EXPECTS PRO FORMA OPERATING PROFITABILITY IN FOURTH QUARTER 2001; FOURTH
QUARTER 2000 PRO FORMA OPERATING LOSS IMPROVES FROM 26 PERCENT TO 6 PERCENT
OF NET SALES; ANNOUNCES RESTRUCTURING
Over 35 Percent of Customers Purchase Items
from Electronics, Kitchen, Tools or Toys;
International Sales More Than Double;
Gross Profit Up 155 Percent;
Inventory $175 Million—18 Turns
SEATTLE, WA—Jan. 30, 2001—Amazon.com, Inc.
(NASDAQ: AMZN) today announced that net sales for the fourth quarter of
2000 were $972 million, an increase of 44 percent over net sales of $676
million in the fourth quarter of 1999. The fourth quarter net sales growth
reflects exceptionally strong sales in Amazon.com's international sites
and its Electronics, Kitchen and Tools & Hardware stores,
with Electronics being its second largest U.S. store for the year. In
the quarter, over 35 percent of U.S. customers purchased items from the
company's Electronics, Kitchen, Tools & Hardware or Toys & Games
stores, an increase of 47 percent over the prior year, demonstrating to
customers the attractiveness of the Amazon.com platform. For the year
ended December 31, 2000, net sales were $2.76 billion, a 68 percent increase
over 1999 net sales of $1.64 billion.
“Over the past year, our U.S. pro forma
operating loss decreased from 24 percent of net sales in the fourth quarter
of 1999 to less than 2 percent in the fourth quarter of 2000,” said Warren
Jenson, Amazon.com chief financial officer. “While the strength of consumer
spending remains uncertain, and there are no guarantees, we expect Amazon.com
as a whole to reach operating profitability in the fourth quarter of this
“We've evolved a great deal in five years,
and in 2000 we learned a tremendous amount about the operating characteristics
of our model, while improving our bottom line each quarter of the year,”
said Jeff Bezos, Amazon.com chief executive officer. “That learning, combined
with even more hard work, positions Amazon.com to profitably serve customers
better than ever.”
Gross profit for the fourth quarter of 2000
was $224 million, an increase of 155 percent over the prior year. Pro
forma operating loss for the fourth quarter of 2000 was $60 million, or
6 percent of net sales, compared to a pro forma operating loss of $175
million, or 26 percent of net sales, in the fourth quarter of 1999. U.S.
pro forma operating loss for the fourth quarter of 2000 was $16 million,
or 2 percent of U.S. net sales. Fourth-quarter pro forma net loss was
$0.25 per share, an improvement over the pro forma net loss of $0.55 per
share in the prior year period. While net sales grew 44 percent for the
quarter, inventory declined 21 percent from the prior year to $175 million,
reflecting improvement in asset turnover.
Fourth-quarter GAAP net loss was $545 million,
or $1.53 per share, and includes charges totaling $339 million for the
impairment of goodwill and equity investments. This compares to a net
loss of $323 million, or $0.96 per share, in the fourth quarter of 1999.
The company also announced a reduction in
its corporate staffing and a consolidation of its distribution and customer
service center network, resulting in the closure of a distribution center
in McDonough, Georgia, and a customer service center in Seattle, Washington.
The company's Seattle distribution center will be operated seasonally.
This restructuring reduces staffing by approximately 15 percent of Amazon.com's
overall workforce, or 1,300 jobs, and will result in a charge in excess
of $150 million in the first half of 2001. In addition to a standard severance
package, the company has established a trust fund of Amazon.com stock
to be distributed to affected employees in 2003.
call to discuss fourth quarter 2000 financial results and the 2001 business
outlook will be Webcast live on Tuesday, January 30, 2001, at 5:00 p.m.
EST/2:00 p.m. PST. This conference call will be available at www.amazon.com/ir through March 31, 2001, and will contain forward-looking
statements and other material information.
The following forward-looking statements reflect Amazon.com's
expectations as of January 30, 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 until its next quarterly results
announcement, other than in publicly available statements.
First Quarter 2001 Expectations
Net sales are expected to grow to between $650 million and
Gross margin is expected to be between 21 percent and 23
percent of net sales.
Pro forma operating losses are expected to decrease year
over year to between 10 percent and 13 percent of net sales.
Cash and marketable securities are expected to be over $650
million as of March 31, 2001, which includes up to $50 million of cash
outflow in connection with the restructuring.
Net sales are expected to increase between 20 percent and
30 percent over 2000.
Pro forma operating losses are expected to be between 4
percent and 7 percent of net sales for the year, with pro forma operating
profitability expected in the fourth quarter.
Cash and marketable securities are expected to be over $900
million at December 31, 2001. Unless the company chooses to raise cash
to further strengthen its balance sheet or for strategic flexibility,
it has no reason to do so.
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, 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 revenues derived from product 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 noncash 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, distribution center expansion and reduction,
adverse consequences arising from system interruptions, management of
potential growth, Auctions, zShops and Marketplace services, fraud and
Amazon.com Payments, 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
September 30, 2000.
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,
lawn and patio items, and wireless products. Through Amazon.com zShops,
any business or individual can sell virtually anything to Amazon.com's
more than 29 million cumulative customers, and with Amazon.com Payments,
sellers can accept credit card transactions, avoiding the hassles of offline
Amazon.com operates four international
Web sites: www.amazon.fr, www.amazon.co.uk, www.amazon.de 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 250,000 movies and entertainment titles
and 1 million cast and crew members dating from the birth of film in 1891
Historical financial results of operations
are preliminary and unaudited and should not be considered a complete
disclosure of quarterly or annual results. 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, impairment-related charges and other
noncash investment gains and losses, net, and equity in losses of equity-method
investees, net; and these results will exclude restructuring charges subsequent