Amazon.com 2006 Annual Report Download - page 39

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needs and cash flows are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.” We continually
evaluate opportunities to sell additional equity or debt securities, obtain credit facilities from lenders, repurchase
common stock, pay dividends, or repurchase, refinance, or otherwise restructure our long-term debt for strategic
reasons or to further strengthen our financial position. The sale of additional equity or convertible debt securities
would likely be dilutive to our shareholders. In addition, we will, from time to time, consider the acquisition of,
or investment in, complementary businesses, products, services, and technologies, which might affect our
liquidity requirements or cause us to issue additional equity or debt securities. There can be no assurance that
additional lines-of-credit or financing instruments will be available in amounts or on terms acceptable to us, if at
all.
Results of Operations
We have organized our operations into two principal segments: North America and International. We
present our segment information along the same lines that our chief executive reviews our operating results in
assessing performance and allocating resources.
Net Sales and Gross Profit
Net sales information is as follows:
Year Ended December 31,
2006 2005 2004
(in millions)
Net Sales:
North America .............................................. $ 5,869 $4,711 $3,847
International ............................................... 4,842 3,779 3,074
Consolidated ........................................... $10,711 $8,490 $6,921
Year-over-year Percentage Growth:
North America .............................................. 25% 22% 18%
International ............................................... 28 23 53
Consolidated ........................................... 26 23 31
Year-over-year Percentage Growth, excluding effect of exchange rates:
North America .............................................. 24% 22% 18%
International ............................................... 28 25 40
Consolidated ........................................... 26 24 26
Net Sales Mix:
North America .............................................. 55% 55% 56%
International ............................................... 45 45 44
Consolidated ........................................... 100% 100% 100%
Revenue increased 26% in 2006, reflecting revenue growth in both our North America and International
segments. Additionally, changes in currency exchange rates positively affected net sales by $24 million for 2006.
For a discussion of the effect on revenue growth of exchange rate changes, see “Effect of Exchange Rates”
below.
The North America revenue growth rate was 25% in 2006. This revenue growth primarily reflects increased
unit sales driven by our continued efforts to reduce prices for our customers, including from our free shipping
offers and Amazon Prime, shift in mix of product sales from media to electronics and other general merchandise,
increased in-stock product availability, and increased selection of product offerings in our existing categories.
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