Changes in exchange rates and interest rates create exposure to market risk. Certain derivative financial instruments are used when available on a cost-effective basis to hedge the underlying economic exposure. These instruments qualify as cash flow, net investment and fair value hedges upon meeting certain criteria, including effectiveness of offsetting hedged exposures. Changes in fair value of derivatives that do not qualify for hedge accounting are recognized in earnings as they occur. Derivative financial instruments are not used for trading purposes.

Financial instruments are subject to counterparty credit risk which is considered as part of the overall fair value measurement. Counterparty credit risk is monitored on an ongoing basis and mitigated by limiting amounts outstanding with any individual counterparty, utilizing conventional derivative financial instruments and only entering into agreements with counterparties that meet high credit quality standards. The consolidated financial statements would not be materially impacted if any counterparty failed to perform according to the terms of its agreement. Collateral is not required by any party whether derivatives are in an asset or liability position under the terms of the agreements.

Level 2 inputs utilize observable prices for similar instruments and quoted prices for identical or similar instruments in non-active markets. Additionally, certain corporate debt securities utilize a third-party matrix pricing model using significant inputs corroborated by market data for substantially the full term of the assets. Equity and fixed income funds are primarily invested in publicly traded securities valued at the respective NAV of the underlying investments. Level 2 derivative instruments are valued using LIBOR yield curves, less credit valuation adjustments, and observable forward foreign exchange rates at the reporting date. Valuations of derivative contracts may fluctuate considerably from volatility in underlying foreign currencies and underlying interest rates driven by market conditions and the duration of the contract.



	December 31, 2019							December 31, 2018
Dollars in Millions	Level 1		Level 2			Level 3		Level 1		Level 2
Cash and cash equivalents - Money market and other securities	$	—	$	10,448		$	—	$	—	$	6,173
Marketable debt securities:
Certificates of deposit	—		1,227			—		—		971
Commercial paper	—		1,093			—		—		273
Corporate debt securities	—		1,494			—		—		2,379
Derivative assets	—		140			—		—		44
Equity investments	2,020		175			—		88		391
Derivative liabilities	—		(40		)	—		—		(31		)
Contingent consideration liability:
Contingent value rights	2,275		—			—		—		—
Other acquisition related contingent consideration	—		—			106		—		—

Contingent consideration obligations are recorded at their estimated fair values and BMS revalues these obligations each reporting period until the related contingencies are resolved. The contingent value rights are adjusted to fair value using the traded price of the securities at the end of each reporting period. The fair value measurements for other contingent consideration liabilities are estimated using probability-weighted discounted cash flow approaches that are based on significant unobservable inputs related to product candidates acquired in business combinations and are reviewed quarterly. These inputs include, as applicable, estimated probabilities and timing of achieving specified development and regulatory milestones, estimated annual sales and the discount rate used to calculate the present value of estimated future payments. Significant changes which increase or decrease the probabilities of achieving the related development and regulatory events, shorten or lengthen the time required to achieve such events, or increase or decrease estimated annual sales would result in corresponding increases or decreases in the fair values of these obligations. The fair value of our contingent consideration as of December 31, 2019 was calculated using the following significant unobservable inputs:



	Ranges (weighted average) utilized as of:
Inputs	December 31, 2019
Discount rate	2.2% to 3.2% (2.6%)
Probability of payment	0% to 68% (4.1%)
Projected year of payment for development and regulatory milestones	2020 to 2029 (2024)
Projected year of payment for sales-based milestones and other amounts calculated as a percentage of annual sales	N/A



	December 31, 2019									December 31, 2018
Dollars in Millions	Amortized Cost		Gross Unrealized					Fair Value		Amortized Cost		Gross Unrealized					Fair Value
Dollars in Millions	Amortized Cost		Gains		Losses			Fair Value		Amortized Cost		Gains		Losses			Fair Value
Certificates of deposit	$	1,227	$	—	$	—		$	1,227	$	971	$	—	$	—		$	971
Commercial paper	1,093		—		—			1,093		273		—		—			273
Corporate debt securities	1,487		8		(1		)	1,494		2,416		—		(37		)	2,379
	$	3,807	$	8	$	(1	)	3,814		$	3,660	$	—	$	(37	)	3,623

Equity investments								2,195									479
Total								$	6,009								$	4,102

Equity investments not measured at fair value and excluded from the above table were limited partnerships and other equity method investments of $429 million at December 31, 2019 and $114 million at December 31, 2018 and other equity investments without readily determinable fair values of $781 million at December 31, 2019 and $206 million at December 31, 2018. These amounts are included in Other non-current assets.

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 is 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, 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 Income/(Loss). 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 and Other (income)/expense, net) within the next 12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $1.8 billion and Japanese yen of $911 million at December 31, 2019.

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

BMS may hedge a portion of its future foreign currency exposure by utilizing a strategy that involves both a purchased local currency put option and a written local currency call option that are accounted for as hedges of future sales denominated in that local currency. Specifically, BMS sells (or writes) a local currency call option and purchases a local currency put option with the same expiration dates and local currency notional amounts but with different strike prices. The premium collected from the sale of the call option is equal to the premium paid for the purchased put option, resulting in no net premium being paid. This combination of transactions is generally referred to as a “zero-cost collar.” The expiration dates and notional amounts correspond to the amount and timing of forecasted foreign currency sales. The foreign currency zero-cost collar contracts outstanding as of December 31, 2019 had settlement dates within 12 months. If the U.S. Dollar weakens relative to the currency of the hedged anticipated sales, the purchased put option value reduces to zero and we benefit from the increase in the U.S. Dollar equivalent value of our anticipated foreign currency cash flows; however, this benefit would be capped at the strike level of the written call, which forms the upper end of the collar.

Net Investment Hedges — Non-U.S. dollar borrowings of €950 million ($1.1 billion) at December 31, 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 included in the foreign currency translation component of Accumulated other comprehensive loss with the related offset in long-term debt.

In January 2018, $300 million of cross-currency interest rate swap contracts maturing in December 2022 were entered into and designated to hedge Japanese yen currency exposures of BMS'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 non-current 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 (1.8% as of December 31, 2019) plus an interest rate spread of 4.6%. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to 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 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 Celgene acquisition, forward starting interest rate swap option contracts were entered into with a total notional value of $7.6 billion to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the acquisition. In April 2019, deal contingent forward starting interest rate swap contracts were entered into, 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 acquisition and the forward starting interest rate swap option contracts were terminated. The deal contingent forward starting interest rate swap contracts were terminated upon the completion of the Celgene acquisition.



	December 31, 2019									December 31, 2018
	Asset^(a)				Liability^(b)					Asset^(a)				Liability^(b)
Dollars in Millions	Notional		Fair Value		Notional		Fair Value			Notional		Fair Value		Notional		Fair Value
Derivatives designated as hedging instruments:
Interest rate swap contracts	$	255	$	6	$	—	$	—		$	—	$	—	$	755	$	(10	)
Cross-currency interest rate swap contracts	175		2		125		(1		)	50		—		250		(5		)
Foreign currency forward contracts	766		27		980		(20		)	1,503		44		496		(10		)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	2,342		91		1,173		(10		)	54		—		600		(6		)
Foreign currency zero-cost collar contracts	2,482		14		2,235		(9		)	—		—		—		—



	Year Ended December 31,
	2019						2018						2017
Dollars in Millions	Cost of products sold			Other (income)/expense, net			Cost of products sold			Other (income)/expense, net			Cost of products sold			Other (income)/expense, net
Interest rate swap contracts	$	—		$	(24	)	$	—		$	(23	)	$	—		$	(31	)
Cross-currency interest rate swap contracts	—			(9		)	—			(8		)	—			—
Foreign currency forward contracts	(103		)	11			(4		)	(14		)	(12		)	52
Forward starting interest rate swap option contracts	—			35			—			—			—			—
Deal contingent forward starting interest rate swap contracts	—			240			—			—			—			—
Foreign currency zero-cost collar contracts	—			2			—			—			—			—



	Year Ended December 31,
Dollars in Millions	2019			2018			2017
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)^(a)	$	65		$	86		$	(108	)
Reclassified to Cost of products sold	(103		)	(4		)	(12		)
Reclassified to Other (income)/expense, net	—			—			36

Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	6			(5		)	—

Non-derivatives qualifying as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	29			45			(134		)

In 2019, BMS issued an aggregate principal amount of approximately $19.0 billion of floating rate and fixed rate unsecured senior notes with proceeds net of discount and deferred loan issuance costs of $18.8 billion. The notes rank equally in right of payment with all of BMS'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.

In 2017, BMS issued an aggregate principal amount of $1.5 billion of senior unsecured notes in registered public offerings with proceeds net of discount and deferred loan issuance costs of $1.5 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 connection with the Celgene acquisition, BMS commenced offers to exchange outstanding notes issued by Celgene of approximately $19.9 billion for a like-amount of new notes to be issued by BMS (the “exchange offers”). This exchange transaction was accounted for as a modification of the assumed debt instruments. Following the settlement of the exchange offers, BMS issued approximately $18.5 billion of new notes in exchange for the Celgene notes tendered in the exchange offers. The aggregate principal amount of Celgene notes that remained outstanding following the settlement of the exchange offers was approximately $1.3 billion.

The fair value of long-term debt was $50.7 billion and $7.1 billion at December 31, 2019 and 2018, respectively, 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 borrowings approximates the carrying value due to the short maturities of the debt instruments.

At December 31, 2019, BMS had four separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility that was renewed to January 2021, 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 BMS's commercial paper borrowings. BMS'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. BMS'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 December 31, 2019 or 2018.

BMS 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 Celgene acquisition. The term loan is subject to customary terms and conditions and does not have any financial covenants. The proceeds under the term loan were used to fund a portion of the cash to be paid in the Celgene acquisition and the payment of related fees and expenses. Subsequent to the completion of the acquisition, BMS repaid the term loan in its entirety using cash proceeds generated from the Otezla* divestiture. Refer to “—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for more information.

Available financial guarantees provided in the form of bank overdraft facilities, stand-by letters of credit and performance bonds were approximately $850 million at December 31, 2019. Stand-by letters of credit are issued through financial institutions in support of guarantees for various obligations. Performance bonds are issued to support a range of ongoing operating activities, including sale of products to hospitals and foreign ministries of health, bonds for customs, duties and value added tax and guarantees related to miscellaneous legal actions.



	December 31,
Dollars in Millions	2019		2018
Principal Value:
1.600% Notes due 2019	$	—	$	750
1.750% Notes due 2019	—		500
Floating Rate Notes due 2020	750		—
2.875% Notes due 2020	1,500		—
3.950% Notes due 2020	500		—
2.250% Notes due 2021	500		—
2.550% Notes due 2021	1,000		—
2.875% Notes due 2021	500		—
Floating Rate Notes due 2022	500		—
2.000% Notes due 2022	750		750
2.600% Notes due 2022	1,500		—
3.250% Notes due 2022	1,000		—
3.550% Notes due 2022	1,000		—
2.750% Notes due 2023	750		—
3.250% Notes due 2023	500		500
3.250% Notes due 2023	1,000		—
4.000% Notes due 2023	700		—
7.150% Notes due 2023	302		302
2.900% Notes due 2024	3,250		—
3.625% Notes due 2024	1,000		—
1.000% Euro Notes due 2025	638		655
3.875% Notes due 2025	2,500		—
3.200% Notes due 2026	2,250		—
6.800% Notes due 2026	256		256
3.250% Notes due 2027	750		750
3.450% Notes due 2027	1,000		—
3.900% Notes due 2028	1,500		—
3.400% Notes due 2029	4,000		—
1.750% Euro Notes due 2035	638		655
5.875% Notes due 2036	287		287
6.125% Notes due 2038	226		226
4.125% Notes due 2039	2,000		—
5.700% Notes due 2040	250		—
3.250% Notes due 2042	500		500
5.250% Notes due 2043	400		—
4.500% Notes due 2044	500		500
4.625% Notes due 2044	1,000		—
5.000% Notes due 2045	2,000		—
4.350% Notes due 2047	1,250		—
4.550% Notes due 2048	1,500		—
4.250% Notes due 2049	3,750		—
6.875% Notes due 2097	87		87
0.13% - 5.75% Other - maturing through 2024	51		58
Total	$	44,335	$	6,776



	December 31,
Dollars in Millions	2019			2018
Principal Value	$	44,335		$	6,776

Adjustments to Principal Value:
Fair value of interest rate swap contracts	6			(10		)
Unamortized basis adjustment from swap terminations	175			201
Unamortized bond discounts and issuance costs	(280		)	(72		)
Unamortized purchase price adjustments of Celgene debt	1,914			—
Total	$	46,150		$	6,895

Current portion of long-term debt	2,763			1,249
Long-term debt	43,387			5,646
Total	$	46,150		$	6,895