Press Release

<< Back Announces Financial Results for First Quarter 1999

SEATTLE, WA-(April 28, 1999), Inc. (NASDAQ: AMZN) today announced financial results for the first quarter of 1999. Net sales for the first quarter were $293.6 million, an increase of 236 percent over net sales of $87.4 million for the first quarter of 1998. reported a first-quarter pro forma operating loss of $30.6 million, or 10 percent of net sales, compared to an operating loss of $10.0 million, or 11 percent of net sales, in the first quarter of 1998. First-quarter pro forma net loss of $36.4 million, or $0.23 per share, compared with a net loss of $10.4 million, or $0.07 per share, in the first quarter of 1998. On a GAAP basis, reported first-quarter net loss was $61.7 million, or $0.39 per share, and included $25.3 million of merger- and acquisition-related costs. announced that cumulative customer accounts increased by more than 2.2 million during the first quarter to more than 8.4 million at March 31, 1999, an increase of more than 250 percent from the 2.3 million customer accounts at March 31, 1998. Repeat customer orders represented more than 66 percent of orders during the quarter ended March 31, 1999.

"Everyone here is working hard to provide the best possible customer experience, and we're extremely grateful to our customers," said Jeff Bezos, founder and CEO. "We're particularly pleased with Auctions, which is off to a very fast start-we had more participants during our first month than even with music."

The company's focus on customers enabled to extend its leadership position on a number of fronts:

  • was ranked in the top 10 Web properties during March, as measured by Media Metrix, making it not only the leading online retail site but also one of the leading Web sites of any kind.
  • In March, was the only company to win more than one Webby award-and it won three. The Webbies, considered by many to be the Oscars(r) of the Internet, are awarded by the International Academy of Digital Arts & Sciences. won awards for Web-site excellence as a commerce site, for technical achievement, and the company's Internet Movie Database for best film site. IMDb also received a People's Choice Award (voted for by Web users) in the film category.
  • More than 1 million customers have now signed up for the company's innovative Delivers program, which provides periodic e-mail updates of new book, music, and video titles. More information on Delivers is available at
  • More than 260,000 Web-site operators have now enrolled in the company's industry-leading Associates program, which allows Web-site operators to earn lucrative referral fees over a range of products. More information on Associates is available at

Regarding's announced 1999 expansion plans, Bezos added, "We have begun and will continue to build out a significant distribution infrastructure. This will give customers greater availability, faster shipping times, and even better service. We will also continue to invest in systems, people, and product expansion, each of which helps us better serve customers. For the rest of 1999, we expect to invest more heavily than we have in the past. Our goal remains to build the world's most customer-centric company."

Recent Highlights Auctions
In March, launched Auctions to help people find, discover, buy-and now sell-virtually anything online. With the launch of Auctions,'s more than 8.4 million customers have been preregistered to begin buying and selling immediately in more than 800 categories. The new service is easy to use, with innovative and time-saving features such as Bid-Click SM for hassle-free bidding. To enhance customer safety, the Auctions Guarantee covers purchases of up to $250 in the event that a buyer does not receive what a seller promised.

Earlier this month, announced it had agreed to purchase, the sole provider of live-event auctions on the Internet. Adding LiveBid's technology and services to Auctions expands the breadth and types of items customers will find and gives local and regional auction houses full access to a vast Internet auction community. and
During the quarter, announced strategic investments in and ( is an online source for thousands of brand-name health, beauty, and wellness products. ( is the leading pet-oriented company on the Internet, specializing in popular and rare pet accessories, products, and food for all types of animals. These companies share's passion for bringing customers value through selection, service, convenience, and community.'s Free Greeting Card Service
On April 27 the company launched Cards, a free electronic greeting-card service. Cards can be sent by visiting and clicking on the e-cards tab. The new site offers diverse styles of electronic greeting cards and a unique selection, with hundreds of illustrations, pictures, animated cards, and messages to choose from. Card senders also have the ability to customize their messages.

Distribution Center Expansion
Continuing its expansion, leased a distribution facility in Coffeyville, Kansas, which will enable faster delivery to customers across the Midwest and Southeast United States. Plans for the existing 460,000-square-foot facility include expansion to over 750,000 square feet and the addition of automation, allowing the company to significantly increase the number of products kept on hand for immediate shipment to customers. The result is that customers in such places as Chicago, St. Louis, Dallas, and Minneapolis will receive their orders much faster, thanks to deeper inventory, faster processing, and shorter delivery times. The Coffeyville facility is expected to begin operations during the second half of 1999. also announced that its 323,000-square-foot facility in Fernley, Nevada began shipping on a limited basis, increasing availability and improving delivery times for customers in the Western U.S.

In March, leased a new distribution center in Bad Hersfeld, Germany. The facility is expected to begin operations during the second half of 1999.

Acquisition of and
Earlier this week, the company agreed to acquire, the premier online marketplace for hard-to-find, antiquarian, and used books at and hard-to-find recordings and music memorabilia at The acquisition will vastly enlarge and enrich's core book- and music-store offerings while providing's thousands of independent dealers and retailers the opportunity to sell and auction their hard-to-find books, recordings, and memorabilia to's growing base of 8.4 million experienced online shoppers. At the same time, the company also announced it had agreed to acquire two other e-commerce companies, and

Early in the quarter, completed a $1.25 billion 4.75% convertible debt offering, which substantially strengthened its cash position and increased its strategic flexibility. Also in the quarter, repurchased $84 million in accreted value of its senior discount notes.

About, Inc. (NASDAQ: AMZN), the Internet's No. 1 music, No. 1 video, and No. 1 book retailer, opened its virtual doors on the World Wide Web in July 1995. Today, the store has expanded to offer online auctions and more than 4.7 million book, music-CD, video, DVD, computer-game, and other titles, plus secure credit-card payment, personalized recommendations, and streamlined ordering through 1-ClickSM technology and hassle-free auction bidding with Bid-ClickSM. operates two international Web sites: in the United Kingdom and in Germany. also operates PlanetAll (, a Web-based address book, calendar, and reminder service. It also operates the Internet Movie Database (, the Web's comprehensive and authoritative source of information on more than 150,000 movies and entertainment programs and 500,000 cast and crew members dating from the birth of film in 1892 to the present. This announcement contains forward-looking statements that involve risks and uncertainties that include, among others,'s limited operating history, anticipated losses, unpredictability of future revenues, potential fluctuations in quarterly operating results, seasonality, consumer trends, competition, risks of system interruption, management of potential growth, risks related to auction services, and risks of new business areas, international expansion, business combinations, and strategic alliances. More information about factors that potentially could affect's financial results is included in's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 1998., Auctions,,, Internet Movie Database, PlanetAll, 1-Click, and Bid-Click are either registered trademarks or trademarks of, Inc., or its affiliates. All other names mentioned herein may be trademarks of their respective owners.

Note on Financial Presentation
Financial results are prepared in accordance with U.S. generally accepted accounting principles. All of the charges associated with's merger, acquisition, and investment activities have been included in "merger- and acquisition-related costs" in the accompanying financial statements in order to enhance their informational value and to present the most comparable classifications in the other line items. Among items included in merger- and acquisition-related costs are amortization of goodwill and other purchased intangibles, equity in loss of investees, and certain non-recurring merger- and acquisition-related costs. Pro forma financial results exclude these merger- and acquisition-related costs.

Consolidated Statements of Operations

(in thousands, except per share amounts)
                                       Quarter Ended March 31,
                                         1999		1998
             			      (Unaudited)  (Unaudited)
Net sales                              $293,643       $87,361 
Cost of sales                           228,852        68,063 
Gross profit                             64,791        19,298 
Operating expenses:
	Marketing and sales              60,744        19,914 
	Product development              23,477         7,320 
	General and administrative       11,165         2,049 
	Merger and acquisition related 
         costs, including amortization	
         of goodwill and other purchased
         intangibles                     25,309           -

          Total operating expenses      120,695        29,283 
Loss from operations                    (55,904)       (9,985)
Interest income                          10,925         1,645
Interest expense                        (16,688)       (2,029)
  Net interest expense                   (5,763)         (384)

Net loss                               $(61,667)     $(10,369)

Basic and diluted loss per share         $(0.39)       $(0.07)
Shares used in computation of basic	
  and diluted loss per share            156,897       141,318 
Pro Forma Results Excluding Merger and Acquisition Related Costs (see
Note 2 below)
Pro forma loss from operations, 
 excluding merger and acquisition
 related costs                         $(30,595)      $(9,985)
Pro forma net loss, excluding merger
 and acquisition related costs         $(36,358)     $(10,369)
Pro forma basic and diluted loss per
 share, excluding merger and 
 acquisition related costs               $(0.23)       $(0.07)
Shares used in computation of pro
 forma basic and diluted loss per       156,897      141,318 
Note 1: On January 4, 1999, the Company effected a three-for-one stock
split in the form of a stock dividend to stockholders of record on
December 18, 1998.  Accordingly, the accompanying consolidated balance
sheets and statements of operations have been restated to reflect the
Note 2: Pro forma results for the quarter ended March 31, 1999 and
1998 are presented for informational purposes only and are not
prepared in accordance with generally accepted accounting
principles. These results present the operating results of,
excluding charges of $25.3 million and $0 for the quarter ended March
31, 1999 and 1998, respectively, for merger and acquisition related
costs arising from's April 1998 acquisitions of Bookpages,
Telebook and Internet Movie Database, and the August 1998 acquisition
of Junglee and the merger with PlanetAll.  Among items included in
merger and acquisition related costs are amortization of goodwill and
other purchased intangibles, equity in loss of investees, and certain
non-recurring merger and acquisition related costs.

Consolidated Balance Sheets	
(in thousands, except per share data)
                                       March 31,	December 31,
                                         1999               1998
Current assets:					
  Cash                                   $5,248            $25,561 
  Marketable securities               1,437,717            347,884 
  Inventories                            45,236             29,501 
  Prepaid expenses and other             37,077             21,308 
    Total current assets              1,525,278            424,254 
Fixed assets, net                        60,600             29,791 
Goodwill and other, net                 187,194            187,003 
Deferred charges                         39,912              7,412 
  Total assets                       $1,812,984           $648,460 
Current liabilities:
  Accounts payable                     $133,018           $113,273 
  Accrued advertising                    16,187             13,071 
  Other liabilities and 
    accrued expenses                     45,194             34,423 
  Current portion of long-term debt
   and capital lease obligation           7,186                808 
     Total current liabilities          201,585            161,575 
Long-term debt and capital lease
  obligation                          1,533,862            348,140 
Stockholders' equity:
  Preferred stock, $0.01 par value:
  Authorized shares -- 10,000
  Issued and outstanding shares -- 
    none                                    -                  -

  Common stock, $0.01 par value:
    Authorized shares -- 300,000	
    Issued and outstanding shares
      -- 161,371 and 159,267 shares
      at March 31, 1999 and 
      December 31, 1998, respectively    1,614               1,593 
  Additional paid-in capital           306,414             300,130
  Note receivable from officer for
    common stock                        (1,099)             (1,099)
  Deferred compensation                 (1,275)             (1,625)
  Accumulated other comprehensive 
    income                              (4,390)              1,806 
  Accumulated deficit                 (223,727)           (162,060)
    Total stockholders' equity          77,537             138,745 
      Total liabilities and 
        stockholders' equity        $1,812,984            $648,460

Note 1: On January 4, 1999, the Company effected a three-for-one stock
split in the form of a stock dividend to stockholders of record on
December 18, 1998.  Accordingly, the accompanying consolidated balance
sheets and statements of operations have been restated to reflect the