

	September 30, 2019					December 31, 2018
Dollars in Millions	Level 1		Level 2			Level 1		Level 2
Cash and cash equivalents - money market and other investments	$	—	$	29,771		$	—	$	6,173
Marketable securities
Certificates of deposit	—		1,156			—		971
Commercial paper	—		129			—		273
Corporate debt securities	—		1,693			—		2,379
Equity investments	—		—			—		125
Derivative assets	—		85			—		44
Equity investments	113		147			88		266
Derivative liabilities	—		(251		)	—		(31		)

As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company's 2018 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). There were no Level 3 financial assets or liabilities as of September 30, 2019 and December 31, 2018.



	September 30, 2019									December 31, 2018
Dollars in Millions	Amortized Cost		Gross Unrealized							Amortized Cost		Gross Unrealized
Dollars in Millions	Amortized Cost		Gains		Losses			Fair Value		Amortized Cost		Gains		Losses			Fair Value
Certificates of deposit	$	1,156	$	—	$	—		$	1,156	$	971	$	—	$	—		$	971
Commercial paper	129		—		—			129		273		—		—			273
Corporate debt securities	1,686		8		(1		)	1,693		2,416		—		(37		)	2,379
	$	2,971	$	8	$	(1	)	2,978		$	3,660	$	—	$	(37	)	3,623

Equity investments								260									479
Total								$	3,238								$	4,102

Equity investments not measured at fair value and excluded from the above fair value table were limited partnerships and other equity method investments of $150 million at September 30, 2019 and $114 million at December 31, 2018 and other equity investments without readily determinable fair values of $164 million at September 30, 2019 and $206 million at December 31, 2018. These amounts are included in Other assets.



	Three Months Ended September 30,					Nine Months Ended September 30,
Dollars in Millions	2019			2018		2019			2018
Net gain/(loss) recognized	$	(235	)	$	97	$	(81	)	$	(262	)
Less: Net gain/(loss) recognized for equity investments sold	—			—		14			—
Net unrealized gain/(loss) on equity investments held	$	(235	)	$	97	$	(95	)	$	(262	)

Cash Flow Hedges — Foreign currency forward contracts are used to hedge certain forecasted intercompany inventory purchases and sales transactions and certain foreign currency transactions. The fair value for contracts designated as cash flow hedges are temporarily reported in Accumulated other comprehensive loss and included in earnings when the hedged item affects earnings. Upon adoption of the amended guidance for derivatives and hedging in the first quarter of 2018, the entire change in fair value of the hedging instrument included in the assessment of hedge effectiveness is recorded in the derivatives qualifying as cash flow hedges component of Other Comprehensive (Loss)/Income. The net gain or loss on foreign currency forward contracts is expected to be reclassified to net earnings (primarily included in Cost of products sold) within the next 12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $921 million and Japanese yen of $546 million at September 30, 2019.

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

Net Investment Hedges — Euro borrowings of €950 million ($1.0 billion) at September 30, 2019 are designated as net investment hedges to hedge euro currency exposures of the net investment in certain foreign affiliates and are recognized in long-term debt. The effective portion of foreign exchange gain on the remeasurement of euro debt was $43 million and $10 million in 2019 and 2018, respectively, and were recorded in the foreign currency translation component of Other Comprehensive Income/(Loss) with the related offset in Long-term debt.

In January 2018, the Company entered into $300 million of cross-currency interest rate swap contracts maturing in December 2022 designated to hedge Japanese yen currency exposures of the Company's net investment in its Japan subsidiary. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive Income/(Loss) with a related offset in Other assets or Other non-current liabilities.

Fair Value Hedges — Fixed to floating interest rate swap contracts are designated as fair value hedges and used as an interest rate risk management strategy to create an appropriate balance of fixed and floating rate debt. The contracts and underlying debt for the hedged benchmark risk are recorded at fair value. The effective interest rate for the contracts is one-month LIBOR (2.0% as of September 30, 2019) plus an interest rate spread of 4.6%. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to match those of the debt being hedged, all changes in fair value of the swap are recorded in interest expense with an associated offset to the derivative asset or liability on the consolidated balance sheet. As a result, there was no net impact in earnings. When the underlying swap is terminated prior to maturity, the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.

Following the announcement of the Company's pending acquisition of Celgene, the Company entered into forward starting interest rate swap option contracts, with a total notional value of $7.6 billion, to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the pending Celgene acquisition. In April 2019, the Company entered into deal contingent forward starting interest rate swap contracts, with an aggregate notional principal amount of $10.4 billion, to hedge interest rate risk associated with the anticipated issuance of long-term debt to fund the Celgene acquisition and terminated the forward starting interest rate swap option contracts. The deal contingent forward starting interest rate swap contracts were unwound upon the May 2019 issuance of the new notes, refer to “—Debt Obligations.”



	September 30, 2019									December 31, 2018
	Asset^(a)				Liability^(b)					Asset^(a)				Liability^(b)
Dollars in Millions	Notional		Fair Value		Notional		Fair Value			Notional		Fair Value		Notional		Fair Value
Derivatives designated as hedging instruments:
Interest rate swap contracts	$	255	$	11	$	—	$	—		$	—	$	—	$	755	$	(10	)
Cross-currency interest rate swap contracts	125		1		175		(2		)	50		—		250		(5		)
Foreign currency forward contracts	1,667		68		246		(4		)	1,503		44		496		(10		)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	525		5		203		(5		)	54		—		600		(6		)
Deal contingent forward starting interest rate swap contracts	—		—		10,350		(240		)	—		—		—		—



	Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019
Dollars in Millions	Cost of products sold		Other income (net)		Cost of products sold		Other income (net)
Interest rate swap contracts	$	—	$	6	$	—	$	18
Cross-currency interest rate swap contracts	—		2		—		6
Foreign currency forward contracts	20		9		76		11
Forward starting interest rate swap option contracts	—		—		—		(35		)
Deal contingent forward starting interest rate swap contracts	—		—		—		(240		)



	Three Months Ended September 30, 2018				Nine Months Ended September 30, 2018
Dollars in Millions	Cost of products sold		Other income (net)		Cost of products sold			Other income (net)
Interest rate swap contracts	$	—	$	5	$	—		$	18
Cross-currency interest rate swap contracts	—		2		—			6
Foreign currency forward contracts	13		10		(20		)	17



	Three Months Ended September 30,						Nine Months Ended September 30,
Dollars in Millions	2019			2018			2019			2018
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)^(a)	$	63		$	18		$	102		$	63
Reclassified to Cost of products sold	(20		)	(13		)	(76		)	20

Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	2			5			4			1

Non-derivatives qualifying as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	41			(6		)	43			10



Dollars in Millions	September 30, 2019			December 31, 2018
Principal Value	$	24,467		$	6,776
Adjustments to Principal Value
Fair value of interest rate swap contracts	11			(10		)
Unamortized basis adjustment from swap terminations	181			201
Unamortized bond discounts and issuance costs	(269		)	(72		)
Total	$	24,390		$	6,895

Current portion of long-term debt	$	—		$	1,249
Long-term debt	24,390			5,646

The fair value of long-term debt was $26.6 billion at September 30, 2019 and $7.1 billion at December 31, 2018 valued using Level 2 inputs. Interest payments were $166 million and $174 million for the nine months ended September 30, 2019 and 2018, respectively, net of amounts related to interest rate swap contracts.

In May 2019, the Company issued an aggregate principal amount of $19.0 billion of floating rate and fixed rate unsecured senior notes. The notes rank equally in right of payment with all of the Company's existing and future senior unsecured indebtedness and the fixed rate notes are redeemable at any time, in whole, or in part, at varying specified redemption prices plus accrued and unpaid interest. All of the notes are subject to special mandatory redemption at a redemption price equal to 101% of the aggregate principal amount of the notes plus accrued and unpaid interest if the pending acquisition of Celgene is not completed by July 30, 2020 or the Company notifies the trustee in respect of the notes that it will not pursue the consummation of the Celgene acquisition. The following table summarizes the note issuances:



Dollars in Millions	2019
Principal Value:
Floating Rate Notes due 2020	$	750
Floating Rate Notes due 2022	500
2.550% Notes due 2021	1,000
2.600% Notes due 2022	1,500
2.900% Notes due 2024	3,250
3.200% Notes due 2026	2,250
3.400% Notes due 2029	4,000
4.125% Notes due 2039	2,000
4.250% Notes due 2049	3,750
Total	$	19,000

Proceeds net of discount and deferred loan issuance costs	$	18,790

As of September 30, 2019, BMS had four revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiring in January 2020, a $1.0 billion facility expiring in January 2022 and two five-year $1.5 billion facilities that were extended to September 2023 and July 2024, respectively. The facilities provide for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for the Company's commercial paper borrowings. The Company's $1.0 billion facility and its two $1.5 billion revolving facilities are extendable annually by one year on the anniversary date with the consent of the lenders. The Company's 364-day $2.0 billion facility can be renewed for one year on each anniversary date, subject to certain terms and conditions. No borrowings were outstanding under any revolving credit facility at September 30, 2019 or December 31, 2018.

In connection with the pending acquisition of Celgene, the Company entered into a bridge commitment letter that provided for up to $33.5 billion in a 364-day senior unsecured bridge facility in January 2019. The Company terminated the bridge facility upon receipt of proceeds from the Company's issuance of $19.0 billion of new notes in May 2019.

The Company also entered into an $8.0 billion term loan credit agreement consisting of a $1.0 billion 364-day tranche, a $4.0 billion three-year tranche and a $3.0 billion five-year tranche in connection with the pending Celgene acquisition. The term loan is subject to customary terms and conditions and does not have any financial covenants. No amounts will be borrowed under the term loan prior to the closing of the pending acquisition of Celgene. If drawn upon, the proceeds under the term loan will be used to fund a portion of the cash to be paid in the pending acquisition of Celgene and the payment of related fees and expenses.