Amgen 2011 Annual Report Download - page 84
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(4) Effective January 1, 2009, we adopted a new accounting standard that changed the method of accounting for
convertible debt that may be partially or wholly settled in cash. As required by this standard, we
retrospectively applied this change in accounting to all prior periods for which we had applicable
outstanding convertible debt. Under this method of accounting, the debt and equity components of our
convertible notes are bifurcated and accounted for separately. The equity components of our convertible
notes are included in Common stock and additional paid-in capital in the Consolidated Balance Sheets, with
a corresponding reduction in the carrying values of these convertible notes as of the date of issuance or
modification, as applicable. The reduced carrying values of our convertible notes are being accreted back to
their principal amounts through the recognition of non-cash interest expense. This results in recognizing
interest expense on these borrowings at effective rates approximating what we would have incurred had we
issued nonconvertible debt with otherwise similar terms. Included in net income for 2011, 2010, 2009, 2008
and 2007 is the incremental non-cash interest expense of $143 million ($91 million, net of tax), $266
million ($168 million, net of tax), $250 million ($155 million, net of tax), $235 million ($144 million, net of
tax) and $168 million ($88 million, net of tax), respectively, related to the adoption of the new accounting
standard.
(5) See Note 14, Financing arrangements, to the Consolidated Financial Statements for discussion of our
financing arrangements. In addition, in 2008 and 2007 we issued $1.0 billion and $4.0 billion, respectively,
aggregate principal amount of notes. In 2008, we repaid our $2.0 billion of floating rate notes. In 2007, as a
result of holders of substantially all of our outstanding zero-coupon 2032 Modified Convertible Notes
exercising their put option, we repurchased the majority of the then outstanding convertible notes, at their
then-accreted value of $1.7 billion.
(6) Throughout the five years ended December 31, 2011, we had a share repurchase program authorized by the
Board of Directors through which we repurchased $8.3 billion, $3.8 billion, $3.2 billion, $2.3 billion and
$5.1 billion, respectively, of Amgen common stock.
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