Amazon.com 2003 Annual Report Download - page 62

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AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The fair value for each stock option granted was estimated at the date of grant using a Black-Scholes
option-pricing model, assuming no dividends and the following assumptions:
Years Ended December 31,
2003 2002 2001
Average risk-free interest rate ................................... 2.5% 3.1% 4.1%
Average expected life (in years) ................................. 3.3 3.3 3.3
Volatility ................................................... 77.7% 81.8% 98.0%
The per share weighted average fair value of stock awards, including restricted stock units, granted in 2003,
2002, and 2001, was $29.88, $14.99, and $5.98.
Outstanding stock awards were as follows (in thousands):
Years Ended December 31,
2003 2002 2001
Stockoptions(1)(2) ......................................... 24,961 42,005 65,950
Restricted stock units (3) ..................................... 4,410 2,935 20
Outstanding stock awards, excluded from common stock
outstanding .......................................... 29,371 44,940 65,970
Restricted stock (4) .......................................... 790 1,011 1,113
Total outstanding stock awards ............................ 30,161 45,951 67,083
(1) The weighted average exercise price was $12.46, $11.91, and $10.65 at December 31, 2003, 2002, and
2001.
(2) Includes 1 million, 5 million, and 12 million options at December 31, 2003, 2002, and 2001 subject to
variable accounting treatment.
(3) Includes 322,000 and 330,000 restricted stock units subject to variable accounting treatment at December
31, 2003 and 2002.
(4) Included in issued and outstanding common stock.
Restructuring Estimates
Restructuring-related liabilities include estimates for, among other things, anticipated disposition of lease
obligations. Key variables in determining such estimates include anticipated timing of sublease rentals, estimates
of sublease rental payment amounts and tenant improvement costs, and estimates for brokerage and other related
costs. Additionally, we may determine that certain of the office space previously vacated as part of our 2001
restructuring, which we have been unable to sublease due to poor real estate market conditions, may be necessary
for our future expansion needs. We periodically evaluate and, if necessary, adjust our estimates based on
currently-available information. If we elect to utilize this office space, in accordance with SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities, we will adjust our restructuring-related liability
and classify future payments to “General and administrative” on the consolidated statements of operations.
Foreign Currency
We have the following internationally-focused websites: www.amazon.co.uk, www.amazon.de,
www.amazon.fr, www.amazon.co.jp, and www.amazon.ca. Net sales generated from internationally-focused
websites, as well as most of the related expenses incurred from those operations, are denominated in the
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