Amazon.com Inc 8-K 2009-10-22

Press Release

Exhibit 99.1

LOGO

AMAZON.COM ANNOUNCES THIRD QUARTER SALES UP 28% TO $5.45 BILLION;

NEWEST KINDLE NOW SHIPPING AND LOWERING PRICE TO $259 FROM $279

SEATTLE(BUSINESS WIRE)October 22, 2009Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2009.

Operating cash flow was $2.25 billion for the trailing twelve months, compared with $1.27 billion for the trailing twelve months ended September 30, 2008. Free cash flow increased 98% to $1.92 billion for the trailing twelve months, compared with $0.97 billion for the trailing twelve months ended September 30, 2008.

Common shares outstanding plus shares underlying stock-based awards outstanding totaled 451 million on September 30, 2009, compared with 448 million a year ago.

Net sales increased 28% to $5.45 billion in the third quarter, compared with $4.26 billion in third quarter 2008. Excluding the $41 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales would have grown 29% compared with third quarter 2008.

Operating income increased 62% to $251 million in the third quarter, compared with $154 million in third quarter 2008. Excluding the $10 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, operating income would have grown 69% compared with third quarter 2008.

Net income increased 68% to $199 million in the third quarter, or $0.45 per diluted share, compared with net income of $118 million, or $0.27 per diluted share, in third quarter 2008.

Kindle has become the #1 bestselling item by both unit sales and dollars not just in our electronics store but across all product categories on Amazon.com. Its also the most wished for and the most gifted. We are grateful for and energized by this customer response, said Jeff Bezos, founder and CEO of Amazon.com. Earlier this week we began shipping the latest generation Kindle. Its 3G wireless works in the U.S. and 100 countries, and weve just lowered its price to $259.

Highlights

This week we started shipping Kindle with U.S. & International Wireless and lowered its price to $259 from $279. This newest Kindle is available to ship to customers living outside the U.S. Customers in more than 100 countries around the world, and U.S. customers traveling abroad, can take advantage of Kindles 3G wireless technology to download a title in 60 seconds or less.

The U.S. Kindle Store now has more than 360,000 books, including 101 of 112 New York Times Bestsellers, more than 7,000 blogs, and more than 90 top U.S. and International newspapers and magazines, including: The New York Times, The Wall Street Journal, The Times (U.K.), Le Monde, The Economist, Newsweek, Time, and Fortune. Kindle owners can also select from over 60,000 audiobooks from Audible.com and listen to them directly on their Kindle.

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The Company announced Kindle for PC, the free application for reading Kindle books on the PC. Kindle for PC features Amazons Whispersync technology, which automatically saves and synchronizes customers bookmarks and last page read across devices, including the Kindle, Kindle DX, iPhone, iPod touch, and PC.

North America segment sales, representing the Companys U.S. and Canadian sites, were $2.84 billion, up 23% from third quarter 2008.

International segment sales, representing the Companys U.K., German, Japanese, French and Chinese sites, were $2.61 billion, up 33% from third quarter 2008. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, International sales grew 35%.

Worldwide Media sales grew 17% to $2.93 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 18%.

Worldwide Electronics & Other General Merchandise sales grew 44% to $2.36 billion. Excluding the unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter sales grew 45%.

Amazon.com launched Local Express Delivery, a new shipping option giving customers same-day delivery on thousands of items in seven major cities: New York, Philadelphia, Boston, Baltimore, Las Vegas, Seattle and Washington D.C. Amazon Prime members pay just $5.99 per item for the service.

The Company continues to expand and enhance free shipping offers across the world. Amazon.co.uk began offering free shipping on all products in the U.K., eliminating the prior threshold of £5; while Amazon.co.jp now offers free same-day delivery service to Amazon Prime customers in the Kanto and Kansai regions of Japan.

Items shipped on behalf of sellers who utilized Fulfillment by Amazon (FBA) more than tripled from the prior year. Sellers can still join FBA and take advantage of Amazons extended delivery promise for the holidays customers can order items as late as December 23rd and still get them in time for the holidays.

Amazon.com expanded its Frustration-Free Packaging program, offering additional items from Fisher-Price, Mattel, Kingston and other leading toy and electronics manufacturers in easy-to-open, environmentally friendly packaging.

Amazon Web Services (AWS) launched Amazon Virtual Private Cloud (Amazon VPC), a secure and seamless bridge between a companys existing IT infrastructure and the AWS cloud, enabling enterprises to connect their existing infrastructure to AWS compute resources.

Financial Guidance

The following forward-looking statements reflect Amazon.coms expectations as of October 22, 2009. This guidance excludes the impact of Zappos.com, Inc., including approximately $35 million of expenses primarily related to employee compensation costs, amortization of intangibles and merger-related expenses that would be recognized in the fourth quarter 2009 if the transaction closes as planned. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

Fourth Quarter 2009 Guidance

Net sales are expected to be between $8.125 billion and $9.125 billion, or to grow between 21% and 36% compared with fourth quarter 2008.

Operating income is expected to be between $300 million and $425 million, or to grow between 10% and 56% compared with fourth quarter 2008. This guidance includes approximately $100 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions or investments are concluded and that there are no further revisions to stock-based compensation estimates.

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A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months at www.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Companys financial and operating results.

These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains and develops commercial agreements, acquisitions and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services and technologies, system interruptions, government regulation and taxation, payments and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.coms financial results is included in Amazon.coms filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent filings.

About Amazon.com

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earths Biggest Selection. Amazon.com, Inc. seeks to be Earths most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Apparel, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial.

Amazon Web Services provides Amazons developer customers with access to in-the-cloud infrastructure services based on Amazons own back-end technology platform, which developers can use to enable virtually any type of business. Examples of the services offered by Amazon Web Services are Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3), Amazon Elastic Block Store, Amazon SimpleDB, Amazon Simple Queue Service (Amazon SQS), Amazon Flexible Payments Service (Amazon FPS), Amazon Mechanical Turk and Amazon CloudFront.

Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn.

As used herein, Amazon.com, we, our and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.

Page 3 of 12

AMAZON.COM, INC.

Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Twelve Months Ended September 30,
	2009			2008			2009			2008			2009			2008
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	1,936		$	1,548		$	2,769		$	2,539		$	1,650		$	1,366

OPERATING ACTIVITIES:
Net income		199			118			518			420			743			627
Adjustments to reconcile net income to net cash from operating activities:
Depreciation of fixed assets, including internal-use software and website development, and other amortization		96			76			266			210			343			273
Stock-based compensation		90			70			242			197			320			251
Other operating expense (income), net		9			7			80			(32	)		90			(29	)
Losses (gains) on sales of marketable securities, net		(1	)		1			(3	)		(2	)		(3	)		(2	)
Other expense (income), net		(9	)		(24	)		(21	)		(17	)		(38	)		(18	)
Deferred income taxes		77			(17	)		84			(47	)		125			(144	)
Excess tax charges (benefits) from stock-based compensation		17			(53	)		(52	)		(160	)		(52	)		(323	)
Changes in operating assets and liabilities:
Inventories		(276	)		(243	)		(192	)		(130	)		(293	)		(361	)
Accounts receivable, net and other		(155	)		(9	)		28			106			(296	)		(131	)
Accounts payable		701			362			(372	)		(524	)		964			620
Accrued expenses and other		(3	)		101			(131	)		39			77			437
Additions to unearned revenue		197			121			610			286			772			366
Amortization of previously unearned revenue		(143	)		(86	)		(375	)		(220	)		(499	)		(291	)

Net cash provided by (used in) operating activities		799			424			682			126			2,253			1,275

INVESTING ACTIVITIES:
Purchases of fixed assets, including internal-use software and website development		(103	)		(102	)		(236	)		(231	)		(337	)		(305	)
Acquisitions, net of cash acquired, and other		(5	)		(8	)		(40	)		(408	)		(127	)		(436	)
Sales and maturities of marketable securities and other investments		586			582			1,277			1,033			1,550			1,149
Purchases of marketable securities and other investments		(780	)		(478	)		(1,730	)		(1,229	)		(2,179	)		(1,382	)

Net cash provided by (used in) investing activities		(302	)		(6	)		(729	)		(835	)		(1,093	)		(974	)

FINANCING ACTIVITIES:
Excess tax benefits (charges) from stock-based compensation		(17	)		53			53			160			52			323
Common stock repurchased														(100	)
Proceeds from long-term debt and other		101			2			97			62			149			91
Repayments of long-term debt and capital lease obligations		(20	)		(295	)		(379	)		(355	)		(394	)		(380	)

Net cash provided by (used in) financing activities		64			(240	)		(229	)		(133	)		(293	)		34

Foreign-currency effect on cash and cash equivalents		17			(76	)		21			(47	)		(3	)		(51	)

Net increase (decrease) in cash and cash equivalents		578			102			(255	)		(889	)		864			284

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	2,514		$	1,650		$	2,514		$	1,650		$	2,514		$	1,650


SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	2		$	14		$	30		$	61		$	32		$	62
Cash paid for income taxes		10			5			44			28			69			38
Fixed assets acquired under capital leases and other financing arrangements		60			37			97			104			141			136
Fixed assets acquired under build-to-suit leases		16			19			133			35			170			50
Conversion of debt					132						605						605

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AMAZON.COM, INC.

Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Net sales	$	5,449		$	4,264		$	14,989		$	12,463
Cost of sales		4,176			3,265			11,435			9,541

Gross profit		1,273			999			3,554			2,922

Operating expenses (1):
Fulfillment		466			393			1,297			1,109
Marketing		149			108			406			313
Technology and content		315			264			890			755
General and administrative		83			73			228			208
Other operating expense (income), net (2)		9			7			80			(32	)

Total operating expenses		1,022			845			2,901			2,353

Income from operations		251			154			653			569

Interest income		7			21			28			67
Interest expense		(7	)		(17	)		(26	)		(60	)
Other income, net		11			24			35			22

Total non-operating income		11			28			37			29


Income before income taxes		262			182			690			598

Provision for income taxes		(60	)		(59	)		(169	)		(167	)
Equity-method investment activity, net of tax		(3	)		(5	)		(3	)		(11	)

Net income	$	199		$	118		$	518		$	420


Basic earnings per share	$	0.46		$	0.28		$	1.20		$	1.00


Diluted earnings per share	$	0.45		$	0.27		$	1.18		$	0.97


Weighted average shares used in computation of earnings per share:
Basic		432			427			431			421

Diluted		441			436			439			431


(1) Includes stock-based compensation as follows:
Fulfillment	$	22		$	15		$	57		$	42
Marketing		5			4			14			10
Technology and content		48			38			130			109
General and administrative		15			13			41			36

(2)	Q2 2008 includes a $53 million non-cash gain recognized on the sale of our European DVD rental assets. Q2 2009 includes the impact of our settlement with Toysrus.com LLC for $51 million, substantially all of which was expensed in Q2 2009.

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AMAZON.COM, INC.

Segment Information

(in millions)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
North America
Net sales	$	2,843		$	2,302		$	7,872		$	6,597
Cost of sales		2,091			1,716			5,754			4,883

Gross profit		752			586			2,118			1,714
Direct segment operating expenses (1)		596			498			1,687			1,400

Segment operating income	$	156		$	88		$	431		$	314


International
Net sales	$	2,606		$	1,962		$	7,117		$	5,866
Cost of sales		2,085			1,549			5,681			4,658

Gross profit		521			413			1,436			1,208
Direct segment operating expenses (1)		327			270			892			788

Segment operating income	$	194		$	143		$	544		$	420


Consolidated
Net sales	$	5,449		$	4,264		$	14,989		$	12,463
Cost of sales		4,176			3,265			11,435			9,541

Gross profit		1,273			999			3,554			2,922
Direct segment operating expenses		923			768			2,579			2,188

Segment operating income		350			231			975			734
Stock-based compensation		(90	)		(70	)		(242	)		(197	)
Other operating income (expense), net (2)		(9	)		(7	)		(80	)		32

Income from operations		251			154			653			569
Total non-operating income, net		11			28			37			29
Provision for income taxes		(60	)		(59	)		(169	)		(167	)
Equity-method investment activity, net of tax		(3	)		(5	)		(3	)		(11	)

Net income	$	199		$	118		$	518		$	420

Segment Highlights:
Y/Y net sales growth:
North America		23	%		29	%		19	%		32	%
International		33			33			21			41
Consolidated		28			31			20			36
Y/Y gross profit growth:
North America		28	%		28	%		24	%		29	%
International		26			37			19			42
Consolidated		27			31			22			34
Y/Y segment operating income growth:
North America		77	%		12	%		37	%		27	%
International		36			46			30			53
Consolidated		52			31			33			41
Net sales mix:
North America		52	%		54	%		53	%		53	%
International		48			46			47			47

(1)	A significant majority of our costs for Technology and content are incurred in the United States and most of these costs are allocated to our North America segment.

(2)	Q2 2008 includes a $53 million non-cash gain recognized on the sale of our European DVD rental assets. Q2 2009 includes the impact of our settlement with Toysrus.com LLC for $51 million, substantially all of which was expensed in Q2 2009.

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AMAZON.COM, INC.

Supplemental Net Sales Information

(in millions)

(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
North America
Media	$	1,412		$	1,245		$	3,865		$	3,599
Electronics and other general merchandise		1,293			950			3,652			2,697
Other		138			107			355			301

Total North America		2,843			2,302			7,872			6,597

International
Media		1,517			1,249			4,229			3,845
Electronics and other general merchandise		1,064			690			2,821			1,955
Other		25			23			67			66

Total International		2,606			1,962			7,117			5,866

Consolidated
Media		2,929			2,494			8,094			7,444
Electronics and other general merchandise		2,357			1,640			6,473			4,652
Other		163			130			422			367

Total Consolidated	$	5,449		$	4,264		$	14,989		$	12,463


Y/Y Net Sales Growth:
North America:
Media		13	%		15	%		7	%		20	%
Electronics and other general merchandise		36			51			35			50
Other		29			41			18			40
Total North America		23			29			19			32

International:
Media		22	%		24	%		10	%		32	%
Electronics and other general merchandise		54			54			44			64
Other		4			49			2			78
Total International		33			33			21			41

Consolidated:
Media		17	%		19	%		9	%		26	%
Electronics and other general merchandise		44			52			39			55
Other		25			42			15			45
Total Consolidated		28			31			20			36

Y/Y Net Sales Growth Excluding Effect of Exchange Rates:
International:
Media		22	%		18	%		17	%		22	%
Electronics and other general merchandise		58			48			56			52
Other		14			52			19			71
Total International		35			28			30			31

Consolidated:
Media		18	%		17	%		13	%		21	%
Electronics and other general merchandise		45			49			44			51
Other		26			43			18			44
Total Consolidated		29			28			25			31

Consolidated Net Sales Mix:
Media		54	%		59	%		54	%		60	%
Electronics and other general merchandise		43			38			43			37
Other		3			3			3			3

Page 7 of 12

AMAZON.COM, INC.

Consolidated Balance Sheets

(in millions, except per share data)


	September 30, 2009			December 31, 2008			September 30, 2008
	(unaudited)						(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,514		$	2,769		$	1,650
Marketable securities		1,487			958			674
Inventories		1,617			1,399			1,315
Accounts receivable, net and other		671			827			597
Deferred tax assets		80			204			194

Total current assets		6,369			6,157			4,430
Fixed assets, net		1,086			854			731
Deferred tax assets		206			145			278
Goodwill		457			438			405
Other assets		854			720			722

Total assets	$	8,972		$	8,314		$	6,566


LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accounts payable	$	3,354		$	3,594		$	2,242
Accrued expenses and other		1,183			1,152			902

Total current liabilities		4,537			4,746			3,144
Long-term debt		116			409			393
Other long-term liabilities		734			487			502

Commitments and contingencies

Stockholders equity:
Preferred stock, $0.01 par value:
Authorized shares 500
Issued and outstanding shares none
Common stock, $0.01 par value:
Authorized shares 5,000
Issued shares 449, 445 and 443
Outstanding shares 433, 428 and 429		4			4			4
Treasury stock, at cost		(600	)		(600	)		(500	)
Additional paid-in capital		4,428			4,121			4,051
Accumulated other comprehensive income (loss)		(35	)		(123	)		(73	)
Accumulated deficit		(212	)		(730	)		(955	)

Total stockholders equity		3,585			2,672			2,527

Total liabilities and stockholders equity	$	8,972		$	8,314		$	6,566

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AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except per share data)

(unaudited)


	Q3 2008			Q4 2008			Q1 2009			Q2 2009			Q3 2009			Y/Y % Change
Cash Flows and Shares

Operating cash flow trailing twelve months (TTM)	$	1,275		$	1,697		$	1,757		$	1,878		$	2,253		77	%

Purchases of fixed assets (incl. internal-use software & website development) TTM	$	305		$	333		$	326		$	336		$	337		11	%

Free cash flow (operating cash flow less purchases of fixed assets) TTM	$	970		$	1,364		$	1,431		$	1,542		$	1,916		98	%
Free cash flow TTM Y/Y growth		21	%		16	%		82	%		89	%		98	%	N/A

Common shares and stock-based awards outstanding		448			446			447			451			451		1	%
Common shares outstanding		429			428			429			432			433		1	%
Stock-based awards outstanding		19			18			17			19			18		(6	)%
Stock-based awards outstanding % of common shares outstanding		4.5	%		4.2	%		4.0	%		4.4	%		4.2	%	N/A

Results of Operations

Worldwide (WW) net sales	$	4,264		$	6,704		$	4,889		$	4,651		$	5,449		28	%
WW net sales Y/Y growth, excluding F/X		28	%		24	%		25	%		20	%		29	%	N/A
WW net sales TTM	$	18,135		$	19,166		$	19,921		$	20,509		$	21,693		20	%
WW net sales TTM Y/Y growth, excluding F/X		33	%		28	%		27	%		24	%		24	%	N/A

Gross profit	$	999		$	1,348		$	1,148		$	1,133		$	1,273		27	%
Gross profit Y/Y growth, excluding F/X		29	%		20	%		27	%		23	%		29	%	N/A
Gross margin % of WW net sales		23.4	%		20.1	%		23.5	%		24.4	%		23.4	%	N/A
Gross profit TTM	$	4,092		$	4,270		$	4,462		$	4,628		$	4,902		20	%
Gross profit TTM Y/Y growth, excluding F/X		31	%		26	%		26	%		24	%		25	%	N/A
Gross margin TTM % of WW net sales		22.6	%		22.3	%		22.4	%		22.6	%		22.6	%	N/A

Operating income (1)	$	154		$	272		$	244		$	159		$	251		62	%
Operating margin % of WW net sales		3.6	%		4.1	%		5.0	%		3.4	%		4.6	%	N/A
Operating income TTM (1) (2)	$	840		$	842		$	887		$	829		$	925		10	%
Operating income TTM Y/Y growth, excluding F/X		36	%		27	%		30	%		13	%		22	%	N/A
Operating margin TTM % of WW net sales		4.6	%		4.4	%		4.5	%		4.0	%		4.3	%	N/A

Net income (1)	$	118		$	225		$	177		$	142		$	199		68	%
Net income per diluted share	$	0.27		$	0.52		$	0.41		$	0.32		$	0.45		66	%
Net income TTM (1) (2)	$	627		$	645		$	679		$	663		$	743		19	%
Net income per diluted share TTM	$	1.46		$	1.49		$	1.56		$	1.52		$	1.69		16	%

Segments

North America Segment:
Net sales	$	2,302		$	3,631		$	2,578		$	2,451		$	2,843		23	%
Net sales Y/Y growth, excluding F/X		29	%		18	%		22	%		13	%		24	%	N/A
Net sales TTM	$	9,680		$	10,228		$	10,681		$	10,963		$	11,503		19	%
Gross profit	$	586		$	781		$	694		$	672		$	752		28	%
Gross margin % of North America net sales		25.5	%		21.5	%		26.9	%		27.4	%		26.5	%	N/A
Gross profit TTM	$	2,412		$	2,495		$	2,620		$	2,733		$	2,899		20	%
Gross margin TTM % of North America net sales		24.9	%		24.4	%		24.5	%		24.9	%		25.2	%	N/A
Operating income	$	88		$	130		$	150		$	125		$	156		77	%
Operating margin % of North America net sales		3.8	%		3.6	%		5.8	%		5.1	%		5.5	%	N/A
Operating income TTM	$	468		$	445		$	464		$	494		$	562		20	%
Operating income TTM Y/Y growth, excluding F/X		26	%		11	%		5	%		8	%		20	%	N/A
Operating margin TTM % of North America net sales		4.8	%		4.4	%		4.4	%		4.5	%		4.9	%	N/A

International Segment:
Net sales	$	1,962		$	3,073		$	2,311		$	2,200		$	2,606		33	%
Net sales Y/Y growth, excluding F/X		28	%		31	%		28	%		28	%		35	%	N/A
Net sales TTM	$	8,455		$	8,938		$	9,240		$	9,546		$	10,190		21	%
Net sales TTM % of WW net sales		47	%		47	%		46	%		47	%		47	%	N/A
Gross profit	$	413		$	567		$	454		$	461		$	521		26	%
Gross margin % of International net sales		21.1	%		18.5	%		19.6	%		20.9	%		20.0	%	N/A
Gross profit TTM	$	1,680		$	1,775		$	1,842		$	1,895		$	2,003		19	%
Gross margin TTM % of International net sales		19.9	%		19.9	%		19.9	%		19.9	%		19.7	%	N/A
Operating income	$	143		$	229		$	172		$	179		$	194		36	%
Operating margin % of International net sales		7.3	%		7.4	%		7.4	%		8.1	%		7.4	%	N/A
Operating income TTM	$	594		$	648		$	692		$	722		$	773		30	%
Operating income TTM Y/Y growth, excluding F/X		41	%		42	%		52	%		49	%		49	%	N/A
Operating margin TTM % of International net sales		7.0	%		7.3	%		7.5	%		7.6	%		7.6	%	N/A

Page 9 of 12

AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except inventory turnover, accounts payable days and employee data)

(unaudited)


	Q3 2008			Q4 2008			Q1 2009			Q2 2009			Q3 2009			Y/Y % Change
Segments (continued)

Consolidated Segments:
Operating expenses	$	768		$	989		$	826		$	829		$	923		20	%
Operating expenses TTM	$	3,030		$	3,177		$	3,306		$	3,412		$	3,567		18	%
Operating income	$	231		$	359		$	322		$	304		$	350		52	%
Operating margin % of consolidated sales		5.4	%		5.4	%		6.6	%		6.5	%		6.4	%	N/A
Operating income TTM	$	1,062		$	1,093		$	1,156		$	1,216		$	1,335		26	%
Operating income TTM Y/Y growth, excluding F/X		35	%		28	%		28	%		29	%		35	%	N/A
Operating margin TTM % of consolidated net sales		5.9	%		5.7	%		5.8	%		5.9	%		6.2	%	N/A

Supplemental North America Segment Net Sales:
Media	$	1,245		$	1,751		$	1,305		$	1,148		$	1,412		13	%
Media Y/Y growth, excluding F/X		15	%		8	%		9	%		0	%		14	%	N/A
Media TTM	$	5,235		$	5,350		$	5,450		$	5,449		$	5,616		7	%
Electronics and other general merchandise	$	950		$	1,733		$	1,172		$	1,187		$	1,293		36	%
Electronics and other general merchandise Y/Y growth, excluding F/X		51	%		30	%		42	%		29	%		36	%	N/A
Electronics and other general merchandise TTM	$	4,033		$	4,430		$	4,776		$	5,043		$	5,385		34	%
Electronics and other general merchandise TTM % of North America net sales		42	%		43	%		45	%		46	%		47	%	N/A
Other	$	107		$	147		$	101		$	116		$	138		29	%
Other TTM	$	412		$	448		$	455		$	471		$	502		22	%

Supplemental International Segment Net Sales:
Media	$	1,249		$	1,889		$	1,418		$	1,294		$	1,517		22	%
Media Y/Y growth, excluding F/X		18	%		22	%		17	%		12	%		22	%	N/A
Media TTM	$	5,537		$	5,734		$	5,814		$	5,849		$	6,118		10	%
Electronics and other general merchandise	$	690		$	1,156		$	874		$	882		$	1,064		54	%
Electronics and other general merchandise Y/Y growth, excluding F/X		48	%		46	%		50	%		60	%		58	%	N/A
Electronics and other general merchandise TTM	$	2,832		$	3,110		$	3,330		$	3,603		$	3,977		40	%
Electronics and other general merchandise TTM % of International net sales		33	%		35	%		36	%		38	%		39	%	N/A
Other	$	23		$	28		$	19		$	24		$	25		4	%
Other TTM	$	86		$	94		$	96		$	94		$	95		11	%

Supplemental Worldwide Net Sales:
Media	$	2,494		$	3,640		$	2,723		$	2,442		$	2,929		17	%
Media Y/Y growth, excluding F/X		17	%		15	%		13	%		7	%		18	%	N/A
Media TTM	$	10,772		$	11,084		$	11,264		$	11,298		$	11,734		9	%
Electronics and other general merchandise	$	1,640		$	2,889		$	2,046		$	2,069		$	2,357		44	%
Electronics and other general merchandise Y/Y growth, excluding F/X		49	%		36	%		46	%		41	%		45	%	N/A
Electronics and other general merchandise TTM	$	6,865		$	7,540		$	8,106		$	8,646		$	9,362		36	%
Electronics and other general merchandise TTM % of WW net sales		38	%		39	%		41	%		42	%		43	%	N/A
Other	$	130		$	175		$	120		$	140		$	163		25	%
Other TTM	$	498		$	542		$	551		$	565		$	597		20	%

Balance Sheet

Cash and marketable securities (3)	$	2,572		$	4,035		$	3,025		$	3,504		$	4,304		67	%

Inventory, net ending	$	1,315		$	1,399		$	1,266		$	1,325		$	1,617		23	%
Inventory turnover, average TTM		12.4			12.2			12.5			12.4			12.1		(2	)%

Fixed assets, net	$	731		$	854		$	889		$	981		$	1,086		49	%

Accounts payable days ending		63			62			57			65			72		14	%

Other

WW shipping revenue	$	191		$	266		$	190		$	185		$	208		8	%
WW shipping costs	$	323		$	508		$	358		$	332		$	388		20	%
WW net shipping costs	$	132		$	242		$	168		$	147		$	180		37	%
WW net shipping costs % of WW net sales		3.1	%		3.6	%		3.4	%		3.1	%		3.3	%	N/A
Employees (full-time and part-time; excludes contractors & temporary personnel)		20,500			20,700			20,600			21,000			21,700		6	%

(1)	Q2 2009 includes the impact of our settlement with Toysrus.com LLC for $51 million, substantially all of which was expensed in Q2 2009.

(2)	Q2 2008 includes a $53 million non-cash gain recognized on the sale of our European DVD rental assets.

(3)	Includes restricted cash, classified within Other Assets on our consolidated balance sheet, of: $248 million Q3 2008, $308 million Q4 2008, $295 million Q1 2009, $292 million Q2 2009, and $303 million Q3 2009.

Page 10 of 12

Amazon.com, Inc.

Certain Definitions and Other

Segment Reporting

We present segment information for North America and International. We measure operating results of our segments using an internal performance measure of direct segment operating expenses that excludes stock- based compensation and other operating expense, each of which is not allocated to segment results. Other centrally incurred operating costs are fully allocated to segment results. Our operating results, particularly for the International segment, are affected by movements in foreign exchange rates.

The North America segment consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com and www.amazon.ca. This segment includes export sales from www.amazon.com and www.amazon.ca.

The International segment consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally focused websites such as www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, and www.amazon.cn. This segment includes export sales from these internationally based sites (including export sales from these sites to customers in the U.S. and Canada), but excludes export sales from www.amazon.com and www.amazon.ca.

We provide supplemental sales information within each segment for three categories: Media, Electronics and Other General Merchandise, and Other. Media consists of amounts earned from retail sales from all sellers in categories such as books, movies, music, digital downloads, software and video games (including game consoles). Electronics and Other General Merchandise consists of amounts earned from retail sales from all sellers of items in categories not included in Media, such as electronics and computers, devices, home and garden, toys, kids and baby, grocery, apparel, shoes and jewelry, health and beauty, sports and outdoors, tools, and auto and industrial. Other consists of non-retail activities, such as the Amazon Enterprise Solutions program, Amazon Web Services, and miscellaneous marketing and promotional activities, such as our co-branded credit card programs.

Customer Accounts

References to customers mean customer accounts, which are unique e-mail addresses, established either when a customers initial order is shipped or when a customer orders from other sellers on our websites. Customer accounts exclude certain customers, including customers associated with certain of our acquisitions (including www.amazon.cn customers), Amazon Enterprise Solutions program customers, Amazon.com Payments customers, Amazon Web Services customers, and the customers of select companies with whom we have a technology alliance or marketing and promotional relationship. Customers are considered active when they have placed an order during the preceding twelve-month period.

Seller Accounts

References to sellers means seller accounts, which are established when a seller receives an order from a customer account. Seller accounts exclude Amazon Enterprise Solutions sellers. Sellers are considered active when they have received an order from a customer during the preceding twelve-month period.

Registered Developers

References to registered developers mean cumulative registered developer accounts, which are established when potential developers enroll with Amazon Web Services and receive a developer access key.

Units

References to units mean physical and digital units sold (net of returns and cancellations) by us and sellers at Amazon.com domains worldwide such as www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca and www.amazon.cn, as well as Amazon.com-owned items sold through non-Amazon.com domains, such as books, music and movie items ordered from Amazon.coms store at www.target.com. Units sold do not include units associated with certain of our acquisitions or Amazon.com gift certificates.

Page 11 of 12

Cash Flows and Return on Invested Capital

Free cash flow is cash flow from operations reduced by purchases of fixed assets, including internal-use software and website development.

Tax benefits relating to excess stock-based compensation deductions are reported as financing cash flows.

Return on invested capital is trailing-twelve-month free cash flow divided by average total assets less current liabilities (excluding current portion of our long-term debt) over five quarter ends.

Net Sales

Revenue is generally recorded gross for sales of our own inventory and net for sales by other sellers. Amounts paid in advance for subscription services, including amounts received for Amazon Prime and other membership programs, are deferred and recognized as revenue over the subscription term. For our products with multiple elements, where a standalone value for each element cannot be established, we recognize the revenue and related cost over the estimated economic life of the product.

Cost of Sales

Cost of sales consists of the purchase price of consumer products and content sold by us, inbound and outbound shipping charges, packaging supplies, and costs incurred in operating and staffing our fulfillment and customer service centers on behalf of other businesses.

Fulfillment

Fulfillment costs relate to variable costs corresponding with sales volume and inventory levels; our mix of product sales; payment processing and related transaction costs, including mix of payment methods and costs from our guarantee for certain seller transactions; and costs from expanding fulfillment capacity.

Marketing

Marketing consists primarily of online advertising, including through our Associates program, sponsored search, portal advertising, e-mail campaigns, and other initiatives.

Technology and Content

Technology and content expenses consist principally of payroll and related expenses for employees involved in application development, category expansion, editorial content, buying, merchandising selection, and systems support, as well as costs associated with the compute, storage and telecommunications infrastructure.

A significant majority of our costs for Technology and content are incurred in the United States and most of these costs are allocated to our North America segment.


Contacts:

Amazon.com Investor Relations		Amazon.com Public Relations
Rob Eldridge, 206/266-2171		Craig Berman, 206/266-7180
www.amazon.com/ir

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