1999 To our shareholders: The first 4½ years of our journey have yielded some amazing results: we’ve now served over 17 million customers in over 150 countries and built the leading global e-commerce brand and platform. In the coming years we expect to benefit from the continued adoption of online commerce around the world as millions of new consumers connect to the Internet for the first time. As the online shopping experience continues to improve, consumer trust and confidence will increase, driving further adoption. And, if we at Amazon.com do our job right, we can be uniquely positioned to serve these new customers best and benefit as a result. A Recap of 1999 During 1999, our relentless focus on customers worked: • Sales grew from $610 million in 1998 to $1.64 billion – a 169 percent increase. • We added 10.7 million new customers, increasing cumulative customer accounts from 6.2 million to 16.9 million. • The percentage of orders placed by repeat customers grew from over 64 percent in the fourth quarter of 1998 to greater than 73 percent in the same period in 1999. • Customers around the world are now choosing Amazon.com for a wide array of products. Only two years ago, Amazon.com's U.S. Books business represented 100 percent of our sales. Today, despite strong growth in U.S. Books, other areas account for more than half our sales. Major 1999 initiatives included Auctions, zShops, Toys, Consumer Electronics, Home Improvement, Software, Video Games, Payments and our wireless initiative, Amazon Anywhere. • We've continued to be recognized as best-of-breed not only in our more established areas such as books, but in our newer stores as well. Just to focus on one area, Amazon Toys has received multiple awards, including being rated the best online toy store in an MSNBC survey, a ranking as the No. 1 on-line toy store by Forrester Research, and the top e-Rating from Consumer Reports in the toys category, in each case beating out a number of longer-established players. • Sales outside of the US accounted for 22 percent of our business, totaling $358 million. In the U.K. and Germany, we added Music, Auctions and zShops. In fact, Amazon.co.uk, Amazon.de, and Amazon.com are now the #1, #2, and #3 most popular online retail domains in Europe. • We grew worldwide distribution capacity from roughly 300,000 square feet to over 5 million square feet in less than 12 months.