Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED STATEMENTS OF EARNINGS

Dollars in millions, except per share data

(UNAUDITED)

Three Months Ended September 30,Nine Months Ended September 30,
EARNINGS2023202220232022
Net product sales$10,645$10,813$32,610$33,606
Alliance and other revenues3214059191,147
Total Revenues10,96611,21833,52934,753
Cost of products sold(a)2,5062,3537,9487,544
Marketing, selling and administrative2,0031,9305,6995,548
Research and development2,2422,4186,8216,999
Acquired IPRD8030313763
Amortization of acquired intangible assets2,2562,4186,7697,252
Other (income)/expense, net(258)(140)(787)793
Total Expenses8,8299,00926,76328,899
Earnings before income taxes2,1372,2096,7665,854
Income tax provision2036014881,534
Net earnings1,9341,6086,2784,320
Noncontrolling interest621515
Net earnings attributable to BMS$1,928$1,606$6,263$4,305
Earnings per common share:
Basic$0.94$0.75$3.01$2.01
Diluted0.930.752.992.00

(a) Excludes amortization of acquired intangible assets.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Dollars in millions

(UNAUDITED)

Three Months Ended September 30,Nine Months Ended September 30,
COMPREHENSIVE INCOME2023202220232022
Net earnings$1,934$1,608$6,278$4,320
Other comprehensive income/(loss), net of taxes and reclassifications to earnings:
Derivatives qualifying as cash flow hedges114286(7)618
Pension and postretirement benefits218(9)64
Marketable debt securities(2)—(2)(2)
Foreign currency translation(13)(153)13(253)
Total Other comprehensive income/(loss)101151(5)427
Comprehensive income2,0351,7596,2734,747
Comprehensive income attributable to noncontrolling interest621515
Comprehensive income attributable to BMS2,0291,7576,2584,732

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

BRISTOL-MYERS SQUIBB COMPANY

CONSOLIDATED BALANCE SHEETS

Dollars in millions

(UNAUDITED)

ASSETSSeptember 30, 2023December 31, 2022
Current assets:
Cash and cash equivalents$7,514$9,123
Marketable debt securities171130
Receivables10,3049,886
Inventories2,4362,339
Other current assets7,2075,795
Total Current assets27,63227,273
Property, plant and equipment6,4816,255
Goodwill21,14721,149
Other intangible assets28,95035,859
Deferred income taxes1,5141,344
Marketable debt securities325—
Other non-current assets5,2144,940
Total Assets$91,263$96,820
LIABILITIES
Current liabilities:
Short-term debt obligations$5,467$4,264
Accounts payable2,8133,040
Other current liabilities15,18214,586
Total Current liabilities23,46221,890
Deferred income taxes3992,166
Long-term debt32,13735,056
Other non-current liabilities6,2036,590
Total Liabilities62,20165,702
Commitments and Contingencies
EQUITY
BMS Shareholders’ equity:
Preferred stock——
Common stock292292
Capital in excess of par value of stock44,84945,165
Accumulated other comprehensive loss(1,286)(1,281)
Retained earnings28,21825,503
Less cost of treasury stock(43,075)(38,618)
Total BMS Shareholders’ equity28,99831,061
Noncontrolling interest6457
Total Equity29,06231,118
Total Liabilities and Equity$91,263$96,820

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)

Nine Months Ended September 30,
20232022
Cash Flows From Operating Activities:
Net earnings$6,278$4,320
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization, net7,2967,755
Deferred income taxes(1,961)(2,114)
Stock-based compensation391338
Impairment charges226144
Divestiture gains and royalties(639)(820)
Acquired IPRD313763
Equity investment losses213966
Other adjustments260179
Changes in operating assets and liabilities:
Receivables(487)(557)
Inventories(554)(28)
Accounts payable(246)(296)
Rebates and discounts1,115730
Income taxes payable(1,647)(310)
Other(950)(1,310)
Net cash provided by operating activities9,6089,760
Cash Flows From Investing Activities:
Sale and maturities of marketable debt securities6925,205
Purchase of marketable debt securities(1,057)(3,566)
Proceeds from sales of equity investments215213
Capital expenditures(879)(772)
Divestiture and other proceeds668815
Acquisition and other payments, net of cash acquired(588)(4,170)
Net cash used in investing activities(949)(2,275)
Cash Flows From Financing Activities:
Short-term debt obligations, net23358
Issuance of long-term debt—5,926
Repayment of long-term debt(1,879)(11,431)
Repurchase of common stock(5,155)(5,585)
Dividends(3,584)(3,489)
Stock option proceeds and other, net2805
Net cash used in financing activities(10,383)(13,716)
Effect of exchange rates on cash, cash equivalents and restricted cash(33)(128)
Decrease in cash, cash equivalents and restricted cash(1,757)(6,359)
Cash, cash equivalents and restricted cash at beginning of period9,32514,316
Cash, cash equivalents and restricted cash at end of period$7,568$7,957

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 ("BMS", "we", "our", "us" or "the Company") prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position of the Company as of September 30, 2023 and December 31, 2022, the results of operations for the three and nine months ended September 30, 2023 and 2022, and cash flows for the nine months ended September 30, 2023 and 2022. All intercompany balances and transactions have been eliminated. These consolidated financial statements and the related footnotes should be read in conjunction with the audited consolidated financial statements of the Company for the year ended December 31, 2022 included in the 2022 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

Business Segment Information

BMS operates in a single segment engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative medicines that help patients prevail over serious diseases. A global research and development organization and supply chain organization are responsible for the discovery, development, manufacturing and supply of products. Regional commercial organizations market, distribute and sell the products. The business is also supported by global corporate staff functions. Consistent with BMS's operational structure, the Chief Executive Officer ("CEO"), as the chief operating decision maker, manages and allocates resources at the global corporate level. Managing and allocating resources at the global corporate level enables the CEO to assess both the overall level of resources available and how to best deploy these resources across functions, therapeutic areas, regional commercial organizations and research and development projects in line with our overarching long-term corporate-wide strategic goals, rather than on a product or franchise basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CEO for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional revenue, see "—Note 2. Revenue".

Use of Estimates and Judgments

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results and trends in these unaudited consolidated financial statements may not be indicative of full year operating results. The preparation of financial statements requires the use of management estimates, judgments and assumptions. The most significant assumptions are estimates used in determining accounting for acquisitions; impairments of intangible assets; charge-backs, cash discounts, sales rebates, returns and other adjustments; legal contingencies; and income taxes. Actual results may differ from estimates.

Reclassifications

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

Recently Adopted Accounting Standards

Fair Value Measurements

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

Business Combinations

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

Note 2. REVENUE

The following table summarizes the disaggregation of revenue by nature:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Net product sales$10,645$10,813$32,610$33,606
Alliance revenues138173461560
Other revenues183232458587
Total Revenues$10,966$11,218$33,529$34,753

The following table summarizes GTN adjustments:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Gross product sales$18,648$17,606$54,047$51,555
GTN adjustments (a)
Charge-backs and cash discounts(2,373)(1,907)(6,743)(5,420)
Medicaid and Medicare rebates(3,730)(3,295)(9,355)(8,003)
Other rebates, returns, discounts and adjustments(1,900)(1,591)(5,339)(4,526)
Total GTN adjustments(8,003)(6,793)(21,437)(17,949)
Net product sales$10,645$10,813$32,610$33,606

(a) Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $18 million and $116 million for the three and nine months ended September 30, 2023 and $10 million and $207 million for the three and nine months ended September 30, 2022, respectively.

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

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
In-Line Products
Eliquis$2,705$2,6559,3329,101
Opdivo2,2752,0476,6226,033
Pomalyst/Imnovid8728862,5512,620
Orencia9258832,6162,551
Sprycel5175601,4041,587
Yervoy5795231,6721,563
Mature and other products4765141,4151,563
Total In-Line Products8,3498,06825,61225,018
New Product Portfolio
Reblozyl248190688518
Abecma93107372263
Opdualag16684437148
Zeposia12369301171
Breyanzi9244263127
Onureg433212187
Inrebic29218162
Camzyos6851438
Sotyktu6611071
Total New Product Portfolio9285532,5131,385
Total In-Line Products and New Product Portfolio9,2778,62128,12526,403
Recent LOE Products(a)
Revlimid1,4292,4204,6477,718
Abraxane260177757632
Total Recent LOE Products1,6892,5975,4048,350
Total revenues$10,966$11,218$33,529$34,753
United States$7,628$7,941$23,552$23,903
International3,1533,0629,46210,216
Other(b)185215515634
Total revenues$10,966$11,218$33,529$34,753

(a) Recent LOE Products include products with significant decline in revenue from the prior reporting period as a result of a loss of exclusivity.

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

Revenue recognized from performance obligations satisfied in prior periods was $114 million and $355 million for the three and nine months ended September 30, 2023 and $119 million and $450 million for the three and nine months ended September 30, 2022, respectively, consisting primarily of royalties for out-licensing arrangements and revised estimates for GTN adjustments related to prior period sales.

Note 3. ALLIANCES

BMS enters into collaboration arrangements with third parties for the development and commercialization of certain products. Although each of these arrangements is unique in nature, both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. BMS refers to these collaborations as alliances and its partners as alliance partners.

Selected financial information pertaining to alliances was as follows, including net product sales when BMS is the principal in the third-party customer sale for products subject to the alliance. Expenses summarized below do not include all amounts attributed to the activities for the products in the alliance, but only the payments between the alliance partners or the related amortization if the payments were deferred or capitalized.

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Revenues from alliances
Net product sales$2,762$2,722$9,614$9,234
Alliance revenues138173461560
Total alliance revenues$2,900$2,895$10,075$9,794
To/(from) alliance partners
Cost of products sold$1,330$1,328$4,650$4,456
Marketing, selling and administrative(52)(53)(190)(160)
Research and development168140
Acquired IPRD——55100
Other (income)/expense, net(10)(18)(37)(41)
Dollars in millionsSeptember 30, 2023December 31, 2022
Selected alliance balance sheet information
Receivables – from alliance partners$209$317
Accounts payable – to alliance partners1,2881,249
Deferred income – from alliances(a)289289

(a) Includes unamortized upfront and milestone payments.

The nature, purpose, significant rights and obligations of the parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 2022 Form 10-K. Significant developments and updates related to alliances during the nine months ended September 30, 2023 and 2022 are set forth below.

BridgeBio

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

Note 4. ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS

Acquisitions

Mirati

In October 2023, BMS entered into a definitive merger agreement to acquire Mirati, a commercial stage targeted oncology company with a pipeline of clinical and commercial oncology medicines. The acquisition will provide BMS with rights to Krazati* (adagrasib) and MRTX1719, among other assets. Krazati* is a best-in-class inhibitor of KRASG12C mutation, which was approved by the FDA as a second-line treatment for patients with NSCLC and is in clinical development in combination with a PD-1 inhibitor as a first-line therapy for patients with NSCLC, as well as in other indications. MRTX1719, is a potential first-in-class MTA-cooperative PRMT5 inhibitor in Phase 1 development. BMS also will gain access to several other promising clinical and pre-clinical stage assets, including additional KRAS inhibitors and enabling programs.

BMS will acquire all of the issued and outstanding shares of Mirati's common stock for $58.00 per share in an all-cash transaction for a total consideration of $4.8 billion, including cash settlements of equity stock awards. Mirati shareholders will also receive one non-tradeable contingent value right for each share of Mirati common stock held, potentially worth $12.00 per share in cash for a total value of approximately $1.0 billion. The payout of the contingent value right is subject to the FDA acceptance of an NDA for MRTX1719 for the treatment of specific indications within seven years of the closing of the transaction. The transaction is expected to be accounted for as a business combination and is anticipated to close by the first half of 2024, subject to fulfillment of customary closing conditions, including approval of Mirati's shareholders and receipt of required regulatory approvals. The acquisition will be funded through a combination of cash-on-hand and debt proceeds.

Turning Point

In the third quarter of 2022, BMS acquired Turning Point for $4.1 billion of cash (or $3.3 billion net of cash acquired). Turning Point was a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the common mutations and alterations that drive cancer growth. The acquisition provided BMS rights to Turning Point's lead asset, repotrectinib, and other clinical and pre-clinical stage assets.

Divestitures

The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).

Three Months Ended September 30,
Net ProceedsDivestiture (Gains)/LossesRoyalty Income
Dollars in millions202320222023202220232022
Diabetes business - royalties$220$205$—$—$(217)$(205)
Mature products and other31————
Total$223$206—$—$(217)(205)
Nine Months Ended September 30,
Net ProceedsDivestiture (Gains)/LossesRoyalty Income
Dollars in Millions202320222023202220232022
Diabetes business - royalties$621$562$—$—$(623)$(595)
Mature products and other (a)10229—(211)—(2)
Total$631$791$—$(211)$(623)$(597)

(a) Includes cash proceeds of $221 million and a divestiture gain of $211 million related to the sale of several mature products to Cheplapharm in the first quarter of 2022.

Mature Products and Other

Manufacturing Operations

During the second quarter of 2022, BMS agreed to sell its manufacturing facility in Syracuse, New York to LOTTE Corporation and accounted for the business as held-for-sale resulting in a $43 million impairment charge recorded to Cost of products sold. Assets and liabilities reclassified to held-for-sale were included within Other current assets and Other current liabilities and were $172 million and $20 million, respectively, as of December 31, 2022. In January 2023, BMS completed the sale resulting in cash proceeds of $159 million, which was received in December 2022.

Licensing and Other Arrangements

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

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Keytruda* royalties$(315)$(268)$(878)$(732)
Tecentriq* royalties(24)(24)(78)(68)
Contingent milestone income——(36)(46)
Amortization of deferred income(12)(18)(39)(41)
Biohaven sublicense income—(55)—(55)
Other royalties and licensing income(14)(9)(37)(25)
Total$(365)$(374)$(1,068)$(967)

LianBio

During October 2023, BMS reacquired the rights for mavacamten in China and certain other Asian territories from LianBio for $350 million in cash. The cost for the reacquired rights will be reflected in Acquired IPRD during the fourth quarter of 2023 as mavacamten is currently in development and not approved for commercial use in China.

Keytruda Patent License Agreement*

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

Immatics

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

Dragonfly

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

Other

Nimbus Change of Control Income

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

Royalty Extinguishment

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

Note 5. OTHER (INCOME)/EXPENSE, NET

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Interest expense (Note 10)$280$299$850$938
Royalty and licensing income (Note 4)(365)(374)(1,068)(967)
Royalty income - divestiture (Note 4)(217)(205)(623)(597)
Equity investment losses (Note 9)—14213966
Integration expenses (Note 6)54114180343
Loss on debt redemption (Note 10)———266
Divestiture gains (Note 4)———(211)
Litigation and other settlements(61)44(393)32
Investment income(107)(52)(304)(89)
Provision for restructuring (Note 6)1411732160
Other1733752
Other (income)/expense, net$(258)$(140)$(787)$793

Litigation and Other Settlements

BeiGene Settlement

In August 2023, BMS and BeiGene, Ltd. ("BeiGene") entered into an agreement that settled all on-going disputes and claims between the parties, including those related to the Abraxane license and supply agreements and related arbitration proceedings as further described in "—Note 18. Legal Proceedings and Contingencies".

The agreement also provided for the termination of all contractual relationships between the parties, including the license and supply arrangements pertaining to Revlimid and Vidaza effective as of December 31, 2023, subject to BeiGene’s right to continue to sell all remaining inventory beyond that date. In consideration for the above, BMS agreed to transfer 23.3 million of BeiGene ordinary shares of common stock held under a share subscription agreement back to BeiGene resulting in $322 million of expense that was included in Other (income)/expense, net during the three months ended September 30, 2023. The expense was determined based on the closing price of the shares on the date of the transfer. In addition, the remaining BeiGene ordinary shares owned by BMS under the share subscription agreement were converted to American Depository Shares, which were subsequently sold during the three months ended September 30, 2023.

AstraZeneca Settlement

In July 2023, BMS entered into an agreement with AZ to settle all outstanding claims between the parties in the CTLA-4 litigation and the two PD-L1 antibody litigations, as further described in "—Note 18. Legal Proceedings and Contingencies". AZ will pay an aggregate of $560 million to BMS in four payments through September 2026, which will be subject to sharing arrangements with Ono and Dana-Farber. BMS's share is approximately $418 million, of which the net present value of $384 million was reflected in Other (income)/expense during the three months ended September 30, 2023.

Nimbus Change of Control Income

During the nine months ended September 30, 2023, $400 million of income was recorded in Other (income)/expense in connection with Nimbus' TYK2 program change of control provision. Refer to "—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements" for further information.

Note 6. RESTRUCTURING

2023 Restructuring Plan

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

Celgene and Other Acquisition Plans

Restructuring and integration plans were initiated to realize expected cost synergies resulting from cost savings and avoidance from the acquisition of Celgene (2019), MyoKardia (2020) and Turning Point (2022). As part of these plans, the Company expects to incur charges of approximately $3.8 billion. Cumulative charges of approximately $3.5 billion have been recognized to date including integration planning and execution expenses, employee termination benefit costs and accelerated stock-based compensation, contract termination costs and other shutdown costs associated with site exits. The remaining charges related to the acquisition of Celgene are primarily related to IT system integration which are expected to be incurred through 2024.

The following provides the charges related to restructuring initiatives by type of cost:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
2023 Restructuring Plan$149$—$380$—
Celgene and Other Acquisition Plans131131269409
Total charges$280$131$649$409
Employee termination costs$135$16$309$57
Other termination costs61123
Provision for restructuring1411732160
Integration expenses54114180343
Accelerated depreciation15—286
Asset impairments (a)70—120—
Total charges$280$131$649$409
Cost of products sold$16$—$53$—
Marketing, selling and administrative65—856
Research and development4—10—
Other (income)/expense, net195131501403
Total charges$280$131$649$409

(a) Includes $65 million impairment charge for a facility lease that commenced during the three months ended September 2023.

The following summarizes the charges and spending related to restructuring plan activities:

Nine Months Ended September 30,
Dollars in millions20232022
Beginning balance$47$101
Provision for restructuring(a)32160
Foreign currency translation and other(3)(10)
Payments(142)(106)
Ending balance$223$45

(a) Includes a reduction of the liability resulting from changes in estimates of $5 million and $6 million for the nine months ended September 30, 2023 and 2022, respectively.

Note 7. INCOME TAXES

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Earnings before income taxes$2,137$2,209$6,766$5,854
Income tax provision2036014881,534
Effective tax rate9.5%27.2%7.2%26.2%

Provision for income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The reduction in the effective tax rate during the three months ended September 30, 2023 was primarily due to recently issued Section 174 guidance regarding deductibility of certain non-U.S. research and development expenses. The revised guidance resulted in a reduction of previously estimated income taxes attributed to 2022 which was reflected in the current quarter as well as a reduction in the estimated annual effective rates for 2023. Previously estimated income taxes for 2022 were reduced by approximately $240 million upon finalization of the U.S. Federal tax return primarily due to the aforementioned revised Section 174 guidance that was issued during the third quarter of 2023. In addition, the effective tax rate during the first nine months of 2023 was impacted by a $656 million deferred income tax benefit following the receipt of a non-U.S. tax ruling regarding the deductibility of a statutory impairment of subsidiary investments, jurisdictional earnings mix resulting from amortization of acquired intangible assets, equity investment losses, litigation and other settlements, as well as releases of income tax reserves of $89 million related to the resolution of Celgene's 2009-2011 IRS audits, partially offset by the impact of changes in the Puerto Rico tax decree that eliminated a previously creditable excise tax. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code. Income tax payments were $4.1 billion and $3.9 billion for the nine months ended September 30, 2023 and 2022, respectively.

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

It is reasonably possible that the amount of unrecognized tax benefits as of September 30, 2023 could decrease in the range of approximately $40 million to $60 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits.

It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits, however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by jurisdiction.

Note 8. EARNINGS PER SHARE

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions, except per share data2023202220232022
Net earnings attributable to BMS$1,928$1,606$6,263$4,305
Weighted-average common shares outstanding – basic2,0572,1332,0832,137
Incremental shares attributable to share-based compensation plans7151017
Weighted-average common shares outstanding – diluted2,0642,1482,0932,154
Earnings per common share
Basic$0.94$0.75$3.01$2.01
Diluted0.930.752.992.00

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

Note 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

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

September 30, 2023December 31, 2022
Dollars in millionsLevel 1Level 2Level 3Level 1Level 2Level 3
Cash and cash equivalents
Money market and other securities$—$5,545$—$—$7,770$—
Marketable debt securities
Certificates of deposit—2——32—
Commercial paper—29——98—
Corporate debt securities—442————
U.S. Treasury securities—23————
Derivative assets—467——305—
Equity investments29155—424680—
Derivative liabilities—120——213—
Contingent consideration liability
Contingent value rights4——5——
Other acquisition related contingent consideration——9——24

As further described in "Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements" in the Company's 2022 Form 10-K, the Company's fair value estimates use inputs that are either (1) quoted prices for identical assets or liabilities in active markets (Level 1 inputs); (2) observable prices for similar assets or liabilities in active markets or for identical or similar assets or liabilities in markets that are not active (Level 2 inputs); or (3) unobservable inputs (Level 3 inputs). The fair value of Level 2 equity investments is adjusted for characteristics specific to the security and is not adjusted for contractual sale restrictions. Equity investments subject to contractual sale restrictions were not material as of December 31, 2022 and the restrictions expired in April 2023.

Marketable Debt Securities

The following table summarizes marketable debt securities:

September 30, 2023December 31, 2022
Dollars in millionsAmortized CostGross UnrealizedAmortized CostGross Unrealized
GainsLossesFair ValueGainsLossesFair Value
Certificates of deposit$2$—$—$2$32$—$—$32
Commercial paper29——2998——98
Corporate debt securities445—(3)442————
U.S. Treasury securities23——23————
Total marketable debt securities(a)$499$—$(3)$496$130$—$—$130

(a) All marketable debt securities mature within three years as of September 30, 2023, and one year as of December 31, 2022.

Equity Investments

The following summarizes the carrying amount of equity investments:

Dollars in millionsSeptember 30, 2023December 31, 2022
Equity investments with readily determinable fair values$346$1,104
Equity investments without readily determinable fair values654537
Limited partnerships and other equity method investments557546
Total equity investments$1,557$2,187

The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Equity investments with readily determinable fair values
Net loss recognized1575203927
Less: net (gain) loss recognized on investments sold(86)(1)2(17)
Net unrealized loss recognized on investments still held10176201944
Equity investments without readily determinable fair values
Upward adjustments(3)(64)(9)(70)
Impairments and downward adjustments6—62
Equity in net (income)/loss of affiliates(18)313107
Total equity investment losses—14213966

Cumulative upwards adjustments and cumulative impairments and downward adjustments based on observable price changes in equity investments without readily determinable fair values still held as of September 30, 2023 were $189 million and $67 million, respectively.

Qualifying Hedges and Non-Qualifying Derivatives

Cash Flow Hedges

BMS enters into foreign currency forward and purchased local currency put option contracts (foreign exchange contracts) to hedge certain forecasted intercompany inventory sales and certain other foreign currency transactions. The objective of these foreign exchange contracts is to reduce variability caused by changes in foreign exchange rates that would affect the U.S. dollar value of future cash flows derived from foreign currency denominated sales, primarily the euro and Japanese yen. The fair values of these derivative contracts are recorded as either assets (gain positions) or liabilities (loss positions) in the consolidated balance sheets. Changes in fair value for these foreign exchange contracts, which are designated as cash flow hedges, are temporarily recorded in Accumulated other comprehensive loss ("AOCL") and reclassified to net earnings when the hedged item affects earnings (typically within the next 24 months). As of September 30, 2023, assuming market rates remain constant through contract maturities, we expect to reclassify pre-tax gains of $179 million into Cost of products sold for our foreign exchange contracts out of AOCL during the next 12 months. The notional amount of outstanding foreign currency exchange contracts was primarily $5.0 billion for the euro contracts and $1.1 billion for Japanese yen contracts as of September 30, 2023.

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

Cash flow hedge accounting is discontinued when the forecasted transaction is no longer probable of occurring within 60 days after the originally forecasted date or when the hedge is no longer effective. Assessments to determine whether derivatives designated as qualifying hedges are highly effective in offsetting changes in the cash flows of hedged items are performed at inception and on a quarterly basis. The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not material during all periods presented. Foreign currency exchange contracts not designated as a cash flow hedge offset exposures in certain foreign currency denominated assets, liabilities and earnings. Changes in the fair value of these derivatives are recognized in earnings as they occur.

Net Investment Hedges

Cross-currency swap contracts and foreign currency forward contracts of $1.8 billion as of September 30, 2023 are designated to hedge currency exposure of BMS's net investment in its foreign subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of AOCL with a related offset in derivative asset or liability in the consolidated balance sheets. The notional amount of outstanding cross-currency swap and foreign currency forward contracts was primarily attributed to the Japanese yen of $650 million and euro of $794 million as of September 30, 2023.

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

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

Fair Value Hedges

Fixed to floating interest rate swap contracts are designated as fair value hedges and used as an interest rate risk management strategy to create an appropriate balance of fixed and floating rate debt. The contracts and underlying debt for the hedged benchmark risk are recorded at fair value. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to align with the debt being hedged, all changes in fair value of the swap are recorded in interest expense with an associated offset to the derivative asset or liability in the consolidated balance sheets. As a result, there was no net impact in earnings. If the underlying swap is terminated prior to maturity, then the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.

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

The following table summarizes the fair value and the notional values of outstanding derivatives:

September 30, 2023December 31, 2022
Asset**(a)**Liability**(b)**Asset**(a)**Liability**(b)**
Dollars in millionsNotionalFair ValueNotionalFair ValueNotionalFair ValueNotionalFair Value
Designated as cash flow hedges
Foreign currency exchange contracts$6,420$326$926$(26)$5,771$271$2,281$(80)
Cross-currency swap contracts58412626(14)——584(7)
Designated as net investment hedges
Foreign currency exchange contracts41620——————
Cross-currency swap contracts48123947(18)7211,157(78)
Designated as fair value hedges
Interest rate swap contracts——3,755(24)——255(18)
Not designated as hedges
Foreign currency exchange contracts2,048861,486(21)1,564331,703(19)
Total return swap contracts (c)——359(17)——322(11)

(a) Included in Other current assets and Other non-current assets.

(b) Included in Other current liabilities and Other non-current liabilities.

(c) Total return swap contracts hedge changes in fair value of certain deferred compensation liabilities.

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

Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Dollars in millionsCost of products soldOther (income)/expense, netCost of products soldOther (income)/expense, net
Foreign currency exchange contracts$(51)$(40)$(261)$(100)
Cross-currency swap contracts—26—(2)
Interest rate swap contracts———(7)
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
Dollars in millionsCost of products soldOther (income)/expense, netCost of products soldOther (income)/expense, net
Foreign currency exchange contracts$(195)$(61)$(408)$(136)
Cross-currency swap contracts—13—5
Interest rate swap contracts—(5)—(23)

The following table summarizes the effect of derivative and non-derivative instruments designated as hedges in Other comprehensive income:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Derivatives designated as cash flow hedges
Foreign exchange contracts gain/(loss):
Recognized in Other comprehensive income$173$548$226$1,149
Reclassified to Cost of products sold(51)(195)(261)(408)
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income(23)(43)5(43)
Reclassified to Other (income)/expense, net35202620
Forward starting interest rate swap contract loss:
Reclassified to Other (income)/expense, net———(3)
Derivatives designated as net investment hedges
Cross-currency swap contracts gain/(loss):
Recognized in Other comprehensive income597194135
Foreign exchange contracts gain/(loss):
Recognized in Other comprehensive income18—18—
Non-derivatives designated as net investment hedges
Non-U.S. dollar borrowings gain/(loss):
Recognized in Other comprehensive income—40(10)123

Note 10. FINANCING ARRANGEMENTS

Short-term debt obligations include:

Dollars in millionsSeptember 30, 2023December 31, 2022
Non-U.S. short-term debt obligations$164$176
Current portion of Long-term debt4,8733,897
Other430191
Total$5,467$4,264

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

Dollars in millionsSeptember 30, 2023December 31, 2022
Principal value$36,329$38,234
Adjustments to principal value:
Fair value of interest rate swap contracts(24)(18)
Unamortized basis adjustment from swap terminations8597
Unamortized bond discounts and issuance costs(265)(284)
Unamortized purchase price adjustments of Celgene debt885924
Total$37,010$38,953
Current portion of Long-term debt$4,873$3,897
Long-term debt32,13735,056
Total$37,010$38,953

The fair value of Long-term debt was $31.7 billion as of September 30, 2023 and $34.9 billion as of December 31, 2022 valued using Level 2 inputs, which are based upon the quoted market prices for the same or similar debt instruments. The fair value of Short-term debt obligations approximates the carrying value due to the short maturities of the debt instruments.

During the nine months ended September 30, 2023, $1.9 billion of debt matured and was repaid including $750 million 2.750% Notes, $890 million 3.250% Notes and $239 million 7.150% Notes.

During the nine months ended September 30, 2022, $4.8 billion of debt matured and was repaid including $1.5 billion 2.600% Notes, $500 million Floating Rate Notes, $750 million 2.000% Notes, $1.0 billion 3.250% Notes and $1.0 billion 3.550% Notes.

During the nine months ended September 30, 2022, BMS issued an aggregate principal amount of $6.0 billion of debt with net proceeds of $5.9 billion. The notes rank equally in right of payment with all of BMS's existing and future senior unsecured indebtedness and are redeemable at any time, in whole, or in part, at varying specified redemption prices plus accrued and unpaid interest. In addition, BMS purchased an aggregate principal amount of $6.0 billion of certain of its debt securities for $6.6 billion of cash in tender offers and "make-whole" redemptions. In connection with these transactions, a $266 million net loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net.

Interest payments were $932 million and $1.1 billion for the nine months ended September 30, 2023 and 2022, respectively, net of amounts related to interest rate swap contracts.

Credit Facilities

As of September 30, 2023, BMS had a five-year $5.0 billion revolving credit facility expiring in January 2028, which is extendable annually by one year with the consent of the lenders. This facility provides for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for our commercial paper borrowings. No borrowings were outstanding under the revolving credit facility as of September 30, 2023 and December 31, 2022.

Note 11. RECEIVABLES

Dollars in millionsSeptember 30, 2023December 31, 2022
Trade receivables$9,095$8,848
Less: charge-backs and cash discounts(661)(675)
Less: allowance for expected credit loss(27)(22)
Net trade receivables8,4078,151
Alliance, royalties, VAT and other1,8971,735
Receivables$10,304$9,886

Non-U.S. receivables sold on a nonrecourse basis were $769 million and $809 million for the nine months ended September 30, 2023 and 2022, respectively. Receivables from the three largest customers in the U.S. represented 71% and 66% of total trade receivables as of September 30, 2023 and December 31, 2022, respectively.

Note 12. INVENTORIES

Dollars in millionsSeptember 30, 2023December 31, 2022
Finished goods$533$509
Work in process2,2891,850
Raw and packaging materials461464
Total inventories$3,283$2,823
Inventories$2,436$2,339
Other non-current assets847484

The fair value adjustment related to the Celgene acquisition was $84 million as of December 31, 2022 and was fully amortized in the second quarter of 2023.

Note 13. PROPERTY, PLANT AND EQUIPMENT

Dollars in millionsSeptember 30, 2023December 31, 2022
Land$162$162
Buildings6,2805,920
Machinery, equipment and fixtures3,5763,284
Construction in progress1,1141,053
Gross property, plant and equipment11,13210,419
Less accumulated depreciation(4,651)(4,164)
Property, plant and equipment$6,481$6,255

Depreciation expense was $151 million and $448 million for the three and nine months ended September 30, 2023 and $148 million and $434 million for the three and nine months ended September 30, 2022, respectively.

Note 14. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amounts in Goodwill were as follows:

Dollars in millions
Balance at December 31, 2022$21,149
Currency translation and other adjustments(2)
Balance at September 30, 2023$21,147

Other Intangible Assets

Other intangible assets consisted of the following:

Estimated Useful LivesSeptember 30, 2023December 31, 2022
Dollars in millionsGross carrying amountsAccumulated amortizationOther intangible assets, netGross carrying amountsAccumulated amortizationOther intangible assets, net
Licenses5 – 15 years$363$(144)$219$400$(128)$272
Acquired marketed product rights3 – 15 years59,577(37,794)21,78360,477(31,949)28,528
Capitalized software3 – 10 years1,639(1,171)4681,555(1,056)499
IPRD6,480—6,4806,560—6,560
Total$68,059$(39,109)$28,950$68,992$(33,133)$35,859

Amortization expense of Other intangible assets was $2.3 billion and $6.9 billion during the three and nine months ended September 30, 2023 and $2.5 billion and $7.4 billion for the three and nine months ended September 30, 2022, respectively.

The other intangible assets impairments were as follows:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
IPRD$60$58$80$98
Licenses29—29—
Total$89$58$109$98

IPRD impairment charges were recognized following decisions to discontinue development of investigational compounds in connection with the prioritization of pipeline opportunities and were recorded in Research and development expense. Licenses impairment charges were recognized for out-licensed assets following assessments of future economic benefits and were included in Other Income/(expense), net. The impairments represented full write-downs.

Note 15. SUPPLEMENTAL FINANCIAL INFORMATION

Dollars in millionsSeptember 30, 2023December 31, 2022
Income taxes$4,933$3,547
Research and development714579
Contract assets410504
Restricted cash(a)54148
Other1,0961,017
Other current assets$7,207$5,795
Dollars in millionsSeptember 30, 2023December 31, 2022
Equity investments (Note 9)$1,557$2,187
Operating leases1,3671,220
Inventories847484
Pension and postretirement296285
Research and development427496
Restricted cash(a)—54
Receivables and convertible notes432—
Other288214
Other non-current assets$5,214$4,940

(a) Restricted cash primarily consists of funds restricted for annual Company contributions to the defined contribution plan in the U.S. and escrow for litigation settlements. Cash is restricted when withdrawal or general use is contractually or legally restricted. As of September 30, 2022, restricted cash of $223 million was included in Cash, cash equivalents and restricted cash in the consolidated statement of cash flows.

Dollars in millionsSeptember 30, 2023December 31, 2022
Rebates and discounts$7,782$6,702
Income taxes1,458942
Employee compensation and benefits8761,425
Research and development1,3071,359
Dividends1,1601,196
Interest371321
Royalties427431
Operating leases150136
Other1,6512,074
Other current liabilities$15,182$14,586
Dollars in millionsSeptember 30, 2023December 31, 2022
Income taxes$3,215$3,992
Pension and postretirement386402
Operating leases1,5131,261
Deferred income316283
Deferred compensation384349
Other389303
Other non-current liabilities$6,203$6,590

Note 16. EQUITY

The following table summarizes changes in equity for the nine months ended September 30, 2023:

Common StockCapital in Excess of Par Value of StockAccumulated Other Comprehensive LossRetained EarningsTreasury StockNoncontrolling Interest
Dollars and shares in millionsSharesPar ValueSharesCost
Balance at December 31, 20222,923$292$45,165$(1,281)$25,503825$(38,618)$57
Net earnings————2,262——5
Other comprehensive loss———(87)————
Cash dividends declared $0.57 per share————(1,197)———
Share repurchase program—————4(250)—
Stock compensation——(25)——(6)60—
Balance at March 31, 20232,923$292$45,140$(1,368)$26,568823$(38,808)$62
Net earnings————2,073——4
Other comprehensive loss———(19)————
Cash dividends declared $0.57 per share————(1,192)———
Share repurchase program—————13(911)—
Stock compensation——159——(2)39—
Distributions———————(9)
Balance at June 30, 20232,92329245,299(1,387)27,449834(39,680)57
Net Earnings————1,928——7
Other comprehensive income———101————
Cash dividends declared $0.57 per share————(1,159)———
Stock repurchase program——(600)——56(3,433)—
Stock compensation——146——(1)27—
Convertible debt——4———11—
Balance at September 30, 20232,923$292$44,849$(1,286)$28,218889$(43,075)$64

The following table summarizes changes in equity for the nine months ended September 30, 2022:

Common StockCapital in Excess of Par Value of StockAccumulated Other Comprehensive LossRetained EarningsTreasury StockNoncontrolling Interest
Dollars and shares in millionsSharesPar ValueSharesCost
Balance at December 31, 20212,923$292$44,361$(1,268)$23,820747$(31,259)$60
Net earnings————1,278——5
Other comprehensive income———39————
Cash dividends declared $0.54 per share————(1,150)———
Share repurchase program——(750)——65(4,250)—
Stock compensation——145——(18)322—
Balance at March 31, 20222,923$292$43,756$(1,229)$23,948794$(35,187)$65
Net earnings————1,421——8
Other comprehensive income———237————
Cash dividends declared $0.54 per share————(1,152)———
Stock repurchase program——300——2(300)—
Stock compensation——319——(8)195—
Distributions———————(12)
Balance at June 30, 20222,92329244,375(992)24,217788(35,292)61
Net Earnings————1,606——2
Other comprehensive income———151————
Cash dividends declared $0.54 per share————(1,148)———
Stock repurchase program——450——12(1,151)—
Stock compensation——131——(1)32—
Balance at September 30, 20222,923$292$44,956$(841)$24,675799$(36,411)$63

During the third quarter of 2023, BMS entered into accelerated share repurchase ("ASR") agreements to repurchase an aggregate amount of $4.0 billion of the Company's common stock. The ASR agreements were funded with cash on-hand and are expected to settle in the fourth quarter of 2023. Approximately 56 million shares of common stock (85% of the $4.0 billion aggregate repurchase price) were received by BMS and included in treasury stock as of September 30, 2023. The total number of shares to be repurchased under the ASR agreements will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. In addition, as part of its share repurchase program, BMS repurchased 17 million shares of its common stock for $1.2 billion during the nine months ended September 30, 2023. The remaining share repurchase capacity under the BMS share repurchase program was approximately $2.0 billion as of September 30, 2023.

During the first quarter of 2022, BMS entered into ASR agreements to repurchase an aggregate amount of $5.0 billion of the Company's common stock. The ASR agreements were funded with cash on-hand and 65 million shares of common stock (85% of the $5.0 billion aggregate repurchase price) were received by BMS and included in treasury stock. The remaining amounts in the ASR agreements were settled in two tranches during the second and third quarters of 2022 and 4 million shares of common stock were received by BMS and transferred to treasury stock.

The following table summarizes the changes in Other comprehensive income by component:

Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
Dollars in millionsPretaxTaxAfter TaxPretaxTaxAfter Tax
Derivatives qualifying as cash flow hedges
Recognized in Other comprehensive income/(loss)$150$(18)$132$231$(31)$200
Reclassified to net earnings(a)(16)(2)(18)(235)28(207)
Derivatives qualifying as cash flow hedges134(20)114(4)(3)(7)
Pension and postretirement benefits
Actuarial gains/(losses)3(1)2(10)1(9)
Marketable debt securities
Unrealized losses(3)1(2)(3)1(2)
Foreign currency translation4(17)(13)35(22)13
Other comprehensive income/(loss)$138$(37)$101$18$(23)$(5)
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
Dollars in millionsPretaxTaxAfter TaxPretaxTaxAfter Tax
Derivatives qualifying as cash flow hedges
Recognized in Other comprehensive income$505$(66)$439$1,106$(147)$959
Reclassified to net earnings(a)(175)22(153)(391)50(341)
Derivatives qualifying as cash flow hedges330(44)286715(97)618
Pension and postretirement benefits
Actuarial gains14(4)1054(11)43
Amortization(b)7(1)619(4)15
Settlements(b)2—27(1)6
Pension and postretirement benefits23(5)1880(16)64
Marketable debt securities
Unrealized losses———(2)—(2)
Foreign currency translation(131)(22)(153)(201)(52)(253)
Other comprehensive income$222$(71)$151$592$(165)$427

(a)Included in Cost of products sold and Other (income)/expense, net. Refer to "—Note 9. Financial Instruments and Fair Value Measurements" for further information.

(b)Included in Other (income)/expense, net.

The accumulated balances related to each component of Other comprehensive income/(loss), net of taxes, were as follows:

Dollars in millionsSeptember 30, 2023December 31, 2022
Derivatives qualifying as cash flow hedges$225$232
Pension and postretirement benefits(632)(623)
Marketable debt securities(2)—
Foreign currency translation(a)(877)(890)
Accumulated other comprehensive loss$(1,286)$(1,281)

(a)Includes net investment hedge gains of $205 million and $125 million as of September 30, 2023 and December 31, 2022, respectively.

Note 17. EMPLOYEE STOCK BENEFIT PLANS

Stock-based compensation expense was as follows:

Three Months Ended September 30,Nine Months Ended September 30,
Dollars in millions2023202220232022
Cost of products sold$14$11$38$30
Marketing, selling and administrative5548162144
Research and development6356191164
Total Stock-based compensation expense$132$115$391$338
Income tax benefit(a)$28$23$80$67

(a) Income tax benefit excludes excess tax benefits from share-based compensation awards that were vested or exercised of $1 million and $21 million for the three and nine months ended September 30, 2023, and $4 million and $63 million for the three and nine months ended September 30, 2022, respectively.

The number of units granted and the weighted-average fair value on the grant date for the nine months ended September 30, 2023 were as follows:

Units in millionsUnitsWeighted-Average Fair Value
Restricted stock units9.3$60.52
Market share units1.058.18
Performance share units1.564.18
Dollars in millionsRestricted Stock UnitsMarket Share UnitsPerformance Share Units
Unrecognized compensation cost$893$63$115
Expected weighted-average period in years of compensation cost to be recognized2.82.91.8

Note 18. LEGAL PROCEEDINGS AND CONTINGENCIES

BMS 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, partners, suppliers, service providers, licensees, licensors, employees, or shareholders, among others. These matters may 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, 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. Legal proceedings that are significant or that BMS believes could become significant or material are described below.

While BMS does not believe that any of these matters, except as otherwise specifically noted below, will have a material adverse effect on its financial position or liquidity as BMS believes it has substantial claims and/or defenses in the matters, the outcomes of BMS's legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. There can be no assurance that there will not be an increase in the scope of one or more of these pending matters or any other or future lawsuits, claims, government investigations or other legal proceedings will not be material to BMS's financial position, results of operations or cash flows for a particular period. Furthermore, failure to successfully enforce BMS's patent rights would likely result in substantial decreases in the respective product revenues from generic competition.

Unless otherwise noted, BMS is unable to assess the outcome of the respective matters nor is it able to estimate the possible loss or range of losses that could potentially result for such matters. Contingency accruals are recognized when it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period. For a discussion of BMS’s tax contingencies, see " —Note 7. Income Taxes."

INTELLECTUAL PROPERTY

Anti-PD-L1 and CTLA-4 — U.S.

On March 17, 2022, BMS filed a lawsuit in U.S. District Court for the District of Delaware against AstraZeneca Pharmaceuticals LP and AstraZeneca UK Ltd (collectively, "AZ") alleging that AZ's marketing of the PD-L1 antibody Imfinzi infringes certain claims of U.S. Patent Nos. 9,580,505, 9,580,507, 10,138,299, 10,308,714, 10,266,594, 10,266,595, 10,266,596 and 10,323,092. On April 25, 2023, BMS filed an additional lawsuit against AZ in U.S. District Court for the District of Delaware alleging that AZ's marketing of the PD-L1 antibody Imfinzi infringes U.S. Patent No. 9,402,899.

On January 23, 2023, BMS filed a lawsuit in U.S. District Court for the District of Delaware against AstraZeneca Pharmaceuticals LP and AstraZeneca AB (collectively, "AZ AB") alleging that AZ AB's marketing of the CTLA-4 antibody Imjudo infringes certain claims of U.S. Patent Nos. 9,320,811 and 9,273,135.

On July 24, 2023, BMS entered into an agreement with AZ and AZ AB to settle all outstanding claims between them in the CTLA-4 litigation and the two PD-L1 antibody litigations described above. Refer to "—Note 5. Other (Income)/Expense, Net" for further information.

Eliquis - Europe

Lawsuits have been filed by generic companies in various countries in Europe seeking revocation of our composition-of-matter patents and Supplementary Protection Certificates ("SPCs") relating to Eliquis, and trials or preliminary proceedings have been held in certain of those cases.

In Finland, the court granted our request for a preliminary injunction prohibiting Teva from offering, storing or selling generic Eliquis products in Finland that have obtained price and reimbursement. A trial regarding Teva's challenge to the validity of the Finnish composition-of-matter patent and related SPC concluded on July 5, 2023, and a decision is expected sometime in the fourth quarter of 2023.

In France, a trial was held regarding Teva's challenge to the validity of the French composition-of-matter patent and related SPC, and a decision was issued on June 8, 2023, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.

In Ireland, the court granted our request for a preliminary injunction prohibiting Teva from making, offering, putting on the market and/or using and/or importing or stocking for the aforesaid purposes, generic Eliquis products. The trial court's preliminary injunction decision was subsequently upheld by the Irish Court of Appeal. A trial regarding Teva's challenge to the validity of the Irish composition-of-matter patent and related SPC concluded on July 28, 2023, and a decision is expected sometime in the fourth quarter of 2023.

In the Netherlands, our requests for preliminary injunctions to prevent at-risk generic launches by Sandoz, Stada and Teva prior to full trials on the validity of the Dutch composition-of-matter patent and SPC were initially denied by the lower courts. However, in a judgment issued on August 15, 2023, the Dutch Court of Appeal overturned the decisions of the lower court, issued preliminary injunctions against Sandoz, Stada and Teva and ordered those companies to recall any generic Eliquis product from the Dutch market. Full trials regarding challenges to the validity of the Dutch composition-of-matter patent and related SPC by Sandoz began on October 13, 2023, and those related to Teva are scheduled to begin on January 12, 2024.

In Norway, a trial was held regarding Teva's challenge to the validity of the Norwegian composition-of-matter patent and related SPC, and a decision was issued on May 23, 2023, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.

In Portugal, there are patent validity and infringement proceedings pending with multiple companies seeking to market generic versions of Eliquis. A trial regarding Mylan's challenge to the validity of the Portuguese composition-of-matter patent is scheduled to conclude November 29, 2023. In early September, Teva launched a generic Eliquis product on the Portuguese market. On September 15, 2023, BMS filed a request for a preliminary injunction against Teva at the Portuguese Intellectual Property Court.

In Spain, a trial regarding Teva's challenge to the validity of the Spanish composition-of-matter patent and related SPC was held on October 18-19, 2023.

In Sweden, a trial was held regarding Teva's challenge to the validity of the Swedish composition-of-matter patent and related SPC, and a decision was issued on November 2, 2022, confirming their validity and rejecting Teva's claims. Teva has appealed the decision.

In Switzerland, a trial regarding Teva's challenge to the validity of the Swiss composition-of-matter patent and related SPC is scheduled to begin on November 29, 2023.

In the UK, Sandoz and Teva filed lawsuits in the United Kingdom seeking revocation of the UK composition-of-matter patent and related SPC. BMS subsequently filed counterclaims for infringement in both actions. A combined trial took place in February 2022, and in a judgment issued on April 7, 2022, the judge found the UK apixaban composition-of-matter patent and related SPC invalid. BMS appealed the judgment and on May 4, 2023, the Court of Appeal upheld the lower court's decision. On June 1, 2023, BMS filed an application to appeal to the UK Supreme Court. Following the first instance decision in the UK, generic manufacturers have begun marketing generic versions of Eliquis in the UK.

In addition to the above, challenges to the validity of the composition-of-matter patent and related SPC are pending in Denmark, Italy, Poland, Czechia, Slovakia, Hungary, Bulgaria, Croatia, Greece and Lithuania.

Generic manufacturers may seek to market generic versions of Eliquis in additional countries in Europe prior to the expiration of our patents, which may lead to additional infringement and invalidity actions involving Eliquis patents being filed in various countries in Europe.

Inrebic - U.S.

In September 2023, BMS received a Notice Letter from Teva notifying BMS that Teva had filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Inrebic in the U.S. and challenging certain patents listed in the Orange Book for Inrebic. In response, in October 2023, BMS filed a patent infringement action against Teva in the U.S. District Court for the District of New Jersey.

Onureg – U.S.

BMS has received Notice Letters from Accord Healthcare, Inc. ("Accord"), MSN Laboratories Private Limited ("MSN"), Teva Pharmaceuticals, Inc. ("Teva") and Natco Pharma Limited ("Natco"), respectively, each notifying BMS that it has filed an ANDA containing a paragraph IV certification seeking approval of a generic version of Onureg in the U.S. and challenging U.S. Patent Nos. 11,571,436 (the "'436 Patent") and 8,846,628 (the "'628 Patent"), FDA Orange Book-listed formulation patents covering Onureg, which expire in 2029 and 2030, respectively. In response, BMS has filed a patent infringement action against Accord, MSN, Teva and Natco in the U.S. District Court for the District of Delaware. In August 2023, the Accord and MSN actions were consolidated, and a trial has been scheduled to begin on September 23, 2024. No trial dates have been scheduled for the Teva or Natco actions.

In February 2023, Apotex Inc. filed a request for inter partes review ("IPR") of the '628 Patent. On July 20, 2023, the USPTO granted Apotex's request to institute an IPR of the '628 Patent.

Plavix* - Australia

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., subsequently changed its name to Apotex ("GenRx-Apotex"). In August 2007, GenRx-Apotex filed an application in the Federal Court of Australia 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 of Australia granted Sanofi's injunction. A subsidiary of BMS 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 GenRx-Apotex case. 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. BMS 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. GenRx-Apotex appealed. On September 29, 2009, the Full Court held all of the claims of Patent No. 597784 invalid. In March 2010, the High Court of Australia denied a request by BMS and Sanofi to hear an appeal of the Full Court decision. The case was remanded to the Federal Court for further proceedings related to damages sought by GenRx-Apotex. BMS and GenRx-Apotex settled, and the GenRx-Apotex case was dismissed. The Australian government intervened in this matter seeking maximum damages up to 449 million AUD ($289 million), plus interest, which would be split between BMS and Sanofi, for alleged losses experienced for paying a higher price for branded Plavix* during the period when the injunction was in place. BMS and Sanofi dispute that the Australian government is entitled to any damages. A trial was concluded in September 2017. In April 2020, the Federal Court issued a decision dismissing the Australian government's claim for damages. In May 2020, the Australian government appealed the Federal Court's decision and an appeal hearing concluded in February 2021. On June 26, 2023, the appeal court issued a ruling in BMS and Sanofi's favor, upholding the lower court's decision. The Australian government is seeking leave to appeal the decision to the High Court of Australia.

Revlimid - U.S.

In April 2023, Celgene received a Notice Letter from Deva Holdings A.S. ("Deva") notifying Celgene that Deva has filed an ANDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, on May 31, 2023, Celgene initiated a patent infringement action against Deva in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book listed patents. On October 23, 2023, BMS entered into a confidential settlement agreement with Deva, settling all outstanding claims in the litigation with Deva. In September 2023, Celgene received a Notice Letter from Accord Healthcare, Inc. ("Accord") notifying Celgene that Accord has filed an ANDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, on October 19, 2023, Celgene initiated a patent infringement action against Accord in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents. On October 19, 2023, BMS entered into a confidential settlement agreement with Accord, settling all outstanding claims in the litigation with Accord.

Sprycel - U.S.

BMS has received Notice Letters from Xspray Pharma AB ("Xspray"), Nanocopoeia, LLC ("Nanocopoeia"), Handa Oncology, LLC ("Handa") and Zydus Pharmaceuticals ("Zydus"), each notifying BMS that it has filed applications containing paragraph IV certifications seeking approval of a dasatinib product in the U.S. and challenging two FDA Orange Book-listed monohydrate form patents expiring in 2025 and 2026. In February 2022, BMS filed a patent infringement action against Xspray in the U.S. District Court for the District of New Jersey. In May 2022, BMS filed a patent infringement action against Nanocopoeia in the U.S. District Court for the District of Minnesota. In November 2022, BMS filed a patent infringement action against Handa in the U.S. District Court for the Northern District of California. On March 24, 2023, the Minnesota court denied a motion that Nanocopoeia had filed seeking a judgment based on the pleadings. On June 16, 2023, BMS entered into a confidential settlement agreement with Handa, settling all outstanding claims in the litigation. On September 13, 2023, BMS entered into a confidential settlement agreement with XSpray, settling all outstanding claims in the litigation. On October 10, 2023, BMS entered into a confidential settlement agreement with Nanocopoeia, settling all outstanding claims in the litigation. In October 2023, BMS filed a patent infringement action against Zydus in the U.S. District Court for the District of New Jersey.

Zeposia - U.S.

On October 15, 2021, Actelion Pharmaceuticals LTD and Actelion Pharmaceuticals US, INC ("Actelion") filed a complaint for patent infringement in the United States District Court for the District of New Jersey against BMS and Celgene for alleged infringement of U.S. Patent No. 10,251,867 (the "'867 Patent"). The Complaint alleges that the sale of Zeposia infringes certain claims of the '867 Patent and Actelion is seeking damages and injunctive relief. No trial date has been scheduled.

PRICING, SALES AND PROMOTIONAL PRACTICES LITIGATION

Plavix* State Attorneys General Lawsuits

BMS and certain Sanofi entities are defendants in a consumer protection action brought by the attorney general of Hawaii relating to the labeling, sales and/or promotion of Plavix*. In February 2021, a Hawaii state court judge issued a decision against Sanofi and BMS, imposing penalties in the total amount of $834 million, with $417 million attributed to BMS. Sanofi and BMS appealed the decision. On March 15, 2023, the Hawaii Supreme Court issued its decision, reversing in part and affirming in part the trial court decision, vacating the penalty award and remanding the case for a new trial and penalty determination. A new bench trial concluded on October 16, 2023.

PRODUCT LIABILITY LITIGATION

BMS 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, BMS also faces unfiled claims involving its products.

Abilify*

BMS 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. Cases were filed in state and federal courts in the United States. Pursuant to a previously disclosed master settlement agreement and settlement related court orders, the vast majority of the cases in the United States were resolved or dismissed. Eleven inactive cases remain pending in state courts in New Jersey. There are also eleven cases pending in Canada (four class actions and seven individual injury claims), two of which are active (the certified class actions in Quebec and Ontario).

Onglyza*

BMS 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*. In February 2018, the Judicial Panel on Multidistrict Litigation ordered all the federal Onglyza* cases to be transferred to an MDL in the U.S. District Court for the Eastern District of Kentucky. A significant majority of the claims were pending in the MDL, with others pending in a coordinated proceeding in California Superior Court in San Francisco ("JCCP"). The JCCP court granted summary judgment to defendants in March 2022, a decision which was affirmed by the California Court of Appeal. The California Supreme Court declined to review the decision in July 2023. In the MDL, the court granted defendants' motion to exclude plaintiffs' only general causation expert on January 5, 2022 and granted summary judgment on August 2, 2022. Plaintiffs filed their Notice of Appeal on December 2, 2022. The appeal remains pending in the Sixth Circuit. As part of BMS's global diabetes business divestiture, BMS sold Onglyza* to AstraZeneca in February 2014 and any potential liability with respect to Onglyza* is expected to be shared with AstraZeneca.

SECURITIES LITIGATION

Celgene Securities Litigations

Beginning in March 2018, two putative class actions were filed against Celgene and certain of its officers in the U.S. District Court for the District of New Jersey (the "Celgene Securities Class Action"). The complaints allege that the defendants violated federal securities laws by making misstatements and/or omissions concerning (1) trials of GED-0301, (2) Celgene's 2020 outlook and projected sales of Otezla*, and (3) the new drug application for Zeposia. The Court consolidated the two actions and appointed a lead plaintiff, lead counsel, and co-liaison counsel for the putative class. In February 2019, the defendants filed a motion to dismiss plaintiff''s amended complaint in full. In December 2019, the Court denied the motion to dismiss in part and granted the motion to dismiss in part (including all claims arising from alleged misstatements regarding GED-0301). Although the Court gave the plaintiff leave to re-plead the dismissed claims, it elected not to do so, and the dismissed claims are now dismissed with prejudice. In November 2020, the Court granted class certification with respect to the remaining claims. In March 2023, the Court granted the defendants leave to file a motion for summary judgment, the briefing for which was completed in June 2023. On September 8, 2023, the Court granted in part and denied in part defendants' motion for summary judgment.

In April 2020, certain Schwab management investment companies on behalf of certain Schwab funds filed an individual action in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action against the same remaining defendants in that action (the "Schwab Action"). In July 2020, the defendants filed a motion to dismiss the plaintiffs' complaint in full. In March 2021, the Court granted in part and denied in part defendants' motion to dismiss consistent with its decision in the Celgene Securities Class Action.

The California Public Employees' Retirement System in April 2021 (the "CalPERS Action"); DFA Investment Dimensions Group Inc., on behalf of certain of its funds; and American Century Mutual Funds, Inc., on behalf of certain of its funds, in July 2021 (respectively the "DFA Action" and the "American Century Action"), and GIC Private Limited in September 2021 (the "GIC Action"), filed separate individual actions in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action and the Schwab individual action against the same remaining defendants in those actions. In October 2021, these actions were consolidated for pre-trial proceedings with the Schwab Action. The Court also consolidated any future direct actions raising common questions of law and fact with the Schwab Action (the "Consolidated Schwab Action"). On October 2, 2023, defendants filed a motion for partial summary judgment in the Consolidated Schwab Action.

No trial dates have been scheduled in any of the above Celgene Securities Litigations.

Contingent Value Rights Litigations

In June 2021, an action was filed against BMS in the U.S. District Court for the Southern District of New York asserting claims of alleged breaches of a Contingent Value Rights Agreement ("CVR Agreement") entered into in connection with the closing of BMS's acquisition of Celgene Corporation in November 2019. The successor trustee under the CVR Agreement alleges that BMS breached the CVR Agreement by allegedly failing to use "diligent efforts" to obtain FDA approval of liso-cel (Breyanzi) before a contractual milestone date, thereby allegedly avoiding a $6.4 billion potential obligation to holders of the contingent value rights governed by the CVR Agreement and by allegedly failing to permit inspection of records in response to a request by the successor trustee. The successor trustee seeks damages in an amount to be determined at trial and other relief, including interest and attorneys' fees. BMS disputes the successor trustee's allegations. BMS filed a motion to dismiss the successor trustee's complaint, which was denied on June 24, 2022.

In October 2021, alleged former Celgene stockholders filed a complaint in the U.S. District Court for the Southern District of New York asserting claims on behalf of a putative class of Celgene stockholders who received CVRs in the BMS merger with Celgene for violations of sections 14(a) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") relating to the joint proxy statement. That action later was consolidated with another action filed in the same court, and a consolidated complaint thereafter was filed asserting claims on behalf of a class of CVR acquirers, whether in the BMS merger with Celgene or otherwise, for violations of sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the "Securities Act") and sections 10(b), 14(a) and 20(2) of the Exchange Act. The complaint alleged that the February 22, 2019 joint proxy statement was materially false or misleading because it failed to disclose that BMS allegedly had no intention to obtain FDA approval for liso-cel (Breyanzi) by the applicable milestone date in the CVR Agreement and that certain statements made by BMS or certain BMS officers in periodic SEC filings, earnings calls, press releases, and investor presentations between December 2019 and November 2020 were materially false or misleading for the same reason. Defendants moved to dismiss the complaint. On March 1, 2023, the Court entered an opinion and order granting defendants' motion and dismissed the complaint in its entirety. The claims under Sections 11, 12(a)(2), and 15 of the Securities Act and Section 14(a) of the Exchange Act were dismissed with prejudice. The claims under Sections 10(a) and 20(a) of the Exchange Act were dismissed with leave to file a further amended complaint, which plaintiffs filed on April 14, 2023. Defendants moved to dismiss the amended complaint and briefing on the motion was completed on June 23, 2023. The motion is currently pending before the Court.

In November 2021, an alleged purchaser of CVRs filed a complaint in the Supreme Court of the State of New York for New York County asserting claims on behalf of a putative class of CVR acquirers for violations of sections 11(a) and 12(a)(2) of the Securities Act of 1933. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to disclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its board of directors at the time of the joint proxy statement, and certain BMS officers who signed the registration statement. Defendants have moved to stay the action pending resolution of the federal action or, in the alternative, to dismiss the complaint. In lieu of responding to the motion, the plaintiff filed an amended complaint on June 15, 2023. Defendants again filed a motion to stay or, in the alternative, to dismiss the amended complaint on July 13, 2023. Briefing on that motion was completed on August 24, 2023.

In November 2021, an alleged Celgene stockholder filed a complaint in the Superior Court of New Jersey, Union County asserting claims on behalf of two separate putative classes, one of acquirers of CVRs and one of acquirers of BMS common stock, for violations of sections 11(a), 12(a)(2), and 15 of the Securities Act. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to disclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its board of directors at the time of the joint proxy statement, certain BMS officers who signed the registration statement and Celgene's former chairman and chief executive officer. Defendants moved to stay the action pending resolution of the federal action and, in the alternative, to dismiss the complaint. On February 17, 2023, the Court granted defendants' motion to stay and declined to reach the merits of defendants' motion to dismiss. On October 9, 2023, the plaintiff filed a motion to vacate the stay.

No trial dates have been scheduled in any of the above CVR Litigations.

OTHER LITIGATION

IRA Litigation

On June 16, 2023, BMS filed a lawsuit against the U.S. Department of Health & Human Services and the Centers for Medicare & Medicaid Services, et al., challenging the constitutionality of the drug-pricing program in the IRA. That program requires pharmaceutical companies, like BMS, under the threat of significant penalties, to sell certain of their medicines at government-dictated prices. On August 29, 2023, the government selected Eliquis for this program. In its lawsuit, BMS argues that this program violates the Fifth Amendment, which requires the government to pay just compensation if it takes property for public use, by requiring pharmaceutical manufacturers to provide medicines to third parties at prices set by the government, without any requirement that those prices reflect fair market value. BMS also argues that this program violates the First Amendment right to free speech by requiring manufacturers to state publicly that the government's price setting is a true negotiation that resulted in a fair price, even if it was not. On August 16, 2023, BMS filed a motion for summary judgment.

Thalomid and Revlimid Litigations

Beginning in November 2014, certain putative class action lawsuits were filed against Celgene in the U.S. District Court for the District of New Jersey alleging that Celgene violated various antitrust, consumer protection, and unfair competition laws by (a) allegedly securing an exclusive supply contract for the alleged purpose of preventing a generic manufacturer from securing its own supply of thalidomide active pharmaceutical ingredient, (b) allegedly refusing to sell samples of Thalomid and Revlimid brand drugs to various generic manufacturers for the alleged purpose of bioequivalence testing necessary for ANDAs to be submitted to the FDA for approval to market generic versions of these products, (c) allegedly bringing unjustified patent infringement lawsuits in order to allegedly delay approval for proposed generic versions of Thalomid and Revlimid, and/or (d) allegedly entering into settlements of patent infringement lawsuits with certain generic manufacturers that allegedly have had anticompetitive effects. The plaintiffs, on behalf of themselves and putative classes of third-party payers, sought injunctive relief and damages. The various lawsuits were consolidated into a master action for all purposes. In March 2020, Celgene reached a settlement with the class plaintiffs. In October 2020, the Court entered a final order approving the settlement and dismissed the matter. That settlement did not resolve the claims of certain entities that opted out of the settlement, and who have since filed new suits advancing related theories. As described below, those suits, together with a suit by certain specialty pharmacies and a new putative class action suit, are pending.

In March 2019, Humana Inc. ("Humana"), which opted out of the above settlement, filed a lawsuit against Celgene in the U.S. District Court for the District of New Jersey. Humana's complaint makes largely the same claims and allegations as were made in the now settled Thalomid and Revlimid antitrust class action litigation. The complaint purports to assert claims on behalf of Humana and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser, and seeks, among other things, treble and punitive damages, injunctive relief and attorneys' fees and costs. In May 2019, Celgene filed a motion to dismiss Humana's complaint. In April 2022, the Court issued an order denying Celgene's motion to dismiss. That order addressed only Celgene's argument that certain of Humana's claims were barred by the statute of limitations. The Court's order did not address Celgene's other grounds for dismissal and instead directed Celgene to present those arguments in a renewed motion to dismiss following the filing of amended complaints. In May 2022, Humana filed an amended complaint against Celgene and BMS asserting the same claims based on additional factual allegations. Celgene and BMS subsequently filed a motion to dismiss Humana's amended complaint. On August 18, and September 8, 2023, the Court held argument on Celgene and BMS' motion. No trial date has been scheduled.

United HealthCare Services, Inc. ("UHS"), Blue Cross Blue Shield Association ("BCBSA"), BCBSM Inc., Health Care Service Corporation ("HCSC"), Blue Cross and Blue Shield of Florida Inc., Cigna Corporation ("Cigna"), Molina Healthcare, Inc. ("Molina") and several MSP related entities (MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; MAO-MSO Recovery II, LLC, Series PMPI, a segregated series of MAO-MSO Recovery II, LLC; MSP Recovery Claims Series 44, LLC; MSP Recovery Claims PROV, Series LLC; and MSP Recovery Claims CAID, Series LLC (together, "MSP")) filed lawsuits making largely the same claims and allegations as were made in the now-settled class action litigation and in the Humana opt-out action. Certain of the matters have made additional claims related to copay assistance for Thalomid and Revlimid. These cases are now pending in the U.S. District Court for the District of New Jersey. Celgene and BMS's motion to dismiss the Humana amended complaint applies to these other opt‑out actions as well, and these other opt‑out actions will proceed as described above with respect to that Humana opt-out action. No trial dates have been scheduled.

In May 2021, Molina sued Celgene and BMS in San Francisco Superior Court. Molina's complaint makes largely the same claims and allegations as were made in the now settled class action litigation. In June 2022, the San Francisco Superior Court dismissed 63 of Molina’s claims, which Molina later reasserted in the District of New Jersey as described above, and stayed the remaining 4 claims. No activity is expected in this case until disposition of the New Jersey actions.

Certain other entities that opted out of the now‑settled class action have also filed summonses related to two actions in the Philadelphia County Court of Common Pleas in connection with the allegations made by Humana and other opt‑out entities. Those actions have been placed in deferred status pending further developments in the above opt‑out cases.

In November 2022, certain specialty pharmacies filed an action as direct purchasers against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The action makes largely the same claims and allegations against Celgene and BMS as were made with respect to Revlimid in the now settled class action litigation, and seek injunctive relief and damages under the Sherman Antitrust Act. Also in November 2022, a putative class of end-payor plaintiffs filed an action against Celgene, BMS, and certain generic manufacturers in the U.S. District Court for the District of New Jersey. The class complaint brings claims based on Celgene's allegedly anticompetitive settlements of Revlimid patent litigation, seeking damages under state antitrust and consumer protection laws and injunctive relief under federal antitrust law. Celgene, BMS and the generic defendants have filed consolidated motions to dismiss these two actions, and the motions were fully briefed in May 2023. No trial dates have been scheduled.

In October 2023, two healthcare systems—the Mayo Clinic and LifePoint Corporate Services, General Partnership—filed a lawsuit against Celgene, BMS and certain generic manufacturers in the U.S. District Court for the Northern District of California. Plaintiffs pursue claims based on their alleged purchases of and reimbursement for Revlimid and generic lenalidomide, and also claim to proceed based on assignments of claims from their subsidiaries and affiliates. The action makes largely the same claims and allegations against Celgene and BMS as were made with respect to Revlimid in the now-settled class action litigation, and seeks injunctive relief and damages under the Sherman Antitrust Act and parallel state laws. No trial date has been scheduled.

In May 2018, Humana filed a lawsuit against Celgene in the Pike County Circuit Court of the Commonwealth of Kentucky. Humana's complaint alleges Celgene engaged in unlawful off-label marketing in connection with sales of Thalomid and Revlimid and asserts claims against Celgene for fraud, breach of contract, negligent misrepresentation, unjust enrichment and violations of New Jersey's Racketeer Influenced and Corrupt Organizations Act ("NJ RICO"). The complaint seeks, among other things, treble and punitive damages, injunctive relief and attorneys' fees and costs. Humana subsequently dismissed its claims for breach of contract voluntarily. A trial for this matter began on January 31, 2023. On January 25, 2023, the Court granted Celgene's summary judgment motion on Humana's claims for violations of NJ RICO and dismissed those claims. On March 2, 2023, following a multi-week trial, the jury returned a full defense verdict in Celgene's favor on Humana's claims of fraud and negligent misrepresentation. In May 2020, Celgene filed suit against Humana Pharmacy, Inc. ("HPI"), a Humana subsidiary, in Delaware Superior Court. Celgene's complaint alleges that HPI breached its contractual obligations to Celgene by assigning claims to Humana that Humana is now asserting. The complaint seeks damages for HPI's breach as well as a declaratory judgment. On February 14, 2023, the Court granted summary judgment in favor of Celgene on its breach of contract claims. In July 2023, BMS and Humana entered into a settlement agreement settling all outstanding claims in both the Kentucky and HPI litigations.

BeiGene Arbitration Matter

On July 5, 2017, Celgene Logistics Sàrl ("Celgene Logistics") and BeiGene, Ltd. (together with its assignees, "BeiGene"), entered into a License and Supply Agreement (the "LSA") pursuant to which BeiGene was granted, among other things, an exclusive license to distribute and commercialize Revlimid, Vidaza and Abraxane in China.

BeiGene initiated an arbitration proceeding against Celgene Logistics and BMS at the International Chamber of Commerce in June 2020, asserting various claims, including breach of contract under the LSA. In October 2021, Celgene Logistics delivered notice to BeiGene terminating the LSA with respect to Abraxane. On August 1, 2023, BMS, Celgene Logistics, and certain of their affiliates entered into a Settlement and Termination Agreement with BeiGene relating to the termination of the parties' ongoing contractual relationships, the arbitration proceeding, other contracts entered into by the parties, as well as resolving other disputes and potential disputes between the parties. The arbitration was subsequently dismissed.

MSK Contract Litigation

On April 1, 2022, Memorial Sloan Kettering Cancer Center and Eureka Therapeutics, Inc. (collectively, "Plaintiffs") filed a complaint against BMS, Celgene and Juno (collectively, "Defendants"). In June 2022, Plaintiffs filed an amended complaint. Plaintiffs allege that Defendants breached a license agreement by allegedly failing to use commercially reasonable efforts to develop, manufacture, and commercialize a certain chimeric antigen receptor product and by failing to pay Plaintiffs a running royalty of at least 1.5% of worldwide sales of Abecma allegedly owed to Plaintiffs under the license agreement. Defendants disagree with plaintiffs' claims, and filed a motion to dismiss the amended complaint in July 2022. No trial date has been scheduled.

Pomalyst Antitrust Class Action

In September 2023, certain health insurance companies filed an action on behalf of a putative class of end-payor plaintiffs against Celgene, BMS, and certain generic pharmaceutical manufacturers in the U.S. District Court for the Southern District of New York. The class complaint asserts claims under federal antitrust law and state antitrust, consumer protection, and unjust enrichment laws based on allegations that Celgene and BMS engaged in anticompetitive conduct related to pomalidomide in the United States, including by allegedly engaging in fraud before the USPTO in the acquisition of patents that cover the use of pomalidomide, by filing sham patent litigations against generic pharmaceutical companies seeking to market generic pomalidomide, and by entering into unlawful patent litigation settlements with certain generic pharmaceutical companies seeking to market generic pomalidomide. No trial date has been scheduled.

GOVERNMENT INVESTIGATIONS

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

ENVIRONMENTAL PROCEEDINGS

As previously reported, BMS 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 BMS's current or former sites or at waste disposal or reprocessing facilities operated by third parties.

CERCLA and Other Remediation Matters

With respect to CERCLA and other remediation matters for which BMS is responsible under various state, federal and international laws, BMS 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 BMS accrues liabilities when they are probable and reasonably estimable. BMS estimated its share of future costs for these sites to be $81 million as of September 30, 2023, 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.

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