Amazon.com 2007 Annual Report Download - page 70

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In 2006 and 2005, we redeemed principal amounts of €250 million and €200 million ($300 million and $265
million based on the Euro to U.S. Dollar exchange rate on the date of redemption) of our outstanding 6.875%
PEACS. As a result of these redemptions, in 2006 and 2005 we recorded a charge classified in “Remeasurements
and other,” of approximately $6 million and $4 million related to the redemption, consisting of $3 million and
$2 million in unamortized deferred issuance charges and $3 million and $2 million relating to unrealized losses
on our terminated currency swap that previously hedged a portion of our 6.875% PEACS.
Based upon quoted market prices, the fair value of the 6.875% PEACS was $358 million and $320 million
(outstanding principal of €240 million) as of December 31, 2007 and 2006.
Debt Repurchase Authorization
In February 2008 our Board of Directors authorized a debt repurchase program, replacing our previous debt
repurchase authorization in its entirety, pursuant to which we may from time to time repurchase (through open
market repurchases or private transactions), redeem, or otherwise retire up to an aggregate of all of our
outstanding 4.75% Convertible Subordinated Notes and 6.875% PEACS. The outstanding principal of our 4.75%
Convertible Subordinated Notes as of this authorization was $899 million, and the outstanding principal amount
of our 6.875% PEACS was €240 million.
Note 5—OTHER LONG-TERM LIABILITIES
Our other long-term liabilities are summarized as follows:
December 31,
2007 2006
(in millions)
Tax contingencies ...................................................... $ 98 $ 75
Long-term capital lease obligations ........................................ 62 20
Construction liability .................................................... 15 —
Other ................................................................ 117 58
$292 $153
Tax Contingencies
As of December 31, 2007 and 2006, we have provided tax reserves for tax contingencies of approximately
$98 million and $75 million for U.S. and foreign income taxes, which primarily relate to restructuring of certain
foreign operations and intercompany pricing between our subsidiaries. See “Note 12—Income Taxes” for
discussion of tax contingencies.
Capital Leases
Certain of our equipment fixed assets, primarily related to technology, have been acquired under capital
leases. Long-term capital lease obligations were as follows:
December 31,
2007
(in millions)
Gross capital lease obligations ....................................................... $101
Less imputed interest .............................................................. (13)
Present value of net minimum lease payments ........................................... 88
Less current portion ............................................................... (26)
Total long-term capital lease obligations ............................................... $ 62
62