Amazon.com 2004 Annual Report Download - page 49

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Cash payments resulting from our operational restructurings were $9 million, $26 million, and $45 million
for 2004, 2003, and 2002. Based on currently available information, we estimate the remaining restructuring-
related cash outflows will be as follows:
Leases Other Total
(in thousands)
Year Ended December 31,
2005 ............................................... $ 3,057 $1,910 $ 4,967
2006 ............................................... 1,903 — 1,903
2007 ............................................... 1,843 — 1,843
2008 ............................................... 1,497 — 1,497
2009 ............................................... 1,374 — 1,374
Thereafter ........................................... 1,305 — 1,305
Total estimated cash outflows (1) ............................ $10,979 $1,910 $12,889
(1) Cash flows are presented net of an estimated $20 million in sublease rentals. At December 31, 2004, we had
signed contractual sublease agreements totaling $13 million.
For additional information about our operational restructuring, see Item 8 of Part II, “Financial Statements
and Supplementary Data—Note 8—Other Operating Expense (Income).”
Income from Operations
Our income from operations was $440 million, $271 million, and $64 million during 2004, 2003, and 2002.
These increases primarily result from net sales and gross profit growth and declines in operating expenses as a
percent of net sales as we leverage the fixed cost portion of our cost structure and seek to improve our variable
costs through process efficiencies. Additionally, in 2004 and 2003 operating income improved from year-over-
year reductions of $47 million and $8 million in stock-based compensation expense associated with variable
accounting, offset by increases in stock-based compensation of $18 million and $27 million associated with
restricted stock units.
Net Interest Expense
The primary component of our net interest expense is the interest we incur on our long-term debt
instruments, including $900 million principal balance of our 4.75% U.S. Convertible Subordinated Notes and
690 million Euros ($935 million based on the exchange rate at December 31, 2004) of 6.875% PEACS at
December 31, 2004. Interest expense was $107 million, $130 million, and $143 million in 2004, 2003, and 2002,
with declines primarily relating to principal repayments of $150 million and $464 million in 2004 and 2003.
At December 31, 2004, our total long-term indebtedness was $1.86 billion compared to $1.95 billion a year
ago. See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 4—Long-Term Debt and
Other.”
We generally invest our excess cash in “A” rated or higher short- to intermediate-term fixed income
securities and money market mutual funds. Our interest income corresponds with the average balance of invested
funds and the prevailing rates we are earning on them.
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