AMZN » Topics » Other Operating Expense (Income)

This excerpt taken from the AMZN 10-K filed Feb 16, 2007.

Note 9—OTHER OPERATING EXPENSE (INCOME)

Other operating expense was $10 million in 2006, primarily attributable to amortization of other intangibles. Other operating expense was $47 million in 2005, primarily attributable to our settlement of a patent lawsuit for $40 million, as well as amortization of other intangibles of $5 million. Other operating income was $8 million for 2004, which includes restructuring-related credits, net, of $9 million, and amortization of other intangibles of $1 million.

During 2004, we determined that certain of the office space previously vacated as part of our 2001 restructuring was necessary for our future needs. We reduced our restructuring-related liability resulting in a gain of $13 million for 2004. Lease payments for this office space are expensed over the lease period and classified to the corresponding operating expense categories on the consolidated statements of operations.

In 2004, we streamlined our organizational structure in France to reduce our operating costs. This reduction resulted in severance costs of $4 million classified in “Other operating expense (income)” on our consolidated statements of operations.

This excerpt taken from the AMZN 10-K filed Feb 17, 2006.

Note 8—OTHER OPERATING EXPENSE (INCOME)

 

Other operating expense was $47 million in 2005, primarily attributable to our settlement of a patent lawsuit for $40 million, as well as amortization of other intangibles of $5 million. Other operating income was $8 million for 2004 and other operating expense was $3 million for 2003, which includes restructuring-related credits, net, of $9 million in 2004 and amortization of other intangibles of $1 million and $3 million in 2004 and 2003.

 

During 2004, we determined that certain of the office space previously vacated as part of our 2001 restructuring, which we had been unable to sublease due to poor real estate market conditions, was necessary for our future needs. We reduced our restructuring-related liability resulting in a gain of $13 million for 2004. Lease payments for this office space are expensed over the lease period and classified to the corresponding operating expense categories on the consolidated statements of operations.

 

In 2004, we streamlined our organizational structure in France to reduce our operating costs. These efforts were primarily focused on eliminating French-office positions in managerial, professional, clerical, and technical roles. The number of employees affected totaled 52 and resulted in severance costs of $4 million classified in “Other operating expense (income)” on the consolidated statements of operations.

 

This excerpt taken from the AMZN 8-K filed Feb 2, 2006.

Other Operating Expense (Income)

 

    Other operating expense (income) includes costs related to a lawsuit settlement and amortization of intangibles of $2 million.

 

    We acquired certain companies during 2005 for an aggregate cash purchase price of $29 million. The excess of purchase price over the fair value of the net assets acquired was $19 million and is classified as “Goodwill” on our consolidated balance sheets. Acquired other intangibles totaled $10 million and have estimated useful lives of between one and three years. The results of operations of each of the acquired businesses have been included in our consolidated results as of the closing date of acquisition. The effect of these acquisitions on consolidated net sales and operating income was not significant for Q4 2005.

 

This excerpt taken from the AMZN 10-Q filed Oct 27, 2005.

Other Operating Expense (Income)

 

In Q3 2005 we settled a patent lawsuit on terms that include, among other things, a one-time payment of $40 million in Q3 2005 that was recorded to “Other operating expense (income)” on the consolidated statements of operations.

 

In Q3 2004 severance terms were finalized to eliminate certain managerial, professional, clerical and technical positions in France. The corresponding costs of $4 million were recorded in the third quarter of 2004 and classified in “Other operating expense (income)” on the consolidated statements of operations.

 

“Other operating expense (income)” for the three quarters ended September 30, 2004 includes a gain of $8 million related to the reduction of our restructure-related liability due to our occupation of certain office space previously vacated as part of our 2001 restructuring.

 

This excerpt taken from the AMZN 8-K filed Oct 25, 2005.

Other Operating Expense (Income)

    We settled a patent lawsuit on terms including a previously unanticipated one-time payment of $40 million in Q3 2005 that was recorded to “Other operating expense (income)” on the consolidated statements of operations. Q3 2005 operating cash flow, free cash flow, operating income, and net income were negatively impacted by this legal settlement, as follows:

 

     Operating
Cash Flow
(TTM)


   Free Cash
Flow (TTM)


   Operating
Income


   Net Income

As reported

   $ 661    $ 475    $ 55    $ 30

Legal settlement

     40      40      40      20
    

  

  

  

Adjusted

   $ 701    $ 515    $ 95    $ 50
    

  

  

  

 

Page 13


    Included in “Other operating expense (income)” are amortization of intangibles and restructuring-related expenses or credits.
    We acquired certain companies during the three quarters ended September 30, 2005, for an aggregate cash purchase price of $29 million. The excess of purchase price over the fair value of the net assets acquired was $19 million and is classified as “Goodwill” on our consolidated balance sheets. Acquired other intangibles totaled $10 million and have estimated useful lives of between one and three years. The results of operations of each of the acquired businesses have been included in our consolidated results as of the closing date of acquisition. The effect of these acquisitions on consolidated net sales and operating income was not significant for Q3 2005.

 

This excerpt taken from the AMZN 10-Q filed Jul 28, 2005.

Other Operating Expense (Income)

 

“Other operating expense (income)” includes amortization of intangibles and restructuring-related expenses or credits. Comparable amounts in Q2 2004 and for the first half of 2004 include gains of $7 million and $8 million related to the reduction of our restructure-related liability due to our occupation of certain office space previously vacated as part of our 2001 restructuring.

 

This excerpt taken from the AMZN 8-K filed Jul 26, 2005.

Other Operating Expense (Income)

 

    Included in “Other operating expense (income)” are amortization of intangibles and restructuring-related expenses or credits.

 

    Amortization of other intangibles was $1 million, and is expected to be $3 million for the remainder of 2005, $4 million in both 2006 and 2007, and $1 million in 2008, based on intangibles as of June 30, 2005.

 

    We acquired certain companies in the first half of 2005 for an aggregate cash purchase price of $24 million. The excess of purchase price over the fair value of the net assets acquired was $16 million and is classified as “Goodwill” on our consolidated balance sheets. Acquired other intangibles totaled $7 million and have estimated useful lives of between one and three years. The results of operations of each of the acquired businesses have been included in our consolidated results as of the closing date of acquisition. The effect of these acquisitions on consolidated net sales and operating income was not significant for Q2.

 

This excerpt taken from the AMZN 8-K filed Apr 26, 2005.

Other Operating Expense (Income)

 

    Included in “Other operating expense (income)” are restructuring-related expenses or credits and amortization of other intangibles.

 

    Amortization of other intangibles was $1 million for first quarter 2005, and is expected to be $3 million for the remainder of 2005, $4 million in both 2006 and 2007, and $2 million in 2008, based on intangibles as of March 31, 2005.

 

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    We acquired certain companies in March 2005 for an aggregate cash purchase price of $18 million. The excess of purchase price over the fair value of the net assets acquired was $10 million and is classified as “Goodwill” on our consolidated balance sheets. Acquired other intangibles totaled $8 million and have estimated useful lives of between one and four years. The results of operations of each of the acquired businesses have been included in our consolidated results as of the closing date of acquisition. The effect of these acquisitions on consolidated net sales and operating income was not significant for the first quarter.

 

This excerpt taken from the AMZN 10-K filed Mar 11, 2005.

Other Operating Expense (Income)

 

Other operating expense (income) was $(8) million, $3 million, and $47 million for 2004, 2003, and 2002, which includes restructuring-related expenses (credits) and amortization of other intangibles. Restructuring-related expenses (credits) were $(9) million, $0 million, and $42 million; and amortization of other intangibles was $1 million, $3 million, and $5 million for 2004, 2003, and 2002.

 

During 2004, we determined that certain of the office space previously vacated as part of our 2001 restructuring, which we had been unable to sublease due to poor real estate market conditions, was necessary for our future needs. We have reduced our restructuring-related liability resulting in a gain of $13 million in 2004. Lease-related payments for this office space, approximately $0.8 million per quarter, are expensed over the lease period and classified to the corresponding operating expense categories on the consolidated statements of operations.

 

In 2004, we streamlined our organizational structure in France to reduce our operating costs. These efforts were primarily focused on eliminating French office positions in managerial, professional, clerical, and technical roles. The number of employees affected totaled 52 and resulted in severance costs of $4 million classified in “Other operating expense (income)” on the consolidated statements of operations.

 

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Table of Contents

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).”

 

These excerpts taken from the AMZN 8-K filed Feb 2, 2005.

Other Operating Expense (Income)

 

We exclude other operating expense (income), including amortization of other intangibles and restructuring-related and other, which are cash and non-cash items for the following reasons:

 

    Amortization of other intangibles is excluded from our internal operating plans and measurement of financial performance;

 

    Amortization of other intangibles is a non-cash charge to current operations;

 

    Amortization of other intangibles has diminished and is currently immaterial; and

 

    Since we have not regularly had restructuring-related charges, the exclusion of such charges from prior periods provides better comparability of our results of operations as viewed by management.

 

Other Operating Expense (Income)

 

    Included in “Other operating expense (income)” are restructuring-related expenses or credits and amortization of other intangibles. Amortization of other intangibles was $0.5 million and $0.1 million for fourth quarter 2004 and 2003.

 

    Our first quarter 2001 operational restructuring plan is complete; however, we may periodically adjust our restructuring-related estimates, such as lease obligations, in the future if necessary.

 

    Cash payments resulting from our 2001 operational restructuring were $3 million in fourth quarter 2004 and 2003.

 

    During the fourth quarter we determined that some of the office space previously vacated as part of our 2001 restructuring, which we had been unable to sublease due to poor real estate market conditions, was necessary for our future needs. This resulted in a gain of $5 million for the fourth quarter. Future lease payments for this office space will be expensed over the lease period and classified to the corresponding operating expense categories on the consolidated statements of operations.

 

    We estimate, based on currently available information, the remaining net cash outflows associated with restructuring-related leases and other commitments will be $5 million in 2005, and $8 million thereafter. Amounts due within twelve months are included within “Accrued expenses and other current liabilities” and the remaining amounts within “Long-term debt and other” on our balance sheet. These amounts are net of anticipated sublease income of $20 million (we have signed sublease agreements for $13 million).

 

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