Amazon.com 2006 Annual Report Download - page 78

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 9—OTHER OPERATING EXPENSE (INCOME)
Other operating expense was $10 million in 2006, primarily attributable to amortization of other intangibles.
Other operating expense was $47 million in 2005, primarily attributable to our settlement of a patent lawsuit for
$40 million, as well as amortization of other intangibles of $5 million. Other operating income was $8 million for
2004, which includes restructuring-related credits, net, of $9 million, and amortization of other intangibles of $1
million.
During 2004, we determined that certain of the office space previously vacated as part of our 2001
restructuring was necessary for our future needs. We reduced our restructuring-related liability resulting in a gain
of $13 million for 2004. Lease payments for this office space are expensed over the lease period and classified to
the corresponding operating expense categories on the consolidated statements of operations.
In 2004, we streamlined our organizational structure in France to reduce our operating costs. This reduction
resulted in severance costs of $4 million classified in “Other operating expense (income)” on our consolidated
statements of operations.
Note 10—OTHER INCOME (EXPENSE), NET
Other income (expense), net, was $(4) million, $2 million, and $(5) million, in 2006, 2005 and 2004, and
consisted primarily of gains and losses on sales of marketable securities, foreign-currency transaction gains and
losses, and other miscellaneous losses.
Foreign-currency transaction gains and losses primarily relate to the interest payable on our 6.875%
PEACS, as well as foreign-currency gains and losses on cross-currency investments. Since interest payments on
our 6.875% PEACS are settled in Euros, the balance of interest payable is subject to gains or losses resulting
from changes in exchange rates between the U.S. Dollar and Euro between reporting dates and payment.
Note 11—REMEASUREMENTS AND OTHER
Remeasurements and other consisted of the following:
Year Ended December 31,
2006 2005 2004
(in millions)
Foreign-currency gain (loss) on remeasurement of 6.875% PEACS ...... $(37) $ 90 $(65)
Loss on redemption of long-term debt ............................. (6) (6) (6)
Foreign-currency gain (loss) on intercompany balances ............... 50 (47) 41
Other ....................................................... 4 5 29
Total remeasurements and other .............................. $11 $42 $ (1)
70