Amazon.com 2001 Annual Report Download - page 41

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equity-method investees during 2001. As equity-method losses are only recorded until the underlying
investments are reduced to zero, we expect, absent additional investments in the voting stock of third parties,
equity-method losses to continue to decline in future periods in comparison with prior periods.
Income Taxes
We provided for current and deferred income taxes in state and foreign jurisdictions where our subsidiaries
produce taxable income. As of December 31, 2001, we have a net deferred tax asset of $2 million, which consists
primarily of state net operating losses. We have provided a full valuation allowance against the remaining portion
of our deferred tax asset, consisting primarily of net operating losses, because of uncertainty regarding its future
realization.
Net Loss
Net loss was $567 million, $1.4 billion and $720 million for 2001, 2000 and 1999, respectively. Although
we reported net income of $5 million during the fourth quarter of 2001, we believe that this positive net income
result is not predictive of future results or trends and should not be viewed as a material positive event for a
variety of reasons. For example, excluding the foreign-currency gain associated with our 6.875% PEACS we
would have reported a net loss in the fourth quarter of 2001. Additionally, we continue to be unable to forecast
the effect on our future reported results of certain items, including the gain or loss associated with our 6.875%
PEACS that will result from fluctuations in foreign exchange rates, and the effect on our results associated with
variable accounting treatment on certain of our employee stock options.
Pro Forma Results of Operations
We provide certain pro forma information regarding our results from operations, which excludes the
following line items on our statements of operations:
• stock-based compensation,
• amortization of goodwill and other intangibles, and
• restructuring-related and other charges.
We also provide certain pro forma information regarding our net loss, which excludes, in addition to the line
items described above, the following line items on our statements of operations:
• other gains (losses), net;
• equity in losses of equity-method investees, net; and
• cumulative effect of change in accounting principle.
This pro forma information is not presented in accordance with accounting principles generally accepted in
the United States, however, we use this pro forma measure internally to evaluate our performance and believe it
may be useful. For information about our financial results, as reported in accordance with accounting principles
generally accepted in the United States, see Item 6 of Part II, “Selected Consolidated Financial Data,” and Item 8
of Part II, “Financial Statements and Supplementary Data.”
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