Amazon.com 2003 Annual Report Download - page 32

accounts payable at December 31, 2003 increased $202 million over the prior year end corresponding with
increased sales volume.
Since our 6.875% PEACS, which are due in 2010, are denominated in Euros, our U.S. Dollar equivalent
interest payments fluctuate with the Euro to U.S. Dollar exchange rate. In 2003, the U.S. Dollar weakened
considerably relative to the Euro resulting in higher U.S. Dollar equivalent interest payments. Additionally, in
2003 we began accruing interest on our 10% Senior Discount Notes and paid $2 million of interest when we
repaid the full principal amount. We also made interest payments of $3 million associated with the $200 million
partial redemption of our 4.75% Convertible Subordinated Notes; this payment was otherwise scheduled to be
paid in 2004. We currently do not hedge our exposure to foreign currency effects on our interest payments
relating to the 6.875% PEACS, and, as a result, any fluctuations in the exchange rate will have an effect on our
interest expense. See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 6—Long-Term
Debt and Other.”
Cash provided by (used in) investing activities corresponds with our buying and selling of marketable
securities and purchases of fixed assets, including internal-use software costs. Cash provided by investing
activities was $237 million during 2003, while cash used in investing activities was $122 million and $253
million during 2002 and 2001. Our capital expenditures were $46 million, $39 million, and $50 million for 2003,
2002, and 2001. We believe our expenditures for repairs and improvements are sufficient to keep our facilities
and equipment in suitable operating condition.
Cash provided by (used in) financing activities consists primarily of cash proceeds from exercises of stock
options, repayment of long-term debt, and repayment of capital lease obligations. Cash used in financing
activities was $332 million during 2003 resulting primarily from repayments of long-term debt obligations. Cash
provided by financing activities was $107 million during 2002 and 2001. We expect cash proceeds from
exercises of employee stock options to decline over time as we plan to continue issuing restricted stock units as
our primary vehicle for employee stock-based awards.
In January 2004, our Board of Directors authorized a debt repurchase program pursuant to which we may
from time to time repurchase (through open market repurchases or private transactions), redeem, or otherwise
retire up to an aggregate of $500 million of our outstanding 4.75% Convertible Subordinated Notes and 6.875%
PEACS. In addition to this debt repurchase program, on February 26, 2004, we will redeem $150 million of our
4.75% Convertible Subordinated Notes.
The following summarizes our principal contractual commitments as of December 31, 2003 (in thousands):
2004 2005 2006 2007 2008 Thereafter Total
Restructuring-related commitments:
Operating leases, net of estimated
sublease income ............ $ 9,577 $ 4,998 $ 3,421 $ 3,356 $ 2,691 $ 5,300 $ 29,343
Other ....................... 897 300 — — — — 1,197
Restructuring-related commitments . . . 10,474 5,298 3,421 3,356 2,691 5,300 30,540
Other commitments:
Debt principal and other (1)(2) . . 3,013 74 — — 246 1,931,160 1,934,493
Debt interest (1)(2) ............ 109,656 109,656 109,656 109,656 109,656 144,517 692,797
Capital leases ................ 1,678 868 341 — — — 2,887
Operating leases (3) ........... 51,498 43,323 42,391 39,100 38,181 131,040 345,533
Purchase obligations (4) ........ 187,881 ———— —187,881
Other commitments ............... 353,726 153,921 152,388 148,756 148,083 2,206,717 3,163,591
Total commitments ................ $364,200 $159,219 $155,809 $152,112 $150,774 $2,212,017 $3,194,131
(1) The principal payment due in 2010 and the annual interest payments due under our 6.875% PEACS fluctuate based on
the Euro/U.S. Dollar exchange ratio. At December 31, 2003, the Euro to U.S. Dollar exchange rate was 1.260. Due to
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