Referring only to the income statement and the balance sheet (Exhibits 3 and 4 for 1997, and Exhibits 7 and 8 for 2005) estimate (i) the amount of cash collected from customers and (ii) the amount of cash paid for inventory in 1997 and 2005. Note, if Accounts Receivable are not reported you can assume they equal $0 for that period. Be sure to explain your answers in summary form and list the additions/subtractions and where from the income statement and balance sheet these numbers are being pulled from for your final calculation (explain your logic).

Exhibit 3: 1997 Income Statement AMAZON.COM, INC. STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) YEARS ENDED DECEMBER 31, 1997 1996 1995 - $ Net sales.... Cost of sales.. $147,758 118, 945 $15, 746 12,287 511 409 - 28,813 3,459 102 Gross profit..... Operating expenses: Marketing and sales. Product development... General and administrative.. 38,964 12,485 6,573 6,090 2,313 1,035 200 171 35 Total operating expenses. Loss from operations.. Interest income.. Interest expense. 58,022 (29,209) 1,898 (279) 9,438 (5,979) 202 406 (304) 1 Net loss.... $ (27,590) $(5,777) $ (303) ==== = ===== ======= Pro forma basic and diluted loss per share.. $ (1.27) $ (0.31) $ (0.02) Shares used in computation of pro forma basic and diluted loss per share... 21,651 18, 544 14,394 Exhibit 4: 1997 Balance Sheet AMAZON.COM, INC. BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) DECEMBER 31, 1997 1996 ASSETS $ 6,248 Current Assets: Cash and cash equivalents.. Short-term investments. Inventories.. Prepaid expenses and other. $109,810 15, 256 8,971 3,298 571 321 Total current assets Fixed assets, net.. Deposits... Deferred charges.. 137, 335 9,265 166 2,240 7,140 985 146 $149,006 $ 8,271 ===== ======= Total assets.. LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable... Accrued advertising.. Accrued product development. Other liabilities and accrued expenses Current portion of long-term debt.. $ 32,697 3,454 $ 2,852 598 500 920 6,167 1,500 4,870 43,818 76,521 181 Total current liabilities. Long-term portion of debt.... Long-term portion of capital lease obligation. Stockholders' Equity: Preferred stock, $0.01 par value: Authorized shares -- 10,000,000 Issued and outstanding shares -- none and 569, 396 shares in 1997 and 1996, respectively. Common stock, $0.01 par value: Authorized shares 100,000,000 Issued and outstanding shares 23,937, 169 and 15, 900, 229 shares in 1997 and 1996, respectively. Additional paid-in capital. Deferred compensation. Accumulated deficit. -- 6 239 63,792 (1,930) (33,615) 159 9,873 (612) (6,025) Total stockholders' equity. 28, 486 3, 401 Total liabilities and stockholders' equity..... $149,006 $ 8,271 EE ======= Exhibit 7: 2005 Income Statement AMAZON.COM, INC. CONSOLIDATED INCOME STATEMENTS (in millions) Fiscal Years Ended Dec. 31, 2005 2004 2003 $ 8,490 $ 6,921 $ 5,264 6,451 5,319 4,006 2,039 1,602 1,258 Net sales Cost of sales Gross profit Operating expenses (1): Fulfillment 745 601 495 198 162 128 Marketing Technology and content General and administrative 451 283 258 166 124 103 Other operating expense (income) Total operating expenses 47 1,607 (8) 1,162 3 987 Income (loss) from operations 432 440 271 Interest income Interest expense Other income (expense), net Remeasurement and other Total non-operating income (expense) 44 (92) 2 42 (4) 28 (107) (5) (1) (85) 22 (130) 6 (130) (232) Income (loss) before income taxes 428 355 39 Provision (benefit) for income taxes 95 (233) 4 Income before change in accounting principle 333 588 35 Cumulative effect of change in accounting principle 26 Net income (loss) $ 359 588 $ 35 Exhibit 8: 2005 Balance Sheet AMAZON.COM, INC. CONSOLIDATED BALANCE SHEETS (in millions) Fiscal Years Ended Dec. 31, 2005 2004 ASSETS Current assets: Cash and cash equivalents $ 1,013 $ 1,303 Marketable securities 987 476 Cash, cash equivalents, and marketable securities 2,000 1,779 Inventories 566 480 Deferred tax assets, current portion 89 81 Accounts receivable, net 274 199 Total current assets 2,929 2,539 Fixed assets, net Deferred tax assets, long term portion Goodwill Other assets Total assets 348 223 159 37 3,696 $ 246 282 139 42 3,248 $ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses and other current liabilities Total current liabilities $ $ 1,366 563 1,929 1,142 478 1,620 Long-term debt and other 1,521 1,855 Commitments and contingencies -- none Stockholders' equity (deficit): Preferred stock, $0.01 par value: Authorized shares -- 500 Issued and outstanding shares Common stock, $0.01 par value: Authorized shares -- 5,000 Issued and outstanding shares Additional paid-in capital Accumulated other comprehensive income Accumulated deficit Total stockholders' equity (deficit) Total liabilities and stockholders' equity (deficit) 4 2,263 6 (2,027) 246 3,696 $ 4 2,123 32 (2,386) (227) 3,248