Amazon.com 2001 Annual Report Download - page 38

using discounted estimates of future cash flows. At December 31, 2001 the carrying amount of assets held for
disposal was not significant.
Continuing lease obligations primarily relate to heavy equipment previously used in the McDonough,
Georgia fulfillment center, vacated corporate office space, technology infrastructure no longer being utilized, and
the unutilized portion of our back-up data center. We are actively seeking third parties to sub-lease abandoned
equipment and facilities. Amounts expensed represent estimates of undiscounted future cash outflows, offset by
anticipated third-party sub-leases. At December 31, 2001, we remain obligated under gross lease obligations of
$121 million associated with our operational restructuring and we anticipate receiving sub-lease income of
$68 million to offset these obligations, of which $17 million is to be received under non-cancelable subleases.
Given the uncertainty of estimating future sub-lease rentals, actual results may differ from estimates which may
result in significant additional expenses for us and corresponding net cash outflow above amounts expected.
Termination benefits are comprised of severance-related payments for all employees terminated in
connection with the operational restructuring, as well as $2.5 million of our common stock contributed to a trust
fund for the benefit of terminated employees. Termination benefits do not include any amounts for employment-
related services prior to termination. Other restructuring costs include professional fees, decommissioning costs
of vacated facilities, broker commissions and other miscellaneous expenses directly attributable to the
restructuring.
At December 31, 2001, the accrued liability associated with the restructuring-related and other charges was
$61 million and consisted of the following (in thousands):
Balance at
March 31,
2001
Subsequent
Accruals,
net
Non-Cash
Settlements
and Other
Adjustments Payments
Balance at
December 31,
2001
Due Within
12 Months
Due After
12 Months
Lease obligations ................. $34,667 $52,738 $(2,675) $(31,543) $53,187 $35,578 $17,609
Termination benefits .............. 8,445 113 (2,354) (6,143) 61 61 —
Broker commissions, professional fees
and other miscellaneous
restructuring costs .............. 4,121 5,052 1,559 (2,542) 8,190 5,159 3,031
$47,233 $57,903 $(3,470) $(40,228) $61,438 $40,798 $20,640
Cash payments resulting from our operational restructuring during 2001 were $49 million. We anticipate the
restructuring charges will result in the following net cash outflows (in thousands):
Leases
Termination
Benefits Other Total
Year Ending December 31,
2002 ................................................ $35,578 $ 61 $5,159 $40,798
2003 ................................................ 5,476 — 3,031 8,507
2004 ................................................ 2,016 — — 2,016
2005 ................................................ 1,983 — — 1,983
2006 ................................................ 2,068 — — 2,068
Thereafter ........................................... 6,066 — — 6,066
Total estimated cash outflows ................................ $53,187 $ 61 $8,190 $61,438
During 2000, we identified certain levels of impairment corresponding with the business-unit goodwill and
other intangibles initially recorded in connection with the following acquisitions: Alexa Internet, Back to Basics
Toys, Inc., Livebid, Inc., and the catalog and Internet assets of Acme Electric Motor Co. (Tool Crib).
Accordingly, we recorded an impairment loss of $184 million. Also during 2000, we recorded an impairment loss
of $11 million relating to the decline in fair value, measured using discounted estimates of future cash flows, of
29