Amazon.com 2007 Annual Report Download - page 38

Item 8 of Part II, “Financial Statements and Supplementary Data—Note 6—Commitments and
Contingencies—Commitments.”
(3) Includes commitments to acquire intellectual property and unrecognized tax benefits under FIN 48, but
excludes $105 million of such unrecognized tax benefits for which we cannot make a reasonably reliable
estimate of the amount and period of payment. See Item 8 of Part II, “Financial Statements and
Supplementary Data—Note 12—Income Taxes.”
(4) Consists of legally-binding commitments to purchase inventory and significant non-inventory commitments.
In January 2008 we closed or entered into agreements, subject to regulatory approvals and other conditions,
to acquire or invest in certain companies. These acquisitions and investments result in aggregate cash payments
of approximately $400 million, net of cash acquired.
Pledged Securities
We are required to pledge or otherwise restrict a portion of our cash and marketable securities as collateral
for standby letters of credit, guarantees, debt, and real estate leases. We classify cash and marketable securities
with use restrictions of twelve months or longer as non-current “Other assets” on our consolidated balance
sheets. The balance of pledged securities at December 31, 2007 consisted of $14 million in “Cash and cash
equivalents” and “Marketable securities,” and $197 million in “Other assets.” The amount required to be pledged
for certain real estate lease agreements changes over the life of our leases based on our credit rating and changes
in our market capitalization (common shares outstanding multiplied by the closing price of our common stock).
Information about collateral required to be pledged under these agreements is as follows:
Standby and Trade
Letters of Credit
and Guarantees Debt (1)
Real Estate
Leases (2) Total
(in millions)
Balance at December 31, 2006............................ $ 60 $56 $20 $136
Net change in collateral pledged .......................... 78 4 (7) 75
Balance at December 31, 2007............................ $138 $60 $13 $211
(1) Represents collateral for certain debt related to our international operations.
(2) At December 31, 2006, our market capitalization was $38.6 billion. The required amount of collateral to be
pledged will increase by $5 million if our market capitalization is equal to or below $18 billion and by an
additional $6 million if our market capitalization is equal to or below $13 billion.
We believe that current cash, cash equivalents, and marketable securities balances will be sufficient to meet
our anticipated operating cash needs for at least the next 12 months. However, any projections of future cash
needs and cash flows are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.” We continually
evaluate opportunities to sell additional equity or debt securities, obtain credit facilities, repurchase common
stock, pay dividends, or repurchase, refinance, or otherwise restructure our long-term debt for strategic reasons or
to further strengthen our financial position. The sale of additional equity or convertible debt securities would
likely be dilutive to our shareholders. In addition, we will, from time to time, consider the acquisition of, or
investment in, complementary businesses, products, services, and technologies, which might affect our liquidity
requirements or cause us to issue additional equity or debt securities. There can be no assurance that additional
lines-of-credit or financing instruments will be available in amounts or on terms acceptable to us, if at all.
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