Amazon.com 2004 Annual Report Download - page 50

Other Income (Expense), Net
Other income (expense), net consisted of the following:
Year Ended December 31,
2004 2003 2002
(in thousands)
Gains on sales of marketable securities, net ..................... $ 586 $9,598 $ 5,700
Foreign-currency transaction losses, net ....................... (5,214) (3,043) (1,086)
Other miscellaneous gains (losses), net ........................ (73) (41) 309
Total other income (expense), net ........................ $(4,701) $ 6,514 $ 4,923
Foreign-currency transaction losses primarily relate to the interest payable on our 6.875% PEACS. Since
these payments are settled in Euros, the balance of interest payable (which is paid annually in February) is
subject to gains or losses resulting from changes in exchange rates between the U.S. Dollar and Euro between
reporting dates and payment.
Remeasurements and Other
Remeasurements and other consisted of the following:
Year Ended December 31,
2004 2003 2002
(in thousands)
Foreign-currency losses on remeasurement of 6.875%
PEACS (1) ....................................... $(65,375) $(140,130) $(103,136)
Gains on sales of Euro-denominated investments, net ........ 9,469 5,827 2,227
Gains on sales of equity investments, net ................. 15,406 796 13,044
Loss on redemption of long-term debt .................... (5,672) (23,829) —
Loss on termination of Euro Currency Swap (2) ............ — (5,880) —
Foreign-currency effect on intercompany balances (3) ....... 40,883 35,574 —
Other-than-temporary impairments and other (4) ........... 4,465 (2,455) (12,577)
Total remeasurements and other .................... $ (824) $(130,097) $(100,442)
(1) Each period the remeasurement of our 6.875% PEACS from Euros to U.S. Dollars results in gains or losses
recorded to “Remeasurements and other” on our consolidated statements of operations.
(2) Represents the remaining basis at date of termination of our Euro Currency Swap that previously was
designated as a cash flow hedge of a portion of our 6.875% PEACS principal and interest.
(3) Represents the gains associated with the remeasurement of intercompany balances due to changes in foreign
exchange rates. See “Item 8 of Part II—Financial Statements—Note 1—Description of Business and
Accounting Policies.”
(4) Included in 2004 is a gain of $6 million relating to the settlement of a contractual dispute, and included in
2003 and 2002 is $0.4 million and $4 million of losses from equity-method investees. No equity-method
losses or income were recorded in 2004.
Income Taxes
We record a tax provision or benefit for current and deferred U.S. federal, state, and foreign income taxes
for all periods presented, classified as “Provision (benefit) for income taxes” on the consolidated statements of
operations.
We periodically evaluate the likelihood of the realization of deferred tax assets, and reduce the carrying
amount of these deferred tax assets by a valuation allowance to the extent we believe a portion will not be
realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets,
42