EX-99.3 4 amzn-20150331xex993.htm EX-99.3 AMZN-2015.03.31-EX99.3
Exhibit 99.3
Segment Financial Information
The North America segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com, www.amazon.ca, and www.amazon.com.mx. This segment includes export sales from these websites.

The International segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused websites. This segment includes export sales from these internationally-focused websites (including export sales from these sites to customers in the U.S. and Canada), but excludes export sales from our North American websites.

The AWS segment consists of amounts earned from sales of compute, storage, database, and other AWS service offerings for start-ups, enterprises, government agencies, and academic institutions.

We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and content,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. In conjunction with creating a separate reportable segment for AWS, we have made other allocation changes among the North America and International segments to reflect the relative contribution provided to both segments. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. We exclude from our allocations the portions of these operating expense lines attributable to stock-based compensation. We do not allocate the line item “Other operating expense (income), net” to our segment operating results. There are no internal revenue transactions between our reportable segments.
 

1


Two years of historical financial information on reportable segments and reconciliation to consolidated net income (loss) using the new segment presentation are as follows (in millions):

  
Year Ended
 
Three Months Ended 
 
Year Ended
 
December 31,
2014
 
December 31,
2014
 
September 30,
2014
 
June 30,
2014
 
March 31,
2014
 
December 31,
2013
North America
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
50,834

 
$
17,333

 
$
11,699

 
$
10,994

 
$
10,808

 
$
41,410

Segment operating expenses (1)
49,542

 
16,600

 
11,759

 
10,665

 
10,518

 
40,244

Segment operating income (loss)
$
1,292

 
$
733

 
$
(60
)
 
$
329

 
$
290

 
$
1,166

International
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
33,510

 
$
10,575

 
$
7,711

 
$
7,341

 
$
7,883

 
$
29,934

Segment operating expenses (1)
33,654

 
10,510

 
7,885

 
7,343

 
7,916

 
29,780

Segment operating income (loss)
$
(144
)
 
$
65

 
$
(174
)
 
$
(2
)
 
$
(33
)
 
$
154

AWS
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
4,644

 
$
1,420

 
$
1,169

 
$
1,005

 
$
1,050

 
$
3,108

Segment operating expenses (1)
3,984

 
1,180

 
1,071

 
928

 
805

 
2,435

Segment operating income
$
660

 
$
240

 
$
98

 
$
77

 
$
245

 
$
673

Consolidated
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
88,988

 
$
29,328

 
$
20,579

 
$
19,340

 
$
19,741

 
$
74,452

Segment operating expenses (1)
87,180

 
28,290

 
20,715

 
18,936

 
19,239

 
72,459

Segment operating income (loss)
1,808

 
1,038

 
(136
)
 
404

 
502

 
1,993

Stock-based compensation
(1,497
)
 
(408
)
 
(377
)
 
(391
)
 
(321
)
 
(1,134
)
Other operating income (expense), net
(133
)
 
(39
)
 
(31
)
 
(28
)
 
(35
)
 
(114
)
Income (loss) from operations
178

 
591

 
(544
)
 
(15
)
 
146

 
745

Total non-operating income (expense)
(289
)
 
(162
)
 
(90
)
 
(12
)
 
(26
)
 
(239
)
Benefit (provision) for income taxes
(167
)
 
(205
)
 
205

 
(94
)
 
(73
)
 
(161
)
Equity-method investment activity, net of tax
37

 
(10
)
 
(8
)
 
(5
)
 
61

 
(71
)
Net income (loss)
$
(241
)
 
$
214

 
$
(437
)
 
$
(126
)
 
$
108

 
$
274

Segment Highlights:
 
 
 
 
 
 
 
 
 
 
 
Y/Y net sales growth:
 
 
 
 
 
 
 
 
 
 
 
North America
23
%
 
21
%
 
23
%
 
25
%
 
23
%
 
26
%
International
12

 
3

 
14

 
18

 
18

 
14

AWS
49

 
47

 
43

 
43

 
69

 
69

Consolidated
20

 
15

 
20

 
23

 
23

 
22

Net sales mix:
 
 
 
 
 
 
 
 
 
 
 
North America
57
%
 
59
%
 
57
%
 
57
%
 
55
%
 
56
%
International
38

 
36

 
37

 
38

 
40

 
40

AWS
5

 
5

 
6

 
5

 
5

 
4

Consolidated
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
_________________
(1)
Excludes stock-based compensation and “Other operating expense (income), net” which are not allocated to segments.






2


Segment Assets

Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities, goodwill and other acquired intangible assets, capitalized internal-use software and website development costs, and tax assets. Technology infrastructure assets are allocated among the segments based on usage, with the majority allocated to the AWS segment. Total segment assets reconciled to consolidated amounts are as follows (in millions):
 
December 31,
 
2014
 
2013
North America (1)
$
13,257

 
$
9,991

International (1)
6,747

 
6,199

AWS (2)
6,981

 
3,840

Corporate
27,520

 
20,129

Consolidated
$
54,505

 
$
40,159

_____________________________
(1)
North America and International segment assets primarily consist of inventory, accounts receivable, and property and equipment.
(2)
AWS segment assets primarily consist of property and equipment and accounts receivable.

Property and Equipment, Net
Property and equipment, net by segment is as follows (in millions):
 
December 31,
 
2014
 
2013
North America
$
5,373

 
$
3,477

International
2,000

 
1,549

AWS
6,043

 
3,253

Corporate
3,551

 
2,670

Consolidated
$
16,967

 
$
10,949

Property and Equipment Additions
Total property and equipment additions by segment are as follows (in millions):
 
December 31,
 
2014
 
2013
North America (1)
$
2,833

 
$
2,326

International (1)
767

 
851

AWS (2)
4,295

 
2,215

Corporate
1,586

 
981

Consolidated
$
9,481

 
$
6,373

________________
(1)
Includes property and equipment added under capital leases of $887 million and $555 million in 2014 and 2013, and under other financing arrangements of $599 million and $715 million in 2014 and 2013.
(2)
Includes property and equipment added under capital leases of $3.0 billion and $1.3 billion in 2014 and 2013, and under other financing arrangements of $62 million and $67 million in 2014 and 2013.




3


Depreciation Expense

Depreciation expense, including amortization of capitalized internal-use software and website development costs and other corporate property and equipment depreciation expense, are allocated to all segments based on usage. Total depreciation expense, by segment, is as follows (in millions):

 
Year Ended December 31,
 
2014
 
2013
North America
$
1,203

 
$
914

International
740

 
583

AWS
1,673

 
963

Consolidated
$
3,616

 
$
2,460



4