10-QPeriod: Q3 FY2002

AMAZON COM INC Quarterly Report for Q3 Ended Sep 30, 2002

Filed October 25, 2002For Securities:AMZN

Summary

Amazon.com, Inc. (AMZN) reported its financial results for the third quarter ended September 30, 2002. The company demonstrated significant top-line growth, with net sales increasing by 33% year-over-year to $851 million. This growth was driven by strong performance across its International and North America Books, Music, and DVD/Video segments. Despite the revenue growth, Amazon continued to report a net loss, although the loss narrowed considerably to $35 million compared to $170 million in the same period last year. This improvement in profitability was supported by an increase in gross profit and reductions in several operating expense categories, including marketing, technology and content, and general and administrative expenses. The company's financial position shows a decrease in cash and cash equivalents but an increase in marketable securities. Total assets have decreased, while liabilities remain substantial, particularly long-term debt. Amazon's ongoing restructuring efforts and associated expenses, including lease obligations for vacated space, continue to impact its financial results. However, the company expressed confidence in its liquidity, expecting its current cash, cash equivalents, and marketable securities to be sufficient for at least the next 12 months and anticipating positive free cash flow for fiscal year 2002.

Key Highlights

  • 1Net sales increased by 33% year-over-year to $851 million, driven by strong international and core product category growth.
  • 2Net loss significantly narrowed to $35 million for the quarter, an improvement from $170 million in the prior year period.
  • 3Operating expenses saw reductions in marketing, technology and content, and general and administrative costs as a percentage of net sales.
  • 4The International segment experienced substantial revenue growth of 90% year-over-year.
  • 5Cash and cash equivalents decreased to $328 million, while marketable securities increased to $538 million, reflecting a shift in asset allocation.
  • 6The company continues to incur restructuring-related expenses, notably lease obligations for vacated facilities, impacting profitability.
  • 7Amazon anticipates positive free cash flow for fiscal year 2002 and believes its current liquidity is sufficient for the next 12 months.

Frequently Asked Questions

Amazon reported a 33% year-over-year increase in net sales for the third quarter ended September 30, 2002, reaching $851 million. This growth was primarily fueled by its International segment, which saw a 90% increase, and the North America Books, Music, and DVD/Video segment.

Amazon reported a net loss of $35 million for the third quarter of 2002. While this represents a significant improvement compared to the $170 million net loss in the same quarter of 2001, the company is not yet profitable on a net income basis.

Amazon's financial position shows a substantial accumulated deficit of $3.0 billion and a negative stockholders' equity of $1.5 billion. However, the company reported $328 million in cash and cash equivalents and $538 million in marketable securities as of September 30, 2002. Management believes its current liquidity is sufficient for the next 12 months and anticipates positive free cash flow for the full year 2002.

Yes, Amazon continues to incur restructuring-related expenses, primarily related to ongoing lease obligations for vacated office and fulfillment center space. In the third quarter of 2002, the company recorded an additional $37 million in such expenses due to revised sublease income estimates and higher-than-expected tenant improvement costs, reflecting weakness in the real estate markets.