Amazon.com 2015 Annual Report Download - page 41

Download and view the complete annual report

Please find page 41 of the 2015 Amazon.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

31
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.
See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 10—Income Taxes” for additional
information.
Equity-Method Investment Activity, Net of Tax
Equity-method investment activity, net of tax, was $(22) million, $37 million, and $(71) million in 2015, 2014, and 2013,
and is primarily related to our investment in LivingSocial. The primary component of this activity during 2014 was our share of
a gain recorded by LivingSocial related to the sale of its Korean operations. This gain was partially offset by operating losses
incurred by LivingSocial during the period.
Effect of Foreign Exchange Rates
The effect on our income from operations from changes in foreign exchange rates versus the U.S. Dollar is as follows (in
millions):
Year Ended December 31, 2015 Year Ended December 31, 2014 Year Ended December 31, 2013
At Prior
Year
Rates (1)
Exchange
Rate
Effect (2)
As
Reported
At Prior
Year
Rates (1)
Exchange
Rate
Effect (2)
As
Reported
At Prior
Year
Rates (1)
Exchange
Rate
Effect (2)
As
Reported
Net sales $ 112,173 $ (5,167) $ 107,006 $89,624 $(636) $ 88,988
$ 75,736 $ (1,284) $ 74,452
Operating expenses 109,956 (5,183)104,773 89,466 (656)88,810
74,962 (1,255)73,707
Income from operations 2,217 16 2,233 158 20 178
774 (29)745
___________________
(1) Represents the outcome that would have resulted had foreign exchange rates in the reported period been the same as those
in effect in the comparable prior year period for operating results.
(2) Represents the increase or decrease in reported amounts resulting from changes in foreign exchange rates from those in
effect in the comparable prior year period for operating results.
Non-GAAP Financial Measures
Regulation G, Conditions for Use of Non-GAAP Financial Measures, and other SEC regulations define and prescribe the
conditions for use of certain non-GAAP financial information. Our measures of free cash flows, operating expenses with and
without stock-based compensation, and the effect of foreign exchange rates on our consolidated statements of operations, meet
the definition of non-GAAP financial measures.
We 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.
Free Cash Flow
Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, including internal-use
software and website development, net” which is included in cash flow from investing activities. The following is a
reconciliation of free cash flow to the most comparable GAAP cash flow measure, “Net cash provided by (used in) operating
activities,” for 2015, 2014, and 2013 (in millions):
Year Ended December 31,
2015 2014 2013
Net cash provided by (used in) operating activities $11,920 $ 6,842 $5,475
Purchases of property and equipment, including internal-use software and website
development, net (4,589 ) (4,893)(3,444)
Free cash flow $7,331 $ 1,949 $2,031
Net cash provided by (used in) investing activities $(6,450) $ (5,065) $ (4,276)
Net cash provided by (used in) financing activities $ (3,763) $ 4,432 $ (539)