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.

Level 3 unobservable inputs are used when little or no market data is available. Level 3 financial liabilities consist of other acquisition related contingent consideration and success payments related to undeveloped product rights resulting from the Celgene acquisition.


	December 31, 2022						December 31, 2021
Dollars in Millions	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Cash and cash equivalents - money market and other securities	$	—	$	7,770	$	—	$	—	$	12,225	$	—
Marketable debt securities:
Certificates of deposit	—		32		—		—		2,264		—

Commercial paper	—		98		—		—		320		—
Corporate debt securities	—		—		—		—		403		—
Derivative assets	—		305		—		—		206		—
Equity investments	424		680		—		1,910		109		—
Derivative liabilities	—		213		—		—		25		—
Contingent consideration liability:
Contingent value rights	5		—		—		8		—		—
Other acquisition related contingent consideration	—		—		24		—		—		35


	December 31, 2022								December 31, 2021
Dollars in Millions	Amortized Cost		Gross Unrealized				Fair Value		Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses						Gains		Losses
Certificates of deposit	$	32	$	—	$	—	$	32	$	2,264	$	—	$	—	$	2,264
Commercial paper	98		—		—		98		320		—		—		320
Corporate debt securities	—		—		—		—		401		2		—		403
Total marketable debt securities	$	130	$	—	$	—	$	130	$	2,985	$	2	$	—	$	2,987


Dollars in Millions	2022		2021
Equity investments with readily determinable fair values	$	1,104	$	2,019
Equity investments without readily determinable fair values	537		283
Limited partnerships and other equity method investments	546		666
Total equity investments	$	2,187	$	2,968


Dollars in Millions	2022		2021		2020
Equity investments with readily determined fair values
Net loss/(gain) recognized	$	762	$	403	$	(964)
Net loss/(gain) recognized on investments sold	(17)		(357)		12
Net unrealized loss/(gain) recognized on investments still held	779		760		(976)

Equity investments without readily determinable fair values
Upward adjustments	(80)		(918)		(388)
Impairments and downward adjustments	11		1		204

Equity in net (income)/loss of limited partnerships and other equity method investments	108		(231)		(72)

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 December 31, 2022 were $181 million and $61 million, respectively.

Cash Flow Hedges — Foreign currency forward and purchased local currency put option 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. The net gain or loss on foreign exchange contracts is expected to be reclassified to net earnings (primarily included in Cost of products sold) within the next 24 months. The notional amount of outstanding foreign currency exchange contracts was primarily attributed to the euro of $5.3 billion and Japanese yen of $1.3 billion as of December 31, 2022.

In 2022, BMS entered into cross-currency interest rate 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 Accumulated other comprehensive loss and reclassified to Other (income)/expense, net, in the same periods during which the hedged debt affects earnings. The notional amount of cross-currency interest rate swap contracts associated with long-term debt denominated in euros was €575 million ($584 million) as of December 31, 2022.

In 2020, Treasury lock hedge contracts were entered into with a total notional value of $2.1 billion to hedge future interest rate risk associated with the anticipated issuance of long-term debt to fund the MyoKardia acquisition. The Treasury lock contracts were terminated upon the issuance of the 2020 unsecured senior notes and the $51 million proceeds were included in Other Comprehensive Income/(Loss).

Net Investment Hedges — Non-U.S. dollar borrowings of €375 million ($400 million) as of December 31, 2022 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 $1.2 billion as of December 31, 2022 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 Accumulated other comprehensive loss with a related offset in Other non-current assets or Other non-current liabilities. The notional amount of outstanding cross-currency interest rate swap contracts was primarily attributed to the Japanese yen of $509 million and euro of $584 million as of December 31, 2022.

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 (4.39% as of December 31, 2022) 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. 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.


	December 31, 2022								December 31, 2021
	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	$	(18)	$	255	$	10	$	—	$	—
Cross-currency interest rate swap contracts	72		1		1,741		(85)		600		26		—		—
Foreign exchange contracts	5,771		271		2,281		(80)		3,587		161		1,814		(20)

Derivatives not designated as hedging instruments:
Foreign exchange contracts	1,564		33		1,703		(19)		883		9		568		(5)

Total return swap contracts(c)	—		—		322		(11)		—		—		—		—


	Year Ended December 31,
	2022				2021				2020
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	$	—	$	(27)	$	—	$	(31)	$	—	$	(29)
Cross-currency interest rate swap contracts	—		(52)		—		(11)		—		(10)
Foreign exchange contracts	(492)		(96)		96		(21)		(18)		(23)


	Year Ended December 31,
Dollars in Millions	2022		2021		2020
Derivatives qualifying as cash flow hedges
Foreign exchange contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	$	592	$	364	$	(267)
Reclassified to Cost of products sold	(492)		96		(54)
Cross-currency interest rate swap contracts gain/(loss):
Recognized in Other Comprehensive Income	(7)		—		—
Reclassified to Other (income)/expense, net	(29)		—		—
Forward starting interest rate swap contract loss:
Reclassified to Other (income)/expense, net	(3)		—		—
Treasury lock hedge contracts gain:
Recognized in Other Comprehensive Income/(Loss)	—		—		51

Derivatives qualifying as net investment hedges
Cross-currency interest rate swap contracts gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	30		38		(11)

Non-derivatives qualifying as net investment hedges
Non U.S. dollar borrowings gain/(loss):
Recognized in Other Comprehensive Income/(Loss)	91		83		(105)