Amazon.com 2015 Annual Report Download - page 33

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We had no borrowings outstanding under our $2.0 billion Credit Agreement as of December 31, 2015. See Item 8 of Part
II, “Financial Statements and Supplementary Data—Note 5—Long-Term Debt” for additional information.
In 2015, 2014, and 2013, we recorded net tax provisions of $950 million, $167 million, and $161 million. Except as
required under U.S. tax laws, 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, and our effective tax rate would be adversely affected. As of December 31, 2015, cash, cash
equivalents, and marketable securities held by foreign subsidiaries were $5.8 billion, which included undistributed earnings of
foreign subsidiaries indefinitely invested outside of the U.S. of $1.5 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. In
December 2015, U.S. legislation was enacted that extended accelerated depreciation deductions on qualifying property through
2019. Cash taxes paid (net of refunds) were $273 million, $177 million, and $169 million for 2015, 2014, and 2013. As of
December 31, 2015, our federal net operating loss carryforward was approximately $1.1 billion and we had approximately
$622 million of federal tax credits potentially available to offset future tax liabilities. Our federal tax credits are primarily
related to the U.S. federal research and development credit, which was made permanent in 2015. As we utilize our federal net
operating losses and tax credits, we expect cash paid for taxes to significantly increase. We endeavor to manage 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 and trade letters of
credit, guarantees, debt, and real estate leases. To the extent we process payments for third-party sellers or offer certain types of
stored value to our customers, some jurisdictions may restrict our use of those funds. These restrictions would result in the
reclassification of a portion of our cash and cash equivalents from “Cash and cash equivalents” to restricted cash, which is
classified within “Accounts receivable, net and other” on our consolidated balance sheets. As of December 31, 2015 and 2014,
restricted cash, cash equivalents, and marketable securities were $285 million and $450 million. See Item 8 of Part II,
“Financial Statements and Supplementary Data—Note 7—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 $6.2 billion as of December 31, 2015. 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 8 for 2015 and 9 for 2014 and 2013. 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 third-party 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 third-party fulfillment providers.
We believe that cash flows generated from operations and our cash, cash equivalents, and marketable securities balances,
as well as borrowing available under our credit agreements, 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, obtain capital, finance, and operating lease arrangements, 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, capital
infrastructure, and technologies, which might affect our liquidity requirements or cause us to secure additional financing, or
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.