Amazon.com 2003 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2003 Amazon.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES
Description of Business
Amazon.com, Inc., a Fortune 500 company, commenced operations on the World Wide Web in July 1995.
We seek to offer Earth’s Biggest Selection and to be Earth’s most customer-centric company, where customers
can find and discover anything they may want to buy online. We endeavor to offer our customers the lowest
possible prices. Through our Merchants@ and Amazon Marketplace programs, we enable businesses and
individuals to sell virtually anything to Amazon.com’s millions of customers
We operate six global websites: www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.fr,
www.amazon.co.jp, and www.amazon.ca. We have organized our operations into two principal segments: North
America and International. The North America segment includes the operating results of www.amazon.com and
www.amazon.ca. The International segment includes the operating results of www.amazon.co.uk,
www.amazon.de, www.amazon.fr,andwww.amazon.co.jp.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. Intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that
affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent
assets and liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but
not limited to, inventory valuation, depreciable lives, sales returns, receivables valuation, restructuring-related
liabilities, incentive discount offers, valuation of investments, taxes, and contingencies. Actual results could
differ materially from those estimates.
Cash and Cash Equivalents
We classify all highly liquid instruments with an original maturity of three months or less at the time of
purchase as cash equivalents.
Allowance for Doubtful Accounts
We estimate losses on receivables based on known troubled accounts, if any, and historical experience of
losses incurred.
Inventories
Inventories, consisting of products available for sale, are accounted for using the FIFO method, and are
valued at the lower of cost or market value. This valuation requires us to make judgments, based on currently-
available information, about the likely method of disposition, such as through sales to individual customers,
returns to product vendors, or liquidations, and expected recoverable values of each disposition category. Based
on this evaluation, we record a valuation allowance to adjust the carrying amount of our inventories to lower of
cost or market value.
49