Amgen 2009 Annual Report Download - page 153

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The discounts associated with the 2011 Convertible Notes and the 2013 Convertible Notes resulting from
the adoption of this new accounting standard are being amortized over periods that end on the scheduled maturity
dates of these notes and result in effective interest rates of approximately 6.24% for the 2011 Convertible Notes
and approximately 6.35% for the 2013 Convertible Notes.
For the years ended December 31, 2009, 2008 and 2007, total interest expense for the 2011 Convertible
Notes was $140 million, $132 million and $124 million, respectively, including non-cash interest expense of
$136 million, $128 million and $121 million, respectively, related to the amortization of the discount resulting
from the adoption of the new accounting standard. The remaining balance of the interest expense relates to the
contractual coupon rates.
For the years ended December 31, 2009, 2008 and 2007, total interest expense for the 2013 Convertible
Notes was $127 million, $120 million and $113 million, respectively, including non-cash interest expense of
$118 million, $110 million and $104 million, respectively, related to the amortization of the discount resulting
from the adoption of the new accounting standard. The remaining balance of the interest expense relates to the
contractual coupon rates.
The principal balances, unamortized discounts and net carrying amounts of the liability components and the
equity components of our 2011 Convertible Notes and our 2013 Convertible Notes are as follows (in millions):
Balance as of December 31, 2009
Liability component Equity component
Principal balance Unamortized discount
Net carrying
amount
Net carrying
amount
2011 Convertible Notes ............... $2,500 $158 $2,342 $643
2013 Convertible Notes ............... 2,500 412 2,088 829
Balance as of December 31, 2008
2011 Convertible Notes ............... $2,500 $294 $2,206 $643
2013 Convertible Notes ............... 2,500 530 1,970 829
2017 Notes and 2037 Notes
In May 2007, we issued $2.0 billion aggregate principal amount of floating rate notes due in November
2008 (the “2008 Floating Rate Notes”), $1.1 billion aggregate principal amount of notes due in 2017 (the “2017
Notes”) and $900 million aggregate principal amount of notes due in 2037 (the “2037 Notes”). The annual inter-
est rate on our 2008 Floating Rate Notes was equal to LIBOR plus 0.08%, which was reset quarterly. The 2017
Notes and 2037 Notes pay interest at fixed annual rates of 5.85% and 6.375%, respectively. The 2017 Notes and
2037 Notes may be redeemed at any time at our option, in whole or in part, at 100% of the principal amount of
the notes being redeemed plus accrued interest and a “make-whole” amount, as defined. In the event of a change
in control triggering event, as defined, we may be required to purchase for cash all or a portion of the 2017 Notes
and 2037 Notes at a price equal to 101% of the principal amount of the notes plus accrued interest. A total of
$3.2 billion of the net proceeds raised from the issuance of these notes were used to repurchase shares of our
common stock under an accelerated share repurchase program (“ASR”) entered into in May 2007. Upon the re-
ceipt of the proceeds from the issuance of the 2018 Notes and 2038 Notes discussed below, in June 2008 we
exercised our right to call and repaid $1.0 billion of the 2008 Floating Rate Notes which were scheduled to ma-
ture in November 2008. The remaining $1.0 billion of the 2008 Floating Rate Notes matured and were repaid in
November 2008.
2009 Notes
In November 2009, $1.0 billion aggregate principal amount of notes with a fixed interest rate of 4.00% (the
“2009 Notes”) became due and were repaid.
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