Amazon.com 2001 Annual Report Download - page 39

certain fixed assets. The fixed-asset impairment amount included $4 million, $3 million and $4 million of
computers, equipment and software; leasehold improvements; and leased assets, respectively.
Other costs associated with our acquisition-related activities were $5 million and $8 million for 2000 and
1999, respectively. No such amounts were recorded during 2001.
Loss from Operations
Our loss from operations was $412 million, $864 million and $606 million for 2001, 2000 and 1999,
respectively. The improvement in operating loss for 2001 in comparison with the prior period was primarily due
to an increase in gross profit; a reduction in certain operating costs including fulfillment, marketing, technology
and content, and general and administrative; and declines in charges such as amortization of goodwill and other
intangibles.
Net Interest Expense and Other
Net interest expense and other, excluding “Other gains (losses), net,” was $112 million, $100 million and
$37 million for 2001, 2000 and 1999, respectively. Interest income was $29 million, $41 million and $45 million
for 2001, 2000 and 1999, respectively. Interest expense was $139 million, $131 million and $85 million for 2001,
2000 and 1999. Other income and expense, consisting primarily of realized gains and losses on sales of
marketable securities, miscellaneous state and foreign taxes and certain realized foreign-currency related
transactional gains and losses, was an expense of $2 million and $10 million for 2001 and 2000, respectively, and
a gain of $2 million for 1999. Interest income relates primarily to interest earned on fixed income securities and
correlates with the average balance of those investments and prevailing interest rates. The increase in interest
expense during 2001 in comparison with 2000 is primarily related to our February 2000 issuance of the 6.875%
PEACS. Other components of interest expense include our February 1999 issuance of $1.25 billion of 4.75%
Convertible Subordinated Notes due 2009 (the “4.75% Convertible Subordinated Notes”), and our May 1998
issuance of approximately $326 million gross proceeds of 10% Senior Discount Notes due 2008 (the “Senior
Discount Notes”). At December 31, 2001, our total long-term indebtedness was $2.16 billion.
Other Gains (Losses), Net
Other gains (losses), net were recorded during 2001 and 2000, resulting in net costs of $2 million and
$143 million, respectively. No comparable amounts were recorded during 1999. Other gains (losses), net
consisted of the following:
Years Ended December 31,
2001 2000
(in thousands)
Foreign-currency gains on 6.875% PEACS ............................ $46,613 $ —
Losses on sales of Euro-denominated investments, net ................... (22,548) —
Other-than-temporary impairment losses, equity investments ............. (43,588) (188,832)
Contract termination by third parties ................................. 22,400 6,033
Net gains from acquisition of investments by third parties ................ 784 40,160
Warrant fair-value remeasurements and other .......................... (5,802) —
$ (2,141) $(142,639)
Effective January 1, 2001, currency gains and losses arising from the remeasurement of the 6.875%
PEACS’s principal from Euros to U.S. dollars each period are recorded to “Other gains (losses), net” on our
statements of operations. Prior to January 1, 2001, 6.875% PEACS’s principal of 615 million Euros was
designated as a hedge of equivalent amount of Euro-denominated investments classified as available-for-sale;
accordingly, currency gains and losses on the 6.875% PEACS were recorded to “Accumulated other
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