Amazon.com 2001 Annual Report Download - page 83

AMAZON.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s deferred tax assets are as follows:
December 31,
2001 2000
(in thousands)
Net operating loss carryforwards ................................. $ 769,632 $ 576,024
Equity in losses of equity-method investees ......................... 152,502 —
Depreciation and amortization ................................... 148,450 9,777
Accrued expenses ............................................. 53,186 32,050
Unearned revenue ............................................. 37,834 39,916
Other ....................................................... 9,674 19,435
Total deferred tax assets ........................................ 1,171,278 677,202
Valuation allowance for deferred tax assets ......................... (1,169,130) (677,202)
Net deferred tax assets ......................................... $ 2,148 $ —
At December 31, 2001, the Company had net operating loss carryforwards of approximately $2.3 billion
related to U.S. federal, state and foreign jurisdictions. Utilization of net operating losses, which begin to expire at
various times starting in 2010, may be subject to certain limitations. Approximately $1 billion of the Company’s
net operating loss carryforwards relates to deductible stock-based compensation in excess of amounts recognized
for financial reporting purposes. To the extent that net operating loss carryforwards, if realized, relate to the
portion associated with stock-based compensation, the resulting benefit will be credited to stockholders’ equity,
rather than results of operations.
Note 15—EMPLOYEE BENEFIT PLAN
The Company has a 401(k) savings plan covering substantially all of its employees. Eligible employees may
contribute through payroll deductions. The Company matches employees’ contributions at the discretion of the
Company’s Board of Directors. To date, the Company has not matched employee contributions to the 401(k)
savings plan.
Note 16—SEGMENT INFORMATION
In January 2001, the Company began presenting information to its chief operating decision maker in four
segments: U.S. Books, Music and DVD/Video; U.S. Electronics, Tools and Kitchen; Services; and International.
Accordingly, the Company is now disclosing its segment financial information along these lines. Allocation
methodologies are consistent with past presentations, and prior period amounts have been reclassified to conform
with the current period presentation.
U.S. Books, Music and DVD/Video Segment
The U.S. Books, Music and DVD/Video Segment includes revenues, direct costs, and cost allocations
associated with retail sales from www.amazon.com for books, music and DVDs/video products and for magazine
subscriptions. This segment also includes product sales, commissions, direct costs and cost allocations from sales
of these products, new or used, through Amazon Marketplace and from stores offering these products through the
Company’s Syndicated Stores Program, such as www.borders.com.
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