AMAZON COM INC
8-K, 1999-01-27
CATALOG & MAIL-ORDER HOUSES
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<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549





                                    FORM 8-K

                                 CURRENT REPORT



                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



                                JANUARY 26, 1999
                                 DATE OF REPORT
                        (DATE OF EARLIEST EVENT REPORTED)



                                AMAZON.COM, INC.
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

             DELAWARE               000-22513               91-1646860
        (STATE OR OTHER       (COMMISSION FILE NO.)        (IRS EMPLOYER
          JURISDICTION                                   IDENTIFICATION NO.)
       OF INCORPORATION)

                 1516 SECOND AVENUE, SEATTLE, WASHINGTON 98101
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

                                 (206) 622-2335
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


<PAGE>   2
ITEM 5. OTHER EVENTS

        On January 26, 1999, Amazon.com, Inc. ("Amazon.com") announced its
financial results for the fourth quarter of 1998 and for the 1998 fiscal year.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS


        (c) Exhibits

                99.1    Press Release dated January 26, 1999 regarding
                        Amazon.com's financial results for the fourth quarter 
                        of 1998 and for the 1998 fiscal year


<PAGE>   3
                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.



                             AMAZON.COM, INC.
                             (REGISTRANT)



Dated: January 27, 1999      By:  /s/ Joy D. Covey
                                 -------------------------------
                                 Joy D. Covey
                                 Chief Financial Officer, Vice President of
                                 Finance and Administration and Secretary


<PAGE>   4
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit Number               Description
- --------------               ----------------------------------------------
<S>                          <C>
99.1                         Press Release dated January 26, 1999 regarding
                             Amazon.com's financial results for the fourth 
                             quarter of 1998 and for the 1998 fiscal year
</TABLE>





<PAGE>   1
                     AMAZON.COM ANNOUNCES FINANCIAL RESULTS
                             FOR FOURTH QUARTER 1998

          RECORD HOLIDAY SEASON PUSHES CUSTOMER TOTAL PAST 6.2 MILLION;
         LEADERSHIP IN BOOKS AND MUSIC EXTENDED TO VIDEO, U.K., GERMANY;
                      EXPANSION AREAS GROW TO 25% OF SALES

SEATTLE, WA--(January 26, 1999)--Amazon.com, Inc. (NASDAQ: AMZN) today announced
financial results for the fourth quarter of 1998 and for the 1998 fiscal year.
Net sales for the fourth quarter were $252.9 million, an increase of 283 percent
over net sales of $66.0 million for the fourth quarter of 1997. Based on fourth
quarter sales, Amazon.com has achieved a $1 billion annualized sales level three
and one-half years after opening for business.

Amazon.com reported a fourth quarter pro forma operating loss of $17.8 million,
or 7 percent of net sales, compared to an operating loss of $11.3 million, or 17
percent of net sales, in the fourth quarter of 1997. Fourth quarter pro forma
net loss of $22.2 million, or $0.14 per share, compared with a net loss of $10.8
million, or $0.08 per share, in the fourth quarter of 1997. On a GAAP basis,
reported fourth quarter net loss was $46.4 million, or $0.30 per share, and
included $24.2 million of merger and acquisition related costs.

Net sales for fiscal 1998 were $610.0 million, a 313 percent increase over net
sales of $147.8 million reported for fiscal 1997. Pro forma net loss for fiscal
1998 was $74.4 million, or $0.50 per share, compared with a net loss in fiscal
1997 of $31.0 million, or $0.24 per share. On a GAAP basis, reported net loss
for fiscal 1998 was $124.5 million, or $0.84 per share, and included $50.2
million of merger and acquisition related costs.

Amazon.com announced that cumulative customer accounts increased by more than
1.7 million during the fourth quarter to over 6.2 million at December 31, 1998,
an increase of over 300 percent from 1.5 million customer accounts at December
31, 1997. Repeat customer orders represented more than 64 percent of orders
placed on Amazon.com during the quarter ended December 31, 1998.

During the fourth quarter of 1998, Amazon.com, the No. 1 online book retailer
and No. 1 online music retailer, extended its leadership position to the video,
U.K. and German markets. Expansion area highlights include:

o       Music sales grew to $33.1 million, a 130 percent increase over sales of
        $14.4 million in the third quarter of 1998;

o       Combined sales in the U.K. and Germany nearly quadrupled over the third
        quarter, establishing Amazon.co.uk and Amazon.de as the No. 1 online
        booksellers in their markets;

o       Video sales were strong following the store's opening on November 17.


<PAGE>   2
Combined, expansion areas accounted for 25 percent of consolidated fourth
quarter sales.

"We have one strategy at Amazon.com--provide the customer with the best shopping
experience," said Amazon.com founder and CEO Jeff Bezos. "We're extremely
grateful to our customers for an incredible holiday season and an exceptional
year."

Bezos noted that because customer response during the holidays was so strong,
the company has committed to a major expansion plan. "In 1999, we intend to
build out a significant distribution infrastructure. We must ensure that we can
support all the sales that customers demand, with speedy access to a deep
product inventory," Bezos added. "We will also continue to enhance the scope and
quality of the products and services that we provide to our customers.
Amazon.com is still a small and young company relative to many offline
retailers, and we must ensure that we build the strongest customer relationships
possible during this critical period. In 1999, we expect to invest even more
aggressively than we have in the past. Our goal is nothing short of building the
world's most customer-centric company."

RECENT HIGHLIGHTS

HOLIDAY SHOPPING SEASON SETS RECORDS

Shoppers seeking to save time and money, avoid holiday shopping hassles, and
select ideal holiday gifts drove strong sales across all product lines and
produced records on a number of key measures. Amazon.com began the holiday
shopping season on November 17 and from then until December 31: 

o       More than 1 million new customers shopped with Amazon.com for the first
        time;

o       Amazon.com shipped more than 7.5 million items--more than the company
        shipped during the entire year of 1997;

o       The company experienced peak shipping of more than $6 million in one
        day;

o       Holiday sales quadrupled from the 1997 holiday season.

EVEN GREATER SELECTION

With the addition of music CDs, videos, and an ever-growing selection of book
titles, Amazon.com reached a total of 4.7 million titles for sale during the
fourth quarter of 1998.

AMAZON.COM EXTENDS LEADERSHIP IN EUROPEAN MARKET

Amazon.com extended its leadership in the European market in October with the
launch of its stores in Germany and the U.K. For the first time on a local
basis, the stores made available to Europeans a vast selection of titles,
guaranteed safety of transactions, unparalleled convenience, and electronic gift
certificates for worry-free gift giving.

Customer response to the launches drove a near-quadrupling of combined sales
from the sites over the preceding quarter, extending Amazon.com's position as
the leading online bookseller in both the U.K. and Germany.


<PAGE>   3
Amazon.de is headquartered and has a distribution center in Regensburg, Germany,
with editorial and marketing offices in Munich, Germany. The store initially
features over 400,000 titles from German publishers, as well as fast and easy
access to nearly 500,000 U.S. titles. Amazon.co.uk is headquartered and has a
distribution center in Slough, England. The store carries a complete catalog of
over 1.2 million titles from U.K. publishers, along with fast and easy access to
over 200,000 U.S. titles. The stores are located at www.amazon.de and
www.amazon.co.uk.


OPENING OF VIDEO AND GIFT STORES

Amazon.com launched its video store on November 17 with more than 60,000 VHS and
more than 2,000 digital video disc titles. At the same time, it opened a holiday
gift store that allowed shoppers to meet more of their gift-buying needs in one
convenient online shopping experience. E-mail gift certificate sales were
especially strong in the closing days of the holiday season, thanks to instant
delivery to anywhere in the world.

NEW DISTRIBUTION CENTER TO OPEN IN NEVADA

As a next step in its expansion plan, Amazon.com obtained a highly mechanized
distribution facility in Fernley, Nevada. The Nevada location will reduce
standard shipping times to key markets in the western U.S. by a full day.
Further, the 322,560 square-foot facility will allow the company to
significantly increase the number of books, CDs, and videos kept on hand for
immediate shipment to customers. The result is that customers in such places as
Los Angeles, San Francisco, San Diego, Phoenix, and Houston will receive their
orders much faster, thanks to greater availability, faster processing, and
shorter delivery times. The distribution center will be leased by Amazon.com and
is expected to begin operations during the first half of 1999.

CONTINUED EXPANSION OF ONLINE PARTNERSHIPS

Amazon.com continued to expand its presence on the World Wide Web through its
growing ties with other Web sites. The company's groundbreaking Associates
program, in which Web site operators receive referral fees for sales generated
by their sites, has now added over 200,000 Associates. With the addition of new
products in 1998, Associates can now generate revenue by selling a broader array
of merchandise than other online retailers offer through similar programs.

In addition, the company secured its presence on several high-traffic sites,
including marketing arrangements with Microsoft and CBS SportsLine. Amazon.com
became CBS SportsLine's online retail partner for books, video, and music in a
newly launched, co-branded store on the CBS SportsLine site. The company also
signed an agreement making Amazon.com the Premier Music Merchant on Microsoft's
MSN Shopping Channel, the MSN.COM portal page, and other selected properties in
the MSN network of sites.

ADVANTAGE EXPANDS TO INCLUDE MUSIC

Amazon.com broadened its popular Advantage program to include music, continuing
to extend the benefits of online retailing for both consumers and artists. The
Advantage program offers a compelling solution to the biggest problem faced by
independent artists, 


<PAGE>   4
bands, and labels: securing widespread distribution of their CDs. Amazon.com's
Advantage program for music makes it easy for independent artists, bands, and
labels to sell their CDs to Amazon.com's customers worldwide. Advantage for
music, a free program, now allows them to sell their CDs at the Amazon.com music
store and to enjoy the same level of exposure on the Amazon.com Web site as CDs
from major artists and labels.

3-FOR-1 STOCK SPLIT AND ADDITION TO NASDAQ 100

On January 4, 1999, Amazon.com effected a 3-for-1 split of its common stock. The
share and per share amounts included in this release are presented on a
post-split basis. In addition, effective with the market open on December 21,
1998, Amazon.com was added to the Nasdaq-100 Index(R).

ABOUT AMAZON.COM, INC.

        Amazon.com, Inc., the Internet's No. 1 music and No. 1 book retailer, 
opened its virtual doors on the World Wide Web in July 1995. Today, the 
Amazon.com store has expanded to offer more than 4.7 million book, music CD, 
video, DVD, computer game, and other titles, plus secure credit card payment, 
personalized recommendations, and streamlined ordering through 1-Click(SM) 
technology.

        Amazon.com operates two international Web sites: www.amazon.co.uk in the
U.K. and www.amazon.de in Germany. Amazon.com also operates PlanetAll
(www.planetall.com), a Web-based address book, calendar, and reminder service.
It also operates the Internet Movie Database (www.imdb.com), the Web's
comprehensive and authoritative source of information on more than 150,000
movies and entertainment programs and 500,000 cast and crewmembers dating from
the birth of film in 1892 to the present.

        This announcement contains forward-looking statements that involve risks
and uncertainties that include, among others, Amazon.com's limited operating
history, anticipated losses, unpredictability of future revenues, potential
fluctuations in quarterly operating results, seasonality, competition, risks
associated with system development and operation risks, management of potential
growth, and risks of new business areas, international expansion, business
combinations, and strategic alliances. More information about factors that
potentially could affect Amazon.com's financial results is included in
Amazon.com's filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K for the year ended December 31, 1997, as amended by
the Form 8-K filed September 11, 1998, and quarterly reports on Form 10-Q for
the quarters ended March 31, 1998, June 30, 1998, and September 30, 1998.

NOTE ON FINANCIAL PRESENTATION

Financial results are prepared in accordance with U.S. generally accepted
accounting principles. All of the charges associated with Amazon.com's merger
and acquisition activities have been included in "merger and acquisition related
costs" in the accompanying financial statements in order to enhance their
informational value and to present the most comparable classifications in the
other line items. Among items included in merger and acquisition related costs
are one-time merger related costs and purchase 


<PAGE>   5
price elements, including amortization of goodwill and other purchased
intangibles. Pro forma financial results exclude these merger and acquisition
related costs.

Amazon.com, Amazon.co.uk, Amazon.de, Internet Movie Database, PlanetAll, Earth's
Biggest Bookstore, and 1-Click are either registered trademarks or trademarks of
Amazon.com, Inc. or its affiliates. All other names mentioned herein may be
trademarks of their respective owners.

Contacts:
Karen Cho                                      Bill Curry
Investor Relations                             Public Relations
Amazon.com, Inc.                               Amazon.com, Inc.
(206) 694-2171                                 (206) 834-7180
[email protected]


<PAGE>   6
                                AMAZON.COM, INC.
                      Consolidated Statements of Operations
                    (in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                     QUARTER ENDED DECEMBER 31,          YEAR ENDED DECEMBER 31,
                                                                     --------------------------        --------------------------
                                                                       1998              1997             1998             1997
                                                                     ---------        ---------        ---------        ---------
                                                                    (Unaudited)      (Unaudited)      (Unaudited)       (Audited)
<S>                                                                 <C>              <C>              <C>               <C>
Net sales                                                            $ 252,893        $  66,040        $ 609,996        $ 147,787
Cost of sales                                                          199,476           53,127          476,155          118,969
                                                                     ---------        ---------        ---------        ---------
Gross profit                                                            53,417           12,913          133,841           28,818

Operating expenses:
     Marketing and sales                                                48,501           16,890          133,023           40,486
     Product development                                                17,281            5,266           46,807           13,916
     General and administrative                                          5,457            2,081           15,799            7,011
     Merger and acquisition related costs                               24,247               --           50,172               --
                                                                     ---------        ---------        ---------        ---------
          Total operating expenses                                      95,486           24,237          245,801           61,413

Loss from operations                                                   (42,069)         (11,324)        (111,960)         (32,595)
Interest income                                                          4,264              783           14,053            1,901
Interest expense                                                        (8,622)            (267)         (26,639)            (326)
                                                                     ---------        ---------        ---------        ---------
     Net interest income (expense)                                      (4,358)             516          (12,586)           1,575

Net loss                                                             $ (46,427)       $ (10,808)       $(124,546)       $ (31,020)
                                                                     =========        =========        =========        =========
Basic and diluted loss per share                                     $   (0.30)       $   (0.08)       $   (0.84)       $   (0.24)
                                                                     =========        =========        =========        =========

Shares used in computation of basic
     and diluted loss per share                                        154,389          139,413          148,172          130,341
                                                                     =========        =========        =========        =========


PRO FORMA RESULTS EXCLUDING MERGER AND ACQUISITION RELATED COSTS

Pro forma loss from operations, excluding merger and
     acquisition related costs                                       $ (17,822)       $ (11,324)       $ (61,788)       $ (32,595)
                                                                     =========        =========        =========        =========
Pro forma net loss, excluding merger and acquisition
     related costs                                                   $ (22,180)       $ (10,808)       $ (74,374)       $ (31,020)
                                                                     =========        =========        =========        =========
Pro forma basic and diluted loss per share, excluding
     merger and acquisition related costs                            $   (0.14)       $   (0.08)       $   (0.50)       $   (0.24)
                                                                     =========        =========        =========        =========
Shares used in computation of pro forma basic
     and diluted loss per share                                        154,389          139,413          148,172          130,341
                                                                     =========        =========        =========        =========
</TABLE>


NOTE: On January 4, 1999, the Company effected a three-for-one stock split in
the form of a stock dividend to stockholders of record on December 18, 1998.
Accordingly, the accompanying consolidated financial statements have been
restated to reflect the split.

NOTE: Pro forma results for the quarter and year ended December 31, 1998 and
1997 are presented for informational purposes only and are not prepared in
accordance with generally accepted accounting principles. These results present
the operating results of Amazon.com, excluding charges of $24.2 million and
$50.2 million for the quarter and year ended December 31, 1998, respectively,
for merger and acquisition related costs arising from Amazon.com's April 1998
acquisitions of Bookpages, Telebook and Internet Movie Database, and the August
1998 acquisitions of Junglee and PlanetAll.


                                AMAZON.COM, INC.
                           Consolidated Balance Sheets
                        (in thousands, except share data)


<TABLE>
<CAPTION>
                                                            DECEMBER 31,     DECEMBER 31,
                                                               1998             1997
                                                            ------------     ------------
                                                            (Unaudited)       (Audited)
<S>                                                         <C>              <C>      
ASSETS
Current assets:
     Cash                                                    $  25,561        $   1,876
     Marketable securities                                     347,884          123,499
     Inventories                                                29,501            8,971
     Prepaid expenses and other                                 21,308            3,363
                                                             ---------        ---------
        Total current assets                                   424,254          137,709

Fixed assets, net                                               29,791            9,726
Deposits and other                                                 626              169
Goodwill and other purchased intangibles, net                  186,377               --
Deferred charges                                                 7,412            2,240
                                                             ---------        ---------
        Total assets                                         $ 648,460        $ 149,844
                                                             =========        =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                        $ 113,273        $  33,027
     Accrued advertising                                        13,071            3,454
     Other liabilities and accrued expenses                     34,547            6,570
     Current portion of long-term debt                             684            1,500
                                                             ---------        ---------
        Total current liabilities                              161,575           44,551

Long-term debt                                                 348,077           76,521
Long-term portion of capital lease obligation                       63              181


Stockholders' equity:
     Preferred stock, $0.01 par value:
         Authorized shares -- 10,000,000
         Issued and outstanding shares -- none                      --               --
     Common stock, $0.01 par value:
         Authorized shares -- 300,000,000
         Issued and outstanding shares -- 159,267,288
            and 144,908,874 shares, respectively                 1,593            1,449
     Additional paid-in capital                                300,130           66,586
     Note receivable from officer for common stock              (1,099)              --
     Deferred compensation                                      (1,625)          (1,930)
     Accumulated other comprehensive income                      1,806               --
     Accumulated deficit                                      (162,060)         (37,514)
                                                             ---------        ---------
        Total stockholders' equity                             138,745           28,591
                                                             ---------        ---------
            Total liabilities and stockholders' equity       $ 648,460        $ 149,844
                                                             =========        =========
</TABLE>


NOTE: On January 4, 1999, the Company effected a three-for-one stock split in
the form of a stock dividend to stockholders of record on December 18, 1998.
Accordingly, the accompanying consolidated financial statements have been
restated to reflect the split.





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