's equity investment in uniQure N.V. and $80 million related to the termination of ~~amended guidance for~~our Europe and Asia partnership with Sanofi in 2019.

Acquisition and integration expenses include the ~~recognition~~following items related to the pending Celgene acquisition: (1) upfront bridge facility commitment fee amortization of $67 million, (2) fair value adjustment of $35 million related to the forward starting interest rate swap option contracts to hedge interest rate risk on the anticipated debt issuance to partially fund the acquisition, (3) financial advisory, legal, proxy filing and ~~measurement~~other regulatory fees of ~~financial assets~~$63 million and ~~liabilities consisting primarily~~(4) consulting fees of ~~a $407~~$22 million ~~charge~~incurred in connection with pre-integration planning activities.

Equity in net income of affiliates was related to our ~~equity investment~~Europe and Asia partnership with Sanofi, which was terminated in ~~Nektar.~~

Restructuring charges relate to changes to the Company's operating model to drive continued success in the near- and long-term through a more focused investment in commercial opportunities for key brands and markets, a competitive and more agile R&D organization that can accelerate the pipeline, streamline operations and realign manufacturing capabilities that broaden biologics capabilities to reflect the current and future portfolio as well as streamline and simplify our small-molecule supply network. The new operating model is expected to enable the Company to deliver the strategic, financial and operational flexibility necessary to invest in the highest priorities across the Company. Aggregate restructuring charges of approximately $150 million are expected to be incurred in 2018 for all actions in addition to accelerated depreciation impacts resulting from early site exits.

~~Litigation and other settlements include $481 million for BMS's share of a patent-infringement settlement related to Merck's PD-1 antibody~~ Keytruda* ~~in the first quarter of 2017.~~

2019.

Divestiture gains includes ~~contingent consideration~~the divestiture of ~~$100 million received for the diabetes business divestiture~~multiple mature global product lines in ~~the first quarter of 2017.~~2018.

Royalties and licensing income includes ~~additional out-licensing consideration of~~higher Keytruda* royalties in 2019, a $50 million fee for amending a royalty rate inand contingent consideration received from the ~~first quarter of 2018, a $25 million sales-based milestone in the second quarter of 2018 and higher Diabetes business divestiture and~~ Keytruda*Erbitux* ~~royalties~~divestiture in ~~2018; and upfront licensing fees of $470 million from Biogen and Roche in the second quarter of 2017.~~2018.

Pension and postretirement includes the interest cost, expected return on plan assets and amortization components of the net periodic benefit cost (credit) as well as net charges for ~~pension~~settlements, curtailments and ~~post-retirement benefit plans including settlement~~special termination benefits of $49 million in 2019 and ~~curtailment charges.~~$31 million in 2018.

Intangible asset ~~impairments include~~impairment includes $64 million in ~~the first quarter of~~ 2018 for an out-licensed asset obtained in the ~~2010~~ acquisition of ZymoGenetics, Inc., which did not meet its primary endpoint in a Phase II clinical study.

~~A debt redemption loss of $109 million resulted from the early redemption of certain long-term debt obligations in the second quarter of 2017.~~

Refer to "Item 1. Financial Statements—Note 1. Basis of Presentation and Recently Issued Accounting Standards, Note 6. Other Income (Net), Note 7. Restructuring and Note 10. Financial Instruments and Fair Value Measurements" for further information.

Income Taxes


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Earnings Before Income Taxes	$	517		$	1,295		$	2,296		$	3,250		$	1,979		$	1,779
Provision for Income Taxes	135			373			419			802			264			284
Effective Tax Rate	26.1		%	28.8		%	18.2		%	24.7		%	13.3		%	16.0		%

Impact of Specified Items	(8.6		)%	(6.4		)%	(0.9		)%	(3.5		)%	(1.2		)%	(1.2		)%

As discussed in more detail in "Item 1. Financial Statements—Note 8. Income Taxes", the above tax impact of specified items primarily resulted from jurisdictional tax rates applied to specified items, including certain non-deductible R&D charges and Nektar equity investment losses as well as changes to the provisional repatriation tax. Excluding the impact of these items, theThe reduction in the effective tax ~~rates~~rate was primarily due to ~~new U.S.~~the recognition of prior period tax ~~reform legislation known as~~credits in 2019. Refer to “Item 1. Financial Statements—Note 7. Income Taxes” for additional information on the ~~Tax Cuts and Jobs Act~~tax impact of 2017 (the Act) enacted on December 22, 2017 partially offset by earnings mix. The Act moves from a worldwide tax system to a quasi-territorial tax system and comprises broad and complex changes to the U.S. tax code. Additional changes to the effective tax rate may occur throughout the year due to various reasons including further changes to the provisional repatriation tax, pretax earnings mix, tax reserves and revised interpretations of the relevant tax code.specified items.

Non-GAAP Financial Measures

Our non-GAAP financial measures, ~~including~~such as non-GAAP earnings and related EPS information, are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including (1) acquisition and integration expenses, (2) restructuring ~~costs;~~costs, (3) accelerated depreciation and impairment of property, plant and equipment and intangible ~~assets;~~assets, (4) R&D charges or other income resulting from up-front or contingent milestone payments in connection with the acquisition or licensing of third-party intellectual property ~~rights;~~rights, (5) divestiture ~~equity investment~~gains or losses, (6) pension, legal and other contractual settlement charges and (7) debt redemption gains or ~~losses; pension settlement charges; and legal and other contractual settlements,~~losses, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates.

We also provide international revenues for our priority products excluding the impact of foreign exchange. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in Exhibit 99.2 to our Form 8-K filed on April 25, 2019 and are incorporated herein by reference.

Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP.

Specified items were as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2018			2017			2019			2018
Impairment charges	$	—		$	127		$	10		$	127		$	—		$	10
Accelerated depreciation and other shutdown costs	14			3			17			3			12			3
Cost of products sold	14			130			27			130			12			13

Marketing, selling and administrative	—			—			1			—			1			1

License and asset acquisition charges	1,075			393			1,135			443			—			60
IPRD impairments	—			—			—			75			32			—
Site exit costs and other	19			96			39			168			19			20
Research and development	1,094			489			1,174			686			51			80

Loss/(gain) on equity investments	356			—			341			—
Equity investment gains													(175		)	(15		)
Provision for restructuring	37			15			57			179			12			20
Litigation and other settlements	—			—			—			(481		)
Acquisition and integration expenses													187			—
Divestiture gains	(25		)	—			(68		)	(100		)	—			(43		)
Royalties and licensing income	(25		)	(497		)	(75		)	(497		)	—			(50		)
Pension and postretirement	37			36			68			69			49			31
Intangible asset impairment	—			—			64			—			—			64
Loss on debt redemption	—			109			—			109
Other income (net)	380			(337		)	387			(721		)	73			7

Increase to pretax income	1,488			282			1,589			95			137			101

Income taxes on items above	(218		)	20			(226		)	92			(43		)	(8		)
Income taxes attributed to U.S. tax reform	3			—			(29		)	—			—			(32		)
Income taxes	(215		)	20			(255		)	92			(43		)	(40		)

Increase to net earnings	1,273			302			1,334			187			$	94		$	61
Noncontrolling interest	—			—			—			(59		)
Increase to net earnings used for Diluted Non-GAAP EPS calculation	$	1,273		$	302		$	1,334		$	128

The reconciliations from GAAP to Non-GAAP were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
Dollars in Millions, except per share data	2018		2017		2018		2017		2019		2018
Net Earnings Attributable to BMS used for Diluted EPS Calculation – GAAP	$	373	$	916	$	1,859	$	2,490	$	1,710	$	1,486
Specified Items	1,273		302		1,334		128		94		61
Net Earnings Attributable to BMS used for Diluted EPS Calculation – Non-GAAP	$	1,646	$	1,218	$	3,193	$	2,618	$	1,804	$	1,547

Average Common Shares Outstanding – Diluted	1,636		1,650		1,638		1,660		1,637		1,640

Diluted EPS Attributable to BMS – GAAP	$	0.23	$	0.56	$	1.13	$	1.50	$	1.04	$	0.91
Diluted EPS Attributable to Specified Items	0.78		0.18		0.82		0.08		0.06		0.03
Diluted EPS Attributable to BMS – Non-GAAP	$	1.01	$	0.74	$	1.95	$	1.58	$	1.10	$	0.94

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Our net cash position was as follows:


Dollars in Millions	June 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Cash and cash equivalents	$	4,999		$	5,421		$	7,335		$	6,911
Marketable securities – current	1,076			1,391			1,429			1,973
Marketable securities – non-current	2,117			2,480			1,233			1,775
Total cash, cash equivalents and marketable securities	8,192			9,292			9,997			10,659
Short-term debt obligations	(1,716		)	(987		)	(381		)	(1,703		)
Long-term debt	(5,671		)	(6,975		)	(5,635		)	(5,646		)
Net cash position	$	805		$	1,330		$	3,981		$	3,310

Cash, cash equivalents and marketable securities held in the U.S. were approximately ~~$3.2~~$8.3 billion at ~~June 30, 2018.~~March 31, 2019. Most of the remaining ~~$5.0~~$1.7 billion is held primarily in ~~low-tax jurisdictions and is subject to restrictions or withholding taxes in certain jurisdictions.~~our international affiliates for local operating needs. We are subject to a one-time deemed repatriation transition tax ~~of $2.6~~in which $2.1 billion ~~which~~ will be payable over the next eight years as a result of U.S. tax ~~reform beginning in 2018. However, we~~reform. We expect to have more flexibility in accessing cash and future cash that may be generated in foreign subsidiaries. We believe that our existing cash, cash equivalents and marketable securities together with cash generated from operations and issuance of commercial paper in the U.S., as well as borrowing available under our credit facilities, will be sufficient to satisfy our ~~normal~~anticipated operating cash ~~requirements~~needs for at least the next few years, including dividends, capital expenditures, milestone payments, working capital and deemed repatriation transition ~~tax and $1.25 billion of long-term debt maturing in 2019.~~tax.

Management continuously evaluates ~~the Company’s~~our capital structure to ensure ~~the Company is~~that we are financed efficiently, which may result in the repurchase of common stock and debt securities, termination of interest rate swap contracts prior to maturity and issuance of debt securities.

The Company repurchased $320 million of common stock in 2018. The average amount of commercial paper outstanding was $38 million at a weighted-average rate of 1.3% during 2018. The maximum amount of commercial paper outstanding was $300 million with no outstanding balance at June 30, 2018.

Dividend payments were ~~$1.3 billion~~$669 million and $653 million in the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017.~~respectively. Dividends declared per common share were ~~$0.80~~$0.41 and ~~$0.78~~$0.40 in the ~~six~~three months ended ~~June 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. Dividend decisions are made on a quarterly basis by our Board of Directors. The merger agreement prohibits us from declaring, setting aside or paying any dividend or other distribution other than our regular cash dividend in the ordinary course of business consistent with past practice in an amount not to exceed $0.41 per share per quarter. Annual capital expenditures were ~~$1.1~~approximately $1.0 billion in ~~2017~~2018 and are expected to be approximately ~~$1.0 billion in 2018 and $900~~$800 million in ~~2019.~~2019 and $600 million in 2020. We continue to expand our biologics manufacturing capabilities and other facility-related activities. For example, we are constructing a new large-scale biologics manufacturing facility in Ireland that will produce multiple therapies for our growing biologics portfolio when ~~completed~~approved for commercial use in ~~2019. We also paid $1.85 billion to Nektar in the second quarter of 2018 for certain collaboration rights and 8.3 million shares of its common stock representing a 4.8% ownership interest.~~early 2020.

Our investment portfolio includes non-current marketable securities, which are subject to changes in fair value as a result of interest rate fluctuations and other market factors. Our investment policy establishes limits on the amount and time to maturity of investments with any institution. The policy also requires that investments are only entered into with corporate and financial institutions that meet high credit quality standards. Refer to “Item 1. Financial Statements—Note ~~10.~~9. Financial Instruments and Fair Value Measurements” for further information.

~~We currently~~Under our commercial paper program, we may issue a maximum of $5 billion unsecured notes that have ~~three separate~~maturities of not more than 366 days from the date of issuance. There were no commercial paper borrowings outstanding as of March 31, 2019.

As of March 31, 2019, we had four revolving credit facilities totaling ~~$5.0~~$6.0 billion, ~~from~~which consisted of a ~~syndicate~~364-day $2.0 billion facility expiring in January 2020, two five-year $1.5 billion facilities that were extended to September 2022 and July 2023, respectively, and a $1.0 billion facility expiring in January 2022. All of ~~lenders. The~~these facilities provide for customary terms and conditions with no financial ~~covenants.~~covenants and may be used to provide backup liquidity for our commercial paper borrowings. Our ~~364-day $2.0~~$1.0 billion facility ~~expires in March 2019~~ and our two $1.5 billion ~~facilities were extended to September 2022 and July 2023. Our two $1.5 billion, five-year~~revolving facilities are extendable annually by one year on the anniversary date with the consent of the lenders. No borrowings were outstanding under any revolving credit facility at ~~June 30, 2018~~March 31, 2019 or December 31, ~~2017.~~2018.

In connection with our pending acquisition of Celgene, in January 2019 we entered into a bridge commitment letter that provides for up to $33.5 billion in a 364-day senior unsecured bridge facility. We also entered into an $8.0 billion term loan credit agreement consisting of a $1.0 billion 364-day tranche, a $4.0 billion three-year tranche and a $3.0 billion five-year tranche. The term loan reduced the commitments under the bridge facility to $25.5 billion. If we obtain additional funding by issuing securities or obtaining other loans, the amount of the bridge facility will be correspondingly reduced. The bridge facility and the term loan are subject to customary terms and conditions and do not have any financial covenants. No amounts will be borrowed under either the bridge facility or the term loan prior to the closing of the pending acquisition of Celgene. If drawn upon, the proceeds of the under the bridge facility and the term loan will be used solely to fund a portion of the cash to be paid in the pending acquisition of Celgene, the anticipated refinancing of debt of Celgene and the payment of related fees and expenses.

Also in connection with the pending acquisition of Celgene, on April 17, 2019, we commenced an exchange offer for any and all outstanding notes issued by Celgene for up to $19.85 billion aggregate principal amount of new notes to be issued by us and cash, which is conditioned upon the closing of the acquisition. The expiration of the offer will be extended until the acquisition closes. In conjunction with the offer to exchange the Celgene notes, we concurrently solicited consents to adopt certain proposed amendments to each of the indentures governing the Celgene notes to eliminate substantially all of the restrictive covenants in such indentures.

We expect to fund the approximately $36 billion that we anticipate will be required to pay the aggregate cash portion of the merger consideration to Celgene shareholders through a combination of cash on hand and, subject to market conditions, short-term borrowings and long-term debt. We also expect to enter into an accelerated share repurchase program of approximately $5.0 billion, which is subject to Board of Directors’ approval. The ultimate amount of shares to be repurchased may change based on company and market factors.

Following the announcement of our pending acquisition of Celgene, we entered into forward starting interest rate swap option contracts, with a total notional value of $7.6 billion, to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the acquisition. In April 2019, we entered into deal contingent forward starting interest rate swap contracts, with an aggregate notional principal amount of $10.4 billion, to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the planned Celgene acquisition. The option contracts that we entered into following the announcement of the planned acquisition of Celgene were terminated contemporaneously with our entry into the deal contingent contracts.

Additional regulations in the U.S. could be passed in the future including additional healthcare reform initiatives, further changes to tax laws, additional pricing laws and potential importation restrictions which may reduce our results of operations, operating cash flow, liquidity and financial flexibility. We continue to monitor the potential impact of the economic conditions in certain European and other countries and the related impact on prescription trends, pricing discounts and creditworthiness of our customers. We believe these economic conditions will not have a material impact on our liquidity, cash flow or financial flexibility.

34The UK voted to depart from the EU during June 2016. Similar to other companies in our industry, certain regulatory, trade, labor and other aspects of our business will likely be affected over time. However, we currently do not believe that these matters and other related financial effects will have a material impact on our consolidated results of operations, financial position or liquidity. Our sales in the UK represent less than 3% of our consolidated revenues.

Credit Ratings

BMS's current long-term and short-term credit ratings assigned by Moody's Investors Service are A2 and Prime-1, respectively, ~~with a stable rating outlook.~~and BMS's current long-term and short-term credit ratings assigned by Standard & Poor's are A+ and A-1+, ~~respectively, with a stable rating outlook. BMS's long-term and short-term credit ratings assigned by Fitch are A- and F2, respectively, with a stable rating outlook. Our~~respectively. The long-term ratings reflect the agencies' opinion that we have a low default risk but are somewhat susceptible to adverse effects of changes in circumstances and economic conditions. ~~Our~~The short-term ratings reflect the agencies' opinion that we have good to extremely strong capacity for timely repayment. The current long-term ratings do not reflect any impact from the planned acquisition of Celgene. In January 2019, Moody's placed BMS under review for downgrade and Standard & Poor's placed BMS on CreditWatch with negative implications, each following the announcement to acquire Celgene. While we expect that additional debt issued in connection with the pending Celgene acquisition will result in a downgrade to our credit ratings, we expect those credit ratings to remain at an investment grade level and we do not expect this change to impact our ability to access short-term or long-term financing. However, we cannot guarantee the future actions of Moody's and/or Standard & Poor's. Any credit rating downgrade may affect the interest rate of any debt we may incur, the fair market value of existing debt and our ability to access the capital markets generally.

Cash Flows

The following is a discussion of cash flow activities:


	Six Months Ended June 30,						Three Months Ended March 31,
Dollars in Millions	2018			2017			2019			2018
Cash flow provided by/(used in):
Operating activities	$	2,232		$	2,445		$	1,390		$	1,175
Investing activities	(391		)	(1,227		)	1,060			(43		)
Financing activities	(2,237		)	(2,019		)	(2,029		)	(1,222		)

Operating Activities

Cash flow from operating activities represents the cash receipts and disbursements from all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting net earnings for noncontrolling interest, non-cash operating items, gains and losses attributed to investing and financing activities and changes in operating assets and liabilities resulting from timing differences between the receipts and payments of cash and when the transactions are recognized in our results of operations. As a result, changes in cash from operating activities reflect the timing of cash collections from customers and alliance partners; payments to suppliers, alliance partners and employees; customer discounts and rebates; and tax payments in the ordinary course of business. For example, annual employee bonuses are typically paid in the first quarter of the subsequent year. In addition, cash collections continue to be impacted by longer payment terms for certain biologic products in the U.S., primarily our newer oncology products including Opdivo, Yervoy and Empliciti (90 ~~days to 120~~ days). The longer payment terms are used to more closely align with the insurance reimbursement timing for physicians and cancer centers following administration to the patients.

The ~~$213~~$200 million change in cash flow from operating activities compared to ~~2017~~2018 was primarily attributable ~~to:~~

~~Higher R&D licensing and collaboration payments of approximately $700 million primarily due~~ to ~~the Nektar transaction in 2018;~~

~~Lower litigation settlement proceeds of approximately $500 million related to Merck's PD-1 antibody~~ Keytruda* ~~in 2017~~; ~~and~~

~~Lower out-license proceeds of approximately $400 million primarily related to the Biogen and Roche transactions in 2017.~~

~~Partially offset by:~~

~~Timing of~~higher cash collections and timing of payments in the ordinary course of business of approximately ~~$1.4 billion.~~$400 million, partially offset by approximately $200 million of Celgene acquisition and integration related payments in 2019.

Investing Activities

Cash requirements from investing activities include cash used for acquisitions, manufacturing and facility-related capital expenditures and purchases of marketable securities with original maturities greater than 90 days at the time of purchase reduced by proceeds from business divestitures (including royalties) and the sale and maturity of marketable securities.

The ~~$836 million~~$1.1 billion change in cash flow from investing activities compared to ~~2017~~2018 was primarily attributable to:

Higher net sales and maturities of marketable securities with maturities greater than 90 days of approximately ~~$1.4 billion~~$1.0 billion; and

Lower net acquisition and other payments of approximately $300 million primarily due to ~~higher yields on cash and cash equivalents and to fund business development activities; and~~the Flexus contingent consideration payment in 2018.

~~Higher~~Partially offset by:

Lower business divestiture proceeds of approximately $200 million primarily due to the ~~sale~~divestiture of ~~the small molecule active pharmaceutical ingredient~~ manufacturing operations in Swords, Ireland ~~to SK Biotek~~and certain mature brands in 2018.

~~Partially offset by:~~

~~Higher net acquisition and other payments of approximately $900 million primarily due to the purchase of 8.3 million shares of Nektar common stock in 2018.~~

Financing Activities

Cash requirements from financing activities include cash used to pay dividends, repurchase common stock and repay long-term debt and other borrowings reduced by proceeds from the exercise of stock options and issuance of long-term debt and other borrowings.

The ~~$218~~$800 million change in cash flow from financing activities compared to ~~2017~~2018 was primarily attributable ~~to:~~

~~Lower net borrowings~~to higher debt repayments of ~~$1.9~~approximately $1.0 billion ~~resulting from~~due to the ~~issuance~~maturity of ~~long-term debt used~~notes in 2019, partially offset by approximately $200 million relating to repurchase of common stock in ~~2017.~~

~~Partially offset by:~~

~~Lower repurchases of common stock of $1.7 billion primarily due to the accelerated share repurchase agreements in 2017.~~2018.

Product and Pipeline Developments

~~We manage our~~

Our R&D programs are managed on a portfolio basis ~~investing resources in each stage~~ from early discovery through late-stage ~~development. We continually evaluate our portfolio of R&D assets to ensure that there is an appropriate~~development and include a balance of ~~early-~~early-stage and late-stage programs to support future growth. ~~We consider our~~Our late stage R&D programs ~~that have entered into~~in Phase III development ~~to be significant, as these programs constitute our late-stage development pipeline. These programs~~ include both investigational compounds ~~in Phase III development~~ for initial indications and ~~marketed products in Phase III development for~~ additional indications or ~~formulations.~~formulations for marketed products. Spending on these programs represent approximately 35-45% of our annual R&D expenses in the last three years. Opdivo was the only investigational compound or marketed product that represented greater than 10% of our R&D expenses in the last three years. Our late-stage development programs could potentially have an impact on our revenue and earnings within the next few years if regulatory approvals are obtained and products are successfully commercialized. The following are the ~~recent~~ developments in our marketed products and our late-stage pipeline:



Product	Indication	Date	Developments



Opdivo	CRC	March 2019	Ono, our alliance partner for Opdivo in Japan, announced the submission of a supplemental application of Opdivo in Japan for additional indication of MSI-H unresectable advanced or recurrent CRC that has progressed following chemotherapy for a partial change in the approved items of the manufacturing and marketing approval. This is mainly based on the result from Phase II CheckMate-142 study evaluating Opdivo in patients with MSI-H or dMMR recurrent or metastatic CRC that has progressed on or after, or been intolerant of, at least one previous line of treatment with chemotherapy including fluoropyrimidine anticancer drugs.
	NSCLC	April 2019	Announced results from pooled analyses of survival data from four studies (CheckMate-017, -057, -063 and -003) in patients with previously-treated advanced NSCLC who were treated with Opdivo. In the pooled analysis of the four studies, 14% of all Opdivo-treated patients were alive at four years. Notably, in patients with PD-L1 greater than or equal to 1% and less than 1%, four-year overall survival rate were 19% and 11%, respectively.
	SCCHN	January 2019	Acceptance in China of sBLA filing for patients who had previously been treated for metastatic or recurrent SCCHN.



~~Opdivo~~ Opdivo+Yervoy	mCRPC	February 2019	Announced results from an interim analysis of the Phase II CheckMate-650 trial evaluating Opdivo+Yervoy in patients with mCRPC showed that among 32 asymptomatic or minimally symptomatic patients whose disease had progressed after second-generation hormone therapy and who had not received chemotherapy (cohort 1), with a median follow-up of 11.9 months, the objective response rate was 25%. Additionally, among 30 patients whose disease progressed after taxane-based chemotherapy (cohort 2), with a median follow-up of 13.5 months, the objective response rate was 10%.
	Melanoma	~~June 2018~~March 2019	Received FDA full approval for Opdivo in combination with Yervoy for the treatment of patients with unresectable or metastatic melanoma based on additional longer term efficacy data from CheckMate-067 (4-year overall survival) without restrictions in patient population. This approval fulfills two Post Marketing Requirements to verify and describe clinical benefit, thereby converting prior accelerated approval to full approval for nivolumab in combination with ipilimumab for patients with unresectable or metastatic melanoma and nivolumab monotherapy for BRAF Mutant subjects with unresectable or metastatic melanoma. Importantly, based on FDA review of the CheckMate-067 4-year overall survival data, the results of exploratory analyses by PD-L1 tumor expression have been removed entirely from the label.
	NSCLC	January 2019	Announced voluntary withdrawal of the Company's sBLA for the Opdivo plus low-dose Yervoy for treatment of first-line advanced NSCLC in patients with TMB greater than or equal to 10 mutations per megabase as data from CheckMate-227, Part 1a. After discussions with FDA, the Company believes further evidence on the relationship between TMB and PD-L1 is required to fully evaluate the impact of Opdivo plus Yervoy on overall survival in first-line NSCLC patients. This analysis will require availability of the final data from CheckMate-227, Part 1a, which the Company anticipates will be available in summer 2019. The data from Part 1a could not be provided on time within the review cycle of the current application.
	RCC	February 2019	Announced new results from the Phase III CheckMate-214 study, showing that therapy with Opdivo plus low-dose Yervoy continued to demonstrate long-term survival benefits in patients with previously untreated advanced or metastatic RCC.
	RCC	January 2019	Announced the EC approval of Opdivo plus low-dose Yervoy for previously untreated patients with intermediate and poor-risk advanced RCC.
	SCCHN	April 2019	Announced topline results from the Phase II CheckMate-714 trial evaluating Opdivo versus Opdivo+Yervoy in patients with recurrent or metastatic SCCHN. The study did not meet its primary endpoints.



Eliquis	NVAF/ACS	March 2019	Announced results from the Phase ~~III CheckMate-238~~IV AUGUSTUS trial evaluating ~~Opdivo~~Eliquis versus ~~Yervoy~~vitamin K antagonists (VKAs) in patients with ~~stage IIIB/C~~ NVAF and ACS and/or ~~stage IV melanoma who are at high risk of recurrence following complete surgical resection demonstrated statistically longer recurrence-free survival of 62.6% for~~ ~~Opdivo~~undergoing PCI. Results show that in patients receiving a P2Y12 inhibitor with or without aspirin (antiplatelet therapies), the ~~primary endpoint~~proportion of ~~the study, versus 50.2% for~~ ~~Yervoy~~ ~~at a minimum follow-up of 24 months across key subgroups, including disease stages and BRAF mutation status.~~
~~Multiple Myeloma~~	~~June 2018~~	~~Announced the FDA lifted a partial clinical hold placed on CheckMate-602, a randomized, open-label Phase III study evaluating the addition of~~ ~~Opdivo~~ ~~to pomalidomide and dexamethasone in~~ patients with ~~relapsed~~major or ~~refractory multiple myeloma. The decision follows consultation~~clinically relevant non-major (CRNM) bleeding at six months was significantly lower for those treated with ~~the FDA and agreement on amendments to the study protocol.~~
~~NSCLC~~	~~June 2018~~	~~Approval in China for the treatment of locally advanced or metastatic NSCLC after prior platinum-based chemotherapy in adult patients without EGFR or ALK genomic tumor aberrations.~~
~~NSCLC~~	~~April 2018~~	~~Announced that the pivotal, randomized Phase III CheckMate-078 trial evaluating~~ ~~Opdivo~~ versus docetaxel in a predominantly Chinese population with previously treated advanced NSCLC demonstrated superior overall survival benefit in the primary endpoint regardless of PD-L1 expression or tumor histology.
~~SCCHN~~	~~April 2018~~	~~Announced two-year overall survival data from CheckMate-141, a Phase III study, evaluating~~ ~~Opdivo~~Eliquis compared to those treated with ~~investigator’s choice chemotherapy (cetuximab, docetaxel or methotrexate) in patients with recurrent or metastatic SCCHN after failure on platinum-based therapy.~~
~~SCLC~~	~~April 2018~~	~~FDA acceptance of the Company's sBLA for priority review to treat patients with SCLC whose disease has progressed after two or more prior lines of therapy. The FDA action date is August 16, 2018.~~
~~Various~~	~~June 2018~~	~~Announced the CHMP of the EMA has recommended expanded approval of the current indications for~~ ~~Opdivo~~ to include the adjuvant treatment of adult patients with melanoma with involvement of lymph nodes or metastatic disease who have undergone complete resection. This is the first time the CHMP has recommended a ~~PD-1 inhibitor as an adjuvant treatment for any type of cancer. The CHMP recommendation will be reviewed by the EC which has the authority to approve medicines for the EU.~~
	~~June 2018~~	~~Announced preliminary data from the ongoing PIVOT Phase I/II Study, which is evaluating the combination of~~ ~~Opdivo~~ with Nektar's investigational medicine, NKTR-214. The preliminary results presented at the 2018 American Society of Clinical Oncology reported safety, efficacy and biomarker data for patients enrolled in the Phase I dose-escalation stage of the study and for the first patients consecutively enrolled in select dose expansion cohorts in Phase II.
	~~April 2018~~	~~EC approval of an every four-week (Q4W)~~ ~~Opdivo~~ ~~dosing schedule of 480 mg infused over 60 minutes as an option for patients with advanced melanoma and previously treated RCC as well as the approval of a two-week~~ ~~Opdivo~~ ~~dosing option of 240 mg infused over 30 minutes to replace weight-based dosing for all six approved monotherapy indications in the EU.~~
	~~March 2018~~	~~FDA approval of the Company's sBLA to update~~ ~~Opdivo~~ ~~dosing to include 480 mg infused every four weeks for a majority of approved indications as well as a shorter 30 minute infusion across all approved indications.~~VKA.



Product	Indication	Date	Developments



~~Opdivo+Yervoy~~Orencia	~~CRC~~JIA	~~July 2018~~April 2019	~~FDA~~Received the EC notification on the adoption of the approval ofon our ~~Opdivo~~Orencia ~~plus low-dose~~ ~~Yervoy~~solution for subcutaneous injection in pre-filled syringe extension application (50 mg & 87.5 mg strength) and extension of indication for the treatment of ~~adult and~~polyarticular JIA in pediatric patients 12two years of age and ~~older with MSI-H or dMMR mCRC that has progressed following treatment with a fluoropyrimidine, oxaliplatin and irinotecan.~~
~~Opdivo+Yervoy~~Orencia	~~Melanoma~~	~~May 2018~~	~~Approval in Japan of~~ ~~Opdivo~~+~~Yervoy~~ ~~combination for chemotherapy-naive patients with unresectable melanoma.~~older.
~~NSCLC~~RA	~~June 2018~~	~~FDA acceptance of the Company's sBLA for~~ ~~Opdivo~~ ~~plus low-dose~~ ~~Yervoy~~ ~~in patients with TMB greater than or equal to 10 mutations per megabase. The target FDA action date is February 20, 2019.~~
~~June 2018~~	~~Announced results from a part of the Phase III CheckMate-227 trial that evaluated~~ ~~Opdivo~~ ~~plus low-dose~~ ~~Yervoy~~ ~~and~~ ~~Opdivo~~ ~~plus chemotherapy versus chemotherapy in patients with first-line NSCLC with PD-L1 expression <1%, across squamous and non-squamous tumor histologies extended progression-free survival.~~
~~May 2018~~	~~Announced the EMA validated a type II variation application for treatment in adult patients with first-line metastatic NSCLC who have TMB greater than or equal to 10 mutations per megabase.~~
~~RCC~~	~~July 2018~~March 2019	Announced the ~~Company will be receiving a negative opinion from~~submission of supplemental applications of “Orencia for Intravenous Infusion 250mg,” “Orencia 125mg Syringe for Subcutaneous Injection 1mL” and “Orencia 125mg Autoinjector for Subcutaneous Injection 1mL” to include the ~~CHMP for~~ ~~Opdivo~~+~~Yervoy~~ ~~combination for previously untreated patients with intermediate and poor-risk advanced RCC. We disagree with this opinion and,~~description of “inhibition of the structural damage of the joints” in the ~~interest~~currently approved indication of ~~patients, we plan to pursue~~RA for a ~~re-examination under~~partial change in approved items of the ~~EU regulatory process.~~
	~~June 2018~~	~~Announced patient-reported outcomes data from the Phase III CheckMate-214 trial~~manufacturing and marketing approval in ~~intermediate- and poor-risk patients with advanced RCC treated with~~ ~~Opdivo~~ ~~plus low-dose~~ ~~Yervoy~~ ~~versus sunitinib over a two-year follow-up period reported significant and sustained health-related quality of life improvements.~~
	~~April 2018~~	~~FDA approval of~~ ~~Opdivo~~+~~Yervoy~~ ~~combination for previously untreated patients with intermediate and poor-risk advanced RCC.~~Japan.



~~Eliquis~~Sprycel	~~NVAF~~ALL	~~March 2018~~February 2019	Announced ~~findings from~~ the ~~largest real-world data analysis~~EC approval of ~~NVAF~~Sprycel, in both tablet and powder for oral suspension formulations, in combination with chemotherapy for the treatment of pediatric patients ~~receiving direct oral anticoagulants showing that Eliquis is associated~~ with ~~lower rates of stroke or systemic embolism and major bleeding than rivaroxaban or dabigatran.~~newly diagnosed Philadelphia chromosome-positive ALL.



Empliciti	~~RRMM~~Multiple Myeloma	~~June 2018~~February 2019	~~Announced~~ ~~the ELOQUENT-3 trial, an international Phase II study evaluating the addition~~Completed filing of ~~Empliciti~~ ~~to pomalidomide and low-dose dexamethasone (EPd) in patients with RRMM, achieved its primary endpoint, showing~~ a ~~statistically significant and clinically meaningful improvement in PFS for patients treated with EPd compared with pomalidomide and dexamethasone (Pd) alone.~~



~~Orencia~~	~~JIA~~	~~February 2018~~	~~Approval in Japan for an intravenously administered treatment of moderate to severe polyarticular JIA in patients two years of age and older.~~



~~Sprycel~~	~~CML~~	~~July 2018~~	~~EC expanded the indication~~supplemental Japanese New Drug Application (sJNDA) for ~~Sprycel~~Empliciti ~~to include~~in combination with Pomalidomide and Dexamethasone for the treatment of ~~children~~patients with multiple myeloma who have received at least two prior therapies, including Revlimid* and ~~adolescents aged 1 year to 18 years with chronic phase Philadelphia chromosome positive CML and to include a powder~~proteasome inhibitor. The sJNDA filing was submitted based on the result of Global Phase II study. The orphan designation was already granted for ~~oral suspension.~~the indication of RRMM at the initial JNDA. This sJNDA will also be reviewed under “priority review.”



~~Yervoy~~	~~Melanoma~~	~~January 2018~~	~~EC approval of advanced (unresectable or metastatic) melanoma in pediatric patients 12 years of age and older.~~

Critical Accounting Policies

The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Our critical accounting policies are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates. For a discussion of our critical accounting policies, refer to “—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2017~~ ~~Annual Report on~~2018 Form 10-K. There have been no material changes to our critical accounting policies during the ~~six~~three months ended ~~June 30, 2018~~.March 31, 2019. For information regarding the impact of recently adopted accounting standards, refer to "—“—Note.1 Basis of Presentation and Recently Issued Accounting ~~Standards".~~Standards.”

Special Note Regarding Forward-Looking Statements

This ~~quarterly report~~Quarterly Report on Form 10-Q (including documents incorporated by reference) and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the ~~Securities~~ Exchange ~~Act of 1934.~~Act. You can identify these forward-looking statements by the fact they use words such as ~~“should”, “expect”, “anticipate”, “estimate”, “target”, “may”, “project”, “guidance”, “intend”, “plan”, “believe”~~“should,” “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on historical performance and current expectations and projections about our future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years, and could cause ~~actual outcomes~~our future financial results, goals, plans and objectives to differ materially from ~~current expectations.~~those expressed in, or implied by, the statements. These statements are likely to relate to, among other things, our goals, plans and ~~projections~~objectives regarding our financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products, our pending acquisition of Celgene and the outcome of contingencies such as legal proceedings and financial results, which are based on current expectations that involve inherent risks and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years.results. No forward-looking statement can be guaranteed. We have included important factors in the cautionary statements included in this ~~report~~Quarterly Report on Form 10-Q and in the ~~2017~~ ~~Annual Report on~~2018 Form 10-K, particularly under “Item 1A. Risk Factors,” that we believe could cause actual results to differ materially from any forward-looking statement.

Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. WeAdditional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report on Form 10-Q not to occur. Except as otherwise required by federal securities law, we undertake no obligation to release publicly any updates or revisions to any forward-looking statements as a result of new information, future events, changed circumstances or ~~otherwise.~~otherwise after the date of this Quarterly Report on Form 10-Q.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of our market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our ~~2017~~ ~~Annual Report on~~2018 Form 10-K.

Item 4. CONTROLS AND PROCEDURES

Management carried out an evaluation, under the supervision and with the participation of ~~the Chief Executive Officer~~its chief executive officer and ~~Chief Financial Officer, evaluated~~chief financial officer, of the effectiveness of ~~our~~the design and operation of its disclosure controls and ~~procedures. Based on their evaluation,~~procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form ~~10-Q, the Chief Executive Officer~~10-Q. Based on this evaluation, our principal executive officer and ~~Chief Financial Officer have~~principal financial officer concluded that as of March 31, 2019, such disclosure controls and procedures ~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934)~~ are effective.

There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~June 30, 2018~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in “Item 1. Financial Statements—Note 18.18. Legal Proceedings and Contingencies,” to the interim consolidated financial statements, and is incorporated by reference herein.

Item 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in the Company’s ~~2017~~ ~~Annual Report on~~2018 Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table summarizes the surrenders of our equity securities during the three months ended ~~June 30, 2018:~~

March 31, 2019:

Period
Total Number of
Shares Purchased^(a)

Average
Price Paid
per Share^(a)

Total Number of
Shares Purchased as
Part of Publicly
Announced
Programs^(b)

Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Programs^(b)
Dollars in Millions, Except Per Share Data
April 1 to 30, 2018 1,640,895
$ 55.69
1,619,379
$ 1,405
May 1 to 31, 2018 1,111,458
51.55
1,101,267
1,348
June 1 to 30, 2018 8,730
53.04
—
1,348
Three months ended June 30, 2018 2,761,083
2,720,646



Period	Total Number of Shares Purchased^(a)	Average Price Paid per Share^(a)		Total Number of Shares Purchased as Part of Publicly Announced Programs^(b)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs^(b)
Dollars in Millions, Except Per Share Data
January 1 to 31, 2019	18,799	$	51.27	—	$	1,348
February 1 to 28, 2019	150,539	51.75		—	1,348
March 1 to 31, 2019	983,201	51.38		—	1,348
Three months ended March 31, 2019	1,152,539			—


(a)	Includes shares repurchased as part of publicly announced programs and shares of common stock surrendered to the Company to satisfy tax-withholding obligations in connection with the vesting of awards under our long-term incentive program.

(b)

In May 2010, the Board of Directors authorized the repurchase of up to $3.0 billion of common stock and in June 2012 increased its authorization for the repurchase of common stock by an additional $3.0 billion. In October 2016, the Board of Directors approved a new share repurchase program authorizing the repurchase of an additional $3.0 billion of common stock. The stock repurchase program does not have an expiration date. Refer to “Item 1. Financial Statements—Note 16. ~~Equity"~~Equity” for information on the accelerated share repurchase agreements.

Item 6. EXHIBITS

Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).



Exhibit No.		Description
~~12.~~		~~Computation of Earnings to Fixed Charges.~~
~~10a.~~		~~Extension to the Five Year Competitive Advance and Revolving Credit Facility Agreement dated as of September 29, 2011.~~
~~10b~~.		~~Extension to the Five Year Competitive Advance and Revolving Credit Facility Agreement dated as of July 30, 2012.~~
31a.		Section 302 Certification Letter.
31b.		Section 302 Certification Letter.
32a.		Section 906 Certification Letter.
32b.		Section 906 Certification Letter.
101.		The following financial statements from the Bristol-Myers Squibb Company Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2018,~~March 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) consolidated statements of earnings, (ii) consolidated statements of comprehensive income, (iii) consolidated balance sheets, (iv) consolidated statements of cash flows, and (v) the notes to the consolidated financial statements.



*

* Indicates, in this Form 10-Q, brand names of products, which are registered trademarks not solely owned by the Company or its subsidiaries. ~~Abilify~~ ~~is a trademark of Otsuka Pharmaceutical Co., Ltd.;~~ ~~Atripla~~ ~~is a trademark of Gilead Sciences, LLC;~~ ~~Byetta~~ ~~is a trademark of Amylin Pharmaceuticals, LLC;~~ ~~Erbitux~~ ~~is a trademark of ImClone LLC;~~ ~~Gleevec~~ ~~is a trademark of Novartis AG;~~ ~~Keytruda~~ ~~is a trademark of Merck Sharp & Dohme Corp.;~~ ~~Onglyza~~ ~~is a trademark of AstraZeneca AB;~~ ~~Plavix~~ ~~is a trademark of Sanofi; and~~ ~~Tybost~~ ~~is atrademark of Gilead Sciences Ireland UC and/or one of its affiliates.~~

Indicates, in this Quarterly Report on Form 10-Q, brand names of products, which are registered trademarks not solely owned by the Company or its subsidiaries. Abilify is a trademark of Otsuka Pharmaceutical Co., Ltd.; Byetta is a trademark of Amylin Pharmaceuticals, LLC; Erbitux is a trademark of ImClone LLC; Gleevec is a trademark of Novartis International AG; Keytruda is a trademark of Merck Sharp & Dohme Corp; Onglyza is a trademark of AstraZeneca AB; and Plavix is a trademark of Sanofi S.A. Brand names of products that are in all italicized letters, without an asterisk, are registered trademarks of BMS and/or one of its subsidiaries.

3940

SUMMARY OF ABBREVIATED TERMS

Bristol-Myers Squibb Company and its consolidated subsidiaries may be referred to as Bristol-Myers Squibb, BMS, the Company, we, our or us in this Quarterly Report on Form ~~10-Q.~~10-Q, unless the context otherwise indicates. Throughout this Quarterly Report on Form 10-Q we have used terms which are defined below:



~~2017~~2018 Form 10-K	Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~
~~ALK~~2018	~~anaplastic lymphoma kinase~~
~~AstraZeneca~~mCRPC	~~AstraZeneca PLC~~
~~Biogen~~	~~Biogen, Inc.~~
~~Cardioxyl~~	~~Cardioxyl Pharmaceuticals, Inc.~~
~~CML~~	~~chronic myeloid leukemia~~
~~CRC~~	~~colorectal~~metastatic castration-resistant prostate cancer
~~CHMP~~ACS	~~Committee for Medicinal Products for Human Use~~acute coronary syndrome	MDL	multi-district litigation
~~Cormorant~~ALL	~~Cormorant Pharmaceuticals~~acute lymphoblastic leukemia	MSI-H	high microsatellite instability
~~CytomX~~Amylin	~~CytomX Therapeutics,~~Amylin Pharmaceuticals, Inc.
~~dMMR~~	~~DNA mismatch repair deficient~~
~~EPS~~	~~earnings per share~~
~~EGFR~~	~~epidermal growth factor receptor~~
EC	~~European Commission~~
~~EMA~~	~~European Medicines Agency~~
~~EPO~~	~~European Patent Office~~
EU	~~European Union~~
~~FASB~~	~~Financial Accounting Standards Board~~
~~Flexus~~	~~Flexus Biosciences, Inc.~~
~~Gilead~~	~~Gilead Sciences, Inc.~~
~~GTN~~	~~gross-to-net~~
~~HIV~~	~~human immunodeficiency virus~~
~~IFM~~	~~IFM Inflammation, Inc.~~
IO	~~immuno-oncology~~
~~IPRD~~	~~in-process research and development~~
~~JIA~~	~~juvenile idiopathic arthritis~~
~~LOE~~	~~loss of exclusivity~~
~~Merck~~	~~Merck & Co., Inc.~~
~~mCRC~~	~~metastatic colorectal cancer~~
~~MSI-H~~	~~microsatellite instability-high~~
NKT	natural killer T cells
~~Nektar~~aNDA	~~Netkar Therapeutics~~abbreviated new drug applications
NSCLC	non-small cell lung cancer
AstraZeneca	AstraZeneca PLC	NVAF	non-valvular atrial fibrillation
Celgene	Celgene Corporation	OTC	over-the-counter
CERCLA	U.S. Comprehensive Environmental Response, Compensation and Liability Act	Otsuka	Otsuka Pharmaceutical Co., Ltd.
CML	chronic myeloid leukemia	PCI	percutaneous coronary intervention
Cormorant	Cormorant Pharmaceuticals	PD-1	programmed cell death protein 1
CRC	colorectal cancer	PD-L1	programmed death-ligand 1
~~PFS~~dMMR	~~progression-free survival~~DNA mismatch repair deficient	Pfizer	Pfizer, Inc.
~~PsiOxus~~EC	~~PsiOxus Therapeutics, Ltd.~~European Commission
PsA	psoriatic arthritis
EPO	European Patent Office	Quarterly Report on Form 10-Q	Quarterly Report on Form 10-Q for the quarterly period ended ~~June 30, 2018~~March 31, 2019
EPS	earnings per share	R&D	research and development
ERISA	Employee Retirement Income Security Act of 1974	RA	rheumatoid arthritis
EU	European Union	RCC	renal cell carcinoma
FASB	Financial Accounting Standards Board	RRMM	relapsed/refractory multiple myeloma
~~RCC~~FCPA	~~renal cell carcinoma~~Foreign Corrupt Practices Act	Sanofi	Sanofi S.A.
~~R&D~~FDA	~~research~~U.S. Food and ~~development~~Drug Administration	sBLA	supplemental Biologics License Application
RAFlexus	~~rheumatoid arthritis~~Flexus Biosciences, Inc.
~~Roche~~	~~Roche Holding AG~~
~~SEC~~	~~Securities and Exchange Commission~~
~~SK Biotek~~	~~SK Biotek Co., Ltd.~~
~~SCLC~~	~~small cell lung cancer~~
SCCHN	squamous cell carcinoma of the head and neck
~~sBLA~~GAAP	~~supplemental Biologics License Application~~U.S. generally accepted accounting principles	SEC	Securities and Exchange Commission
GTN	gross-to-net	SK Biotek	SK Biotek Co., Ltd.
IO	immuno-oncology	TMB	tumor mutational burden
~~FDA~~IPRD	in-process research and development	U.S. ~~Food and Drug Administration~~	United States
~~GAAP~~JIA	~~U.S. generally accepted accounting principles~~juvenile idiopathic arthritis
UK	United Kingdom
~~U.S.~~LIBOR	~~United States~~London Interbank Offered Rate	VAT	value added tax
Lilly	Eli Lilly and Company	VTE	venous thromboembolic
LOE	loss of exclusivity

4041

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		BRISTOL-MYERS SQUIBB COMPANY (REGISTRANT)

Date:	~~July 26, 2018~~April 25, 2019	By:	/s/ Giovanni Caforio
			Giovanni Caforio Chairman of the Board and Chief Executive Officer

Date:	~~July 26, 2018~~April 25, 2019	By:	/s/ Charles Bancroft
			Charles Bancroft Chief Financial Officer

4142



	Three Months Ended June 30, 2017						Six Months Ended June 30, 2017
Dollars in Millions	As Previously Reported			As Adjusted			As Previously Reported			As Adjusted
Cost of products sold	$	1,562		$	1,569		$	2,821		$	2,834
Marketing, selling and administrative	1,167			1,187			2,241			2,272
Research and development	1,659			1,679			2,947			2,982
Other income (net)	(539		)	(586		)	(1,186		)	(1,265		)



Dollars in Millions	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Net loss recognized	$	(374	)	$	(359	)
Less: Net loss recognized for equity investments sold	—			—
Net unrealized loss on equity investments held	$	(374	)	$	(359	)



Dollars in Millions	2017
Principal amount	$	337
Carrying value	366
Debt redemption price	474
Loss on debt redemption^(a)	109