Amgen 2009 Annual Report Download - page 160

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AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Notes payable
The following tables present the carrying value and fair value of our convertible notes, modified convertible
notes and other long-term notes. The fair values of our convertible and modified convertible notes were esti-
mated using discounted cash flow models based upon market observable inputs, including benchmark yields
adjusted for our credit risk, which were corroborated by prices on recent transactions (Level 2). The fair values of
our other long-term notes were estimated using quoted prices, which were corroborated by market prices of re-
cent transactions (Level 2). The fair values of our convertible notes and modified convertible notes exclude the
equity components of our convertible notes and represent only the liability component of these instruments, and
their equity components are included in “Common stock and additional paid-in capital” in the Consolidated Bal-
ance Sheets (in millions):
December 31, 2009
Carrying value Fair value
2011 Convertible Notes .................................................. $ 2,342 $ 2,487
2013 Convertible Notes .................................................. 2,088 2,374
2017 Notes ............................................................ 1,099 1,207
2014 Notes ............................................................ 1,000 1,075
2019 Notes ............................................................ 998 1,077
2039 Notes ............................................................ 995 1,102
2037 Notes ............................................................ 899 988
2018 Notes ............................................................ 499 551
2038 Notes ............................................................ 499 582
2032 Modified Convertible Notes .......................................... 82 81
Other ................................................................. 100 125
Total ............................................................. $10,601 $11,649
December 31, 2008
Carrying value Fair value
2011 Convertible Notes .................................................. $2,206 $2,300
2013 Convertible Notes .................................................. 1,970 2,080
2017 Notes ............................................................ 1,099 1,140
2009 Notes ............................................................ 1,000 1,017
2014 Notes ............................................................ 1,000 994
2037 Notes ............................................................ 899 948
2018 Notes ............................................................ 499 536
2038 Notes ............................................................ 498 567
2032 Modified Convertible Notes .......................................... 81 58
Other ................................................................. 100 111
Total ............................................................. $9,352 $9,751
19. Derivative instruments
The Company is exposed to certain risks related to its business operations. The primary risks that we man-
age by using derivative instruments are foreign exchange rate risk and interest rate risk. We use financial
instruments, including foreign currency forward, foreign currency option and interest rate swap contracts, to re-
duce our risk to these exposures. We do not use derivatives for speculative trading purposes and are not a party to
any leveraged derivatives.
We recognize all of our derivative instruments as either assets or liabilities at fair value in the Consolidated
Balance Sheets (see Note 18, “Fair value measurement”). The accounting for changes in the fair value of a
F-40