

	March 31, 2020							December 31, 2019
Dollars in Millions	Level 1		Level 2			Level 3		Level 1		Level 2			Level 3
Cash and cash equivalents - money market and other securities	$	—	$	13,528		$	—	$	—	$	10,448		$	—
Marketable debt securities:
Certificates of deposit	—		1,062			—		—		1,227			—
Commercial paper	—		869			—		—		1,093			—
Corporate debt securities	—		1,225			—		—		1,494			—
Derivative assets			202					—		140			—
Equity investments	1,822		145			—		2,020		175			—
Derivative liabilities	—		(29		)	—		—		(40		)	—
Contingent consideration liability:
Contingent value rights	2,862		—			—		2,275		—			—
Other acquisition related contingent consideration	—		—			69		—		—			106

As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company's 2019 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).

Contingent consideration obligations are recorded at their estimated fair values and these obligations are revalued 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 March 31, 2020 was calculated using the following significant unobservable inputs:



	Ranges (weighted average) utilized as of:
Inputs	March 31, 2020
Discount rate	2.2% to 2.7% (2.4%)
Probability of payment	0% to 80% (2.6%)
Projected year of payment for development and regulatory milestones	2020 to 2029 (2022)
Projected year of payment for sales-based milestones and other amounts calculated as a percentage of annual sales	N/A



	March 31, 2020									December 31, 2019
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	$	1,062	$	—	$	—		$	1,062	$	1,227	$	—	$	—		$	1,227
Commercial paper	869		—		—			869		1,093		—		—			1,093
Corporate debt securities	1,216		11		(2		)	1,225		1,487		8		(1		)	1,494
	$	3,147	$	11	$	(2	)	3,156		$	3,807	$	8	$	(1	)	3,814

Equity investments								1,967									2,195
Total								$	5,123								$	6,009

Equity investments not measured at fair value and excluded from the above fair value table were limited partnerships and other equity method investments of $424 million at March 31, 2020 and $429 million at December 31, 2019 and other equity investments without readily determinable fair values of $754 million at March 31, 2020 and $781 million at December 31, 2019. These amounts are included in Other non-current assets. Upward adjustments to equity investments without readily determinable fair values for the three months ended March 31, 2020 were $75 million resulting from observable price changes for similar securities for the same issuer and were recorded in Other expense/(income), net. Downward adjustments to equity investments without readily determinable fair values for the three months ended March 31, 2020 were $188 million due to the significant adverse change in the global economy during the period primarily caused by the COVID-19 pandemic.

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. 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 expense/(income), net) within the next 12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $1.7 billion and Japanese yen of $1.2 billion at March 31, 2020.

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.

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 March 31, 2020 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 ($1.0 billion) at March 31, 2020 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. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive (Loss)/Income with a related offset in Other non-current assets or Other non-current liabilities.

Cross-currency interest rate swap contracts of $400 million at March 31, 2020 are designated to hedge Japanese yen currency exposure of BMS's net investment in its Japan subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive (Loss)/Income 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 (1.0% as of March 31, 2020) 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.



	March 31, 2020									December 31, 2019
	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	$	25	$	—	$	—		$	255	$	6	$	—	$	—
Cross-currency interest rate swap contracts	400		7		—		—			175		2		125		(1		)
Foreign currency forward contracts	2,383		75		301		(2		)	766		27		980		(20		)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	1,177		73		772		(19		)	2,342		91		1,173		(10		)
Foreign currency zero-cost collar contracts	1,522		22		1,597		(8		)	2,482		14		2,235		(9		)



	Three Months Ended March 31, 2020
Dollars in Millions	Cost of products sold			Other expense/(income), net
Interest rate swap contracts	$	—		$	(7	)
Cross-currency interest rate swap contracts	—			(2		)
Foreign currency forward contracts	(23		)	(76		)
Foreign currency zero-cost collar contracts	—			(9		)



	Three Months Ended March 31, 2019
Dollars in Millions	Cost of products sold			Other expense/(income), net
Interest rate swap contracts	$	—		$	(5	)
Cross-currency interest rate swap contracts	—			(2		)
Foreign currency forward contracts	(30		)	9
Forward starting interest rate swap options	—			35



	Three Months Ended March 31,
Dollars in Millions	2020			2019
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive (Loss)/Income^(a)	$	97		$	45
Reclassified to Cost of products sold	(20		)	(30		)

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

Non-derivatives qualifying as net investment hedges
Non-U.S. dollar borrowings gain:
Recognized in Other Comprehensive (Loss)/Income	20			8



Dollars in Millions	March 31, 2020			December 31, 2019
Principal Value	$	44,310		$	44,335

Adjustments to Principal Value:
Fair value of interest rate swap contracts	25			6
Unamortized basis adjustment from swap terminations	168			175
Unamortized bond discounts and issuance costs	(271		)	(280		)
Unamortized purchase price adjustments of Celgene debt	1,873			1,914
Total	$	46,105		$	46,150

Current portion of long-term debt	$	3,261		$	2,763
Long-term debt	42,844			43,387
Total	$	46,105		$	46,150

The fair value of long-term debt was $51.9 billion at March 31, 2020 and $50.7 billion at December 31, 2019 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. Interest payments were $491 million and $57 million for the three months ended March 31, 2020 and 2019, respectively, net of amounts related to interest rate swap contracts.

As of March 31, 2020, BMS had four separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiring in January 2021, a $1.0 billion facility that was renewed to 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 revolving credit facilities at March 31, 2020 or December 31, 2019.