Amazon.com Announces Second Quarter Sales up 41% to $6.57 Billion
Amazon.com, Inc. today announced financial results for its second quarter ended June 30, 2010.
Operating cash flow was $2.56 billion for the trailing twelve months, compared with $1.88 billion for the trailing twelve months ended June 30, 2009. Free cash flow increased 29% to $1.99 billion for the trailing twelve months, compared with $1.54 billion for the trailing twelve months ended June 30, 2009.
Common shares outstanding plus shares underlying stock-based awards totaled 465 million on June 30, 2010, compared with 451 million a year ago.
Net sales increased 41% to $6.57 billion in the second quarter, compared with $4.65 billion in second quarter 2009. Excluding the $48 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 42% compared with second quarter 2009.
Operating income increased 71% to $270 million in the second quarter, compared with $159 million in second quarter 2009. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $10 million. Second quarter 2009 operating income was negatively impacted by a $51 million legal settlement.
Net income increased 45% to $207 million in the second quarter, or $0.45 per diluted share, compared with net income of $142 million, or $0.32 per diluted share, in second quarter 2009.
"We're seeing rapid growth in Kindle, Amazon Web Services, third-party sales, and retail. We're also encouraged by what we see in mobile. In the last twelve months, customers around the world have ordered more than $1 billion of products from Amazon using a mobile device," said Jeff Bezos, founder and CEO of Amazon.com. "The leading mobile commerce device today is the smartphone, but we're excited by the potential of the new category of wireless tablet computers. Over time, tablet computers could become a meaningful additional driver for our business."
Highlights
- Readers are responding to Kindle's uncompromising approach to the reading experience. Weighing 10.2 ounces, Kindle can be held comfortably in one hand for hours, has an e-ink display that is easy on the eyes even in bright daylight, has two weeks of battery life, and has free 3G wireless with no monthly fees or annual contracts-all at a $189 price.
- Amazon.com is now selling more Kindle books than hardcover books. Over the past three months, for every 100 hardcover books Amazon.com has sold, the Company has sold 143 Kindle books. Over the past month, for every 100 hardcover books Amazon.com has sold, the Company has sold 180 Kindle books. This is across Amazon.com's entire U.S. book business and includes sales of hardcover books where there is no Kindle edition. Free Kindle books are excluded and if included would make the number even higher.
- Amazon sold more than 3x as many Kindle books in the first half of 2010 as in the first half of 2009.
- The Association of American Publishers' latest data reports that e-book sales grew 163 percent in the month of May and 207 percent year-to-date through May. Kindle book sales in May and year-to-date through May exceeded those growth rates.
- On July 6, Hachette announced that James Patterson had sold 1.14 million e-books to date. Of those, 867,881 were Kindle books.
- Five authors-Charlaine Harris, Stieg Larsson, Stephenie Meyer, James Patterson, and Nora Roberts-have each sold more than 500,000 Kindle books.
- Amazon.com continues to expand Kindle's "Buy once, read everywhere" strategy with this quarter's launch of Kindle for Android. Like all Kindle apps, Kindle for Android includes Whispersync technology, which automatically synchronizes your last page read, bookmarks, notes and highlights across your Kindle, Kindle DX, iPad, iPod touch, iPhone, Mac, PC, BlackBerry, and Android-based devices.
- Kindle offers the largest selection of the most popular books people want to read. The U.S. Kindle Store now has more than 630,000 books, including New Releases and 106 of 110 New York Times Best Sellers. Over 510,000 of these books are $9.99 or less, including 75 New York Times Best Sellers. Over 1.8 million free, out-of-copyright, pre-1923 books are also available to read on Kindle.
- North America segment sales, representing the Company's U.S. and Canadian sites, were $3.59 billion, up 46% from second quarter 2009.
- International segment sales, representing the Company's U.K., German, Japanese, French and Chinese sites, were $2.98 billion, up 35% from second quarter 2009. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 38%.
- Worldwide Media sales grew 18% to $2.87 billion.
- Worldwide Electronics & Other General Merchandise sales grew 69% to $3.49 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 70%.
- The Company introduced Textbook Buyback, an easy-to-use program that helps students lower their textbook costs, giving them great value for their used textbooks.
- The Amazon.co.uk and Amazon.de websites each launched Grocery stores offering customers free delivery on thousands of new items from brands such as Kraft, Nestlé, Mars, PepsiCo, Proctor & Gamble, and Unilever.
- Businesses and developers in over 190 countries are taking advantage of Amazon Web Services (AWS). In the first half of 2010, AWS continued significant geographic expansion, launching the first Asia Pacific Region in Singapore as well as extending additional services including Amazon Virtual Private Cloud and Amazon Relational Database Service into the EU.
- AWS announced a new storage option within the Amazon Simple Storage Service (S3), Amazon S3 Reduced Redundancy Storage (RRS), which enables customers to reduce their costs by storing non-critical, reproducible data at lower levels of redundancy than Amazon S3's standard storage.
- AWS introduced Cluster Compute Instances, an Amazon Elastic Compute Cloud (EC2) instance type specifically tailored for high-performance computing.
Financial Guidance
The following forward-looking statements reflect Amazon.com's expectations as of July 22, 2010. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.
Third Quarter 2010 Guidance
- Net sales are expected to be between $6.900 billion and $7.625 billion, or to grow between 27% and 40% compared with third quarter 2009.
- Operating income is expected to be between $210 million and $310 million, or between 16% decline and 24% growth compared with third quarter 2009.
- This guidance includes approximately $130 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.
A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company's financial and operating results.
These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, 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, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services and technologies, system interruptions, government regulation and taxation, payments and fraud. In addition, the current global economic climate amplifies many of these risks. 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 most recent Annual Report on Form 10-K and subsequent filings.
About Amazon.com
Amazon.com, Inc., a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com, Inc. seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Electronics & Computers; Home & Garden; Toys, Kids & Baby; Grocery; Apparel, Shoes & Jewelry; Health & Beauty; Sports & Outdoors; and Tools, Auto & Industrial. Amazon Web Services provides Amazon's developer customers with access to in-the-cloud infrastructure services based on Amazon's own back-end technology platform, which developers can use to enable virtually any type of business. Kindle and Kindle DX are the revolutionary portable readers that wirelessly download books, magazines, newspapers, blogs and personal documents to a crisp, high-resolution electronic ink display that looks and reads like real paper. Kindle and Kindle DX utilize the same 3G wireless technology as advanced cell phones, so users never need to hunt for a Wi-Fi hotspot. Kindle is the #1 bestselling product across the millions of items sold on Amazon.
Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn. As used herein, "Amazon.com," "we," "our" and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.
| AMAZON.COM, INC. | ||||||||||||||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | Twelve Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | June 30, | ||||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | $ | 1,844 | $ | 1,701 | $ | 3,444 | $ | 2,769 | $ | 1,936 | $ | 1,548 | ||||||||||||
| OPERATING ACTIVITIES: | ||||||||||||||||||||||||
| Net income | 207 | 142 | 505 | 319 | 1,088 | 663 | ||||||||||||||||||
|
Adjustments to reconcile net income to net cash from operating activities: |
||||||||||||||||||||||||
|
Depreciation of fixed assets, including internal-use software and website development, and other amortization |
129 | 84 | 249 | 171 | 456 | 323 | ||||||||||||||||||
| Stock-based compensation | 111 | 85 | 196 | 152 | 386 | 300 | ||||||||||||||||||
| Other operating expense (income), net | 25 | 60 | 51 | 71 | 83 | 86 | ||||||||||||||||||
| Losses (gains) on sales of marketable securities, net | - | - | - | (2 | ) | (2 | ) | (1 | ) | |||||||||||||||
| Other expense (income), net | (22 | ) | (14 | ) | (27 | ) | (12 | ) | (31 | ) | (53 | ) | ||||||||||||
| Deferred income taxes | (8 | ) | 6 | (28 | ) | 7 | 49 | 30 | ||||||||||||||||
| Excess tax benefits from stock-based compensation | (75 | ) | (20 | ) | (161 | ) | (70 | ) | (196 | ) | (122 | ) | ||||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||||||||
| Inventories | (141 | ) | (23 | ) | 180 | 84 | (435 | ) | (261 | ) | ||||||||||||||
| Accounts receivable, net and other | (42 | ) | 16 | 412 | 183 | (252 | ) | (149 | ) | |||||||||||||||
| Accounts payable | (81 | ) | 56 | (1,972 | ) | (1,073 | ) | 959 | 625 | |||||||||||||||
| Accrued expenses and other | 200 | (6 | ) | (161 | ) | (128 | ) | 265 | 182 | |||||||||||||||
| Additions to unearned revenue | 161 | 207 | 349 | 413 | 990 | 696 | ||||||||||||||||||
| Amortization of previously unearned revenue | (214 | ) | (125 | ) | (441 | ) | (232 | ) | (799 | ) | (441 | ) | ||||||||||||
| Net cash provided by (used in) operating activities | 250 | 468 | (848 | ) | (117 | ) | 2,561 | 1,878 | ||||||||||||||||
| INVESTING ACTIVITIES: | ||||||||||||||||||||||||
|
Purchases of fixed assets, including internal-use software and website development |
(196 | ) | (78 | ) | (336 | ) | (133 | ) | (575 | ) | (336 | ) | ||||||||||||
| Acquisitions, net of cash acquired, and other | (21 | ) | (19 | ) | (40 | ) | (35 | ) | (45 | ) | (129 | ) | ||||||||||||
| Sales and maturities of marketable securities and other investments | 1,208 | 378 | 2,080 | 692 | 3,354 | 1,545 | ||||||||||||||||||
| Purchases of marketable securities and other investments | (1,466 | ) | (560 | ) | (2,721 | ) | (951 | ) | (5,661 | ) | (1,877 | ) | ||||||||||||
| Net cash provided by (used in) investing activities | (475 | ) | (279 | ) | (1,017 | ) | (427 | ) | (2,927 | ) | (797 | ) | ||||||||||||
| FINANCING ACTIVITIES: | ||||||||||||||||||||||||
| Excess tax benefits from stock-based compensation | 75 | 20 | 161 | 70 | 196 | 122 | ||||||||||||||||||
| Common stock repurchased | - | - | - | - | - | (100 | ) | |||||||||||||||||
| Proceeds from long-term debt and other | 5 | 2 | 67 | 6 | 133 | 44 | ||||||||||||||||||
| Repayments of long-term debt, capital lease, and finance lease obligations | (37 | ) | (25 | ) | (98 | ) | (368 | ) | (186 | ) | (663 | ) | ||||||||||||
| Net cash provided by (used in) financing activities | 43 | (3 | ) | 130 | (292 | ) | 143 | (597 | ) | |||||||||||||||
| Foreign-currency effect on cash and cash equivalents | (33 | ) | 49 | (80 | ) | 3 | (84 | ) | (96 | ) | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (215 | ) | 235 | (1,815 | ) | (833 | ) | (307 | ) | 388 | ||||||||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,629 | $ | 1,936 | $ | 1,629 | $ | 1,936 | $ | 1,629 | $ | 1,936 | ||||||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||||||||||||
| Cash paid for interest | $ | 3 | $ | 2 | $ | 5 | $ | 28 | $ | 9 | $ | 43 | ||||||||||||
| Cash paid for income taxes | 43 | 23 | 46 | 34 | 60 | 64 | ||||||||||||||||||
| Fixed assets acquired under capital leases | 83 | 19 | 142 | 37 | 252 | 118 | ||||||||||||||||||
| Fixed assets acquired under build-to-suit leases | 60 | 61 | 120 | 117 | 191 | 173 | ||||||||||||||||||
| AMAZON.COM, INC. | ||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Net sales | $ | 6,566 | $ | 4,651 | $ | 13,697 | $ | 9,541 | ||||||||
| Operating expenses (1): | ||||||||||||||||
| Cost of sales | 4,957 | 3,518 | 10,458 | 7,260 | ||||||||||||
| Fulfillment | 582 | 409 | 1,128 | 831 | ||||||||||||
| Marketing | 211 | 129 | 412 | 257 | ||||||||||||
| Technology and content | 408 | 299 | 773 | 575 | ||||||||||||
| General and administrative | 113 | 77 | 210 | 145 | ||||||||||||
| Other operating expense (income), net (2) | 25 | 60 | 51 | 71 | ||||||||||||
| Total operating expenses | 6,296 | 4,492 | 13,032 | 9,139 | ||||||||||||
| Income from operations | 270 | 159 | 665 | 402 | ||||||||||||
| Interest income | 12 | 8 | 23 | 20 | ||||||||||||
| Interest expense | (9 | ) | (7 | ) | (16 | ) | (19 | ) | ||||||||
| Other income (expense), net | 24 | 19 | 27 | 24 | ||||||||||||
| Total non-operating income (expense) | 27 | 20 | 34 | 25 | ||||||||||||
| Income before income taxes | 297 | 179 | 699 | 427 | ||||||||||||
| Provision for income taxes | (88 | ) | (39 | ) | (189 | ) | (108 | ) | ||||||||
| Equity-method investment activity, net of tax | (2 | ) | 2 | (5 | ) | - | ||||||||||
| Net income | $ | 207 | $ | 142 | $ | 505 | $ | 319 | ||||||||
| Basic earnings per share | $ | 0.46 | $ | 0.33 | $ | 1.13 | $ | 0.74 | ||||||||
| Diluted earnings per share | $ | 0.45 | $ | 0.32 | $ | 1.11 | $ | 0.73 | ||||||||
| Weighted average shares used in computation of earnings per share: | ||||||||||||||||
| Basic | 447 | 431 | 446 | 430 | ||||||||||||
| Diluted | 455 | 440 | 455 | 438 | ||||||||||||
| __________________________ | ||||||||||||||||
| (1) Includes stock-based compensation as follows: | ||||||||||||||||
| Fulfillment | $ | 24 | $ | 20 | $ | 42 | $ | 35 | ||||||||
| Marketing | 7 | 5 | 12 | 9 | ||||||||||||
| Technology and content | 58 | 46 | 103 | 82 | ||||||||||||
| General and administrative | 22 | 14 | 39 | 26 | ||||||||||||
| (2) Q2 2009 was negatively impacted by a $51 million legal settlement. | ||||||||||||||||
| AMAZON.COM, INC. | ||||||||||||||||
| Segment Information | ||||||||||||||||
| (in millions) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| North America | ||||||||||||||||
| Net sales | $ | 3,590 | $ | 2,451 | $ | 7,370 | $ | 5,030 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of sales | 2,570 | 1,779 | 5,332 | 3,664 | ||||||||||||
| Direct segment operating expenses (1) | 820 | 547 | 1,565 | 1,091 | ||||||||||||
| Segment operating income | $ | 200 | $ | 125 | $ | 473 | $ | 275 | ||||||||
| International | ||||||||||||||||
| Net sales | $ | 2,976 | $ | 2,200 | $ | 6,327 | $ | 4,511 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of sales | 2,387 | 1,739 | 5,126 | 3,596 | ||||||||||||
| Direct segment operating expenses (1) | 383 | 282 | 762 | 565 | ||||||||||||
| Segment operating income | $ | 206 | $ | 179 | $ | 439 | $ | 350 | ||||||||
| Consolidated | ||||||||||||||||
| Net sales | $ | 6,566 | $ | 4,651 | $ | 13,697 | $ | 9,541 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of sales | 4,957 | 3,518 | 10,458 | 7,260 | ||||||||||||
| Direct segment operating expenses | 1,203 | 829 | 2,327 | 1,656 | ||||||||||||
| Segment operating income | 406 | 304 | 912 | 625 | ||||||||||||
| Stock-based compensation | (111 | ) | (85 | ) | (196 | ) | (152 | ) | ||||||||
| Other operating income (expense), net (2) | (25 | ) | (60 | ) | (51 | ) | (71 | ) | ||||||||
| Income from operations | 270 | 159 | 665 | 402 | ||||||||||||
| Total non-operating income (expense), net | 27 | 20 | 34 | 25 | ||||||||||||
| Provision for income taxes | (88 | ) | (39 | ) | (189 | ) | (108 | ) | ||||||||
| Equity-method investment activity, net of tax | (2 | ) | 2 | (5 | ) | - | ||||||||||
| Net income | $ | 207 | $ | 142 | $ | 505 | $ | 319 | ||||||||
| Segment Highlights: | ||||||||||||||||
| Y/Y net sales growth: | ||||||||||||||||
| North America | 46 | % | 13 | % | 47 | % | 17 | % | ||||||||
| International | 35 | 16 | 40 | 16 | ||||||||||||
| Consolidated | 41 | 14 | 44 | 16 | ||||||||||||
| Y/Y segment operating income growth: | ||||||||||||||||
| North America | 61 | % | 30 | % | 72 | % | 22 | % | ||||||||
| International | 15 | 20 | 25 | 27 | ||||||||||||
| Consolidated | 34 | 24 | 46 | 24 | ||||||||||||
| Net sales mix: | ||||||||||||||||
| North America | 55 | % | 53 | % | 54 | % | 53 | % | ||||||||
| International | 45 | 47 | 46 | 47 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
| __________________________ | ||||||||||||||||
|
(1) A significant majority of our costs for "Technology and content" are incurred in the United States and most of these costs are allocated to our North America segment. |
||||||||||||||||
| (2) Q2 2009 was negatively impacted by a $51 million legal settlement. | ||||||||||||||||
| AMAZON.COM, INC. | ||||||||||||||||
| Supplemental Net Sales Information | ||||||||||||||||
| (in millions) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| North America | ||||||||||||||||
| Media | $ | 1,324 | $ | 1,148 | $ | 2,921 | $ | 2,454 | ||||||||
| Electronics and other general merchandise | 2,090 | 1,187 | 4,114 | 2,359 | ||||||||||||
| Other | 176 | 116 | 335 | 217 | ||||||||||||
| Total North America | $ | 3,590 | $ | 2,451 | $ | 7,370 | $ | 5,030 | ||||||||
| International | ||||||||||||||||
| Media | $ | 1,550 | $ | 1,294 | $ | 3,383 | $ | 2,712 | ||||||||
| Electronics and other general merchandise | 1,399 | 882 | 2,887 | 1,756 | ||||||||||||
| Other | 27 | 24 | 57 | 43 | ||||||||||||
| Total International | $ | 2,976 | $ | 2,200 | $ | 6,327 | $ | 4,511 | ||||||||
| Consolidated | ||||||||||||||||
| Media | $ | 2,874 | $ | 2,442 | $ | 6,304 | $ | 5,166 | ||||||||
| Electronics and other general merchandise | 3,489 | 2,069 | 7,001 | 4,115 | ||||||||||||
| Other | 203 | 140 | 392 | 260 | ||||||||||||
| Total Consolidated | $ | 6,566 | $ | 4,651 | $ | 13,697 | $ | 9,541 | ||||||||
| Y/Y Net Sales Growth: | ||||||||||||||||
| North America: | ||||||||||||||||
| Media | 15 | % | 0 | % | 19 | % | 4 | % | ||||||||
| Electronics and other general merchandise | 76 | 29 | 74 | 35 | ||||||||||||
| Other | 52 | 16 | 54 | 12 | ||||||||||||
| Total North America | 46 | 13 | 47 | 17 | ||||||||||||
| International: | ||||||||||||||||
| Media | 20 | % | 3 | % | 25 | % | 4 | % | ||||||||
| Electronics and other general merchandise | 59 | 45 | 64 | 39 | ||||||||||||
| Other | 13 | (8 | ) | 32 | 1 | |||||||||||
| Total International | 35 | 16 | 40 | 16 | ||||||||||||
| Consolidated: | ||||||||||||||||
| Media | 18 | % | 1 | % | 22 | % | 4 | % | ||||||||
| Electronics and other general merchandise | 69 | 35 | 70 | 37 | ||||||||||||
| Other | 45 | 11 | 51 | 10 | ||||||||||||
| Total Consolidated | 41 | 14 | 44 | 16 | ||||||||||||
| Y/Y Net Sales Growth Excluding Effect of Exchange Rates: | ||||||||||||||||
| International: | ||||||||||||||||
| Media | 21 | % | 12 | % | 22 | % | 15 | % | ||||||||
| Electronics and other general merchandise | 63 | 60 | 62 | 55 | ||||||||||||
| Other | 18 | 10 | 31 | 22 | ||||||||||||
| Total International | 38 | 28 | 38 | 28 | ||||||||||||
| Consolidated: | ||||||||||||||||
| Media | 18 | % | 7 | % | 20 | % | 10 | % | ||||||||
| Electronics and other general merchandise | 70 | 41 | 69 | 44 | ||||||||||||
| Other | 46 | 15 | 50 | 13 | ||||||||||||
| Total Consolidated | 42 | 20 | 42 | 22 | ||||||||||||
| Consolidated Net Sales Mix: | ||||||||||||||||
| Media | 44 | % | 52 | % | 46 | % | 54 | % | ||||||||
| Electronics and other general merchandise | 53 | 45 | 51 | 43 | ||||||||||||
| Other | 3 | 3 | 3 | 3 | ||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
| AMAZON.COM, INC. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (in millions, except per share data) | ||||||||||||
| June 30, | December 31, | June 30, | ||||||||||
| 2010 | 2009 | 2009 | ||||||||||
| ASSETS | (unaudited) | (unaudited) | ||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 1,629 | $ | 3,444 | $ | 1,936 | ||||||
| Marketable securities | 3,479 | 2,922 | 1,276 | |||||||||
| Inventories | 1,940 | 2,171 | 1,325 | |||||||||
| Accounts receivable, net and other | 805 | 988 | 584 | |||||||||
| Deferred tax assets | 265 | 272 | 183 | |||||||||
| Total current assets | 8,118 | 9,797 | 5,304 | |||||||||
| Fixed assets, net | 1,704 | 1,290 | 981 | |||||||||
| Deferred tax assets | 29 | 18 | 118 | |||||||||
| Goodwill | 1,229 | 1,234 | 451 | |||||||||
| Other assets | 1,317 | 1,474 | 821 | |||||||||
| Total assets | $ | 12,397 | $ | 13,813 | $ | 7,675 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 3,545 | $ | 5,605 | $ | 2,508 | ||||||
| Accrued expenses and other | 1,705 | 1,759 | 1,128 | |||||||||
| Total current liabilities | 5,250 | 7,364 | 3,636 | |||||||||
| Long-term debt | 132 | 109 | 109 | |||||||||
| Other long-term liabilities | 1,158 | 1,083 | 674 | |||||||||
| Commitments and contingencies | ||||||||||||
| Stockholders' equity: | ||||||||||||
| Preferred stock, $0.01 par value: | ||||||||||||
| Authorized shares -- 500 | ||||||||||||
| Issued and outstanding shares -- none | - | - | - | |||||||||
| Common stock, $0.01 par value: | ||||||||||||
| Authorized shares -- 5,000 | ||||||||||||
| Issued shares -- 464, 461 and 448 | ||||||||||||
| Outstanding shares -- 448, 444 and 432 | 5 | 5 | 4 | |||||||||
| Treasury stock, at cost | (600 | ) | (600 | ) | (600 | ) | ||||||
| Additional paid-in capital | 6,056 | 5,736 | 4,321 | |||||||||
| Accumulated other comprehensive loss | (282 | ) | (56 | ) | (58 | ) | ||||||
| Retained earnings (accumulated deficit) | 678 | 172 | (411 | ) | ||||||||
| Total stockholders' equity | 5,857 | 5,257 | 3,256 | |||||||||
| Total liabilities and stockholders' equity | $ | 12,397 | $ | 13,813 | $ | 7,675 | ||||||
| AMAZON.COM, INC. | |||||||||||||||||||||||
| Supplemental Financial Information and Business Metrics | |||||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Y/Y % | |||||||||||||||||||||||
| Q2 2009 | Q3 2009 | Q4 2009 | Q1 2010 | Q2 2010 | Change | ||||||||||||||||||
| Cash Flows and Shares | |||||||||||||||||||||||
| Operating cash flow -- trailing twelve months (TTM) | $ | 1,878 | $ | 2,253 | $ | 3,293 | $ | 2,780 | $ | 2,561 | 36 | % | |||||||||||
| Purchases of fixed assets (incl. internal-use software & website development) -- TTM | $ | 336 | $ | 337 | $ | 373 | $ | 458 | $ | 575 | 71 | % | |||||||||||
| Free cash flow (operating cash flow less purchases of fixed assets) -- TTM | $ | 1,542 | $ | 1,916 | $ | 2,920 | $ | 2,322 | $ | 1,986 | 29 | % | |||||||||||
| Free cash flow -- TTM Y/Y growth | 89 | % | 98 | % | 114 | % | 62 | % | 29 | % | N/A | ||||||||||||
| Invested capital (1) | $ | 3,666 | $ | 3,847 | $ | 4,449 | $ | 5,104 |
$ |
5,820 | N/A | ||||||||||||
| Return on invested capital (2) | 42 | % | 50 | % | 66 | % | 45 | % | 34 | % | N/A | ||||||||||||
| Common shares and stock-based awards outstanding | 451 | 451 | 461 | 463 | 465 | 3 | % | ||||||||||||||||
| Common shares outstanding | 432 | 433 | 444 | 446 | 448 | 4 | % | ||||||||||||||||
| Stock-based awards outstanding | 19 | 18 | 17 | 18 | 17 | (11 | %) | ||||||||||||||||
| Stock-based awards outstanding -- % of common shares outstanding | 4.4 | % | 4.2 | % | 3.8 | % | 4.0 | % | 3.8 | % | N/A | ||||||||||||
| Results of Operations | |||||||||||||||||||||||
| Worldwide (WW) net sales | $ | 4,651 | $ | 5,449 | $ | 9,519 | $ | 7,131 | $ | 6,566 | 41 | % | |||||||||||
| WW net sales -- Y/Y growth, excluding F/X | 20 | % | 29 | % | 37 | % | 42 | % | 42 | % | N/A | ||||||||||||
| WW net sales -- TTM | $ | 20,509 | $ | 21,693 | $ | 24,509 | $ | 26,750 | $ | 28,664 | 40 | % | |||||||||||
| WW net sales -- TTM Y/Y growth, excluding F/X | 24 | % | 24 | % | 29 | % | 33 | % | 38 | % | N/A | ||||||||||||
| Operating income (3) | $ | 159 | $ | 251 | $ | 476 | $ | 394 | $ | 270 | 71 | % | |||||||||||
| Operating income -- Y/Y growth (decrease), excluding F/X |
(13 |
%) |
69 | % | 63 | % | 56 | % | 77 | % | N/A | ||||||||||||
| Operating margin -- % of WW net sales | 3.4 | % | 4.6 | % | 5.0 | % | 5.5 | % | 4.1 | % | N/A | ||||||||||||
| Operating income -- TTM (3) | $ | 829 | $ | 925 | $ | 1,129 | $ | 1,279 | $ | 1,391 | 68 | % | |||||||||||
| Operating income -- TTM Y/Y growth, excluding F/X | 13 | % | 22 | % | 39 | % | 44 | % | 65 | % | N/A | ||||||||||||
| Operating margin -- TTM % of WW net sales | 4.0 | % | 4.3 | % | 4.6 | % | 4.8 | % | 4.9 | % | N/A | ||||||||||||
| Net income (3) | $ | 142 | $ | 199 | $ | 384 | $ | 299 | $ | 207 | 45 | % | |||||||||||
| Net income per diluted share | $ | 0.32 | $ | 0.45 | $ | 0.85 | $ | 0.66 | $ | 0.45 | 41 | % | |||||||||||
| Net income -- TTM (3) | $ | 663 | $ | 743 | $ | 902 | $ | 1,024 | $ | 1,088 | 64 | % | |||||||||||
| Net income per diluted share -- TTM | $ | 1.52 | $ | 1.69 | $ | 2.04 | $ | 2.30 | $ | 2.42 | 59 | % | |||||||||||
| Segments | |||||||||||||||||||||||
| North America Segment: | |||||||||||||||||||||||
| Net sales | $ | 2,451 | $ | 2,843 | $ | 4,956 | $ | 3,780 | $ | 3,590 | 46 | % | |||||||||||
| Net sales -- Y/Y growth, excluding F/X | 13 | % | 24 | % | 36 | % | 46 | % | 46 | % | N/A | ||||||||||||
| Net sales -- TTM | $ | 10,963 | $ | 11,503 | $ | 12,828 | $ | 14,030 | $ | 15,168 | 38 | % | |||||||||||
| Operating income | $ | 125 | $ | 156 | $ | 278 | $ | 273 | $ | 200 | 61 | % | |||||||||||
| Operating margin -- % of North America net sales | 5.1 | % | 5.5 | % | 5.6 | % | 7.2 | % | 5.6 | % | N/A | ||||||||||||
| Operating income -- TTM | $ | 494 | $ | 562 | $ | 709 | $ | 832 | $ | 907 | 84 | % | |||||||||||
| Operating income -- TTM Y/Y growth, excluding F/X | 8 | % | 20 | % | 59 | % | 79 | % | 84 | % | N/A | ||||||||||||
| Operating margin -- TTM % of North America net sales | 4.5 | % | 4.9 | % | 5.5 | % | 5.9 | % | 6.0 | % | N/A | ||||||||||||
| International Segment: | |||||||||||||||||||||||
| Net sales | $ | 2,200 | $ | 2,606 | $ | 4,563 | $ | 3,351 | $ | 2,976 | 35 | % | |||||||||||
| Net sales -- Y/Y growth, excluding F/X | 28 | % | 35 | % | 37 | % | 37 | % | 38 | % | N/A | ||||||||||||
| Net sales -- TTM | $ | 9,546 | $ | 10,190 | $ | 11,681 | $ | 12,720 | $ | 13,496 | 41 | % | |||||||||||
| Net sales -- TTM % of WW net sales | 47 | % | 47 | % | 48 | % | 48 | % | 47 | % | N/A | ||||||||||||
| Operating income | $ | 179 | $ | 194 | $ | 319 | $ | 234 | $ | 206 | 15 | % | |||||||||||
| Operating margin -- % of International net sales | 8.1 | % | 7.4 | % | 7.0 | % | 7.0 | % | 6.9 | % | N/A | ||||||||||||
| Operating income -- TTM | $ | 722 | $ | 773 | $ | 863 | $ | 925 | $ | 952 | 32 | % | |||||||||||
| Operating income -- TTM Y/Y growth, excluding F/X | 49 | % | 49 | % | 41 | % | 33 | % | 28 | % | N/A | ||||||||||||
| Operating margin -- TTM % of International net sales | 7.6 | % | 7.6 | % | 7.4 | % | 7.3 | % | 7.1 | % | N/A | ||||||||||||
| Consolidated Segments: | |||||||||||||||||||||||
| Operating expenses (4) | $ | 4,347 | $ | 5,099 | $ | 8,922 | $ | 6,624 | $ | 6,160 | 42 | % | |||||||||||
| Operating expenses -- TTM (4) | $ | 19,293 | $ | 20,358 | $ | 22,937 | $ | 24,993 | $ | 26,805 | 39 | % | |||||||||||
| Operating income | $ | 304 | $ | 350 | $ | 597 | $ | 507 | $ | 406 | 34 | % | |||||||||||
| Operating margin -- % of consolidated sales | 6.5 | % | 6.4 | % | 6.3 | % | 7.1 | % | 6.2 | % | N/A | ||||||||||||
| Operating income -- TTM | $ | 1,216 | $ | 1,335 | $ | 1,572 | $ | 1,757 | $ | 1,859 | 53 | % | |||||||||||
| Operating income -- TTM Y/Y growth, excluding F/X | 29 | % | 35 | % | 48 | % | 51 | % | 51 | % | N/A | ||||||||||||
| Operating margin -- TTM % of consolidated net sales | 5.9 | % | 6.2 | % | 6.4 | % | 6.6 | % | 6.5 | % | N/A | ||||||||||||
| AMAZON.COM, INC. | |||||||||||||||||||||||
| Supplemental Financial Information and Business Metrics | |||||||||||||||||||||||
| (in millions, except inventory turnover, accounts payable days and employee data) | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Y/Y % | |||||||||||||||||||||||
| Q2 2009 | Q3 2009 | Q4 2009 | Q1 2010 | Q2 2010 | Change | ||||||||||||||||||
| Supplemental | |||||||||||||||||||||||
| Supplemental North America Segment Net Sales: | |||||||||||||||||||||||
| Media | $ | 1,148 | $ | 1,412 | $ | 2,099 | $ | 1,597 | $ | 1,324 | 15 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 0 | % | 14 | % | 19 | % | 22 | % | 15 | % | N/A | ||||||||||||
| Media -- TTM | $ | 5,449 | $ | 5,616 | $ | 5,964 | $ | 6,255 | $ | 6,432 | 18 | % | |||||||||||
| Electronics and other general merchandise | $ | 1,187 | $ | 1,293 | $ | 2,662 | $ | 2,024 | $ | 2,090 | 76 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 29 | % | 36 | % | 54 | % | 73 | % | 76 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 5,043 | $ | 5,385 | $ | 6,314 | $ | 7,166 | $ | 8,069 | 60 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of North America net sales | 46 | % | 47 | % | 49 | % | 51 | % | 53 | % | N/A | ||||||||||||
| Other | $ | 116 | $ | 138 | $ | 195 | $ | 159 | $ | 176 | 52 | % | |||||||||||
| Other -- TTM | $ | 471 | $ | 502 | $ | 550 | $ | 608 | $ | 668 | 42 | % | |||||||||||
| Supplemental International Segment Net Sales: | |||||||||||||||||||||||
| Media | $ | 1,294 | $ | 1,517 | $ | 2,580 | $ | 1,833 | $ | 1,550 | 20 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 12 | % | 22 | % | 26 | % | 23 | % | 21 | % | N/A | ||||||||||||
| Media -- TTM | $ | 5,849 | $ | 6,118 | $ | 6,810 | $ | 7,225 | $ | 7,480 | 28 | % | |||||||||||
| Electronics and other general merchandise | $ | 882 | $ | 1,064 | $ | 1,947 | $ | 1,489 | $ | 1,399 | 59 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 60 | % | 58 | % | 56 | % | 61 | % | 63 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 3,603 | $ | 3,977 | $ | 4,768 | $ | 5,382 | $ | 5,899 | 64 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of International net sales | 38 | % | 39 | % | 41 | % | 42 | % | 44 | % | N/A | ||||||||||||
| Other | $ | 24 | $ | 25 | $ | 36 | $ | 29 | $ | 27 | 13 | % | |||||||||||
| Other -- TTM | $ | 94 | $ | 95 | $ | 103 | $ | 114 | $ | 117 | 24 | % | |||||||||||
| Supplemental Worldwide Net Sales: | |||||||||||||||||||||||
| Media | $ | 2,442 | $ | 2,929 | $ | 4,679 | $ | 3,430 | $ | 2,874 | 18 | % | |||||||||||
| Media -- Y/Y growth, excluding F/X | 7 | % | 18 | % | 23 | % | 22 | % | 18 | % | N/A | ||||||||||||
| Media -- TTM | $ | 11,298 | $ | 11,734 | $ | 12,774 | $ | 13,480 | $ | 13,912 | 23 | % | |||||||||||
| Electronics and other general merchandise | $ | 2,069 | $ | 2,357 | $ | 4,609 | $ | 3,513 | $ | 3,489 | 69 | % | |||||||||||
| Electronics and other general merchandise -- Y/Y growth, excluding F/X | 41 | % | 45 | % | 54 | % | 68 | % | 70 | % | N/A | ||||||||||||
| Electronics and other general merchandise -- TTM | $ | 8,646 | $ | 9,362 | $ | 11,082 | $ | 12,548 | $ | 13,968 | 62 | % | |||||||||||
| Electronics and other general merchandise -- TTM % of WW net sales | 42 | % | 43 | % | 45 | % | 47 | % | 49 | % | N/A | ||||||||||||
| Other | $ | 140 | $ | 163 | $ | 231 | $ | 188 | $ | 203 | 45 | % | |||||||||||
| Other -- TTM | $ | 565 | $ | 597 | $ | 653 | $ | 722 | $ | 785 | 39 | % | |||||||||||
| Balance Sheet | |||||||||||||||||||||||
| Cash and marketable securities (5) | $ | 3,504 | $ | 4,304 | $ | 6,672 | $ | 5,381 | $ | 5,419 | 55 | % | |||||||||||
| Inventory, net -- ending | $ | 1,325 | $ | 1,617 | $ | 2,171 | $ | 1,820 | $ | 1,940 | 46 | % | |||||||||||
| Inventory turnover, average -- TTM | 12.4 | 12.1 | 12.2 | 12.6 | 12.5 | 1 | % | ||||||||||||||||
| Fixed assets, net | $ | 981 | $ | 1,086 | $ | 1,290 | $ | 1,436 | $ | 1,704 | 74 | % | |||||||||||
| Accounts payable -- ending | $ | 2,508 | $ | 3,354 | $ | 5,605 | $ | 3,619 | $ | 3,545 | 41 | % | |||||||||||
| Accounts payable days -- ending | 65 | 72 | 68 | 59 | 65 | 0 | % | ||||||||||||||||
| Other | |||||||||||||||||||||||
| WW shipping revenue | $ | 185 | $ | 208 | $ | 341 | $ | 248 | $ | 239 | 29 | % | |||||||||||
| WW shipping costs | $ | 332 | $ | 388 | $ | 696 | $ | 518 | $ | 487 | 47 | % | |||||||||||
| WW net shipping costs | $ | 147 | $ | 180 | $ | 355 | $ | 270 | $ | 248 | 69 | % | |||||||||||
| WW net shipping costs -- % of WW net sales | 3.1 | % | 3.3 | % | 3.7 | % | 3.8 | % | 3.8 | % | N/A | ||||||||||||
| Employees (full-time and part-time; excludes contractors & temporary personnel) | 21,000 | 21,700 | 24,300 | 26,100 | 28,300 | 35 | % | ||||||||||||||||
| (1) Average Total Assets minus Current Liabilities (excluding current portion of Long Term Debt) over five quarter ends. | |||||||||||||||||||||||
| (2) TTM Free Cash Flow divided by Invested Capital. | |||||||||||||||||||||||
| (3) Q2 2009 was negatively impacted by a $51 million legal settlement. | |||||||||||||||||||||||
|
(4) Represents cost of sales, fulfillment, marketing, technology and content, and general and administrative operating expenses, excluding stock-based compensation. |
|||||||||||||||||||||||
|
(5) Includes restricted cash, classified within "Other Assets" on our consolidated balance sheet, of: $292 million Q2 2009, $303 million Q3 2009, $306 million in Q4 2009, $318 million in Q1 2010 and $311 million in Q2 2010. |
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Amazon.com, Inc.
Certain Definitions
Customer Accounts
· References to customers mean customer accounts, which are unique e-mail addresses, established either when a customer's initial order is shipped or when a customer orders from other sellers on our websites. Customer accounts exclude certain customers, including customers associated with certain of our acquisitions, Amazon Enterprise Solutions program customers, Amazon.com Payments customers, Amazon Web Services customers, and the customers of select companies with whom we have a technology alliance or marketing and promotional relationship. Customers are considered active when they have placed an order during the preceding twelve-month period.
Seller Accounts
· References to sellers means seller accounts, which are established when a seller receives an order from a customer account. Seller accounts exclude Amazon Enterprise Solutions sellers. Sellers are considered active when they have received an order from a customer during the preceding twelve-month period.
Registered Developers
· References to registered developers mean cumulative registered developer accounts, which are established when potential developers enroll with Amazon Web Services and receive a developer access key.
Units
· References to units mean physical and digital units sold (net of returns and cancellations) by us and sellers at Amazon.com domains worldwide - such as www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca and www.amazon.cn, as well as Amazon.com-owned items sold through non-Amazon.com domains. Units sold do not include units associated with certain of our acquisitions or Amazon.com gift certificates.
