
	March 31, 2021						December 31, 2020
Dollars in Millions	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash and cash equivalents - money market and other securities	$	—	$	8,381	$	—	$	—	$	12,361	$	—
Marketable debt securities:
Certificates of deposit	—		1,633		—		—		1,020		—

Corporate debt securities	—		603		—		—		698		—
Derivative assets	—		165		27		—		42		27
Equity investments	3,094		162		—		3,314		138		—
Derivative liabilities	—		(72)		—		—		(270)		—
Contingent consideration liability:
Contingent value rights	9		—		—		530		—		—
Other acquisition related contingent consideration	—		—		79		—		—		78

As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company’s 2020 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 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 or shorten or lengthen the time required to achieve such events would result in corresponding increases or decreases in the fair values of these obligations. The fair value of other acquisition related contingent consideration as of March 31, 2021 was calculated using the following significant unobservable inputs:


	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
Dollars in Millions	Asset		Liability		Asset		Liability
Fair value as of January 1	$	27	$	78	$	—	$	106

Changes in estimated fair value	—		3		—		(36)

Foreign exchange	—		(2)		—		(1)
Fair value as of March 31	$	27	$	79	$	—	$	69


	March 31, 2021								December 31, 2020
Dollars in Millions	Amortized Cost		Gross Unrealized						Amortized Cost		Gross Unrealized
			Gains		Losses		Fair Value				Gains		Losses		Fair Value
Certificates of deposit	$	1,633	$	—	$	—	$	1,633	$	1,020	$	—	$	—	$	1,020

Corporate debt securities	592		11		—		603		684		14		—		698
Total available-for-sale debt securities(a)	$	2,225	$	11	$	—	$	2,236	$	1,704	$	14	$	—	$	1,718


Dollars in Millions	March 31, 2021		December 31, 2020
Equity investments with readily determinable fair values	$	3,256	$	3,452
Equity investments without readily determinable fair values	616		694
Equity method investments	683		549
Total equity investments	$	4,555	$	4,695


	Three Months Ended March 31,
Dollars in Millions	2021		2020
Net gain/(loss) recognized on equity investments with readily determinable fair values(a)	$	437	$	(228)
Realized loss recognized on equity investments with readily determinable fair value sold	(3)		—

Upward adjustments on equity investments without readily determinable fair value	31		75
Impairments and downward adjustments on equity investments without readily determinable fair value	(1)		(188)

Cumulative upward adjustments on equity investments without readily determinable fair value	218
Cumulative impairments and downward adjustments on equity investments without readily determinable fair value	(167)

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 (income)/expense, net) within the next 12 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $3.3 billion and Japanese yen of $1.1 billion at March 31, 2021.

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. If the U.S. Dollar weakens relative to the currency of the hedged anticipated sales, the purchased put option value reduces to zero and BMS benefits 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 March 31, 2021 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.

Cross-currency interest rate swap contracts of $400 million at March 31, 2021 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 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 (0.11% as of March 31, 2021) 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, 2021								December 31, 2020
	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	$	14	$	—	$	—	$	255	$	24	$	—	$	—
Cross-currency interest rate swap contracts	400		16		—		—		—		—		400		(10)
Foreign currency forward contracts	3,873		118		1,688		(64)		231		1		5,813		(259)

Derivatives not designated as hedging instruments:
Foreign currency forward contracts	809		17		539		(8)		1,104		17		336		(1)

Other	—		27		—		—		—		27		—		—


	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
Dollars in Millions	Cost of products sold		Other (income)/expense, net		Cost of products sold		Other (income)/expense, net
Interest rate swap contracts	$	—	$	(8)	$	—	$	(7)
Cross-currency interest rate swap contracts	—		(3)		—		(2)
Foreign currency forward contracts	67		(32)		(23)		(76)
Foreign currency zero-cost collar contracts	—		—		—		(9)


	Three Months Ended March 31,
Dollars in Millions	2021		2020
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)(a)	$	259	$	97
Reclassified to Cost of products sold	36		(20)




Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain:
Recognized in Other Comprehensive Income/(Loss)	26		6

Non-derivatives qualifying as net investment hedges
Non-U.S. dollar borrowings gain:
Recognized in Other Comprehensive Income/(Loss)	41		20


Dollars in Millions	March 31, 2021		December 31, 2020
Principal Value	$	44,646	$	48,711

Adjustments to Principal Value:
Fair value of interest rate swap contracts	14		24
Unamortized basis adjustment from swap terminations	137		149
Unamortized bond discounts and issuance costs	(287)		(303)
Unamortized purchase price adjustments of Celgene debt	1,495		1,755
Total	$	46,005	$	50,336

Current portion of long-term debt	$	1,500	$	2,000
Long-term debt	44,505		48,336
Total	$	46,005	$	50,336

The fair value of long-term debt was $50.3 billion at March 31, 2021 and $58.5 billion at December 31, 2020 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.

In the three months ended March 31, 2021, BMS purchased aggregate principal amount of $3.5 billion of certain of its debt securities for approximately $4.0 billion of cash in a series of tender offers and “make whole” redemptions. In connection with these transactions, a $281 million loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net. In addition, the $500 million 2.875% Notes matured and were repaid.