With another quarter of strong revenue growth, Electronics remained the company’s second-biggest U.S. store, while net sales from Amazon.com’s four international sites rose to $132 million, an increase of 76 percent from the first quarter of 2000.

Pro forma operating loss was $49 million in the first quarter of 2001, compared with a pro forma operating loss of $99 million in the first quarter of 2000. This marks the fifth sequential quarter in which pro forma absolute dollar operating losses have declined. The company posted a pro forma net loss of $0.21 per share, compared with $0.35 per share in the prior year quarter. A detailed reconciliation of GAAP to pro forma is included with the attached financial statements.

Net loss (GAAP) for the quarter was $234 million, or $0.66 per share. Excluding $114 million, which represents this quarter’s portion of previously announced restructuring and other charges, and excluding a net gain of $23 million for certain other items, the net loss for the quarter would have been $143 million, or $0.40 per share. First quarter 2000 net loss was $308 million, or $0.90 per share. Amazon.com ended the quarter with $643 million in cash and marketable securities.

This was another quarter of significant progress for Amazon.com — we are on track to reach our objective of pro forma operating profitability in the coming December quarter, said Warren Jenson, Amazon.com’s chief financial officer.

We’re working hard every day to innovate, making Amazon.com even better for customers, and we’re grateful for their response. Cumulative customer accounts grew to over 32 million, which includes 6 million international customers, said Jeff Bezos, founder and CEO of Amazon.com. Again this quarter our customers responded with particularly strong purchase levels in our electronics, tools and kitchen stores and from our international sites.

On January 30, 2001, the company announced a reduction in its corporate staffing and a consolidation of its fulfillment and customer service center networks. The company took restructuring and other charges of $114 million during the first quarter of 2001, and expects to take additional restructuring and other charges of over $50 million during the second quarter of the year.

Highlights of First Quarter Results (all comparisons are with the prior year quarter)

Net sales rose 22% to $700 million.

Gross profit increased 43% to $183 million.

Worldwide, 3 million new customers ordered, including 1 million new International customers.

Pro forma loss from operations was $49 million, or 7% of net sales, compared with $99 million, or 17% of net sales.

Pro forma net loss was $0.21 per share, compared with $0.35 per share.

Net loss (GAAP) was $234 million, or $0.66 per share, down from $308 million, or $0.90 per share, an improvement of more than 24%. Excluding $114 million for this quarter’s portion of previously announced restructuring and other charges, and excluding a net gain of $23 million for certain other items, the net loss would have been $143 million, or $0.40 per share.

Cash and marketable securities were $643 million at March 31, 2001.

Pro forma information regarding Amazon.com’s results from operations is provided as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP). Pro forma operating loss excludes stock-based compensation costs, amortization of goodwill and other intangibles, and impairment-related and other costs (including restructuring and other charges). Management measures the progress of the business using this pro forma information.

Pro forma net loss excludes stock-based compensation costs, amortization of goodwill and other intangibles, impairment-related and other costs (including restructuring and other charges), non-cash gains and losses, equity in losses of equity-method investees, and the cumulative effect of change in accounting principle.

Operational Highlights

Amazon.com and Borders Group, Inc., (NYSE: BGP) announced an agreement to re-launch Borders.com as a co-branded Web site powered by Amazon.com’s e-commerce platform.

Amazon Marketplace gross merchandise sales in March 2001 nearly doubled over December 2000, and over a quarter of a million Amazon.com customers have already made at least one purchase from Amazon Marketplace, a new service that allows customers to buy and sell used and collectible items directly from Amazon.com’s product detail pages.

Amazon.com launched the Amazon Honor System (www.amazon.com/honor), now with over 1,000 participating Web sites, enabling online visitors to easily tip their favorite sites or to pay for access to premium content.

Amazon.com’s Worldwide Digital Group launched three new initiatives: a Software Downloads store (www.amazon.com/software); a global alliance to offer the Adobe (NASDAQ: ADBE) Acrobat eBook ReaderO software in Amazon.com’s e-Books store (www.amazon.com/ebooks), which offers nearly 2,000 Adobe Portable Document Format-based eBooks; and a new free music downloads community (www.amazon.com/music-downloads), designed to help fans discover the music of major-label and independent artists through thousands of free MP3 and Liquid Audio downloads and artist uploads.

The Trilogy/Fortune Survey on Customer Relations 2001 named Amazon.com the best non-Fortune 500 company overall at managing customer relations.

Business Outlook

Second Quarter 2001 Expectations

Net sales are expected to be between $650 million and $700 million.

Gross margin is expected to be between 23 and 26 percent of net sales.

Absolute pro forma operating losses are expected to be flat to slightly improved from the first quarter of 2001.

Cash and marketable securities are expected to be approximately $600 million as of June 30, 2001, and approximately $900 million at December 31, 2001.

Full Year 2001 Expectations

Net sales are expected to increase between 20 and 30 percent over 2000.

Pro forma operating losses are expected to be between 3 and 6 percent of net sales for the year, with pro forma operating profitability expected in the fourth quarter.

Cash and marketable securities are expected to be approximately $900 million at December 31, 2001.