Amazon.com 2000 Annual Report Download - page 35

Presentation of pro forma results on the face of the financial statements is not in conformity with
accounting principles generally accepted in the United States. We are providing pro forma results for
informational purposes only. The pro forma results are derived from information recorded in our financial
statements.
We expect that our pro forma loss from operations will decline as a percentage of net sales for 2001.
Additionally, we expect to generate pro forma operating income for the quarter ended December 31, 2001. We
also expect that our U.S. Books, Music and DVD/video segment will generate income on a pro forma operating
basis for the second consecutive year in 2001. Over the longer term, it is our objective that pro forma operating
profit will reach the low double-digits as a percentage of net sales and our return on invested capital may reach
the low triple-digits. 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 cash and cash equivalents balance was $822 million and $133 million, and our marketable securities
balance was $278 million and $573 million, at December 31, 2000 and 1999, respectively.
Net cash used by operating activities in 2000 was $130 million. This was primarily attributable to the net
loss for the year of $1.4 billion, largely offset by net non-cash charges totaling $995 million primarily related to
depreciation, stock-based compensation, equity in losses of equity-method investees, amortization of goodwill
and other intangibles, impairment-related and other costs, amortization of unearned revenue, investment gains
and losses, and interest expense, as well as $286 million of cash provided by changes in operating assets and
liabilities. Cash provided by changes in operating assets and liabilities is primarily a function of a decrease in
inventories, increases in accounts payable and accrued liabilities and increases in unearned revenue, offset by
an increase in prepaid expenses and other current assets. For 1999, net cash used in operating activities was
$91 million and was primarily attributable to the net loss for the year of $720 million offset by net non-cash
expenses of $399 million and changes in operating assets and liabilities of $230 million. For 1998, net cash
provided by operating activities was $31 million.
Net cash provided by investing activities in 2000 was $164 million and consisted of net sales of
marketable securities of $361 million, offset by purchases of fixed assets of $135 million and cash paid for
investments in equity-method investees and other investments of $63 million. Net cash used in investing
activities during 1999 and 1998 was $952 million and $324 million, respectively, and consisted of net
purchases of marketable securities of $295 million and $277 million, purchases of fixed assets of $287 million
and $28 million, and cash paid for investments in equity-method investees and other investments of
$370 million and $19 million, respectively.
Net cash provided by financing activities in 2000 was $693 million relating primarily to our issuance of
690 million Euros of PEACS, net of financing costs of $16 million, and proceeds of $45 million from exercises
of stock options, offset by repayments of long-term debt of $17 million. Net cash provided by financing
activities of $1.1 billion for 1999 was primarily due to $1.25 billion of proceeds from the sale of our 4.75%
Convertible Subordinated Notes, net of financing costs of $35 million, and proceeds of $64 million from
exercises of stock options, offset by repayments of long-term debt, including $178 million of cash paid to
repurchase a portion of our outstanding Senior Discount Notes. Net cash provided by financing activities during
1998 was $254 million and was related to the issuance of our Senior Discount Notes, offset by financing costs
and the repayment of other long-term debt obligations.
As of December 31, 2000, our principal sources of liquidity consisted of $1.1 billion of cash and cash
equivalents and marketable securities. As of that date, our principal commitments consisted of obligations
totaling $2.1 billion related primarily to our 6.875% PEACS, 4.75% Convertible Subordinated Notes and
Senior Discount Notes, as well as $1.1 billion in obligations related to operating leases, trade payables, and
commitments for advertising and promotional arrangements.
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