Amazon.com Announces 2001 Third Quarter Results; Expects Pro Forma Operating Profitability in Fourth Quarter; Looks Forward to Seventh Holiday Season.Business Editors SEATTLE--(BUSINESS WIRE)--Oct. 23, 2001 Amazon.com (Amazon.com, Seattle, WA, www.amazon.com) The largest online shopping site and one of the most widely known e-commerce sites on the Web. Founded by Jeff Bezos in 1995, it had 11 employees by year's end. Within four years, it had more than 1,600 employees and four million customers. , Inc. (NASD NASD See: National Association of Securities Dealers NASD See National Association of Securities Dealers (NASD). :AMZN AMZN Amazon.com (NASDAQ symbol) ) today announced financial results for its third quarter ended Sept. 30, 2001. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight were $639 million compared to net sales of $638 million in the third quarter of 2000. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma loss from operations improved 60 percent to $27 million, or 4 percent of net sales, compared with $68 million, or 11 percent of net sales in the third quarter of 2000. Pro forma net loss, which includes net interest expense, improved 35 percent to $58 million, or $0.16 per share, compared with $89 million, or $0.25 per share in the third quarter of 2000. Net loss (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) for the quarter improved 29 percent to $170 million, or $0.46 per share, from $241 million, or $0.68 per share. A reconciliation of GAAP to pro forma is included in the attached financial statements. "We are pleased that our quarterly results were again in line with our guidance, and with our recent order trends," said Warren Warren. 1 City (1990 pop. 144,864), Macomb co., SE Mich., a suburb of Detroit; est. 1837, inc. as a city 1957. It is an important metalworking center where steel is processed. Jenson Jenson is a surname, and may refer to:
Amazon (ăm`əzŏn), in Greek mythology, one of a tribe of warlike women who lived in Asia Minor. .com's chief financial officer. "We continue to expect pro forma operating profitability for the fourth quarter, and while there are no guarantees, we are well positioned to achieve this important milestone “Milemarker” redirects here. For the American indie rock band, see Milemarker (band). A milestone or kilometre sign is one of a series of numbered markers placed along a road at regular intervals, typically at the side of the road or in a median. ." "We've we've Contraction of we have. we've have lowered our operating costs operating costs npl → gastos mpl operacionales 20 percent and can now afford to drive growth by lowering prices for customers," said Jeff Bezos Jeffrey Preston Bezos (born January 12, 1964 , Albuquerque ) is the founder, president, chief executive officer, and chairman of the board of Amazon.com. Bezos, a Phi Beta Kappa graduate of Princeton University, worked as a financial analyst for D. E. Shaw & Co. , founder and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Amazon.com. "If you're you're Contraction of you are. you're you are you're be buying books over $20 from anywhere but Amazon.com, you're probably wasting money." Highlights of Third Quarter Results (comparisons are with the third quarter of 2000) -- Our segment reporting includes four segments: U.S. Books, Music and DVD/Video; U.S. Electronics, Tools and Kitchen; International; and Services. Allocation methodologies are consistent with past presentations and prior period amounts have been reclassified to conform with the current period presentation. -- 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, DVD and video products, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- 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 and housewares, camera and photo items, software, cell phones and service, tools and hardware, outdoor living, toys, and computer and video games products, sold other than through our Toysrus.com strategic alliance, and new initiatives, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- The International segment includes all revenues, direct costs and cost allocations associated with the retail sales of our four internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp and www.amazon.co.uk. -- The Services segment includes revenues, direct costs and cost allocations associated with our business-to-business strategic relationships, including our strategic alliance with Toysrus.com, product sales from syndicated stores such as www.borders.com, miscellaneous marketing and promotional revenues, and amounts from Amazon Auctions, zShops and Payments. Amounts earned from the Services segment are attributed to the U.S. -- All references to customers mean customer accounts, which are unique e-mail addresses, established either when a customer's order is shipped or when a customer orders from a third-party seller. Customer accounts exclude Amazon Payments customers, our catalog businesses customers, and the customers of selected companies with whom we have strategic marketing and promotional relationships, but include customers of Amazon Marketplace, Auctions, and zShops services, and customer accounts shared with Toysrus.com and Borders.com. -- 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 and our strategic relationships with selected companies, but exclude sales of inventory to Toysrus.com and catalog sales. A customer is considered active upon placing an order. -- 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, new customer accounts, cumulative customer accounts, active customer accounts, International customer accounts, International cumulative customers, International active customer accounts, trailing twelve-month net sales per active customer account, and cost per new customer account would have been 2.7 million, 35.0 million, 21.9 million, .8 million, 6.9 million, 5.5 million, $131, and $13, respectively. Amounts prior to the second quarter of 2001 have not been recalculated under the current methodology. Business Outlook The following forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. reflect Amazon.com's expectations as of Oct. 23, 2001. Given the potential changes in general economic conditions and consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. (including any future declines related to the events of Sept. 11, 2001, or similar events), the emerging nature and rate of growth of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and online commerce and the various other risk factors discussed below, actual results may differ materially. The Company intends to continue its practice of not updating forward-looking statements other than in publicly available statements. Fourth Quarter 2001 Expectations -- Net sales are expected to be flat to up 10 percent compared to the fourth quarter of 2000, or between $970 million and $1.07 billion. -- Gross margin is expected to be between 22 percent and 25 percent of net sales. -- A pro forma operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. is expected for the quarter. -- Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has are expected to be approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $900 million at Dec. 31, 2001; cash and marketable securities are expected to be over $550 million at March 31, 2002, and the Company expects to generate cash and marketable securities for the nine months ending Dec. 31, 2002, combined. 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, 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 de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from products as compared with services, risks of inventory management, the degree to which the Company enters into service relationships and other strategic transactions, fluctuations in the value of securities and non-cash payments Amazon.com receives in connection with such transactions, foreign currency exchange risks, and risks of fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. and productivity. Other risks and uncertainties include, among others, Amazon.com's anticipated losses, significant amount of indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , competition, seasonality, potential fluctuations in operating results, management of potential growth, system interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. , consumer trends, fulfillment center optimization optimization Field of applied mathematics whose principles and methods are used to solve quantitative problems in disciplines including physics, biology, engineering, and economics. , inventory, limited operating history, fraud and Amazon Payments, new business areas, international expansion, business combinations, strategic alliances and strategic partnerships. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended Dec. 31, 2000, and all subsequent filings, including Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . Pro Forma Results Pro forma information regarding Amazon.com's results from operations is provided as a complement to results provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (GAAP). Pro forma operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. excludes stock-based compensation, amortization of goodwill and other intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , and restructuring-related and other. Management measures the progress of the business using this pro forma information. Pro forma net loss excludes stock-based compensation, amortization of goodwill and other intangibles, restructuring-related and other, other gains (losses), equity in losses of equity-method investees, and the cumulative effect of change in accounting principle. Conference Call A conference call will be Webcast live on Tuesday Tuesday: see week. , Oct. 23, 2001, at 5:00 p.m. EDT/2:00 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT and will contain forward-looking statements and other material information. This conference call will be available at www.amazon.com/ir through Dec. 28, 2001. About Amazon.com Amazon.com opened its virtual doors on the World Wide Web in July July: see month. 1995 and today offers Earth's Biggest Selection, along with online auctions and free electronic greeting cards See e-card. . 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 house·wares pl.n. Cooking utensils, dishes, and other small articles used in a household, especially in the kitchen. , books, music, DVDs, videos, camera and photo items, toys, baby and baby registry The configuration database in all 32-bit versions of Windows that contains settings for the hardware and software in the PC it is installed in. The Registry is made up of the SYSTEM.DAT and USER.DAT files. Many settings previously stored in the WIN.INI and SYSTEM. , software, computer and video games This article is about the British magazine covering computer and video games. For the American magazine, see Computer Games Magazine. Computer And Video Games (CVG , cell phones and service, tools and hardware, travel services, and outdoor living products. Through Amazon Marketplace Amazon Marketplace ( i.e:Third-party Marketplace ) is Amazon.com's fixed-price online marketplace that allows sellers to survey their goods alongside Amazon's offerings. Buyers can buy new and used items sold directly by a third party through Amazon. , zShops and Auctions, any business or individual can sell virtually anything to Amazon.com's more than 38 million customers (cumulative customer accounts), and with Amazon.com Payments, sellers can accept credit card transactions, avoiding the hassles of offline (1) Not connected to the Internet, online service or internal network. See offline file. (2) Not connected to or not installed in the computer. If a terminal, printer or other device is physically connected to the computer, but is not turned on or in ready mode, it is 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 275,000 movies and entertainment titles and 1 million cast and crew members dating from the birth of film.
AMAZON.COM, INC.
Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2001 2000 2001 2000
---------- ---------- ------------ ----------
Net sales $ 639,281 $ 637,858 $ 2,007,262 $1,789,623
Cost of sales 477,089 470,579 1,482,753 1,358,146
---------- ---------- ------------ ----------
Gross profit 162,192 167,279 524,509 431,477
Operating expenses:
Fulfillment 81,400 96,421 265,231 283,481
Marketing 32,537 41,921 103,833 124,785
Technology and content 53,846 71,159 188,840 199,535
General and administrative 21,481 26,217 70,287 80,730
Stock-based compensation (2,567) 4,091 2,700 25,909
Amortization of goodwill
and other intangibles 41,835 79,194 143,496 242,562
Restructuring-related
and other 3,994 11,791 176,904 16,259
---------- ---------- ------------ ----------
Total operating
expenses 232,526 330,794 951,291 973,261
---------- ---------- ------------ ----------
Loss from operations (70,334) (163,515) (426,782) (541,784)
Interest income 6,316 9,402 23,073 29,842
Interest expense (35,046) (33,809) (103,942) (94,827)
Other income
(expense), net (2,203) 3,353 (7,265) (4,693)
Other gains (losses), net (63,625) 12,366 (18,453) 12,366
---------- ---------- ------------ ----------
Net interest expense
and other (94,558) (8,688) (106,587) (57,312)
---------- ---------- ------------ ----------
Loss before equity in
losses of equity-method
investees (164,892) (172,203) (533,369) (599,096)
Equity in losses of
equity-method investees,
net (4,982) (68,321) (28,472) (267,037)
---------- ---------- ------------ ----------
Loss before change in
accounting principle (169,874) (240,524) (561,841) (866,133)
Cumulative effect of
change in accounting
principle - - (10,523) -
---------- ---------- ------------ ----------
Net loss $(169,874) $(240,524) $ (572,364) $(866,133)
========== ========== ============ ==========
Basic and diluted loss
per share:
Prior to cumulative
effect of change in
accounting principle $ (0.46) $ (0.68) $ (1.55) $ (2.48)
Cumulative effect of
change in accounting
principle - - (0.03) -
---------- ---------- ------------ ----------
$ (0.46) $ (0.68) $ (1.58) $ (2.48)
========== ========== ============ ==========
Shares used in
computation of basic
and diluted loss per
share 368,052 353,954 361,782 349,258
========== ========== ============ ==========
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
September 30, 2001
-------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
-------------------------------------------
Net sales $ 639,281 - $ 639,281
Cost of sales 477,089 - 477,089
-------------------------------------------
Gross profit 162,192 - 162,192
Operating expenses:
Fulfillment 81,400 - 81,400
Marketing 32,537 - 32,537
Technology and content 53,846 - 53,846
General and administrative 21,481 - 21,481
Stock-based compensation (2,567) 2,567 -
Amortization of goodwill
and other intangibles 41,835 (41,835) -
Restructuring-related
and other 3,994 (3,994) -
-------------------------------------------
Total operating
expenses 232,526 (43,262) 189,264
-------------------------------------------
Loss from operations (70,334) 43,262 (27,072)
Interest income 6,316 - 6,316
Interest expense (35,046) - (35,046)
Other income (expense), net (2,203) - (2,203)
Other gains (losses), net (63,625) 63,625 -
-------------------------------------------
Net interest expense
and other (94,558) 63,625 (30,933)
-------------------------------------------
Loss before equity in losses
of equity-method investees (164,892) 106,887 (58,005)
Equity in losses of
equity-method investees,
net (4,982) 4,982 -
-------------------------------------------
Net loss $ (169,874) $ 111,869 $ (58,005)
===========================================
Net cash used in operating
activities $ (64,403) $ (64,403)
=========== ===========
Basic and diluted loss
per share $ (0.46) $ (0.16)
=========== ===========
Shares used in computation
of basic and diluted loss
per share 368,052 368,052
=========== ===========
Three Months Ended
September 30, 2000
-------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
-------------------------------------------
Net sales $ 637,858 - $ 637,858
Cost of sales 470,579 - 470,579
-------------------------------------------
Gross profit 167,279 - 167,279
Operating expenses:
Fulfillment 96,421 - 96,421
Marketing 41,921 - 41,921
Technology and content 71,159 - 71,159
General and administrative 26,217 - 26,217
Stock-based compensation 4,091 (4,091) -
Amortization of goodwill
and other intangibles 79,194 (79,194) -
Restructuring-related
and other 11,791 (11,791) -
-------------------------------------------
Total operating expenses 330,794 (95,076) 235,718
-------------------------------------------
Loss from operations (163,515) 95,076 (68,439)
Interest income 9,402 - 9,402
Interest expense (33,809) - (33,809)
Other income (expense), net 3,353 - 3,353
Other gains (losses), net 12,366 (12,366) -
-------------------------------------------
Net interest expense and other (8,688) (12,366) (21,054)
-------------------------------------------
Loss before equity in losses
of equity-method investees (172,203) 82,710 (89,493)
Equity in losses of
equity-method investees,
net (68,321) 68,321 -
-------------------------------------------
Net loss $ (240,524) $ 151,031 $ (89,493)
===========================================
Net cash used in operating
activities $ (3,688) $ (3,688)
=========== ===========
Basic and diluted loss
per share $ (0.68) $ (0.25)
=========== ===========
Shares used in computation
of basic and diluted loss
per share 353,954 353,954
=========== ===========
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)
Nine Months Ended
September 30, 2001
------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------------------------------------
Net sales $ 2,007,262 - $ 2,007,262
Cost of sales 1,482,753 - 1,482,753
-----------------------------------------
Gross profit 524,509 - 524,509
Operating expenses:
Fulfillment 265,231 - 265,231
Marketing 103,833 - 103,833
Technology and content 188,840 - 188,840
General and administrative 70,287 - 70,287
Stock-based compensation 2,700 (2,700) -
Amortization of goodwill
and other intangibles 143,496 (143,496) -
Restructuring-related
and other 176,904 (176,904) -
-----------------------------------------
Total operating expenses 951,291 (323,100) 628,191
-----------------------------------------
Loss from operations (426,782) 323,100 (103,682)
Interest income 23,073 - 23,073
Interest expense (103,942) - (103,942)
Other expense, net (7,265) - (7,265)
Other gains (losses), net (18,453) 18,453 -
-----------------------------------------
Net interest expense and other (106,587) 18,453 (88,134)
-----------------------------------------
Loss before equity in losses
of equity-method investees (533,369) 341,553 (191,816)
Equity in losses of
equity-method investees, net (28,472) 28,472 -
-----------------------------------------
Loss before change in
accounting principle (561,841) 370,025 (191,816)
Cumulative effect of change
in accounting principle (10,523) 10,523 -
-----------------------------------------
Net loss $ (572,364) $ 380,548 $ (191,816)
=========================================
Net cash used in
operating activities $ (468,902) $ (468,902)
============ ============
Basic and diluted loss
per share:
Prior to cumulative effect
of change in accounting
principle $ (1.55) $ (0.53)
Cumulative effect of change
in accounting principle (0.03) -
------------ ------------
$ (1.58) $ (0.53)
============ ============
Shares used in computation
of basic and diluted loss
per share 361,782 361,782
============ ============
Nine Months Ended
September 30, 2000
------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma
------------------------------------------
Net sales $ 1,789,623 - $ 1,789,623
Cost of sales 1,358,146 - 1,358,146
-----------------------------------------
Gross profit 431,477 - 431,477
Operating expenses:
Fulfillment 283,481 - 283,481
Marketing 124,785 - 124,785
Technology and content 199,535 - 199,535
General and administrative 80,730 - 80,730
Stock-based compensation 25,909 (25,909) -
Amortization of goodwill
and other intangibles 242,562 (242,562) -
Restructuring-related
and other 16,259 (16,259) -
-----------------------------------------
Total operating expenses 973,261 (284,730) 688,531
-----------------------------------------
Loss from operations (541,784) 284,730 (257,054)
Interest income 29,842 - 29,842
Interest expense (94,827) - (94,827)
Other expense, net (4,693) - (4,693)
Other gains (losses), net 12,366 (12,366) -
-----------------------------------------
Net interest expense and other (57,312) (12,366) (69,678)
-----------------------------------------
Loss before equity in losses
of equity-method investees (599,096) 272,364 (326,732)
Equity in losses of
equity-method investees,
net (267,037) 267,037 -
-----------------------------------------
Loss before change in
accounting principle (866,133) 539,401 (326,732)
Cumulative effect of change
in accounting principle - - -
-----------------------------------------
Net loss $ (866,133) $ 539,401 $ (326,732)
=========================================
Net cash used in
operating activities $ (378,095) $ (378,095)
============ ============
Basic and diluted loss per share:
Prior to cumulative effect
of change in accounting
principle $ (2.48) $ (0.94)
Cumulative effect of change
in accounting principle - -
------------ ------------
$ (2.48) $ (0.94)
============ ============
Shares used in computation
of basic and diluted loss
per share 349,258 349,258
============ ============
Note: The attached "Financial and Operational Highlights" are an
integral part of the press release financial statements.
AMAZON.COM, INC.
Segment Information
(in thousands)
(unaudited)
Three Months Ended September 30, 2001
----------------------------------------------------------------------
U.S.
Retail
------------------------------
Books, Music Electronics,
and DVD/Video Tools and Total Services Inter- Con-
Kitchen national solidated
----------------------------------------------------------------------
Net sales $351,431 $ 103,112 $ 454,543 $ 46,247 $ 138,491 $ 639,281
Gross profit 93,354 13,327 106,681 27,348 28,163 162,192
Pro forma
income
(loss) from
operations 26,223 (33,107) (6,884) 7,812 (28,000) (27,072)
Other
non-cash and
restructuring-
related
operating
expenses (43,262)
Net interest
expense and
other (94,558)
Equity in
losses of
equity-
method
investees,
net (4,982)
-----------
Net loss $ (169,874)
===========
Segment highlights:
Y / Y net
sales growth (12%) 6% (9%) (12%) 58% 0%
Y / Y gross
profit
growth (14%) 49% (9%) (11%) 49% (3%)
Gross margin 27% 13% 23% 59% 20% 25%
Pro forma
operating
margin 7% (32%) (2%) 17% (20%) (4%)
Net sales mix 55% 16% 71% 7% 22% 100%
Three Months Ended September 30, 2000
---------------------------------------------------------------------
U.S.
Retail
------------------------------
Books, Music Electronics,
and DVD/Video Tools and Total Services Inter- Con-
Kitchen national solidated
----------------------------------------------------------------------
Net sales $399,905 $ 97,597 $ 497,502 $ 52,691 $ 87,665 $ 637,858
Gross profit 108,746 8,940 117,686 30,711 18,882 167,279
Pro forma
income
(loss) from
operations 24,688 (60,839) (36,151) 7,281 (39,569) (68,439)
Other non-cash
and
restructuring
-related
operating
expenses (95,076)
Net interest
expense and
other (8,688)
Equity in
losses of
equity-
method
investees,
net (68,321)
-----------
Net loss $ (240,524)
===========
Segment highlights:
Y / Y net
sales growth 33% 681% 59% N/A 121% 79%
Y / Y gross
profit
growth 70% N/A 98% N/A 110% 137%
Gross margin 27% 9% 24% 58% 22% 26%
Pro forma
operating
margin 6% (62%) (7%) 14% (45%) (11%)
Net sales mix 63% 15% 78% 8% 14% 100%
Nine Months Ended September 30, 2001
----------------------------------------------------------------------
U.S.
Retail
------------------------------
Books, Music Electronics,
and DVD/Video Tools and Total Services Inter- Con-
Kitchen national solidated
----------------------------------------------------------------------
Net sales $1,150,740 $330,576 $1,481,316 $127,004 $398,942 $2,007,262
Gross profit 313,317 43,706 357,023 81,908 85,578 524,509
Pro forma
income
(loss) from
operations 92,815 (120,262) (27,447) 16,327 (92,562) (103,682)
Other
non-cash and
restructuring
-related
operating
expenses (323,100)
Net interest
expense and
other (106,587)
Equity in
losses of
equity-
method
investees,
net (28,472)
Cumulative
effect of
change in
accounting
principle (10,523)
-----------
Net loss $ (572,364)
===========
Segment highlights:
Y / Y net
sales growth (3%) 25% 2% 23% 69% 12%
Y / Y gross
profit growth 13% 96% 19% 3% 67% 22%
Gross margin 27% 13% 24% 64% 21% 26%
Pro forma
operating
margin 8% (36%) (2%) 13% (23%) (5%)
Net sales mix 57% 16% 74% 6% 20% 100%
Nine Months Ended September 30, 2000
----------------------------------------------------------------------
U.S.
Retail
------------------------------
Books, Music Electronics,
and DVD/Video Tools and Total Services Inter- Con-
Kitchen national solidated
----------------------------------------------------------------------
Net sales $1,186,595 $263,948 $1,450,543 $102,890 $236,190 $1,789,623
Gross profit 278,463 22,248 300,711 79,562 51,204 431,477
Pro forma
income
(loss) from
operations 32,319 (197,165) (164,846) 9,312 (101,520) (257,054)
Other non-cash
and
restructuring
-related
operating
expenses (284,730)
Net interest
expense and
other (57,312)
Equity in
losses of
equity-method
investees,
net (267,037)
-----------
Net loss $ (866,133)
===========
Segment highlights:
Y / Y net
sales growth 40% N/A 68% N/A 144% 86%
Y / Y gross
profit
growth 50% N/A 68% N/A 147% 113%
Gross margin 23% 8% 21% 77% 22% 24%
Pro forma
operating
margin 3% (75%) (11%) 9% (43%) (14%)
Net sales mix 66% 15% 81% 6% 13% 100%
AMAZON.COM, INC.
Segment Information
(in thousands)
(unaudited)
Supplemental geographical segment information is as follows (in
thousands):
Three Months Ended Three Months Ended
September 30, 2001 September 30, 2000
---------- ---------- ---------- ---------
Net Sales Pro Forma Income Net Sales Pro Forma Income
(Loss) from (Loss) from
Operations Operations
---------- ---------- ---------- ---------
U.S.
Books, Music
and
DVD/Video $ 351,431 $ 26,223 $ 399,905 $ 24,688
Electronics,
Tools and
Kitchen 103,112 (33,107) 97,597 (60,839)
---------- ---------- ---------- ---------
U.S. Retail 454,543 (6,884) 497,502 (36,151)
Services 46,247 7,812 52,691 7,281
---------- ---------- ---------- ---------
Total U.S. 500,790 928 550,193 (28,870)
International 138,491 (28,000) 87,665 (39,569)
---------- ---------- ---------- ---------
Total
Consolidated$ 639,281 $ (27,072) $ 637,858 $ (68,439)
========= ========== ========== ==========
Nine Months Ended Nine Months Ended
September 30, 2001 September 30, 2000
------------- ---------- ------------ ---------
Net Sales Pro Forma Income Net Sales Pro Forma Income
(Loss) from (Loss) from
Operations Operations
------------- ---------- ------------ ---------
U.S.
Books, Music
and
DVD/Video $ 1,150,740 $ 92,815 $ 1,186,595 $ 32,319
Electronics,
Tools and
Kitchen 330,576 (120,262) 263,948 (197,165)
------------- ---------- ------------ ---------
U.S. Retail 1,481,316 (27,447) 1,450,543 (164,846)
Services 127,004 16,327 102,890 9,312
------------- ---------- ------------ ---------
Total U.S. 1,608,320 (11,120) 1,553,433 (155,534)
International 398,942 (92,562) 236,190 (101,520)
------------- ---------- ------------ ---------
Total
Consolidated $ 2,007,262 $ (103,682) $ 1,789,623 $ (257,054)
============= ========= ============ =========
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)
September 30, December 31,
2001 2000
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 432,307 $ 822,435
Marketable securities 235,793 278,087
Inventories 130,739 174,563
Prepaid expenses and other current assets 71,437 86,044
----------- -----------
Total current assets 870,276 1,361,129
Fixed assets, net 288,373 366,416
Goodwill, net 62,788 158,990
Other intangibles, net 48,273 96,335
Investments in equity-method investees 7,242 52,073
Other equity investments 18,105 40,177
Other assets 51,311 60,049
----------- -----------
Total assets $ 1,346,368 $ 2,135,169
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 236,992 $ 485,383
Accrued expenses and other
current liabilities 243,229 272,683
Unearned revenue 90,288 131,117
Interest payable 41,635 69,196
Current portion of
long-term debt and other 16,054 16,577
----------- -----------
Total current liabilities 628,198 974,956
Long-term debt and other 2,172,164 2,127,464
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
-- 371,766 and 357,140
shares at September 30, 2001
and December 31, 2000, respectively 3,718 3,571
Additional paid-in capital 1,455,693 1,338,303
Deferred stock-based compensation (11,306) (13,448)
Accumulated other comprehensive loss (36,434) (2,376)
Accumulated deficit (2,865,665) (2,293,301)
----------- -----------
Total stockholders' deficit (1,453,994) (967,251)
----------- -----------
Total liabilities and
stockholders' deficit $ 1,346,368 $ 2,135,169
=========== ===========
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
September 30,
--------------------
2001 2000
-------- -------
CASH AND CASH EQUIVALENTS, BEGINNING $462,949 $720,377
OF PERIOD OPERATING ACTIVITIES:
Net loss (169,874) (240,524)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of fixed assets and
other amortization 19,795 22,857
Stock-based compensation (2,567) 4,091
Equity in losses of equity-method
investees, net 4,982 68,321
Amortization of goodwill and
other intangibles 41,835 79,194
Non-cash restructuring-related and other 1,881 11,791
Gain on sale of marketable securities, net (1,351) (3,205)
Other losses (gains), net 63,625 (12,366)
Non-cash interest expense and other 6,834 6,227
Cumulative effect of change
in accounting principle -- --
Changes in operating assets and liabilities:
Inventories (659) 8,480
Prepaid expenses and other current assets 2,960 (13,034)
Accounts payable (22,594) 18,470
Accrued expenses and other
current liabilities (9,721) 12,887
Unearned revenue 33,443 64,466
Amortization of previously unearned revenue (30,100) (26,870)
Interest payable (2,892) (4,473)
--------- ---------
Net cash used in operating activities (64,403) (3,688)
INVESTING ACTIVITIES:
Sales and maturities of
marketable securities 141,724 72,619
Purchases of marketable securities (223,817) (44,954)
Purchases of fixed assets,
including internal-use software
and web-site development (12,925) (41,948)
Investments in equity-method
investees and other investments -- (5,760)
--------- ---------
Net cash provided by (used in)
investing activities (95,018) (20,043)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 1,101 4,564
Proceeds from issuance of common stock,
net of issuance costs 99,831 --
Proceeds from long-term debt and other -- 500
Repayment of long-term debt and other (6,466) (3,777)
Financing costs -- --
--------- ---------
Net cash provided by
financing activities 94,466 1,287
Effect of exchange-rate changes
on cash and cash equivalents 34,313 (50,885)
--------- ---------
Net increase (decrease) in cash
and cash equivalents (30,642) (73,329)
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $432,307 $647,048
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Fixed assets acquired under
capital leases $2,014 $ --
Fixed assets acquired under
financing agreements -- --
Equity securities received for
commercial agreements -- 9,009
Stock issued in connection with
business acquisitions -- 2,130
Cash paid for interest 30,275 33,640
Nine Months Ended
September 30,
-------------------
2001 2000
-------- -------
CASH AND CASH EQUIVALENTS, BEGINNING $ 822,435 $ 133,309
OF PERIOD OPERATING ACTIVITIES:
Net loss (572,364) (866,133)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation of fixed assets and
other amortization 63,662 61,719
Stock-based compensation 2,700 25,909
Equity in losses of equity-method
investees, net 28,472 267,037
Amortization of goodwill and
other intangibles 143,496 242,562
Non-cash restructuring-related
and other 70,410 16,259
Gain on sale of marketable
securities, net (1,137) (4,157)
Other losses (gains), net 18,453 (12,366)
Non-cash interest expense and other 20,119 18,316
Cumulative effect of change
in accounting principle 10,523 --
Changes in operating assets
and liabilities:
Inventories 44,441 56,766
Prepaid expenses and other
current assets 18,091 (11,997)
Accounts payable (253,984) (158,317)
Accrued expenses and other
current liabilities (15,212) (19,407)
Unearned revenue 76,640 66,091
Amortization of previously
unearned revenue (95,400) (65,558)
Interest payable (27,812) 5,181
--------- ---------
Net cash used in operating activities (468,902) (378,095)
INVESTING ACTIVITIES:
Sales and maturities of
marketable securities 303,061 521,913
Purchases of marketable securities (280,938) (95,740)
Purchases of fixed assets,
including internal-use software
and web-site development (42,787) (97,427)
Investments in equity-method
investees and other investments -- (61,842)
--------- ---------
Net cash provided by (used in)
investing activities (20,664) 266,904
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 14,578 39,717
Proceeds from issuance of common stock,
net of issuance costs 99,831 --
Proceeds from long-term debt and other 10,000 681,499
Repayment of long-term debt and other (15,135) (12,997)
Financing costs -- (16,122)
--------- ---------
Net cash provided by
financing activities 109,274 692,097
Effect of exchange-rate changes
on cash and cash equivalents (9,836) (67,167)
--------- ---------
Net increase (decrease) in cash
and cash equivalents (390,128) 513,739
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $432,307 $647,048
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Fixed assets acquired under
capital leases $4,483 $4,346
Fixed assets acquired under
financing agreements -- 4,844
Equity securities received for
commercial agreements 331 106,848
Stock issued in connection with
business acquisitions -- 32,130
Cash paid for interest 110,990 65,382
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)
----------------------------------------------------------------------
Q3 Q4 Q1 Q2 Q3 Y / Y
2000 2000 2001 2001 2001 Growth %
----------------------------------------------------------------------
Results of
Operations
Net sales $ 638 $ 972 $ 700 $ 668 $ 639 0%
Net sales --
trailing
twelve months
(TTM) $ 2,466 $ 2,762 $ 2,888 $ 2,978 $ 2,980 21%
Net sales outside
the U.S. (including
U.S. export sales)
-- % of net sales 23% 21% 26% 28% 29% N/A
Gross profit $ 167 $ 224 $ 183 $ 180 $ 162 (3%)
Gross margin -- % of
net sales 26.2% 23.1% 26.1% 26.9% 25.4% N/A
Fulfillment costs --
% of net sales 15.1% 13.5% 14.0% 12.8% 12.7% N/A
Fulfillment costs --
% of U.S. Retail
and International
combined net sales 16.5% 14.9% 14.9% 13.6% 13.7% N/A
Pro forma operating
expenses $ 236 $ 284 $ 231 $ 208 $ 189 (20%)
Pro forma operating
loss $ (68) $ (60) $ (49) $ (28) $ (27) (60%)
Pro forma operating
loss --
% of net sales (10.7%) (6.2%) (6.9%) (4.2%) (4.2%) N/A
GAAP operating loss
before depreciation
and amortization $ (61) $ (220) $ (143) $ (68) $ (9) (86%)
Pro forma net loss $ (89) $ (90) $ (76) $ (58) $ (58) (35%)
Pro forma net loss
per share $ (0.25) $ (0.25) $ (0.21) $ (0.16) $(0.16) (36%)
GAAP net loss $ (241) $ (545) $ (234) $ (168) $ (170) (29%)
GAAP net loss per
share $ (0.68) $ (1.53) $ (0.66) $ (0.47) $(0.46) (32%)
U.S. books, music
and DVD/video (US
BMVD) segment:
US BMVD net sales $ 400 $ 512 $ 410 $ 390 $ 351 (12%)
US BMVD net sales
-- TTM $ 1,646 $ 1,698 $ 1,706 $ 1,711 $ 1,662 1%
US BMVD gross
profit $ 109 $ 139 $ 109 $ 111 $ 93 (14%)
US BMVD pro forma
operating income
-- % of US BMVD
net sales 6% 8% 7% 10% 7% N/A
U.S. electronics,
tools and kitchen
(US ETK) segment:
US ETK net sales $ 98 $ 220 $ 117 $ 111 $ 103 6%
US ETK net sales
-- TTM $ 400 $ 484 $ 526 $ 545 $ 551 38%
US ETK gross
profit $ 9 $ 22 $ 17 $ 13 $ 13 49%
US ETK pro forma
operating loss
-- % of US ETK
net sales (62%) (33%) (39%) (37%) (32%) N/A
Services segment:
Services net sales $ 53 $ 96 $ 42 $ 39 $ 46 (12%)
Services net sales
-- TTM $ 112 $ 198 $ 218 $ 229 $ 223 99%
Services gross
profit $ 31 $ 37 $ 28 $ 26 $ 27 (11%)
Services pro forma
operating income
-- % of Services
net sales 14% 18% 10% 11% 17% N/A
U.S. Retail and
Services combined
pro forma
operating income
(loss) -- %
of U.S. Retail and
Services net sales (5%) (2%) (2%) 0% 0% N/A
International
segment:
International net
sales $ 88 $ 145 $ 132 $ 128 $ 138 58%
International net
sales -- TTM $ 307 $ 381 $ 438 $ 493 $ 544 77%
International
gross profit $ 19 $ 26 $ 28 $ 29 $ 28 49%
International pro
forma operating
loss -- % of
International
net sales (45%) (30%) (26%) (23%) (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 account, cost
per new customer account, inventory turnover, accounts payable days,
and employee data)
----------------------------------------------------------------------
Q3 Q4 Q1 Q2 Q3 Y / Y
2000 2000 2001 2001 2001 Growth %
----------------------------------------------------------------------
Customer Data(a)
New customer
accounts 2.9 4.1 3.0 2.6 2.9 0%
Cumulative customer
accounts 25.4 29.5 32.5 35.1 37.9 49%
Active customer
accounts -- TTM 18.2 19.8 20.5 21.1 23.0 26%
New customer
accounts --
international 0.9 1.1 1.0 0.9 1.0 11%
Cumulative customer
accounts --
international 3.9 5.0 6.0 6.9 7.9 103%
Active customer
accounts --
international --
TTM 3.3 4.2 4.9 5.4 6.1 85%
Net sales (excluding
catalog sales and
inventory sales to
Toysrus.com)
per active
customer account
-- TTM $130 $ 134 $ 135 $ 136 $ 126 (3%)
Cost per new
customer account $ 15 $ 13 $ 12 $ 14 $ 11 (27%)
U.S. customers
(excluding
Marketplace,
Auctions and
zShops customers)
ordering from
non-US BMVD stores 14% 36% 19% 21% 22% N/A
Balance Sheet
Cash and marketable
securities $ 900 $ 1,101 $ 643 $ 609 $ 668 (26%)
Inventory, net $ 164 $ 175 $ 156 $ 129 $ 131 (20%)
Inventory -- % of
net sales 26% 18% 22% 19% 20% N/A
Inventory turnover
-- annualized 11.2 17.7 12.6 13.7 14.7 31%
Inventory turnover
-- TTM 11.5 11.7 13.0 14.0 14.8 29%
Fixed assets, net $ 352 $ 366 $ 304 $ 292 $ 288 (18%)
Accounts payable
days -- ending 60 60 45 48 46 (23%)
Cash Flows
Cash generated by
(used in)
operations $ (4) $ 248 $ (407) $ 2 $ (64) N/M
Cash used in
operations -- TTM $ (347) $ (130) $ (217) $(161) $(221) (36%)
Purchases of fixed
assets $ (42) $ (37) $ (19) $ (10) $ (13) (69%)
Purchases of fixed
assets -- TTM $ (203) $ (135) $ (128) $(109) $ (80) (61%)
Other
Options outstanding
-- % of common
stock outstanding 21% 20% 12% 12% 18% N/A
Employees (full-time
and part-time) 8,500 9,000 8,600 7,800 7,900 (7%)
----------------------------------------------------------------------
(a) 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, new customer accounts, cumulative
customer accounts, active customer accounts, International
customer accounts, International cumulative customers,
International active customer accounts, trailing twelve-month net
sales per active customer account, and cost per new customer
account would have been 2.7 million, 35.0 million, 21.9 million,
.8 million, 6.9 million, 5.5 million, $131, and $13, respectively.
Amounts prior to the second quarter of 2001 have not been
recalculated under the current methodology.
AMAZON.COM, INC. Financial and Operational Highlights Third Quarter Ended September September: see month. 30, 2001 (unaudited) Results of Operations (all comparisons are with the third quarter of 2000) Net Sales -- Our segment reporting includes four segments: U.S. Books, Music and DVD/Video; U.S. Electronics, Tools and Kitchen; International; and Services. Allocation methodologies are consistent with past presentations and prior period amounts have been reclassified to conform with the current period presentation. -- 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, DVD and video products, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- 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 and housewares, camera and photo items, software, cell phones and service, tools and hardware, outdoor living, toys, and computer and video games products, sold other than through our Toysrus.com strategic alliance, and new initiatives, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- The International segment includes all revenues, direct costs and cost allocations associated with the retail sales of our four internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp and www.amazon.co.uk. -- The Services segment includes revenues, direct costs and cost allocations associated with our business-to-business strategic relationships, including our strategic alliance with Toysrus.com, product sales from syndicated stores such as www.borders.com, miscellaneous marketing and promotional revenues, and amounts from Amazon Auctions, zShops and Payments. Amounts earned from the Services segment are attributed to the U.S. -- All references to customers mean customer accounts, which are unique e-mail addresses, established either when a customer's order is shipped or when a customer orders from a third-party seller. Customer accounts exclude Amazon Payments customers, our catalog businesses customers, and the customers of selected companies with whom we have strategic marketing and promotional relationships, but include customers of Amazon Marketplace, Auctions, and zShops services, and customer accounts shared with Toysrus.com and Borders.com. -- 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 and our strategic relationships with selected companies, but exclude sales of inventory to Toysrus.com and catalog sales. A customer is considered active upon placing an order. -- 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, new customer accounts, cumulative customer accounts, active customer accounts, International customer accounts, International cumulative customers, International active customer accounts, trailing twelve-month net sales per active customer account, and cost per new customer account would have been 2.7 million, 35.0 million, 21.9 million, .8 million, 6.9 million, 5.5 million, $131, and $13, respectively. Amounts prior to the second quarter of 2001 have not been recalculated under the current methodology. Gross Profit -- Gross margin, excluding the results of our Services segment, would have been 23%, flat with 23%. -- Costs associated with our service revenues classified as cost of services generally include fulfillment-related costs to ship products on behalf of our service partners, costs to provide customer service, credit-card fees and other related costs. Cost of sales for our Services segment associated with syndicated stores, such as www.borders.com, consists of only the purchase price of consumer products, inbound in·bound 1 adj. Bound inward; incoming: inbound commuter traffic. Adj. 1. inbound and outbound out·bound adj. Outward bound; headed away: outbound trains. Adj. 1. outbound - that is going out or leaving; "the departing train"; "an outward journey"; "outward-bound ships" shipping charges and packaging supplies. -- Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: shipping gross loss was approximately $2 million. The International segment's shipping gross loss was approximately $3 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 from time to time continue offering shipping promotions to our customers and may continue to experience fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. shipping margins. Fulfillment -- Fulfillment costs represent those costs incurred in operating and staffing our fulfillment and customer service centers, including costs attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk 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. Stock-Based Compensation -- During the first quarter of 2001, we offered a limited non-compulsory exchange of employee stock options. This option exchange offer results in variable accounting treatment for approximately 13 million stock options at Sept. 30, 2001, which includes approximately 11 million options granted under the exchange offer with an exercise price of $13.375, and approximately 2 million options that were subject to the exchange offer but were not exchanged. Variable accounting treatment will result in unpredictable charges or credits, recorded to "Stock-based compensation," dependent on fluctuations in quoted prices for our common stock. -- During the three months ended Sept. 30, 2001, we issued approximately 26 million employee stock options, with a weighted average exercise price of $7.93, in connection with our annual performance-based option-grant program. These options are not subject to variable accounting treatment as they were issued at least six months from the date the limited non-compulsory exchange concluded. Amortization of Goodwill and Other Intangibles -- The Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). issued SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 142 "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. " which requires use of a non-amortization approach to account for purchased goodwill and certain intangibles, effective Jan. 1, 2002. We expect the adoption of this accounting standard will have the impact, commencing Jan. 1, 2002, of substantially reducing our amortization of goodwill and intangibles; however, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. reviews may result in future periodic write-downs. Restructuring-Related and Other -- We continued the implementation of our operational restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). plan to reduce our operating costs, streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. our organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. and consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. certain of our fulfillment and customer service operations. As a result of this initiative, we recorded restructuring and other charges of approximately $173 million during the first half of 2001, and $4 million in the third quarter ended Sept. 30, 2001. This initiative involved the reduction of employee staff by approximately 1,300 positions throughout the Company in managerial, professional, clerical, technical and fulfillment roles; consolidation of our Seattle Seattle (sēăt`əl), city (1990 pop. 516,259), seat of King co., W Wash., built on seven hills, between Elliott Bay of Puget Sound and Lake Washington; inc. 1869. corporate office locations; closure of our McDonough, Georgia McDonough is a city in Henry County, Georgia, United States. The population was 8,493 at the 2000 census. Census Estimates of 2005 indicate a population of 15,523. This is due both in part to growth of the city and extension of the city limits. , fulfillment center; seasonal operation of our Seattle fulfillment center; closure of our customer service centers in Seattle and The Hague Hague , The or 's Gra·ven·ha·ge The de facto capital of the Netherlands, in the western part of the country near the North Sea. The Hague grew around a palace built c. , Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. ; and migration of a large portion of our technology infrastructure to a Linux-based operating platform, which entails ongoing lease obligations for equipment no longer utilized. Each component of the restructuring plan has been substantially completed. -- Costs that relate to ongoing operations, including inventory adjustments, are not part of restructuring and other charges. There were no significant inventory write-downs resulting from the restructuring. -- We anticipate the restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. will result in the following net cash outflows:
(in thousands) Termination
Leases Benefits Other Total
Year Ending December 31,
2001 $35,678 $12,707 $4,773 $53,158
2002 35,261 78 3,571 38,910
2003 4,643 -- -- 4,643
2004 1,612 -- -- 1,612
2005 1,563 -- -- 1,563
Thereafter 6,473 -- -- 6,473
------- ------- ------ --------
Total estimated cash outflows $85,230 $12,785 $8,344 $106,359
======= ======= ====== ========
Cash payments resulting from the restructuring, which are included in the above amounts, were $20 million in the first half of 2001, and $15 million in the third quarter ended September 30, 2001. Other Expense, Net -- Other expense primarily relates to net realized gains Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. and losses on sales of marketable securities, miscellaneous operating taxes and foreign currency related transaction gains and losses. Other Losses, Net -- Other losses, net were $64 million for the three months ended September 30, 2001, consisting of the following (in thousands):
Foreign-currency loss on PEACS $(39,572)
Losses on sales of Euro-denominated investments, net (16,332)
Other-than-temporary impairment losses, equity investments (2,382)
Warrant remeasurements and other (5,339)
---------
$(63,625)
=========
-- Currency gains and losses arising from the remeasurement of the PEACS's principal from Euros to U.S. dollars are recorded each quarter. Equity in Losses of Equity-Method Investees -- Equity in losses of equity-method investees represents our share of losses of companies in which we have investments that give us the ability to exercise significant influence, but not control, over an investee. Equity-method losses reduce our underlying investment balances until the recorded basis is reduced to zero. Loss Per Share -- Our segment reporting includes four segments: U.S. Books, Music and DVD/Video; U.S. Electronics, Tools and Kitchen; International; and Services. Allocation methodologies are consistent with past presentations and prior period amounts have been reclassified to conform with the current period presentation. -- 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, DVD and video products, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- 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 and housewares, camera and photo items, software, cell phones and service, tools and hardware, outdoor living, toys, and computer and video games products, sold other than through our Toysrus.com strategic alliance, and new initiatives, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- The International segment includes all revenues, direct costs and cost allocations associated with the retail sales of our four internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp and www.amazon.co.uk. -- The Services segment includes revenues, direct costs and cost allocations associated with our business-to-business strategic relationships, including our strategic alliance with Toysrus.com, product sales from syndicated stores such as www.borders.com, miscellaneous marketing and promotional revenues, and amounts from Amazon Auctions, zShops and Payments. Amounts earned from the Services segment are attributed to the U.S. -- All references to customers mean customer accounts, which are unique e-mail addresses, established either when a customer's order is shipped or when a customer orders from a third-party seller. Customer accounts exclude Amazon Payments customers, our catalog businesses customers, and the customers of selected companies with whom we have strategic marketing and promotional relationships, but include customers of Amazon Marketplace, Auctions, and zShops services, and customer accounts shared with Toysrus.com and Borders.com. -- 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 and our strategic relationships with selected companies, but exclude sales of inventory to Toysrus.com and catalog sales. A customer is considered active upon placing an order. -- 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, new customer accounts, cumulative customer accounts, active customer accounts, International customer accounts, International cumulative customers, International active customer accounts, trailing twelve-month net sales per active customer account, and cost per new customer account would have been 2.7 million, 35.0 million, 21.9 million, .8 million, 6.9 million, 5.5 million, $131, and $13, respectively. Amounts prior to the second quarter of 2001 have not been recalculated under the current methodology. 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 178 million Euros ($162 million, based on an exchange rate of .91 Euros per U.S. dollar, the exchange rate as of Sept. 30, 2001). -- Our marketable securities, at fair value, consist of the following, as of Sept. 30, 2001 (in thousands):
Certificates of deposit $ 18,587
Corporate notes and bonds 30,604
Asset-backed and agency securities 125,997
Treasury notes and bonds 51,153
Equity securities 9,452
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$235,793
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 are consistent with past presentations and prior period amounts have been reclassified to conform with the current period presentation. -- 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, DVD and video products, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- 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 and housewares, camera and photo items, software, cell phones and service, tools and hardware, outdoor living, toys, and computer and video games products, sold other than through our Toysrus.com strategic alliance, and new initiatives, and includes amounts earned on sales of similar products, new or used, sold through Amazon Marketplace. -- The International segment includes all revenues, direct costs and cost allocations associated with the retail sales of our four internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp and www.amazon.co.uk. -- The Services segment includes revenues, direct costs and cost allocations associated with our business-to-business strategic relationships, including our strategic alliance with Toysrus.com, product sales from syndicated stores such as www.borders.com, miscellaneous marketing and promotional revenues, and amounts from Amazon Auctions, zShops and Payments. Amounts earned from the Services segment are attributed to the U.S. -- All references to customers mean customer accounts, which are unique e-mail addresses, established either when a customer's order is shipped or when a customer orders from a third-party seller. Customer accounts exclude Amazon Payments customers, our catalog businesses customers, and the customers of selected companies with whom we have strategic marketing and promotional relationships, but include customers of Amazon Marketplace, Auctions, and zShops services, and customer accounts shared with Toysrus.com and Borders.com. -- 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 and our strategic relationships with selected companies, but exclude sales of inventory to Toysrus.com and catalog sales. A customer is considered active upon placing an order. -- 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, new customer accounts, cumulative customer accounts, active customer accounts, International customer accounts, International cumulative customers, International active customer accounts, trailing twelve-month net sales per active customer account, and cost per new customer account would have been 2.7 million, 35.0 million, 21.9 million, .8 million, 6.9 million, 5.5 million, $131, and $13, respectively. Amounts prior to the second quarter of 2001 have not been recalculated under the current methodology. |
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