AMAZON COM INC (AMZN) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016
AMAZON.COM ANNOUNCES THIRD QUARTER SALES UP 29% TO $32.7 BILLION
SEATTLE—(BUSINESS WIRE)—October 27, 2016—Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its third quarter ended September 30, 2016.
Operating cash flow increased 49% to $14.6 billion for the trailing twelve months, compared with $9.8 billion for the trailing twelve months ended September 30, 2015. Free cash flow increased to $8.6 billion for the trailing twelve months, compared with $5.4 billion for the trailing twelve months ended September 30, 2015. Free cash flow less lease principal repayments increased to $4.9 billion for the trailing twelve months, compared with $3.1 billion for the trailing twelve months ended September 30, 2015. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to $3.4 billion for the trailing twelve months, compared with $637 million for the trailing twelve months ended September 30, 2015.
Common shares outstanding plus shares underlying stock-based awards totaled 496 million on September 30, 2016, compared with 489 million one year ago.
Net sales increased 29% to $32.7 billion in the third quarter, compared with $25.4 billion in third quarter 2015. The favorable impact from year-over-year changes in foreign exchange rates throughout the quarter on net sales was $52 million.
Operating income was $575 million in the third quarter, compared with $406 million in third quarter 2015.
Net income was $252 million in the third quarter, or $0.52 per diluted share, compared with $79 million, or $0.17 per diluted share, in third quarter 2015.
“Alexa may be Amazon’s most loved invention yet — literally — with over 250,000 marriage proposals from customers and counting,” said Jeff Bezos, founder and CEO of Amazon. “And she’s just getting better. Because Alexa’s brain is in the cloud, we can easily and continuously add to her capabilities and make her more useful — wait until you see some of the surprises the team is working on now.”
Amazon Studios announced a slate of new Original Movies and Series premiering in the coming months, including the theatrical debut of Manchester by the Sea, a Sundance and Toronto Film Festival favorite, as well as exclusive Prime Video premieres of Amazon Original Series including The Man in the High Castle, the second season of the most watched original series on Prime Video; The Grand Tour, the highly-anticipated series with Clarkson, Hammond, and May; and Mozart in the Jungle, the third season of the multi-Golden Globe winning series.
Amazon Studios released Gleason, The Dressmaker, The Handmaiden, and Author: The JT LeRoy Story in theaters nationwide. Each film will be available exclusively to Prime members through Prime Video following its theatrical release.
Amazon Video won six Emmys, including the second win for both Jeffrey Tambor and Jill Soloway for Outstanding Lead Actor in a Comedy Series and Outstanding Directing for a Comedy Series, respectively, for Transparent.
Amazon debuted five Amazon Original Series, including the third season of award-winning series Transparent, and the debut seasons of One Mississippi, Fleabag, Woody Allen’s first TV series, Crisis in Six Scenes, and David E. Kelley’s Goliath, starring Billy Bob Thornton.
Since launching in May, Amazon customers have streamed billions of minutes of content from providers that self-published through Amazon Video Direct.
Amazon launched Amazon Music Unlimited, an on-demand music streaming service with tens of millions of songs and thousands of curated playlists and personalized stations. Customers listening to Amazon Music Unlimited on Echo, Echo Dot, or Amazon Tap can access their favorite music with new natural language voice controls powered by Alexa. The on-demand music service is $7.99 per month for Prime members, and only $3.99 per month for customers who subscribe to the exclusive “for Echo” subscription plan.
The following information was filed by AMAZON COM INC on Thursday, October 27, 2016 as an 8K 2.02 statement, which is a press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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- amzn_10k_2017-02-10_5_13Financial - ExpenseOur variable costs include product and content costs, payment processing and related transaction costs, picking, packaging, and preparing orders for shipment, transportation, customer service support, costs necessary to run AWS, and a portion of our marketing costs.
- amzn_10k_2017-02-10_55_150Financial - ExpenseWe expect our cost of shipping to continue to increase to the extent our customers accept and use our shipping offers at an increasing rate, our product mix shifts to the electronics and other general merchandise category, we reduce shipping rates, we use more expensive shipping methods, and we offer additional services.
- amzn_10k_2017-02-10_74_259Financial - ExpenseThe increase in fulfillment costs in absolute dollars in 2014, 2015, and 2016, compared to the comparable prior year periods, is primarily due to variable costs corresponding with increased physical and digital product and service sales volume, inventory levels, and sales mix costs from expanding fulfillment capacity and payment processing and related transaction costs.
- amzn_10k_2017-02-10_91_193Revenue - GeographyLosses for which we may not realize a related tax benefit, primarily due to losses of foreign subsidiaries, reduce our pre-tax income without a corresponding reduction in our tax expense, and therefore increase our effective tax rate.
- amzn_10k_2017-02-10_69_153Financial - ExpenseCost of sales primarily consists of the purchase price of consumer products, digital media content costs where we record revenue gross, including Prime Video and Prime Music, packaging supplies, sortation and delivery centers and related equipment costs, and inbound and outbound shipping costs, including where we are the transportation service provider.
- amzn_10k_2017-02-10_78_261Financial - ExpenseWhile costs associated with Amazon Prime memberships and other shipping offers are not included in marketing expense, we view these offers as effective worldwide marketing tools, and intend to continue offering them indefinitely.
- amzn_10k_2017-02-10_72_157Financial - ExpenseFulfillment costs as a percentage of net sales may vary due to several factors, such as payment processing and related transaction costs, our level of productivity and accuracy, changes in volume, size, and weight of units received and fulfilled, timing of fulfillment capacity expansion, the extent we utilize fulfillment services provided by third parties, mix of products and services sold, and our ability to affect customer service contacts per unit by implementing improvements in our operations and enhancements to our
- amzn_10k_2017-02-10_11_30Revenue - ProductLikewise, if the U.S. Dollar strengthens year-over-year relative to currencies in our international locations, our consolidated net sales and operating expenses will be lower than if currencies had remained constant.
- amzn_10k_2017-02-10_75_160Revenue - ProductWe seek to expand our fulfillment capacity to accommodate a greater selection and in-stock inventory levels and to meet anticipated shipment volumes from sales of our own products as well as sales by third parties for which we provide the fulfillment services.
- amzn_10k_2017-02-10_39_134Revenue - ProductIncreased unit sales were driven largely by our continued efforts to reduce prices for our customers, including from our shipping offers, sales in faster growing categories such as electronics and other general merchandise, increased in-stock inventory availability, and increased selection of product offerings.
- amzn_10k_2017-02-10_28_91Other - OtherWe had no borrowings outstanding under our $3.0 billion unsecured revolving credit facility the Credit Agreement and $495 million of borrowings outstanding under our $500 million secured revolving credit facility the Credit Facility as of December 31, 2016.
- amzn_10k_2017-02-10_25_73Financial - ExpenseCash provided by used in investing activities corresponds with cash capital expenditures, including leasehold improvements, internal-use software and website development costs, cash outlays for acquisitions, investments in other companies and intellectual property rights, and purchases, sales, and maturities of marketable securities.
- amzn_10k_2017-02-10_25_75Other - OtherCash capital expenditures were $4.9 billion, $4.6 billion, and $6.7 billion in 2014, 2015, and 2016, which primarily reflect additional capacity to support our fulfillment operations and additional investments in support of continued business growth due to investments in technology infrastructure the majority of which is to support AWS, during all three periods.
- amzn_10k_2017-02-10_84_263Financial - ExpenseThe increase in general and administrative costs in absolute dollars in 2014, 2015, and 2016, compared to the comparable prior year period, is primarily due to increases in payroll and related expenses.
- amzn_10k_2017-02-10_41_235Revenue - Productour shipping offers, sales in faster growing categories such as electronics and other general merchandise, increased in-stock inventory availability, and increased selection of product offerings.
- amzn_10k_2017-02-10_19_61Other - OtherIf this matter is adversely resolved, Luxembourg may be required to assess, and we may be required to pay, additional amounts with respect to current and prior periods and our taxes in the future could increase.
- amzn_10k_2017-02-10_85_264Financial - ExpenseOther operating expense, net was $133 million, $171 million, and $167 million during 2014, 2015, and 2016, and was primarily related to the amortization of intangible assets.
- amzn_10k_2017-02-10_9_20Other - OtherWe seek to invest efficiently in several areas of technology and content, including AWS, and expansion of new and existing product categories and service offerings, as well as in technology infrastructure to enhance the customer experience and improve our process efficiencies.
- amzn_10k_2017-02-10_77_260Financial - ExpenseThe increase in marketing costs in absolute dollars in 2014, 2015, and 2016, compared to the comparable prior year periods, is primarily due to increased spending on online marketing channels and television advertising, as well as payroll and related expenses.
- amzn_10k_2017-02-10_40_138Revenue - ProductIncreased unit sales were driven largely by our continued efforts to reduce prices for our customers, including from
- amzn_10k_2017-02-10_90_190Financial - ExpenseFor example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.
- amzn_10k_2017-02-10_38_131Revenue - ProductFor a discussion of the effect on sales growth of foreign exchange rates, see Effect of Foreign Exchange Rates below.
- amzn_10k_2017-02-10_5_14Financial - ExpenseOur fixed costs include the costs necessary to build and run our technology infrastructure to build, enhance, and add features to our websites and web services, our electronic devices, and digital offerings and to build and optimize our fulfillment centers.
- amzn_10k_2017-02-10_73_159Financial - ExpenseAdditionally, because payment processing and fulfillment costs associated with seller transactions are based on the gross purchase price of underlying transactions, and payment processing and related transaction and fulfillment costs are higher as a percentage of sales versus our retail sales, sales by our sellers have higher fulfillment costs as a percent of net sales.
- amzn_10k_2017-02-10_39_133Revenue - ProductThe sales growth in each year primarily reflects increased unit sales, including sales by marketplace sellers.
- amzn_10k_2017-02-10_40_136Revenue - ProductThe sales growth in each year primarily reflects increased unit sales, including sales by marketplace sellers.
- amzn_10k_2017-02-10_19_57Legal - OtherDevelopments in an audit, litigation, or the relevant laws, regulations, administrative practices, principles, and interpretations could have a material effect on our operating results or cash flows in the period or periods for which that development occurs, as well as for prior and subsequent periods.
- amzn_10k_2017-02-10_82_262Financial - ExpenseThe increase in payroll and related costs is primarily due to the expansion of existing product categories and service offerings, including AWS, and initiatives to introduce new product and service offerings.
- amzn_10k_2017-02-10_5_12Financial - ExpenseWe seek to reduce our variable costs per unit and work to leverage our fixed costs.
- amzn_10k_2017-02-10_42_140Revenue - ProductThe sales growth primarily reflects increased customer usage, partially offset by pricing changes.
- amzn_10k_2017-02-10_19_59Other - OtherIn addition to the risk of additional tax for 2005 and 2006 transactions, if this litigation is adversely determined or if the IRS were to seek transfer pricing adjustments of a similar nature for transactions in subsequent years, we could be subject to significant additional tax liabilities.
- amzn_10k_2017-02-10_6_225Financial - Cash FlowSee Results of Operations Non-GAAP Financial Measures below for additional information on our non-GAAP free cash flows financial measures.
- amzn_10k_2017-02-10_86_180Financial - IncomeOur interest income corresponds with the average balance of invested funds based on the prevailing rates, which vary depending on the geographies and currencies in which they are invested.
- amzn_10k_2017-02-10_18_52Financial - EarningsOur effective tax rates could be affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies and changes to our existing businesses, acquisitions including integrations and investments, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations, including fundamental changes to the tax laws applicable to corporate multinationals.
- amzn_10k_2017-02-10_24_66Financial - Cash FlowOur operating cash flows result primarily from cash received from our consumer, seller, developer, enterprise, and content creator customers, advertising agreements, and our co-branded credit card agreements, offset by cash payments we make for products and services, employee compensation less amounts capitalized related to internal-use software that are reflected as cash used in investing activities, payment processing and related transaction costs, operating leases, and interest payments on our long-term obligations.
- amzn_10k_2017-02-10_9_21Financial - ExpenseWe believe that advances in technology, specifically the speed and reduced cost of processing power and the advances of wireless connectivity, will continue to improve the consumer experience on the Internet and increase its ubiquity in peoples lives.
- amzn_10k_2017-02-10_96_204Financial - Shares / EquityThe primary component of this activity during 2014 was our share of a gain recorded by LivingSocial related to the sale of its Korean operations.
- amzn_10k_2017-02-10_5_15Financial - ExpenseVariable costs generally change directly with sales volume, while fixed costs generally are dependent on the timing of capacity needs, geographic expansion, category expansion, and other factors.
- amzn_10k_2017-02-10_26_84Financial - DebtCash inflows from financing activities primarily result from proceeds from long-term debt and other and tax benefits relating to excess stock-based compensation deductions.
- amzn_10k_2017-02-10_69_154Financial - ExpenseShipping costs to receive products from our suppliers are included in our inventory and recognized as cost of sales upon sale of products to our customers.
- amzn_10k_2017-02-10_98_267Financial - Cash FlowWe provide multiple measures of free cash flows because we believe these measures provide additional perspective on the impact of acquiring property and equipment with cash and through capital and finance leases.
- amzn_10k_2017-02-10_38_129Revenue - ProductSales increased 20%, 20%, and 27% in 2014, 2015, and 2016, compared to the comparable prior year periods.
- amzn_10k_2017-02-10_39_132Revenue - GeographyNorth America sales increased 23%, 25%, and 25% in 2014, 2015, and 2016, compared to the comparable prior year periods.
- amzn_10k_2017-02-10_40_135Revenue - ProductInternational sales increased 12%, 6%, and 24% in 2014, 2015, and 2016, compared to the comparable prior year periods.
- amzn_10k_2017-02-10_42_139Revenue - ProductAWS sales increased 49%, 70%, and 55% in 2014, 2015, and 2016, compared to the comparable prior year periods.
- amzn_10k_2017-02-10_90_188Financial - IncomeOur effective tax rate is subject to significant variation due to several factors, including variability in our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how we do business, acquisitions including integrations and investments, audit-related developments, foreign currency gains losses, tax law developments including changes in statutes, regulations, case law, and administrative practices, and relative changes of expenses or losses for which tax benefits are not recognized.
- amzn_10k_2017-02-10_4_224Financial - Cash FlowOur financial focus is on long-term, sustainable growth in free cash flows
- amzn_10k_2017-02-10_97_208Financial - Cash FlowOur measures of free cash flows and the effect of foreign exchange rates on our consolidated statements of operations, meet the definition of non-GAAP financial measures.
- amzn_10k_2017-02-10_2_7Other - OtherThese risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from managements expectations, are described in greater detail in Item 1A of Part I, Risk Factors.
- amzn_10k_2017-02-10_29_96Revenue - GeographyAs of December 31, 2016, cash, cash equivalents, and marketable securities held by foreign subsidiaries was $8.6 billion, which included undistributed earnings of foreign subsidiaries indefinitely invested outside of the U.S. of $2.8 billion.
- amzn_10k_2017-02-10_31_111Other - OtherOn average, our high inventory velocity means we generally collect from consumers before our payments to suppliers come due.
- amzn_10k_2017-02-10_92_198Financial - IncomeWe generated income and losses in lower tax jurisdictions primarily related to our European operations.
- amzn_10k_2017-02-10_37_234Revenue - GeographyYear-over-year Percentage Growth, excluding the effect of foreign exchange rates:
- amzn_10k_2017-02-10_55_151Financial - ExpenseWe seek to mitigate costs of shipping over time in part through achieving higher sales volumes, optimizing our fulfillment network, negotiating better terms with our suppliers, and achieving better operating efficiencies.
- amzn_10k_2017-02-10_11_29Revenue - ProductFor example, if the U.S. Dollar weakens year-over-year relative to currencies in our international locations, our consolidated net sales and operating expenses will be higher than if currencies had remained constant.
- amzn_10k_2017-02-10_11_31Financial - Shares / EquityWe believe that our increasing diversification beyond the U.S. economy through our growing international businesses benefits our shareholders over the long-term.
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- Form Type: Annual
- Number of times amended: 0
- Accession Number: 0001018724-17-000011
- Submitted to the SEC: Friday, February 10, 2017
- Accepted by the SEC: Thursday, February 9, 2017
- Period Ending: December 2016
AMAZON COM INC
$845.61 -1.77 (-0.21%)
$843.53 to $851.80
$575.56 to $862.80
Earnings per Share:
PEG / Short / PE Ratios:
3.39 / 1.58 / 172.57
$843.53 to $851.80
$575.56 to $862.80
Earnings per Share:
PEG / Short / PE Ratios:
3.39 / 1.58 / 172.57