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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2002
 
or
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from                              to                             .
 
Commission File No. 000-22513
 
AMAZON.COM, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
     
91-1646860
(State or other jurisdiction of
incorporation or organization)
     
(I.R.S. Employer
Identification No.)
 
1200 12th Avenue South, Suite 1200, Seattle, Washington 98144-2734
(Address of principal executive offices, zip code)
 
(206) 266-1000
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x  No  ¨
 
381,465,499 shares of $0.01 par value common stock outstanding as of October 14, 2002
 

Table of Contents
AMAZON.COM, INC.
 
FORM 10-Q
For the Three Months Ended September 30, 2002
 
INDEX
 
         
Page
    
PART I.    FINANCIAL INFORMATION
     
Item 1.
   
Consolidated Financial Statements (Unaudited)
     
       
1
       
2
       
3
       
4
Item 2.
      
18
Item 3.
      
48
Item 4.
      
49
    
PART II.    OTHER INFORMATION
     
Item 1.
      
50
Item 2.
      
50
Item 3.
      
50
Item 4.
      
50
Item 5.
      
50
Item 6.
      
51
  
52

Table of Contents
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
AMAZON.COM, INC.
 
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
 
    
September 30,
2002
     
December 31, 2001
  
ASSETS
              
Current assets:
                  
Cash and cash equivalents
   
$
327,564
 
   
$
540,282
 
Marketable securities
   
 
538,238
 
   
 
456,303
 
Inventories
   
 
151,514
 
   
 
143,722
 
Prepaid expenses and other current assets
   
 
102,291
 
   
 
67,613
 
    
  
Total current assets
   
 
1,119,607
 
   
 
1,207,920
 
Fixed assets, net
   
 
239,238
 
   
 
271,751
 
Goodwill, net
   
 
70,811
 
   
 
45,367
 
Other intangibles, net
   
 
4,373
 
   
 
34,382
 
Investments in equity-method investees
   
 
1,136
 
   
 
10,387
 
Other equity investments
   
 
15,362
 
   
 
17,972
 
Other assets
   
 
46,878
 
   
 
49,768
 
    
  
Total assets
   
$
1,497,405
 
   
$
1,637,547
 
    
  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
              
Current liabilities:
                  
Accounts payable
   
$
347,519
 
   
$
444,748
 
Accrued expenses and other current liabilities
   
 
241,674
 
   
 
305,064
 
Unearned revenue
   
 
65,878
 
   
 
87,978
 
Interest payable
   
 
42,793
 
   
 
68,632
 
Current portion of long-term debt and other
   
 
13,134
 
   
 
14,992
 
    
  
Total current liabilities
   
 
710,998
 
   
 
921,414
 
Long-term debt and other
   
 
2,264,846
 
   
 
2,156,133
 
Commitments and contingencies
                  
Stockholders’ deficit:
                  
Preferred stock, $0.01 par value:
                  
Authorized shares—500,000
                  
Issued and outstanding shares—none
   
 
—  
 
   
 
—  
 
Common stock, $0.01 par value:
                  
Authorized shares—5,000,000
                  
Issued and outstanding shares—381,216 and 373,218 shares, respectively
   
 
3,812
 
   
 
3,732
 
Additional paid-in capital
   
 
1,550,118
 
   
 
1,462,769
 
Deferred stock-based compensation
   
 
(7,775
)
   
 
(9,853
)
Accumulated other comprehensive loss
   
 
(12,233
)
   
 
(36,070
)
Accumulated deficit
   
 
(3,012,361
)
   
 
(2,860,578
)
    
  
Total stockholders’ deficit
   
 
(1,478,439
)
   
 
(1,440,000
)
    
  
Total liabilities and stockholders’ deficit
   
$
1,497,405
 
   
$
1,637,547
 
    
  
 
See accompanying notes to consolidated financial statements.

1

Table of Contents
AMAZON.COM, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
 
    
Three Months Ended
September 30,
     
Nine Months Ended
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
Net sales
   
$
851,299
 
   
$
639,281
 
   
$
2,504,326
 
   
$
2,007,262
 
Cost of sales
   
 
635,132
 
   
 
477,089
 
   
 
1,846,867
 
   
 
1,482,753
 
    
  
  
  
Gross profit
   
 
216,167
 
   
 
162,192
 
   
 
657,459
 
   
 
524,509
 
Operating expenses:
                                    
Fulfillment
   
 
90,342
 
   
 
81,400
 
   
 
265,908
 
   
 
265,231
 
Marketing
   
 
26,728
 
   
 
32,537
 
   
 
87,804
 
   
 
103,833
 
Technology and content
   
 
52,907
 
   
 
53,846
 
   
 
166,569
 
   
 
188,840
 
General and administrative
   
 
18,698
 
   
 
21,481
 
   
 
59,034
 
   
 
70,287
 
Stock-based compensation (1)
   
 
(832
)
   
 
(2,567
)
   
 
33,247
 
   
 
2,700
 
Amortization of goodwill and other intangibles
   
 
1,212
 
   
 
41,835
 
   
 
4,565
 
   
 
143,496
 
Restructuring-related and other
   
 
36,757
 
   
 
3,994
 
   
 
46,731
 
   
 
176,904
 
    
  
  
  
Total operating expenses
   
 
225,812
 
   
 
232,526
 
   
 
663,858
 
   
 
951,291
 
    
  
  
  
Loss from operations
   
 
(9,645
)
   
 
(70,334
)
   
 
(6,399
)
   
 
(426,782
)
Interest income
   
 
5,600
 
   
 
6,316
 
   
 
16,902
 
   
 
23,073
 
Interest expense
   
 
(35,922
)
   
 
(35,046
)
   
 
(106,817
)
   
 
(103,942
)
Other income (expense), net
   
 
3,183
 
   
 
(2,203
)
   
 
2,876
 
   
 
(7,265
)
Other gains (losses), net
   
 
2,261
 
   
 
(63,625
)
   
 
(55,677
)
   
 
(18,453
)
    
  
  
  
Total non-operating expenses, net
   
 
(24,878
)
   
 
(94,558
)
   
 
(142,716
)
   
 
(106,587
)
    
  
  
  
Loss before equity in losses of equity-method investees
   
 
(34,523
)
   
 
(164,892
)
   
 
(149,115
)
   
 
(533,369
)
Equity in losses of equity-method investees, net
   
 
(557
)
   
 
(4,982
)
   
 
(3,469
)
   
 
(28,472
)
    
  
  
  
Loss before change in accounting principle
   
 
(35,080
)
   
 
(169,874
)
   
 
(152,584
)
   
 
(561,841
)
Cumulative effect of change in accounting principle
   
 
—  
 
   
 
—  
 
   
 
801
 
   
 
(10,523
)
    
  
  
  
Net loss
   
$
(35,080
)
   
$
(169,874
)
   
$
(151,783
)
   
$
(572,364
)
    
  
  
  
Basic and diluted loss per share:
                                    
Prior to cumulative effect of change in accounting principle
   
$
(0.09
)
   
$
(0.46
)
   
$
(0.41
)
   
$
(1.55
)
Cumulative effect of change in accounting principle
   
 
—  
 
   
 
—  
 
   
 
0.01
 
   
 
(0.03
)
    
  
  
  
    
$
(0.09
)
   
$
(0.46
)
   
$
(0.40
)
   
$
(1.58
)
    
  
  
  
Shares used in computation of loss per share:
                                    
Basic and diluted
   
 
379,650
 
   
 
368,052
 
   
 
376,564
 
   
 
361,782