Amazon.com 2002 Annual Report Download - page 74

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
Note 6 Ì Long-Term Debt and Other
The Company's long-term debt and other long-term liabilities are summarized as follows (in
thousands):
December 31,
2002 2001
4.75% Convertible Subordinated Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,249,807 $1,249,807
6.875% PEACS ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 724,500 608,787
Senior Discount Notes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 255,597 231,830
Long-term restructuring liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31,614 20,640
Euro currency swap ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 12,159 33,265
Capital lease obligations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,491 16,415
Other long-term debtÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 8,456 10,381
2,290,624 2,171,125
Less current portion of capital lease obligationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (7,506) (9,922)
Less current portion of other long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (5,813) (5,070)
$2,277,305 $2,156,133
6.875% PEACS
On February 16, 2000, the Company completed an oÅering of 690 million Euros of 6.875% PEACS
due 2010. The 6.875% PEACS are convertible into the Company's common stock at a conversion price of
84.883 Euros per share. The initial conversion price of 104.947 Euros per share was adjusted down due to
reset provisions in the note. Interest on the 6.875% PEACS is payable annually in arrears in February of
each year. The 6.875% PEACS are unsecured and are subordinated to all of the Company's existing and
future senior indebtedness. The 6.875% PEACS rank equally with the Company's outstanding 4.75%
Convertible Subordinated Notes. Subject to certain conditions, the 6.875% PEACS may be redeemed at
the Company's option on or after February 20, 2003, in whole or in part, at the redemption price of 1,000
Euros per note, plus accrued and unpaid interest.
Upon the occurrence of a ""fundamental change'' prior to the maturity of the 6.875% PEACS, each
holder thereof has the right to require the Company to redeem all or any part of such holder's 6.875%
PEACS at a price equal to 100% of the principal amount of the notes being redeemed, together with
accrued interest. As deÑned in the indenture, a ""fundamental change'' is the occurrence of certain types of
transactions in which the stockholders do not receive publicly-traded securities.
The indenture governing the 6.875% PEACS contains certain aÇrmative covenants of the Company,
including making principal and interest payments when due, maintaining its corporate existence and
properties and paying taxes and other claims in a timely manner. The Company was in compliance with
these covenants at December 31, 2002.
In order to hedge a portion of the risk of foreign exchange Öuctuations between the U.S. Dollar and
the Euro, the Company entered into a cross-currency swap agreement. Under the swap agreement, the
Company agreed to pay at inception and receive upon maturity 75 million Euros in exchange for receiving
at inception and paying at maturity $67 million. In addition, the Company agreed to receive in February of
each year 27 million Euros for interest payments on 390 million Euros of the 6.875% PEACS and,
simultaneously, to pay $32 million. The agreement expires February 16, 2010 and is cancelable, in whole
or in part, at the Company's option at no cost on or after February 20, 2003 if the Company's underlying
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