Amazon.com 2011 Annual Report Download - page 77

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We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and
content,” and “General and administrative,” but exclude from our allocations the portions of these expense lines
attributable to stock-based compensation. We do not allocate the line item “Other operating expense (income),
net” to our segment operating results. A majority of our costs for “Technology and content” are incurred in the
United States and most of these costs are allocated to our North America segment. There are no internal revenue
transactions between our reporting segments.
North America
The North America segment consists of amounts earned from retail sales of consumer products (including
from sellers) and subscriptions through North America-focused websites such as www.amazon.com and
www.amazon.ca and include amounts earned from AWS. This segment includes export sales from
www.amazon.com and www.amazon.ca.
International
The International segment consists of amounts earned from retail sales of consumer products (including
from sellers) and subscriptions through internationally focused locations. This segment includes export sales
from these internationally based locations (including export sales from these sites to customers in the U.S. and
Canada), but excludes export sales from our U.S. and Canadian locations.
Information on reportable segments and reconciliation to consolidated net income is as follows:
Year Ended December 31,
2011 2010 2009
(in millions)
North America
Net sales ...................................................... $26,705 $18,707 $12,828
Segment operating expenses (1) .................................... 25,772 17,752 12,119
Segment operating income ........................................ $ 933 $ 955 $ 709
International
Net sales ...................................................... $21,372 $15,497 $11,681
Segment operating expenses (1) .................................... 20,732 14,516 10,818
Segment operating income ........................................ $ 640 $ 981 $ 863
Consolidated
Net sales ...................................................... $48,077 $34,204 $24,509
Segment operating expenses (1) .................................... 46,504 32,268 22,937
Segment operating income ........................................ 1,573 1,936 1,572
Stock-based compensation ........................................ (557) (424) (341)
Other operating income (expense), net .............................. (154) (106) (102)
Income from operations .......................................... 862 1,406 1,129
Total non-operating income (expense) ............................... 72 91 32
Provision for income taxes ........................................ (291) (352) (253)
Equity-method investment activity, net of tax ......................... (12) 7 (6)
Net income .................................................... $ 631 $ 1,152 $ 902
(1) Represents operating expenses, excluding stock-based compensation and “Other operating expense
(income), net,” which are not allocated to segments.
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