Amazon.com 2015 Annual Report Download - page 45

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The fair value of our debt will fluctuate with movements of interest rates, increasing in periods of declining rates of
interest and declining in periods of increasing rates of interest. Based upon quoted market prices and Level 2 inputs, the fair
value of our total debt was $8.8 billion as of December 31, 2015.
Foreign Exchange Risk
During 2015, net sales from our International segment accounted for 33% of our consolidated revenues. Net sales and
related expenses generated from our internationally-focused websites, and from www.amazon.ca and www.amazon.com.mx
(which are included in our North America segment), are primarily denominated in the functional currencies of the
corresponding websites and primarily include Euros, Japanese Yen, and British Pounds. The results of operations of, and certain
of our intercompany balances associated with, our internationally-focused websites and AWS are exposed to foreign exchange
rate fluctuations. Upon consolidation, as foreign exchange rates vary, net sales and other operating results may differ materially
from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances. For
example, as a result of fluctuations in foreign exchange rates during 2015, International segment revenues decreased by $5.0
billion in comparison with the prior year.
We have foreign exchange risk related to foreign-denominated cash, cash equivalents, and marketable securities (“foreign
funds”). Based on the balance of foreign funds as of December 31, 2015, of $7.3 billion, an assumed 5%, 10%, and 20%
adverse change to foreign exchange would result in fair value declines of $365 million, $730 million, and $1.5 billion. All
investments are classified as “available-for-sale.” Fluctuations in fair value are recorded in “Accumulated other comprehensive
loss,” a separate component of stockholders’ equity.
We have foreign exchange risk related to our intercompany balances denominated in various foreign currencies. Based on
the intercompany balances as of December 31, 2015, an assumed 5%, 10%, and 20% adverse change to foreign exchange
would result in losses of $190 million, $405 million, and $905 million, recorded to “Other income (expense), net.”
See Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—
Results of Operations—Effect of Foreign Exchange Rates” for additional information on the effect on reported results of
changes in foreign exchange rates.
Investment Risk
As of December 31, 2015, our recorded basis in equity investments was $280 million. These investments primarily relate
to equity-method and cost-method investments in private companies. We review our investments for impairment when events
and circumstances indicate that the decline in fair value of such assets below the carrying value is other-than-temporary. Our
analysis includes a review of recent operating results and trends, recent sales/acquisitions of the investee securities, and other
publicly available data. The current global economic climate provides additional uncertainty. Valuations of private companies
are inherently more complex due to the lack of readily available market data. As such, we believe that market sensitivities are
not practicable.