|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
91-1646860
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Title of Each Class
|
Trading Symbol(s)
|
Name of Each Exchange on Which Registered
|
Common Stock, par value $.01 per share
|
AMZN
|
Nasdaq Global Select Market
|
Large accelerated filer
|
|
☒
|
Accelerated filer
|
|
☐
|
|
|
|
|
|
|
Non-accelerated filer
|
|
☐
|
Smaller reporting company
|
|
☐
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
☐
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
Item 1.
|
Financial Statements
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Twelve Months Ended
June 30, |
||||||||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
|
$
|
17,616
|
|
|
$
|
23,507
|
|
|
$
|
21,856
|
|
|
$
|
32,173
|
|
|
$
|
13,851
|
|
|
$
|
20,536
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
2,534
|
|
|
2,625
|
|
|
4,163
|
|
|
6,186
|
|
|
6,275
|
|
|
12,096
|
|
||||||
Adjustments to reconcile net income to net cash from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other
|
3,630
|
|
|
5,202
|
|
|
7,301
|
|
|
10,056
|
|
|
13,711
|
|
|
18,097
|
|
||||||
Stock-based compensation
|
1,468
|
|
|
1,971
|
|
|
2,651
|
|
|
3,245
|
|
|
4,914
|
|
|
6,012
|
|
||||||
Other operating expense (income), net
|
85
|
|
|
80
|
|
|
141
|
|
|
67
|
|
|
240
|
|
|
200
|
|
||||||
Other expense (income), net
|
110
|
|
|
(7
|
)
|
|
(75
|
)
|
|
(142
|
)
|
|
(207
|
)
|
|
152
|
|
||||||
Deferred income taxes
|
(139
|
)
|
|
105
|
|
|
3
|
|
|
520
|
|
|
(380
|
)
|
|
958
|
|
||||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Inventories
|
(1,090
|
)
|
|
(2,100
|
)
|
|
1,130
|
|
|
(1,381
|
)
|
|
(2,717
|
)
|
|
(3,826
|
)
|
||||||
Accounts receivable, net and other
|
(1,364
|
)
|
|
(2,193
|
)
|
|
(336
|
)
|
|
(2,594
|
)
|
|
(4,859
|
)
|
|
(6,873
|
)
|
||||||
Accounts payable
|
2,703
|
|
|
3,668
|
|
|
(7,513
|
)
|
|
(2,716
|
)
|
|
4,364
|
|
|
8,060
|
|
||||||
Accrued expenses and other
|
(205
|
)
|
|
(623
|
)
|
|
(2,430
|
)
|
|
(3,556
|
)
|
|
(491
|
)
|
|
(653
|
)
|
||||||
Unearned revenue
|
(283
|
)
|
|
390
|
|
|
623
|
|
|
1,278
|
|
|
943
|
|
|
1,806
|
|
||||||
Net cash provided by (used in) operating activities
|
7,449
|
|
|
9,118
|
|
|
5,658
|
|
|
10,963
|
|
|
21,793
|
|
|
36,029
|
|
||||||
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
(3,243
|
)
|
|
(3,562
|
)
|
|
(6,341
|
)
|
|
(6,852
|
)
|
|
(13,035
|
)
|
|
(13,938
|
)
|
||||||
Proceeds from property and equipment incentives
|
294
|
|
|
919
|
|
|
665
|
|
|
1,488
|
|
|
1,663
|
|
|
2,927
|
|
||||||
Acquisitions, net of cash acquired, and other
|
(866
|
)
|
|
(117
|
)
|
|
(879
|
)
|
|
(1,285
|
)
|
|
(14,173
|
)
|
|
(2,592
|
)
|
||||||
Sales and maturities of marketable securities
|
1,660
|
|
|
5,161
|
|
|
4,337
|
|
|
7,804
|
|
|
10,034
|
|
|
11,706
|
|
||||||
Purchases of marketable securities
|
(537
|
)
|
|
(9,950
|
)
|
|
(1,007
|
)
|
|
(16,827
|
)
|
|
(8,173
|
)
|
|
(22,919
|
)
|
||||||
Net cash provided by (used in) investing activities
|
(2,692
|
)
|
|
(7,549
|
)
|
|
(3,225
|
)
|
|
(15,672
|
)
|
|
(23,684
|
)
|
|
(24,816
|
)
|
||||||
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from long-term debt and other
|
96
|
|
|
283
|
|
|
221
|
|
|
473
|
|
|
16,380
|
|
|
1,020
|
|
||||||
Repayments of long-term debt and other
|
(149
|
)
|
|
(112
|
)
|
|
(351
|
)
|
|
(464
|
)
|
|
(1,564
|
)
|
|
(781
|
)
|
||||||
Principal repayments of finance leases
|
(1,284
|
)
|
|
(2,327
|
)
|
|
(3,297
|
)
|
|
(4,541
|
)
|
|
(6,037
|
)
|
|
(8,693
|
)
|
||||||
Principal repayments of financing obligations
|
(57
|
)
|
|
(2
|
)
|
|
(129
|
)
|
|
(3
|
)
|
|
(244
|
)
|
|
(211
|
)
|
||||||
Net cash provided by (used in) financing activities
|
(1,394
|
)
|
|
(2,158
|
)
|
|
(3,556
|
)
|
|
(4,535
|
)
|
|
8,535
|
|
|
(8,665
|
)
|
||||||
Foreign currency effect on cash, cash equivalents, and restricted cash
|
(443
|
)
|
|
47
|
|
|
(197
|
)
|
|
36
|
|
|
41
|
|
|
(119
|
)
|
||||||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
2,920
|
|
|
(542
|
)
|
|
(1,320
|
)
|
|
(9,208
|
)
|
|
6,685
|
|
|
2,429
|
|
||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
|
$
|
20,536
|
|
|
$
|
22,965
|
|
|
$
|
20,536
|
|
|
$
|
22,965
|
|
|
$
|
20,536
|
|
|
$
|
22,965
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash paid for interest on long-term debt
|
$
|
168
|
|
|
$
|
147
|
|
|
$
|
450
|
|
|
$
|
433
|
|
|
$
|
628
|
|
|
$
|
837
|
|
Cash paid for operating leases
|
—
|
|
|
838
|
|
|
—
|
|
|
1,547
|
|
|
—
|
|
|
1,547
|
|
||||||
Cash paid for interest on finance leases
|
85
|
|
|
150
|
|
|
159
|
|
|
315
|
|
|
273
|
|
|
536
|
|
||||||
Cash paid for interest on financing obligations
|
40
|
|
|
4
|
|
|
95
|
|
|
5
|
|
|
176
|
|
|
105
|
|
||||||
Cash paid for income taxes, net of refunds
|
300
|
|
|
283
|
|
|
813
|
|
|
451
|
|
|
1,077
|
|
|
822
|
|
||||||
Assets acquired under operating leases
|
—
|
|
|
2,220
|
|
|
—
|
|
|
3,094
|
|
|
—
|
|
|
3,094
|
|
||||||
Property and equipment acquired under finance leases
|
2,335
|
|
|
3,307
|
|
|
4,605
|
|
|
5,935
|
|
|
9,631
|
|
|
11,944
|
|
||||||
Property and equipment acquired under build-to-suit arrangements
|
795
|
|
|
283
|
|
|
1,536
|
|
|
719
|
|
|
3,128
|
|
|
2,825
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Net product sales
|
$
|
31,864
|
|
|
$
|
35,856
|
|
|
$
|
63,468
|
|
|
$
|
70,139
|
|
Net service sales
|
21,022
|
|
|
27,548
|
|
|
40,460
|
|
|
52,965
|
|
||||
Total net sales
|
52,886
|
|
|
63,404
|
|
|
103,928
|
|
|
123,104
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
30,632
|
|
|
36,337
|
|
|
61,367
|
|
|
70,257
|
|
||||
Fulfillment
|
7,932
|
|
|
9,271
|
|
|
15,724
|
|
|
17,872
|
|
||||
Marketing
|
2,901
|
|
|
4,291
|
|
|
5,600
|
|
|
7,955
|
|
||||
Technology and content
|
7,247
|
|
|
9,065
|
|
|
14,006
|
|
|
16,991
|
|
||||
General and administrative
|
1,111
|
|
|
1,270
|
|
|
2,177
|
|
|
2,444
|
|
||||
Other operating expense (income), net
|
80
|
|
|
86
|
|
|
143
|
|
|
81
|
|
||||
Total operating expenses
|
49,903
|
|
|
60,320
|
|
|
99,017
|
|
|
115,600
|
|
||||
Operating income
|
2,983
|
|
|
3,084
|
|
|
4,911
|
|
|
7,504
|
|
||||
Interest income
|
94
|
|
|
215
|
|
|
173
|
|
|
398
|
|
||||
Interest expense
|
(343
|
)
|
|
(383
|
)
|
|
(673
|
)
|
|
(749
|
)
|
||||
Other income (expense), net
|
(129
|
)
|
|
(27
|
)
|
|
109
|
|
|
138
|
|
||||
Total non-operating income (expense)
|
(378
|
)
|
|
(195
|
)
|
|
(391
|
)
|
|
(213
|
)
|
||||
Income before income taxes
|
2,605
|
|
|
2,889
|
|
|
4,520
|
|
|
7,291
|
|
||||
Provision for income taxes
|
(74
|
)
|
|
(257
|
)
|
|
(361
|
)
|
|
(1,094
|
)
|
||||
Equity-method investment activity, net of tax
|
3
|
|
|
(7
|
)
|
|
4
|
|
|
(11
|
)
|
||||
Net income
|
$
|
2,534
|
|
|
$
|
2,625
|
|
|
$
|
4,163
|
|
|
$
|
6,186
|
|
Basic earnings per share
|
$
|
5.21
|
|
|
$
|
5.32
|
|
|
$
|
8.58
|
|
|
$
|
12.57
|
|
Diluted earnings per share
|
$
|
5.07
|
|
|
$
|
5.22
|
|
|
$
|
8.34
|
|
|
$
|
12.31
|
|
Weighted-average shares used in computation of earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
486
|
|
|
493
|
|
|
485
|
|
|
492
|
|
||||
Diluted
|
500
|
|
|
503
|
|
|
499
|
|
|
503
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Net income
|
$
|
2,534
|
|
|
$
|
2,625
|
|
|
$
|
4,163
|
|
|
$
|
6,186
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of tax of $(1), $(6), $17, and $(8)
|
(469
|
)
|
|
7
|
|
|
(411
|
)
|
|
(1
|
)
|
||||
Net change in unrealized gains (losses) on available-for-sale debt securities:
|
|
|
|
|
|
|
|
||||||||
Unrealized gains (losses), net of tax of $0, $(11), $9, and $(11)
|
1
|
|
|
44
|
|
|
(40
|
)
|
|
76
|
|
||||
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $0, $0, and $0
|
1
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||
Net unrealized gains (losses) on available-for-sale debt securities
|
2
|
|
|
43
|
|
|
(39
|
)
|
|
76
|
|
||||
Total other comprehensive income (loss)
|
(467
|
)
|
|
50
|
|
|
(450
|
)
|
|
75
|
|
||||
Comprehensive income
|
$
|
2,067
|
|
|
$
|
2,675
|
|
|
$
|
3,713
|
|
|
$
|
6,261
|
|
|
December 31, 2018
|
|
June 30, 2019
|
||||
|
|
|
(unaudited)
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
31,750
|
|
|
$
|
22,616
|
|
Marketable securities
|
9,500
|
|
|
18,847
|
|
||
Inventories
|
17,174
|
|
|
18,580
|
|
||
Accounts receivable, net and other
|
16,677
|
|
|
16,747
|
|
||
Total current assets
|
75,101
|
|
|
76,790
|
|
||
Property and equipment, net
|
61,797
|
|
|
64,723
|
|
||
Operating leases
|
—
|
|
|
21,649
|
|
||
Goodwill
|
14,548
|
|
|
14,727
|
|
||
Other assets
|
11,202
|
|
|
13,462
|
|
||
Total assets
|
$
|
162,648
|
|
|
$
|
191,351
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
38,192
|
|
|
$
|
36,063
|
|
Accrued expenses and other
|
23,663
|
|
|
26,140
|
|
||
Unearned revenue
|
6,536
|
|
|
7,475
|
|
||
Total current liabilities
|
68,391
|
|
|
69,678
|
|
||
Long-term lease liabilities
|
9,650
|
|
|
35,134
|
|
||
Long-term debt
|
23,495
|
|
|
23,329
|
|
||
Other long-term liabilities
|
17,563
|
|
|
10,149
|
|
||
Commitments and contingencies (Note 4)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
Authorized shares — 500
|
|
|
|
||||
Issued and outstanding shares — none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares — 5,000
|
|
|
|
||||
Issued shares — 514 and 518
|
|
|
|
||||
Outstanding shares — 491 and 494
|
5
|
|
|
5
|
|
||
Treasury stock, at cost
|
(1,837
|
)
|
|
(1,837
|
)
|
||
Additional paid-in capital
|
26,791
|
|
|
30,035
|
|
||
Accumulated other comprehensive loss
|
(1,035
|
)
|
|
(960
|
)
|
||
Retained earnings
|
19,625
|
|
|
25,818
|
|
||
Total stockholders’ equity
|
43,549
|
|
|
53,061
|
|
||
Total liabilities and stockholders’ equity
|
$
|
162,648
|
|
|
$
|
191,351
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||
Shares used in computation of basic earnings per share
|
486
|
|
|
493
|
|
|
485
|
|
|
492
|
|
Total dilutive effect of outstanding stock awards
|
14
|
|
|
10
|
|
|
14
|
|
|
11
|
|
Shares used in computation of diluted earnings per share
|
500
|
|
|
503
|
|
|
499
|
|
|
503
|
|
|
December 31, 2018
|
|
June 30, 2019
|
||||||||||||||||
|
Total
Estimated Fair Value |
|
Cost or
Amortized Cost |
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Total
Estimated Fair Value |
||||||||||
Cash
|
$
|
10,406
|
|
|
$
|
8,553
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,553
|
|
Level 1 securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Money market funds
|
12,515
|
|
|
10,757
|
|
|
—
|
|
|
—
|
|
|
10,757
|
|
|||||
Equity securities (1)
|
170
|
|
|
|
|
|
|
|
|
277
|
|
||||||||
Level 2 securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign government and agency securities
|
815
|
|
|
1,596
|
|
|
—
|
|
|
—
|
|
|
1,596
|
|
|||||
U.S. government and agency securities
|
11,667
|
|
|
8,573
|
|
|
13
|
|
|
(5
|
)
|
|
8,581
|
|
|||||
Corporate debt securities
|
4,990
|
|
|
9,915
|
|
|
31
|
|
|
(2
|
)
|
|
9,944
|
|
|||||
Asset-backed securities
|
892
|
|
|
1,834
|
|
|
7
|
|
|
(1
|
)
|
|
1,840
|
|
|||||
Other fixed income securities
|
188
|
|
|
264
|
|
|
2
|
|
|
—
|
|
|
266
|
|
|||||
Equity securities (1)
|
33
|
|
|
|
|
|
|
|
|
—
|
|
||||||||
|
$
|
41,676
|
|
|
$
|
41,492
|
|
|
$
|
53
|
|
|
$
|
(8
|
)
|
|
$
|
41,814
|
|
Less: Restricted cash, cash equivalents, and marketable securities (2)
|
(426
|
)
|
|
|
|
|
|
|
|
(351
|
)
|
||||||||
Total cash, cash equivalents, and marketable securities
|
$
|
41,250
|
|
|
|
|
|
|
|
|
$
|
41,463
|
|
(1)
|
The related unrealized gain (loss) recorded in “Other income (expense), net” was $14 million in Q2 2019 and $82 million for the six months ended June 30, 2019.
|
(2)
|
We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”
|
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due within one year
|
$
|
24,249
|
|
|
$
|
24,255
|
|
Due after one year through five years
|
7,428
|
|
|
7,467
|
|
||
Due after five years through ten years
|
296
|
|
|
296
|
|
||
Due after ten years
|
966
|
|
|
966
|
|
||
Total
|
$
|
32,939
|
|
|
$
|
32,984
|
|
|
December 31, 2018
|
|
June 30, 2019
|
||||
Cash and cash equivalents
|
$
|
31,750
|
|
|
$
|
22,616
|
|
Restricted cash included in accounts receivable, net and other
|
418
|
|
|
318
|
|
||
Restricted cash included in other assets
|
5
|
|
|
31
|
|
||
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows
|
$
|
32,173
|
|
|
$
|
22,965
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
|
||||
Operating lease cost (1)
|
$
|
874
|
|
|
$
|
1,710
|
|
Finance lease cost:
|
|
|
|
||||
Amortization of lease assets
|
2,402
|
|
|
4,709
|
|
||
Interest on lease liabilities
|
160
|
|
|
316
|
|
||
Finance lease cost
|
2,562
|
|
|
5,025
|
|
||
Variable lease cost
|
281
|
|
|
531
|
|
||
Total lease cost
|
$
|
3,717
|
|
|
$
|
7,266
|
|
(1)
|
Rental expense under operating lease agreements was $815 million for Q2 2018 and $1.6 billion for the six months ended June 30, 2018.
|
|
June 30, 2019
|
|
|
|
|
Weighted-average remaining lease term – operating leases
|
11.2 years
|
|
Weighted-average remaining lease term – finance leases
|
5.7 years
|
|
Weighted-average discount rate – operating leases
|
3.2
|
%
|
Weighted-average discount rate – finance leases
|
2.9
|
%
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
Gross lease liabilities
|
$
|
28,739
|
|
|
$
|
26,204
|
|
|
$
|
54,943
|
|
Less: imputed interest
|
(6,324
|
)
|
|
(1,970
|
)
|
|
(8,294
|
)
|
|||
Present value of lease liabilities
|
22,415
|
|
|
24,234
|
|
|
46,649
|
|
|||
Less: current portion of lease liabilities
|
(2,631
|
)
|
|
(8,884
|
)
|
|
(11,515
|
)
|
|||
Total long-term lease liabilities
|
$
|
19,784
|
|
|
$
|
15,350
|
|
|
$
|
35,134
|
|
|
Six Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
|
||||||||||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt principal and interest
|
$
|
1,816
|
|
|
$
|
2,162
|
|
|
$
|
1,887
|
|
|
$
|
2,103
|
|
|
$
|
1,807
|
|
|
$
|
30,020
|
|
|
$
|
39,795
|
|
Operating leases
|
1,632
|
|
|
3,377
|
|
|
3,102
|
|
|
2,744
|
|
|
2,438
|
|
|
15,446
|
|
|
28,739
|
|
|||||||
Finance lease liabilities, including interest
|
4,319
|
|
|
8,418
|
|
|
5,359
|
|
|
1,961
|
|
|
1,026
|
|
|
5,121
|
|
|
26,204
|
|
|||||||
Financing obligations, including interest
|
18
|
|
|
44
|
|
|
45
|
|
|
45
|
|
|
46
|
|
|
703
|
|
|
901
|
|
|||||||
Unconditional purchase obligations (1)
|
1,176
|
|
|
3,416
|
|
|
3,464
|
|
|
3,167
|
|
|
3,002
|
|
|
5,253
|
|
|
19,478
|
|
|||||||
Other commitments (2) (3)
|
1,296
|
|
|
2,498
|
|
|
1,871
|
|
|
1,676
|
|
|
1,129
|
|
|
11,057
|
|
|
19,527
|
|
|||||||
Total commitments
|
$
|
10,257
|
|
|
$
|
19,915
|
|
|
$
|
15,728
|
|
|
$
|
11,696
|
|
|
$
|
9,448
|
|
|
$
|
67,600
|
|
|
$
|
134,644
|
|
(1)
|
Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.
|
(2)
|
Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements and lease arrangements prior to the lease commencement date and digital media content liabilities associated with long-term digital media content assets with initial terms greater than one year.
|
(3)
|
Excludes approximately $3.7 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.
|
|
December 31, 2018
|
|
June 30, 2019
|
||||
2.600% Notes due on December 5, 2019 (2)
|
1,000
|
|
|
1,000
|
|
||
1.900% Notes due on August 21, 2020 (3)
|
1,000
|
|
|
1,000
|
|
||
3.300% Notes due on December 5, 2021 (2)
|
1,000
|
|
|
1,000
|
|
||
2.500% Notes due on November 29, 2022 (1)
|
1,250
|
|
|
1,250
|
|
||
2.400% Notes due on February 22, 2023 (3)
|
1,000
|
|
|
1,000
|
|
||
2.800% Notes due on August 22, 2024 (3)
|
2,000
|
|
|
2,000
|
|
||
3.800% Notes due on December 5, 2024 (2)
|
1,250
|
|
|
1,250
|
|
||
5.200% Notes due on December 3, 2025 (4)
|
1,000
|
|
|
1,000
|
|
||
3.150% Notes due on August 22, 2027 (3)
|
3,500
|
|
|
3,500
|
|
||
4.800% Notes due on December 5, 2034 (2)
|
1,250
|
|
|
1,250
|
|
||
3.875% Notes due on August 22, 2037 (3)
|
2,750
|
|
|
2,750
|
|
||
4.950% Notes due on December 5, 2044 (2)
|
1,500
|
|
|
1,500
|
|
||
4.050% Notes due on August 22, 2047 (3)
|
3,500
|
|
|
3,500
|
|
||
4.250% Notes due on August 22, 2057 (3)
|
2,250
|
|
|
2,250
|
|
||
Credit Facility
|
594
|
|
|
509
|
|
||
Other long-term debt
|
121
|
|
|
307
|
|
||
Total debt
|
24,965
|
|
|
25,066
|
|
||
Less current portion of long-term debt
|
(1,371
|
)
|
|
(1,636
|
)
|
||
Face value of long-term debt
|
$
|
23,594
|
|
|
$
|
23,430
|
|
(1)
|
Issued in November 2012, effective interest rate of the 2022 Notes was 2.66%.
|
(2)
|
Issued in December 2014, effective interest rates of the 2019, 2021, 2024, 2034, and 2044 Notes were 2.73%, 3.43%, 3.90%, 4.92%, and 5.11%.
|
(3)
|
Issued in August 2017, effective interest rates of the 2020, 2023, 2024, 2027, 2037, 2047, and 2057 Notes were 2.16%, 2.56%, 2.95%, 3.25%, 3.94%, 4.13%, and 4.33%.
|
(4)
|
Consists of $872 million of 2025 Notes issued in December 2017 in exchange for notes assumed in connection with the acquisition of Whole Foods Market and $128 million of 2025 Notes issued by Whole Foods Market that did not participate in our December 2017 exchange offer. The effective interest rate of the 2025 Notes was 3.02%.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Cost of sales
|
$
|
19
|
|
|
$
|
43
|
|
|
$
|
34
|
|
|
$
|
67
|
|
Fulfillment
|
320
|
|
|
360
|
|
|
564
|
|
|
594
|
|
||||
Marketing
|
190
|
|
|
307
|
|
|
351
|
|
|
516
|
|
||||
Technology and content
|
788
|
|
|
1,077
|
|
|
1,419
|
|
|
1,752
|
|
||||
General and administrative
|
151
|
|
|
184
|
|
|
284
|
|
|
316
|
|
||||
Total stock-based compensation expense
|
$
|
1,468
|
|
|
$
|
1,971
|
|
|
$
|
2,652
|
|
|
$
|
3,245
|
|
|
Number of Units
|
|
Weighted-Average
Grant-Date
Fair Value
|
|||
Outstanding as of December 31, 2018
|
15.9
|
|
|
$
|
1,024
|
|
Units granted
|
4.6
|
|
|
1,807
|
|
|
Units vested
|
(3.4
|
)
|
|
789
|
|
|
Units forfeited
|
(0.9
|
)
|
|
1,120
|
|
|
Outstanding as of June 30, 2019
|
16.2
|
|
|
$
|
1,287
|
|
|
Six Months Ended December 31,
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||||||
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|||||||
Scheduled vesting—restricted stock units
|
3.2
|
|
|
6.1
|
|
|
4.9
|
|
|
1.4
|
|
|
0.4
|
|
|
0.2
|
|
|
16.2
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Total beginning stockholders’ equity
|
$
|
31,463
|
|
|
$
|
48,410
|
|
|
$
|
27,709
|
|
|
$
|
43,549
|
|
|
|
|
|
|
|
|
|
||||||||
Beginning and ending common stock
|
5
|
|
|
5
|
|
|
5
|
|
|
5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Beginning and ending treasury stock
|
(1,837
|
)
|
|
(1,837
|
)
|
|
(1,837
|
)
|
|
(1,837
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Beginning additional paid-in capital
|
22,563
|
|
|
28,059
|
|
|
21,389
|
|
|
26,791
|
|
||||
Stock-based compensation and issuance of employee benefit plan stock
|
1,465
|
|
|
1,976
|
|
|
2,639
|
|
|
3,244
|
|
||||
Ending additional paid-in capital
|
24,028
|
|
|
30,035
|
|
|
24,028
|
|
|
30,035
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Beginning accumulated other comprehensive loss
|
(467
|
)
|
|
(1,010
|
)
|
|
(484
|
)
|
|
(1,035
|
)
|
||||
Other comprehensive income (loss)
|
(467
|
)
|
|
50
|
|
|
(450
|
)
|
|
75
|
|
||||
Ending accumulated other comprehensive loss
|
(934
|
)
|
|
(960
|
)
|
|
(934
|
)
|
|
(960
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Beginning retained earnings
|
11,199
|
|
|
23,193
|
|
|
8,636
|
|
|
19,625
|
|
||||
Cumulative effect of changes in accounting principles (1)
|
—
|
|
|
—
|
|
|
934
|
|
|
7
|
|
||||
Net income
|
2,534
|
|
|
2,625
|
|
|
4,163
|
|
|
6,186
|
|
||||
Ending retained earnings
|
13,733
|
|
|
25,818
|
|
|
13,733
|
|
|
25,818
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total ending stockholders’ equity
|
$
|
34,995
|
|
|
$
|
53,061
|
|
|
$
|
34,995
|
|
|
$
|
53,061
|
|
(1)
|
We recorded cumulative effect adjustments related to the new revenue and income tax standards in Q1 2018 and the new lease standard in Q1 2019. See Item 1 of Part I, “Financial Statements — Note 1 — Accounting Policies — Accounting Pronouncements Recently Adopted” for additional information.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
North America
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
32,169
|
|
|
$
|
38,653
|
|
|
$
|
62,894
|
|
|
$
|
74,465
|
|
Operating expenses
|
30,334
|
|
|
37,089
|
|
|
59,910
|
|
|
70,614
|
|
||||
Operating income
|
$
|
1,835
|
|
|
$
|
1,564
|
|
|
$
|
2,984
|
|
|
$
|
3,851
|
|
|
|
|
|
|
|
|
|
||||||||
International
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
14,612
|
|
|
$
|
16,370
|
|
|
$
|
29,487
|
|
|
$
|
32,563
|
|
Operating expenses
|
15,106
|
|
|
16,971
|
|
|
30,603
|
|
|
33,253
|
|
||||
Operating income (loss)
|
$
|
(494
|
)
|
|
$
|
(601
|
)
|
|
$
|
(1,116
|
)
|
|
$
|
(690
|
)
|
|
|
|
|
|
|
|
|
||||||||
AWS
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
6,105
|
|
|
$
|
8,381
|
|
|
$
|
11,547
|
|
|
$
|
16,076
|
|
Operating expenses
|
4,463
|
|
|
6,260
|
|
|
8,504
|
|
|
11,733
|
|
||||
Operating income
|
$
|
1,642
|
|
|
$
|
2,121
|
|
|
$
|
3,043
|
|
|
$
|
4,343
|
|
|
|
|
|
|
|
|
|
||||||||
Consolidated
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
52,886
|
|
|
$
|
63,404
|
|
|
$
|
103,928
|
|
|
$
|
123,104
|
|
Operating expenses
|
49,903
|
|
|
60,320
|
|
|
99,017
|
|
|
115,600
|
|
||||
Operating income
|
2,983
|
|
|
3,084
|
|
|
4,911
|
|
|
7,504
|
|
||||
Total non-operating income (expense)
|
(378
|
)
|
|
(195
|
)
|
|
(391
|
)
|
|
(213
|
)
|
||||
Provision for income taxes
|
(74
|
)
|
|
(257
|
)
|
|
(361
|
)
|
|
(1,094
|
)
|
||||
Equity-method investment activity, net of tax
|
3
|
|
|
(7
|
)
|
|
4
|
|
|
(11
|
)
|
||||
Net income
|
$
|
2,534
|
|
|
$
|
2,625
|
|
|
$
|
4,163
|
|
|
$
|
6,186
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Net Sales:
|
|
|
|
||||||||||||
Online stores (1)
|
$
|
27,165
|
|
|
$
|
31,053
|
|
|
$
|
54,105
|
|
|
$
|
60,552
|
|
Physical stores (2)
|
4,312
|
|
|
4,330
|
|
|
8,575
|
|
|
8,636
|
|
||||
Third-party seller services (3)
|
9,702
|
|
|
11,962
|
|
|
18,966
|
|
|
23,104
|
|
||||
Subscription services (4)
|
3,408
|
|
|
4,676
|
|
|
6,510
|
|
|
9,018
|
|
||||
AWS
|
6,105
|
|
|
8,381
|
|
|
11,547
|
|
|
16,076
|
|
||||
Other (5)
|
2,194
|
|
|
3,002
|
|
|
4,225
|
|
|
5,718
|
|
||||
Consolidated
|
$
|
52,886
|
|
|
$
|
63,404
|
|
|
$
|
103,928
|
|
|
$
|
123,104
|
|
(1)
|
Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, music, videos, games, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in Subscription services.
|
(2)
|
Includes product sales where our customers physically select items in a store. Sales from customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”
|
(3)
|
Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.
|
(4)
|
Includes annual and monthly fees associated with Amazon Prime memberships, as well as audiobook, digital video, e-book, digital music, and other non-AWS subscription services.
|
(5)
|
Primarily includes sales of advertising services, as well as sales related to our other service offerings.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
Twelve Months Ended
June 30, |
||||||||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
$
|
7,449
|
|
|
$
|
9,118
|
|
|
$
|
5,658
|
|
|
$
|
10,963
|
|
|
$
|
21,793
|
|
|
$
|
36,029
|
|
Investing activities
|
(2,692
|
)
|
|
(7,549
|
)
|
|
(3,225
|
)
|
|
(15,672
|
)
|
|
(23,684
|
)
|
|
(24,816
|
)
|
||||||
Financing activities
|
(1,394
|
)
|
|
(2,158
|
)
|
|
(3,556
|
)
|
|
(4,535
|
)
|
|
8,535
|
|
|
(8,665
|
)
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
32,169
|
|
|
$
|
38,653
|
|
|
$
|
62,894
|
|
|
$
|
74,465
|
|
International
|
14,612
|
|
|
16,370
|
|
|
29,487
|
|
|
32,563
|
|
||||
AWS
|
6,105
|
|
|
8,381
|
|
|
11,547
|
|
|
16,076
|
|
||||
Consolidated
|
$
|
52,886
|
|
|
$
|
63,404
|
|
|
$
|
103,928
|
|
|
$
|
123,104
|
|
Year-over-year Percentage Growth:
|
|
|
|
|
|
|
|
||||||||
North America
|
44
|
%
|
|
20
|
%
|
|
45
|
%
|
|
18
|
%
|
||||
International
|
27
|
|
|
12
|
|
|
31
|
|
|
10
|
|
||||
AWS
|
49
|
|
|
37
|
|
|
49
|
|
|
39
|
|
||||
Consolidated
|
39
|
|
|
20
|
|
|
41
|
|
|
18
|
|
||||
Year-over-year Percentage Growth, excluding the effect of foreign exchange rates:
|
|
|
|
|
|
|
|
||||||||
North America
|
44
|
%
|
|
20
|
%
|
|
45
|
%
|
|
19
|
%
|
||||
International
|
21
|
|
|
17
|
|
|
21
|
|
|
17
|
|
||||
AWS
|
49
|
|
|
37
|
|
|
49
|
|
|
39
|
|
||||
Consolidated
|
37
|
|
|
21
|
|
|
38
|
|
|
20
|
|
||||
Net sales mix:
|
|
|
|
|
|
|
|
||||||||
North America
|
61
|
%
|
|
61
|
%
|
|
61
|
%
|
|
61
|
%
|
||||
International
|
28
|
|
|
26
|
|
|
28
|
|
|
26
|
|
||||
AWS
|
11
|
|
|
13
|
|
|
11
|
|
|
13
|
|
||||
Consolidated
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Operating Income (Loss):
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
1,835
|
|
|
$
|
1,564
|
|
|
$
|
2,984
|
|
|
$
|
3,851
|
|
International
|
(494
|
)
|
|
(601
|
)
|
|
(1,116
|
)
|
|
(690
|
)
|
||||
AWS
|
1,642
|
|
|
2,121
|
|
|
3,043
|
|
|
4,343
|
|
||||
Consolidated
|
$
|
2,983
|
|
|
$
|
3,084
|
|
|
$
|
4,911
|
|
|
$
|
7,504
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||
Operating Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
30,632
|
|
|
$
|
36,337
|
|
|
$
|
61,367
|
|
|
$
|
70,257
|
|
Fulfillment
|
7,932
|
|
|
9,271
|
|
|
15,724
|
|
|
17,872
|
|
||||
Marketing
|
2,901
|
|
|
4,291
|
|
|
5,600
|
|
|
7,955
|
|
||||
Technology and content
|
7,247
|
|
|
9,065
|
|
|
14,006
|
|
|
16,991
|
|
||||
General and administrative
|
1,111
|
|
|
1,270
|
|
|
2,177
|
|
|
2,444
|
|
||||
Other operating expense (income), net
|
80
|
|
|
86
|
|
|
143
|
|
|
81
|
|
||||
Total operating expenses
|
$
|
49,903
|
|
|
$
|
60,320
|
|
|
$
|
99,017
|
|
|
$
|
115,600
|
|
Year-over-year Percentage Growth:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
31
|
%
|
|
19
|
%
|
|
34
|
%
|
|
14
|
%
|
||||
Fulfillment
|
54
|
|
|
17
|
|
|
60
|
|
|
14
|
|
||||
Marketing
|
30
|
|
|
48
|
|
|
35
|
|
|
42
|
|
||||
Technology and content
|
31
|
|
|
25
|
|
|
35
|
|
|
21
|
|
||||
General and administrative
|
27
|
|
|
14
|
|
|
30
|
|
|
12
|
|
||||
Other operating expense (income), net
|
22
|
|
|
8
|
|
|
30
|
|
|
(43
|
)
|
||||
Percent of Net Sales:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
57.9
|
%
|
|
57.3
|
%
|
|
59.0
|
%
|
|
57.1
|
%
|
||||
Fulfillment
|
15.0
|
|
|
14.6
|
|
|
15.1
|
|
|
14.5
|
|
||||
Marketing
|
5.5
|
|
|
6.8
|
|
|
5.4
|
|
|
6.5
|
|
||||
Technology and content
|
13.7
|
|
|
14.3
|
|
|
13.5
|
|
|
13.8
|
|
||||
General and administrative
|
2.1
|
|
|
2.0
|
|
|
2.1
|
|
|
2.0
|
|
||||
Other operating expense (income), net
|
0.2
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
Twelve Months Ended
June 30, |
||||||
|
2018
|
|
2019
|
||||
Net cash provided by (used in) operating activities
|
$
|
21,793
|
|
|
$
|
36,029
|
|
Purchases of property and equipment, net of proceeds from property and equipment incentives
|
(11,372
|
)
|
|
(11,011
|
)
|
||
Free cash flow
|
$
|
10,421
|
|
|
$
|
25,018
|
|
|
|
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(23,684
|
)
|
|
$
|
(24,816
|
)
|
Net cash provided by (used in) financing activities
|
$
|
8,535
|
|
|
$
|
(8,665
|
)
|
|
Twelve Months Ended
June 30, |
||||||
|
2018
|
|
2019
|
||||
Net cash provided by (used in) operating activities
|
$
|
21,793
|
|
|
$
|
36,029
|
|
Purchases of property and equipment, net of proceeds from property and equipment incentives
|
(11,372
|
)
|
|
(11,011
|
)
|
||
Free cash flow
|
10,421
|
|
|
25,018
|
|
||
Principal repayments of finance leases (1)
|
(6,037
|
)
|
|
(8,693
|
)
|
||
Principal repayments of financing obligations (1)
|
(244
|
)
|
|
(211
|
)
|
||
Free cash flow less principal repayments of finance leases and financing obligations
|
$
|
4,140
|
|
|
$
|
16,114
|
|
|
|
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(23,684
|
)
|
|
$
|
(24,816
|
)
|
Net cash provided by (used in) financing activities
|
$
|
8,535
|
|
|
$
|
(8,665
|
)
|
|
Twelve Months Ended
June 30, |
||||||
|
2018
|
|
2019
|
||||
Net cash provided by (used in) operating activities
|
$
|
21,793
|
|
|
$
|
36,029
|
|
Purchases of property and equipment, net of proceeds from property and equipment incentives
|
(11,372
|
)
|
|
(11,011
|
)
|
||
Free cash flow
|
10,421
|
|
|
25,018
|
|
||
Equipment acquired under finance leases (1)
|
(9,631
|
)
|
|
(11,656
|
)
|
||
Principal repayments of all other finance leases (2)
|
—
|
|
|
(176
|
)
|
||
Principal repayments of financing obligations
|
(244
|
)
|
|
(211
|
)
|
||
Free cash flow less equipment finance leases and principal repayments of all other finance leases and financing obligations
|
$
|
546
|
|
|
$
|
12,975
|
|
|
|
|
|
||||
Net cash provided by (used in) investing activities
|
$
|
(23,684
|
)
|
|
$
|
(24,816
|
)
|
Net cash provided by (used in) financing activities
|
$
|
8,535
|
|
|
$
|
(8,665
|
)
|
(1)
|
For the twelve months ended June 30, 2019, this amount relates to equipment included in “Property and equipment acquired under finance leases” of $11,944 million. Amounts for 2018 have not been retrospectively adjusted.
|
(2)
|
For the twelve months ended June 30, 2019, this amount relates to property included in “Principal repayments of finance leases” of $8,693 million. Amounts for 2018 have not been retrospectively adjusted.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||||||||||||||||
|
2018
|
|
2019
|
|
2018
|
|
2019
|
||||||||||||||||||||||||||||||||||||||||
|
As
Reported |
|
Exchange
Rate
Effect (1)
|
|
At Prior
Year Rates (2) |
|
As Reported
|
|
Exchange
Rate
Effect (1)
|
|
At Prior
Year Rates (2) |
|
As
Reported |
|
Exchange
Rate Effect (1) |
|
At Prior
Year Rates (2) |
|
As Reported
|
|
Exchange
Rate Effect (1) |
|
At Prior
Year Rates (2) |
||||||||||||||||||||||||
Net sales
|
$
|
52,886
|
|
|
$
|
(760
|
)
|
|
$
|
52,126
|
|
|
$
|
63,404
|
|
|
$
|
814
|
|
|
$
|
64,218
|
|
|
$
|
103,928
|
|
|
$
|
(2,315
|
)
|
|
$
|
101,613
|
|
|
$
|
123,104
|
|
|
$
|
1,940
|
|
|
$
|
125,044
|
|
Operating expenses
|
49,903
|
|
|
(718
|
)
|
|
49,185
|
|
|
60,320
|
|
|
872
|
|
|
61,192
|
|
|
99,017
|
|
|
(2,302
|
)
|
|
96,715
|
|
|
115,600
|
|
|
2,082
|
|
|
117,682
|
|
||||||||||||
Operating income
|
2,983
|
|
|
(42
|
)
|
|
2,941
|
|
|
3,084
|
|
|
(58
|
)
|
|
3,026
|
|
|
4,911
|
|
|
(13
|
)
|
|
4,898
|
|
|
7,504
|
|
|
(142
|
)
|
|
7,362
|
|
(1)
|
Represents the change in reported amounts resulting from changes in foreign exchange rates from those in effect in the comparable prior year period for operating results.
|
(2)
|
Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those in effect in the comparable prior year period for operating results.
|
•
|
Net sales are expected to be between $66.0 billion and $70.0 billion, or to grow between 17% and 24% compared with third quarter 2018. This guidance anticipates an unfavorable impact of approximately 30 basis points from foreign exchange rates.
|
•
|
Operating income is expected to be between $2.1 billion and $3.1 billion, compared with $3.7 billion in third quarter 2018.
|
•
|
This guidance assumes, among other things, that no additional business acquisitions, investments, restructurings, or legal settlements are concluded.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
•
|
our ability to retain and increase sales to existing customers, attract new customers, and satisfy our customers’ demands;
|
•
|
our ability to retain and expand our network of sellers;
|
•
|
our ability to offer products on favorable terms, manage inventory, and fulfill orders;
|
•
|
the introduction of competitive stores, websites, products, services, price decreases, or improvements;
|
•
|
changes in usage or adoption rates of the Internet, e-commerce, electronic devices, and web services, including outside the U.S.;
|
•
|
timing, effectiveness, and costs of expansion and upgrades of our systems and infrastructure;
|
•
|
the success of our geographic, service, and product line expansions;
|
•
|
the extent to which we finance, and the terms of any such financing for, our current operations and future growth;
|
•
|
the outcomes of legal proceedings and claims, which may include significant monetary damages or injunctive relief and could have a material adverse impact on our operating results;
|
•
|
variations in the mix of products and services we sell;
|
•
|
variations in our level of merchandise and vendor returns;
|
•
|
the extent to which we offer free shipping, continue to reduce prices worldwide, and provide additional benefits to our customers;
|
•
|
factors affecting our reputation or brand image;
|
•
|
the extent to which we invest in technology and content, fulfillment, and other expense categories;
|
•
|
increases in the prices of fuel and gasoline, as well as increases in the prices of other energy products and commodities like paper and packing supplies;
|
•
|
the extent to which our equity-method investees record significant operating and non-operating items;
|
•
|
the extent to which operators of the networks between our customers and our stores successfully charge fees to grant our customers unimpaired and unconstrained access to our online services;
|
•
|
our ability to collect amounts owed to us when they become due;
|
•
|
the extent to which use of our services is affected by spyware, viruses, phishing and other spam emails, denial of service attacks, data theft, computer intrusions, outages, and similar events; and
|
•
|
terrorist attacks and armed hostilities.
|
•
|
local economic and political conditions;
|
•
|
government regulation (such as regulation of our product and service offerings and of competition); restrictive governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs); nationalization; and restrictions on foreign ownership;
|
•
|
restrictions on sales or distribution of certain products or services and uncertainty regarding liability for products, services, and content, including uncertainty as a result of less Internet-friendly legal systems, local laws, lack of legal precedent, and varying rules, regulations, and practices regarding the physical and digital distribution of media products and enforcement of intellectual property rights;
|
•
|
business licensing or certification requirements, such as for imports, exports, web services, and electronic devices;
|
•
|
limitations on the repatriation and investment of funds and foreign currency exchange restrictions;
|
•
|
limited fulfillment and technology infrastructure;
|
•
|
shorter payable and longer receivable cycles and the resultant negative impact on cash flow;
|
•
|
laws and regulations regarding consumer and data protection, privacy, network security, encryption, payments, and restrictions on pricing or discounts;
|
•
|
lower levels of use of the Internet;
|
•
|
lower levels of consumer spending and fewer opportunities for growth compared to the U.S.;
|
•
|
lower levels of credit card usage and increased payment risk;
|
•
|
difficulty in staffing, developing, and managing foreign operations as a result of distance, language, and cultural differences;
|
•
|
different employee/employer relationships and the existence of works councils and labor unions;
|
•
|
compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties;
|
•
|
laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes; and
|
•
|
geopolitical events, including war and terrorism.
|
•
|
disruption of our ongoing business, including loss of management focus on existing businesses;
|
•
|
impairment of other relationships;
|
•
|
variability in revenue and income from entering into, amending, or terminating such agreements or relationships; and
|
•
|
difficulty integrating under the commercial agreements.
|
•
|
disruption of our ongoing business, including loss of management focus on existing businesses;
|
•
|
problems retaining key personnel;
|
•
|
additional operating losses and expenses of the businesses we acquired or in which we invested;
|
•
|
the potential impairment of tangible and intangible assets and goodwill, including as a result of acquisitions;
|
•
|
the potential impairment of customer and other relationships of the company we acquired or in which we invested or our own customers as a result of any integration of operations;
|
•
|
the difficulty of completing such transactions and achieving anticipated benefits within expected timeframes, or at all;
|
•
|
the difficulty of incorporating acquired operations, technology, and rights into our offerings, and unanticipated expenses related to such integration;
|
•
|
the difficulty of integrating a new company’s accounting, financial reporting, management, information and information security, human resource, and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented;
|
•
|
for investments in which an investee’s financial performance is incorporated into our financial results, either in full or in part, the dependence on the investee’s accounting, financial reporting, and similar systems, controls, and processes;
|
•
|
the difficulty of implementing at companies we acquire the controls, procedures, and policies appropriate for a larger public company;
|
•
|
the risks associated with businesses we acquire or invest in, which may differ from or be more significant than the risks our other businesses face;
|
•
|
potential unknown liabilities associated with a company we acquire or in which we invest; and
|
•
|
for foreign transactions, additional risks related to the integration of operations across different cultures and languages, and the economic, political, and regulatory risks associated with specific countries.
|
•
|
changes in interest rates;
|
•
|
conditions or trends in the Internet and the industry segments we operate in;
|
•
|
quarterly variations in operating results;
|
•
|
fluctuations in the stock market in general and market prices for Internet-related companies in particular;
|
•
|
changes in financial estimates by us or securities analysts and recommendations by securities analysts;
|
•
|
changes in our capital structure, including issuance of additional debt or equity to the public;
|
•
|
changes in the valuation methodology of, or performance by, other e-commerce or technology companies; and
|
•
|
transactions in our common stock by major investors and certain analyst reports, news, and speculation.
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance Sheets, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
|
|
|
|
104
|
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Inline XBRL.
|
|
AMAZON.COM, INC. (REGISTRANT)
|
|
|
|
|
|
By:
|
/s/ Shelley L. Reynolds
|
|
|
Shelley L. Reynolds
|
|
|
Vice President, Worldwide Controller
|
|
|
(Principal Accounting Officer)
|
|
/s/ Jeffrey P. Bezos
|
|
Jeffrey P. Bezos
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Brian T. Olsavsky
|
|
Brian T. Olsavsky
|
|
Senior Vice President and
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
/s/ Jeffrey P. Bezos
|
|
Jeffrey P. Bezos
|
|
Chairman and Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
/s/ Brian T. Olsavsky
|
|
Brian T. Olsavsky
|
|
Senior Vice President and
Chief Financial Officer
|
|
(Principal Financial Officer)
|