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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
our subsidiaries that either operate or support www.amazon.co.uk, www.amazon.de, www.amazon.fr,
www.amazon.co.jp, www.amazon.ca, and www.joyo.com is the same as the local currency of the United
Kingdom, Germany, France, Japan, Canada, and China. Assets and liabilities of these subsidiaries are translated
into U.S. Dollars at period-end exchange rates, and revenues and expenses are translated at average rates
prevailing throughout the period. Translation adjustments are included in “Accumulated other comprehensive
income (loss),” a separate component of stockholders’ equity, and in the “Effect of exchange-rate changes on
cash and cash equivalents,” on our consolidated statements of cash flows. Transaction gains and losses arising
from transactions denominated in a currency other than the functional currency of the entity involved are
included in “Other income (expense), net” on our consolidated statements of operations. See “Note 10—Other
Income (Expense), Net.”
Gains and losses arising from intercompany foreign currency transactions are included in net income. Our
international operations are financed, in part, by the U.S. parent company. In connection with the remeasurement
of intercompany balances, we recorded a gain of $50 million in 2006, a loss of $47 million 2005, and a gain of
$41 million in 2004.
Recent Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. (FIN) 48,
Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109, which prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 will be
effective beginning in the first quarter of 2007. We estimate the cumulative effect of adopting FIN 48 to be
immaterial to the consolidated financial statements.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Note 2—CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
The following tables summarize, by major security type, our cash and marketable securities (in millions):
December 31, 2006
Cost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses (1)
Estimated
Fair Value
Cash ................................................. $ 118 $— $— $ 118
Money market funds .................................... 763 — — 763
Bank of certificates of deposits ............................ 50 — — 50
Corporate debt securities ................................. 420 — (1) 419
U.S. government and agency securities ...................... 208 1 (2) 207
Asset-backed securities .................................. 348 — (1) 347
Equity and other securities ................................ 113 3 (1) 115
Total cash, cash equivalents, and marketable securities (2) .... $2,020 $ 4 $ (5) $2,019
(1) The fair value of investments with loss positions was $978 million. We evaluated the nature of these
investments, which are primarily U.S. Treasury Notes, the duration of the impairments (substantially all less
than twelve months), and concluded that such amounts were not “other-than-temporary.”
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