Amazon.com 2012 Annual Report Download - page 40

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• Operating income (loss) is expected to be between $(285) million and $65 million, compared to
$192 million in the prior year period.
• This guidance includes approximately $285 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.
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 and
our long-term debt. 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, 2012 (in millions, except percentages):
2013 2014 2015 2016 2017 Thereafter Total
Estimated
Fair Value at
December 31,
2012
Money market funds $5,561 $ — $ — $ — $ — $ — $5,561 $5,561
Weighted average interest rate 0.12% 0.00% 0.00% 0.00% 0.00% 0.00% 0.12%
Corporate debt securities 223 243 204 27 — — 697 725
Weighted average interest rate 0.45% 0.62% 0.84% 1.25% 0.00% 0.00% 0.65%
U.S. Government and Agency
Securities 771 561 433 20 5 — 1,790 1,810
Weighted average interest rate 0.30% 0.43% 0.65% 1.12% 1.00% 0.00% 0.43%
Asset backed securities 26 16 7 — — — 49 49
Weighted average interest rate 0.48% 0.69% 0.67% 0.00% 0.00% 0.00% 0.58%
Foreign government and agency
securities 141 228 340 30 — — 739 772
Weighted average interest rate 0.18% 0.10% 0.12% 0.06% 0.00% 0.00% 0.12%
Other securities 8 9 10 5 — — 32 33
Weighted average interest rate 0.88% 0.68% 0.80% 1.08% 0.00% 0.00% 0.83%
$6,730 $1,057 $ 994 $ 82 $ 5 $ — $8,868
Cash equivalents and
marketable fixed-income
securities $8,950
33