Amgen 2007 Annual Report Download - page 139

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the gains and losses on these forward and option contracts are reported in accumulated other comprehensive in-
come and reclassified to earnings in the same periods during which the hedged transactions affect earnings.
During the years ended December 31, 2007, 2006 and 2005, unrealized and realized gains and losses on these
foreign currency forward and option contracts were not material. No portions of these contracts are excluded
from the assessment of hedge effectiveness, and there are no material ineffective portions of these hedging
instruments. At December 31, 2007 and 2006, amounts in accumulated other comprehensive income related to
cash flow hedges were not material.
We also enter into foreign currency forward contracts to reduce exposures to foreign currency fluctuations
of certain assets and liabilities denominated in foreign currencies. These forward contracts have not been des-
ignated as hedges and accordingly, changes in the fair value of these foreign currency forward contracts are
recognized in interest and other income, net in the current period. During the years ended December 31, 2007,
2006 and 2005, gains and losses on these foreign currency forward contracts were not material.
We also have interest rate swap agreements, which qualify and are designated as fair value hedges, to
achieve a desired mix of fixed and floating interest rate debt. The terms of the interest rate swap agreements
correspond to the related hedged debt instruments. As a result, there is no material hedge ineffectiveness. During
the years ended December 31, 2007, 2006 and 2005, gains and losses on these interest rate swap agreements were
not material and were fully offset by the losses and gains on the hedged debt instruments through current earn-
ings.
Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141(R),
“Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Accounting and Reporting of Noncontrolling
Interests in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS 160”). These standards
will significantly change the accounting and reporting for business combination transactions and noncontrolling
(minority) interests in consolidated financial statements, including capitalizing at the acquisition date the fair
value of acquired IPR&D, and remeasuring and writing down these assets, if necessary, in subsequent periods
during their development. These new standards will be applied prospectively for business combinations that oc-
cur on or after January 1, 2009, except that presentation and disclosure requirements of SFAS 160 regarding
noncontrolling interests shall be applied retrospectively.
In December 2007, the FASB ratified EITF No. 07-1, “Accounting for Collaborative Agreements” (“EITF
07-1”). EITF 07-1 provides guidance regarding financial statement presentation and disclosure of collaborative
arrangements, as defined, which includes arrangements the Company has entered into regarding development and
commercialization of products and product candidates. EITF 07-1 is effective for the Company as of January 1,
2009, and its adoption is not expected to have a material impact on our consolidated results of operations or
financial position.
In June 2007, the FASB ratified EITF No. 07-3, “Accounting for Nonrefundable Advance Payments for
Goods or Services to Be Used in Future Research and Development Activities” (“EITF 07-3”), which requires
that nonrefundable advance payments for goods and services that will be used or rendered in future R&D activ-
ities pursuant to executory contractual arrangements be deferred and recognized as an expense in the period that
the related goods are delivered or services are performed. EITF No. 07-3 became effective as of January 1, 2008
and it did not have a material impact on our consolidated results of operations or financial position upon adop-
tion.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS 157”). SFAS 157
defines fair value, provides guidance for measuring fair value in U.S. generally accepted accounting principles
and expands disclosures about fair value measurements. SFAS 157 became effective as of January 1, 2008 and it
did not have a material impact on our consolidated results of operations or financial position.
F-13