Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Commitments We have entered into non-cancellable operating and finance leases and financing obligations for equipment and office, fulfillment, sortation, delivery, data center, physical store, and renewable energy facilities. The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of March 31, 2019 (in millions): Nine Months Ended December 31, Year Ended December 31, 2019 2020 2021 2022 2023 Thereafter Total Debt principal and interest $ 1,992 $ 2,161 $ 1,874 $ 2,090 $ 1,794 $ 30,014 $ 39,925 Operating leases 2,355 3,077 2,794 2,473 2,214 13,818 26,731 Finance lease liabilities, including interest 6,247 7,268 4,218 1,444 1,022 4,805 25,004 Financing obligations, including interest 15 23 23 24 24 313 422 Unconditional purchase obligations (1) 2,272 3,845 3,314 3,057 2,931 5,148 20,567 Other commitments (2) (3) 2,409 2,154 1,450 1,188 1,015 10,451 18,667 Total commitments $ 15,290 $ 18,528 $ 13,673 $ 10,276 $ 9,000 $ 64,549 $ 131,316 ___________________ (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 $3.6 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any. Pledged Assets As of December 31, 2018 and March 31, 2019 , we have pledged or otherwise restricted $575 million and $609 million of our cash, cash equivalents, and marketable securities, and certain property and equipment as collateral for real estate leases, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. Other Contingencies In 2016, we determined that we processed and delivered orders of consumer products for certain individuals and entities located outside Iran covered by the Iran Threat Reduction and Syria Human Rights Act or other United States sanctions and export control laws. The consumer products included books, music, other media, apparel, home and kitchen, health and beauty, jewelry, office, consumer electronics, software, lawn and patio, grocery, and automotive products. Our review is ongoing and we have voluntarily reported these orders to the United States Treasury Department’s Office of Foreign Assets Control and the United States Department of Commerce’s Bureau of Industry and Security. We intend to cooperate fully with OFAC and BIS with respect to their review, which may result in the imposition of penalties. For additional information, see Item 5 of Part II, “Other Information — Disclosure Pursuant to Section 13(r) of the Exchange Act.” We are subject to claims related to various indirect taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit such taxes. If the relevant taxing authorities were successfully to pursue these claims, we could be subject to significant additional tax liabilities. For example, in June 2017, the State of South Carolina issued an assessment for uncollected sales and use taxes for the period from January 2016 to March 2016, including interest and penalties. South Carolina is alleging that we should have collected sales and use taxes on transactions by our third-party sellers. We believe the assessment is without merit. If South Carolina or other states were successfully to seek additional adjustments of a similar nature, we could be subject to significant additional tax liabilities. We intend to defend ourselves vigorously in this matter. Legal Proceedings The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2018 Annual Report on Form 10-K as supplemented by the following: In November 2018, Dynamic Data Technologies, LLC filed a complaint for patent infringement against Amazon.com, Inc., Amazon Web Services, Inc., and Amazon Digital Services, LLC in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that products and services with H.265 functionality, including Amazon Elastic Transcoder, AWS Elemental Media Convert, AWS Elemental MediaLive, certain EC2 instances, Amazon CloudFront, Amazon Fire TV, and Amazon Fire tablets, infringe U.S. Patent Nos. 8,135,073, entitled “Enhancing Video Images Depending On Prior Image Enhancements”; 6,774,918, entitled “Video Overlay Processor With Reduced Memory And Bus Performance Requirements”; and 7,571,450, entitled “System For And Method Of Displaying Information.” The complaint also alleges that products and services with H.265 functionality, including AWS Elemental Media Convert, AWS Elemental MediaLive, certain EC2 instances, Amazon CloudFront, and Amazon Fire TV, infringe U.S. Patent Nos. 8,073,054, entitled “Unit For And Method Of Estimating A Current Motion Vector”; 6,996,177, entitled “Motion Estimation”; 8,311,112, entitled “System And Method For Video Compression Using Predictive Coding”; and 7,894,529, entitled “Method And Device For Determining Motion Vectors.” The complaint also alleges that products and services for encoding video data, including Amazon Elastic Transcoder and Amazon Video, infringe U.S. Patent No. 8,184,689, entitled “Method Video Encoding And Decoding Preserving Cache Localities,” and that products and services with VP9 encoding functionality, including Amazon Elastic Transcoder and Amazon Fire TV, infringe U.S. Patent No. 7,519,230, entitled “Background Motion Vector Detection.” In February 2019, Dynamic Data Technologies filed an amended complaint. The amended complaint adds allegations that products and services with H.265 image encoding functionality, including Amazon Elastic Transcoder, AWS Elemental Media Convert, AWS Elemental MediaLive, and Amazon Fire TV, infringe U.S. Patent No. 6,639,944, entitled “Sub-Pixel Accurate Motion Vector Estimation And Compensated Interpolation.” The amended complaint also adds allegations that products and services with H.265 functionality, including AWS Elemental Media Convert, AWS Elemental MediaLive, certain EC2 instances, Amazon CloudFront, and Amazon Fire TV, infringe U.S. Patent Nos. 6,782,054, entitled “Method And Apparatus For Motion Vector Estimation,” and 7,010,039, entitled “Motion Estimator For Reduced Halos In MC Up-Conversion.” The amended complaint also adds allegations that products and services with H.265 functionality, including Amazon Elastic Transcoder, AWS Elemental Media Convert, AWS Elemental MediaLive, certain EC2 instances, Amazon CloudFront, Amazon Fire TV, and Amazon Fire tablets, infringe U.S. Patent No. 8,189,105, entitled “Systems And Methods Of Motion And Edge Adaptive Processing Including Motion Compensation Features,” and that products and services with VP9 image processing functionality, including Amazon Elastic Transcoder and Amazon Fire TV, infringe U.S. Patent No. 7,058,227, entitled “Problem Area Location In An Image Signal.” The amended complaint seeks an unspecified amount of damages, enhanced damages, and attorneys’ fees. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. In January 2019, Saint Lawrence Communications, LLC filed a complaint against Amazon.com, Inc. and Amazon.com LLC in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that voice encoding functionality in Amazon devices infringes U.S. Patent Nos. 6,795,805, entitled “Periodicity Enhancement In Decoding Wideband Signals”; 6,807,524, entitled “Perceptual Weighting Device And Method For Efficient Coding Of Wideband Signals”; 7,151,802, entitled “High Frequency Content Recovering Method And Device For Over-Sampled Synthesized Wideband Signal”; 7,191,123, entitled “Gain-Smoothing In Wideband Speech And Audio Signal Decoder”; and 7,260,521, entitled “Method And Device For Adaptive Bandwidth Pitch Search In Coding Wideband Signals.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, and interest. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. In March 2019, Data Scape, LLC filed a petition with the United States International Trade Commission requesting that the International Trade Commission commence an investigation into the sale of certain Amazon-branded devices, including Kindle e-readers, Fire tablets, FireTV devices, and the Echo Spot and Echo Show (“accused devices”). Data Scape’s petition alleges that, when used on the accused devices, Amazon Photo, Amazon Drive, Amazon Music, and book delivery infringe U.S. Patent Nos. 7,720,929; 7,617,537; and 8,386,581, each entitled “Communication System And Its Method And Communication Apparatus And Its Method.” Data Scape is seeking a general exclusion order preventing the importation of the accused devices into the United States. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. In April 2019, Vocalife LLC filed a complaint against Amazon.com, Inc. and Amazon.com LLC in the United States District Court for the Eastern District of Texas. The complaint alleges, among other things, that Amazon Echo devices infringe U.S. Patent No. RE47,049, entitled “Microphone Array System.” The complaint seeks injunctive relief, an unspecified amount of damages, attorneys’ fees, costs, and interest. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter. The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. In addition, for the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. See also “Note 7 — Income Taxes.” |