AMAZON COM INC, 10-Q filed on 7/30/2021
Quarterly Report
v3.21.2
Cover - shares
6 Months Ended
Jun. 30, 2021
Jul. 21, 2021
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Jun. 30, 2021  
Document Transition Report false  
Entity File Number 000-22513  
Entity Registrant Name AMAZON.COM, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 91-1646860  
Entity Address, Address Line One 410 Terry Avenue North  
Entity Address, City or Town Seattle,  
Entity Address, State or Province WA  
Entity Address, Postal Zip Code 98109-5210  
City Area Code 206  
Local Phone Number 266-1000  
Title of 12(b) Security Common Stock, par value $.01 per share  
Trading Symbol AMZN  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   506,440,520
Amendment Flag false  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Current Fiscal Year End Date --12-31  
Entity Central Index Key 0001018724  
v3.21.2
Consolidated Statements of Cash Flows - USD ($)
$ in Millions
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement of Cash Flows [Abstract]            
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD $ 34,155 $ 27,505 $ 42,377 $ 36,410 $ 37,842 $ 22,965
OPERATING ACTIVITIES:            
Net income 7,778 5,243 15,885 7,778 29,438 13,180
Adjustments to reconcile net income to net cash from operating activities:            
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other 8,038 5,748 15,546 11,110 29,687 22,843
Stock-based compensation 3,591 2,601 5,897 4,358 10,747 7,977
Other operating expense (income), net 18 282 48 348 (372) 445
Other expense (income), net (1,258) (769) (2,714) (204) (5,092) (310)
Deferred income taxes 701 465 2,404 787 1,063 1,063
Changes in operating assets and liabilities:            
Inventories (209) (672) (513) 720 (4,082) (1,176)
Accounts receivable, net and other (4,462) (2,854) (6,717) (1,592) (13,294) (6,680)
Accounts payable 47 8,616 (8,219) 573 8,689 11,482
Accrued expenses and other (1,685) 1,699 (5,745) (1,063) 1,071 1,110
Unearned revenue 156 247 1,056 854 1,467 1,286
Net cash provided by (used in) operating activities 12,715 20,606 16,928 23,669 59,322 51,220
INVESTING ACTIVITIES:            
Purchases of property and equipment (14,288) (7,459) (26,370) (14,254) (52,256) (24,263)
Proceeds from property and equipment sales and incentives 1,300 844 2,195 2,212 5,080 4,895
Acquisitions, net of cash acquired, and other (320) (118) (950) (210) (3,066) (1,385)
Sales and maturities of marketable securities 13,213 8,138 31,039 19,764 61,512 34,641
Purchases of marketable securities (21,985) (19,209) (36,660) (34,210) (74,929) (49,196)
Net cash provided by (used in) investing activities (22,080) (17,804) (30,746) (26,698) (63,659) (35,308)
FINANCING ACTIVITIES:            
Proceeds from short-term debt, and other 1,176 2,433 3,102 3,050 6,848 4,145
Repayments of short-term debt, and other (1,176) (1,906) (3,177) (2,537) (6,817) (3,693)
Proceeds from long-term debt 18,516 9,918 18,627 9,994 19,158 10,699
Repayments of long-term debt (41) (205) (80) (241) (1,392) (1,305)
Principal repayments of finance leases (2,804) (2,817) (6,210) (5,417) (11,435) (10,504)
Principal repayments of financing obligations (28) (15) (95) (32) (116) (56)
Net cash provided by (used in) financing activities 15,643 7,408 12,167 4,817 6,246 (714)
Foreign currency effect on cash, cash equivalents, and restricted cash 234 127 (59) (356) 916 (321)
Net increase (decrease) in cash, cash equivalents, and restricted cash 6,512 10,337 (1,710) 1,432 2,825 14,877
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 40,667 $ 37,842 $ 40,667 $ 37,842 $ 40,667 $ 37,842
v3.21.2
Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Total net sales $ 113,080 $ 88,912 $ 221,598 $ 164,364
Operating expenses:        
Cost of sales 64,176 52,660 126,579 96,917
Fulfillment 17,638 13,806 34,168 25,337
Technology and content 13,871 10,388 26,359 19,713
Marketing 7,524 4,345 13,731 9,173
General and administrative 2,158 1,580 4,145 3,032
Other operating expense (income), net 11 290 49 360
Total operating expenses 105,378 83,069 205,031 154,532
Operating income 7,702 5,843 16,567 9,832
Interest income 106 135 211 337
Interest expense (435) (403) (834) (805)
Other income (expense), net 1,261 646 2,958 240
Total non-operating income (expense) 932 378 2,335 (228)
Income before income taxes 8,634 6,221 18,902 9,604
Provision for income taxes (868) (984) (3,024) (1,729)
Equity-method investment activity, net of tax 12 6 7 (97)
Net income $ 7,778 $ 5,243 $ 15,885 $ 7,778
Basic earnings per share (in usd per share) $ 15.40 $ 10.50 $ 31.49 $ 15.59
Diluted earnings per share (in usd per share) $ 15.12 $ 10.30 $ 30.92 $ 15.32
Weighted-average shares used in computation of earnings per share:        
Basic (in shares) 505 500 505 499
Diluted (in shares) 514 509 514 508
Product        
Total net sales $ 58,004 $ 50,244 $ 115,495 $ 92,085
Service        
Total net sales $ 55,076 $ 38,668 $ 106,103 $ 72,279
v3.21.2
Consolidated Statements of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement of Comprehensive Income [Abstract]        
Net income $ 7,778 $ 5,243 $ 15,885 $ 7,778
Net change in foreign currency translation adjustments:        
Foreign currency translation adjustments, net of tax of $(8), $(17), $13 and $(4) 159 207 (215) (668)
Net change in unrealized gains (losses) on available-for-sale debt securities:        
Unrealized gains (losses), net of tax of $(73), $(2), $(61) and $28 (6) 407 (104) 205
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $4, $0 and $8 (12) (6) (26) (6)
Net unrealized gains (losses) on available-for-sale debt securities (18) 401 (130) 199
Total other comprehensive income (loss) 141 608 (345) (469)
Comprehensive income $ 7,919 $ 5,851 $ 15,540 $ 7,309
v3.21.2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($)
$ in Millions
3 Months Ended 6 Months Ended
Jun. 30, 2021
Jun. 30, 2020
Jun. 30, 2021
Jun. 30, 2020
Statement of Comprehensive Income [Abstract]        
Foreign currency translation adjustments, tax $ (17) $ (8) $ (4) $ 13
Unrealized gains (losses), tax (2) (73) 28 (61)
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” tax $ 4 $ 0 $ 8 $ 0
v3.21.2
Consolidated Balance Sheets - USD ($)
$ in Millions
Jun. 30, 2021
Dec. 31, 2020
Current assets:    
Cash and cash equivalents $ 40,380 $ 42,122
Marketable securities 49,514 42,274
Inventories 24,119 23,795
Accounts receivable, net and other 26,835 24,542
Total current assets 140,848 132,733
Property and equipment, net 133,502 113,114
Operating leases 43,346 37,553
Goodwill 15,350 15,017
Other assets 27,273 22,778
Total assets 360,319 321,195
Current liabilities:    
Accounts payable 66,090 72,539
Accrued expenses and other 41,007 44,138
Unearned revenue 10,695 9,708
Total current liabilities 117,792 126,385
Long-term lease liabilities 56,297 52,573
Long-term debt 50,279 31,816
Other long-term liabilities 21,148 17,017
Commitments and contingencies (Note 4)
Stockholders’ equity:    
Preferred stock, $0.01 par value: Authorized shares - 500 Issued and outstanding shares - none 0 0
Common stock, $0.01 par value: Authorized shares - 5,000 Issued shares - 527 and 530 Outstanding shares - 503 and 506 5 5
Treasury stock, at cost (1,837) (1,837)
Additional paid-in capital 48,724 42,865
Accumulated other comprehensive income (loss) (525) (180)
Retained earnings 68,436 52,551
Total stockholders’ equity 114,803 93,404
Total liabilities and stockholders’ equity $ 360,319 $ 321,195
v3.21.2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Preferred stock, par value (in usd per share) $ 0.01 $ 0.01
Preferred stock, authorized (in shares) 500,000,000 500,000,000
Preferred stock, issued (in shares) 0 0
Preferred stock, outstanding (in shares) 0 0
Common stock, par value (in usd per share) $ 0.01 $ 0.01
Common stock, authorized (in shares) 5,000,000,000 5,000,000,000
Common stock, issued (in shares) 530,000,000 527,000,000
Common stock, outstanding (in shares) 506,000,000 503,000,000
v3.21.2
Accounting Policies and Supplemental Disclosures
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Accounting Policies and Supplemental Disclosures ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES
Unaudited Interim Financial Information
We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2021 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2020 Annual Report on Form 10-K.
Principles of Consolidation
The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, and valuation and impairment of investments. Actual results could differ materially from these estimates.
Supplemental Cash Flow Information
The following table shows supplemental cash flow information (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
202020212020202120202021
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt$139 $179 $430 $455 $872 $942 
Cash paid for operating leases1,086 1,577 2,115 3,217 3,929 5,577 
Cash paid for interest on finance leases161 129 329 286 662 569 
Cash paid for interest on financing obligations21 35 43 68 77 127 
Cash paid for income taxes, net of refunds486 1,803 791 2,604 1,221 3,526 
Assets acquired under operating leases3,347 5,578 5,755 9,114 10,530 19,576 
Property and equipment acquired under finance leases3,155 1,642 5,321 3,709 13,110 9,976 
Property and equipment acquired under build-to-suit arrangements482 1,094 861 1,981 1,504 3,387 

Earnings Per Share
Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.
The following table shows the calculation of diluted shares (in millions):
  
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Shares used in computation of basic earnings per share500 505 499 505 
Total dilutive effect of outstanding stock awards
Shares used in computation of diluted earnings per share509 514 508 514 
Other Income (Expense), Net
Other income (expense), net, is as follows (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Marketable equity securities valuation gains (losses)$235 $157 $204 $81 
Equity warrant valuation gains (losses)418 939 266 1,244 
Upward adjustments relating to equity investments in private companies— 31 — 1,506 
Foreign currency gains (losses)13 110 (209)79 
Other, net(20)24 (21)48 
Total other income (expense), net646 1,261 240 2,958 
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.3 billion and $2.4 billion as of December 31, 2020 and June 30, 2021.
Accounts Receivable, Net and Other
Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2020 and June 30, 2021, customer receivables, net, were $14.8 billion and $16.3 billion, vendor receivables, net, were $4.8 billion and $4.2 billion, and seller receivables, net, were $381 million and $646 million. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.
We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion as of December 31, 2020 and June 30, 2021.
Digital Video and Music Content
The total capitalized costs of video, which is primarily released content, and music as of December 31, 2020 and June 30, 2021 were $6.8 billion and $8.6 billion. Total video and music expense was $2.8 billion and $3.1 billion in Q2 2020 and Q2 2021, and $5.2 billion and $6.2 billion for the six months ended June 30, 2020 and 2021.
Unearned Revenue
Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2020 was $11.6 billion, of which $6.7 billion was recognized as revenue during the six months ended June 30, 2021. Included in “Other long-term liabilities” on our consolidated balance sheets was $1.9 billion of unearned revenue as of December 31, 2020 and June 30, 2021.
Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $60.7 billion as of June 30, 2021. The weighted-average remaining life of our long-term contracts is 3.6 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.
v3.21.2
Financial Instruments
6 Months Ended
Jun. 30, 2021
Investments, Debt and Equity Securities [Abstract]  
Financial Instruments FINANCIAL INSTRUMENTS
Cash, Cash Equivalents, Restricted Cash, and Marketable Securities
As of December 31, 2020 and June 30, 2021, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S. and foreign government and agency securities, other investment grade securities, and marketable equity securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:
Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.
Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.
We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2020 and June 30, 2021.
The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):
 December 31, 2020June 30, 2021
  
Total
Estimated
Fair Value
Cost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Total
Estimated
Fair Value
Cash$10,063 $10,266 $— — $10,266 
Level 1 securities:
Money market funds27,430 24,587 — — 24,587 
Equity securities (1)617 772 
Level 2 securities:
Foreign government and agency securities5,131 1,423 — 1,424 
U.S. government and agency securities7,439 6,987 18 (9)6,996 
Corporate debt securities29,988 39,049 189 (14)39,224 
Asset-backed securities3,235 4,976 20 (4)4,992 
Other fixed income securities710 785 (1)790 
Equity securities (1)40 1,133 
$84,653 $88,073 $234 $(28)$90,184 
Less: Restricted cash, cash equivalents, and marketable securities (2)(257)(290)
Total cash, cash equivalents, and marketable securities$84,396 $89,894 
___________________
(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $235 million and $119 million in Q2 2020 and Q2 2021, and $204 million and $122 million for the six months ended June 30, 2020 and 2021.
(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”
The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2021 (in millions):
Amortized
Cost
Estimated
Fair Value
Due within one year$50,515 $50,530 
Due after one year through five years22,210 22,382 
Due after five years through ten years1,445 1,450 
Due after ten years3,637 3,651 
Total$77,807 $78,013 
Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.
Equity Warrants and Non-Marketable Equity Investments
We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2020 and June 30, 2021, these warrants had a fair value of $3.0 billion and $3.6 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.
As of December 31, 2020 and June 30, 2021, equity investments not accounted for under the equity-method and without readily determinable fair values, had a carrying value of $2.7 billion and $3.7 billion, and are recorded within “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.
Consolidated Statements of Cash Flows Reconciliation
The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):
December 31, 2020June 30, 2021
Cash and cash equivalents$42,122 $40,380 
Restricted cash included in accounts receivable, net and other233 265 
Restricted cash included in other assets22 22 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$42,377 $40,667 
v3.21.2
Leases
6 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Leases LEASES
We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $68.1 billion and $70.2 billion as of December 31, 2020 and June 30, 2021. Accumulated amortization associated with finance leases was $36.5 billion and $39.9 billion as of December 31, 2020 and June 30, 2021.
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2020202120202021
Operating lease cost$1,149 $1,662 $2,217 $3,218 
Finance lease cost:
Amortization of lease assets2,029 2,489 3,923 4,945 
Interest on lease liabilities156 119 320 251 
Finance lease cost2,185 2,608 4,243 5,196 
Variable lease cost294 415 558 763 
Total lease cost$3,628 $4,685 $7,018 $9,177 
Other information about lease amounts recognized in our consolidated financial statements is as follows:
 December 31, 2020June 30, 2021
Weighted-average remaining lease term – operating leases10.7 years10.7 years
Weighted-average remaining lease term – finance leases6.2 years6.8 years
Weighted-average discount rate – operating leases2.5 %2.4 %
Weighted-average discount rate – finance leases2.1 %2.1 %
Our lease liabilities were as follows (in millions):
December 31, 2020
 Operating LeasesFinance LeasesTotal
Gross lease liabilities$44,833 $30,437 $75,270 
Less: imputed interest(5,734)(2,003)(7,737)
Present value of lease liabilities39,099 28,434 67,533 
Less: current portion of lease liabilities(4,586)(10,374)(14,960)
Total long-term lease liabilities$34,513 $18,060 $52,573 
June 30, 2021
 Operating LeasesFinance LeasesTotal
Gross lease liabilities$51,702 $27,613 $79,315 
Less: imputed interest(6,419)(1,943)(8,362)
Present value of lease liabilities45,283 25,670 70,953 
Less: current portion of lease liabilities(5,214)(9,442)(14,656)
Total long-term lease liabilities$40,069 $16,228 $56,297 
Leases LEASES
We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $68.1 billion and $70.2 billion as of December 31, 2020 and June 30, 2021. Accumulated amortization associated with finance leases was $36.5 billion and $39.9 billion as of December 31, 2020 and June 30, 2021.
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2020202120202021
Operating lease cost$1,149 $1,662 $2,217 $3,218 
Finance lease cost:
Amortization of lease assets2,029 2,489 3,923 4,945 
Interest on lease liabilities156 119 320 251 
Finance lease cost2,185 2,608 4,243 5,196 
Variable lease cost294 415 558 763 
Total lease cost$3,628 $4,685 $7,018 $9,177 
Other information about lease amounts recognized in our consolidated financial statements is as follows:
 December 31, 2020June 30, 2021
Weighted-average remaining lease term – operating leases10.7 years10.7 years
Weighted-average remaining lease term – finance leases6.2 years6.8 years
Weighted-average discount rate – operating leases2.5 %2.4 %
Weighted-average discount rate – finance leases2.1 %2.1 %
Our lease liabilities were as follows (in millions):
December 31, 2020
 Operating LeasesFinance LeasesTotal
Gross lease liabilities$44,833 $30,437 $75,270 
Less: imputed interest(5,734)(2,003)(7,737)
Present value of lease liabilities39,099 28,434 67,533 
Less: current portion of lease liabilities(4,586)(10,374)(14,960)
Total long-term lease liabilities$34,513 $18,060 $52,573 
June 30, 2021
 Operating LeasesFinance LeasesTotal
Gross lease liabilities$51,702 $27,613 $79,315 
Less: imputed interest(6,419)(1,943)(8,362)
Present value of lease liabilities45,283 25,670 70,953 
Less: current portion of lease liabilities(5,214)(9,442)(14,656)
Total long-term lease liabilities$40,069 $16,228 $56,297 
v3.21.2
Commitments and Contingencies
6 Months Ended
Jun. 30, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies COMMITMENTS AND CONTINGENCIES
Commitments
The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2021 (in millions): 
 Six Months Ended December 31,Year Ended December 31,  
 20212022202320242025ThereafterTotal
Long-term debt principal and interest$1,772 $2,997 $4,725 $7,120 $3,401 $56,613 $76,628 
Operating lease liabilities3,130 6,132 5,709 5,209 4,752 26,770 51,702 
Finance lease liabilities, including interest4,802 8,124 4,362 1,787 1,110 7,428 27,613 
Financing obligations, including interest (1)120 269 273 272 272 4,349 5,555 
Leases not yet commenced713 2,073 2,506 2,650 2,599 29,191 39,732 
Unconditional purchase obligations (2)1,251 5,508 5,062 4,492 4,180 13,617 34,110 
Other commitments (3)(4)2,624 2,993 1,414 1,080 914 11,277 20,302 
Total commitments$14,412 $28,096 $24,051 $22,610 $17,228 $149,245 $255,642 
___________________
(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $111 million and $132 million are recorded within “Accrued expenses and other” and $3.4 billion and $3.8 billion are recorded within “Other long-term liabilities” as of December 31, 2020 and June 30, 2021. The weighted-average remaining term of the financing obligations was 19.0 and 18.8 years and the weighted-average imputed interest rate was 3.8% and 3.7% as of December 31, 2020 and June 30, 2021.
(2)Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.
(3)Includes the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction, asset retirement obligations, and liabilities associated with digital media content agreements with initial terms greater than one year.
(4)Excludes approximately $2.8 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.
In addition, in May 2021, we entered into an agreement to acquire MGM Holdings Inc. (“MGM”) for approximately $8.5 billion, including MGM’s debt, subject to customary closing conditions. We expect to fund this acquisition with cash on hand.
Pledged Assets
As of December 31, 2020 and June 30, 2021, we have pledged or otherwise restricted $875 million and $882 million of our cash, cash equivalents, and marketable securities, and certain property and equipment primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. Additionally, we have pledged our cash and seller receivables for debt related to our Credit Facility. See “Note 5 — Debt.”
Other Contingencies
We are disputing claims and denials of refunds or credits related to various indirect taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. If the relevant taxing authorities were to prevail, we could be subject to significant additional tax costs. For example, in June 2017, the State of South Carolina issued an assessment for uncollected sales and use taxes for the period from January 2016 to March 2016, including interest and penalties. South Carolina is alleging that we should have collected sales and use taxes on transactions by our third-party sellers. In September 2019, the South Carolina Administrative Law Court ruled in favor of the Department of Revenue and we have appealed the decision to the state Court of Appeals. We believe the assessment is without merit and intend to defend ourselves vigorously in this matter.
Legal Proceedings
The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2020 Annual Report on Form 10-K as supplemented by the following:
On July 16, 2021, the Luxembourg National Commission for Data Protection (the “CNPD”) issued a decision against Amazon Europe Core S.à r.l. claiming that Amazon’s processing of personal data did not comply with the EU General Data Protection Regulation. The decision imposes a fine of €746 million and corresponding practice revisions. We believe the CNPD’s decision to be without merit and intend to defend ourselves vigorously in this matter.
Beginning in March 2020, with Frame-Wilson v. Amazon.com, Inc. filed in the United States District Court for the Western District of Washington, a number of cases have been filed in the U.S. and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc. and third-party sellers in Amazon’s stores, monopolization and attempted monopolization, and consumer protection and unjust enrichment claims. Some of the cases include allegations of several distinct purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon through another e-commerce retailer. The complaints seek billions of dollars of alleged actual damages, treble damages, punitive damages, and injunctive relief. Individuals have also initiated arbitrations based on substantially similar allegations. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.
In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.
The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.
See also “Note 7 — Income Taxes.”
v3.21.2
Debt
6 Months Ended
Jun. 30, 2021
Debt Disclosure [Abstract]  
Debt DEBT
As of June 30, 2021, we had $50.7 billion of unsecured senior notes outstanding (the “Notes”). We issued $18.5 billion of Notes in May 2021, of which $1.0 billion was issued for green or social projects, such as projects related to clean transportation, renewable energy, sustainable buildings, affordable housing, or socioeconomic advancement and empowerment, and the remainder for general corporate purposes. We also had other long-term debt and borrowings under our credit facility of $924 million and $1.0 billion as of December 31, 2020 and June 30, 2021. Our total long-term debt obligations are as follows (in millions):
Maturities (1)Stated Interest RatesEffective Interest RatesDecember 31, 2020June 30, 2021
2012 Notes issuance of $3.0 billion
20222.50%2.66%1,250 1,250 
2014 Notes issuance of $6.0 billion
2021 - 2044
3.30% - 4.95%
3.43% - 5.11%
5,000 5,000 
2017 Notes issuance of $17.0 billion
2023 - 2057
2.40% - 5.20%
2.56% - 4.33%
16,000 16,000 
2020 Notes issuance of $10.0 billion
2023 - 2060
0.40% - 2.70%
0.56% - 2.77%
10,000 10,000 
2021 Notes issuance of $18.5 billion
2023 - 2061
0.25% - 3.25%
0.35% - 3.31%
— 18,500 
Credit Facility338 503 
Other long-term debt586 509 
Total face value of long-term debt33,174 51,762 
Unamortized discount and issuance costs, net(203)(325)
Less current portion of long-term debt(1,155)(1,158)
Long-term debt$31,816 $50,279 
___________________
(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, and 2021 Notes were 1.4, 11.3, 15.7, 18.2, and 14.8 years as of June 30, 2021. The combined weighted-average remaining life of the Notes was 15.1 years as of June 30, 2021.
Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $37.7 billion and $54.6 billion as of December 31, 2020 and June 30, 2021, which is based on quoted prices for our debt as of those dates.
We have a $740 million secured revolving credit facility with a lender that is secured by certain seller receivables, which we may from time to time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is available until October 2022, bears interest at the London interbank offered rate (“LIBOR”) plus 1.40%, and has a commitment fee of 0.50% on the undrawn portion. There were $338 million and $503 million of borrowings outstanding under the Credit Facility as of December 31, 2020 and June 30, 2021, which had a weighted-average interest rate of 3.0% and 2.9%, respectively. As of December 31, 2020 and June 30, 2021, we have pledged $398 million and $580 million of our cash and seller receivables as collateral for debt related to our Credit Facility. The estimated fair value of the Credit Facility, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2020 and June 30, 2021.
Other long-term debt, including the current portion, had a weighted-average interest rate of 2.9% as of December 31, 2020 and June 30, 2021. We used the net proceeds from the issuance of this debt primarily to fund certain business operations. The estimated fair value of other long-term debt, which is based on Level 2 inputs, approximated its carrying value as of December 31, 2020 and June 30, 2021.
We have a commercial paper program (the “Commercial Paper Program”) under which we may from time to time issue unsecured commercial paper up to a total of $10.0 billion at any time, with individual maturities that may vary but will not exceed 397 days from the date of issue. There were $725 million of borrowings outstanding under the Commercial Paper Program as of December 31, 2020 and June 30, 2021, which were included in “Accrued expenses and other” on our consolidated balance sheets and had a weighted-average effective interest rate, including issuance costs, of 0.11% and 0.08%, respectively. We use the net proceeds from the issuance of commercial paper for general corporate purposes.
We also have a $7.0 billion unsecured revolving credit facility with a syndicate of lenders with a term that extends to June 2023 (the “Credit Agreement”). It may be extended for up to three additional one-year terms if approved by the lenders. The interest rate applicable to outstanding balances under the amended and restated Credit Agreement is LIBOR plus 0.50%, with a commitment fee of 0.04% on the undrawn portion of the credit facility. There were no borrowings outstanding under the Credit Agreement as of December 31, 2020 and June 30, 2021.
We also utilize other short-term credit facilities for working capital purposes. These amounts are included in “Accrued expenses and other” on our consolidated balance sheets. In addition, we had $5.8 billion of unused letters of credit as of June 30, 2021.
v3.21.2
Stockholders' Equity
6 Months Ended
Jun. 30, 2021
Equity [Abstract]  
Stockholders' Equity STOCKHOLDERS’ EQUITY
Stock Repurchase Activity
In February 2016, the Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock, with no fixed expiration. There were no repurchases of common stock during the six months ended June 30, 2020 or 2021.
Stock Award Activity
Common shares outstanding plus shares underlying outstanding stock awards totaled 518 million and 522 million as of December 31, 2020 and June 30, 2021. These totals include all vested and unvested stock awards outstanding, including those awards we estimate will be forfeited. Stock-based compensation expense is as follows (in millions):
  
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Cost of sales$76 $145 $118 $235 
Fulfillment417 566 677 908 
Technology and content1,421 1,887 2,382 3,115 
Marketing456 691 787 1,147 
General and administrative231 302 394 492 
Total stock-based compensation expense$2,601 $3,591 $4,358 $5,897 
The following table summarizes our restricted stock unit activity for the six months ended June 30, 2021 (in millions):
Number of UnitsWeighted-Average
Grant-Date
Fair Value
Outstanding as of December 31, 202015.2 $2,004 
Units granted4.4 3,298 
Units vested(2.9)1,623 
Units forfeited(1.0)2,115 
Outstanding as of June 30, 202115.7 2,430 
Scheduled vesting for outstanding restricted stock units as of June 30, 2021, is as follows (in millions):
 Six Months Ended December 31,Year Ended December 31,  
 20212022202320242025ThereafterTotal
Scheduled vesting — restricted stock units2.6 5.6 5.1 1.8 0.4 0.2 15.7 
As of June 30, 2021, there was $18.3 billion of net unrecognized compensation cost related to unvested stock-based compensation arrangements. This compensation is recognized on an accelerated basis with approximately half of the compensation expected to be expensed in the next twelve months, and has a remaining weighted-average recognition period of 1.2 years. The estimated forfeiture rate as of December 31, 2020 and June 30, 2021 was 27%. Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.
Changes in Stockholders’ Equity
The following table shows changes in stockholders’ equity (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Total beginning stockholders’ equity$65,272 $103,320 $62,060 $93,404 
Beginning and ending common stock
Beginning and ending treasury stock(1,837)(1,837)(1,837)(1,837)
Beginning additional paid-in capital35,412 45,160 33,658 42,865 
Stock-based compensation and issuance of employee benefit plan stock2,605 3,564 4,359 5,859 
Ending additional paid-in capital38,017 48,724 38,017 48,724 
Beginning accumulated other comprehensive income (loss)(2,063)(666)(986)(180)
Other comprehensive income (loss)608 141 (469)(345)
Ending accumulated other comprehensive income (loss)(1,455)(525)(1,455)(525)
Beginning retained earnings33,755 60,658 31,220 52,551 
Net income5,243 7,778 7,778 15,885 
Ending retained earnings38,998 68,436 38,998 68,436 
Total ending stockholders’ equity$73,728 $114,803 $73,728 $114,803 
v3.21.2
Income Taxes
6 Months Ended
Jun. 30, 2021
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Our tax provision or benefit from income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter we update our estimate of the annual effective tax rate, and if our estimated tax rate changes, we make a cumulative adjustment.
Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, is subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, intercompany transactions, the applicability of special tax regimes, changes in how we do business, acquisitions, investments, developments in tax controversies, changes in our stock price, changes in our deferred tax assets and liabilities and their valuation, foreign currency gains (losses), changes in statutes, regulations, case law, and administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions, and relative changes of expenses or losses for which tax benefits are not recognized. Our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower. In addition, we record valuation allowances against deferred tax assets when there is uncertainty about our ability to generate future income in relevant jurisdictions, and the effects of the COVID-19 pandemic on our business make estimates of future income more challenging. Since Q2 2017, we have recorded a valuation allowance against our net deferred tax assets in Luxembourg. There is still significant uncertainty whether our income in Luxembourg is sustainable in the future and we will maintain the valuation allowance until sufficient positive evidence exists to support a release of the valuation allowance.
For 2021, we estimate that our effective tax rate will be favorably affected by the impact of excess tax benefits from stock-based compensation and the U.S. federal research and development credit and adversely affected by state income taxes.
Our income tax provisions for the six months ended June 30, 2020 and 2021 were $1.7 billion and $3.0 billion, which included $831 million and $1.4 billion of net discrete tax benefits primarily attributable to excess tax benefits from stock-based compensation and, in 2021, audit-related developments.
Cash paid for income taxes, net of refunds was $486 million and $1.8 billion in Q2 2020 and Q2 2021, and $791 million and $2.6 billion for the six months ended June 30, 2020 and 2021.
As of December 31, 2020 and June 30, 2021, tax contingencies were approximately $2.8 billion. Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies. The timing of the resolution of income tax controversies is highly uncertain, and the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts accrued. It is reasonably possible that within the next twelve months we will receive additional assessments by various tax authorities or possibly reach resolution of income tax controversies in one or more jurisdictions. These assessments or settlements could result in changes to our contingencies related to positions on prior years’ tax filings.
We are under examination, or may be subject to examination, by the Internal Revenue Service for the calendar year 2013 and thereafter. These examinations may lead to ordinary course adjustments or proposed adjustments to our taxes or our net operating losses with respect to years under examination as well as subsequent periods.
In October 2014, the European Commission opened a formal investigation to examine whether decisions by the tax authorities in Luxembourg with regard to the corporate income tax paid by certain of our subsidiaries comply with European Union rules on state aid. On October 4, 2017, the European Commission announced its decision that determinations by the tax authorities in Luxembourg did not comply with European Union rules on state aid. Based on that decision, the European Commission announced an estimated recovery amount of approximately €250 million, plus interest, for the period May 2006 through June 2014, and ordered Luxembourg tax authorities to calculate the actual amount of additional taxes subject to recovery. Luxembourg computed an initial recovery amount, consistent with the European Commission’s decision, which we deposited into escrow in March 2018, subject to adjustment pending conclusion of all appeals. In December 2017, Luxembourg appealed the European Commission’s decision. In May 2018, we appealed. On May 12, 2021, the European Union General Court annulled the European Commission’s state aid decision. In July 2021, the European Commission appealed the decision to the European Court of Justice. We will continue to defend ourselves vigorously in this matter. We are also subject to taxation in various states and other foreign jurisdictions including China, Germany, India, Japan, Luxembourg, and the United Kingdom. We are under, or may be subject to, audit or examination and additional assessments by the relevant authorities in respect of these particular jurisdictions primarily for 2009 and thereafter.
v3.21.2
Segment Information
6 Months Ended
Jun. 30, 2021
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
We have organized our operations into three segments: North America, International, and AWS. We allocate to segment results the operating expenses “Fulfillment,” “Technology and content,” “Marketing,” and “General and administrative” based on usage, which is generally reflected in the segment in which the costs are incurred. The majority of technology infrastructure costs are allocated to the AWS segment based on usage. The majority of the remaining non-infrastructure technology costs are incurred in the U.S. and are allocated to our North America segment. There are no internal revenue transactions between our reportable segments. These segments reflect the way our chief operating decision maker evaluates the Company’s business performance and manages its operations.
North America
The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused online and physical stores. This segment includes export sales from these online stores.
International
The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused online stores. This segment includes export sales from these internationally-focused online stores (including export sales from these online stores to customers in the U.S., Mexico, and Canada), but excludes export sales from our North America-focused online stores.
AWS
The AWS segment consists of amounts earned from global sales of compute, storage, database, and other services for start-ups, enterprises, government agencies, and academic institutions.
Information on reportable segments and reconciliation to consolidated net income is as follows (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
North America
Net sales$55,436 $67,550 $101,563 $131,916 
Operating expenses53,295 64,403 98,111 125,319 
Operating income$2,141 $3,147 $3,452 $6,597 
International
Net sales$22,668 $30,721 $41,774 $61,370 
Operating expenses22,323 30,359 41,826 59,756 
Operating income (loss)$345 $362 $(52)$1,614 
AWS
Net sales$10,808 $14,809 $21,027 $28,312 
Operating expenses7,451 10,616 14,595 19,956 
Operating income$3,357 $4,193 $6,432 $8,356 
Consolidated
Net sales$88,912 $113,080 $164,364 $221,598 
Operating expenses83,069 105,378 154,532 205,031 
Operating income5,843 7,702 9,832 16,567 
Total non-operating income (expense)378 932 (228)2,335 
Provision for income taxes(984)(868)(1,729)(3,024)
Equity-method investment activity, net of tax12 (97)
Net income$5,243 $7,778 $7,778 $15,885 
Net sales by groups of similar products and services, which also have similar economic characteristics, is as follows (in millions):    
  
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Net Sales:
Online stores (1)$45,896 $53,157 $82,549 $106,058 
Physical stores (2)3,774 4,198 8,414 8,118 
Third-party seller services (3)18,195 25,085 32,676 48,794 
Subscription services (4)6,018 7,917 11,574 15,497 
AWS10,808 14,809 21,027 28,312 
Other (5)4,221 7,914 8,124 14,819 
Consolidated$88,912 $113,080 $164,364 $221,598 
____________________________
(1)Includes product sales and digital media content where we record revenue gross. We leverage our retail infrastructure to offer a wide selection of consumable and durable goods that includes media products available in both a physical and digital format, such as books, videos, games, music, and software. These product sales include digital products sold on a transactional basis. Digital product subscriptions that provide unlimited viewing or usage rights are included in “Subscription services.”
(2)Includes product sales where our customers physically select items in a store. Sales to customers who order goods online for delivery or pickup at our physical stores are included in “Online stores.”
(3)Includes commissions and any related fulfillment and shipping fees, and other third-party seller services.
(4)Includes annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services.
(5)Primarily includes sales of advertising services, as well as sales related to our other service offerings.
v3.21.2
Accounting Policies and Supplemental Disclosures (Policies)
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Unaudited Interim Financial Information
Unaudited Interim Financial Information
We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2021 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2020 Annual Report on Form 10-K.
Principles of Consolidation
Principles of Consolidation
The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.
Use of Estimates
Use of Estimates
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, and valuation and impairment of investments. Actual results could differ materially from these estimates.
Earnings Per Share
Earnings Per Share
Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.
Inventories
Inventories
Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.3 billion and $2.4 billion as of December 31, 2020 and June 30, 2021.
Accounts Receivable, Net and Other
Accounts Receivable, Net and Other
Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2020 and June 30, 2021, customer receivables, net, were $14.8 billion and $16.3 billion, vendor receivables, net, were $4.8 billion and $4.2 billion, and seller receivables, net, were $381 million and $646 million. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.
We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion as of December 31, 2020 and June 30, 2021.
Digital Video and Music Content
Digital Video and Music Content
The total capitalized costs of video, which is primarily released content, and music as of December 31, 2020 and June 30, 2021 were $6.8 billion and $8.6 billion. Total video and music expense was $2.8 billion and $3.1 billion in Q2 2020 and Q2 2021, and $5.2 billion and $6.2 billion for the six months ended June 30, 2020 and 2021.
Unearned Revenue
Unearned Revenue
Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2020 was $11.6 billion, of which $6.7 billion was recognized as revenue during the six months ended June 30, 2021. Included in “Other long-term liabilities” on our consolidated balance sheets was $1.9 billion of unearned revenue as of December 31, 2020 and June 30, 2021.
Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $60.7 billion as of June 30, 2021. The weighted-average remaining life of our long-term contracts is 3.6 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.
v3.21.2
Accounting Policies and Supplemental Disclosures (Tables)
6 Months Ended
Jun. 30, 2021
Accounting Policies [Abstract]  
Supplemental Cash Flow Information
The following table shows supplemental cash flow information (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
Twelve Months Ended
June 30,
202020212020202120202021
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt$139 $179 $430 $455 $872 $942 
Cash paid for operating leases1,086 1,577 2,115 3,217 3,929 5,577 
Cash paid for interest on finance leases161 129 329 286 662 569 
Cash paid for interest on financing obligations21 35 43 68 77 127 
Cash paid for income taxes, net of refunds486 1,803 791 2,604 1,221 3,526 
Assets acquired under operating leases3,347 5,578 5,755 9,114 10,530 19,576 
Property and equipment acquired under finance leases3,155 1,642 5,321 3,709 13,110 9,976 
Property and equipment acquired under build-to-suit arrangements482 1,094 861 1,981 1,504 3,387 
Calculation of Diluted Shares
The following table shows the calculation of diluted shares (in millions):
  
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Shares used in computation of basic earnings per share500 505 499 505 
Total dilutive effect of outstanding stock awards
Shares used in computation of diluted earnings per share509 514 508 514 
Other Income (Expense), Net
Other income (expense), net, is as follows (in millions):
Three Months Ended
June 30,
Six Months Ended
June 30,
2020202120202021
Marketable equity securities valuation gains (losses)$235 $157 $204 $81 
Equity warrant valuation gains (losses)418 939 266 1,244 
Upward adjustments relating to equity investments in private companies— 31 — 1,506 
Foreign currency gains (losses)13 110 (209)79 
Other, net(20)24 (21)48 
Total other income (expense), net646 1,261 240 2,958 
v3.21.2
Financial Instruments (Tables)
6 Months Ended
Jun. 30, 2021
Investments, Debt and Equity Securities [Abstract]  
Fair Value by Major Security Type
The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):
 December 31, 2020June 30, 2021
  
Total
Estimated
Fair Value
Cost or
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Total
Estimated
Fair Value
Cash$10,063 $10,266 $— — $10,266 
Level 1 securities:
Money market funds27,430 24,587 — — 24,587 
Equity securities (1)617 772 
Level 2 securities:
Foreign government and agency securities5,131 1,423 — 1,424 
U.S. government and agency securities7,439 6,987 18 (9)6,996 
Corporate debt securities29,988 39,049 189 (14)39,224 
Asset-backed securities3,235 4,976 20 (4)4,992 
Other fixed income securities710 785 (1)790 
Equity securities (1)40 1,133 
$84,653 $88,073 $234 $(28)$90,184 
Less: Restricted cash, cash equivalents, and marketable securities (2)(257)(290)
Total cash, cash equivalents, and marketable securities$84,396 $89,894 
___________________
(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $235 million and $119 million in Q2 2020 and Q2 2021, and $204 million and $122 million for the six months ended June 30, 2020 and 2021.
(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”
Investments Classified by Contractual Maturity Date
The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2021 (in millions):
Amortized
Cost
Estimated
Fair Value
Due within one year$50,515 $50,530 
Due after one year through five years22,210 22,382 
Due after five years through ten years1,445 1,450 
Due after ten years3,637 3,651 
Total$77,807 $78,013 
Consolidated Statements of Cash Flow Reconciliation - Cash and Cash Equivalents
The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):
December 31, 2020June 30, 2021
Cash and cash equivalents$42,122 $40,380 
Restricted cash included in accounts receivable, net and other233 265 
Restricted cash included in other assets22 22 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$42,377 $40,667 
Consolidated Statements of Cash Flow Reconciliation - Restricted Cash
The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):
December 31, 2020June 30, 2021
Cash and cash equivalents$42,122 $40,380 
Restricted cash included in accounts receivable, net and other233 265 
Restricted cash included in other assets22 22 
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows$42,377 $40,667 
v3.21.2
Leases (Tables)
6 Months Ended
Jun. 30, 2021
Leases [Abstract]  
Lease Costs
Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):
Three Months Ended June 30,Six Months Ended June 30,
2020202120202021
Operating lease cost$1,149 $1,662 $2,217 $3,218 
Finance lease cost:
Amortization of lease assets2,029 2,489 3,923 4,945 
Interest on lease liabilities156 119 320 251 
Finance lease cost2,185 2,608 4,243 5,196 
Variable lease cost294 415