Amazon.com 2013 Annual Report Download - page 33

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billion, $588 million, and $444 million in 2013, 2012, and 2011. Property and equipment acquired under capital leases were
$1.9 billion, $802 million, and $753 million in 2013, 2012, and 2011, with the increases primarily reflecting additional
investments in support of continued business growth due to investments in technology infrastructure, including AWS. We
repurchased 5.3 million shares of common stock for $960 million in 2012 and 1.5 million shares of common stock for $277
million in 2011 under the $2.0 billion repurchase program authorized by our Board of Directors in January 2010. Cash inflows
from financing activities primarily result from proceeds from long-term debt and tax benefits relating to excess stock-based
compensation deductions. Proceeds from long-term debt and other were $394 million, $3.4 billion, and $177 million in 2013,
2012, and 2011. During 2012, cash inflows from financing activities consisted primarily of net proceeds from the issuance of
$3.0 billion of senior nonconvertible unsecured debt in three tranches: $750 million of 0.65% notes due in 2015; $1.0 billion of
1.20% notes due in 2017; and $1.3 billion of 2.50% notes due in 2022. See Item 8 of Part II, “Financial Statements and
Supplementary Data—Note 6—Long-Term Debt” for additional discussion of the notes. Tax benefits relating to excess stock-
based compensation deductions are presented as financing cash flows. Cash inflows from tax benefits related to stock-based
compensation deductions were $78 million, $429 million, and $62 million in 2013, 2012, and 2011.
In 2013, 2012, and 2011 we recorded net tax provisions of $161 million, $428 million, and $291 million. Except as
required under U.S. tax law, we do not provide for U.S. taxes on our undistributed earnings of foreign subsidiaries that have not
been previously taxed since we intend to invest such undistributed earnings indefinitely outside of the U.S. If our intent
changes or if these funds are needed for our U.S. operations, we would be required to accrue or pay U.S. taxes on some or all of
these undistributed earnings. As of December 31, 2013, cash held by foreign subsidiaries was $4.6 billion, which include
undistributed earnings of foreign subsidiaries indefinitely invested outside of the U.S. of $2.5 billion. We have tax benefits
relating to excess stock-based compensation deductions and accelerated depreciation deductions that are being utilized to
reduce our U.S. taxable income. Accelerated depreciation deductions on qualifying property were a result of U.S. legislation
that expired in December 2013. As such, cash taxes paid (net of refunds) were $169 million, $112 million, and $33 million for
2013, 2012, and 2011. As of December 31, 2013, our federal net operating loss carryforward was approximately $275 million
and we had approximately $295 million of federal tax credits potentially available to offset future tax liabilities. The U.S.
federal research and development credit expired in December 2013. As we utilize our federal net operating losses and tax
credits, we expect cash paid for taxes to significantly increase. We endeavor to optimize our global taxes on a cash basis, rather
than on a financial reporting basis.
Our liquidity is also affected by restricted cash balances that are pledged as collateral for standby letters of credit,
guarantees, debt, and real estate lease agreements. As of December 31, 2013 and 2012, restricted cash, cash equivalents, and
marketable securities were $301 million and $99 million. To the extent we process payments for third-party sellers or offer
certain types of stored value to our customers, some states may restrict our use of those funds. This restriction would result in
the reclassification of a portion of our cash and cash equivalents from “Cash and cash equivalents” to “Accounts receivable, net
and other” on our consolidated balance sheets. See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 8—
Commitments and Contingencies” for additional discussion of our principal contractual commitments, as well as our pledged
assets. Purchase obligations and open purchase orders, consisting of inventory and significant non-inventory commitments,
were $4.4 billion as of December 31, 2013. Purchase obligations and open purchase orders are generally cancellable in full or
in part through the contractual provisions.
On average, our high inventory velocity means we generally collect from consumers before our payments to suppliers
come due. Inventory turnover was 9, 9, and 10 for 2013, 2012, and 2011. We expect variability in inventory turnover over time
since it is affected by several factors, including our product mix, the mix of sales by us and by other sellers, our continuing
focus on in-stock inventory availability and selection of product offerings, our investment in new geographies and product
lines, and the extent to which we choose to utilize outsource fulfillment providers.
We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances
will be sufficient to meet our anticipated operating cash needs for at least the next 12 months. However, any projections of
future cash needs and cash flows are subject to substantial uncertainty. See Item 1A of Part I, “Risk Factors.” We continually
evaluate opportunities to sell additional equity or debt securities, obtain credit facilities, repurchase common stock, pay
dividends, or repurchase, refinance, or otherwise restructure our debt for strategic reasons or to further strengthen our financial
position. The sale of additional equity or convertible debt securities would likely be dilutive to our shareholders. In addition, we
will, from time to time, consider the acquisition of, or investment in, complementary businesses, products, services, and
technologies, which might affect our liquidity requirements or cause us to issue additional equity or debt securities. There can
be no assurance that additional lines-of-credit or financing instruments will be available in amounts or on terms acceptable to
us, if at all.