Amazon.com 2000 Annual Report Download - page 70

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Depreciation expense for the U.S. Books, Music and DVD/video segment was $30 million, $15 million
and $7 million in 2000, 1999 and 1998, respectively. Depreciation expense for the International segment was
$19 million, $7 million and $3 million in 2000, 1999 and 1998, respectively. Depreciation expense for the
Early-Stage Business and other segment was $34 million and $13 million in 2000 and 1999, respectively.
At December 31, 2000 and 1999, fixed assets, net totaled $315 million and $309 million in the
United States, respectively, and $51 million and $9 million in other countries, respectively.
Note 16—SUBSEQUENT EVENTS
Subsequent to December 31, 2000, the Company approved a plan for an operational restructuring in which
it will reduce its employee staff by approximately 1,300 positions, or 15% of its workforce. Additionally, the
Company will consolidate its Seattle, Washington corporate office locations, close its McDonough, Georgia
fulfillment center, operate its Seattle, Washington fulfillment center on a seasonal basis, close its customer
service centers in Seattle, Washington and The Hague, Netherlands, and migrate a large portion of its
technology infrastructure to a new hardware and software platform. The Company estimates that the
restructuring will result in costs during the first half of 2001 exceeding $150 million relating primarily to
severance, fixed asset impairments, continuing lease obligations and other exit costs directly related to its
restructuring.
Subsequent to December 31, 2000, the Company offered a limited non-compulsory exchange of employee
stock options. The option exchange offer will result in variable accounting treatment for stock options
representing approximately 15 million shares of the Company’s common stock. Variable accounting treatment
will result in unpredictable stock-based compensation dependent on fluctuations in quoted prices for the
Company’s common stock. Pursuant to the option exchange offer, the number of shares issuable upon option
exercises decreased from approximately 70 million shares, or 19.5% of the Company’s outstanding common
stock, to approximately 52 million shares, or 14.4% of the Company’s outstanding common stock.
A number of purported class action complaints were filed by stockholders against the Company and some
of its senior officers in March 2001, in the United States District Court for the Western District of Washington,
alleging that the defendants made false and misleading statements regarding the Company’s financial and
accounting disclosures in 2000 and early 2001, including disclosures regarding some of the Company’s
strategic partner transactions. The complaints further allege that the defendants’ conduct violated securities laws
and seek compensatory damages and injunctive relief against all defendants. The Company disputes the
allegations of wrongdoing in these complaints and intends to vigorously defend itself in these matters.
AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
62