1015476612
49808027303
3392000000
38840000000
8997000000
0
26720000000
0.0001
2750000000
1015000000
63000000
635000000
2182000000
2913000000
17696000000
2968000000
4383000000
2780000000
11339000000
2061000000
38840000000
4548000000
6088000000
1000000000
1488000000
1225000000
2461000000
5800000000
-5423000000
21360000000
2024000000
36427000000
7778000000
0
26441000000
0.0001
2750000000
1047000000
117000000
504000000
2073000000
3382000000
15221000000
1774000000
4257000000
2988000000
11339000000
2075000000
36427000000
4886000000
4095000000
1000000000
1521000000
1000000000
2304000000
5879000000
-5673000000
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0.84
0.84
2585000000
1130000000
224000000
137000000
906000000
88000000
1179000000
284000000
72000000
809000000
3764000000
3692000000
904000000
1081000000
1078000000
515000000
73000000
1.25
1.25
2256000000
1357000000
88000000
150000000
1269000000
50000000
1457000000
49000000
79000000
693000000
3713000000
3634000000
910000000
1017000000
1013000000
531000000
73000000
1368000000
1.85
1.85
4783000000
531000000
2510000000
504000000
360000000
200000000
-23000000
69000000
105000000
-46000000
286000000
-1540000000
-293000000
3201000000
2006000000
202000000
2594000000
36000000
294000000
148000000
-61000000
1549000000
3422000000
48000000
335000000
-16000000
992000000
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3081000000
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1503000000
7377000000
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276000000
10-Q
false
N.A.
2009-06-30
AMGEN INC
0000318154
AMGN
--12-31
Yes
No
Yes
Large Accelerated Filer
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>7. Available-for-sale
securities</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We consider
our investment portfolio and marketable equity investments
available-for-sale as defined in SFAS No. 115,
“<i>Accounting for Certain Investments in Debt and Equity
Securities</i>.” Accordingly, these investments are recorded
at fair value. For the three months ended June 30, 2009 and
2008, realized gains related to these investments were $32 million
and $24 million, respectively, and realized losses related to these
investments were $16 million and $7 million, respectively. For the
six months ended June 30, 2009 and 2008, realized gains
related to these investments were $68 million and $76 million,
respectively, and realized losses related to these investments were
$55 million and $36 million, respectively. The cost of securities
sold is based on the specific identification method.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The fair
values of available-for-sale investments by type of security,
contractual maturity and classification in the Condensed
Consolidated Balance Sheets are as follows (in
millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>June 30, 2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Amortized  <br />
cost</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Gross<br />
  unrealized  <br />
gains</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Gross<br />
  unrealized  <br />
losses</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Estimated  <br />
fair</b></font><br />
<font face="Times New Roman" size="2"><b>value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Type of security:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">U.S. Treasury securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,276  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(12)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,273  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Obligations of U.S. government agencies
and FDIC guaranteed bank debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,060  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">73  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,127  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate debt securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,920  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">42  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(12)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,950  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Mortgage and asset backed
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">331  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">334  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other short-term interest bearing
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,084  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,084  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total debt securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,671  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">127  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(30)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,768  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">67  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(8)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,738  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">139  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(38)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,839  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>December 31, 2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Amortized  <br />
cost</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Gross<br />
  unrealized  <br />
gains</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Gross<br />
  unrealized  <br />
losses</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Estimated  <br />
fair</b></font><br />
<font face="Times New Roman" size="2"><b>value</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Type of security:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">U.S. Treasury securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,896   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">58   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,952   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Obligations of U.S. government agencies
and FDIC guaranteed bank debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,396   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,493   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate debt securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,432   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(72)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,370   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Mortgage and asset backed
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">508   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">504   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other short-term interest bearing
securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,126   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,126   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total debt securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,358   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">170   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(83)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,445   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">65   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(8)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">57   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,423   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">170   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(91)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,502   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Contractual maturity</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>      June 30,      <br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    December 31,    <br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Maturing in one year or less</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,759   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,179   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Maturing after one year through three
years</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,015   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,724   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Maturing after three years</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,994   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,542   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total debt securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,768   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,445   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">57   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,839   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,502   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Classification in the Condensed
Consolidated Balance Sheets</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size="2"><b>June
30,</b></font><br />
<font face="Times New Roman" size="2"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    December
31,    <br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cash and cash equivalents</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,968   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,774   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Marketable securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,997   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,778   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets - noncurrent</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">30   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,036   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,582   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Less cash</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(197)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(80)  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,839   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,502   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The primary
objectives for our marketable security investment portfolio are
liquidity and safety of principal. Investments are made with the
objective of achieving the highest rate of return consistent with
these two objectives. Our investment policy limits investments to
certain types of debt and money market instruments issued by
institutions primarily with investment grade credit ratings and
places restrictions on maturities and concentration by type and
issuer.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We review
periodically our available-for-sale securities for other than
temporary declines in fair value below their cost basis and
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. As of
June 30, 2009 and December 31, 2008, the Company believes
that the cost basis for our available-for-sale securities were
recoverable in all material respects.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
</div>
1194000000
2.24
2.23
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>13. Commitments and
Contingencies</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In the
ordinary course of business, we are involved in various legal
proceedings and other matters that are complex in nature and have
outcomes that are difficult to predict. In accordance with SFAS 5,
“<i>Accounting for Contingencies</i>,” we record
accruals for such contingencies to the extent that we conclude that
it is probable that a liability will be incurred and the amount of
the related loss can be reasonably estimated. See Note 10,
“<i>Contingencies</i>” to our Consolidated Financial
Statements in our Annual Report on Form 10-K for the year ended
December 31, 2008 and Note 11,
“<i>Contingencies</i>” to our Condensed Consolidated
Financial Statements in our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2009 for further discussion of certain
of our legal proceedings and other matters.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Certain
recent developments concerning our legal proceedings and other
matters are discussed below:</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Average Wholesale Price
(“AWP”) Litigation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The U.S.
District Court for the District of Massachusetts (the
“Massachusetts District Court”) held a May 28,
2009 status conference where mediation with respect to all
non-settling MDL Proceeding cases was discussed. Final approval
hearing of the Track Two settlement is set for October 21,
2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>Robert J.
Swanston v. TAP Pharmaceutical Products, Inc., et
al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
June 8, 2009, the Maricopa County, Arizona Superior Court
granted defendants’ motion for summary judgment.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>State of
Arizona, etc., et al. v. Abbott Laboratories, Inc., et
al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
June 29, 2009 Amgen and Immunex were dismissed from the case
after reaching a settlement with the state of Arizona.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>State of
Illinois v. Abbott Laboratories, Inc., et al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
July 2, 2009, Amgen and Immunex were dismissed from the case
after reaching a settlement with the state of Illinois.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>State of
Mississippi v. Abbott Laboratories, Inc., et al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
July 7, 2009, Amgen and Immunex were dismissed from the case
after reaching a settlement with the state of
Mississippi.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Roche Matters</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>Amgen Inc.
v. F. Hoffmann-La Roche Ltd., et al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Oral argument
before the United States Court of Appeals for the Federal Circuit
(the “Federal Circuit”) covering the matters on appeal
was held on June 4, 2009. No decision has been issued from the
Federal Circuit Court.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>U.S.
International Trade Commission (“ITC”)</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Jurisdiction
over the investigation has now been returned to the ITC from the
Federal Circuit. On June 22, 2009 the Roche respondents filed
a motion for a stay and Amgen and the Office of Unfair Import
Investigations (“OUII”) opposed. On July 10, 2009
the Roche respondents filed a motion to terminate the investigation
based on a consent order and Amgen and the OUII opposed. No
decision has been issued on either motion.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Amgen Inc., et al., v. Ariad
Pharmaceuticals, Inc. (“Ariad”)</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
June 1, 2009, the Federal Circuit affirmed the U.S. District
Court for the District of Delaware’s (the “Delaware
District Court”) ruling on claim construction and
non-infringement in favor of Amgen.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Human Genome Sciences
(“HGS”) Litigations</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
May 29, 2009, HGS filed an action under 35 U.S.C. §146
against Amgen in the Delaware District Court to review a Decision
on Priority and Judgment on Priority entered on March 31, 2009
by the Board of Patent Appeals and Interferences in Interference
No. 105,380. On July 31, 2009, and as discussed with the
Delaware District Court during a scheduling teleconference on
January 23, 2009 in related Civil Action 07-526, the parties
filed a joint Stipulated Order requesting a stay of the case until
further order of the Delaware District Court.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Sensipar® Abbreviated New Drug
Application (“ANDA”) Litigation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">After a
hearing on the motions on May 14, 2009, the Delaware District
Court issued an order on May 15, 2009 denying Teva’s
motion to add a counterclaim of infringement of U.S. Patent
No. 7,449,603 and granting defendants’ motions to add
affirmative defenses and declaratory judgment counterclaims of
unenforceability for inequitable conduct and to clarify that their
previously pled invalidity defenses include invalidity for
statutory and non-statutory double patenting. On May 15, 2009,
the Delaware District Court entered a third scheduling order
setting a claims construction hearing for January 25 and 26,
2010 and indicating that the case will be placed in the trial pool
on September 1, 2010.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Teva U.S. Patent No. 7,449,603
(‘603) Litigation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
May 20, 2009, Teva Pharmaceutical Industries Ltd. (“Teva
Ltd.”) and Teva Pharmaceuticals USA, Inc. (“Teva
USA”) filed a lawsuit against Amgen in the U.S. District
Court for the Eastern District of Pennsylvania alleging
infringement of U.S. Patent No. 7,449,603 (the ‘603
Patent). On July 13, 2009, Amgen filed a motion to dismiss the
claims of plaintiff Teva USA for lack of subject matter
jurisdiction. On July 22, 2009, Teva Ltd. filed an amended
complaint for patent infringement in its own name. On July 29,
2009, Teva Ltd. filed an opposition to Amgen’s motion to
dismiss the claims of Teva USA for lack of subject matter
jurisdiction.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Federal Securities Litigation —
In re Amgen Inc. Securities Litigation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">A class
certification hearing before the U.S. District Court for the
Central District of California (the “California Central
District Court”), was held on July 17, 2009. No ruling
has been issued by the California Central District
Court.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>State Derivative Litigation —
Birch v. Sharer, et al.</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Amgen and the
individual defendants filed motions to dismiss on June 23,
2009 and oral argument is currently set for September 4, 2009
before a judge in the Complex Department of the Los Angeles County
Superior Court.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>ERISA Litigation</i></font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
July 14, 2009, the U.S. Court of Appeals for the
9</font><font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">th</sup></font>
<font face="Times New Roman" size="2">Circuit (the
“9</font><font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">th</sup></font>
<font face="Times New Roman" size="2">Circuit”) reversed the
California Central District Court’s decision and remanded the
case back to the district court. In the meantime, a third ERISA
class action was filed by Don Hanks on June 2, 2009 in the
Central District of California alleging the same ERISA violations
as in the Harris and Ramos lawsuits. It is anticipated that a
motion to consolidate the cases will be filed with the California
Central District Court. If the cases are consolidated, an amended
complaint will be filed and Amgen will have 30 days to file its
responsive pleading.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Third-Party Payers
Litigation</i></font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
June 17, 2009, the California Central District Court granted
Amgen’s motion and dismissed the entire action with
prejudice. Plaintiffs filed a notice of appeal on July 17,
2009 with the 9</font><font face="Times New Roman" size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">th</sup></font>
<font face="Times New Roman" size="2">Circuit.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Qui Tam Actions</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The
Massachusetts District Court held a status hearing on May 18,
2009 and ordered that the government make a decision whether or not
to intervene in the Massachusetts Qui Tam Action by
September 1, 2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Other</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
May 12, 2009, Amgen was served with a third subpoena from the
U.S. Attorney’s Office for the Western District of Washington
related to Johnson and Johnson clinical trials and correspondence
with payers. Amgen intends to cooperate fully with the
government’s requests.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
July 29, 2009, Amgen was served with a second subpoena from
the U.S. Attorney’s Office for the Eastern District of New
York related to dosing. Amgen intends to cooperate fully with the
government’s requests.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In the
ordinary course of business, we are involved in various legal
proceedings and other matters, including those discussed in this
Note. While it is not possible to accurately predict or determine
the eventual outcome of these items, one or more of these items
currently pending could have a material adverse effect on our
condensed consolidated results of operations, financial position or
cash flows.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>9. Financing
arrangements</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table reflects the carrying value of our long-term borrowings under
our various financing arrangements as of June 30, 2009 and
December 31, 2008 (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>      June 30,      <br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  December 31,  <br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">0.125% convertible notes due 2011 (2011
Convertible Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,273  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,206  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">0.375% convertible notes due 2013 (2013
Convertible Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,028  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,970  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">5.85% notes due 2017 (2017
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,099  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,099  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">4.85% notes due 2014 (2014
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">4.00% notes due 2009 (2009
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">5.70% notes due 2019 (2019
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">998  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">6.40% notes due 2039 (2039
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">995  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">6.375% notes due 2037 (2037
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">899  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">899  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">6.15% notes due 2018 (2018
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">499  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">499  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">6.90% notes due 2038 (2038
Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">498  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">498  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Zero coupon modified convertible notes
due in 2032 (2032 Modified Convertible Notes)</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">81  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total borrowings</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,471  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,352  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Less current portion</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total non-current debt</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10,471  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,352  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2"><i>2019 Notes
and 2039 Notes</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In January
2009, we issued $1.0 billion aggregate principal amount of notes
due in 2019 (the “2019 Notes”) and $1.0 billion
aggregate principal amount of notes due in 2039 (the “2039
Notes”) in a registered offering. The 2019 Notes and 2039
Notes pay interest at fixed annual rates of 5.70% and 6.40%,
respectively. The 2019 Notes and 2039 Notes may be redeemed at any
time at our option, in whole or in part, at 100% of the principal
amount of the notes being redeemed plus accrued and unpaid
interest, if any, and a “make-whole” amount, as
defined. Upon the occurrence of a change in control triggering
event, as defined, we may be required to purchase for cash all or a
portion of the 2019 Notes and the 2039 Notes at a price equal to
101% of the principal amount of the notes plus accrued interest.
The total debt discount on issuance and debt issuance costs were $7
million and $13 million, respectively, and are being amortized over
the lives of the notes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size=
"2"><i>Convertible notes</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Effective
January 1, 2009, we adopted FSP APB 14-1 and, as required by
this new standard, we retrospectively applied this change in
accounting to all prior periods for which we had applicable
outstanding convertible debt (see Note 2, <i>“Change in
method of accounting for convertible debt instruments”).</i>
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, including our 2011
Convertible Notes, 2013 Convertible Notes and 2032 Modified
Convertible Notes, are included in “Common stock and
additional paid-in capital” in the Condensed Consolidated
Balance Sheets, with a corresponding reduction in the carrying
values of these convertible notes as of</font> <font face=
"Times New Roman" size="2">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.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The 2011
Convertible Notes and the 2013 Convertible Notes were issued at par
and pay interest at a rate of 0.125% and 0.375%, respectively. The
discounts associated with these notes resulting from the adoption
of FSP APB 14-1 are being amortized over periods that end on the
scheduled maturity dates of these notes and result in effective
interest rates of approximately 6.24% for the 2011 Convertible
Notes and approximately 6.35% for the 2013 Convertible
Notes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">For the three
and six months ended June 30, 2009, interest expense for the
2011 Convertible Notes was approximately $1 million and $2 million,
respectively, based on the contractual coupon rates. For the three
and six months ended June 30, 2008, interest expense for the
2011 Convertible Notes was approximately $1 million and $2 million,
respectively, based on the contractual coupon rates. For the three
and six months ended June 30, 2009, interest expense for the
2013 Convertible Notes was approximately $2 million and $5 million,
respectively, based on the contractual coupon rates. For the three
and six months ended June 30, 2008, interest expense for the
2013 Convertible Notes was approximately $2 million and $5 million,
respectively, based on the contractual coupon rates.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">For the three
and six months ended June 30, 2009, amortization of the
discount for the 2011 Convertible Notes was approximately $34
million and $67 million, respectively. For the three and six months
ended June 30, 2008, amortization of the discount for the 2011
Convertible Notes was approximately $32 million and $63 million,
respectively. For the three and six months ended June 30,
2009, amortization of the discount for the 2013 Convertible Notes
was approximately $29 million and $58 million, respectively. For
the three and six months ended June 30, 2008, amortization of
the discount for the 2013 Convertible Notes was approximately $27
million and $54 million, respectively.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The 2011
Convertible Notes and the 2013 Convertible Notes may, subject to
certain conditions, be converted based on a conversion rate of
12.5247 and 12.5814 shares, respectively, per $1,000 principal
amount of notes (which represents a conversion price of
approximately $79.84 and $79.48 per share, respectively). Upon
conversion, a holder would receive the conversion value, as
defined, in: (i) cash equal to the lesser of the principal
amount of the note or the conversion value and (ii) shares of
our common stock, cash or a combination of common stock and cash,
at our option, to the extent the conversion value exceeds the
principal amount of the note. As of June 30, 2009, these notes
were not convertible and the principal values exceeded the
conversion values.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The principal
balances, unamortized discounts and net carrying amounts of the
liability components and the equity components for our 2011
Convertible Notes and 2013 Convertible Notes as of June 30,
2009 and December 31, 2008 are as follows (in
millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="48%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="8"><font face=
"Times New Roman" size="2"><b>Liability Component</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size="2"><b>Equity<br />
Component</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size=
"2"><b>    Principal    <br />
Balance</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size=
"2"><b>  Unamortized  <br />
Discount</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size=
"2"><b>  Net Carrying  <br />
Amount</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size=
"2"><b>  Net Carrying  <br />
Amount</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance as of June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2011 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,500  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">227  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,273  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">643  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2013 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,500  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">472  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,028  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">829  </font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Balance as of December 31,
2008</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2011 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,500  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">294  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,206  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">643  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2013 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,500  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">530  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,970  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">829  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The 2032
Modified Convertible Notes were issued in 2005 in exchange for
zero-coupon, 30-year convertible notes that we issued in 2002. Like
the notes for which they were exchanged, no interest is currently
payable on the 2032 Modified Convertible Notes. These notes were
issued at a discount from their principal amount (prior to the
adoption of FSP APB 14-1). The reduced carrying value resulting
from issuing these notes at a discount is being accreted back to
the principal amount based on a contractual interest rate of 1.125%
over the life of the notes. In March 2007, substantially all of the
holders of the 2032 Modified Convertible Notes exercised their
option to put these convertible notes to us. The additional
discount on the 2032 Modified Convertible Notes recognized pursuant
to the retrospective application of FSP APB 14-1 (in excess of the
discount recognized under the contractual</font> <font face=
"Times New Roman" size="2">terms of these securities) was amortized
as non-cash interest expense prior to the holders putting these
convertible notes to us. We continue to recognize interest expense
for the amortization of the discount based on the contractual rate
for the 2032 Modified Convertible Notes that remain outstanding.
Such amounts were not material for the three and six months ended
June 30, 2009 and 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Holders of
the remaining outstanding 2032 Modified Convertible Notes may,
subject to certain conditions, convert each of their notes based on
a conversion rate of 8.8601 shares of common stock. The conversion
price per share of the convertible notes as of any day will equal
the accreted value on that day, divided by the conversion rate, or
$87.52, as of June 30, 2009. If converted, the 2032 Modified
Convertible Notes will be settled in cash for an amount equal to
the lesser of the accreted value of the 2032 Modified Convertible
Notes at the conversion date or the conversion value, as defined,
and shares of common stock, if any, to the extent the conversion
value exceeds the amount paid in cash. As of June 30, 2009,
these notes were not convertible and the accreted value exceeded
the amount that would have been received upon conversion. As of
June 30, 2009 and December 31, 2008, the equity component
for the 2032 Modified Convertible Notes was approximately $29
million.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Other facilities</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">As of
June 30, 2009, we have a $2.3 billion syndicated unsecured
revolving credit facility which matures in November 2012 and is
available for general corporate purposes, or as a liquidity
backstop to our commercial paper program. In late 2008, a
participating financial institution in the credit facility who had
provided $178 million of such commitment declared bankruptcy.
Subsequently, this financial institution, which is a subsidiary of
Lehman Brothers Holdings, Inc. (“Lehman”), was removed
from the credit facility and the aggregate commitment was reduced
to its current level of $2.3 billion.</font></p>
</div>
4243000000
520000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>12. Derivative
instruments</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The Company
is exposed to certain risks related to its business operations. The
primary risks that we manage by using derivatives 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 reduce our risk to
these exposures. We do not use derivatives for speculative trading
purposes and are not a party to any leveraged
derivatives.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We recognize
all of our derivative instruments as either assets or liabilities
at fair value in the Condensed Consolidated Balance Sheets. Fair
value is determined in accordance with SFAS 157 (see Note 11,
“<i>Fair value measurement</i>”). The accounting for
changes in the fair value of a derivative instrument depends on
whether it has been designated and qualifies as part of a hedging
relationship and, further, on the type of hedging relationship. For
derivatives designated as hedges under SFAS No. 133
“<i>Accounting for Derivative Instruments and Hedging
Activities”</i> (“SFAS 133”), we formally assess,
both at inception and periodically thereafter, whether the hedging
derivatives are highly effective in offsetting changes in either
the fair value or cash flows of the hedged item. Our derivatives
that are not designated and do not qualify as hedges under SFAS 133
are adjusted to fair value through current earnings.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We enter into
foreign currency forward and option contracts to reduce our
exposure to possible changes in values of certain anticipated
foreign currency cash flows resulting from changes in foreign
currency exchange rates, primarily associated with sales
denominated in Euros. Increases or decreases in the cash flows
associated with our international product sales due to movements in
foreign currency exchange rates are partially offset by the
corresponding increases and decreases in our international
operating expenses resulting from these foreign currency exchange
rate movements. To further reduce our exposure to foreign currency
exchange rate fluctuations on our international product sales, we
enter into foreign currency forward and option contracts to hedge a
portion of our projected international product sales over a
three-year time horizon. As of June 30, 2009, we had
outstanding foreign currency forward and options contracts,
primarily Euro-based, with notional amounts of $2.6 billion and
$382 million, respectively.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In connection
with the issuance of long-term debt, we may enter into forward
interest rate contracts in order to hedge the variability in cash
flows due to changes in the applicable Treasury rate between the
time we entered into these contracts and the time the related debt
is issued. In connection with the issuance of our 2019 Notes and
2039 Notes in January 2009, we entered into forward interest rate
contracts related to a portion of these borrowings.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">These foreign
currency forward and option contracts and forward interest rate
contracts are designated as cash flow hedges, and accordingly, the
effective portion of gains and losses on these contracts are
reported in “Accumulated other comprehensive income” in
the Condensed Consolidated Balance Sheets and reclassified to
earnings in the same periods during which the hedged transactions
affect earnings.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!--##PBStart##-->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Information
regarding our cash flow hedge contracts for the three and six
months ended June 30, 2009 is presented in the table below (in
millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="31%"></td>
<td valign="bottom" width="31%"></td>
<td></td>
<td></td>
<td valign="bottom" width="31%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size="2"><b>Three
months ended</b></font><br />
<font face="Times New Roman" size="2"><b>June 30,
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Six months ended</b></font><br />
<font face="Times New Roman" size="2"><b>June 30,
2009</b></font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="2"><b>Derivatives in SFAS 133
cash flow<br />
hedging relationships</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Amount of gain/(loss) recognized in<br />
  Other Comprehensive Income (“OCI”)  <br />
(effective portion)</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Amount of gain/(loss) recognized in OCI  <br />
(effective portion)</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(11)  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(100)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(77)  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(100)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(88)  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="3%"></td>
<td valign="bottom" width="16%"></td>
<td width="46%"></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
<td valign="bottom" width="16%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Three months ended<br />
June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Six months ended June 30,<br />
2009</b></font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="2"><b>Derivatives in SFAS 133
cash flow<br />
hedging relationships</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size=
"2"><b> Location of gain/(loss) reclassified <br />
from Accumulated OCI into<br />
income (effective portion)</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size="2"><b>Amount of gain/(loss)<br />
reclassified from<br />
Accumulated OCI into<br />
 income (effective portion) </b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size="2"><b>Amount of gain/(loss)<br />
reclassified from<br />
Accumulated OCI into<br />
 income (effective portion) </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Interest
expense, net</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Product
sales</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">10  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">No portions
of our cash flow hedge contracts are excluded from the assessment
of hedge effectiveness, and ineffective portions of these hedging
instruments resulted in less than $1 million of expense recorded in
“Interest and other income, net” and “Interest
expense, net” in the Condensed Consolidated Statements of
Income for both the three and six months ended June 30, 2009.
As of June 30, 2009, the amounts expected to be reclassified
into earnings over the next 12 months are approximately $1 million
of gains on foreign currency forward and option contracts and $1
million of losses on forward interest rate contracts.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We have
interest rate swap agreements, which qualify and are designated as
fair value hedges, to achieve a desired mix of fixed and floating
interest rate debt. The terms of the 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 June 30,
2009, we had interest rate swap agreements with an aggregate
notional amount of $2.5 billion on our notes due in 2009, 2014 and
2018. For derivative instruments that are designated and qualify as
a fair value hedge, the gain or loss on the derivative as well as
the offsetting loss or gain on the hedged item attributable to the
hedged risk are recognized in current earnings. For the three and
six months ended June 30, 2009, we included the gain on the
hedged debt of $41 million and $103 million, respectively, in the
same line item, “Interest expense, net” in the
Condensed Consolidated Statements of Income, as the offsetting loss
of $41 million and $103 million, respectively, on the related
interest rate swaps.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">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 under SFAS 133. These exposures are hedged on
a month-to-month basis. As of June 30, 2009, the total
notional amount of these foreign currency forward contracts was
$464 million.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!--##PBStart##-->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table reflects the effect of these derivative instruments on the
Condensed Consolidated Statements of Income for the three and six
months ended June 30, 2009 (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="35%"></td>
<td valign="bottom" width="9%"></td>
<td width="34%"></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
<td valign="bottom" width="9%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Three months ended<br />
June 30, 2009</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Six months ended<br />
June 30, 2009</b></font></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="2"><b>Derivatives not designated
as hedging<br />
instruments under SFAS 133</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
<font face="Times New Roman" size="2"><b>  Location of
gain/(loss)  </b></font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size="2"><b>recognized in
income</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size="2"><b>Amount of gain/(loss)<br />
recognized in income</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap" align="middle" colspan="2"><font face=
"Times New Roman" size="2"><b>Amount of gain/(loss)<br />
recognized in income</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Interest
and other income, net</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(10)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table reflects the fair values of both derivatives designated as
hedging instruments and not designated as hedging instruments under
SFAS 133 included in the Condensed Consolidated Balance Sheet as of
June 30, 2009 (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="39%"></td>
<td valign="bottom" width="5%"></td>
<td width="21%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td valign="bottom" width="5%"></td>
<td width="16%"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size=
"2"><b>Derivative assets</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size=
"2"><b>Derivative liabilities</b></font></p>
</td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size=
"2"><b>    Balance Sheet location    </b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Fair value  </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px" align="center">
<font face="Times New Roman" size=
"2"><b>    Balance Sheet location    </b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Fair value  </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Derivatives designated as hedging
instruments under SFAS 133:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest rate contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other current assets/ Other non-current
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">103  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accrued liabilities/ Other non-current
liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other current assets/ Other non-current
assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accrued liabilities/ Other non-current
liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives designated as hedging
instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">191  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Derivatives not designated as hedging
instruments under SFAS 133:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Foreign exchange contracts</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other current assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accrued liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives not designated as
hedging instruments under SFAS 133</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total derivatives</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">191  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Our foreign
exchange contracts that were in a liability position as of
June 30, 2009 contain certain credit risk related contingent
provisions that are triggered if (i) we were to undergo a
change in control and (ii) our or the surviving entity’s
creditworthiness deteriorates, which is generally defined as having
either a credit rating that is below investment grade or a
materially weaker creditworthiness after the change in control. If
these events were to occur, the counterparties would have the
right, but not the obligation, to close the contracts under early
termination provisions. In such circumstances, the counterparties
could request immediate settlement of these contracts for amounts
that approximate the then current fair values of the
contracts.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>11. Fair value
measurement</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In
determining the fair value of its financial assets and liabilities,
the Company uses various valuation approaches. SFAS 157 establishes
a hierarchy for inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use of unobservable
inputs by requiring that observable inputs be used when available.
Observable inputs are inputs that market participants would use in
pricing the asset or liability based on market data obtained from
sources independent of the Company. Unobservable inputs are inputs
that reflect the Company’s assumptions about the inputs that
market participants would use in pricing the asset or liability and
are developed based on the best information available in the
circumstances. The fair value hierarchy is broken down into three
levels based on the source of inputs as follows:</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="1%"></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td width="97%"></td>
</tr>
<tr>
<td valign="top" nowrap="nowrap">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 1</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Valuations
based on unadjusted quoted prices in active markets for identical
assets or liabilities that the Company has the ability to
access</font></p>
</td>
</tr>
<tr>
<td height="16"></td>
<td colspan="2" height="16"></td>
<td colspan="2" height="16"></td>
</tr>
<tr>
<td valign="top" nowrap="nowrap">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 2</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="top"><font face="Times New Roman" size=
"2">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Valuations
based on quoted prices for similar assets or liabilities in active
markets, quoted prices for identical or similar assets or
liabilities in markets that are not active and models for which all
significant inputs are observable, either directly or
indirectly</font></p>
</td>
</tr>
<tr>
<td height="16"></td>
<td colspan="2" height="16"></td>
<td colspan="2" height="16"></td>
</tr>
<tr>
<td valign="top" nowrap="nowrap">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Level 3</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">—</font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom">
<p align="justify"><font face="Times New Roman" size="2">Valuations
based on inputs that are unobservable and significant to the
overall fair value measurement.</font></p>
</td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The
availability of observable inputs can vary among the various types
of financial assets and liabilities. To the extent that the
valuation is based on models or inputs that are less observable or
unobservable in the market, the determination of fair value
requires more judgment. In certain cases, the inputs used to
measure fair value may fall into different levels of the fair value
hierarchy. In such cases, for financial statement disclosure
purposes, the level in the fair value hierarchy within which the
fair value measurement is categorized is based on the lowest level
input that is significant to the overall fair value
measurement.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Our
derivative assets and liabilities include interest rate swaps and
foreign currency forward and option contracts. The fair values of
these derivatives are determined using models based on market
observable inputs, including interest rate curves and both forward
and spot prices for foreign currencies.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
fair value hierarchy table presents information about each major
category of the Company’s financial assets and liabilities
measured at fair value on a recurring basis as of June 30,
2009 and December 31, 2008 (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="41%"></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
<td valign="bottom" width="11%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="11"><font face="Times New Roman" size="2"><b>Fair
value measurement at June 30, 2009 using:</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="2"><b>Quoted prices in<br />
    active markets for    </b></font><br />
<font face="Times New Roman" size=
"2"><b>identical assets</b></font><br />
<font face="Times New Roman" size="2"><b>(Level
1)</b></font></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Significant other<br />
    observable inputs    <br />
(Level 2)</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="2"><b>Significant<br />
    unobservable    <br />
inputs</b></font><br />
<font face="Times New Roman" size="2"><b>(Level
3)</b></font></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Total        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Available-for-sale
securities:</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom" colspan="7"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">U.S. Treasury securities</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,273  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,273  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size=
"2">Obligations of U.S. government agencies
and FDIC guaranteed bank debt</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,127  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,127  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Corporate debt securities</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,950  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,950  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size=
"2">Mortgage and asset backed securities</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">334  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">334  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top" nowrap="nowrap">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size=
"2">Other short-term interest bearing securities</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,614  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">470  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,084  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Equity securities</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">71  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,958  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7,881  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,839  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">191  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">191  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 4em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,958  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">8,072  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,030  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 2em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 4em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">95  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="88%"></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
<td valign="bottom" width="1%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="11"><font face="Times New Roman" size="2"><b>Fair
value measurement at December 31, 2008 using:</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Quoted prices in<br />
  active markets for  <br />
identical assets<br />
(Level 1)</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Significant other<br />
  observable inputs  <br />
(Level 2)</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font size="+0"><font face="Times New Roman"
size="2"><b>Significant<br />
    unobservable    <br />
inputs</b></font><br />
<font face="Times New Roman" size=
"2"><b>(Level 3)</b></font></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Total        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Available-for-sale securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,575  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,927  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,502  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  415  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  415  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3,575  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6,342  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,917  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Derivatives</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">66  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">66  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 5em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">66  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">66  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">There were no
material remeasurements to fair value during the six months ended
June 30, 2009 and 2008 of assets and liabilities that are not
measured at fair value on a recurring basis.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px" align="justify">
<font face="Times New Roman" size="2">Following is a summary of the
fair value of other financial instruments:</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%">
<font face="Times New Roman" size="2"><i>Short-term assets and
liabilities</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The fair
values of cash equivalents, accounts receivable and accounts
payable approximate their carrying values due to the short-term
nature of these financial instruments.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; MARGIN-LEFT: 8%">
<font face="Times New Roman" size="2"><i>Notes</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table presents the carrying value and fair value information for
our convertible notes, modified convertible notes and other
long-term notes. The fair values shown are based on significant
other observable inputs (Level 2) (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
<font size="+0"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"2"><b>June 30, 2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Carrying value  </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Fair value        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2011 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,273  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,427  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2013 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,028  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,234  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2017 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,099  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,200  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2014 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,055  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2009 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,013  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2019 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">998  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,091  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2039 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">995  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,080  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2037 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">899  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">965  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2018 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">499  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">560  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2038 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">498  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">573  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2032 Modified Convertible
Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">82  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">60  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">112  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">11,471  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12,370  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"2"><b>December 31, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Carrying value  </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Fair value        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2011 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,206  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,300  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2013 Convertible Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,970  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,080  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2017 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,099  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,140  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2014 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">994  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2009 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,017  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2037 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">899  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">948  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2018 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">499  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">536  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2038 Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">498  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">567  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">2032 Modified Convertible
Notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">81  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">58  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">100  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">111  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
<font size="+0"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,352  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9,751  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td valign="bottom"><font size="+0">  </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
<font size="+0"> </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
</div>
2589000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>3. Income taxes</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The effective
tax rates for the three and six months ended June 30, 2009 and
June 30, 2008 are different from the statutory rate primarily
as a result of indefinitely invested earnings of our foreign
operations. In addition, the effective tax rate for the three and
six months ended June 30, 2009 was further reduced by
favorable resolution of certain non-routine transfer pricing
matters with the Internal Revenue Service (“IRS”) for
prior periods. We do not provide for U.S. income taxes on
undistributed earnings of our foreign operations that are intended
to be invested indefinitely outside the United States.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">One or more
of our legal entities file income tax returns in the U.S. federal
jurisdiction, various U.S. state jurisdictions and certain foreign
jurisdictions. Our income tax returns are routinely audited by the
tax authorities in those jurisdictions. Significant disputes can
arise with these tax authorities involving issues of the timing and
amount of deductions, the use of tax credits and allocations of
income among various tax jurisdictions because of differing
interpretations of tax laws and regulations. We are no longer
subject to U.S. federal income tax examinations for years ending on
or before December 31, 2004 or to California state income tax
examinations for years ending on or before December 31,
2003.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The IRS is
currently examining our U.S. income tax returns for the years ended
December 31, 2005 and 2006. As of June 30, 2009, the
Company and the IRS have agreed to certain non-routine transfer
pricing adjustments and the Company has accordingly adjusted its
liability for unrecognized tax benefits (“UTBs”). The
remainder of this examination is currently anticipated to be
completed in 2009.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">During the
three and six months ended June 30, 2009, the gross amount of
our UTBs increased approximately $55 million and $145 million,
respectively, as a result of tax positions taken during the current
year. During the six months ended June 30, 2009, the gross
amount of our UTBs decreased approximately $170 million primarily
as a result of resolving certain non-routine transfer pricing
matters related to prior periods. The majority of our UTBs as of
June 30, 2009, if recognized, would affect our effective tax
rate.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">As of
June 30, 2009, we believe that it is reasonably possible that
our gross liabilities for UTBs may decrease by approximately $100
million within the succeeding twelve months due to potential tax
settlements.</font></p>
</div>
301000000
48000000
108000000
-79000000
-50000000
-355000000
48000000
297000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 9 Repeat_Hdr_End * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>8. Inventories</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Inventories
consisted of the following (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="92%"></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
<td valign="bottom" width="2%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>      June 30,      <br />
2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    December 31,    <br />
2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Raw materials</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">121  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">112  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Work in process</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,371  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,519  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Finished goods</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">569  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">444  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,061  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,075  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
</tbody>
</table>
</div>
98000000
-1442000000
2538000000
2288000000
<div>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 8%"
align="justify"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>2. Change in method of accounting for
convertible debt instruments</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">As discussed
in Note 1, <i>“Summary of significant accounting policies -
Change in method of accounting for convertible debt
instruments,”</i> effective January 1, 2009, we adopted
FSP APB 14-1 and, as required by this new standard, we
retrospectively applied this change in accounting to all prior
periods for which we had applicable outstanding convertible
debt.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
illustrates the impact of adopting FSP APB 14-1 on the Condensed
Consolidated Statements of Income for the three and six months
ended June 30, 2009 and 2008 and on the Condensed Consolidated
Balance Sheets as of June 30, 2009 and December 31, 2008
(in millions, except per share information):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="58%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size=
"2"><b>        Three months
ended June 30,
2009        </b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Excluding the  <br />
effect of FSP<br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Effect of FSP  <br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    Including the  <br />
effect of FSP<br />
APB 14-1</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,457  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,457  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">62   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">150  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest and other income,
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">50  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">50  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income before income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,419  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(62)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,357  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Provision for income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">111  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(23)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,308  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(39)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,269  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Earnings per share:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.29  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.04)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.25  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.29  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.04)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.25  </font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="9" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size="2"><b>Three
months ended June 30, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size="2"><b>As
originally<br />
reported</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Effect of FSP<br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>“Revised”</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,179  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,179  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">79  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">58   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">137  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest and other income,
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">88  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income before income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,188  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(58)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,130  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Provision for income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">247  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(23)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">224  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">941  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(35)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">906  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Earnings per share:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.87  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.03)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.84  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.87  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.03)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.84  </font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="9" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size="2"><b>Six
months ended June 30, 2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Excluding the<br />
effect of FSP<br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Effect of FSP<br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Including the<br />
effect of FSP<br />
APB 14-1</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,778  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,778  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">174  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">123   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">297  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest and other income,
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">108  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">108  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income before income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,712  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(123)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,589  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Provision for income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">347  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(46)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">301  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,365  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(77)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,288  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Earnings per share:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.31  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.07)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.24  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.30  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.07)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.23  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="85%"></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
<td valign="bottom" width="3%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size="2"><b>Six
months ended June 30, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  As originally  <br />
reported</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Effect of FSP  <br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  “Revised”  </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Operating income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,594  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,594  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest expense, net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">171  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">115   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">286  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Interest and other income,
net</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">202  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">202  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income before income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,625  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(115)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,510  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Provision for income taxes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">548  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(44)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">504  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,077  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(71)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,006  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Earnings per share:</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.92  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.07)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.85  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.91  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(0.06)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.85  </font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="9" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size=
"2"><b>June 30, 2009</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Excluding the<br />
  effect of FSP APB  <br />
14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Effect of FSP  <br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Including the</b></font><br />
<font face="Times New Roman" size=
"2"><b>  effect of FSP APB  </b></font><br />
<font face="Times New Roman" size="2"><b>14-1</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Non-current assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,239   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(14)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,225   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Non-current
liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Convertible notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,082   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(699)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,383   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other non-current liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,198   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">263   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,461   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Stockholders’
equity:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Common stock and additional paid-in
capital</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">25,806   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">914   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,720   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accumulated deficit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(4,931)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(492)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5,423)  </font></td>
</tr>
<tr>
<td height="16"></td>
<td colspan="9" height="16"></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="8"><font face="Times New Roman" size=
"2"><b>December 31, 2008</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size="2"><b>As
originally<br />
reported</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>  Effect of FSP  <br />
APB 14-1</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>“Revised”</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Non-current assets:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other assets</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,016   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(16)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,000   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Non-current
liabilities:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Convertible notes</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5,081   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(824)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4,257   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other non-current liabilities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,995   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">309   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,304   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2"><b>Stockholders’
equity:</b></font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Common stock and additional paid-in
capital</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">25,527   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">914   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">26,441   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Accumulated deficit</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5,258)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(415)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(5,673)  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The effect of
FSP APB 14-1 on other non-current liabilities reflects the impact
of deferred taxes. In addition, the effect of FSP APB 14-1 on
common stock and additional paid-in capital reflects, principally,
the impact of the equity component of our convertible debt
partially offset by deferred taxes.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">As a result
of the accounting change, our accumulated deficit as of
January 1, 2008, increased from $7.2 billion as originally
reported, to $7.4 billion after applying FSP APB 14-1. There was no
impact resulting from this accounting change on our cash flows from
operating activities, investing activities or financing activities
as reflected in the Condensed Consolidated Statements of Cash
Flows.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 8 Repeat_Hdr_Start * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
 </p>
</div>
108000000
2778000000
111000000
54000000
149000000
32000000
1997000000
7483000000
0
256000000
18000000
1980000000
964000000
5365000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>5. Related party
transactions</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We own a 50%
interest in KA, a corporation formed in 1984 with Kirin Holdings
Company, Limited (“Kirin”) for the development and
commercialization of certain products based on advanced
biotechnology. We account for our interest in KA under the equity
method and include our share of KA’s profits or losses in
“Selling, general and administrative” in the Condensed
Consolidated Statements of Income. During the three and six months
ended June 30, 2009, our share of KA’s profits was $17
million and $36 million, respectively. During the three and six
months ended June 30, 2008, our share of KA’s profits
was $17 million and $31 million, respectively. As of June 30,
2009 and December 31, 2008, the carrying value of our equity
method investment in KA, net of dividends paid, was $392 million
and $356 million, respectively, and is included in non-current
“Other assets” in the Condensed Consolidated Balance
Sheets. KA’s revenues consist of royalty income related to
its licensed technology rights. All of our rights to manufacture
and market certain products, including darbepoetin alfa,
pegfilgrastim, granulocyte colony-stimulating factor
(“G-CSF”) and recombinant human erythropoietin, are
pursuant to exclusive licenses from KA, which we currently market
under the brand names Aranesp®, Neulasta®, NEUPOGEN®
and EPOGEN®, respectively. KA receives royalty income from us,
as well as from Kirin, J&J and F. Hoffmann-La Roche Ltd.
(“Roche”) under separate product license agreements for
certain geographic areas outside of the United States. During the
three and six months ended June 30, 2009, KA earned royalties
from us of $81 million and $152 million, respectively. During the
three and six months ended June 30, 2008, KA earned royalties
from us of $83 million and $158 million, respectively. These
amounts are included in “Cost of sales (excludes amortization
of certain acquired intangible assets)” in the Condensed
Consolidated Statements of Income. As of June 30, 2009 and
December 31, 2008, we owed KA $88 million and $82 million,
respectively, which were included in “Accrued
liabilities” in the Condensed Consolidated Balance
Sheets.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">KA’s
expenses primarily consist of costs related to R&D activities
conducted on its behalf by Amgen and Kirin. KA pays Amgen and Kirin
for such services at negotiated rates. During the three and six
months ended June 30, 2009, we earned revenues from KA of $25
million and $54 million, respectively, for certain R&D
activities performed on KA’s behalf. During the three and six
months ended June 30, 2008, we earned revenues from KA of $27
million and $59 million, respectively, for certain R&D
activities performed on KA’s behalf. These amounts are
included in “Other revenues” in the Condensed
Consolidated Statements of Income.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<!-- 8 Repeat_Hdr_Start * DO NOT REMOVE OR EDIT -->
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center">
 </p>
</div>
0
1326000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>6. Restructuring</b></font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
August 15, 2007, we announced a plan to restructure our
worldwide operations in order to improve our cost structure. This
restructuring plan was primarily the result of regulatory and
reimbursement developments that began in 2007 involving
erythropoiesis-stimulating agent (“ESA”) products,
including our marketed ESA products Aranesp<font face=
"Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">®</sup></font>
and EPOGEN<font face="Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">®</sup></font>
, and the resulting impact on our operations. Key components of our
restructuring plan initially included: (i) worldwide staff
reductions, (ii) rationalization of our worldwide network of
manufacturing facilities and, to a lesser degree, changes to
certain R&D capital projects and (iii) abandoning leases
primarily for certain R&D facilities that will not be used in
our operations. Subsequently, we identified certain additional
initiatives designed to further assist in improving our cost
structure, including outsourcing certain non-core business
functions, most notably certain of our information systems’
infrastructure services, as well as abandoning leases for certain
additional facilities that will no longer be used in our
operations. As of March 31, 2009, we have completed all of the
actions and incurred all related costs initially included in our
restructuring plan. As of June 30, 2009, we currently estimate
that we will incur an additional $15 million to $30 million of
costs, including related implementation costs, with respect to the
subsequently identified initiatives.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Through
June 30, 2009, we have incurred $942 million of costs related
to the above-noted actions. The charges included $217 million of
separation costs, $473 million of asset impairments, $148 million
of accelerated depreciation and $104 million of other net charges,
which primarily include $161 million of loss accruals for leases,
$10 million loss on the disposal of certain less significant
marketed products, $29 million for implementation costs associated
with certain cost saving initiatives and $19 million of other
charges, offset by $115 million of cost recoveries from
Wyeth.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
tables summarize the charges (credits) recorded during the three
and six months ended June 30, 2009 and 2008 related to the
above-noted actions by type of activity (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="55%"></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
<td valign="bottom" width="8%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Three months ended June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    Separation    <br />
costs</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>Asset<br />
    impairments    </b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Other        </b></font></td>
<td valign="bottom"><font size="1"> </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Total        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of sales (excludes amortization of
certain acquired intangible assets)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">    $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">R&D</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">SG&A</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other charges</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">24   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">36   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Three months ended June 30,
2008</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">R&D</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other charges</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">21   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">9   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">22   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Six months ended June 30,
2009</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of sales (excludes amortization of
certain acquired intangible assets)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">R&D</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(3)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">5   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">SG&A</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(2)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">19   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">17   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other charges</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">6   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">55   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom"
nowrap="nowrap">
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 1px"><font face=
"Times New Roman" size="2"><b>Six months ended June 30,
2008</b></font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom" colspan="2"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Cost of sales (excludes amortization of
certain acquired intangible assets)</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1   </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">R&D</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3   </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">SG&A</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-         </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1)  </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(1)  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Other charges</font></p>
</td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">14   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">13   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">31   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top"></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">7   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">15   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">12   </font></td>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">34   </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom"> </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table summarizes the charges and spending relating to the
restructuring plan (in millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="63%"></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
<td valign="bottom" width="10%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    Separation    <br />
costs</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Other        </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>        Total        </b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restructuring reserves as of January 1,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">$</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">162   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">166  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Expense</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">29   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">20   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">49  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Payments</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(6)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(43)  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">(49) </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Restructuring reserves as of June 30,
2009</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">27   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">139   </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">166  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The Company
records restructuring activities in accordance with SFAS 88,
“<i>Employers’ Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination
Benefits,”</i> SFAS 144, “<i>Accounting for the
Impairment or Disposal of Long-Lived Assets”</i> and SFAS
146, “<i>Accounting for Costs Associated with Exit or
Disposal Activities</i>.”</font></p>
</div>
7021000000
6872000000
1708000000
123000000
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px" align="center"></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>1. Summary of significant accounting
policies</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Business</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Amgen Inc. is
a global biotechnology company that discovers, develops,
manufactures and markets human therapeutics based on advances in
cellular and molecular biology.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Basis of presentation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The financial
information for the three and six months ended June 30, 2009
and 2008 is unaudited but includes all adjustments (consisting of
only normal recurring adjustments, unless otherwise indicated),
which Amgen Inc., including its subsidiaries (referred to as
“Amgen,” “the Company,” “we,”
“our” or “us”), considers necessary for a
fair presentation of the results of operations for those periods.
Interim results are not necessarily indicative of results for the
full fiscal year.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The condensed
consolidated financial statements should be read in conjunction
with our consolidated financial statements and the notes thereto
contained in our Annual Report on Form 10-K for the year ended
December 31, 2008.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Change in method of accounting for
convertible debt instruments</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Effective
January 1, 2009, we adopted Financial Accounting Standards
Board’s (“FASB”) Staff Position
(“FSP”) No. APB 14-1, “<i>Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)”</i>
(“FSP APB 14-1”) and, as required by this new 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, including our 2011
Convertible Notes, 2013 Convertible Notes and 2032 Modified
Convertible Notes, are included in “Common stock and
additional paid-in capital” in the Condensed 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. See Note
2, “<i>Change in method of accounting for convertible debt
instruments</i>” and Note 9, “<i>Financing
arrangements</i>.”</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Principles of
consolidation</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The condensed
consolidated financial statements include the accounts of Amgen as
well as its wholly owned subsidiaries. We do not have any
significant interests in any variable interest entities. All
material intercompany transactions and balances have been
eliminated in consolidation.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Use of estimates</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The
preparation of condensed consolidated financial statements in
conformity with accounting principles generally accepted in the
United States (“GAAP”) requires management to make
estimates and assumptions that affect the amounts reported in the
condensed consolidated financial statements and accompanying notes.
Actual results may differ from those estimates.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Fair value measurement</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We adopted
the provisions of the FASB’s Statement of Financial
Accounting Standards (“SFAS”) No. 157,
“<i>Fair Value Measurements</i>” (“SFAS
157”), effective January 1, 2008, for financial assets
and liabilities and effective January 1, 2009, with respect to
the fair value measurement requirements for non-financial assets
and liabilities that are not remeasured on a recurring basis. Under
this standard, fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability (i.e.,
the “exit price”) in an orderly transaction between
market participants at the measurement date. The adoption of SFAS
157 did not have a material impact on our condensed consolidated
results of operations, financial position or cash flows.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">During the
three months ended June 30, 2009, we adopted the provisions of
the FASB’s FSP SFAS No. 115-2 and SFAS 124-2,
“<i>Recognition and Presentation of Other-Than-Temporary
Impairments</i>” (“FSP SFAS 115-2 and SFAS
124-2”). FSP SFAS 115-2 and SFAS 124-2 modifies the guidance
to determine whether the impairment of a debt security is
other-than-temporary. This new standard also amends the
presentation and disclosure requirements of other-than-temporarily
impaired debt and equity securities in the financial statements.
The adoption of FSP SFAS 115-2 and SFAS 124-2 did not have a
material impact on our condensed consolidated results of
operations, financial position or cash flows.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">During the
three months ended June 30, 2009, we adopted the provisions of
the FASB’s FSP SFAS No. 157-4, “<i>Determining
Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly</i>” and FASB’s FSP SFAS
No. 107-1 and APB 28-1, “<i>Interim Disclosures About
Fair Value of Financial Instruments.</i>” The adoption of
these FSP’s resulted in additional interim disclosures and
did not have a material impact on our condensed consolidated
results of operations, financial position or cash flows.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Derivative instruments</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Effective
January 1, 2009, we adopted the provisions of the FASB’s
SFAS No. 161, “<i>Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB
Statement No. 133</i>” (“SFAS 161”) for our
derivative instruments. SFAS 161 requires that the objectives for
using derivative instruments be disclosed to better convey the
purpose of derivative use in terms of the risks that we are
intending to manage. This new standard also requires disclosure of
how derivatives and related hedged items affect our financial
statements. The adoption of SFAS 161 did not have a material impact
on our condensed consolidated results of operations, financial
position or cash flows. See Note 12, <i>“Derivative
instruments.”</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Inventories</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Inventories
are stated at the lower of cost or market. Cost, which includes
amounts related to materials, labor and overhead, is determined in
a manner which approximates the first-in, first-out
(“FIFO”) method.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Property, plant and equipment,
net</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Property,
plant and equipment are recorded at historical cost, net of
accumulated depreciation of $4.4 billion and $4.1 billion as of
June 30, 2009 and December 31, 2008,
respectively.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Goodwill</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Goodwill
principally relates to the acquisition of Immunex Corporation
(“Immunex”). We perform an impairment test annually and
whenever events or changes in circumstances indicate that the
carrying amount of goodwill may not be recoverable.</font></p>
<p style="MARGIN-TOP: 18px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Product sales</i></font></p>
<p style="MARGIN-TOP: 6px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Product sales
primarily consist of sales of Aranesp® (darbepoetin alfa),
EPOGEN® (Epoetin alfa), Neulasta® (pegfilgrastim),
NEUPOGEN® (Filgrastim) and Enbrel®
(etanercept).</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Sales of our
products are recognized when shipped and title and risk of loss
have passed. Product sales are recorded net of accruals for
estimated rebates, wholesaler chargebacks, discounts and other
incentives (collectively “sales incentives”) and
returns. Taxes assessed by government authorities on the sale of
the Company’s products, primarily in Europe, are excluded
from revenues.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">We have the
exclusive right to sell Epoetin alfa for dialysis, certain
diagnostics and all non-human, non-research uses in the United
States. We sell Epoetin alfa under the brand name EPOGEN®. We
granted to Ortho Pharmaceutical Corporation (which has assigned its
rights under the product license agreement to Ortho Biotech
Products, L.P. (“Ortho Biotech”)), a subsidiary of
Johnson & Johnson (“J&J”), a license
relating to Epoetin alfa for sales in the United States for all
human uses except dialysis and diagnostics. This license agreement,
which is perpetual, may be terminated for various reasons,
including upon mutual agreement of the parties, or default. The
parties are required to compensate each other for Epoetin alfa
sales that either party makes into the other party’s
exclusive market, sometimes referred to as “spillover.”
Accordingly, we do not recognize product sales we make into the
exclusive market of J&J and do recognize the product sales made
by J&J into our exclusive market. Sales in our exclusive market
are derived from our sales to our customers, as adjusted for
spillover. We are employing an arbitrated audit methodology to
measure each party’s spillover based on estimates of and
subsequent adjustments thereto of third-party data on shipments to
end users and their usage.</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Research and development
costs</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Research and
development (“R&D”) costs are expensed as incurred
and primarily include salaries, benefits and other staff-related
costs; facilities and overhead costs; clinical trial and related
clinical manufacturing costs; contract services and other outside
costs; information systems’ costs and amortization of
acquired technology used in R&D with alternative future uses.
R&D expenses also include costs incurred under R&D
arrangements with our corporate partners, such as activities
performed on behalf of Kirin-Amgen Inc. (“KA”), and
costs and cost recoveries associated with collaborative R&D and
in-licensing arrangements, including upfront fees and milestones
paid to collaboration partners in connection with technologies that
have no alternative future use. Net payment or reimbursement of
R&D costs for R&D collaborations is recognized when the
obligations are incurred or as we become entitled to the cost
recovery.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Selling, general and administrative
costs</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Selling,
general and administrative (“SG&A”) expenses are
primarily comprised of salaries, benefits and other staff-related
costs associated with sales and marketing, finance, legal and other
administrative personnel; facilities and overhead costs; outside
marketing, advertising and legal expenses and other general and
administrative costs.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">SG&A
expenses include costs and cost recoveries associated with certain
collaborative arrangements. Net payment or reimbursement of
SG&A costs for collaborations is recognized when the
obligations are incurred or as we become entitled to the cost
recovery.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Subsequent events</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In May 2009,
the FASB issued SFAS No. 165, “<i>Subsequent
Events</i>”, (“SFAS 165”). SFAS 165 is effective
for financial statements ending after June 15, 2009, and we
adopted SFAS 165 during the three months ended June 30, 2009.
SFAS 165 establishes general standards of accounting for and
disclosure of subsequent events that occur after the balance sheet
date. Entities are also required to disclose the date through which
subsequent events have been evaluated. We have evaluated subsequent
events through the date of issuance of our financial statements in
this Form 10-Q.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Recent accounting
pronouncements</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In June 2009,
the FASB issued SFAS No. 167, “<i>Amendments to FASB
Interpretation No. 46(R)</i>” (“SFAS 167”),
which amends guidance regarding consolidation of variable interest
entities to address the elimination of the concept of a qualifying
special purpose entity. SFAS 167 also replaces the
quantitative-based risks and rewards calculation for determining
which enterprise has a controlling financial interest in a variable
interest entity with an approach focused on identifying which
enterprise has the power to direct the activities of the variable
interest entity, and the obligation to absorb losses of the entity
or the right to receive benefits from the entity. Additionally,
SFAS 167 requires any enterprise that holds a variable interest in
a variable interest entity to provide enhanced disclosures that
will provide users of financial statements with more transparent
information about an enterprise’s involvement in a variable
interest entity. SFAS 167 is effective for interim and annual
reporting periods beginning after November 30, 2009. We are
currently evaluating the potential impact of SFAS 167 on our
financial statements.</font></p>
<p style=
"MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; PADDING-BOTTOM: 3px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In June 2009,
the FASB issued SFAS No. 168 “<i>The FASB Accounting
Standards Codification<font face="Times New Roman" size=
"1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">™</sup></font>
and the Hierarchy of Generally Accepted Accounting
Principles—a replacement of FASB Statement
No. 162</i>” (“SFAS 168”), which will be
effective for interim and annual periods ending after
September 15, 2009. The FASB Accounting Standards Codification
(“Codification”) will become the source of
authoritative GAAP recognized by the FASB. Rules and interpretive
releases of the Securities and Exchange Commission
(“SEC”) under authority of federal securities laws
continue to be sources of authoritative GAAP for SEC registrants.
All existing FASB accounting standards and guidance are superseded
as described in SFAS 168. Subsequently, instead of issuing new
accounting standards in the form of statements, FASB staff
positions, and Emerging Issues Task Force (“EITF”)
abstracts, the FASB will issue Accounting Standards Updates that
will update the Codification. Adoption of the Codification will not
have a significant impact on our financial statements.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>10. Stockholders’
equity</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>Stock repurchase
programs</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">A summary of
activity under our stock repurchase programs for the three and six
months ended June 30, 2009 and 2008 is as follows (in
millions):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="61%"></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td valign="bottom" width="6%"></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="4"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="Times New Roman" size=
"2"><b>    Shares    </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    Dollars    </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle"><font face="Times New Roman" size=
"2"><b>    Shares    </b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>    Dollars    </b></font></td>
<td valign="bottom"><font size="1"> </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">First quarter</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37.5  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,997  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-       </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Second quarter</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">-      </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">32.7  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,549  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(1)</sup></font><font face="Times New Roman"
size="2"> </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td> </td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Total</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">37.5  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,997  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">32.7  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,549  </font></td>
<td valign="bottom" nowrap="nowrap"><font face="Times New Roman"
size="2">  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td> </td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 6px; MARGIN-BOTTOM: 0px">
 </p>
<p style=
"MARGIN-TOP: 0px; MARGIN-BOTTOM: 2px; WIDTH: 15%; LINE-HEIGHT: 8px; BORDER-BOTTOM: #000000 0.5pt solid">
 </p>
<table style="BORDER-COLLAPSE: collapse" cellspacing="0"
cellpadding="0" width="100%" border="0">
<tbody>
<tr>
<td valign="top" align="left" width="4%"><font face=
"Times New Roman" size="1"><sup style=
"VERTICAL-ALIGN: baseline; BOTTOM: 0.8ex; POSITION: relative">(1)</sup></font></td>
<td valign="top" align="left">
<p align="justify"><font face="Times New Roman" size="2">The total
cost of shares repurchased during the three and six months ended
June 30, 2008 excludes approximately $19.1 million paid in
July 2008 in connection with the final settlement of an accelerated
share repurchase program (“ASR’) entered into in May
2008.</font></p>
</td>
</tr>
</tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">As of
June 30, 2009, $2.2 billion remained available for stock
repurchases as authorized by our Board of Directors. The manner of
purchases, the amount we spend and the number of shares repurchased
will vary based on a variety of factors, including the stock price,
blackout periods in which we are restricted from repurchasing
shares, and our credit rating and may include private block
purchases as well as market transactions.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><i>2009 Equity Incentive
Plan</i></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">On
May 6, 2009, the stockholders approved the Amgen Inc. 2009
Equity Incentive Plan (the “2009 Plan”) for
non-employee members of our Board of Directors, the employees and
consultants of Amgen, its subsidiaries and affiliates. After
May 6, 2009, no further awards may be made under our existing
equity plans. The 2009 Plan authorizes the issuance of 100,000,000
shares, subject to reduction for awards granted under our existing
plans after December 31, 2008 through May 6, 2009. To the
extent any awards granted under existing plans after
December 31, 2008 or any awards granted under the 2009 Plan
expire, or are forfeited without the issuance of shares, or are
settled for cash in lieu of shares, the shares subject to such
awards will be added back into the pool of available shares in
accordance with the terms of the 2009 Plan.</font></p>
</div>
<div>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>14. Other charges</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">In the three
and six months ended June 30, 2009, we recorded loss accruals
for settlements of certain commercial legal proceedings aggregating
$20 million. In the three and six months ended June 30, 2008,
we recorded loss accruals for settlements of certain commercial
legal proceedings aggregating $263 million, principally related to
the settlement of the Ortho Biotech antitrust suit. Such expenses
are included in “Other charges” in the Condensed
Consolidated Statements of Income.</font></p>
</div>
1027000000
1023000000
1008000000
<div>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px"><font face=
"Times New Roman" size="2"><b>4. Earnings per share</b></font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Basic
earnings per share (“EPS”) is based upon the
weighted-average number of common shares outstanding. Diluted EPS
is based upon the weighted-average number of common shares and
dilutive potential common shares outstanding. Potential common
shares outstanding principally include stock options, restricted
stock (including restricted stock units) and other equity awards
under our employee compensation plans and potential issuance of
stock upon the assumed conversion of our 2011 Convertible Notes,
2013 Convertible Notes and 2032 Modified Convertible Notes, as
discussed below, and upon the assumed exercise of our warrants
using the treasury stock method (collectively “Dilutive
Securities”). The convertible note hedges purchased in
connection with the issuance of our 2011 Convertible Notes and 2013
Convertible Notes are excluded from the calculation of diluted EPS
as their impact is always anti-dilutive.</font></p>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">Our 2011
Convertible Notes, 2013 Convertible Notes and 2032 Modified
Convertible Notes are considered Instrument C securities as defined
by EITF No. 90-19 “<i>Convertible Bonds with Issuer
Option to Settle for Cash upon Conversion.</i>” Therefore,
only the shares of common stock potentially issuable with respect
to the excess of the notes’ conversion value over their
principal amount or accreted value, if any, are considered as
dilutive potential common shares for purposes of calculating
diluted EPS. For the three and six months ended June 30, 2009
and 2008, the conversion values for our convertible notes were less
than the related principal amounts or accreted value and,
accordingly, no shares were assumed to be issued for purposes of
computing diluted EPS. For further information regarding our
convertible notes, see Note 9, “<i>Financing
arrangements</i>.”</font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px"><font size=
"1"> </font></p>
<p style="MARGIN-TOP: 0px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">The following
table sets forth the computation for basic and diluted EPS (in
millions, except per share information):</font></p>
<p style="MARGIN-TOP: 0px; FONT-SIZE: 12px; MARGIN-BOTTOM: 0px">
 </p>
<table cellspacing="0" cellpadding="0" width="100%" align="center"
border="0"><!-- 5 First_Row * DO NOT REMOVE OR EDIT -->
<tbody>
<tr>
<td width="69%"></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
<td valign="bottom" width="4%"></td>
<td></td>
<td></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"2"><b>      Three months ended<br />
June 30,</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="5"><font face="Times New Roman" size=
"2"><b>      Six months ended      <br />
June 30,</b></font></td>
</tr>
<tr>
<td valign="bottom"><font size="1"> </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>2009</b></font></td>
<td valign="bottom"><font size="1">  </font></td>
<td style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" align=
"middle" colspan="2"><font face="Times New Roman" size=
"2"><b>2008</b></font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Income (Numerator):</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Net income for basic and diluted
EPS</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,269  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">906  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,288  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2,006  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Shares (Denominator):</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Weighted-average shares for basic
EPS</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,013  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,078  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,023  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,083  </font></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Effect of Dilutive Securities</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">4  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">3  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 1px solid" valign="bottom">
 </td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 3em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Weighted-average shares for diluted
EPS</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,017  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  1,081  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">  1,027  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2"> </font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1,086  </font></td>
</tr>
<tr style="FONT-SIZE: 1px">
<td valign="bottom"></td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td valign="bottom">  </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
<td style="BORDER-TOP: #000000 3px double" valign="bottom">
 </td>
</tr>
<tr>
<td height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
<td colspan="3" height="16"></td>
</tr>
<tr bgcolor="#CCEEFF">
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Basic EPS</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.25  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.84  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.24  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.85  </font></td>
</tr>
<tr>
<td valign="top">
<p style="MARGIN-LEFT: 1em; TEXT-INDENT: -1em"><font face=
"Times New Roman" size="2">Diluted EPS</font></p>
</td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.25  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">0.84  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">2.23  </font></td>
<td valign="bottom"><font size="1">  </font></td>
<td valign="bottom"><font face="Times New Roman" size=
"2">  $</font></td>
<td valign="bottom" align="right"><font face="Times New Roman"
size="2">1.85  </font></td>
</tr>
<!-- 6 Last_Row * DO NOT REMOVE OR EDIT --></tbody>
</table>
<p style="MARGIN-TOP: 12px; MARGIN-BOTTOM: 0px; TEXT-INDENT: 8%"
align="justify"><font face="Times New Roman" size="2">For the three
and six months ended June 30, 2009, there were employee stock
options, calculated on a weighted average basis, to purchase
51 million and 48 million shares, respectively, with
exercise prices greater than the average market prices of common
stock for these periods that are not included in the computation of
diluted EPS as their impact would have been anti-dilutive. For both
the three and six months ended June 30, 2008, there were
employee stock options, calculated on a weighted average basis, to
purchase 53 million shares with exercise prices greater than
the average market prices of common stock for these periods that
are not included in the computation of diluted EPS as their impact
would have been anti-dilutive. In addition, shares which may be
issued upon conversion of our convertible debt or upon exercise of
our warrants are not included in any of the periods presented above
as their impact on diluted EPS would have been anti-dilutive.
Shares which may be issued under our 2007 and 2009 performance
award programs were also excluded for the applicable periods
because conditions under the programs were not met.</font></p>
</div>
97000000
147000000
-12000000
0000318154
2009-01-01
2009-06-30
0000318154
2008-01-01
2008-06-30
0000318154
2009-04-01
2009-06-30
0000318154
2008-04-01
2008-06-30
0000318154
2008-12-31
0000318154
2007-12-31
0000318154
2009-06-30
0000318154
2008-06-30
0000318154
2009-08-03
shares
iso4217:USD
iso4217:USD
shares