Amgen 2015 Annual Report Download - page 58

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Cash, cash equivalents, and marketable securities
Of our cash, cash equivalents and marketable securities totaling approximately $31.4 billion as of December 31, 2015,
approximately $29.0 billion was generated from operations in foreign tax jurisdictions and is intended to be invested indefinitely
outside the United States. Under current tax laws, if these funds were repatriated for use in our U.S. operations, we would be
required to pay additional income taxes at the tax rates then in effect.
The primary objective of our investment portfolio is to enhance overall returns in an efficient manner while maintaining
safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security
investments to certain types of debt and money market instruments issued by institutions with primarily investment grade credit
ratings and places restrictions on maturities and concentration by asset class and issuer.
Financing arrangements
The current and noncurrent portions of our long-term borrowings at December 31, 2015, were $2.3 billion and $29.3 billion,
respectively. The current and noncurrent portions of our long-term borrowings at December 31, 2014, were $0.5 billion and $30.2
billion, respectively. As of December 31, 2015, Standard & Poor’s Financial Services LLC (S&P), Moody’s Investor Service, Inc.
(Moody’s) and Fitch, Inc. (Fitch) assigned credit ratings to our outstanding senior notes of A with a stable outlook, Baa1 with a
stable outlook and BBB with a stable outlook, respectively, which are considered investment grade. Unfavorable changes to these
ratings may have an adverse impact on future financings and would affect the interest rate paid under our Term Loan Credit Facility.
During the years ended December 31, 2015, 2014 and 2013, we issued long-term debt with aggregate principal amounts of
$3.5 billion, $4.5 billion, and $8.1 billion, respectively. During the years ended December 31, 2015, 2014 and 2013, we repaid
debt of $2.4 billion, $5.6 billion, and $3.4 billion, respectively. For information regarding specific issuances and repayments of
debt, see Part IV—Note 14, Financing arrangements, to the Consolidated Financial Statements.
To achieve a desired mix of fixed and floating interest rate debt, we entered into interest rate swap contracts that effectively
converted a fixed-rate interest coupon for certain of our debt issuances to a floating London Interbank Offered Rates (LIBOR)-
based coupon over the life of the respective note. These interest rate swap contracts qualified and are designated as fair value
hedges. As of December 31, 2015 and 2014, we had interest rate swap contracts with aggregate notional amounts of $6.65 billion.
See Part IV—Note 14, Financing arrangements, and Note 17, Derivative instruments, to the Consolidated Financial Statements
for further discussion of our interest rate swap contracts.
To hedge our exposure to foreign currency exchange rate risk associated with certain of our long-term notes denominated
in foreign currencies, we entered into cross-currency swap contracts, which effectively convert the interest payments and principal
repayment of the respective notes from euros/pounds sterling to U.S. dollars. These cross-currency swap contracts qualify and are
designated as cash flow hedges. As of December 31, 2015 and 2014, we had cross-currency swap contracts with aggregate notional
amounts of $2.7 billion. See Part IV—Note 17, Derivative instruments, to the Consolidated Financial Statements for further
discussion of our cross-currency swap contracts.
As of December 31, 2015, we had a commercial paper program that allows us to issue up to $2.5 billion of unsecured
commercial paper to fund our working capital needs. At December 31, 2015 and 2014, we had no amounts outstanding under our
commercial paper program.
In July 2014, we entered into a $2.5 billion syndicated, unsecured, revolving credit agreement which is available for general
corporate purposes or as a liquidity backstop to our commercial paper program. The commitments under the revolving credit
agreement may be increased by up to $500 million with the agreement of the banks. Each bank which is a party to the agreement
has an initial commitment term of five years. This term may be extended for up to two additional one-year periods with the
agreement of the banks. Annual commitment fees for this agreement are 0.1% based on our current credit rating. Generally, we
would be charged interest at LIBOR plus 0.9% for any amounts borrowed under this facility. As of December 31, 2015 and 2014,
no amounts were outstanding under this facility.
In February 2014, we filed a shelf registration statement with the SEC which allows us to issue unspecified amounts of debt
securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depository
shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depository
shares. Under this shelf registration statement, all of the securities available for issuance may be offered from time to time with
terms to be determined at the time of issuance. This shelf registration statement expires in February 2017.
In 1997, we established a $400 million medium-term note program under which medium-term debt securities may be offered
from time to time with terms to be determined at the time of issuance. As of December 31, 2015 and 2014, no securities were
outstanding under this medium-term note program.