Amazon.com 2000 Annual Report Download - page 57

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Activity in the Company’s equity-method investments and other equity investments for the years ended
December 31, 1999 and 2000, is as follows:
Equity-
Method
Investments
Other
Equity
Investments Total
(in thousands)
Balance, January 1, 1999 .............................. $ 7,740 $ 0 $ 7,740
Cash investments ................................ 281,969 80,329 362,298
Fair value of equity securities received in non-cash
transactions .................................. — 54,402 54,402
Equity-method losses, net ......................... (76,769) — (76,769)
Basis adjustments for public offerings or acquisitions of
investees by a third party ........................ 13,787 — 13,787
Unrealized gains on available-for-sale investments, net .... — 10,004 10,004
Balance, December 31, 1999 ........................... 226,727 144,735 371,462
Cash investments ................................ 48,091 13,485 61,576
Fair value of equity securities received in non-cash
transactions .................................. 80,190 26,658 106,848
Equity-method losses, net ......................... (304,596) — (304,596)
Sales of investments ............................. (41) (9,163) (9,204)
Realized gains (losses) on sales of investments .......... (2,763) 8,156 5,393
Basis adjustments for public offerings or acquisitions of
investees by a third party ........................ 117,058 — 117,058
Non-cash loss, living.com bankruptcy ................. (14,092) — (14,092)
Non-cash losses for other-than-temporary declines in fair
value (see Note 3) ............................. — (100,726) (100,726)
Unrealized gains on available-for-sale investments, net .... — 693 693
Investment reclassifications, net, at fair value ........... (98,501) (43,661) (142,162)
Balance, December 31, 2000 ........................... $52,073 $ 40,177 $ 92,250
Three of the Company’s equity-method investees, HomeGrocer.com, Inc., Pets.com, Inc. and
drugstore.com, inc., completed public offerings of their common stock during 2000 and 1999. As a result of
those public offerings, the Company’s ownership percentage in each investee was diluted, creating an ‘‘implied
sale’’ of a portion of its investments. In accordance with Staff Accounting Bulletin No. 51 ‘‘Accounting for
Sales of Stock by a Subsidiary,’’ the Company recorded unrealized gains, net of unrealized losses, as additional
paid-in capital totaling $77 million and $14 million in 2000 and 1999, respectively. The unrealized gains, net
represent the difference between the Company’s carrying basis and the fair value of the portion of each
investment deemed to have been sold by the investees.
The Company recorded a non-cash gain of $40 million in connection with the September 2000 acquisition
of HomeGrocer.com, Inc. by an unrelated third-party, Webvan Group, Inc. This non-cash gain represents the
difference between the Company’s recorded basis in the common stock of HomeGrocer.com, Inc. prior to the
acquisition and the fair value of equity securities received from the acquiring company, Webvan Group, Inc.
The resulting investment is classified as available-for-sale at December 31, 2000 as the Company no longer has
the ability to exercise significant influence over the investee. This change in classification resulted in a
reclassification from ‘‘Investments in equity-method investees’’ of $82 million and $2 million to ‘‘Marketable
securities’’ and ‘‘Other equity investments,’’ respectively.
AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
49