Financing arrangements

6 Months Ended

Jun. 30, 2011

Financing arrangements [Abstract]

Financing arrangements

8. Financing arrangements

The carrying values and the fixed contractual coupon rates of our borrowings under our various financing arrangements were as follows (dollar amounts in millions):

	June 30,			December 31,
	2011			2010
0.125% convertible notes due 2011 (2011 Convertible Notes)	$	—		$	2,488
0.375% convertible notes due 2013 (2013 Convertible Notes)		2,279			2,213
5.65% notes due 2042 (2042 Notes)		1,244			—
5.85% notes due 2017 (2017 Notes)		1,099			1,099
4.85% notes due 2014 (2014 Notes)		1,000			1,000
5.70% notes due 2019 (2019 Notes)		998			998
4.10% notes due 2021 (2021 Notes)		997			—
6.40% notes due 2039 (2039 Notes)		996			996
6.375% notes due 2037 (2037 Notes)		899			899
3.45% notes due October 2020 (October 2020 Notes)		897			897
2.30% notes due 2016 (2016 Notes)		748			—
5.75% notes due 2040 (2040 Notes)		697			696
4.95% notes due 2041 (2041 Notes)		595			595
6.15% notes due 2018 (2018 Notes)		499			499
6.90% notes due 2038 (2038 Notes)		499			499
4.50% notes due March 2020 (March 2020 Notes)		300			300
Other notes including our zero coupon convertible notes		183			183
Total borrowings		13,930			13,362
Less current portion		(83	)		(2,488	)
Total non-current debt	$	13,847		$	10,874

The holders of our zero coupon convertible notes due in 2032 have the right to put the debt to us for repayment on March 1, 2012. Accordingly the debt is classified as a current liability as of June 30, 2011.

Debt repayments

In February 2011, the 2011 Convertible Notes became due, and we repaid the $2.5 billion aggregate principal amount. As these convertible notes were cash settleable, the debt and equity components of these notes were bifurcated and accounted for separately. The discounted carrying value of the debt component resulting from the bifurcation was accreted back to the principal amount over the period the notes were outstanding. The total aggregate amount repaid, including the amount related to the debt discount of $643 million resulting from the bifurcation, is included in Cash flows from financing activities in the Condensed Consolidated Statement of Cash Flows.

Warrants to acquire approximately 31.3 million shares of our common stock that were issued concurrent with the issuance of the 2011 Convertible Notes expired in May 2011.

Debt issuances

In June 2011, we issued $750 million principal amount of notes due in 2016 (the 2016 Notes), $1.0 billion principal amount of notes due in 2021 (the 2021 Notes) and $1.25 billion principal amount of notes due in 2042 (the 2042 Notes) in a registered offering. The 2016 Notes, 2021 Notes and 2042 Notes pay interest at fixed annual rates of 2.30%, 4.10% and 5.65%, respectively. These notes may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued interest and a “make-whole” amount, as defined. In the event of a change in control triggering event, as defined, we may be required to purchase all or a portion of these notes at a price equal to 101% of the principal amount of the notes plus accrued interest. Debt issuance costs incurred in connection with the issuance of this debt totaling approximately $17 million are being amortized over the respective lives of the notes, and the related charge is included in Interest expense, net in the Condensed Consolidated Statements of Income.

Shelf registration statement

In March 2011, we filed a shelf registration statement with the U.S. Securities and Exchange Commission (SEC) to replace an existing shelf registration statement that was scheduled to expire in April 2011. This shelf registration allows us to issue an unspecified amount of: debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depository shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depository shares. Under this registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance. This shelf registration expires in March 2014.