Amazon.com Inc 8-K 2010-10-21

Press Release Dated October 21, 2010

Exhibit 99.1

LOGO

AMAZON.COM ANNOUNCES THIRD QUARTER SALES UP 39% TO $7.56 BILLION

SEATTLE(BUSINESS WIRE)October 21, 2010Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2010.

Operating cash flow increased 16% to $2.62 billion for the trailing twelve months, compared with $2.25 billion for the trailing twelve months ended September 30, 2009. Free cash flow decreased 5% to $1.83 billion for the trailing twelve months, compared with $1.92 billion for the trailing twelve months ended September 30, 2009.

Common shares outstanding plus shares underlying stock-based awards totaled 465 million on September 30, 2010, compared with 451 million a year ago.

Net sales increased 39% to $7.56 billion in the third quarter, compared with $5.45 billion in third quarter 2009. Excluding the $83 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 40% compared with third quarter 2009.

Operating income increased 7% to $268 million in the third quarter, compared with $251 million in third quarter 2009. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $15 million.

Net income increased 16% to $231 million in the third quarter, or $0.51 per diluted share, compared with net income of $199 million, or $0.45 per diluted share, in third quarter 2009.

Every year for the last 15 years weve worked to improve the things customers care about, and this year is no exception, said Jeff Bezos, founder and CEO of Amazon.com. This holiday season well have the best prices, the biggest selection, the highest in-stock, and the fastest delivery in our history.

Highlights

Amazon began shipping a new Kindle that offers an electronic-ink screen with 50 percent better contrast, a 21 percent smaller body, a 15 percent lighter weight, 20 percent faster page turns, up to one-month of battery life with wireless off, double the storage, and built-in Wi-Fiall for only $139. Kindle 3G adds free 3G wirelessno monthly bills or annual contractsall for only $189.

The new generation Kindle devices are the fastest-selling Kindles of all time and the bestselling products on Amazon.com and Amazon.co.uk. More new generation Kindle devices were ordered in the first twelve weeks of availability than in the same time frame following any other Kindle launch. In addition, in the twelve weeks following the introduction of the new generation of Kindles, customers ordered more Kindle devices on Amazon.com and Amazon.co.uk than any other product.

The U.S. Kindle Store now has more than 720,000 books, including New Releases and 108 of 111 New York Times Best Sellers. Over 590,000 of these books are $9.99 or less, including 78 New York Times Best Sellers. Over 1.8 million free, out-of-copyright, pre-1923 books are also available to read on Kindle.

Amazon added to its growing list of Buy Once, Read Everywhere Kindle apps, announcing it will launch a Kindle App for the new BlackBerry PlayBook tablet computer. All Kindle apps let customers Buy Once, Read Everywhereon Kindle, Kindle 3G, Kindle DX, iPad, iPod touch, iPhone, Mac, PC, BlackBerry, Android-based devices, and in the coming months the BlackBerry PlayBook. All Kindle apps are free and incorporate Amazons Whispersync technology, which allows readers to seamlessly switch between devices. With Kindle Worry-Free Archive, books purchased from the Kindle Store are automatically backed up online in the Kindle library on Amazon where they can be re-downloaded wirelessly for free, anytime.

The popular Kindle for Android app was updated with a number of new features that allow customers to search the full text of Kindle books by voice or text, seamlessly look up words and phrases in Wikipedia, lock screen orientation in portrait or landscape mode, and view details about a book on Shelfari, the books-focused social networking siteall without leaving the app.

Amazon announced that it will launch Kindle Singlescompelling ideas expressed at their natural length. Kindle Singles, which can be twice the length of a New Yorker feature or as much as a few chapters of a typical book might be the perfect, natural length to lay out a single killer idea, well researched, well argued and well illustratedwhether its a business lesson, a political point of view, a scientific argument, or a beautifully crafted essay on a current event. Kindle Singles will have their own section in the Kindle Store and be priced much lower than a typical book.

North America segment sales, representing the Companys U.S. and Canadian sites, were $4.13 billion, up 45% from third quarter 2009.

International segment sales, representing the Companys U.K., German, Japanese, French and Chinese sites, were $3.43 billion, up 32% from third quarter 2009. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 35%.

Worldwide Media sales grew 14% to $3.35 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 15%.

Worldwide Electronics & Other General Merchandise sales grew 68% to $3.97 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, sales grew 71%.

Amazon.com announced the launch of Amazon Moma new, free membership program that offers exclusive promotions and discounts available only to parents and caregivers. Customers who sign up for Amazon Mom can receive one year of Amazon Primes Unlimited Free Two-Day Shipping on items ranging from baby bottles to video cameras, and 30 percent off select diapers and wipes with Subscribe & Save.

The Company introduced Amazon Student, offering college students Amazon Prime Unlimited Free Two-Day Shipping free for one year on textbooks and millions of other items.

The Company announced the Heidi Klum for New Balance collection, exclusively available at Amazon.com. The collection includes tunics, knits, woven tops, leggings and outerwear pieces, all created for active women and featuring high-end fabrics such as cashmere blends, cottons and silks.

Amazon Elastic Compute Cloud (EC2) and Amazon Relational Database Service (RDS) lowered On-Demand and Reserved Instance prices for their largest high-memory instances, making it even more cost efficient for developers to take advantage of Amazon Web Services (AWS).

AWS announced the launch of a free usage tier. Beginning November 1, new AWS customers will be able to run a free Amazon EC2 instance for a year, while also leveraging a new free usage tier for Amazon S3, Amazon Elastic Block Store, Amazon Elastic Load Balancer, and AWS data transfer. This will enable developers to launch new applications, broaden their AWS knowledge, or simply gain hands-on familiarity with the servicesall while incurring no charges.

AWS announced that a wide selection of Oracle enterprise software, including Oracle E-Business Suite, PeopleSoft Enterprise, Siebel CRM, Oracle Fusion Middleware, Oracle Database, and Oracle Linux, has been certified to run on Amazon EC2, enabling customers who power their businesses with Oracle software to fully leverage the scalability, reliability, and utility-based pricing model of AWS.

Financial Guidance

The following forward-looking statements reflect Amazon.coms expectations as of October 21, 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.

Fourth Quarter 2010 Guidance

Net sales are expected to be between $12.0 billion and $13.3 billion, or to grow between 26% and 40% compared with fourth quarter 2009.

Operating income is expected to be between $360 million and $560 million, or between 24% decline and 18% growth compared with fourth quarter 2009.

This guidance includes approximately $140 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 Companys 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.coms financial results is included in Amazon.coms 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. (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earths Biggest Selection. Amazon.com, Inc. seeks to be Earths 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 Amazons developer customers with access to in-the-cloud infrastructure services based on Amazons own back-end technology platform, which developers can use to enable virtually any type of business. Kindle, Kindle 3G 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 3G 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						Nine Months Ended						Twelve Months Ended
	September 30,						September 30,						September 30,
	2010			2009			2010			2009			2010			2009
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	1,629		$	1,936		$	3,444		$	2,769		$	2,514		$	1,650

OPERATING ACTIVITIES:
Net income		231			199			736			518			1,120			743
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		150			96			399			266			510			343
Stock-based compensation		107			90			304			242			404			320
Other operating expense (income), net		26			9			77			80			98			90
Losses (gains) on sales of marketable securities, net		(2	)		(1	)		(2	)		(3	)		(2	)		(3	)
Other expense (income), net		(35	)		(9	)		(62	)		(21	)		(56	)		(38	)
Deferred income taxes		(16	)		77			(44	)		84			(44	)		125
Excess tax benefits (charges) from stock-based compensation		(75	)		17			(236	)		(52	)		(288	)		(52	)
Changes in operating assets and liabilities:
Inventories		(505	)		(276	)		(326	)		(192	)		(666	)		(293	)
Accounts receivable, net and other		(64	)		(155	)		348			28			(161	)		(296	)
Accounts payable		894			701			(1,078	)		(372	)		1,152			964
Accrued expenses and other		192			(3	)		31			(131	)		460			77
Additions to unearned revenue		152			197			502			610			946			772
Amortization of previously unearned revenue		(200	)		(143	)		(642	)		(375	)		(856	)		(499	)

Net cash provided by (used in) operating activities		855			799			7			682			2,617			2,253

INVESTING ACTIVITIES:
Purchases of fixed assets, including internal-use software and website development		(315	)		(103	)		(651	)		(236	)		(788	)		(337	)
Acquisitions, net of cash acquired, and other		(42	)		(5	)		(82	)		(40	)		(81	)		(127	)
Sales and maturities of marketable securities and other investments		1,059			586			3,139			1,277			3,827			1,550
Purchases of marketable securities and other investments		(1,830	)		(780	)		(4,551	)		(1,730	)		(6,711	)		(2,179	)

Net cash provided by (used in) investing activities		(1,128	)		(302	)		(2,145	)		(729	)		(3,753	)		(1,093	)

FINANCING ACTIVITIES:
Excess tax benefits (charges) from stock-based compensation		75			(17	)		236			53			288			52
Common stock repurchased																	(100	)
Proceeds from long-term debt and other		67			101			110			97			125			149
Repayments of long-term debt, capital lease, and finance lease obligations		(49	)		(20	)		(122	)		(379	)		(241	)		(394	)

Net cash provided by (used in) financing activities		93			64			224			(229	)		172			(293	)

Foreign-currency effect on cash and cash equivalents		90			17			9			21			(11	)		(3	)

Net increase (decrease) in cash and cash equivalents		(90	)		578			(1,905	)		(255	)		(975	)		864

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	1,539		$	2,514		$	1,539		$	2,514		$	1,539		$	2,514


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	3		$	2		$	8		$	30		$	10		$	32
Cash paid for income taxes		16			10			62			44			66			69
Fixed assets acquired under capital leases		141			60			283			97			333			141
Fixed assets acquired under build-to-suit leases		39			16			159			133			214			170

AMAZON.COM, INC.

Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

Net sales	$	7,560		$	5,449		$	21,257		$	14,989

Operating expenses (1):
Cost of sales		5,786			4,176			16,244			11,435
Fulfillment		680			466			1,808			1,297
Marketing		241			149			653			406
Technology and content		442			315			1,216			890
General and administrative		117			83			327			228
Other operating expense (income), net (2)		26			9			77			80

Total operating expenses		7,292			5,198			20,325			14,336


Income from operations		268			251			932			653

Interest income		13			7			36			28
Interest expense		(11	)		(7	)		(28	)		(26	)
Other income (expense), net		22			11			50			35

Total non-operating income (expense)		24			11			58			37


Income before income taxes		292			262			990			690

Provision for income taxes		(79	)		(60	)		(267	)		(169	)
Equity-method investment activity, net of tax		18			(3	)		13			(3	)

Net income	$	231		$	199		$	736		$	518

Basic earnings per share	$	0.51		$	0.46		$	1.65		$	1.20

Diluted earnings per share	$	0.51		$	0.45		$	1.62		$	1.18


Weighted average shares used in computation of earnings per share:
Basic		448			432			447			431

Diluted		456			441			455			439

(1) Includes stock-based compensation as follows:
Fulfillment	$	23		$	22		$	65		$	57
Marketing		7			5			19			14
Technology and content		56			48			159			130
General and administrative		21			15			61			41

(2) Q2 2009 was negatively impacted by a $51 million legal settlement.

AMAZON.COM, INC.

Segment Information

(in millions)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
North America
Net sales	$	4,126		$	2,843		$	11,496		$	7,872
Operating expenses
Cost of sales		3,011			2,091			8,343			5,754
Direct segment operating expenses (1)		929			596			2,494			1,687

Segment operating income	$	186		$	156		$	659		$	431


International
Net sales	$	3,434		$	2,606		$	9,761		$	7,117
Operating expenses
Cost of sales		2,775			2,085			7,901			5,681
Direct segment operating expenses (1)		444			327			1,206			892

Segment operating income	$	215		$	194		$	654		$	544


Consolidated
Net sales	$	7,560		$	5,449		$	21,257		$	14,989
Operating expenses
Cost of sales		5,786			4,176			16,244			11,435
Direct segment operating expenses		1,373			923			3,700			2,579

Segment operating income		401			350			1,313			975
Stock-based compensation		(107	)		(90	)		(304	)		(242	)
Other operating income (expense), net (2)		(26	)		(9	)		(77	)		(80	)

Income from operations		268			251			932			653
Total non-operating income (expense)		24			11			58			37
Provision for income taxes		(79	)		(60	)		(267	)		(169	)
Equity-method investment activity, net of tax		18			(3	)		13			(3	)

Net income	$	231		$	199		$	736		$	518


Segment Highlights:
Y/Y net sales growth:
North America		45	%		23	%		46	%		19	%
International		32			33			37			21
Consolidated		39			28			42			20
Y/Y segment operating income growth:
North America		19	%		77	%		53	%		37	%
International		11			36			20			30
Consolidated		15			52			35			33
Net sales mix:
North America		55	%		52	%		54	%		53	%
International		45			48			46			47

		100	%		100	%		100	%		100	%

(1)	A 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 September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
North America
Media	$	1,591		$	1,412		$	4,512		$	3,865
Electronics and other general merchandise		2,326			1,293			6,440			3,652
Other		209			138			544			355

Total North America	$	4,126		$	2,843		$	11,496		$	7,872


International
Media	$	1,759		$	1,517		$	5,142		$	4,229
Electronics and other general merchandise		1,644			1,064			4,531			2,821
Other		31			25			88			67

Total International	$	3,434		$	2,606		$	9,761		$	7,117


Consolidated
Media	$	3,350		$	2,929		$	9,654		$	8,094
Electronics and other general merchandise		3,970			2,357			10,971			6,473
Other		240			163			632			422

Total Consolidated	$	7,560		$	5,449		$	21,257		$	14,989


Y/Y Net Sales Growth:
North America:
Media		13	%		13	%		17	%		7	%
Electronics and other general merchandise		80			36			76			35
Other		52			29			53			18
Total North America		45			23			46			19

International:
Media		16	%		22	%		22	%		10	%
Electronics and other general merchandise		54			54			61			44
Other		26			4			30			2
Total International		32			33			37			21

Consolidated:
Media		14	%		17	%		19	%		9	%
Electronics and other general merchandise		68			44			69			39
Other		48			25			50			15
Total Consolidated		39			28			42			20

Y/Y Net Sales Growth Excluding Effect of Exchange Rates:
International:
Media		18	%		22	%		20	%		17	%
Electronics and other general merchandise		60			58			61			56
Other		33			14			32			19
Total International		35			35			37			30

Consolidated:
Media		15	%		18	%		18	%		13	%
Electronics and other general merchandise		71			45			70			44
Other		49			26			50			18
Total Consolidated		40			29			41			25

Consolidated Net Sales Mix:
Media		44	%		54	%		45	%		54	%
Electronics and other general merchandise		53			43			52			43
Other		3			3			3			3

		100	%		100	%		100	%		100	%

AMAZON.COM, INC.

Consolidated Balance Sheets

(in millions, except per share data)


	September 30, 2010			December 31, 2009			September 30, 2009
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,539		$	3,444		$	2,514
Marketable securities		4,346			2,922			1,487
Inventories		2,515			2,171			1,617
Accounts receivable, net and other		959			988			671
Deferred tax assets		200			272			80

Total current assets		9,559			9,797			6,369
Fixed assets, net		2,099			1,290			1,086
Deferred tax assets		43			18			206
Goodwill		1,277			1,234			457
Other assets		1,184			1,474			854

Total assets	$	14,162		$	13,813		$	8,972


LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable	$	4,614		$	5,605		$	3,354
Accrued expenses and other		1,761			1,759			1,183

Total current liabilities		6,375			7,364			4,537
Long-term debt		164			109			116
Other long-term liabilities		1,226			1,083			734

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 449
Outstanding shares 448, 444 and 433		5			5			4
Treasury stock, at cost		(600	)		(600	)		(600	)
Additional paid-in capital		6,215			5,736			4,428
Accumulated other comprehensive loss		(131	)		(56	)		(35	)
Retained earnings (accumulated deficit)		908			172			(212	)

Total stockholders equity		6,397			5,257			3,585

Total liabilities and stockholders equity	$	14,162		$	13,813		$	8,972

AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except per share data)

(unaudited)


	Q3 2009			Q4 2009			Q1 2010			Q2 2010			Q3 2010			Y/Y % Change
Cash Flows and Shares
Operating cash flow trailing twelve months (TTM)	$	2,253		$	3,293		$	2,780		$	2,561		$	2,617			16	%
Purchases of fixed assets (incl. internal-use software & website development) TTM	$	337		$	373		$	458		$	575		$	788			134	%
Free cash flow (operating cash flow less purchases of fixed assets) TTM	$	1,916		$	2,920		$	2,322		$	1,986		$	1,829			(5	%)
Free cash flow TTM Y/Y growth		98	%		114	%		62	%		29	%		(5	%)		N/A
Invested capital (1)	$	3,847		$	4,449		$	5,104		$	5,820			6,576			N/A
Return on invested capital (2)		50	%		66	%		45	%		34	%		28	%		N/A

Common shares and stock-based awards outstanding		451			461			463			465			465			3	%
Common shares outstanding		433			444			446			448			449			4	%
Stock-based awards outstanding		18			17			18			17			16			(11	%)
Stock-based awards outstanding % of common shares outstanding		4.2	%		3.8	%		4.0	%		3.8	%		3.6	%		N/A

Results of Operations
Worldwide (WW) net sales	$	5,449		$	9,519		$	7,131		$	6,566		$	7,560			39	%
WW net sales Y/Y growth, excluding F/X		29	%		37	%		42	%		42	%		40	%		N/A
WW net sales TTM	$	21,693		$	24,509		$	26,750		$	28,664		$	30,776			42	%
WW net sales TTM Y/Y growth, excluding F/X		24	%		29	%		33	%		38	%		40	%		N/A

Operating income (3)	$	251		$	476		$	394		$	270		$	268			7	%
Operating income Y/Y growth, excluding F/X		69	%		63	%		56	%		77	%		13	%		N/A
Operating margin % of WW net sales		4.6	%		5.0	%		5.5	%		4.1	%		3.5	%		N/A
Operating income TTM (3)	$	925		$	1,129		$	1,279		$	1,391		$	1,408			52	%
Operating income TTM Y/Y growth, excluding F/X		22	%		39	%		44	%		65	%		50	%		N/A
Operating margin TTM % of WW net sales		4.3	%		4.6	%		4.8	%		4.9	%		4.6	%		N/A

Net income (3)	$	199		$	384		$	299		$	207		$	231			16	%
Net income per diluted share	$	0.45		$	0.85		$	0.66		$	0.45		$	0.51			12	%
Net income TTM (3)	$	743		$	902		$	1,024		$	1,088		$	1,120			51	%
Net income per diluted share TTM	$	1.69		$	2.04		$	2.30		$	2.42		$	2.47			46	%

Segments
North America Segment:
Net sales	$	2,843		$	4,956		$	3,780		$	3,590		$	4,126			45	%
Net sales Y/Y growth, excluding F/X		24	%		36	%		46	%		46	%		45	%		N/A
Net sales TTM	$	11,503		$	12,828		$	14,030		$	15,168		$	16,452			43	%
Operating income	$	156		$	278		$	273		$	200		$	186			19	%
Operating margin % of North America net sales		5.5	%		5.6	%		7.2	%		5.6	%		4.5	%		N/A
Operating income TTM	$	562		$	709		$	832		$	907		$	937			67	%
Operating income TTM Y/Y growth, excluding F/X		20	%		59	%		79	%		84	%		67	%		N/A
Operating margin TTM % of North America net sales		4.9	%		5.5	%		5.9	%		6.0	%		5.7	%		N/A

International Segment:
Net sales	$	2,606		$	4,563		$	3,351		$	2,976		$	3,434			32	%
Net sales Y/Y growth, excluding F/X		35	%		37	%		37	%		38	%		35	%		N/A
Net sales TTM	$	10,190		$	11,681		$	12,720		$	13,496		$	14,324			41	%
Net sales TTM % of WW net sales		47	%		48	%		48	%		47	%		47	%		N/A
Operating income	$	194		$	319		$	234		$	206		$	215			11	%
Operating margin % of International net sales		7.4	%		7.0	%		7.0	%		6.9	%		6.2	%		N/A
Operating income TTM	$	773		$	863		$	925		$	952		$	973			26	%
Operating income TTM Y/Y growth, excluding F/X		49	%		41	%		33	%		28	%		23	%		N/A
Operating margin TTM % of International net sales		7.6	%		7.4	%		7.3	%		7.1	%		6.8	%		N/A

Consolidated Segments:
Operating expenses (4)	$	5,099		$	8,922		$	6,624		$	6,160		$	7,159			40	%
Operating expenses TTM (4)	$	20,358		$	22,937		$	24,993		$	26,805		$	28,866			42	%
Operating income	$	350		$	597		$	507		$	406		$	401			15	%
Operating margin % of consolidated sales		6.4	%		6.3	%		7.1	%		6.2	%		5.3	%		N/A
Operating income TTM	$	1,335		$	1,572		$	1,757		$	1,859		$	1,910			43	%
Operating income TTM Y/Y growth, excluding F/X		35	%		48	%		51	%		51	%		42	%		N/A
Operating margin TTM % of consolidated net sales		6.2	%		6.4	%		6.6	%		6.5	%		6.2	%		N/A

AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except inventory turnover, accounts payable days and employee data)

(unaudited)


	Q3 2009			Q4 2009			Q1 2010			Q2 2010			Q3 2010			Y/Y % Change
Supplemental
Supplemental North America Segment Net Sales:
Media	$	1,412		$	2,099		$	1,597		$	1,324		$	1,591			13	%
Media Y/Y growth, excluding F/X		14	%		19	%		22	%		15	%		12	%		N/A
Media TTM	$	5,616		$	5,964		$	6,255		$	6,432		$	6,610			18	%
Electronics and other general merchandise	$	1,293		$	2,662		$	2,024		$	2,090		$	2,326			80	%
Electronics and other general merchandise Y/Y growth, excluding F/X		36	%		54	%		73	%		76	%		80	%		N/A
Electronics and other general merchandise TTM	$	5,385		$	6,314		$	7,166		$	8,069		$	9,103			69	%
Electronics and other general merchandise TTM % of North America net sales		47	%		49	%		51	%		53	%		55	%		N/A
Other	$	138		$	195		$	159		$	176		$	209			52	%
Other TTM	$	502		$	550		$	608		$	668		$	739			47	%

Supplemental International Segment Net Sales:
Media	$	1,517		$	2,580		$	1,833		$	1,550		$	1,759			16	%
Media Y/Y growth, excluding F/X		22	%		26	%		23	%		21	%		18	%		N/A
Media TTM	$	6,118		$	6,810		$	7,225		$	7,480		$	7,723			26	%
Electronics and other general merchandise	$	1,064		$	1,947		$	1,489		$	1,399		$	1,644			54	%
Electronics and other general merchandise Y/Y growth, excluding F/X		58	%		56	%		61	%		63	%		60	%		N/A
Electronics and other general merchandise TTM	$	3,977		$	4,768		$	5,382		$	5,899		$	6,478			63	%
Electronics and other general merchandise TTM % of International net sales		39	%		41	%		42	%		44	%		45	%		N/A
Other	$	25		$	36		$	29		$	27		$	31			26	%
Other TTM	$	95		$	103		$	114		$	117		$	123			29	%

Supplemental Worldwide Net Sales:
Media	$	2,929		$	4,679		$	3,430		$	2,874		$	3,350			14	%
Media Y/Y growth, excluding F/X		18	%		23	%		22	%		18	%		15	%		N/A
Media TTM	$	11,734		$	12,774		$	13,480		$	13,912		$	14,333			22	%
Electronics and other general merchandise	$	2,357		$	4,609		$	3,513		$	3,489		$	3,970			68	%
Electronics and other general merchandise Y/Y growth, excluding F/X		45	%		54	%		68	%		70	%		71	%		N/A
Electronics and other general merchandise TTM	$	9,362		$	11,082		$	12,548		$	13,968		$	15,581			66	%
Electronics and other general merchandise TTM % of WW net sales		43	%		45	%		47	%		49	%		51	%		N/A
Other	$	163		$	231		$	188		$	203		$	240			48	%
Other TTM	$	597		$	653		$	722		$	785		$	862			44	%

Balance Sheet
Cash and marketable securities (5)	$	4,304		$	6,672		$	5,381		$	5,419		$	6,123			42	%
Inventory, net ending	$	1,617		$	2,171		$	1,820		$	1,940		$	2,515			56	%
Inventory turnover, average TTM		12.1			12.2			12.6			12.5			11.8			(3	%)
Fixed assets, net	$	1,086		$	1,290		$	1,436		$	1,704		$	2,099			93	%

Accounts payable ending	$	3,354		$	5,605		$	3,619		$	3,545		$	4,614			38	%
Accounts payable days ending		72			68			59			65			73			2	%

Other
WW shipping revenue	$	208		$	341		$	248		$	239		$	270			30	%
WW shipping costs	$	388		$	696		$	518		$	487		$	576			48	%
WW net shipping costs	$	180		$	355		$	270		$	248		$	306			70	%
WW net shipping costs % of WW net sales		3.3	%		3.7	%		3.8	%		3.8	%		4.0	%		N/A

Employees (full-time and part-time; excludes contractors & temporary personnel)		21,700			24,300			26,100			28,300			31,200			44	%

(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: $303 million in Q3 2009, $306 million in Q4 2009, $318 million in Q1 2010, $311 million in Q2 2010 and $238 million in Q3 2010.

Amazon.com, Inc.

Certain Definitions

Customer Accounts

References to customers mean customer accounts, which are unique e-mail addresses, established either when a customer places an order 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.

Contacts:

Amazon.com Investor Relations

Rob Eldridge, 206/266-2171

www.amazon.com/ir

Amazon.com Public Relations

Mary Osako, 206/266-7180

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