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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 001-01136
___________________________
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
___________________________
Delaware 22-0790350
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S Employer
Identification No.)
430 E. 29th Street, 14FL, New York, NY 10016
(Address of principal executive offices) (Zip Code)
(212546-4200
(Registrant’s telephone number, including area code)

___________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 Par ValueBMYNew York Stock Exchange
1.000% Notes due 2025BMY25New York Stock Exchange
1.750% Notes due 2035BMY35New York Stock Exchange
Celgene Contingent Value RightsCELG RTNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  
Accelerated filer  
Non-accelerated filer  
Smaller reporting company  
Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes    No  
APPLICABLE ONLY TO CORPORATE ISSUERS:
At March 31, 2022, there were 2,129,064,271 shares outstanding of the Registrant’s $0.10 par value common stock.



BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
March 31, 2022
*    Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index at the end of this Quarterly Report on Form 10-Q.




PART I—FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
Dollars in Millions, Except Per Share Data
(UNAUDITED)
 Three Months Ended March 31,
EARNINGS20222021
Net product sales$11,308 $10,798 
Alliance and other revenues340 275 
Total Revenues11,648 11,073 
Cost of products sold(a)
2,471 2,841 
Marketing, selling and administrative1,831 1,666 
Research and development2,260 2,219 
Acquired IPRD333 6 
Amortization of acquired intangible assets2,417 2,513 
Other (income)/expense, net649 (702)
Total Expenses9,961 8,543 
Earnings Before Income Taxes1,687 2,530 
Provision for Income Taxes404 501 
Net Earnings1,283 2,029 
Noncontrolling Interest5 8 
Net Earnings Attributable to BMS$1,278 $2,021 
Earnings per Common Share
Basic$0.60 $0.90 
Diluted0.59 0.89 
(a)    Excludes amortization of acquired intangible assets.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in Millions
(UNAUDITED)
 Three Months Ended March 31,
COMPREHENSIVE INCOME20222021
Net Earnings$1,283 $2,029 
Other Comprehensive Income, net of taxes and reclassifications to earnings:
Derivatives qualifying as cash flow hedges31 280 
Pension and postretirement benefits21 23 
Marketable debt securities(1)(2)
Foreign currency translation(12)(6)
Total Other Comprehensive Income39 295 
Comprehensive Income1,322 2,324 
Comprehensive Income Attributable to Noncontrolling Interest5 8 
Comprehensive Income Attributable to BMS$1,317 $2,316 
The accompanying notes are an integral part of these consolidated financial statements.

3


BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in Millions
(UNAUDITED)
 
ASSETSMarch 31,
2022
December 31,
2021
Current Assets:
Cash and cash equivalents$12,369 $13,979 
Marketable debt securities2,599 2,987 
Receivables8,511 9,369 
Inventories2,104 2,095 
Other current assets4,538 4,832 
Total Current Assets30,121 33,262 
Property, plant and equipment6,047 6,049 
Goodwill20,500 20,502 
Other intangible assets40,103 42,527 
Deferred income taxes1,418 1,439 
Other non-current assets4,845 5,535 
Total Assets$103,034 $109,314 
LIABILITIES
Current Liabilities:
Short-term debt obligations$7,522 $4,948 
Accounts payable2,944 2,949 
Other current liabilities12,355 13,971 
Total Current Liabilities22,821 21,868 
Deferred income taxes3,809 4,501 
Long-term debt37,450 39,605 
Other non-current liabilities7,309 7,334 
Total Liabilities71,389 73,308 
Commitments and contingencies
EQUITY
Bristol-Myers Squibb Company Shareholders’ Equity:
Preferred stock  
Common stock292 292 
Capital in excess of par value of stock43,756 44,361 
Accumulated other comprehensive loss(1,229)(1,268)
Retained earnings23,948 23,820 
Less cost of treasury stock(35,187)(31,259)
Total Bristol-Myers Squibb Company Shareholders’ Equity31,580 35,946 
Noncontrolling interest65 60 
Total Equity31,645 36,006 
Total Liabilities and Equity$103,034 $109,314 
The accompanying notes are an integral part of these consolidated financial statements.
4


BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in Millions
(UNAUDITED)
 Three Months Ended March 31,
 20222021
Cash Flows From Operating Activities:
Net earnings$1,283 $2,029 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization, net2,584 2,668 
Deferred income taxes(687)68 
Stock-based compensation107 151 
Impairment charges41 339 
Pension settlements and amortization7 11 
Divestiture gains and royalties(387)(135)
Acquired IPRD333 6 
Equity investment losses/(gains)644 (601)
Contingent consideration fair value adjustments1 (510)
Other adjustments248 233 
Changes in operating assets and liabilities:
Receivables786 67 
Inventories1 106 
Accounts payable23 303 
Rebates and discounts(930)(221)
Income taxes payable831 227 
Other(1,073)(917)
Net Cash Provided by Operating Activities3,812 3,824 
Cash Flows From Investing Activities:
Sale and maturities of marketable debt securities2,100 782 
Purchase of marketable debt securities(1,714)(1,302)
Proceeds from sales of equity investment securities2 405 
Capital expenditures(253)(173)
Divestiture and other proceeds402 180 
Acquisition and other payments, net of cash acquired(442)(35)
Net Cash Provided by/(Used in) Investing Activities95 (143)
Cash Flows From Financing Activities:
Short-term debt obligations, net42 (62)
Issuance of long-term debt5,926  
Repayment of long-term debt(5,769)(4,522)
Repurchase of common stock(5,000)(1,775)
Dividends(1,185)(1,108)
Other333 172 
Net Cash Used in Financing Activities(5,653)(7,295)
Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash9 (38)
Decrease in Cash, Cash Equivalents and Restricted Cash(1,737)(3,652)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period14,316 14,973 
Cash, Cash Equivalents and Restricted Cash at End of Period$12,579 $11,321 
The accompanying notes are an integral part of these consolidated financial statements.

5


Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS

Basis of Consolidation

Bristol-Myers Squibb Company (“BMS” or “the Company”) prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position at March 31, 2022 and December 31, 2021 and the results of operations and cash flows for the three months ended March 31, 2022 and 2021. All intercompany balances and transactions have been eliminated. These financial statements and the related notes should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 included in the 2021 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.

Business Segment Information

BMS operates in a single segment engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative medicines that help patients prevail over serious diseases. A global research and development organization and supply chain organization are responsible for the discovery, development, manufacturing and supply of products. Regional commercial organizations market, distribute and sell the products. The business is also supported by global corporate staff functions. Consistent with BMS’s operational structure, the Chief Executive Officer (“CEO”), as the chief operating decision maker, manages and allocates resources at the global corporate level. Managing and allocating resources at the global corporate level enables the CEO to assess both the overall level of resources available and how to best deploy these resources across functions, therapeutic areas, regional commercial organizations and research and development projects in line with our overarching long-term corporate-wide strategic goals, rather than on a product or franchise basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CEO for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional revenue, see “—Note 2. Revenue”.

Use of Estimates and Judgments

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results and trends in these unaudited consolidated financial statements may not be indicative of full year operating results. The preparation of financial statements requires the use of management estimates, judgments and assumptions. The most significant assumptions are estimates used in determining accounting for acquisitions; impairments of goodwill and intangible assets; chargebacks, cash discounts, sales rebates, returns and other adjustments; legal contingencies; and income taxes. Actual results may differ from estimates.

Reclassifications

Certain reclassifications were made to conform the prior period consolidated financial statements to the current period presentation. Up-front and contingent milestone charges in connection with asset acquisitions or licensing of third-party intellectual property rights previously presented in Research and development are now presented in Acquired IPRD in the consolidated statement of earnings. Proceeds received from the sale of equity investment securities previously presented in Divestiture and other proceeds in the consolidated statements of cash flows is now presented separately in Proceeds from sales of equity investment securities. Additionally, Rebates and discounts previously presented in Other changes in operating assets and liabilities in the consolidated statements of cash flows is now presented separately in Rebates and discounts.

Recently Issued Accounting Standards Not Yet Adopted

Business Combinations

In October 2021, the FASB issued amended guidance on accounting for contract assets and contract liabilities from contracts with customers in a business combination. The guidance is intended to address inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized. At the acquisition date, an entity should account for the related revenue contracts in accordance with existing revenue recognition guidance generally by assessing how the acquiree applied recognition and measurement in their financial statements. The amended guidance is effective January 1, 2023 on a prospective approach. Early adoption is permitted.


6


Note 2. REVENUE

The following table summarizes the disaggregation of revenue by nature:
Three Months Ended March 31,
Dollars in Millions20222021
Net product sales$11,308 $10,798 
Alliance revenues188 142 
Other revenues152 133 
Total Revenues$11,648 $11,073 

The following table summarizes GTN adjustments:
Three Months Ended March 31,
Dollars in Millions20222021
Gross product sales$16,650 $15,559 
GTN adjustments(a)
Charge-backs and cash discounts(1,763)(1,586)
Medicaid and Medicare rebates(2,084)(1,718)
Other rebates, returns, discounts and adjustments(1,495)(1,457)
Total GTN adjustments(5,342)(4,761)
Net product sales$11,308 $10,798 
(a)    Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $74 million and $217 million for the three months ended March 31, 2022, and 2021, respectively.

The following table summarizes the disaggregation of revenue by product and region:
Three Months Ended March 31,
Dollars in Millions20222021
In-Line Products
Eliquis$3,211 $2,886 
Opdivo1,923 1,720 
Pomalyst/Imnovid826 773 
Orencia792 758 
Sprycel483 470 
Yervoy515 456 
Empliciti75 85 
Mature and other products462 506 
New Product Portfolio
Reblozyl156 112 
Abecma67  
Zeposia36 18 
Breyanzi44  
Inrebic18 16 
Onureg23 15 
Opdualag6  
Recent LOE Products(a)
Revlimid2,797 2,944 
Abraxane214 314 
Total Revenues$11,648 $11,073 
United States$7,694 $7,010 
Europe2,413 2,553 
Rest of the World1,314 1,346 
Other(b)
227 164 
Total Revenues$11,648 $11,073 
(a)    Recent LOE Products includes products with significant decline in revenue from the prior reporting period as a result of a loss of exclusivity.
(b)    Other revenues include royalties and alliance-related revenues for products not sold by BMS’s regional commercial organizations.
7



Revenue recognized from performance obligations satisfied in prior periods was $147 million and $284 million for the three months ended March 31, 2022 and 2021, respectively, consisting primarily of revised estimates for GTN adjustments related to prior period sales and royalties for out-licensing arrangements.

Note 3. ALLIANCES

BMS enters into collaboration arrangements with third parties for the development and commercialization of certain products. Although each of these arrangements is unique in nature, both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. BMS may either in-license intellectual property owned by the other party or out-license its intellectual property to the other party. These arrangements also typically include research, development, manufacturing, and/or commercial activities and can cover a single investigational compound or commercial product or multiple compounds and/or products in various life cycle stages. The rights and obligations of the parties can be global or limited to geographic regions. BMS refers to these collaborations as alliances and its partners as alliance partners.

Selected financial information pertaining to alliances was as follows, including net product sales when BMS is the principal in the third-party customer sale for products subject to the alliance. Expenses summarized below do not include all amounts attributed to the activities for the products in the alliance, but only the payments between the alliance partners or the related amortization if the payments were deferred or capitalized.
Three Months Ended March 31,
Dollars in Millions20222021
Revenues from alliances:
Net product sales$3,239 $2,882 
Alliance revenues188 142 
Total Revenues$3,427 $3,024 
Payments to/(from) alliance partners:
Cost of products sold$1,556 $1,397 
Marketing, selling and administrative(54)(49)
Research and development22 7 
Other (income)/expense, net(12)(5)
Dollars in MillionsMarch 31,
2022
December 31,
2021
Selected Alliance Balance Sheet information:
Receivables – from alliance partners$304 $320 
Accounts payable – to alliance partners1,504 1,229 
Deferred income from alliances(a)
326 330 
(a)    Includes unamortized upfront and milestone payments.

The nature, purpose, significant rights and obligations of the parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 2021 Form 10-K. Significant developments and updates related to alliances during the three months ended March 31, 2022 are set forth below.

Nektar

In April 2022, BMS and Nektar announced that the companies have jointly decided to end the global clinical development program for bempegaldesleukin in combination with Opdivo based on results from pre-planned analyses of two late-stage clinical studies in RCC and bladder cancer. These studies and all other ongoing studies in the program will be discontinued.

8


Note 4. DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS

Divestitures

The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).
Three Months Ended March 31,
Net Proceeds(a)
Divestiture (Gains)/LossesRoyalty Income
Dollars in Millions202220212022202120222021
Diabetes Business$172 $164 $ $ $(170)$(134)
Mature Products and Other225 16 (211) (1)(1)
Total$397 $180 $(211)$ $(171)$(135)
(a)    Includes royalties received subsequent to the related sale of the asset or business.

Mature Products and Other

In the three months ended March 31, 2022, product rights to several mature products were sold to Cheplapharm resulting in cash proceeds of $221 million and divestiture gain of $211 million.

Licensing and Other Arrangements

The following table summarizes the financial impact of Keytruda* royalties, Tecentriq* royalties, up-front licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.
Three Months Ended March 31,
Dollars in Millions20222021
Keytruda* royalties
$(221)$(192)
Tecentriq* royalties
(25)(22)
Contingent milestone income(41) 
Amortization of deferred income(12)(15)
Other royalties(7)(3)
Total$(306)$(232)

In-license Arrangements

Immatics

In the three months ended March 31, 2022, BMS obtained a global exclusive license to Immatics’ TCR bispecific IMA401 program. IMA401 is being studied in oncology and a Clinical Trial Application has been approved by the German federal regulatory authority and the trial is planned to commence in the first half of 2022. BMS and Immatics will collaborate on the development and BMS will be responsible for the commercialization of IMA401 and its related products worldwide, including strategic decisions, regulatory responsibilities, funding and manufacturing. Immatics has the option to co-fund U.S. development in exchange for enhanced U.S. royalty payments and/or to co-promote IMA401 in the U.S. The transaction included an up-front payment of $150 million which was included in Acquired IPRD and Immatics is eligible to receive contingent development, regulatory and sales-based milestones of up to $770 million as well as royalties on global net sales.

Dragonfly

In the three months ended March 31, 2022, a Phase I development milestone for interlukin-12 (“IL-12”) was achieved resulting in a $175 million payment to Dragonfly and an Acquired IPRD charge. The parties also amended the terms of three future milestones by requiring the achievement of certain criteria by specified dates unless BMS notifies Dragonfly that it will discontinue development of IL-12. These milestones continue to be considered substantive and contingent because the decision to proceed will be based on an assessment of clinical data prior to the specified dates.

9


Other

MyoKardia

In April 2022, BMS amended the terms of a license arrangement and paid a third party $295 million to extinguish a future royalty obligation related to mavacamten prior to its FDA approval which will result in an Acquired IPRD charge.

Note 5. OTHER (INCOME)/EXPENSE, NET
Three Months Ended March 31,
Dollars in Millions20222021
Interest expense$326 $353 
Royalties and licensing income(477)(367)
Equity investment losses/(gains)644 (601)
Integration expenses105 141 
Contingent consideration1 (510)
Loss on debt redemption275 281 
Provision for restructuring23 45 
Litigation and other settlements(37)(8)
Transition and other service fees(1)(15)
Investment income(10)(9)
Divestiture gains(211) 
Other11 (12)
Other (income)/expense, net$649 $(702)

Note 6. RESTRUCTURING

Celgene Acquisition Plan

In 2019, a restructuring and integration plan was implemented as an initiative to realize sustainable run rate synergies resulting from cost savings and avoidance from the Celgene acquisition that are currently expected to be approximately $3.0 billion. The synergies are expected to be realized in Cost of products sold (5%), Marketing, selling and administrative expenses (65%) and Research and development expenses (30%). Charges of approximately $3.3 billion are expected to be incurred. The majority of the charges are expected to be incurred through 2022. Cumulative charges of approximately $2.7 billion have been recognized to date including integration planning and execution expenses, employee termination benefit costs and accelerated stock-based compensation, contract termination costs and other shutdown costs associated with site exits. Cash outlays in connection with these actions are expected to be approximately $3.0 billion. Employee workforce reductions were approximately 60 for the three months ended March 31, 2022 and 2021.

MyoKardia Acquisition Plan

In 2020, a restructuring and integration plan was initiated to realize expected cost synergies resulting from cost savings and avoidance from the MyoKardia acquisition. Charges of approximately $150 million are expected to be incurred through 2022, and consist of integration planning and execution expenses, employee termination benefit costs and other costs. Cumulative charges of approximately $120 million have been recognized for these actions to date.
10



The following provides the charges related to restructuring initiatives by type of cost:
Three Months Ended March 31,
Dollars in Millions20222021
Celgene Acquisition Plan$127 $173 
MyoKardia Acquisition Plan3 37 
Total charges$130 $210 
Employee termination costs$22 $44 
Other termination costs1 1 
Provision for restructuring23 45 
Integration expenses105 141 
Accelerated depreciation2  
Asset impairments 24 
Total charges$130 $210 
Cost of products sold$ $24 
Marketing, selling and administrative2  
Other (income)/expense, net128 186 
Total charges$130 $210 

The following summarizes the charges and spending related to restructuring plan activities:
Three Months Ended March 31,
Dollars in Millions20222021
Liability at December 31$101 $148 
Provision for restructuring(a)
23 39 
Foreign currency translation and other(1)(2)
Payments(21)(59)
Liability at March 31
$102 $126 
(a)    Includes a reduction of the liability resulting from changes in estimates of $9 million and $1 million for the three months ended March 31, 2022 and 2021, respectively. Excludes $6 million for the three months ended March 31, 2021 of accelerated stock-based compensation relating to the Celgene Acquisition Plan.

Note 7. INCOME TAXES
Three Months Ended March 31,
Dollars in Millions20222021
Earnings Before Income Taxes$1,687 $2,530 
Provision for Income Taxes404 501 
Effective Tax Rate23.9 %19.8 %

Income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The effective tax rates in 2022 and 2021 were impacted by low jurisdictional tax rates attributed to the unwinding of inventory fair value adjustments and intangible asset amortization and contingent value rights fair value adjustments that were not taxable in 2021. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code.

It is reasonably possible that the amount of unrecognized tax benefits at March 31, 2022 could decrease in the range of approximately $450 million to $500 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits.

BMS is currently under examination by a number of tax authorities, which have proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax positions for the 2008 to 2012 tax years. BMS disagrees with the IRS’s positions and continues to work cooperatively with the IRS to resolve these open tax audits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.
11



Note 8. EARNINGS PER SHARE
Three Months Ended March 31,
Amounts in Millions, Except Per Share Data20222021
Net Earnings Attributable to BMS Used for Basic and Diluted EPS Calculation$1,278 $2,021 
Weighted-Average Common Shares Outstanding – Basic2,146 2,236 
Incremental Shares Attributable to Share-Based Compensation Plans18 29 
Weighted-Average Common Shares Outstanding – Diluted2,164 2,265 
Earnings per Common Share
Basic$0.60 $0.90 
Diluted0.59 0.89 

The total number of potential shares of common stock excluded from the diluted earnings per common share computation because of the antidilutive impact was not material for the three months ended March 31, 2022 and 2021.

Note 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
March 31, 2022December 31, 2021
Dollars in MillionsLevel 1Level 2Level 3Level 1Level 2Level 3
Cash and cash equivalents - money market and other securities$ $9,467 $ $ $12,225 $ 
Marketable debt securities:
Certificates of deposit 2,013   2,264  
Commercial paper 325   320  
Corporate debt securities 261   403  
Derivative assets 288 10  206 12 
Equity investments1,410 44  1,910 109  
Derivative liabilities 58   25  
Contingent consideration liability:
Contingent value rights6   8   
Other acquisition related contingent consideration  34   35 

As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company’s 2021 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).

12


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.

Marketable Debt Securities and Equity Investments

The following table summarizes marketable debt securities:
March 31, 2022December 31, 2021
Dollars in MillionsAmortized CostGross UnrealizedAmortized CostGross Unrealized
GainsLossesFair ValueGainsLossesFair Value
Certificates of deposit$2,013 $ $ $2,013 $2,264 $ $ $2,264 
Commercial paper325   325 320   320 
Corporate debt securities260 1  261 401 2  403 
Total marketable debt securities(a)
$2,598 $1 $ $2,599 $2,985 $2 $ $2,987 
(a)    All marketable debt securities mature within one year as of March 31, 2022 and December 31, 2021.

The following summarizes the carrying amount of equity investments:
Dollars in MillionsMarch 31,
2022
December 31,
2021
Equity investments with readily determinable fair values$1,454 $2,019 
Equity investments without readily determinable fair values330 283 
Equity method investments629 666 
Total equity investments$2,413 $2,968 

The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.
Three Months Ended March 31,
Dollars in Millions20222021
Equity investments with readily determined fair values(a)
Net loss/(gain) recognized$598 $(196)
Net loss recognized on investments sold 3 
Net unrealized loss/(gain) recognized on investments still held598 (199)
Equity investments without readily determinable fair values
Upward adjustments(6)(269)
Impairments and downward adjustments2 1 
Cumulative upward adjustments(109)
Cumulative impairments and downward adjustments52 
Equity in net (income)/loss of affiliates50 (137)
(a)    Certain prior year amounts have been reclassified to conform to the current year's presentation.

Qualifying Hedges and Non-Qualifying Derivatives

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. 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 24 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $5.3 billion and Japanese yen of $1.3 billion at March 31, 2022.
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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 — Non-U.S. dollar borrowings of €950 million ($1.1 billion) at March 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 $600 million at March 31, 2022 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 Accumulated other comprehensive 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 (0.45% as of March 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.

In February 2022, Treasury lock contracts were entered into with a total notional value of $3.0 billion to hedge interest rate risk associated with the anticipated issuance of long-term debt. The Treasury lock contracts were terminated upon the issuance of the aggregate $6.0 billion of unsecured senior notes. These contracts were not designated for hedge accounting. The settlement of these contracts were not material.

In March 2022, Treasury lock contracts were entered into with a total notional value of $2.3 billion to hedge cash payment for the anticipated redemption of long-term debt. The Treasury lock contracts were terminated upon pricing the debt redemption. These contracts were not designated for hedge accounting. The settlement of these contracts were not material.

The following table summarizes the fair value of outstanding derivatives:
 March 31, 2022December 31, 2021
Asset(a)
Liability(b)
Asset(a)
Liability(b)
Dollars in MillionsNotionalFair ValueNotionalFair ValueNotionalFair ValueNotionalFair Value
Derivatives designated as hedging instruments:
Interest rate swap contracts$ $ $255 $(3)$255 $10 $ $ 
Cross-currency interest rate swap contracts450 37 150 (1)600 26   
Foreign currency forward contracts5,409 230 2,492 (44)3,587 161 1,814 (20)
Derivatives not designated as hedging instruments:
Foreign currency forward contracts744 21 629 (10)883 9 568 (5)
Other 10    12   
(a)    Included in Other current assets and Other non-current assets.
(b)    Included in Other current liabilities and Other non-current liabilities.
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The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedging instruments:
Three Months Ended March 31, 2022Three Months Ended March 31, 2021
Dollars in MillionsCost of products soldOther (income)/expense, netCost of products soldOther (income)/expense, net
Interest rate swap contracts$ $(11)$ $(8)
Cross-currency interest rate swap contracts (4) (3)
Foreign currency forward contracts(82)(57)67 (32)

The following table summarizes the effect of derivative and non-derivative instruments designated as hedging instruments in Other Comprehensive Income:
Three Months Ended March 31,
Dollars in Millions20222021
Derivatives qualifying as cash flow hedges
Foreign currency forward contracts gain/(loss):
Recognized in Other Comprehensive Income(a)
$120 $259 
Reclassified to Cost of products sold(82)36 
Forward starting interest rate swap contract loss:
Reclassified to Other (income)/expense, net(3) 
Derivatives qualifying as net investment hedges