Amazon.com 2005 Annual Report Download - page 64

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other Assets
Included in “Other assets” on our consolidated balance sheets are amounts primarily related to deferred
issuance charges on our long-term debt, which are amortized over the life of the debt; certain equity investments;
and intangible assets, net of amortization. At December 31, 2005, and 2004, deferred issuance charges were $13
million, and $19 million; equity investments were $8 million and $15 million; and intangibles, net of
amortization, were $11 million, and $5 million.
Other intangibles, included within “Other assets,” consist of the following:
December 31,
2005 2004
Other
Intangibles (1)
Accumulated
Amortization (1)
Other
Intangibles,
Net (2)
Other
Intangibles (1)
Accumulated
Amortization (1)
Other
Intangibles,
Net
(in millions)
Marketing-related ...... $ 4 $ (1) $ 3 $ 3 $— $ 3
Contract-based ........ 2 — 2 3 (1) 2
Technology-based ..... 7 (3) 4 — — —
Customer-related ...... 4 (2) 2 — — —
Other intangibles . . $17 $ (6) $11 $ 6 $ (1) $ 5
(1) Excludes the original cost and accumulated amortization of fully-amortized intangibles.
(2) The net carrying amount of intangible assets at December 31, 2005 is scheduled to be fully amortized over
the next three years as follows: $6 million in 2006; $4 million in 2007; $1 million in 2008. The weighted-
average amortization period is 2 years based on useful life assumptions between one and four years.
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 any period
presented. We do not hold over 20% interest in any of our investees as of December 31, 2005 or 2004.
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,” a separate component of Stockholders’ Equity (Deficit).
We generally invest our excess cash in investment grade short to intermediate term fixed income securities
and AAA-rated 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.” 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.
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