Amazon.com 2001 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2001 Amazon.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 8—COMMITMENTS AND CONTINGENCIES
Commitments
The Company currently leases office and fulfillment center facilities and fixed assets under noncancelable
operating and capital leases. Rental expense under operating lease agreements for 2001, 2000 and 1999 was
$81 million, $98 million and $43 million, respectively.
Future minimum commitments are as follows:
Restructuring-Related Commitments Other Commitments
TotalLeases
Termination
Benefits Other Sub-Total
Capital
Leases
Operating
Leases
Marketing
Agreements
(in thousands)
Year Ending December 31,
2002 .......................... $35,578 $ 61 $5,159 $40,798 $11,339 $ 60,837 $16,411 $129,385
2003 .......................... 5,476 — 3,031 8,507 6,573 57,501 217 72,798
2004 .......................... 2,016 — — 2,016 41 48,729 — 50,786
2005 .......................... 1,983 — — 1,983 — 41,953 — 43,936
2006 .......................... 2,068 — — 2,068 — 42,400 — 44,468
Thereafter ...................... 6,066 — — 6,066 — 206,373 — 212,439
Total estimated cash outflows ........... $53,187 $ 61 $8,190 $61,438 $17,953 $457,793 $16,628 $553,812
Less imputed interest ................. (1,538)
Present value of net minimum lease
payments ......................... 16,415
Less current portion .................. (9,922)
Long-term capital lease
obligation ........................ $ 6,493
At December 31, 2001, the Company remains obligated under gross lease obligations of $121 million
associated with its operational restructuring and anticipates receiving sub-lease income of $68 million to offset
these obligations, of which $17 million are to be received under non-cancelable subleases.
Stand-by Letters of Credit
At December 31, 2001, the Company pledged marketable securities of $78 million as collateral for stand-by
letters of credit that guarantee certain of its contractual obligations, a majority of which relates to property leases.
In addition, under the terms of certain real estate lease agreements, the Company has pledged $41 million of its
marketable securities.
Legal Proceedings
As previously disclosed in our Quarterly Report on Form 10-Q for the third quarter of 2000, we have
received informal inquiries from the staff of the Securities and Exchange Commission Staff (the “SEC”) with
respect to the accounting treatment and disclosures for some of our initial strategic alliances and have been
cooperating with the SEC staff in responding to those inquiries. We reviewed our accounting treatment for the
transactions with our independent auditors and the SEC staff, and we believe our accounting treatment and
disclosures were appropriate. The SEC staff recently notified us that it believes the other party to one such
transaction, Ashford.com, improperly reported the resolution of a business dispute with us, and that it is
considering whether the Company, or any of its officers or employees may have facilitated Ashford.com’s
64