Amazon.com 2001 Annual Report Download - page 69

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
investees. Such reclassifications are either to “Other equity investments” or “Marketable securities” depending
on the marketability of the investments and whether the Company had the intent to hold such investments for
over one year from the date of reclassification. During 2000, net reclassifications in “Other equity investments”
are a combination of reclassifications in from “Investments in equity method investees” and reclassifications out
to “Marketable securities” as the Company no longer had the intent to hold certain investments for over one year
from the date of reclassification.
At December 31, 2001 and 2000, “Other equity investments” included $3 million and $7 million of equity
securities and warrant investments recorded at fair value and $15 million and $33 million of equity securities
accounted for under the cost-method, respectively. Gross unrealized gains and losses were not significant at
December 31, 2001. At December 31, 2000 gross unrealized gains were zero and gross unrealized losses were
$3 million.
At December 31, 2001 and 2000, the Company’s investments in the common stock of publicly held equity-
method investees, at fair value, were $25 million and $12 million, respectively.
Note 6—UNEARNED REVENUE
Activity in unearned revenue was as follows (in thousands):
Balance, December 31, 1999 ................................................. $ 54,790
Cash received or cash receivable .......................................... 97,818
Fair value of equity securities received ..................................... 106,848
Amortization to revenue ................................................. (108,211)
Contract termination .................................................... (20,128)
Balance, December 31, 2000 ................................................. 131,117
Cash received or cash receivable .......................................... 114,738
Fair value of equity securities received ..................................... 331
Amortization to revenue ................................................. (135,808)
Contract termination .................................................... (22,400)
Balance, December 31, 2001 ................................................. $ 87,978
During 2001, the Company recognized previously unearned revenue associated with the termination of its
commercial agreement with Kozmo.com, which was included in “Other gains (losses), net” on the accompanying
consolidated statements of operations. Since services had not yet been performed under the contract, no amounts
associated with the Kozmo.com commercial agreement were previously recognized in “Net sales” on the
accompanying consolidated statements of operations during any period.
During 2000, living.com, Inc. declared bankruptcy and terminated its commercial agreement with the
Company. As a result, the Company recorded a net gain of $6 million, comprised of a $14 million loss
representing the Company’s remaining investment balance in living.com and a $20 million gain relating to the
unamortized portion of unearned revenue associated with the living.com commercial agreement. The gain and
the loss are recorded net and included in “Other gains (losses), net” on the accompanying consolidated
statements of operations.
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