Amazon.com 2006 Annual Report Download - page 81

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 13—SEGMENT INFORMATION
We have organized our operations into two principal segments: North America and International. We
present our segment information along the same lines that our chief executive reviews our operating results in
assessing performance and allocating resources.
We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and
content,” and “General and administrative,” but exclude from our allocations the portions of these expense lines
attributable to stock-based compensation. Additionally, we do not allocate the line item “Other operating expense
(income)” to our segment operating results. A significant majority of our costs for “Technology and content” are
incurred in the United States and most of these costs are allocated to our North America segment. There are no
internal revenue transactions between our reporting segments.
North America
The North America segment consists of amounts earned from retail sales of consumer products (including
from third-party sellers) and subscriptions through North America-focused websites such as www.amazon.com,
www.amazon.ca, www.shopbop.com, and www.endless.com; from our mail-order tool catalog phone orders; from
our Amazon Prime membership program; and from non-retail activities such as North America-focused Amazon
Enterprise Solutions, marketing, and promotional agreements. This segment includes export sales from
www.amazon.com and www.amazon.ca.
International
The International segment consists of amounts earned from retail sales of consumer products (including
from third-party sellers) and subscriptions through internationally focused websites such as www.amazon.co.uk,
www.amazon.de,www.amazon.co.jp,www.amazon.fr, and since September 2004, www.joyo.com; from our DVD
rental service and from non-retail activities such as internationally focused marketing and promotional
agreements. This segment includes export sales from these internationally based sites (including export sales
from these sites to customers in the U.S. and Canada), but excludes export sales from www.amazon.com and
www.amazon.ca.
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