Amazon.com 2004 Annual Report Download - page 41

Pledged Securities
We are required to pledge a portion of our marketable securities as collateral for standby letters of credit that
guarantee certain of our contractual obligations and for real estate lease agreements. The amount required to be
pledged for real estate lease agreements changes over the life of our leases; with fluctuations in our market
capitalization, which is common shares outstanding multiplied by the closing price of our common stock; and
based on our credit-rating. The change in the total amount of collateral required to be pledged under these
agreements is as follows:
Standby
Letters of
Credit (1)
Line of
Credit (2)
Real Estate
Leases (3) Total
(in thousands)
Balance at December 31, 2003 ............................. $60,799 $ — $25,936 $ 86,735
Net change in collateral pledged ............................ (10,383) 1,933 (4,412) (12,862)
Balance at December 31, 2004 (4) .......................... $50,416 $1,933 $21,524 $ 73,873
(1) Pursuant to available standby letter-of-credit facilities totaling $151 million.
(2) Pursuant to an available line of credit totaling $10 million.
(3) The required amount of collateral to be pledged on certain of our real estate leases fluctuates based on our
market capitalization. At December 31, 2004, our market capitalization was $18.1 billion. If our market
capitalization decreases, the required amount of collateral to be pledged will increase $5 million (if market
capitalization is less than $18 billion but more than $13 billion) or $11 million (if our market capitalization
is less than $13 billion).
(4) Includes $10 million of cash equivalents pledged as collateral. See “Note 2—Cash, Cash Equivalents, and
Marketable Securities.”
We believe that current cash, cash equivalents, and marketable securities balances will be sufficient to meet
our anticipated operating cash needs for at least the next 12 months. However, any projections of future cash
needs and cash flows are subject to substantial uncertainty. See Item 1 of Part I “Business—Additional Factors
That May Affect Future Results.” We continually evaluate opportunities to sell additional equity or debt
securities, obtain credit facilities from lenders, repurchase common stock, pay dividends, or repurchase,
refinance, or otherwise restructure our long-term debt for strategic reasons or to further strengthen our financial
position. The sale of additional equity or convertible debt securities would likely be dilutive to our shareholders.
In addition, we will, from time to time, consider the acquisition of, or investment in, complementary businesses,
products, services, and technologies, which might affect our liquidity requirements or cause us to issue additional
equity or debt securities. There can be no assurance that lines-of-credit or financing instruments will be available
in amounts or on terms acceptable to us, if at all.
Results of Operations
We have organized our operations into two principal segments: North America and International. We
present our segment information along the same lines that our chief operating decision maker reviews our
operating results in assessing performance and allocating resources.
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