Amgen 2009 Annual Report Download - page 162

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
OCI into income over the next 12 months are approximately $49 million of losses on foreign currency forward
and option contracts and $1 million of losses on forward interest rate contracts.
To achieve a desired mix of fixed and floating interest rate debt, we have entered into interest rate swap
agreements, which qualify and have been designated as fair value hedges. The terms of these interest rate swap
agreements correspond to the related hedged debt instruments and effectively convert a fixed interest rate coupon
to a LIBOR-based floating rate coupon over the lives of the respective notes. As of December 31, 2009, we had
interest rate swap agreements with an aggregate notional amount of $1.5 billion on our notes due in 2014 and
2018. For derivative instruments that are designated and qualify as a fair value hedge, the unrealized gain or loss
on the derivative as well as the offsetting unrealized loss or gain on the hedged item attributable to the hedged
risk are recognized in current earnings. For the year ended December 31, 2009, we included the unrealized gain
on the hedged debt of $116 million in the same line item, “Interest expense, net” in the Consolidated Statement
of Income, as the offsetting unrealized loss of $116 million on the related interest rate swap agreements.
We enter into foreign currency forward contracts to reduce our exposure to foreign currency fluctuations of
certain assets and liabilities denominated in foreign currencies which are not designated as hedging transactions.
These exposures are hedged on a month-to-month basis. As of December 31, 2009, the total notional amount of
these foreign currency forward contracts was $414 million.
The following table reflects the location in the Consolidated Statement of Income and the amount of loss rec-
ognized in income for the derivative instruments not designated as hedging instruments (in millions):
Derivatives not designated as hedging instruments Statement of Income location
Year ended
December 31, 2009
Foreign exchange contracts ..................... Interest and other income, net $(24)
The following table reflects the fair values of both derivatives designated as hedging instruments and not
designated as hedging instruments included in the Consolidated Balance Sheet as of December 31, 2009 (in
millions):
Derivative assets Derivative liabilities
Balance Sheet location Fair value Balance Sheet location Fair value
Derivatives designated as hedging instruments:
Interest rate contracts .................... Other current
assets/Other
non-current assets
$ 90 Accrued liabilities/
Other non-current
liabilities
$—
Foreign exchange contracts ............... Other current
assets/ Other non-
current assets 63
Accrued liabilities/
Other non-current
liabilities 152
Total derivatives designated as hedging
instruments ........................ 153 152
Derivatives not designated as hedging instruments:
Foreign exchange contracts ............... Other current assets — Accrued liabilities —
Total derivatives not designated as hedging
instruments ........................ — —
Total derivatives .................... $153 $152
Our foreign exchange contracts that were in a liability position as of December 31, 2009 contain certain cred-
it risk related contingent provisions that are triggered if (i) we were to undergo a change in control and (ii) our or
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