Amazon.com 2002 Annual Report Download - page 39

December 31, 2002 resulting from variable accounting treatment would have been as follows (in thousands,
except percentages and per share amounts):
Hypothetical vs.
Actual Cumulative
Hypothetical Increase Hypothetical Market Hypothetical Cumulative Compensation Expense
Over $13.375 Price per Share Compensation Expense December 31, 2002
15% $15.38 $47,471 $(13,017)
25% 16.72 52,423 (8,065)
50% 20.06 64,802 4,314
75% 23.41 77,181 16,693
100% 26.75 89,561 29,073
Actual variable-accounting related compensation could diÅer signiÑcantly from the above illustration
in instances where options are exercised during a period at prices that diÅer from the closing stock price
for the reporting period. As of December 31, 2002, the Company's common stock closed at $18.89,
representing an increase of 41% over $13.375. Cumulative compensation expense associated with variable
accounting treatment was $60 million, of which $40 million is associated with options exercised and
therefore no longer subject to future variability.
If at the end of any Ñscal quarter the quoted price of our common stock is lower than the quoted
price at the end of the previous Ñscal quarter, or to the extent previously-recorded amounts relate to
unvested portions of options that were cancelled, compensation expense associated with variable accounting
will be recalculated using the cumulative expense method and may result in a net beneÑt to our results of
operations.
Amortization of Goodwill and Other Intangibles
Amortization of goodwill and other intangibles was $5 million, $181 million and $322 million for
2002, 2001 and 2000, respectively. The decline in amortization of goodwill and intangibles in 2002
primarily results from our adoption of SFAS No. 141, which resulted in $25 million of intangible assets,
comprised of assembled workforce intangibles, being subsumed into goodwill, and our adoption of SFAS
No. 142, which requires that goodwill no longer be amortized. The decline in amortization of goodwill and
intangibles in 2001 results from an impairment loss of $184 million recorded in the fourth quarter of 2000
associated with certain of our 1999 business acquisitions. This impairment loss reduced our recorded basis
in goodwill and other intangibles and had the eÅect of reducing amortization expense during 2001.
Restructuring-Related and Other
Restructuring-related and other expenses were $42 million, $182 million and $200 million for 2002,
2001 and 2000, respectively. In the Ñrst quarter of 2001, we announced and began implementation of our
operational restructuring plan to reduce operating costs, streamline our organizational structure, consolidate
certain of our fulÑllment and customer service operations and migrate a large portion of our technology
infrastructure to a new operating platform. This initiative involved the reduction of employee staÅ by 1,327
positions throughout the Company in managerial, professional, clerical, technical and fulÑllment roles;
consolidation of our Seattle, Washington corporate oÇce locations; closure of our McDonough, Georgia
fulÑllment center; seasonal operation of our Seattle, Washington fulÑllment center; closure of our customer
service centers in Seattle, Washington and The Hague, Netherlands; and migration of a large portion of
our technology infrastructure to a new operating platform, which entails ongoing lease obligations for
technology infrastructure no longer being utilized. Actual employee termination beneÑts paid were
$12 million. The restructuring is complete; however we may adjust our restructuring-related estimates in
the future, if necessary.
During 2002, we revised our estimates of ongoing net lease obligations for our facilities in Seattle,
Washington and McDonough, Georgia, primarily due to weakness in these real estate markets; we reached
a termination agreement with the landlord of our leased fulÑllment center facility in McDonough, Georgia,
30