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.
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. |
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. |
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 |
|
