Amazon.com 2011 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2011 Amazon.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

• Operating income (loss) is expected to be between $(200) million and $100 million, or between 162%
decline and 69% decline compared with first quarter 2011.
• This guidance includes approximately $200 million for stock-based compensation and amortization of
intangible assets, and it assumes, among other things, that no additional business acquisitions or
investments are concluded and that there are no further revisions to stock-based compensation estimates.
These projections are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.”
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk for the effect of interest rate changes, foreign currency fluctuations, and
changes in the market values of our investments. Information relating to quantitative and qualitative disclosures
about market risk is set forth below and in Item 7 of Part II, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Interest Rate Risk
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. All of
our cash equivalent and marketable fixed income securities are designated as available-for-sale and, accordingly,
are presented at fair value on our consolidated balance sheets. We generally invest our excess cash in investment
grade short- to intermediate-term fixed income securities and AAA-rated money market funds. Fixed rate
securities may have their fair market value adversely affected due to a rise in interest rates, and we may suffer
losses in principal if forced to sell securities that have declined in market value due to changes in interest rates.
The following table provides information about our current and long-term cash equivalent and marketable
fixed income securities, including principal cash flows by expected maturity and the related weighted average
interest rates at December 31, 2011 (in millions, except percentages):
2012 2013 2014 2015 2016 Thereafter Total
Estimated
Fair Value at
December 31,
2011
Money market funds .................. $3,651 $ — $ — $ — $— $— $3,651 $3,651
Weighted average interest rate . . . 0.06% — — — — — 0.06%
Corporate debt securities ............... 140 280 124 1 — — 545 563
Weighted average interest rate . . . 1.46% 1.88% 2.01% 1.66% — — 1.80%
U.S . Government and Agency
Securities ......................... 1,390 963 179 31 — — 2,563 2,593
Weighted average interest rate . . . 0.12% 0.29% 0.63% 1.16% — — 0.23%
Asset backed securities ................ 23 26 5 — — — 54 55
Weighted average interest rate . . . 1.16% 1.13% 1.77% — — — 1.21%
Foreign government and agency
securities ......................... 782 279 450 81 — — 1,592 1,640
Weighted average interest rate . . . 0.17% 0.87% 0.91% 0.91% — — 0.54%
Other securities ...................... 11 6 4 — — — 21 22
Weighted average interest rate . . . 0.74% 0.75% 0.70% — — — 0.74%
$5,997 $1,554 $ 762 $ 113 $— $— $8,426
Cash equivalents and marketable fixed
-income securities .............. $8,524
32