Amgen 2010 Annual Report Download - page 150

giving effect to this bifurcation, the effective interest rates on these borrowings are 6.24% for the 2011 Convertible
Notes and 6.35% for the 2013 Convertible Notes. For the years ended December 31, 2010, 2009 and 2008, total
interest expense for the 2011 Convertible Notes was $149 million, $140 million and $132 million, respectively,
including non-cash interest expense of $146 million, $136 million and $128 million, respectively. For the years
ended December 31, 2010, 2009 and 2008, total interest expense for the 2013 Convertible Notes was $134 million,
$127 million and $120 million, respectively, including non-cash interest expense of $125 million, $118 million and
$110 million, respectively. The difference between the total interest expense and non-cash interest expense for the
2011 Convertible Notes and the 2013 Convertible Notes in each year is the interest expense related 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 were as follows as of
December 31, 2010 and 2009 (in millions):
December 31, 2010
Principal
balance
Unamortized
discount
Net carrying
amount
Net carrying
amount
Liability component Equity component
2011 Convertible Notes......................... $2,500 $ 12 $2,488 $ 643
2013 Convertible Notes......................... 2,500 287 2,213 829
December 31, 2009
2011 Convertible Notes......................... $2,500 $158 $2,342 $ 643
2013 Convertible Notes......................... 2,500 412 2,088 829
Other
Other notes include zero coupon convertible notes due in 2032 with a carrying value of $83 million and
$82 million at December 31, 2010 and 2009, respectively, and notes due in 2097 with a carrying value of
$100 million.
Interest rate swaps
To achieve a desired mix of fixed and floating interest rate debt, we enter into interest rate swap agreements
that effectively convert a fixed rate interest coupon for certain of our debt issuances to a floating LIBOR-based
coupon over the life of the respective note. These interest rate swap agreements qualify and are designated as fair
value hedges. The effective interest rates on these notes as of December 31, 2010 and 2009 after giving effect to the
related interest rate swap agreements and the notional amounts of these interest rate swap agreements were as
follows as of December 31, 2010 and 2009 (dollar amounts in millions):
Effective interest rate 2010 2009
Notional amount
2017 Notes ........................................ LIBOR + 2.5% $1,100 $ —
2014 Notes ........................................ LIBOR + 0.3% 1,000 1,000
2019 Notes ........................................ LIBOR + 2.6% 1,000 —
2018 Notes ........................................ LIBOR + 1.8% 500 500
$3,600 $1,500
F-28
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)