(BSNS WIRE) Amazon.com Third-quarter Sales Up 79% Year-Over-Year; Electroni
Amazon.com Third-quarter Sales Up 79% Year-Over-Year; Electronics Store Becomes
Second-Largest Business At Amazon.com, Surpassing Music
Business Editors
SEATTLE--(BUSINESS WIRE)--Oct. 24, 2000--
US Books, Music and DVD/Video Segment Achieves 6% Pro Forma Operating
Margin; Cash and Marketable Securities of $900 Million
Amazon.com, Inc. (Nasdaq:AMZN) today announced net sales for the
third quarter of 2000 were $638 million, an increase of 79% over net
sales of $356 million for the third quarter of 1999. For the first
time, the Electronics store has grown to become the second-largest
U.S. store, behind Books and ahead of Music. Gross margin for the
third quarter of 2000 was 26%, up from 20% for the third quarter of
1999.
Pro forma operating loss for the third quarter of 2000 was $68
million, or 11% of sales, compared to a pro forma operating loss of
$79 million, or 22% of sales, in the third quarter of 1999.
Third-quarter pro forma net loss was $0.25 per share, an improvement
over the pro forma net loss of $0.26 per share in the third quarter of
1999.
Amazon.com's U.S. Books, Music and DVD/Video segment's fully
allocated third-quarter pro forma operating profit was $25 million, or
6% of sales, up from 0% in the same period a year ago.
"The strong growth in electronics is due to great prices and deep
selection combined with our widely recognized customer service. In
September, 6 of the 10 top-selling items on Amazon.com were from our
electronics store," said Jeff Bezos, Amazon.com chief executive
officer. "As always, we're grateful to customers for continuing to
choose Amazon.com."
"This was a strong quarter for Amazon.com; we are driving toward
profitability, and we surpassed our key internal operational and
financial objectives," said Warren Jenson, Amazon.com chief financial
officer. "As we enter our sixth holiday season, we are better prepared
operationally than ever to deliver for customers, while at the same
time we expect to improve our operating margin for the fourth
consecutive quarter."
Amazon.com worldwide cumulative customer accounts increased by
over 2.8 million during the quarter to over 25 million as of September
30, 2000. Sales per active customer for the twelve months ended
September 30, 2000, were $130, up from $108 for the same period a year
ago. As part of its agreement with Amazon.com, Toysrus.com purchased
at cost approximately $20 million of toys-related inventory, which is
included in third-quarter sales.
Amazon International sales, which comprise the Amazon.co.uk,
Amazon.de, and Amazon.fr businesses, were $88 million, up 121% from
$40 million for the third quarter of 1999. Amazon International added
approximately 800,000 new customer accounts in the third quarter of
2000, bringing cumulative Amazon International customer accounts to
approximately 3.9 million, an increase of 225% from approximately 1.2
million as of September 30, 1999.
Operating cash usage in the third quarter was $4 million, compared
to $76 million in the third quarter of 1999.
Third-quarter GAAP net loss was $0.68 per share, compared to a net
loss of $0.59 per share in the third quarter of 1999.
Recent Highlights
Global Expansion
-- Amazon.com launched Amazon.fr, a French-language site offering
books, music CDs, DVDs and videos dedicated to customers in
France and to French-speaking customers around the world.
Amazon.fr was named the best overall online retailer by
leading French publications Capital, Le Monde and Journal du
Net.
-- Amazon.de launched a Software store.
Expanded Selection and Partnerships
-- Amazon.com, in connection with a strategic alliance with
Toysrus.com, launched a co-branded toy store. The new online
store combined the strengths of the two e-tailers' prior
stores, to bring customers the best toy-buying experience
available online.
-- Microsoft Corp. (NASDAQ:MSFT) announced its Microsoft Reader
had been selected by Amazon.com as the preferred format for
Amazon.com's forthcoming e-Books store.
-- Amazon.com launched a Camera & Photo store, offering digital
and film cameras, optical gear, and accessories, and announced
an alliance with Ofoto, Inc., a premier online photography
service.
-- Apple (Nasdaq:AAPL) announced it had licensed Amazon.com's
1-Click patent and trademark for use in its Apple Online
Store, as part of an e-commerce patent cross-licensing
agreement.
-- Amazon.com launched a Computer & Video Games store, offering
the largest selection of computer and video games and
accessories available, online or off-, to provide a one-stop
gaming destination for both casual and hard-core gaming
enthusiasts.
-- Amazon.com launched a new-car buying service, providing
customers with a superior car-buying experience backed by
service and support from an expansive network of premier auto
dealers affiliated with its partner Greenlight.com.
Platform Growth
-- Amazon.com announced the availability of Mobile Auctions, a
wireless service that provides customers the ability to search
for new auction items, enter and monitor bids, and track
sales, and offers mobile alerts for Amazon Auctions directly
from a mobile phone.
-- Enrollment in the Amazon.com Associates Program surpassed
500,000 members, reinforcing its position as the largest and
most popular program of its kind.
Business Outlook
The following forward looking-statements reflect Amazon.com's
expectations as of October 24, 2000. Given the emerging nature of
online retail, potential changes in general economic conditions, 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 until its next quarterly results
announcement, other than in publicly available statements.
Fourth Quarter 2000 Expectations
-- Sales are expected to be between $950 million and $1.05
billion.
-- Gross margin is expected to be seasonally down compared to the
third quarter of this year, although up strongly over the
fourth quarter of 1999.
-- Pro forma operating losses are expected to be between 5% and
8% of sales.
-- Cash and marketable securities at year-end are expected to be
over $1 billion.
2001 Expectations
-- Sales are expected to be approximately $4 billion.
-- Pro forma loss from operations is expected to narrow to less
than 5% of sales, perhaps substantially so.
-- Cash and marketable securities as of March 31, 2001, are
expected to be approximately $700 million, and the company
expects to generate significant positive cash flow from
operations for the nine months ended December 31, 2001.
The aforementioned forward-looking statements are inherently
difficult to predict. Actual results could differ materially for a
variety of reasons, including the rate of growth of the Internet and
online commerce, the amount that Amazon.com invests in new business
opportunities and the timing of those investments, customer spending
patterns, the mix of products sold to customers, the mix of revenues
derived from products sales as compared to services, risks of
inventory management, the magnitude of losses arising from investments
accounted for under the equity method, the degree to which the company
enters into Amazon Commerce Network and other strategic transactions,
fluctuations in the value of securities and non-cash payments
Amazon.com receives in connection with such transactions, and risks of
distribution and fulfillment throughput and productivity. Other risks
and uncertainties include Amazon.com's limited operating history,
anticipated losses, potential fluctuations in quarterly operating
results, seasonality, consumer trends, competition, risks associated
with distribution center expansion, adverse consequences arising from
system interruptions, risks associated with management of potential
growth, risks related to auction and zShops services, risks related to
fraud and Amazon.com Payments, and risks of new business areas,
international expansion, business combinations, and strategic
alliances. More information about factors that potentially could
affect Amazon.com's financial results is included in Amazon.com's
filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K and 10-K/A for the year ended December 31,
1999, and its Quarterly Report on Form 10-Q for the quarter ended June
30, 2000.
A live Webcast of Amazon.com's third quarter 2000 financial
results conference call can be heard at 2:00 p.m. PDT/5:00 p.m. EDT
today at www.amazon.com/ir. The call will also be archived and
available until December 31, 2000.
About Amazon.com
Amazon.com (Amazon.com, Inc., and its subsidiaries) is the
Internet's No. 1 retailer. 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 lists more than 28
million unique items in categories such as electronics, kitchen
products, books, music, DVDs, videos, camera and photo items, toys,
software, computer and video games, tools and hardware, and lawn and
patio items. Through Amazon.com zShops, any business or individual can
sell virtually anything to Amazon.com's more than 25 million
customers, and with Amazon.com Payments, sellers can accept credit
card transactions, avoiding the hassles of offline payments.
Amazon.com operates three international Web sites: www.amazon.fr,
www.amazon.co.uk and www.amazon.de. It also operates the Internet
Movie Database (www.imdb.com), the Web's comprehensive and
authoritative source of information on more than 250,000 movies and
entertainment titles and 1 million cast and crew members dating from
the birth of film in 1891 to 2003.
Amazon Anywhere is the leader in mobile e-commerce, providing
access from anywhere in the world to Amazon.com, Amazon.co.uk and
Amazon.de on personal digital assistants (PDAs) and through handheld
wireless Internet devices that use HDML or the Wireless Application
Protocol.
Notes on Financial Presentation
Historical results of operations are preliminary and unaudited.
Financial results are prepared in accordance with U.S. generally
accepted accounting principles. Pro forma financial results exclude
stock-based compensation costs, amortization of goodwill and other
intangibles, acquisition-related and other costs, non-cash investment
gains and losses, net, and equity in losses of equity-method
investees, net.
The Electronics store business includes Amazon Electronics, Video
Games and Software. Customer accounts exclude Amazon Commerce Network
partners' businesses and Amazon.com's catalog businesses but include
users of Amazon Marketplace services. Trailing twelve-month sales per
active customer figures include revenue recorded from Amazon Commerce
Network partners and exclude catalog sales and $20 million from the
sale of inventory to Toysrus.com.
Amazon.com commenced its Amazon Commerce Network program in the
fall of 1999 to develop new strategic relationships and expand the
products and services the company offers to its customers. As part of
this program, Amazon.com entered into a variety of relationships with
third parties, including relationships where the company invested in
its partners and relationships where the company received securities
of its partners as payment for services it provides to them. These
relationships, particularly those in which Amazon.com receives
securities in payment for its services, require reporting and
disclosure that involve estimates to determine fair value, the
recognition of revenue over time, and the ongoing accounting for the
company's investments in its partners. Estimates of fair value are
based on the use of independent third party appraisals when
appropriate. Amazon.com has received informal inquiries from the SEC
staff with respect to accounting treatment and disclosures for some of
its initial Amazon Commerce Network transactions and has responded to
those questions. Amazon.com reviewed the accounting for the
transactions with its auditors and the SEC staff, and the company
believes that the accounting treatment, and disclosures, were
appropriate. Amazon.com will continue to cooperate with the SEC staff
if they have further questions.
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AMAZON.COM, INC.
Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Net sales $ 637,858 $ 355,777 $ 1,789,623 $ 963,797
Cost of sales 470,579 285,300 1,358,146 760,998
--------- --------- ----------- ---------
Gross profit 167,279 70,477 431,477 202,799
Operating expenses:
Marketing, sales and
fulfillment 138,342 86,842 408,266 233,725
Technology and
content 71,159 44,451 199,535 102,002
General and
administrative 26,217 18,382 80,730 44,094
Stock-based
compensation 4,091 11,789 25,909 16,569
Amortization of
goodwill and other
intangibles 79,194 74,343 242,562 132,393
Acquisition-related
and other (Note 3) 11,791 1,779 16,259 5,987
--------- --------- ----------- ---------
Total operating
expenses 330,794 237,586 973,261 534,770
--------- --------- ----------- ---------
Loss from
operations (163,515) (167,109) (541,784) (331,971)
Interest income 9,402 12,699 29,842 36,479
Interest expense (33,809) (21,470) (94,827) (66,424)
Other income (expense),
net 3,353 2,159 (4,693) 2,037
Non-cash investment
gains and losses,
net (Note 4) 12,366 -- 12,366 --
--------- --------- ----------- ---------
Net interest expense
and other (8,688) (6,612) (57,312) (27,908)
--------- --------- ----------- ---------
Loss before equity
in losses of
equity-method
investees (172,203) (173,721) (599,096) (359,879)
Equity in losses of
equity-method
investees, net (68,321) (23,359) (267,037) (36,876)
--------- --------- ----------- ---------
Net loss $ (240,524) $ (197,080) $ (866,133) $ (396,755)
=========== =========== =========== ===========
Basic and diluted
loss per share $ (0.68) $ (0.59) $ (2.48) $ (1.23)
=========== =========== =========== ===========
Shares used in computation
of basic and diluted
loss per share
(Note 1) 353,954 332,488 349,258 323,064
=========== =========== =========== ===========
Pro Forma Results
(Note 2)
Pro forma loss from
operations $ (68,439) $ (79,198) $ (257,054) $ (177,022)
=========== =========== =========== ===========
Pro forma net loss $ (89,493) $ (85,810) $ (326,732) $ (204,930)
=========== =========== =========== ===========
Pro forma basic and
diluted loss
per share $ (0.25) $ (0.26) $ (0.94) $ (0.63)
=========== =========== =========== ===========
Shares used in
computation of
pro forma basic
and diluted loss
per share
(Note 1) 353,954 332,488 349,258 323,064
=========== =========== =========== ===========
Note 1: The Company effected a three-for-one stock split and
two-for-one stock split on January 4, 1999 and September 1, 1999,
respectively. Each stock split was in the form of a stock dividend to
stockholders of record on December 18, 1998 and August 12, 1999,
respectively. Accordingly, the accompanying balance sheets and
statements of operations have been restated to reflect the splits.
Note 2: Pro forma results for the 3-month and 9-month periods
ended September 30, 2000 and 1999 are presented for informational
purposes only and are not prepared in accordance with generally
accepted accounting principles. These results present the operating
results of Amazon.com, excluding net amounts of $151.0 million and
$111.3 million for the 3-month periods, and $539.4 million and $191.8
million for the 9-month periods ended September 30, 2000 and 1999,
respectively, related to amortization of goodwill and other
intangibles; equity in losses of equity-method investees, net;
stock-based compensation; acquisition-related and other costs; and
non-cash investment gains and losses, net.
Note 3: Acquisition-related and other expenses for the 3-month and
9-month periods ended September 30, 2000 includes $11.1 million
related to the loss on retirement of certain fixed assets to be
disposed of.
Note 4: Non-cash investment gains and losses, net for the 3-month
and 9-month periods ended September 30, 2000 includes the following
items: a gain of $40.2 million related to the acquisition of
HomeGrocer.com, Inc., previously one of the Company's equity-method
investees, by Webvan Group, Inc.; a gain of $20.1 million representing
the previously unearned revenue recognized upon the termination of the
Company's commercial agreement with living.com, which filed for
bankruptcy during the 3-month period ended September 30, 2000; a loss
of $14.1 million, representing the Company's investment in living.com
at the time of its bankruptcy; and losses totaling $33.8 million to
record certain of the Company's investments at their fair values as of
September 30, 2000.
AMAZON.COM, INC.
Balance Sheets
(in thousands, except per share data)
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents (Note 2) $ 647,048 $ 133,309
Marketable securities (Note 2) 252,976 572,879
Inventories 163,880 220,646
Prepaid expenses and other current
assets 99,181 85,344
---------- -----------
Total current assets 1,163,085 1,012,178
Fixed assets, net 352,290 317,613
Goodwill, net 383,996 534,699
Other purchased intangibles, net 136,474 195,445
Investments in equity-method investees 91,131 226,727
Other investments 73,345 144,735
Deferred charges and other 54,306 40,154
----------- -----------
Total assets $ 2,254,627 $ 2,471,551
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 304,709 $ 463,026
Accrued expenses and other
current liabilities 160,073 181,909
Unearned revenue 142,046 54,790
Interest payable 35,056 24,888
Current portion of long-term
debt and other 17,213 14,322
---------- -----------
Total current liabilities 659,097 738,935
Long-term debt 2,082,697 1,466,338
Commitments and contingencies
Stockholders' equity (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 --
356,102 and 345,155
shares at September 30, 2000
and December 31, 1999,
respectively 3,561 3,452
Additional paid-in capital 1,342,574 1,194,369
Stock-based compensation (19,504) (47,806)
Accumulated other comprehensive loss (65,637) (1,709)
Accumulated deficit (1,748,161) (882,028)
------------- ------------
Total stockholders' equity
(deficit) (487,167) 266,278
------------- ------------
Total liabilities and stockholders'
equity (deficit) $ 2,254,627 $ 2,471,551
============= ============
Note 1: The Company effected a three-for-one stock split and
two-for-one stock split on January 4, 1999 and September 1, 1999,
respectively. Each stock split was in the form of a stock dividend to
stockholders of record on December 18, 1998 and August 12, 1999,
respectively. Accordingly, the accompanying balance sheets and
statements of operations have been restated to reflect the splits.
Note 2: The Company classifies all highly liquid instruments with
an original maturity of three months or less as cash equivalents.
Marketable securities consist primarily of equity securities and high
quality short- to intermediate-term fixed income securities.
Investments are included in marketable securities if they do not meet
the definition of a cash equivalent and if the Company does not have
the positive intent to hold the investment for over one year. During
the quarter ended September 30, 2000 we reclassified approximately
$96.1 million of investments to marketable securities that were
previously classified as "Other investments" or "Investments in
equity-method investees."
AMAZON.COM INC.
Segment Information
(in thousands)
(unaudited)
Three Months Ended September 30, 2000
US Books, Early-Stage
Music and Businesses Con-
DVD/Video Intl. And Other solidated
Net sales $ 399,905 $ 87,665 $ 150,288 $ 637,858
Gross profit 108,746 18,882 39,651 167,279
Proforma Operating Income
(Loss) by Segment 24,688 (39,569) (53,558) (68,439)
Other 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)
==========
Three Months Ended September 30, 1999
US Books, Early-Stage
Music and Businesses Con-
DVD/Video Intl. And Other solidated
Net sales $ 301,307 $ 39,682 $ 14,788 $ 355,777
Gross profit 64,100 8,995 (2,618) 70,477
Proforma Operating
Income (Loss) by Segment (109) (18,138) (60,951) (79,198)
Other operating expenses -- -- -- (87,911)
Net interest expense
and other -- -- -- (6,612)
Equity in losses of
equity-method investees, net -- -- -- (23,359)
------- ------- -------- -------
Net loss -- -- -- $ (197,080)
==========
Nine Months Ended September 30, 2000
US Books, Early-Stage
Music and Businesses Con-
DVD/Video Intl. And Other solidated
Net sales $1,186,595 $ 236,190 $ 366,838 $1,789,623
Gross profit 278,463 51,205 101,809 431,477
Proforma Operating
Income (Loss) by Segment 32,319 (101,519) (187,854) (257,054)
Other 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)
==========
Nine Months Ended September 30, 1999
US Books, Early-Stage
Music and Businesses Con-
DVD/Video Intl. And Other solidated
Net sales $ 848,422 $ 96,746 $ 18,629 $ 963,797
Gross profit 185,046 20,728 (2,975) 202,799
Proforma Operating
Income (Loss) by
Segment (14,373) (48,425) (114,224) (177,022)
Other operating expenses -- -- -- (154,949)
Net interest expense
and other -- -- -- (27,908)
Equity in losses of
equity-method investees, net -- -- -- (36,876)
------- ------- -------- -------
Net loss -- -- -- $ (396,755)
==========
Note 1: The Company identifies operating segments based on product
line information, considering line maturity, within the United States
and separately identifies its international operations as an operating
segment.
*T
--30--APS/se*
CONTACT: Amazon.com, Inc.
Amanda Lawrence, 206/266-2171 (Investor Relations)
ir@amazon.com
or
Bill Curry, 206/266-7180 (Public Relations)
KEYWORD: WASHINGTON
INDUSTRY KEYWORD: RETAIL E-COMMERCE EARNINGS COMPUTERS/ELECTRONICS
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