Exhibit 99.1
AMAZON.COM ANNOUNCES OPERATING PROFIT, LOWERS BOOK PRICES AGAIN AND RAISES
FINANCIAL GUIDANCE--THIRD PRICE CUT IN NINE MONTHS EFFECTIVE TODAY
SEATTLE--(BUSINESS WIRE)--Apr. 23, 2002--Amazon.com, Inc. (NASD: AMZN) today
announced financial results for its first quarter ended March 31, 2002, and
further reductions in book prices.
Net sales for the quarter were $847 million, compared with $700 million in the
first quarter of 2001, an increase of 21%.
The Company recorded a first quarter 2002 operating profit of $2 million,
compared with a loss of $217 million a year ago. Net loss for the first quarter
of 2002 was $23 million, or $0.06 per share, compared with a first quarter 2001
net loss of $234 million (including restructuring-related and other charges of
$114 million and goodwill amortization of $49 million), or $0.66 per share.
Amazon.com exceeded its pro forma operating profit goal for the quarter. Pro
forma operating profit was $25 million, compared with a loss of $49 million in
the first quarter of 2001, an improvement of over $70 million. Pro forma net
loss, which includes net interest expense, for the first quarter of 2002 was $5
million, or $0.01 per share, compared with a pro forma net loss of $76 million,
or $0.21 per share, in the first quarter of 2001. (Details on the differences
between GAAP results and pro forma results are included below, with a tabular
reconciliation of those differences included in the attached financial
statements.)
The Company also announced that, effective today, Amazon.com has lowered book
prices again. Customers can now save 30% on books over $15, unless marked
otherwise.
"Last July we lowered book prices to 30% off books over $20, then six months
later we introduced free Super Saver Shipping on orders over $99. Today, we're
thrilled to extend our 30% discount to include books over $15," said Jeff Bezos,
founder and CEO of Amazon.com. "We said we're the type of retailer that
relentlessly works to lower prices for customers, but we didn't expect to be
able to do it again so soon."
"We are ahead of schedule financially. Our continued operational progress and
momentum allow us to further lower prices for customers and at the same time
increase our 2002 guidance," said Warren Jenson, chief financial officer. "It's
the best of all worlds--lower prices for customers, better customer service and
lower costs--all driving us toward our objective of free cash flow for the
year."
Highlights of First Quarter Results (comparisons are with the equivalent period
of 2001)
. Operating cash flow reached $46 million for the trailing twelve
months, an improvement of over $260 million.
. Marketplace (new, used and refurbished items sold on Amazon.com
product detail pages by small businesses and individuals) equaled
approximately 23% of total U.S. orders and 12% of U.S. units, compared
with 4% of U.S. orders and 2% of U.S. units.
. International segment sales, from the Company's U.K., Germany, France
and Japan sites, grew 71% to $226 million and pro forma operating
results improved by 67% to a loss of $11 million, or 5% of
International sales.
. Including sales from the U.S. site, more than one-third of the
Company's sales were made to international customers.
. U.S. Books, Music, and DVD/Video segment sales growth accelerated to
8% and pro forma operating profit increased 68%.
. U.S. Electronics, Tools and Kitchen segment sales grew 8% to $126
million and pro forma operating losses declined by 55%, to $21
million.
. Annualized inventory turns improved 40% to 18, up from 13.
. Cash and marketable securities were $745 million at March 31, 2002.
Financial Guidance
The following forward-looking statements reflect Amazon.com's expectations as of
April 23, 2002. Results may be materially affected by many factors, such as
potential changes in general economic conditions and consumer spending, the
emerging nature and rate of growth of the Internet and online commerce, and the
various factors detailed below.
Second Quarter 2002 Expectations
. Net sales are expected to be between $765 million and $815 million, or
grow between 15% and 22%.
. Pro forma operating income is expected to be between $5 million and
$15 million.
Full Year 2002 Expectations
. Net sales are expected to grow by over 15%.
. Pro forma operating income is expected to be over $100 million.
These forward-looking statements are inherently difficult to predict. Actual
results could differ materially for a variety of reasons, including, among
others, the rate of growth of the economy in general and of the Internet and
online commerce, customer spending patterns, the amount that Amazon.com invests
in new business opportunities and the timing of those investments, the mix of
products sold to customers, the mix of net sales derived from products as
compared with services, risks of inventory management, the degree to which the
Company enters into, maintains and develops service relationships with
third-party sellers and other strategic transactions, foreign currency exchange
risks, seasonality, international growth and expansion, risks of fulfillment
throughput and productivity, and fluctuations in the value of securities and
non-cash payments Amazon.com receives in connection with such transactions.
Other risks and uncertainties include, among others, risk of future losses,
significant amount of indebtedness, competition, potential fluctuations in
operating results, management of potential growth, system interruption, consumer
trends, fulfillment center optimization, inventory, limited operating history,
government regulation and taxation, customer or third-party sellers fraud and
Amazon.com Payments, new business areas, business combinations, and strategic
alliances. More information about factors that potentially could affect
Amazon.com's financial results is included in Amazon.com's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K for
the year ended December 31, 2001, and all subsequent filings.
The Company intends to continue its practice of not updating forward-looking
statements other than in publicly available documents.
Pro Forma Results
Pro forma results, which generally exclude non-operational, non-cash charges and
benefits as well as one-time charges, are provided as a complement to results
provided in accordance with accounting principles generally accepted in the
United States (known as "GAAP"). Management uses such pro forma measures
internally to evaluate the Company's performance and manage its operations. A
reconciliation of GAAP to pro forma is included in the attached financial
statements.
Pro forma operating results exclude the following line items on the Company's
statements of operations:
. Stock-based compensation,
. Amortization of goodwill and other intangibles, and
. Restructuring-related and other.
Pro forma net results exclude, in addition to the line items described above,
the following line items on the Company's statements of operations:
. Other gains (losses), net,
. Equity in losses of equity-method investees, net, and
. Cumulative effect of change in accounting principle.
Conference Call
A conference call will be Webcast live at www.amazon.com/ir today at 2 p.m.
PDT/5 p.m. EDT and will be available through June 30, 2002. This call will
contain forward-looking statements and other material information.
About Amazon.com
Amazon.com opened its virtual doors on the World Wide Web in July 1995 and today
offers Earth's Biggest Selection. Amazon.com seeks to be the world's most
customer-centric company, where customers can find and discover anything they
might want to buy online. Amazon.com and sellers list millions of unique new and
used items in categories such as electronics, computers, kitchen and housewares,
books, music, DVDs, videos, camera and photo items, toys, baby and baby
registry, software, computer and video games, cell phones and service, tools and
hardware, travel services, magazine subscriptions and outdoor living items.
Through Amazon
Marketplace, zShops and Auctions, any business or individual can sell virtually
anything to Amazon.com's millions of customers, and with Amazon.com Payments,
sellers can accept credit card transactions, avoiding the hassles of offline
payments.
Amazon.com operates four international Web sites: www.amazon.co.uk,
www.amazon.de, www.amazon.fr and www.amazon.co.jp. It also operates the Internet
Movie Database (www.imdb.com), the Web's comprehensive and authoritative source
of information on more than 300,000 movies and entertainment titles and 1
million cast and crew members dating from the birth of film.
Contact:
Amazon.com Investor Relations
Tim Halladay, 206/266-2171, ir@amazon.com
Amazon.com Public Relations
Bill Curry, 206/266-7180
AMAZON.COM, INC.
Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
----------------------
2002 2001
--------- ---------
Net sales $ 847,422 $ 700,356
Cost of sales 624,297 517,759
--------- ---------
Gross profit 223,125 182,597
Operating expenses:
Fulfillment 89,815 98,248
Marketing 32,244 36,638
Technology and content 55,497 70,284
General and administrative 20,911 26,028
Stock-based compensation 10,931 2,916
Amortization of goodwill and other intangibles 1,979 50,831
Restructuring-related and other 9,974 114,260
--------- ---------
Total operating expenses 221,351 399,205
--------- ---------
Income (loss) from operations 1,774 (216,608)
Interest income 5,652 9,950
Interest expense (35,244) (33,748)
Other income (expense), net 95 (3,884)
Other gains (losses), net 5,516 33,857
--------- ---------
Net interest expense and other (23,981) 6,175
--------- ---------
Loss before equity in losses of equity-method investees (22,207) (210,433)
Equity in losses of equity-method investees, net (1,744) (13,175)
--------- ---------
Loss before change in accounting principle (23,951) (223,608)
Cumulative effect of change in accounting principle 801 (10,523)
--------- ---------
Net loss $ (23,150) $(234,131)
========= =========
Basic and diluted loss per share:
Prior to cumulative effect of change in accounting principle $ (0.06) $ (0.63)
Cumulative effect of change in accounting principle -- (0.03)
--------- ---------
$ (0.06) $ (0.66)
========= =========
Shares used in computation of basic
and diluted loss per share: 373,031 357,424
========= =========
Note: The attached "Financial and Operational Highlights"
are an integral part of the press release financial statements.
AMAZON.COM, INC.
Pro Forma Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, 2002 March 31, 2001
---------------------------------------- --------------------------------------
As Reported Pro Forma As Reported Pro Forma
(1) Adjustments Pro Forma (1) Adjustments Pro Forma
---------------------------------------- --------------------------------------
Net sales $ 847,422 $ -- $ 847,422 $ 700,356 $ -- $ 700,356
Cost of sales 624,297 -- 624,297 517,759 -- 517,759
---------------------------------------- --------------------------------------
Gross profit 223,125 -- 223,125 182,597 -- 182,597
Operating expenses:
Fulfillment 89,815 -- 89,815 98,248 -- 98,248
Marketing 32,244 -- 32,244 36,638 -- 36,638
Technology and content 55,497 -- 55,497 70,284 -- 70,284
General and administrative 20,911 -- 20,911 26,028 -- 26,028
Stock-based compensation 10,931 (10,931) -- 2,916 (2,916) --
Amortization of goodwill and
other intangibles 1,979 (1,979) -- 50,831 (50,831) --
Restructuring-related and other 9,974 (9,974) -- 114,260 (114,260) --
---------------------------------------- --------------------------------------
Total operating expenses 221,351 (22,884) 198,467 399,205 (168,007) 231,198
---------------------------------------- --------------------------------------
Income (loss) from operations 1,774 22,884 24,658 (216,608) 168,007 (48,601)
Interest income 5,652 -- 5,652 9,950 -- 9,950
Interest expense (35,244) -- (35,244) (33,748) -- (33,748)
Other income (expense), net 95 -- 95 (3,884) -- (3,884)
Other gains (losses), net 5,516 (5,516) -- 33,857 (33,857) --
---------------------------------------- --------------------------------------
Net interest expense and other (23,981) (5,516) (29,497) 6,175 (33,857) (27,682)
---------------------------------------- --------------------------------------
Loss before equity in losses of
equity-method investees (22,207) 17,368 (4,839) (210,433) 134,150 (76,283)
Equity in losses of equity-method
investees, net (1,744) 1,744 -- (13,175) 13,175 --
---------------------------------------- --------------------------------------
Loss before change in accounting principle (23,951) 19,112 (4,839) (223,608) 147,325 (76,283)
Cumulative effect of change in accounting
principle 801 (801) -- (10,523) 10,523 --
---------------------------------------- --------------------------------------
Net loss $ (23,150) $ 18,311 $ (4,839) $(234,131) $ 157,848 $ (76,283)
======================================== ======================================
Net cash used in operating activities $(241,033) $(241,033) $(406,984) $(406,984)
========== ========== ========== ===========
Basic and diluted loss per share:
Prior to cumulative effect of change in
accounting principle $ (0.06) $ 0.05 $ (0.01) $ (0.63) $ 0.42 $ (0.21)
Cumulative effect of change in
accounting principle -- -- -- (0.03) 0.03 --
---------------------------------------- --------------------------------------
$ (0.06) $ 0.05 $ (0.01) $ (0.66) $ 0.45 $ (0.21)
======================================== ======================================
Shares used in computation of basic
and diluted loss per share: 373,031 373,031 357,424 357,424
========== ========== ========== ===========
Note: The attached "Financial and Operational Highlights" are an integral part
of the press release financial statements.
(1) In accordance with accounting principles generally accepted in the United
States
AMAZON.COM, INC.
Segment Information
(in thousands)
(unaudited)
Three Months Ended March 31, 2002
-----------------------------------------------------------------------------------------------
U.S. Retail
-------------------------------------------
Books, Music Electronics,
and DVD/Video Tools and Kitchen Total International Services Consolidated
-----------------------------------------------------------------------------------------------
Net sales $ 443,038 $ 126,203 $ 569,241 $ 225,520 $ 52,661 $ 847,422
Gross profit 123,135 19,423 142,558 49,004 31,563 223,125
Pro forma income (loss)
from operations 46,363 (20,756) 25,607 (11,264) 10,315 24,658
Stock-based compensation (10,931)
Amortization of goodwill
and other intangibles (1,979)
Restructuring-related
and other (9,974)
Net interest expense
and other (23,981)
Equity in losses of
equity-method investees, net (1,744)
Cumulative effect of change
in accounting principle 801
---------
Net loss $ (23,150)
=========
Segment highlights:
Y / Y net sales growth 8% 8% 8% 71% 25% 21%
Y / Y gross profit growth 13% 13% 13% 75% 12% 22%
Gross margin 28% 15% 25% 22% 60% 26%
Pro forma operating margin 10% (16%) 4% (5%) 20% 3%
Net sales mix 52% 15% 67% 27% 6% 100%
Three Months Ended March 31, 2001
-----------------------------------------------------------------------------------------------
U.S. Retail
-------------------------------------------
Books, Music Electronics,
and DVD/Video Tools and Kitchen Total International Services Consolidated
-----------------------------------------------------------------------------------------------
Net sales $ 409,586 $ 116,507 $ 526,093 $ 132,105 $ 42,158 $ 700,356
Gross profit 109,119 17,220 126,339 28,050 28,208 182,597
Pro forma income (loss)
from operations 27,625 (45,833) (18,208) (34,569) 4,176 (48,601)
Stock-based compensation (2,916)
Amortization of goodwill
and other intangibles (50,831)
Restructuring-related
and other (114,260)
Net interest expense
and other 6,175
Equity in losses of
equity-method investees, net (13,175)
Cumulative effect of change
in accounting principle (10,523)
----------
Net loss $ (234,131)
==========
Segment highlights:
Y / Y net sales growth 2% 56% 11% 76% 85% 22%
Y / Y gross profit growth 32% 144% 41% 75% 27% 43%
Gross margin 27% 15% 24% 21% 67% 26%
Pro forma operating margin 7% (39%) (3%) (26%) 10% (7%)
Net sales mix 58% 17% 75% 19% 6% 100%
Note: The attached "Financial and Operational Highlights" are an integral part
of the press release financial statements.
AMAZON.COM, INC.
Balance Sheets
(in thousands, except per share data)
(unaudited)
March 31, December 31,
2002 2001
----------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 296,689 $ 540,282
Marketable securities 448,569 456,303
Inventories 138,996 143,722
Prepaid expenses and other current assets 70,019 67,613
----------------- -----------------
Total current assets 954,273 1,207,920
Fixed assets, net 256,403 271,751
Goodwill, net 70,811 45,367
Other intangibles, net 6,959 34,382
Investments in equity-method investees 8,643 10,387
Other equity investments 16,770 17,972
Other assets 48,069 49,768
----------------- -----------------
Total assets $ 1,361,928 $ 1,637,547
================= =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 314,616 $ 444,748
Accrued expenses and other current liabilities 232,898 305,064
Unearned revenue 79,361 87,978
Interest payable 16,197 68,632
Current portion of long-term debt and other 13,958 14,992
----------------- -----------------
Total current liabilities 657,030 921,414
Long-term debt and other 2,152,273 2,156,133
Commitments and contingencies
Stockholders' deficit:
Preferred stock, $0.01 par value:
Authorized shares -- 500,000
Issued and outstanding shares -- none -- --
Common stock, $0.01 par value:
Authorized shares -- 5,000,000
Issued and outstanding shares -- 375,109
and 373,218, respectively 3,751 3,732
Additional paid-in capital 1,480,935 1,462,769
Deferred stock-based compensation (9,710) (9,853)
Accumulated other comprehensive loss (38,623) (36,070)
Accumulated deficit (2,883,728) (2,860,578)
----------------- -----------------
Total stockholders' deficit (1,447,375) (1,440,000)
----------------- -----------------
Total liabilities and stockholders' deficit $ 1,361,928 $ 1,637,547
================= =================
Note: The attached "Financial and Operational Highlights" are an integral part
of the press release financial statements.
AMAZON.COM, INC.
Statements of Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
--------------------------------------
2002 2001
--------------------------------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 540,282 $ 822,435
OPERATING ACTIVITIES:
Net loss (23,150) (234,131)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of fixed assets and other amortization 20,940 23,073
Stock-based compensation 10,931 2,916
Equity in losses of equity-method investees, net 1,744 13,175
Amortization of goodwill and other intangibles 1,979 50,831
Non-cash restructuring-related and other -- 62,004
Loss (gain) on sale of marketable securities, net (376) 27
Other gains, net (5,516) (33,857)
Non-cash interest expense and other 7,061 6,572
Cumulative effect of change in accounting principle (801) 10,523
Changes in operating assets and liabilities:
Inventories 4,674 19,823
Prepaid expenses and other current assets (3,320) 27,334
Accounts payable (128,286) (229,758)
Accrued expenses and other current liabilities (65,861) (57,762)
Unearned revenue 28,716 18,005
Amortization of previously unearned revenue (37,333) (33,392)
Interest payable (52,435) (52,367)
----------------- -----------------
Net cash used in operating activities (241,033) (406,984)
INVESTING ACTIVITIES:
Sales and maturities of marketable securities 136,575 94,366
Purchases of marketable securities (134,227) (30,378)
Purchases of fixed assets, including internal-use software and
web-site development (4,854) (19,437)
----------------- -----------------
Net cash provided by (used in) investing activities (2,506) 44,551
FINANCING ACTIVITIES:
Proceeds from exercise of stock options and other 7,409 5,833
Proceeds from long-term debt and other -- 10,000
Repayment of capital lease obligations and other (4,563) (4,575)
----------------- -----------------
Net cash provided by financing activities 2,846 11,258
Effect of exchange-rate changes on cash and cash equivalents (2,900) (24,316)
----------------- -----------------
Net decrease in cash and cash equivalents (243,593) (375,491)
----------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 296,689 $ 446,944
================= =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Fixed assets acquired under capital leases $ 924 $ 2,298
Equity securities received for commercial agreements -- 331
Cash paid for interest 80,483 79,517
Note: The attached "Financial and Operational Highlights" are an integral part
of the press release financial statements.
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(unaudited)
(in millions, except per share data)
Q1 2001 Q2 2001 Q3 2001
-----------------------------------------------
Results of Operations
Net sales $ 700 $ 668 $ 639
Net sales -- trailing twelve months (TTM) $ 2,888 $ 2,978 $ 2,980
Net sales to customers outside the U.S. -- % of net sales 26% 28% 29%
Gross profit $ 183 $ 180 $ 162
Gross margin -- % of net sales 26.1% 26.9% 25.4%
Gross profit -- TTM $ 710 $ 754 $ 749
Gross margin -- TTM % of net sales 24.6% 25.3% 25.1%
Fulfillment costs -- % of net sales 14.0% 12.8% 12.7%
Fulfillment costs -- TTM % of net sales 14.3% 13.8% 13.3%
Fulfillment costs -- % of U.S. Retail and International 14.9% 13.6% 13.7%
combined net sales
Pro forma operating expenses $ 231 $ 208 $ 189
Pro forma operating expenses -- TTM $ 977 $ 959 $ 912
Pro forma operating income (loss) $ (49) $ (28) $ (27)
Pro forma operating margin -- % of net sales (6.9%) (4.2%) (4.2%)
Pro forma operating income (loss) -- TTM $ (266) $ (205) $ (164)
Pro forma operating income (loss) -- TTM % of net sales (9.2%) (6.9%) (5.5%)
GAAP operating income (loss) $ (217) $ (140) $ (70)
GAAP operating income (loss) -- % of net sales (30.9%) (20.9%) (11.0%)
GAAP operating income (loss) -- TTM $ (883) $ (842) $ (749)
GAAP operating income (loss) -- TTM % of net sales (30.6%) (28.3%) (25.1%)
Pro forma net income (loss) $ (76) $ (58) $ (58)
Pro forma net income (loss) per share $ (0.21) $ (0.16) $ (0.16)
Pro forma net income (loss) -- TTM $ (372) $ (314) $ (282)
GAAP net income (loss) $ (234) $ (168) $ (170)
GAAP net income (loss) per share $ (0.66) $ (0.47) $ (0.46)
GAAP net income (loss) -- TTM $(1,337) $(1,188) $(1,118)
U.S. books, music and DVD/video (US BMVD) segment:
US BMVD net sales $ 410 $ 390 $ 351
US BMVD net sales -- TTM $ 1,706 $ 1,711 $ 1,662
US BMVD gross profit $ 109 $ 111 $ 93
US BMVD pro forma operating margin -- % of US BMVD net sales 7% 10% 7%
U.S. electronics, tools and kitchen (US ETK) segment:
US ETK net sales $ 117 $ 111 $ 103
US ETK net sales -- TTM $ 526 $ 545 $ 551
US ETK gross profit $ 17 $ 13 $ 13
US ETK pro forma operating margin -- % of US ETK net sales (39%) (37%) (32%)
International segment:
International net sales $ 132 $ 128 $ 138
International net sales -- TTM $ 438 $ 493 $ 544
International gross profit $ 28 $ 29 $ 28
International pro forma operating margin -- % of International net sales (26%) (23%) (20%)
Services segment:
Services net sales $ 42 $ 39 $ 46
Services net sales -- TTM $ 218 $ 229 $ 223
Services gross profit $ 28 $ 26 $ 27
Services pro forma operating margin -- % of Services net sales 10% 11% 17%
Y / Y %
Q4 2001 Q1 2002 Growth
-----------------------------------------------
Results of Operations
Net sales $1,115 $ 847 21%
Net sales -- trailing twelve months (TTM) $3,122 $3,269 13%
Net sales to customers outside the U.S. -- % of net sales 29% 34% N/A
Gross profit $ 274 $ 223 22%
Gross margin -- % of net sales 24.6% 26.3% N/A
Gross profit -- TTM $ 799 $ 839 18%
Gross margin -- TTM % of net sales 25.6% 25.7% N/A
Fulfillment costs -- % of net sales 9.8% 10.6% N/A
Fulfillment costs -- TTM % of net sales 12.0% 11.2% N/A
Fulfillment costs -- % of U.S. Retail and International 10.7% 11.3% N/A
combined net sales
Pro forma operating expenses $ 215 $ 198 (14%)
Pro forma operating expenses -- TTM $ 844 $ 811 (17%)
Pro forma operating income (loss) $ 59 $ 25 N/A
Pro forma operating margin -- % of net sales 5.3% 2.9% N/A
Pro forma operating income (loss) -- TTM $ (45) $ 28 N/A
Pro forma operating income (loss) -- TTM % of net sales (1.4%) 0.9% N/A
GAAP operating income (loss) $ 15 $ 2 N/A
GAAP operating income (loss) -- % of net sales 1.3% 0.2% N/A
GAAP operating income (loss) -- TTM $ (412) $ (194) (78%)
GAAP operating income (loss) -- TTM % of net sales (13.2%) (5.9%) N/A
Pro forma net income (loss) $ 35 $ (5) (94%)
Pro forma net income (loss) per share $ 0.09 $(0.01) N/A
Pro forma net income (loss) -- TTM $ (157) $ (86) (77%)
GAAP net income (loss) $ 5 $ (23) (90%)
GAAP net income (loss) per share $ 0.01 $(0.06) N/A
GAAP net income (loss) -- TTM $ (567) $ (356) (73%)
U.S. books, music and DVD/video (US BMVD) segment:
US BMVD net sales $ 538 $ 443 8%
US BMVD net sales -- TTM $1,689 $1,722 1%
US BMVD gross profit $ 140 $ 123 13%
US BMVD pro forma operating margin -- % of US BMVD net sales 12% 10% N/A
U.S. electronics, tools and kitchen (US ETK) segment:
US ETK net sales $ 217 $ 126 8%
US ETK net sales -- TTM $ 547 $ 557 6%
US ETK gross profit $ 35 $ 19 13%
US ETK pro forma operating margin -- % of US ETK net sales (9%) (16%) N/A
International segment:
International net sales $ 262 $ 226 71%
International net sales -- TTM $ 661 $ 755 72%
International gross profit $ 55 $ 49 75%
International pro forma operating margin -- % of International net sales (4%) (5%) N/A
Services segment:
Services net sales $ 98 $ 53 25%
Services net sales -- TTM $ 225 $ 236 8%
Services gross profit $ 45 $ 32 12%
Services pro forma operating margin -- % of Services net sales 26% 20% N/A
Note: The attached Financial and Operational Highlights are an integral part of
this Supplemental Financial Information and Business Metrics.
AMAZON.COM, INC.
Supplemental Financial Information and Business Metrics
(unaudited)
(in millions, except net sales per active customer, marketing
cost per active customer account, inventory turnover,
accounts payable days, and employee data)
Q1 2001 Q2 2001 Q3 2001
-----------------------------------------------
Customer Data*
Active customer accounts -- TTM 20.5 21.1 23.0
Active customer accounts -- International -- TTM 4.9 5.4 6.1
Net sales (excluding catalog sales) per active customer account -- TTM $ 135 $ 136 $ 126
Marketing cost per active customer account -- TTM $ 8.6 $ 8.0 $ 6.9
Balance Sheet
Cash and marketable securities $ 643 $ 609 $ 668
Inventory, net $ 156 $ 129 $ 131
Inventory -- % of net sales 24% 21% 20%
Inventory -- % of TTM net sales 6% 5% 5%
Inventory turnover -- annualized 12.6 13.7 14.7
Inventory turnover -- TTM 13.0 14.0 14.8
Fixed assets, net $ 304 $ 292 $ 288
Accounts payable days -- ending 45 48 46
Cash Flows
Cash generated by (used in) operations -- TTM $ (217) $ (161) $ (221)
Free cash flow (operating cash flow less purchases of fixed assets) -- TTM $ (345) $ (270) $ (301)
Adjusted free cash flow (free cash flow less repayment of capital lease
obligations) -- TTM $ (362) $ (286) $ (320)
Other
Common shares outstanding 359 362 372
Options outstanding -- % of common shares outstanding 12% 12% 18%
Employees (full-time and part-time) 8,600 7,800 7,900
Y / Y %
Q4 2001 Q1 2002 Growth
------------------------------------------------
Customer Data*
Active customer accounts -- TTM 24.7 26.2 27%
Active customer accounts -- International -- TTM 6.9 7.6 55%
Net sales (excluding catalog sales) per active customer account -- TTM $ 123 $ 122 (10%)
Marketing cost per active customer account -- TTM $ 5.6 $ 5.1 (41%)
Balance Sheet
Cash and marketable securities $ 997 $ 745 16%
Inventory, net $ 144 $ 139 (11%)
Inventory -- % of net sales 12% 17% N/A
Inventory -- % of TTM net sales 5% 4% N/A
Inventory turnover -- annualized 24.5 17.7 40%
Inventory turnover -- TTM 15.8 17.4 34%
Fixed assets, net $ 272 $ 256 (16%)
Accounts payable days -- ending 49 45 0%
Cash Flows
Cash generated by (used in) operations -- TTM $ (120) $ 46 N/A
Free cash flow (operating cash flow less purchases of fixed assets) -- TTM $ (170) $ 10 N/A
Adjusted free cash flow (free cash flow less repayment of capital lease
obligations) -- TTM $ (190) $ (9) (98%)
Other
Common shares outstanding 373 375 4%
Options outstanding -- % of common shares outstanding 18% 17% N/A
Employees (full-time and part-time) 7,800 7,900 (8%)
Note: The attached Financial and Operational Highlights are an integral part of
this Supplemental Financial Information and Business Metrics.
* Our customer account and active customer calculation methodology was
modified in the third quarter 2001, primarily to include all customers who
order new and used products through Amazon Marketplace. Our prior
methodology did not capture all such customers. If second quarter 2001
customer metrics were presented under the modified methodology, active
customer accounts, International active customer accounts, TTM net sales
per active customer account, and marketing cost per active customer
account would have been 21.9 million, 5.5 million, $131, and $7.7,
respectively. Amounts prior to the 2001 second quarter have not been
recalculated under the current methodology.
AMAZON.COM, INC.
Financial and Operational Highlights
First Quarter Ended March 31, 2002
(unaudited)
Results of Operations (all comparisons are with the equivalent period of 2001)
Net Sales
. Shipping revenue, excluding commissions earned from Amazon
Marketplace, was approximately $89 million, up from $82 million.
. Equity-based services revenues decreased to approximately $5 million,
or 10% of services net sales, from $9 million, or 21%.
Gross Profit
. Gross margin, excluding the results of our Services segment, would
have been 24%, up from 23%.
. Effective January 1, 2002, we prospectively changed our inventory
costing method from the specific-identification method to the
first-in, first-out (FIFO) method of accounting. This change resulted
in a cumulative increase in product inventory of $0.8 million, with a
corresponding amount recorded to "Cumulative effect of change in
accounting principle" on the statements of operations. The effect on
each quarter during 2001 would have been less than $1.2 million
individually and in the aggregate.
. Costs associated with our services revenues, classified as cost of
services, generally include fulfillment-related costs to ship products
on behalf of third-party sellers, costs to provide customer service,
credit card fees and other related costs.
. Shipping loss was approximately $1 million, down from $5 million. We
continue to measure our shipping results relative to their impact on
our overall financial results, with the viewpoint that shipping
promotions are an effective marketing tool. We will continue offering
shipping promotions to our customers, which reduce shipping revenue as
a percentage of sales and will negatively affect gross margins on our
retail sales.
Fulfillment
. Fulfillment costs represent those costs incurred in operating and
staffing our fulfillment and customer service centers, including costs
attributable to receiving, inspecting and warehousing inventories;
picking, packaging and preparing customers' orders for shipment;
credit card fees and bad debt costs; and responding to inquiries from
customers. Fulfillment costs also include amounts paid to third-party
co-sourcers, who assist us in fulfillment and customer service
operations. Certain fulfillment-related costs incurred on behalf of
third-party sellers, excluding those costs associated with Syndicated
Stores, are classified as cost of sales rather than fulfillment.
Stock-Based Compensation
. During the first quarter 2001, we offered a limited non-compulsory
exchange of employee stock options. This option exchange offer results
in variable accounting treatment for approximately 11 million stock
options at March 31, 2002, which includes approximately 10 million
options granted under the exchange offer with an exercise price of
$13.375, and approximately 1 million options that were subject to the
exchange offer but were not exchanged. Variable accounting treatment
will result in unpredictable and potentially significant charges or
credits, depending on fluctuations in quoted prices for our common
stock, which we are unable to forecast.
Amortization of Goodwill and Other Intangibles
. As a result of our adoption of the full provisions of Statement of
Financial Accounting Standards No. 141 and No. 142, during the first
quarter we reclassified $25 million of other intangibles (comprising
only assembled workforce intangibles) to goodwill and discontinued the
amortization of our goodwill assets. In addition, we completed an
impairment analysis of goodwill and determined the amount to be fairly
stated.
Restructuring-Related and Other
. In 2001 we initiated an operational restructuring plan to reduce our
operating costs, streamline our organizational structure, consolidate
certain of our fulfillment and customer service operations and migrate
a large portion of our technology infrastructure to a new operating
platform. As a result of this initiative, we recorded restructuring
and other charges of approximately $114 million in the first quarter
2001 and an additional $68 million during the last three quarters of
2001. Each component of the restructuring plan has been substantially
completed.
. During the first quarter 2002 we permanently closed our fulfillment
center in Seattle and, in connection with our 2001 operational
restructuring, we revised our sublease income estimates for Seattle-
area restructured office space. These items resulted in additional
restructuring-related expenses of $10 million primarily associated
with ongoing lease obligations.
. Cash payments resulting from the restructuring were $14 million in the
first quarter 2002 and $10 million in first quarter 2001. The
restructuring charges are anticipated to result in the following net
cash outflows (included within accrued expenses and other current
liabilities and long-term debt and other on our balance sheet):
(in thousands)
Leases (a) Other Total
---------- ------ -------
Nine Months Ending December 31,
2002........................ $23,922 $5,060 $28,982
Year Ending December 31,
2003........................ 6,410 3,037 9,447
2004........................ 2,761 -- 2,761
2005........................ 2,770 -- 2,770
2006........................ 3,036 -- 3,036
Thereafter.................. 10,909 -- 10,909
------- ------ -------
Total estimated cash outflows.. $49,808 $8,097 $57,905
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(a) Net of anticipated sublease income of approximately $60 million.
Other Income (Expense), Net
. Other income (expense) consists primarily of net realized gains and
losses on sales of marketable securities, miscellaneous state and
foreign taxes and certain foreign-currency-related transaction gains
and losses.
Other Gains (Losses), Net
. Other gains, net were $6 million for the first quarter 2002, primarily
consisting of a foreign-currency gain on the remeasurement of our
6.875% convertible subordinated notes from Euros to U.S. dollars.
. We are unable to forecast the gains or losses associated with our
6.875% convertible subordinated notes that will result from
fluctuations in foreign exchange rates in future periods.
Earnings per Share
. Basic and diluted earnings per share is computed using the weighted
average number of common and common stock equivalent shares
outstanding during the period; common stock equivalent shares, such as
options, warrants and convertible securities, were excluded from the
computation because their effect is antidilutive. If the effect of
common stock equivalents had been included, the number of shares used
in the computation of diluted loss per share would have been
approximately 394 million, compared with 374 million.
Financial Condition
Cash and Marketable Securities
. Cash and marketable securities are impacted by the effect of quarterly
fluctuations in foreign-currency exchange rates, particularly the
Euro. Our Euro investments, classified as available for sale, had a
balance of 160 million Euros ($140 million, based on the exchange rate
as of March 31, 2002).
. Our marketable securities, at estimated fair value, consist of the
following, as of March 31, 2002 (in thousands):
Certificates of deposit......................... $ 18,104
Commercial paper and short-term obligations..... 38,719
Corporate notes and bonds....................... 37,251
Asset-backed and agency securities.............. 278,678
Treasury notes and bonds........................ 63,032
Equity securities............................... 12,785
--------
$448,569
. We have pledged approximately $158 million of our marketable
securities as collateral for certain contractual obligations, compared
to $167 million as of December 31, 2001. Amounts pledged for standby
letters of credit that guarantee certain contractual obligations,
primarily property leases, were $72 million; $46 million is pledged
for the swap agreement that hedges the foreign-exchange rate risk on a
portion of our 6.875% convertible subordinated notes; and $41 million
is pledged for certain of our real estate lease agreements. The amount
of marketable securities we are required to pledge pursuant to the
swap agreement fluctuates with the fair market value of the swap
obligation.
Certain Definitions and Other
. Our segment reporting includes four segments: U.S. Books, Music and
DVD/Video; U.S. Electronics, Tools and Kitchen; International; and
Services. Allocation methodologies have been consistently applied.
. The U.S. Books, Music and DVD/Video segment includes revenues, direct
costs and cost allocations associated with retail sales from
www.amazon.com for books, music, DVDs, video products and magazine
subscriptions, and from stores offering these products through our
Syndicated Stores Program (whereby a third-party seller's e-commerce
Web site uses our e-commerce services and tools, and offers our
product selection), such as www.borders.com. This segment also
includes commissions and other amounts earned from sales of these
products, new or used, through Amazon Marketplace, and will include
amounts earned from offerings of these products by third-party
sellers, if any, under our Merchant@amazon.com Program (whereby a
third-party seller offers its products or services for sale on our Web
site, either in our retail stores or in a cobranded store on our Web
site, or both).
. The U.S. Electronics, Tools and Kitchen segment includes revenues,
direct costs and cost allocations associated with www.amazon.com
retail sales of electronics, computers, kitchen products and
housewares, camera and photo items, software, cell phones and service,
tools and hardware, outdoor living items, and computer and video game
products, sold other than through our Toysrus.com strategic alliance,
as well as catalog sales of toys and tools and hardware, and will
include stores offering these products, if any, through our Syndicated
Stores Program. This segment also includes commissions earned from
sales of these products, new or used, through Amazon Marketplace and
from offerings of these products by third-party sellers under our
Merchant@amazon.com Program, such as Circuit City.
. The International segment includes all revenues, direct costs and cost
allocations associated with the retail sales of our four
internationally focused Web sites--www.amazon.de, www.amazon.fr,
www.amazon.co.jp and www.amazon.co.uk--and from stores offering
products through our Syndicated Stores Program. This segment also
includes commissions and other amounts earned from sales of products,
new or used, through Amazon Marketplace, and amounts earned from
offerings of products by third-party sellers, if any, under our
Merchant@amazon.com Program.
. The Services segment includes revenues, direct costs and cost
allocations associated with our business-to-business strategic
alliances, including the Merchant Program (whereby a
third-party seller's e-commerce Web site operates at its own URL using
our features and technology), such as www.target.com beginning summer
2002, and, to the extent full product categories are not also offered
by our online retail stores, the Merchant@amazon.com Program, such as
our strategic alliance with Toysrus.com, as well as the strategic
technology alliance with America Online, Inc. This segment also
includes Amazon Auctions, zShops and Payments, and miscellaneous
marketing and promotional agreements.
. All references to customers mean customer accounts, which are unique
e-mail addresses, established either when a customer's initial order
is shipped or when a customer orders from certain third-party sellers
on Amazon.com. Customer accounts include customers of Amazon
Marketplace, Auctions and zShops services and from our
Merchant@amazon.com and Syndicated Stores Programs, but exclude
Amazon.com Payments customers, our catalog customers and the customers
of selected companies with whom we have strategic marketing and
promotional relationships.
. Trailing twelve-month net sales per active customer account figures
include all amounts earned through Internet sales, including net sales
earned from new or used products sold through Amazon Marketplace,
Auctions and zShops services, and products sold through our
Merchant@amazon.com and Syndicated Stores Programs, but excluding
products sold through our catalogs and certain strategic alliances and
sales of inventory to Toysrus.com. A customer is considered active
upon placing an order.