Amazon.com 2015 Annual Report Download - page 42

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32
Free Cash Flow Less Lease Principal Repayments
Free cash flow less lease principal repayments is free cash flow reduced by “Principal repayments of capital lease
obligations,” and “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities.
Free cash flow less lease principal repayments approximates the actual payments of cash for our capital and finance leases. The
following is a reconciliation of free cash flow less lease principal repayments 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)
Principal repayments of capital lease obligations (2,462 ) (1,285)(775)
Principal repayments of finance lease obligations (121 ) (135)(5)
Free cash flow less lease principal repayments $4,748 $ 529 $1,251
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)
Free Cash Flow Less Finance Lease Principal Repayments and Assets Acquired Under Capital Leases
Free cash flow less finance lease principal repayments and assets acquired under capital leases is free cash flow reduced
by “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities, and property
and equipment acquired under capital leases. In this measure, property and equipment acquired under capital leases is reflected
as if these assets had been purchased with cash, which is not the case as these assets have been leased. The following is a
reconciliation of free cash flow less finance lease principal repayments and assets acquired under capital leases 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)
Property and equipment acquired under capital leases (4,717 ) (4,008)(1,867)
Principal repayments of finance lease obligations (121 ) (135)(5)
Free cash flow less finance lease principal repayments and assets acquired under
capital leases $2,493
$ (2,194) $ 159
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)
All of these free cash flows measures have limitations as they omit certain components of the overall cash flow statement
and do not represent the residual cash flow available for discretionary expenditures. For example, these measures of free cash
flows do not incorporate the portion of payments representing principal reductions of debt or cash payments for business
acquisitions. Additionally, our mix of property and equipment acquisitions with cash or other financing options may change
over time. Therefore, we believe it is important to view free cash flows measures only as a complement to our entire
consolidated statements of cash flows.
Operating Expenses, Excluding Stock-Based Compensation
Operating expenses with and without stock-based compensation is provided to show the impact of stock-based
compensation, which is non-cash and excluded from our internal operating plans and measurement of financial performance
(although we consider the dilutive impact to our shareholders when awarding stock-based compensation and value such awards
accordingly). In addition, unlike other centrally-incurred operating costs, stock-based compensation is not allocated to segment