Amazon.com 2008 Annual Report Download - page 37

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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, 2008 consisted of $308 million included 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, 2007............................ $138 $ 60 $13 $211
Net change in collateral pledged .......................... — 100 (3) 97
Balance at December 31, 2008............................ $138 $160 $10 $308
(1) Represents collateral for certain debt related to our international operations.
(2) At December 31, 2008, our market capitalization was $22.0 billion. The required amount of collateral to be
pledged will increase by $5 million if our market capitalization is equal to or below $18.0 billion and by an
additional $6 million if our market capitalization is equal to or below $13.0 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.
Results of Operations
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. Our period-over-period revenue growth was 26% in 2006, 39%
in 2007 and 36% for the first three quarters of 2008. For Q4 2008, our quarterly revenue growth rate declined to
18%, driven primarily by decreased consumer demand following disruptions in the global financial markets and
changes in foreign exchange rates (excluding the $320 million unfavorable impact from year-over-year changes
in foreign exchange rates throughout the fourth quarter, net sales would have grown 24% compared with Q4
2007). See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 14—Quarterly Results
(Unaudited).”
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