Amazon.com 2005 Annual Report Download - page 41

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Net Sales and Gross Profit
Net sales information is as follows:
Year Ended December 31,
2005 2004 2003
(in millions)
Net Sales:
North America .............................................. $4,711 $3,847 $3,259
International ................................................ 3,779 3,074 2,005
Consolidated ............................................ $8,490 $6,921 $5,264
Year-over-year Percentage Growth:
North America .............................................. 22% 18% 18%
International ................................................ 23 53 71
Consolidated ............................................ 23 31 34
Year-over-year Percentage Growth, excluding effect of exchange rates:
North America .............................................. 22% 18% 18%
International ................................................ 25 40 52
Consolidated ............................................ 24 26 28
Net Sales Mix:
North America .............................................. 55% 56% 62%
International ................................................ 45 44 38
Consolidated ............................................ 100% 100% 100%
Revenue increased 23% in 2005, due to an acceleration of revenue growth in our North America segment,
offset by slower revenue growth in our International segment, representing a decrease from 31% revenue growth
in 2004 and 34% revenue growth in 2003. Excluding the effect of exchange rates, revenue growth was 24%,
26%, and 28% for 2005, 2004, and 2003. Changes in currency exchange rates negatively affected 2005 net sales
by $73 million, and positively affected net sales by $276 million and $232 million for 2004 and 2003. For a
discussion of the effect on revenue growth by changes in exchange rates, see “Effect of Exchange Rates” below.
North America revenue growth rates increased to 22% in 2005, compared to 18% growth rates in 2004 and
2003. The increased growth rate primarily reflects an increase in unit sales driven by our continued efforts to
reduce prices for our customers, including from our free shipping offers and by increased selection such as
through additions to our product categories, as well as increases in our service-related revenues, particularly from
Amazon Enterprise Solutions and from our co-branded credit card agreement. Changes in currency exchange
rates positively affected 2005, 2004, and 2003 net sales for our North America segment by $5 million,
$5 million, and $6 million.
International revenue growth rates declined to 23% in 2005, compared to 53% and 71% growth rates in
2004 and 2003. This decrease in revenue growth is primarily due to changes in currency exchange rates, which
negatively affected revenue growth by $78 million for 2005 and positively affected revenue growth by $271
million and $226 million for 2004 and 2003. Additionally, revenue growth was affected by declining revenue
growth rates in certain product categories, primarily media. Excluding the effect of exchange rates, revenue
growth was 25%, 40%, and 52% for 2005, 2004, and 2003.
We endeavor to increase sales over time by continuing to offer low prices, including from free shipping,
convenience, including new and innovative features such as personalization, 1-Click, and Search Inside the
Book, and broad product availability and selection, including from new product categories and from third-party
sales.
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