Other Income (Expense), Net
Other income (expense), net, consists primarily of foreign currency gains and losses of $(95) million, $64 million, and $75 million in
2012, 2011, and 2010, and realized gains and losses on marketable securities sales of $10 million, $4 million, and $1 million in 2012, 2011, and 2010.
We have internationally-focused websites for the United
Kingdom, Germany, France, Japan, Canada, China, Italy, Spain, and Brazil. Net sales generated from these websites, as well as most of the related expenses directly incurred from those operations, are denominated in the functional currencies
of the resident countries. The functional currency of our subsidiaries that either operate or support these websites is the same as the local currency. Assets and liabilities of these subsidiaries are translated into U.S. Dollars at period-end
exchange rates, and revenues and expenses are translated at average rates prevailing throughout the period. Translation adjustments are included in Accumulated other comprehensive income (loss), a separate component of stockholders
equity, and in the Foreign-currency effect on cash and cash equivalents, on our consolidated statements of cash flows. Transaction gains and losses including intercompany transactions denominated in a currency other than the functional
currency of the entity involved are included in Other income (expense), net on our consolidated statements of operations. In connection with the settlement and remeasurement of intercompany balances, we recorded gains (losses) of $(95)
million in 2012 and $70 million in both 2011 and 2010.
Recent Accounting Pronouncements
In 2011, the Financial Accounting Standards Board (FASB) issued two Accounting Standard Updates (ASU), which amend
guidance for the presentation of comprehensive income. The amended guidance requires an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or
in two separate, but consecutive statements. The option to report other comprehensive income and its components in the statement of stockholders equity has been eliminated. Although the new guidance changes the presentation of comprehensive
income, there are no changes to the components that are recognized in net income or other comprehensive income under existing guidance. We adopted these ASUs using two consecutive statements for all periods presented.
Note 2CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES
As of December 31, 2012 and 2011, our cash, cash equivalents, and marketable securities primarily consisted of
cash, U.S. and foreign government and agency securities, AAA-rated money market funds, and other investment grade securities. Our marketable fixed-income securities have effective maturities of less than 5 years. Cash equivalents and marketable
securities are recorded at fair value. The following table summarizes,