Q4 2012 Earnings Call Transcript

Transcript Call Date 01/29/2013

Operator: Good day everyone, and welcome to the Fourth Quarter 2012 Financial Results Teleconference. At this time, all participants are in a listen-only mode. After today's presentation, we will conduct a question-and-answer session. Today's call is being recorded.

For opening remarks, I will be turning the call over to the Vice President of Investor Relations, Mr. Sean Boyle. Please go ahead.

Sean Boyle - IR: Hello and welcome to our Q4 2012 financial results conference call. Joining us today is Tom Szkutak, our CFO. We will be available for questions after our prepared remarks. The following discussion and responses to your questions reflect management's views as of today, January 29, 2013 only and will include forward-looking statements.

Actual results may differ materially. Additional information about factors that could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent Annual Report on Form 10-K. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results, as well as metrics and commentary on the quarter.

During this call, we will discuss certain non-GAAP financial measures. In our press release, slides accompanying this webcast and our filings with the SEC, each of which is posted on our IR website, you'll find additional disclosures regarding these non-GAAP measures, including reconciliations of these measures with comparable GAAP measures.

Finally, unless otherwise stated, all comparisons in this call will be against our results for the comparable period of 2011.

Now, I will turn the call over to Tom.

Thomas J. Szkutak - SVP and CFO: Thanks, Sean. I'll begin with comments on our fourth quarter financial results. Trailing 12 month operating cash flow increased 7% to $4.18 billion. Trailing 12 month free cash flow decreased 81% to $395 million. Trailing 12 month capital expenditures were $3.79 billion. This amount includes $1.4 billion in purchases of our previously leased corporate office space, as well as property for development of additional corporate office space located in Seattle, Washington, which we purchased in the fourth quarter.

The increase in capital expenditures reflects additional investments in support of continued business growth consisting of investing in technology infrastructure, including Amazon Web Services and additional capacity to support our for fulfillment operations.

Return on invested capital was 4%, down from 22%. ROIC is TTM free cash flow divided by average total assets minus current liabilities, excluding the current portion of long-term debt over five quarter ends.

The combination of common stock and stock-based awards outstanding was 470 million shares, compared with 468 million shares one year ago. Worldwide revenue grew 22% to $21.27 billion or 23% excluding the $178 million unfavorable impact from year-over-year changes in foreign exchange. We're grateful to our customers who continue to take advanced of our low prices, vast selection and shipping offers.

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