Amazon.com 2003 Annual Report Download - page 79

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 11—OTHER INCOME (EXPENSE), NET
Other income (expense), net consisted of the following (in thousands):
Years Ended December 31,
2003 2002 2001
Gains on sales of marketable securities, net ................................ $9,598 $5,700 $1,335
Foreign-currency transaction losses, net (1) ............................... (3,045) (1,086) (2,019)
Miscellaneous state, foreign and other taxes ............................... (3,704) 700 (1,222)
Other miscellaneous gains (losses), net ................................... (41) 309 6
Total other income (expense), net ................................... $2,808 $5,623 $(1,900)
(1) Includes a loss of $5 million and $2 million for 2003 and 2002, and a gain of $0.2 million for 2001
associated with the remeasurement from Euros to U.S. Dollars of interest obligations on our 6.875%
PEACS. See “Note 6—Long-Term Debt and Other.”
Note 12—REMEASUREMENT OF 6.875% PEACS AND OTHER
Remeasurement of 6.875% PEACS and other consisted of the following (in thousands):
Years Ended December 31,
2003 2002 2001
Foreign-currency gain (loss) on 6.875% PEACS ........... $(140,130) $(103,136) $ 46,613
Gain (loss) on sales of Euro-denominated investments, net . . . 5,827 2,227 (22,548)
Gain on sales of equity investments, net .................. 796 13,044 —
Gain from terminations of commercial contracts ........... — — 22,400
Net gain from acquisition of investments by third parties ..... — — 784
Loss on redemption of long-term debt (See Note 6) ......... (23,829) — —
Loss on termination of Euro Currency Swap (See Note 6) .... (5,880) — —
Amortization of net unrealized losses on Euro Currency Swap
(SeeNote6) ...................................... (1,127) — —
Foreign currency effect on intercompany balances (1) ....... 35,574 — —
Other-than-temporary impairments and other (2) ........... (892) (8,408) (49,390)
Total remeasurement of 6.875% PEACS and other ...... $(129,661) $ (96,273) $ (2,141)
(1) Represents the gain associated with the remeasurement of intercompany balances due to changes in foreign
exchange rates (See “Note 1—Description of Business and Accounting Policies” ).
(2) Includes a $2 million gain on the sale of our mail-order toy catalog business for $5 million in cash recorded
in the third quarter of 2003.
Note 13—INCOME TAXES
We have provided for current and deferred U.S. federal, state, and foreign income taxes for the current and
all prior periods presented. Current and deferred income taxes were provided with respect to jurisdictions where
our subsidiaries produce taxable income. As of December 31, 2003, we have recorded a net deferred tax asset of
$2 million, which consists primarily of certain state jurisdiction net operating loss carryforwards. We have
provided a valuation allowance for the remainder of our deferred tax asset, consisting primarily of net operating
loss carryforwards, because of uncertainty regarding its realization. The increase in the valuation allowance on
the deferred tax asset was $131 million and $196 million for 2003 and 2002.
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