losses in principal if forced to sell securities that have declined in market value due to changes in interest rates. 

Foreign Exchange Risk 

During 2011, net sales from our International segment accounted for 44% of our consolidated revenues. Net sales and related expenses generated from our international websites, as well as those relating to www.amazon.ca (which is included in our North America segment), are denominated in the functional currencies of the corresponding websites and primarily include Euros, British Pounds, and Japanese Yen. The functional currency of our subsidiaries that either operate or support these websites is the same as the corresponding local currency. The results of operations of, and certain of our intercompany balances associated with, our internationally-focused websites are exposed to foreign exchange rate fluctuations. Upon consolidation, as 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 2011, International segment revenues increased $1.1 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 at December 31, 2011 of $4.1 billion, an assumed 5%, 10%, and 20% negative currency movement would result in fair value declines of $205 million, $405 million, and $815 million. All investments are classified as “available-for-sale.” Fluctuations in fair value are recorded in “Accumulated other comprehensive income (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 at December 31, 2011, an assumed 5%, 10%, and 20% adverse change to foreign exchange would result in losses of $55 million, $110 million, and $220 million, recorded to “Other income (expense), net.” 

See Item 7 of Part II, “Effect of Exchange Rates,” for additional information on the effect on reported results of changes in exchange rates. 

Investment Risk 

As of December 31, 2011, our recorded basis in equity investments was $266 million. These investments primarily relate to equity-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 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 difficult due to the lack of readily available market data. As such, we believe that market sensitivities are not practicable.