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timer Asked: Apr 21st, 2015

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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
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