Amazon.com 2001 Annual Report Download - page 44

We are providing pro forma results for informational purposes only. The pro forma results are derived from
information recorded in our financial statements.
For the quarter ending March 31, 2002, we expect our pro forma loss from operations to be between a loss
of $16 million and break-even, or between a loss of 2% to 0% of net sales. For the full year of 2002, we expect
that our pro forma income from operations will be $30 million or more. However, any such projections are
subject to substantial uncertainty. See Item 1 of Part I, “Business—Additional Factors That May Affect Future
Results.”
Liquidity and Capital Resources
Our principal source of liquidity is our cash, cash equivalents, and marketable securities. Our cash and cash
equivalents balance was $540 million and $822 million, and our marketable securities balance was $456 million
and $278 million at December 31, 2001 and 2000, respectively. Combined cash, cash equivalents, and
marketable securities were $997 million and $1.10 billion at December 31, 2001 and 2000, respectively. Equity
securities of $13 million are included in “Marketable securities” at December 31, 2001, the value of which may
fluctuate significantly. Equity securities of $36 million were included in “Marketable securities” at December 31,
2000.
As of December 31, 2001, our principal commitments consisted of long-term obligations totaling $2.16 billion
related primarily to our 6.875% PEACS, 4.75% Convertible Subordinated Notes and Senior Discount Notes; trade
payables of $445 million; accrued expenses and other liabilities of $305 million, which includes current
restructuring-related obligations of $41 million; as well as $474 million in obligations related to operating leases and
commitments for advertising and promotional arrangements. We generally have payment terms with our vendors that
extend beyond the amount of time necessary to collect proceeds from our customers. As a result of holiday sales, at
December 31 of each year our cash, cash equivalents and marketable securities balance reaches its highest level
(other than as a result of cash flows provided by investing and financing activities). This operating cycle results in a
corresponding increase in accounts payable, which at December 31, 2001 was $445 million. The majority of our
accounts payable balance at December 31, 2001 will be settled during the first three months of 2002 and will result
in a corresponding decline in the amount of cash, cash equivalents and marketable securities on hand, offset by
amounts payable associated with activity in the first quarter of 2002.
We have pledged a portion of our marketable securities as collateral for stand-by letters of credit that
guarantee certain of our contractual obligations, a majority of which relates to property leases; the swap
agreement that hedges the foreign-exchange rate risk on a portion of our 6.875% PEACS; and some of our real
estate lease agreements. The amount of marketable securities we are required to pledge pursuant to the swap
agreement fluctuates with the fair market value of the swap obligation. At December 31, 2001, the total amount
of collateral pledged under these agreements was as follows (in thousands):
Stand-by letters of credit ................................. $ 77,635
Swap agreement ....................................... 48,498
Real estate leases ...................................... 40,657
$166,790
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