Amazon.com 2004 Annual Report Download - page 66

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other intangibles, included within “Other assets,” consist of the following:
December 31,
2004 2003
Other
Intangibles,
Gross (1)
Accumulated
Amortization (1)
Other
Intangibles,
Net (2)
Other
Intangibles,
Gross (1)
Accumulated
Amortization (1)
Other
Intangibles,
Net
(in thousands)
Marketing-related ......... $3,204 $(304) $2,900 $ 5,617 $ (5,326) $291
Contract-based ............ 2,503 (196) 2,307 — — —
Technology-based ......... 220 (66) 154 4,386 (4,360) 26
Customer-related .......... — — — 2,021 (1,820) 201
Other intangibles ...... $5,927 $(566) $5,361 $12,024 $(11,506) $518
(1) Excludes the original cost and accumulated amortization of fully-amortized intangibles.
(2) The net carrying amount of intangible assets at December 31, 2004 is scheduled to be fully amortized over
the next four years as follows: $2 million in 2005; $1 million in 2006; $1 million in 2007; and $1 million in
2008. The weighted-average amortization period is 3.4 years based on useful life assumptions between one
and four years.
The increase in net other intangibles in 2004 primarily relates to the acquisition of Joyo.com.
Investments
The initial carrying cost of our investments is the price we paid. Investments are accounted for using the
equity method of accounting if the investment gives us the ability to exercise significant influence, but not
control, over an investee. We classify our investments in equity-method investees on the consolidated balance
sheets as “Other assets” and our share of the investees’ earnings or losses as “Remeasurements and other” on the
consolidated statements of operations. Losses from equity-method investees were not significant for 2004, 2003,
and 2002. We do not hold over 20% interest in any of our investees as of December 31, 2004 or 2003.
All other equity investments, which consist of investments for which we do not have the ability to exercise
significant influence, are accounted for under the cost method. Under the cost method of accounting, investments
in private companies are carried at cost and are adjusted only for other-than-temporary declines in fair value,
distributions of earnings, and additional investments. For public companies that have readily determinable fair
values, we classify our equity investments as available-for-sale and, accordingly, record these investments at
their fair values with unrealized gains and losses, net of tax, included in “Accumulated other comprehensive
income (loss),” a separate component of Stockholders’ Deficit.
We generally invest our excess cash in “A” rated or higher short- to intermediate-term fixed income
securities and money market mutual funds. Such investments are included in “Cash and cash equivalents,” or
“Marketable securities” on the accompanying consolidated balance sheets and are reported at fair value with
unrealized gains and losses included in “Accumulated other comprehensive income (loss).” The weighted
average method is used to determine the cost of Euro-denominated securities sold and the specific identification
method is used to determine the cost of all other securities.
We periodically evaluate whether declines in fair values of our investments are other-than-temporary. This
evaluation consists of a review of qualitative and quantitative factors, including quoted market prices, if
available; recent financial results and operating trends; other publicly available information; implied values from
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