Unformatted Attachment Preview
Palepu, K., Healy, P., (2013) Business Analysis and Valuation: Using Financial
Statements, Text and Cases (5th ed)
Use the sample templates in Tables 4-1, 4-2, and 4-3 as a reference to recast the financial
statements for Amazon.com below. Step 1 is to classify the lines appropriately, then step
2 is to aggregate like items to produce the standardized
Helpful Notes: (a) fulfillment costs – these are viewed as cost of sales for most retailers;
(b) stock option costs – these are probably for senior management and hence should
probably be classified as SG&A; and (c) in the cash flow statement gains and losses on
currency translations (shown at the end of the statement are shown as operating factors
that imply that cash from operations in the standardized format does not equate to that
reported by the firm.
Income Statement
Classifications
Net sales
Cost of sales
Gross profit
Operating expenses:
Fulfillment
Marketing
Technology and content
2002
2001
$3,932,936 $3,122,433
2000
$2,761,983
2,940,318
992,618
2,323,875
798,558
2,106,206
655,777
392,467
125,383
215,617
374,250
138,283
241,165
414,509
179,980
269,326
79,049
68,927
89,862
4,637
108,962
24,797
5,478
41,573
181,033
181,585
321,772
200,311
Total operating expenses
$928,494 $1,210,815
$1,519,657
Income (loss) from operations
Interest income
Interest expense
64,124
23,687
-142,925
-412,257
29,103
-139,232
-863,880
40,821
-130,921
5,623
-96,273
-1,900
-2,141
-10,058
-142,639
Total non-operating expenses, net
Loss before equity in losses of equitymethod investees
Equity in losses of equity-method
investees, net
Loss before change in accounting
principle
Cumulative effect of change in
accounting principle
($209,888)
($114,170)
($242,797)
-145,764
-526,427
-1,106,677
-4,169
-30,327
-304,596
($149,933)
($556,754)
($1,411,273)
801
-10,523
Net loss
($149,132)
($567,277)
General and administrative
Stock-based compensation
Amortization of goodwill and
other intangibles
Restructuring-related and other
Other income (expense), net
Other gains (losses), net
($1,411,273)
Balance Sheet
Classifications
Year Beginning January 1, ($000's)
Current assets:
Cash and cash equivalents
Marketable securities
Inventories
Accounts receivable, net & other current
assets
Total current assets
Fixed assets, net
Goodwill, net
Other intangibles, net
Other equity investments
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable
Accrued expenses and other current
liabilities
Unearned revenue
Interest payable
Current portion of long-term debt and
other
Total current liabilities
Long-term debt and other
Shareholders’ deficit
Common stock, $0.01 par value:
Authorized shares 5,000,000 Issued
and outstanding shares -- 387,906 and
373,218 shares, respectively
Additional paid-in capital
Deferred stock-based compensation
Accumulated other comprehensive
income (loss)
Accumulated deficit
Total stockholders' deficit
Total liabilities and stockholders' deficit
2003
2002
$738,254
562,715
202,425
$540,282
456,303
143,722
112,282
67,613
$1,615,676 $1,207,920
239,398
70,811
271,751
45,367
3,460
15,442
45,662
34,382
28,359
49,768
$1,990,449 $1,637,547
618,128
444,748
314,935
47,916
71,661
305,064
87,978
68,632
13,318
14,992
$1,065,958
$921,414
2,277,305
2,156,133
3,879
3,732
$1,649,946 $1,462,769
-6,591
-9,853
9,662
-3,009,710
-36,070
-2,860,578
($1,352,814) ($1,440,000)
1,990,449
1,637,547
Cash Flow Statement
Classifications
Year Ended December 31, ($000's)
OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation of fixed assets and
other amortization
Stock-based compensation
Equity in losses of equitymethod investees
Amortization of goodwill and
other intangibles
Non-cash restructuring-related
and other
Gain on sale of marketable
securities, net
Other losses (gains), net
Non-cash interest expense and
other
Cumulative effect of change in
accounting principle
Changes in operating assets and
liabilities:
Inventories
Accounts receivable, net and other
cur. assets
Accounts payable
Accrued expenses and other
current liabilities
Unearned revenue
Amortization of previously
unearned revenue
Interest payable
Net cash provided by (used in) operating
activities
Year Ended December 31, ($000's)
INVESTING ACTIVITIES:
Sales/maturities of marketable securities
and investments
Purchases of marketable securities
Purchases of fixed assets, including
internal-use software
Investments (including in equity-method
investees)
Net cash provided by (used in) investing
activities
2002
($149,132)
2001
2000
($567,277) ($1,411,273)
82,274
68,927
84,709
4,637
84,460
24,797
4,169
30,327
304,596
5,478
181,033
321,772
3,470
73,293
200,311
-5,700
96,273
-1,335
2,141
-280
142,639
29,586
26,629
24,766
-801
10,523
-51,303
30,628
46,083
-32,948
156,542
20,732
-44,438
-8,585
22,357
4,491
50,031
93,967
95,404
114,738
97,818
-135,466
3,027
-135,808
-345
-108,211
34,341
$174,291
($119,782)
($130,442)
2002
2001
2000
553,289
370,377
545,724
-635,810
-567,152
-184,455
-39,163
-50,321
-134,758
-6,198
-62,533
($253,294)
$163,978
($121,684)
FINANCING ACTIVITIES:
Proceeds from exercise of stock options
and other
Proceeds from issuance of common
stock, net of issue costs
Proceeds from long-term debt and
other
Repayment of capital lease obligations
and other
121,689
16,625
99,831
-14,795
10,000
681,499
-19,575
-16,927
Financing costs
Net cash provided by financing activities
Effect of exchange-rate changes on cash
and cash equivalents
Net increase (decrease) in cash and cash
equivalents
44,697
-16,122
$106,894
$106,881
$693,147
38,471
-15,958
-37,557
$197,972
($282,153)
$689,126