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Amazon.com Releases 2001 Second Quarter Results.

Business/High-Tech Editors

SEATTLE--(BUSINESS WIRE)--July 23, 2001

Pro Forma Operating Loss Improves to $28 Million

Used Orders Approximately 10% of Total U.S. Orders

Expands Strategic Alliance with America Online

Amazon.com, Inc. (Nasdaq:AMZN) today announced financial results for its second quarter ended June 30, 2001.

Net sales were within the range of the company's guidance, increasing 16 percent to $668 million, compared with $578 million in the second quarter of 2000. Pro forma loss from operations improved by 69 percent to $28 million, or 4 percent of net sales, compared with $89 million, or 15 percent of net sales in the second quarter of 2000.

Pro forma net loss, which includes net interest expense, improved by 50 percent to $58 million, or $0.16 per share, compared with $116 million, or $0.33 per share in the second quarter of 2000. Net loss (GAAP) for the quarter improved by 47 percent to $168 million, or $0.47 per share, from $317 million, or $0.91 per share. A detailed reconciliation of GAAP to pro forma is included with the attached financial statements.

"We continue to make progress toward reaching pro forma operating profitability in the fourth quarter of 2001," said Warren Jenson, Amazon.com's chief financial officer. "This quarter, the U.S. was profitable on a pro forma operating basis for the first time, and this is our sixth sequential quarter of improved absolute pro forma operating results."

"We thank our over 21 million customers who have purchased in the last year, more than 1 million of whom have purchased a used product from one of our more than 60,000 Amazon Marketplace sellers," said David Risher, Amazon.com's senior vice president of marketing and merchandising. "In fact, this quarter, roughly 10 percent of our U.S. orders were for a used product, and we're very pleased that so many of our customers have embraced this option."

Today the company also announced an expanded strategic alliance with America Online, Inc., a subsidiary of AOL Time Warner (NYSE:AOL). Amazon.com's e-commerce platform will power America Online's Shop@ destinations. America Online, Inc., also invested $100 million in Amazon.com common stock, priced at the lower of $15.282 per share or the average closing price of Amazon.com common stock from July 24 to July 30, 2001. The common stock was sold pursuant to a registration statement that Amazon.com previously filed with the Securities and Exchange Commission.

"We've worked hard to build the easiest-to-use, most customer-focused and technologically sophisticated e-commerce platform," said Jeff Bezos, founder and CEO of Amazon.com. "We are pleased that today's alliance with America Online will bring many of these same benefits to AOL's merchants and more than 30 million members."

Highlights of Second Quarter Results (comparisons are with the second 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.

-- 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 and DVD/video products, and includes amounts earned on sales of
similar products 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 (consumer electronics products, camera and photo items, software,
computer and video games, and cell phones and related service), Tools (tools
and hardware) and Kitchen (kitchen and housewares products and outdoor living
items) products, toys and video games sold other than through our Toysrus.com
strategic alliance, and new initiatives, and includes amounts earned on sales
of similar products sold through Amazon Marketplace.

-- U.S. Retail represents the combination of the U.S. Books, Music and
DVD/Video segment and the U.S. Electronics, Tools and Kitchen segment.

-- The Services segment includes revenues, direct costs and cost allocations
associated with the Company's business-to-business strategic relationships,
including our strategic alliance with Toysrus.com, and miscellaneous
advertising revenues, as well as amounts from Amazon Auctions, zShops and
Payments. Amounts earned from the Services segment are attributed to the U.S.

-- U.S. represents the combination of U.S. Retail and the Services segment.

-- The International segment includes all revenues, direct costs and cost
allocations associated with the retail sales of the Company's four
internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp
and www.amazon.co.uk.

-- Trailing twelve-month sales per active customer account figures include all
amounts earned through Internet sales, including revenue earned from our
strategic relationships with selected companies, but exclude catalog sales and
sales of inventory to Toysrus.com.

-- All references to customers mean customer accounts. Customer accounts
exclude the customers of selected companies with whom we have strategic
relationships, and customer accounts of our catalog businesses, but include
customer accounts shared with Toysrus.com and customers of Amazon Auctions,
zShops and Marketplace services.


Business Outlook

The following forward-looking statements reflect Amazon.com's expectations as of July 23, 2001. Given the potential changes in general economic conditions and consumer spending, the emerging nature of online retail 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.

Third Quarter 2001 Expectations

-- Net sales are expected to be between $625 million and $675

million.

-- Gross margin is expected to be between 24 and 27 percent of

net sales.

-- Absolute pro forma operating losses are expected to be

approximately flat with to very slightly down from the second

quarter of 2001.

-- Cash and marketable securities, including the $100 million

investment from America Online, Inc., announced today, are

expected to be over $600 million at September 30, 2001.

Fourth Quarter 2001 Expectations

-- Net sales are expected to increase between 10 percent and 20

percent over the fourth quarter of 2000.

-- Pro forma operating profitability is expected for the quarter.

-- Cash and marketable securities, including the $100 million

investment from America Online, Inc., announced today, are

expected to be approximately $900 million at December 31,

2001.

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 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 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 throughput and productivity. Other risks and uncertainties include, among others, Amazon.com's anticipated losses, significant amount of indebtedness, competition, seasonality, potential fluctuations in operating results, management of potential growth, system interruption, consumer trends, fulfillment center optimization, 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 for the year ended December 31, 2000, and all subsequent filings, including Quarterly Reports on Form 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 with accounting principles generally accepted in the United States (GAAP). Pro forma operating loss excludes stock-based compensation costs, amortization of goodwill and other intangibles, and restructuring-related and other costs. Management measures the progress of the business using this pro forma information.

Pro forma net loss excludes stock-based compensation costs, amortization of goodwill and other intangibles, restructuring-related and other costs, other gains, equity in losses of equity-method investees, and the cumulative effect of change in accounting principle.

Conference Call

A conference call to discuss second quarter 2001 financial results and 2001 business outlook will be Webcast live on Monday, July 23, 2001, at 5:00 p.m. EDT/2:00 p.m. PDT. This conference call will be available at www.amazon.com/ir through September 30, 2001, and will contain forward-looking statements and other material information.

About Amazon.com

Amazon.com (Nasdaq:AMZN) opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection, along with online auctions and free electronic greeting cards. 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, kitchen and housewares, books, music, DVDs, videos, camera and photo items, toys, software, computer and video games, cell phones and service, tools and hardware, and outdoor living products. Through Amazon Marketplace, zShops and Auctions, any business or individual can sell virtually anything to Amazon.com's over 35 million cumulative customer accounts, and with Amazon 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 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 Six Months Ended
 June 30, June 30,
 ----------------------- -------------------------
 2001 2000 2001 2000
 ---------- ----------- ---------- -----------

Net sales $667,625 $577,876 $1,367,981 $1,151,765
Cost of sales 487,905 441,812 1,005,664 887,567
 ---------- ---------- ---------- ----------
Gross profit 179,720 136,064 362,317 264,198

Operating expenses:
 Fulfillment 85,583 87,597 183,831 187,060
 Marketing 34,658 42,216 71,296 82,864
 Technology
 and content 64,710 67,132 134,994 128,376
 General
 and administrative 22,778 28,468 48,806 54,513
 Stock-based
 compensation 2,351 8,166 5,267 21,818
 Amortization of
 goodwill and other
 intangibles 50,830 80,413 101,661 163,368
 Restructuring-related
 and other 58,650 2,449 172,910 4,468
 ---------- ---------- ---------- ----------
 Total operating
 expenses 319,560 316,441 718,765 642,467
 ---------- ---------- ---------- ----------
Loss
 from operations (139,840) (180,377) (356,448) (378,269)

Interest income 6,807 10,314 16,757 20,440
Interest expense (35,148) (33,397) (68,896) (61,018)
Other expense, net (1,178) (3,272) (5,062) (8,046)
Other gains, net 11,315 -- 45,172 --
 ---------- ---------- ---------- ----------
 Net interest
 expense and
 other (18,204) (26,355) (12,029) (48,624)
 ---------- ---------- ---------- ----------
Loss before equity
 in losses of equity-
 method investees (158,044) (206,732) (368,477) (426,893)

Equity in losses of
 equity-method
 investees, net (10,315) (110,452) (23,490) (198,716)
 ---------- ---------- ---------- ----------
Net loss before
 change in accounting
 principle (168,359) (317,184) (391,967) (625,609)

Cumulative effect
 of change in accounting
 principle -- -- (10,523) --
 ---------- ---------- ---------- ----------
Net loss $(168,359) $(317,184) $(402,490) $(625,609)
 ========== ========== ========== ==========

Basic and diluted loss per share:
 Prior to cumulative effect
 of change in accounting
 principle $(0.47) $(0.91) $(1.09) $(1.80)
 Cumulative effect
 of change in accounting
 principle -- -- (0.03) --
 ---------- ---------- ---------- ----------
 $(0.47) $(0.91) $(1.12) $(1.80)
 ========== ========== ========== ==========

Shares used in computation
 of basic and diluted
 loss per share 359,752 349,886 358,595 346,680
 ========== ========== ========== ==========

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
 June 30, 2001
 ------------------------------------
 Pro Forma
 As Reported Adjustments Pro Forma
 ------------------------------------

Net sales $667,625 -- $667,625
Cost of sales 487,905 -- 487,905
 ------------------------------------
Gross profit 179,720 -- 179,720

Operating expenses:
 Fulfillment 85,583 -- 85,583
 Marketing 34,658 -- 34,658
 Technology and content 64,710 -- 64,710
 General and administrative 22,778 -- 22,778
 Stock-based compensation 2,351 (2,351) --
 Amortization of goodwill
 and other intangibles 50,830 (50,830) --
 Restructuring-related and other 58,650 (58,650) --
 ------------------------------------
 Total operating expenses 319,560 (111,831) 207,729
 ------------------------------------

Loss from operations (139,840) 111,831 (28,009)

Interest income 6,807 -- 6,807
Interest expense (35,148) -- (35,148)
Other expense, net (1,178) -- (1,178)
Other gains, net 11,315 (11,315) --
 ------------------------------------
 Net interest expense and other (18,204) (11,315) (29,519)
 ------------------------------------

Loss before equity in losses of
 equity-method investees (158,044) 100,516 (57,528)

Equity in losses of
 equity-method investees, net (10,315) 10,315 --
 ------------------------------------

Net loss $(168,359) $110,831 $(57,528)
 ====================================
Cash provided by (used in)
 operating activities $ 2,485 $ 2,485
 =========== ============

Basic and diluted loss per share $(0.47) $(0.16)
 =========== ===========

Shares used in computation of basic
 and diluted loss per share 359,752 359,752
 =========== ===========


 Three Months Ended
 June 30, 2000
 ------------------------------------
 Pro Forma
 As Reported Adjustments Pro Forma
 ------------------------------------

Net sales $577,876 -- $577,876
Cost of sales 441,812 -- 441,812
 ------------------------------------
Gross profit 136,064 -- 136,064

Operating expenses:
 Fulfillment 87,597 -- 87,597
 Marketing 42,216 -- 42,216
 Technology and content 67,132 -- 67,132
 General and administrative 28,468 -- 28,468
 Stock-based compensation 8,166 (8,166) --
 Amortization of goodwill
 and other intangibles 80,413 (80,413) --
 Restructuring-related and other 2,449 (2,449) --
 ------------------------------------
 Total operating expenses 316,441 (91,028) 225,413
 ------------------------------------

Loss from operations (180,377) 91,028 (89,349)

Interest income 10,314 -- 10,314
Interest expense (33,397) -- (33,397)
Other expense, net (3,272) -- (3,272)
Other gains, net -- -- --
 ------------------------------------
 Net interest expense and other (26,355) -- (26,355)
 ------------------------------------

Loss before equity in losses of
 equity-method investees (206,732) 91,028 (115,704)

Equity in losses of
 equity-method investees, net (110,452) 110,452 --
 ------------------------------------

Net loss $(317,184) $201,480 $(115,704)
 ====================================
Cash provided by (used in)
 operating activities $ (54,029) $ (54,029)
 =========== ============

Basic and diluted loss per share: $(0.91) $(0.33)
 =========== ===========

Shares used in computation of basic
 and diluted loss per share 349,886 349,886
 =========== ===========

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)

 Six Months Ended
 June 30, 2001
 ------------------------------------
 Pro Forma
 As Reported Adjustments Pro Forma
 ------------------------------------

Net sales $1,367,981 -- $1,367,981
Cost of sales 1,005,664 -- 1,005,664
 ------------------------------------
Gross profit 362,317 -- 362,317

Operating expenses:
 Fulfillment 183,831 -- 183,831
 Marketing 71,296 -- 71,296
 Technology and content 134,994 -- 134,994
 General and administrative 48,806 -- 48,806
 Stock-based compensation 5,267 (5,267) --
 Amortization of goodwill
 and other intangibles 101,661 (101,661) --
 Restructuring-related and other 172,910 (172,910) --
 ------------------------------------
 Total operating expenses 718,765 (279,838) 438,927
 ------------------------------------

Loss from operations (356,448) 279,838 (76,610)

Interest income 16,757 -- 16,757
Interest expense (68,896) -- (68,896)
Other expense, net (5,062) -- (5,062)
Other gains, net 45,172 (45,172) --
 ------------------------------------
 Net interest expense and other (12,029) (45,172) (57,201)
 ------------------------------------

Loss before equity in losses of
 equity-method investees (368,477) 234,666 (133,811)

Equity in losses of
 equity-method investees, net (23,490) 23,490 --
 ------------------------------------

Net loss before change
 in accounting principle (391,967) 258,156 (133,811)

Cumulative effect of change
 in accounting principle (10,523) 10,523 --
 ------------------------------------

Net loss $(402,490) $268,679 $(133,811)
 ====================================
Cash provided by (used in)
 operating activities $(404,499) $(404,499)
 =========== ===========
Basic and diluted loss per share:
Prior to cumulative effect of change
 in accounting principle $(1.09) $(0.37)
Cumulative effect of change
 in accounting principle (0.03) --
 ----------- -----------
 $(1.12) $(0.37)
 =========== ===========

Shares used in computation of basic
 and diluted loss per share 358,595 358,595
 =========== ===========


 Six Months Ended
 June 30, 2000
 ------------------------------------
 Pro Forma
 As Reported Adjustments Pro Forma
 ------------------------------------

Net sales $1,151,765 -- $1,151,765
Cost of sales 887,567 -- 887,567
 ------------------------------------
Gross profit 264,198 -- 264,198

Operating expenses:
 Fulfillment 187,060 -- 187,060
 Marketing 82,864 -- 82,864
 Technology and content 128,376 -- 128,376
 General and administrative 54,513 -- 54,513
 Stock-based compensation 21,818 (21,818) --
 Amortization of goodwill
 and other intangibles 163,368 (163,368) --
 Restructuring-related and other 4,468 (4,468) --
 ------------------------------------
 Total operating expenses 642,467 (189,654) 452,813
 ------------------------------------

Loss from operations (378,269) 189,654 (188,615)

Interest income 20,440 -- 20,440
Interest expense (61,018) -- (61,018)
Other expense, net (8,046) -- (8,046)
Other gains, net -- -- --
 ------------------------------------
 Net interest expense and other (48,624) -- (48,624)
 ------------------------------------

Loss before equity in losses of
 equity-method investees (426,893) 189,654 (237,239)

Equity in losses of
 equity-method investees, net (198,716) 198,716 --
 ------------------------------------

Net loss before change
 in accounting principle (625,609) 388,370 (237,239)

Cumulative effect of change
 in accounting principle -- -- --
 ------------------------------------

Net loss $(625,609) $388,370 $(237,239)
 ====================================

Cash provided by (used in)
 operating activities $ (374,407) $ (374,407)
 ============ ============
Basic and diluted loss per share:
Prior to cumulative effect of change
 in accounting principle $(1.80) $(0.68)
Cumulative effect of change
 in accounting principle -- --
 ----------- -----------
 $(1.80) $(0.68)
 =========== ===========

Shares used in computation of basic
 and diluted loss per share 346,680 346,680
 =========== ===========

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 June 30, 2001
 -------------------------------------------
 U.S. Retail
 -------------------------------------------
 Electronics,
 Books, Music Tools and
 and DVD/Video Kitchen Total
 -------------------------------------------
Net sales $ 389,723 $ 110,957 $ 500,680
Gross profit 110,844 13,159 124,003
Pro forma income
 (loss) from
 operations 38,967 (41,322) (2,355)
Other non-cash and
 restructuring-
 related operating
 expenses -- -- --
Net interest expense
 and other -- -- --
Equity in losses
 of equity-method
 investees, net -- -- --
Net loss -- -- --

Segment highlights:
Y / Y net sales
 growth 1% 21% 5%
Y / Y gross
 profit growth 28% 111% 33%
Gross margin 28% 12% 25%
Pro forma
 operating margin 10% (37%) 0%


 Services International Consolidated
 -------------------------------------------
Net sales $ 38,599 $ 128,346 $ 667,625
Gross profit 26,352 29,365 179,720
Pro forma income
 (loss) from
 operations 4,339 (29,993) (28,009)
Other non-cash and
 restructuring-
 related operating
 expenses -- -- (111,831)
Net interest expense
 and other -- -- (18,204)
Equity in losses
 of equity-method
 investees, net -- -- (10,315)
 -----------
Net loss -- -- $ (168,359)
 ===========

Segment highlights:
Y / Y net sales
 growth 41% 75% 16%
Y / Y gross
 profit growth (1%) 80% 32%
Gross margin 68% 23% 27%
Pro forma
 operating margin 11% (23%) (4%)


 Three Months Ended June 30, 2000
 -------------------------------------------
 U.S. Retail
 -------------------------------------------
 Electronics,
 Books, Music Tools and
 and DVD/Video Kitchen Total
 -------------------------------------------
Net sales $ 385,275 $ 91,755 $ 477,030
Gross profit 86,862 6,249 93,111
Pro forma income
 (loss) from
 operations 10,056 (69,077) (59,021)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- --
Net interest
 expense and other -- -- --
Equity in losses
 of equity-method
 investees, net -- -- --
Net loss -- -- --

Segment highlights:
Y / Y net sales
 growth 38% N/A 70%
Y / Y gross
 profit growth 41% N/A 56%
Gross margin 23% 7% 20%
Pro forma
 operating margin 3% (75%) (12%)


 Services International Consolidated
 -------------------------------------------
Net sales $ 27,453 $ 73,393 $ 577,876
Gross profit 26,667 16,286 136,064
Pro forma income
 (loss) from
 operations 4,175 (34,503) (89,349)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- (91,028)
Net interest
 expense and other -- -- (26,355)
Equity in losses
 of equity-method
 investees, net -- -- (110,452)
 -----------
Net loss -- -- $ (317,184)
 ===========
Segment highlights:
Y / Y net sales
 growth N/A 134% 84%
Y / Y gross
 profit growth N/A 148% 101%
Gross margin 97% 22% 24%
Pro forma
 operating margin 15% (47%) (15%)


 Six Months Ended June 30, 2001
 -------------------------------------------
 U.S. Retail
 -------------------------------------------
 Electronics,
 Books, Music Tools and
 and DVD/Video Kitchen Total
 -------------------------------------------
Net sales $ 799,309 $ 227,464 $1,026,773
Gross profit 219,963 30,379 250,342
Pro forma income
 (loss) from
 operations 66,592 (87,155) (20,563)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- --
Net interest expense
 and other -- -- --
Equity in losses
 of equity-method
 investees, net -- -- --
Cumulative effect
 of change in
 accounting
 principle -- -- --

Net loss -- -- --

Segment highlights:
Y / Y net sales
 growth 2% 37% 8%
Y / Y gross
 profit growth 30% 128% 37%
Gross margin 28% 13% 24%
Pro forma
 operating margin 8% (38%) (2%)


 Services International Consolidated
 -------------------------------------------
Net sales $ 80,757 $ 260,451 $1,367,981
Gross profit 54,560 57,415 362,317
Pro forma income
 (loss) from
 operations 8,515 (64,562) (76,610)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- (279,838)
Net interest
 expense and other -- -- (12,029)
Equity in losses
 of equity-method
 investees, net -- -- (23,490)
Cumulative effect
 of change in
 accounting
 principle -- -- (10,523)
 -----------
Net loss -- -- $ (402,490)
 ===========
Segment highlights:
Y / Y net sales
 growth 61% 75% 19%
Y / Y gross
 profit growth 12% 78% 37%
Gross margin 68% 22% 26%
Pro forma
 operating margin 11% (25%) (6%)


 Six Months Ended June 30, 2000
 -------------------------------------------
 U.S. Retail
 -------------------------------------------
 Electronics,
 Books, Music Tools and
 and DVD/Video Kitchen Total
 -------------------------------------------
Net sales $ 786,690 $ 166,351 $ 953,041
Gross profit 169,717 13,308 183,025
Pro forma income
 (loss) from
 operations 7,631 (136,326) (128,695)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- --
Net interest
 expense and other -- -- --
Equity in losses
 of equity-method
 investees, net -- -- --
Net loss -- -- --

Segment highlights:
Y / Y net sales
 growth 44% N/A 74%
Y / Y gross
 profit growth 40% N/A 53%
Gross margin 22% 8% 19%
Pro forma
 operating margin 1% (82%) (14%)


 Services International Consolidated
 -------------------------------------------
Net sales $ 50,199 $ 148,525 $1,151,765
Gross profit 48,851 32,322 264,198
Pro forma income
 (loss) from
 operations 2,031 (61,951) (188,615)
Other non-cash
 and restructuring-
 related operating
 expenses -- -- (189,654)
Net interest
 expense and other -- -- (48,624)
Equity in losses
 of equity-method
 investees, net -- -- (198,716)
 -----------
Net loss -- -- $ (625,609)
 ===========
Segment highlights:
Y / Y net sales
 growth N/A 160% 89%
Y / Y gross
 profit growth N/A 176% 100%
Gross margin 97% 22% 23%
Pro forma
 operating margin 4% (42%) (16%)


Supplemental geographical segment information is as follows (in
thousands):

 Three Months Ended Three Months Ended
 June 30, 2001 June 30, 2000
 ====================== ======================
 Pro Forma Pro Forma
 Income Income
 (Loss) from (Loss) from
 Net Sales Operations Net Sales Operations
 ---------------------- ----------------------
 U.S.
 Books, Music
 and DVD/Video $ 389,723 $ 38,967 $ 385,275 $ 10,056
 Electronics,
 Tools and
 Kitchen 110,957 (41,322) 91,755 (69,077)
 ---------------------- ----------------------
 U.S. Retail 500,680 (2,355) 477,030 (59,021)
 Services 38,599 4,339 27,453 4,175
 ---------------------- ----------------------
 Total U.S. 539,279 1,984 504,483 (54,846)


 International 128,346 (29,993) 73,393 (34,503)
 ---------------------- ----------------------
Total
 Consolidated $ 667,625 $ (28,009) $ 577,876 $ (89,349)
 ====================== ======================


 Six Months Ended Six Months Ended
 June 30, 2001 June 30, 2000
 ====================== ======================
 Pro Forma Pro Forma
 Income Income
 (Loss) from (Loss) from
 Net Sales Operations Net Sales Operations
 ---------------------- ----------------------
 U.S.
 Books, Music
 and DVD/Video $ 799,309 $ 66,592 $ 786,690 $ 7,631
 Electronics,
 Tools and
 Kitchen 227,464 (87,155) 166,351 (136,326)
 ---------------------- ----------------------
 U.S. Retail 1,026,773 (20,563) 953,041 (128,695)
 Services 80,757 8,515 50,199 2,031
 ---------------------- ----------------------
 Total U.S. 1,107,530 (12,048) 1,003,240 (126,664)


 International 260,451 (64,562) 148,525 (61,951)
 ---------------------- ----------------------
Total
 Consolidated $1,367,981 $ (76,610) $1,151,765 $ (188,615)
 ====================== ======================

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)

 June 30, December 31,
 2001 2000
 ----------- -----------
ASSETS
Current assets:
 Cash and cash equivalents $ 462,949 $ 822,435
 Marketable securities 146,020 278,087
 Inventories 129,035 174,563
 Prepaid expenses and other current assets 71,353 86,044
 ----------- -----------
 Total current assets 809,357 1,361,129

Fixed assets, net 292,422 366,416
Goodwill, net 89,002 158,990
Other intangibles, net 63,893 96,335
Investments in equity-method investees 12,223 52,073
Other equity investments 24,729 40,177
Other assets 53,410 60,049
 ----------- -----------
 Total assets $ 1,345,036 $ 2,135,169
 =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
 Accounts payable $ 257,976 $ 485,383
 Accrued expenses and other current
 liabilities 241,149 272,683
 Unearned revenue 86,945 131,117
 Interest payable 43,833 69,196
 Current portion of long-term debt and
 other 18,337 16,577
 ----------- -----------
 Total current liabilities 648,240 974,956

Long-term debt and other 2,126,727 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 --
 362,191 and 357,140 shares at
 June 30, 2001 and December 31, 2000,
 respectively 3,622 3,571
Additional paid-in capital 1,356,216 1,338,303
Deferred stock-based compensation (10,132) (13,448)
Accumulated other comprehensive loss (83,846) (2,376)
Accumulated deficit (2,695,791) (2,293,301)
 ----------- -----------
 Total stockholders' deficit (1,429,931) (967,251)
 ----------- -----------
 Total liabilities and stockholders'
 deficit $ 1,345,036 $ 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
 June 30,
 -----------------------
 2001 2000
 -----------------------
CASH AND CASH EQUIVALENTS,
 BEGINNING OF PERIOD $ 446,944 $ 755,133
OPERATING ACTIVITIES:
Net loss (168,359) (317,184)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
 Depreciation of fixed assets and other
 amortization 20,794 20,682
 Stock-based compensation 2,351 8,166
 Equity in losses of equity-method investees,
 net 10,315 110,452
 Amortization of goodwill and other intangibles 50,830 80,413
 Non-cash restructuring-related and other costs 6,525 2,449
 Amortization of previously unearned revenue (31,908) (20,203)
 Loss (gain) on sale of marketable securities 187 1,648
 Other gains, net (11,315) --
 Non-cash interest expense and other 6,713 6,208
 Cumulative effect of change in accounting
 principle -- --

Changes in operating assets and liabilities:
 Inventories 25,277 (103)
 Prepaid expenses and other current assets (12,203) 4,104
 Accounts payable (1,632) 30,442
 Accrued expenses and other current liabilities 52,271 (756)
 Unearned revenue 25,192 1,011
 Interest payable 27,447 18,642
 ---------- ----------
Net cash provided by (used in) operating
 activities 2,485 (54,029)

INVESTING ACTIVITIES:
Sales and maturities of marketable securities 66,971 68,949
Purchases of marketable securities (26,743) (21,930)
Purchases of fixed assets, including
 internal-use software and web-site development (10,425) (28,878)
Investments in equity-method investees and
 other investments -- (8,595)
 ---------- ----------
 Net cash provided by investing activities 29,803 9,546

FINANCING ACTIVITIES:
Proceeds from exercise of stock options 7,644 13,794
Proceeds from long-term debt and other -- 1,625
Repayment of long-term debt and other (4,094) (5,197)
Financing costs -- (227)
 ---------- ----------
 Net cash provided by financing activities 3,550 9,995
Effect of exchange rate changes on cash and cash
 equivalents (19,833) (268)
 ---------- ----------
Net increase (decrease) in cash and
 cash equivalents 16,005 (34,756)
 ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 462,949 $ 720,377
 ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Fixed assets acquired under capital leases $ 171 $ 844
Fixed assets acquired under financing agreements -- 293
Stock issued in connection with business
 acquisitions -- 30,000
Equity securities received for commercial
 agreements -- --
Cash paid for interest 1,198 7,996


 Six Months Ended
 June 30,
 -----------------------
 2001 2000
 -----------------------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 822,435 $ 133,309
OPERATING ACTIVITIES:
Net loss (402,490) (625,609)
Adjustments to reconcile net loss to net cash
 provided by (used in) operating activities:
 Depreciation of fixed assets and other
 amortization 43,867 38,862
 Stock-based compensation 5,267 21,818
 Equity in losses of equity-method investees,
 net 23,490 198,716
 Amortization of goodwill and other intangibles 101,661 163,368
 Non-cash restructuring-related and other costs 68,529 4,468
 Amortization of previously unearned revenue (65,300) (38,688)
 Loss (gain) on sale of marketable securities 214 (952)
 Other gains, net (45,172) --
 Non-cash interest expense and other 13,285 12,089
 Cumulative effect of change in accounting
 principle 10,523 --

Changes in operating assets and liabilities:
 Inventories 45,100 48,286
 Prepaid expenses and other current assets 15,131 1,037
 Accounts payable (231,390) (176,787)
 Accrued expenses and other current liabilities (5,491) (32,294)
 Unearned revenue 43,197 1,625
 Interest payable (24,920) 9,654
 ---------- ----------
Net cash provided by (used in) operating
 activities (404,499) (374,407)

INVESTING ACTIVITIES:
Sales and maturities of marketable securities 161,337 449,294
Purchases of marketable securities (57,121) (50,786)
Purchases of fixed assets, including internal-use
 software and web-site development (29,862) (55,479)
Investments in equity-method investees and other
 investments -- (56,082)
 ---------- ----------
 Net cash provided by investing activities 74,354 286,947

FINANCING ACTIVITIES:
Proceeds from exercise of stock options 13,477 35,153
Proceeds from long-term debt and other 10,000 680,999
Repayment of long-term debt and other (8,669) (9,220)
Financing costs -- (16,122)
 ---------- ----------
 Net cash provided by financing activities 14,808 690,810
Effect of exchange rate changes on cash and cash
 equivalents (44,149) (16,282)
 ---------- ----------
Net increase (decrease) in cash and cash
 equivalents (359,486) 587,068
 ---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 462,949 $ 720,377
 ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Fixed assets acquired under capital leases $ 2,469 $ 4,346
Fixed assets acquired under financing agreements -- 4,844
Stock issued in connection with business
 acquisitions -- 30,000
Equity securities received for commercial
 agreements 331 97,839
Cash paid for interest 87,422 43,831

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)


 2000 Y/Y
 -------------------------
 Q2 Q3 Q4 Q1 2001 Q2 2001 Growth
 %
 -------------------------------------------------
Results of Operations

Net sales $ 578 $ 638 $ 972 $ 700 $ 668 16%
Net sales -
 trailing twelve
 months (TTM) $ 2,184 $ 2,466 $ 2,762 $ 2,888 $ 2,978 36%
Net sales outside
 the U.S.
 (including .com
 export sales) -
 % of net sales 23% 23% 21% 26% 28% N/A

Gross profit $ 136 $ 167 $ 224 $ 183 $ 180 32%
Gross margin - %
 of net sales 23.5% 26.2% 23.1% 26.1% 26.9% N/A

Fulfillment costs -
 % of net sales 15.2% 15.1% 13.5% 14.0% 12.8% N/A

Pro forma operating
 expenses $ 225 $ 236 $ 284 $ 231 $ 208 (8%)

Pro forma operating
 loss $ (89) $ (68) $ (60) $ (49) $ (28) (69%)
Pro forma operating
 loss - % of net
 sales (15.5%) (10.7%) (6.2%) (6.9%) (4.2%) N/A

Pro forma net loss $ (116) $ (89) $ (90) $ (76) $ (58) (50%)
Pro forma net loss
 per share $ (0.33) $ (0.25) $ (0.25) $ (0.21) $ (0.16) (52%)

GAAP net loss $ (317) $ (241) $ (545) $ (234) $ (168) (47%)
GAAP net loss per
 share $ (0.91) $ (0.68) $ (1.53) $ (0.66) $ (0.47) (48%)

U.S. books, music and DVD/video (US BMVD) segment:
 US BMVD net sales $ 385 $ 400 $ 512 $ 410 $ 390 1%
 US BMVD gross
 profit $ 87 $ 109 $ 139 $ 109 $ 111 28%
 US BMVD pro forma
 operating income
 - % of US BMVD
 net sales 3% 6% 8% 7% 10% N/A

U.S. electronics, tools and kitchen (US ETK) segment:
 US ETK net sales $ 92 $ 98 $ 220 $ 117 $ 111 21%
 US ETK gross
 profit $ 6 $ 9 $ 22 $ 17 $ 13 117%
 US ETK pro forma
 operating loss -
 % of US ETK net
 sales (75%) (62%) (33%) (39%) (37%) N/A

Services segment:
 Services net
 sales $ 27 $ 53 $ 96 $ 42 $ 39 44%
 Services gross
 profit $ 27 $ 31 $ 37 $ 28 $ 26 (4%)
 Services pro forma
 operating income
 - % of services
 net sales 15% 14% 18% 10% 11% N/A

U.S. Retail and
 Services combined
 pro forma
 operating income
 (loss) - % of U.S.
 Retail and
 Services net sales (11%) (5%) (2%) (2%) 0% N/A

International segment:
 International net
 sales $ 73 $ 88 $ 145 $ 132 $ 128 75%
 International
 gross profit $ 16 $ 19 $ 26 $ 28 $ 29 81%
 International pro
 forma operating
 loss - % of
 international net
 sales (47%) (45%) (30%) (26%) (23%) N/A


 AMAZON.COM, INC.
 Supplemental Financial Information and Business Metrics
 (unaudited)
 (in millions, except cost per new customer account, net sales per
 active customer account, inventory turnover, accounts payable days,
 and employee data)

 2000
 ------------------------- Y/Y
 Q2 Q3 Q4 Q1 2001 Q2 2001 Growth
 %
 -------------------------------------------------
Customer Data

New customer
 accounts 2.5 2.9 4.1 3.0 2.6 4%
Cumulative customer
 accounts 22.5 25.4 29.5 32.5 35.1 56%
Active customer
 accounts - TTM 17.0 18.2 19.8 20.5 21.1 24%

New customer accounts
 - international 0.6 0.9 1.1 1.0 0.9 50%
Cumulative customer
 accounts -
 international 3.0 3.9 5.0 6.0 6.9 130%
Active customer
 accounts -
 international -
 TTM 2.7 3.3 4.2 4.9 5.4 100%

Cost per new customer
 account $ 17 $ 15 $ 13 $ 12 $ 14 (18%)

Net sales (excluding
 catalog sales and
 inventory sales to
 Toysrus.com) per
 active customer
 account - TTM $ 125 $ 130 $ 134 $ 135 $ 136 9%

U.S. customers
 purchasing from
 non-US BMVD stores 13% 14% 36% 19% 21% N/A

Balance Sheet

Cash and marketable
 securities $ 908 $ 900 $ 1,101 $ 643 $ 609 (33%)

Inventory, net $ 172 $ 164 $ 175 $ 156 $ 129 (25%)
Inventory - % of net
 sales 30% 26% 18% 22% 19% N/A
Inventory turnover
 - annualized 10.3 11.2 17.7 12.6 13.7 33%

Fixed assets,
 net $ 344 $ 352 $ 366 $ 304 $ 292 (15%)

Accounts payable days
 - ending 59 60 60 45 48 (19%)

Cash Flows

Cash generated by
 (used in)
 operations $ (54) $ (4) $ 248 $ (407) $ 2 104%
Cash used in
 operations -
 TTM $ (418) $ (347) $ (130) $ (217) $ (161) (61%)

Purchases of fixed
 assets $ (29) $ (42) $ (37) $ (19) $ (10) (66%)

Other

Employees (full-time
 and part-time) 7,700 8,500 9,000 8,600 7,800 1%


 AMAZON.COM, INC.
 Financial and Operational Highlights
 Second Quarter Ended June 30, 2001
 (unaudited)


Results of Operations (all comparisons are with the second 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.

-- 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 and DVD/video products, and includes amounts earned on sales of
similar products 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 (consumer electronics products, camera and photo items, software,
computer and video games, and cell phones and related service), Tools (tools
and hardware) and Kitchen (kitchen and housewares products and outdoor living
items) products, toys and video games sold other than through our Toysrus.com
strategic alliance, and new initiatives, and includes amounts earned on sales
of similar products sold through Amazon Marketplace.

-- U.S. Retail represents the combination of the U.S. Books, Music and
DVD/Video segment and the U.S. Electronics, Tools and Kitchen segment.

-- The Services segment includes revenues, direct costs and cost allocations
associated with the Company's business-to-business strategic relationships,
including our strategic alliance with Toysrus.com, and miscellaneous
advertising revenues, as well as amounts from Amazon Auctions, zShops and
Payments. Amounts earned from the Services segment are attributed to the U.S.

-- U.S. represents the combination of U.S. Retail and the Services segment.

-- The International segment includes all revenues, direct costs and cost
allocations associated with the retail sales of the Company's four
internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp
and www.amazon.co.uk.

-- Trailing twelve-month sales per active customer account figures include all
amounts earned through Internet sales, including revenue earned from our
strategic relationships with selected companies, but exclude catalog sales and
sales of inventory to Toysrus.com.

-- All references to customers mean customer accounts. Customer accounts
exclude the customers of selected companies with whom we have strategic
relationships, and customer accounts of our catalog businesses, but include
customer accounts shared with Toysrus.com and customers of Amazon Auctions,
zShops and Marketplace services.


Gross Profit

-- Gross margin, excluding the results of our Services segment,

would have been 24%, up from 20%.

-- Shipping gross loss was approximately $2 million, down from

gross profit of $7 million. We will from time to time continue

to offer shipping promotions to our customers and may continue

to experience fluctuating shipping margins.

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 amounted to approximately 13% of net sales,

down from 15% of net sales; excluding net sales from our

Services segment, fulfillment costs would have been

approximately 14%, down from 16%.

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 June 30, 2001, which

includes approximately 12 million options granted under the

exchange offer with an exercise price of $13.375, and 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.

-- Stock-based compensation includes stock-based charges

resulting from variable accounting treatment, option-related

deferred compensation recorded at our initial public offering

and certain other compensation and severance arrangements.

Stock-based compensation also includes the portion of

acquisition-related consideration conditioned on the continued

tenure of key employees of certain of our acquired businesses.

During the quarter, stock-based compensation related to

variable accounting treatment was $4 million, and the

termination of certain acquisition-related employees prior to

vesting in stock-based compensation awards had the effect of

reducing stock-based compensation to $2 million.

Amortization of Goodwill and Other Intangibles

-- The Financial Accounting Standards Board issued SFAS No. 142

"Goodwill and Other Intangible Assets" which requires use of a

non-amortization approach to account for purchased goodwill

and certain intangibles, effective January 1, 2002. We expect

the adoption of this accounting standard will have the impact,

commencing January 1, 2002, of reducing to zero our

amortization of goodwill and significantly reducing our

amortization of intangibles.

Restructuring-Related and Other

-- We continued the implementation of our operational

restructuring plan to reduce our operating costs, streamline

our organizational structure and consolidate certain of our

fulfillment and customer service operations. As a result of

this initiative, we recorded restructuring and other charges

of approximately $114 million during the first quarter and $59

million during the second quarter of 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 corporate office locations;

closure of our McDonough, Georgia, fulfillment center;

seasonal operation of our Seattle fulfillment center; closure

of our customer service centers in Seattle and The Hague,

Netherlands; 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 as of June 30, 2001.

-- Costs that relate to ongoing operations are not part of

restructuring and other charges. All inventory adjustments

that may result from the closure or seasonal operation of our

fulfillment centers are classified in "Cost of goods sold" on

the consolidated statements of operations. There were no

significant inventory write-downs resulting from the

restructuring.

-- For the quarter ended June 30, 2001, the charges associated

with our restructuring were as follows (in thousands):

 Asset impairments $ 7,225
 Continuing lease obligations 49,713
 Termination benefits (327)
 Broker commissions, professional fees and
 other miscellaneous restructuring costs 2,039
 --------
 $ 58,650
 ========


-- Continuing lease obligations primarily relate to technology

infrastructure no longer being utilized. Where possible, we

are actively seeking third parties to sublease abandoned

equipment. Amounts expensed represent estimates of

undiscounted future cash outflows, offset by anticipated

third-party subleases.

-- We anticipate the restructuring charges will result in the

following net cash outflows:

 Termination
 (in thousands) Leases Benefits Other Total
 Year Ending December 31,
 2001 $ 35,678 $ 12,108 $ 4,630 $ 52,416
 2002 34,059 78 3,538 37,675
 2003 4,643 -- -- 4,643
 2004 1,589 -- -- 1,589
 2005 1,563 -- -- 1,563
 Thereafter 6,473 -- -- 6,473
 -------- -------- -------- --------
 Total estimated cash
 outflows $ 84,005 $ 12,186 $ 8,168 $104,359
 ======== ======== ======== ========

First and second quarter 2001 cash payments resulting from the
restructuring, which are included in the above amounts, were $10
million and $11 million, respectively.


Net Interest Expense and Other

-- Other expense primarily relates to net realized gains and

losses on sales of marketable securities, miscellaneous

operating taxes and foreign currency transaction losses.

Other Gains

-- Other gains, net were $11 million for the three months ended

June 30, 2001, consisting of the following (in thousands):


 Foreign currency gain on PEACS $ 22,876
 Foreign currency losses on conversion
 of Euro-denominated investments (6,216)
 Other than temporary impairment losses,
 equity investments (4,858)
 Warrant remeasurements and other (487)
 --------
 $ 11,315
 ========


-- As of June 30, 2001, our recorded basis in our investment in

Webvan Group, Inc., was reduced to zero as Webvan Group, Inc.

ceased operations and announced their intentions to file for

bankruptcy. We do not expect to recover any portion of our

investment in Webvan Group, Inc.

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.

-- 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 and DVD/video products, and includes amounts earned on sales of
similar products 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 (consumer electronics products, camera and photo items, software,
computer and video games, and cell phones and related service), Tools (tools
and hardware) and Kitchen (kitchen and housewares products and outdoor living
items) products, toys and video games sold other than through our Toysrus.com
strategic alliance, and new initiatives, and includes amounts earned on sales
of similar products sold through Amazon Marketplace.

-- U.S. Retail represents the combination of the U.S. Books, Music and
DVD/Video segment and the U.S. Electronics, Tools and Kitchen segment.

-- The Services segment includes revenues, direct costs and cost allocations
associated with the Company's business-to-business strategic relationships,
including our strategic alliance with Toysrus.com, and miscellaneous
advertising revenues, as well as amounts from Amazon Auctions, zShops and
Payments. Amounts earned from the Services segment are attributed to the U.S.

-- U.S. represents the combination of U.S. Retail and the Services segment.

-- The International segment includes all revenues, direct costs and cost
allocations associated with the retail sales of the Company's four
internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp
and www.amazon.co.uk.

-- Trailing twelve-month sales per active customer account figures include all
amounts earned through Internet sales, including revenue earned from our
strategic relationships with selected companies, but exclude catalog sales and
sales of inventory to Toysrus.com.

-- All references to customers mean customer accounts. Customer accounts
exclude the customers of selected companies with whom we have strategic
relationships, and customer accounts of our catalog businesses, but include
customer accounts shared with Toysrus.com and customers of Amazon Auctions,
zShops and Marketplace services.


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 marketable securities, at fair value, consist of the

following, as of June 30, 2001 (in thousands):


 Corporate notes and bonds $ 14,898
 Asset-backed and agency securities 34,346
 Treasury notes and bonds 83,950
 Equity securities 12,826
 --------
 $146,020
 ========


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.

-- 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 and DVD/video products, and includes amounts earned on sales of
similar products 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 (consumer electronics products, camera and photo items, software,
computer and video games, and cell phones and related service), Tools (tools
and hardware) and Kitchen (kitchen and housewares products and outdoor living
items) products, toys and video games sold other than through our Toysrus.com
strategic alliance, and new initiatives, and includes amounts earned on sales
of similar products sold through Amazon Marketplace.

-- U.S. Retail represents the combination of the U.S. Books, Music and
DVD/Video segment and the U.S. Electronics, Tools and Kitchen segment.

-- The Services segment includes revenues, direct costs and cost allocations
associated with the Company's business-to-business strategic relationships,
including our strategic alliance with Toysrus.com, and miscellaneous
advertising revenues, as well as amounts from Amazon Auctions, zShops and
Payments. Amounts earned from the Services segment are attributed to the U.S.

-- U.S. represents the combination of U.S. Retail and the Services segment.

-- The International segment includes all revenues, direct costs and cost
allocations associated with the retail sales of the Company's four
internationally focused sites: www.amazon.de, www.amazon.fr, www.amazon.co.jp
and www.amazon.co.uk.

-- Trailing twelve-month sales per active customer account figures include all
amounts earned through Internet sales, including revenue earned from our
strategic relationships with selected companies, but exclude catalog sales and
sales of inventory to Toysrus.com.

-- All references to customers mean customer accounts. Customer accounts
exclude the customers of selected companies with whom we have strategic
relationships, and customer accounts of our catalog businesses, but include
customer accounts shared with Toysrus.com and customers of Amazon Auctions,
zShops and Marketplace services.
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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