Amazon.com 2003 Annual Report Download - page 43

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Limitations of Free Cash Flow
Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for
discretionary expenditures. For example, free cash flow does not incorporate payments made on capital lease
obligations. Therefore, we believe it is important to view free cash flow as a complement to our entire
consolidated statements of cash flows.
Full year and corresponding quarterly consolidated segment operating income, and certain cash flow
information for 2003, 2002 and 2001, were as follows (in thousands):
Year Ended December 31, 2003
Full Year
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Consolidated segment operating income ............ $361,238 $ 152,936 $ 73,653 $ 67,189 $ 67,460
Pro forma net income ........................... $256,022 $ 124,979 $ 48,427 $ 42,268 $ 40,348
Consolidated segment operating income as a
percentage of net sales ........................ 7% 8% 6% 6% 6%
Pro forma basic earnings per share ................ $ 0.65 $ 0.31 $ 0.12 $ 0.11 $ 0.10
Pro forma diluted earnings per share ............... $ 0.61 $ 0.29 $ 0.11 $ 0.10 $ 0.10
Weighted average shares used in computation of pro
forma basic earnings per share .................. 395,479 401,422 397,912 393,876 388,541
Weighted average shares used in computation of pro
forma diluted earnings per share ................ 419,352 425,214 422,802 418,138 411,091
Net cash provided by (used in) operating activities .... $392,022 $ 480,963 $ 36,817 $ 126,024 $(251,782)
Net cash provided by (used in) investing activities .... 236,651 93,489 (60,012) 233,668 (30,494)
Net cash provided by (used in) financing activities .... (331,986) (177,242) 37,798 (227,876) 35,334
Year Ended December 31, 2002
Full Year
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Consolidated segment operating income ............ $180,102 $ 101,958 $ 27,492 $ 25,994 $ 24,658
Pro forma net income (loss) ...................... $ 66,487 $ 75,382 $ 353 $ (4,409) $ (4,839)
Consolidated segment operating income as a
percentage of net sales ........................ 5% 7% 3% 3% 3%
Pro forma basic earnings (loss) per share ........... $ 0.18 $ 0.20 $ 0.00 $ (0.01) $ (0.01)
Pro forma diluted earnings (loss) per share .......... $ 0.17 $ 0.19 $ 0.00 $ (0.01) $ (0.01)
Weighted average used in computation of pro forma
basic earnings (loss) per share .................. 378,363 383,702 379,650 376,937 373,031
Weighted average shares used in computation of pro
formadilutedearnings(loss)pershare ............ 399,656 407,056 398,361 376,937 373,031
Net cash provided by (used in) operating activities .... $174,291 $ 372,579 $ 38,108 $ 4,637 $(241,033)
Net cash provided by (used in) investing activities .... (121,684) (36,279) 11,082 (93,981) (2,506)
Net cash provided by financing activities ........... 106,894 62,702 1,912 39,434 2,846
Year Ended December 31, 2001
Full Year
Fourth
Quarter
Third
Quarter
Second
Quarter
First
Quarter
Consolidated segment operating income (loss) ....... $ (45,002) $ 58,680 $ (27,072) $ (28,009) $ (48,601)
Pro forma net income (loss) ...................... $(157,031) $ 34,785 $ (58,005) $ (57,528) $ (76,283)
Consolidated segment operating income (loss) as a
percentage of net sales ........................ (1)% 5% (4)% (4)% (7)%
Pro forma basic earnings (loss) per share ........... $ (0.43) $ 0.09 $ (0.16) $ (0.16) $ (0.21)
Pro forma diluted earnings (loss) per share .......... $ (0.43) $ 0.09 $ (0.16) $ (0.16) $ (0.21)
Weighted average shares used in computation of pro
formabasicearnings(loss)pershare .............. 364,211 371,420 368,052 359,752 357,424
Weighted average shares used in computation of pro
formadilutedearnings(loss)pershare ............ 364,211 384,045 368,052 359,752 357,424
Net cash provided by (used in) operating activities .... $(119,782) $ 349,120 $ (64,403) $ 2,485 $(406,984)
Net cash provided by (used in) investing activities .... (253,294) (232,630) (95,018) 29,803 44,551
Net cash provided by (used in) financing activities .... 106,881 (2,393) 94,466 3,550 11,258
37