Amazon.com 2007 Annual Report Download - page 83

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Depreciation expense, by segment, was as follows (in millions):
Year Ended December 31,
2007 2006 2005
North America .................................. $212 $166 $ 94
International .................................... 46 34 19
Consolidated ................................ $258 $200 $113
Note 14—FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying amount and estimated fair values of our financial instruments were as follows (in millions):
December 31,
2007 2006
Carrying
Amount Fair Value
Carrying
Amount Fair Value
Cash and cash equivalents .................................. $2,539 $2,539 $1,022 $1,022
Marketable securities (1) ................................... 573 573 997 997
Other equity investments (2) ................................ 17 43 19 51
Long-term debt (3) ........................................ 1,282 1,466 1,247 1,234
(1) The fair value of marketable securities is determined from publicly quoted prices. See “Note 2—Cash, Cash
Equivalents, and Marketable Securities.”
(2) The fair value of other equity investments is determined from publicly quoted prices, plus the carrying
amount of privately-held investments for which market values are not readily determinable. We evaluate
“Other equity investments” for impairment in accordance with our stated policy. See “Note 1—Description
of Business and Accounting Policies.”
(3) The fair value of our long-term debt is determined based on quoted prices. See “Note 4—Long-Term Debt.”
Note 15—QUARTERLY RESULTS (UNAUDITED)
The following tables contain selected unaudited statement of operations information for each quarter of
2007 and 2006. The following information reflects all normal recurring adjustments necessary for a fair
presentation of the information for the periods presented. The operating results for any quarter are not necessarily
indicative of results for any future period. Our business is affected by seasonality, which historically has resulted
in higher sales volume during our fourth quarter, which ends December 31.
Unaudited quarterly results were as follows (in millions, except per share data):
Year Ended December 31, 2007 (1)
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Net sales ..................................................... $5,673 $3,262 $2,886 $3,015
Gross profit ................................................... 1,170 762 701 719
Income before income taxes ...................................... 281 124 111 144
Provision for income taxes ....................................... 74 44 33 33
Net income ................................................... 207 80 78 111
Basic earnings per share ......................................... $ 0.50 $ 0.19 $ 0.19 $ 0.27
Diluted earnings per share ....................................... $ 0.48 $ 0.19 $ 0.19 $ 0.26
Shares used in computation of earnings per share:
Basic .................................................... 416 414 412 412
Diluted .................................................. 427 425 423 420
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