What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-02 compared with 2023-02-03 · 197 added, 163 removed, 1016 unchanged (26% of the section changed)

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We have audited the accompanying consolidated balance sheets of Amazon.com, Inc.

(the Company) as of December 31, 2022 and 2021, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

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Stock-based compensation 12,757 19,621 24,023

Other expense (income), net ( 2,582 ) ( 14,306 ) 16,966

Non-operating expense (income), net ( 14,306 ) 16,966 ( 748 )

Deferred income taxes ( 310 ) ( 8,148 ) ( 5,876 )

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Accounts receivable, net and other ( 9,145 ) ( 8,622 ) ( 8,348 )

Other assets ( 9,018 ) ( 13,275 ) ( 12,265 )

Accounts payable 3,602 2,945 5,473

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Proceeds from property and equipment sales and incentives 5,657 5,324 4,596

Acquisitions, net of cash acquired, and other ( 2,325 ) ( 1,985 ) ( 8,316 )

Acquisitions, net of cash acquired, non-marketable investments, and other ( 1,985 ) ( 8,316 ) ( 5,839 )

Sales and maturities of marketable securities 59,384 31,601 5,627

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Fulfillment 75,111 84,299 90,619

Technology and content 42,740 56,052 73,213

Technology and infrastructure 56,052 73,213 85,622

Sales and marketing 32,551 42,238 44,370

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( 819 ) ( 2,586 ) 1,027

Net change in unrealized gains (losses) on available-for-sale debt securities:

Unrealized gains (losses), net of tax of $( 83 ), $ 72 , and $ 159

Available-for-sale debt securities:

Change in net unrealized gains (losses), net of tax of $ 72 , $ 159 , and $( 110 )

( 343 ) ( 823 ) 366

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( 34 ) 298 50

Net unrealized gains (losses) on available-for-sale debt securities 245 ( 377 ) ( 525 )

Net change ( 377 ) ( 525 ) 416

Other, net of tax of $ 0 , $ 0 , and $( 1 )

Total other comprehensive income (loss) ( 1,196 ) ( 3,111 ) 1,447

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Balance as of December 31, 2021 10,175 106 ( 1,837 ) 55,437 ( 1,376 ) 85,915 138,245

Net income — — — — — 33,364 33,364

Net loss — — — — — ( 2,722 ) ( 2,722 )

Other comprehensive income (loss) — — — — ( 3,111 ) — ( 3,111 )

Stock-based compensation and issuance of employee benefit plan stock 113 2 — 19,629 — — 19,631

Common stock repurchased ( 46 ) — ( 6,000 ) — — — ( 6,000 )

Balance as of December 31, 2022 10,242 108 ( 7,837 ) 75,066 ( 4,487 ) 83,193 146,043

Net loss — — — — — ( 2,722 ) ( 2,722 )

Net income — — — — — 30,425 30,425

Other comprehensive income (loss) — — — — 1,447 — 1,447

Stock-based compensation and issuance of employee benefit plan stock 141 1 — 23,959 — — 23,960

Common stock repurchased ( 46 ) — ( 6,000 ) — — — ( 6,000 )

Balance as of December 31, 2023 10,383 $ 109 $ ( 7,837 ) $ 99,025 $ ( 3,040 ) $ 113,618 $ 201,875

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We serve consumers through our online and physical stores and focus on selection, price, and convenience.

We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders through us, and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content.

We offer programs that enable sellers to grow their businesses, sell their products in our stores, and fulfill orders using our services, and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content.

We serve developers and enterprises of all sizes through AWS, which offers a broad set of on-demand technology services, including compute, storage, database, analytics, and machine learning, and other services.

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Certain prior period amounts have been reclassified to conform to the current period presentation.

“Other operating expense (income), net” was reclassified into “Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other” on our consolidated statements of cash flows.

“Other assets” were reclassified out of “Accounts receivable, net and other” on our consolidated statements of cash flows.

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.

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Actual results could differ materially from these estimates.

We review the useful lives of equipment on an ongoing basis, and effective January 1, 2022 we changed our estimate of the useful lives for our servers from four years to five years and for our networking equipment from five years to six years .

The longer useful lives are due to continuous improvements in our hardware, software, and data center designs.

The effect of this change in estimate for the year ended December 31, 2022, based on servers and networking equipment that were included in “Property and equipment, net” as of December 31, 2021 and those acquired during the year ended December 31, 2022, was a reduction in depreciation and amortization expense of $ 3.6 billion and a benefit to net loss of $ 2.8 billion, or $ 0.28 per basic share and $ 0.28 per diluted share.

For example, in Q4 2023 we completed a useful life study for our servers and are increasing the useful life from five years to six years in January 2024, which, based on servers that are included in “Property and equipment, net” as of December 31, 2023, will have an anticipated impact to our 2024 operating income of $ 3.1 billion.

We had previously increased the useful life of our servers from four years to five years in January 2022.

For the year ended December 31, 2022, we recorded approximately $ 1.1 billion, of which $ 720 million was recorded in the fourth quarter, of impairments of property and equipment and operating leases primarily related to physical stores.

These charges were recorded in “Other operating expense (income), net” on our consolidated statements of operations and primarily impacted our North America segment.

For the year ended December 31, 2022, we also recorded expenses of approximately

$ 480 million primarily in “Fulfillment” on our consolidated statements of operations relating to terminating contracts for certain leases not yet commenced as well as other purchase commitments, which primarily impacted our North America segment.

For the year ended December 31, 2022, we also recorded expenses of approximately $ 480 million, primarily in “Fulfillment”, on our consolidated statements of operations primarily relating to terminating contracts for certain leases not yet commenced as well as other purchase commitments, which primarily impacted our North America segment.

For the year ended December 31, 2022, we recorded approximately $ 720 million, of which $ 640 million was recorded in the fourth quarter, of estimated severance costs primarily related to planned role eliminations.

These charges were recorded primarily in “Technology and content,” “Fulfillment,” and “General and administrative” on our consolidated statements of operations and primarily impacted our North America segment.

These charges were recorded primarily in “Technology and infrastructure,” “Fulfillment,” and “General and administrative” on our consolidated statements of operations and primarily impacted our North America segment.

Charges for impairment, expenses for terminating contracts and other commitments, and severance costs were not material to our consolidated results of operations for the years ended December 31, 2021 and 2023.

Supplemental Cash Flow Information

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SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest on debt $ 916 $ 1,098 $ 1,561

Cash paid for interest on debt, net of capitalized interest $ 1,098 $ 1,561 $ 2,608

Cash paid for operating leases $ 6,722 $ 8,633 $ 10,453

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Revenue is recognized when control of the goods is transferred to the customer, which generally occurs upon our delivery to a third-party carrier or, in the case of an Amazon delivery, to the customer.

Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders through us.

Third-party seller services - We offer programs that enable sellers to sell their products in our stores, and fulfill orders using our services.

We are not the seller of record in these transactions.

The commissions and any related fulfillment and shipping fees we earn from these arrangements are recognized when the services are rendered, which generally occurs upon delivery of the related products to a third-party carrier or, in the case of an Amazon delivery, to the customer.

Advertising services - We provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

Revenue is recognized as ads are delivered based on the number of clicks or impressions.

Subscription services - Our subscription sales include fees associated with Amazon Prime memberships and access to content including digital video, audiobooks, digital music, e-books, and other non-AWS subscription services.

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Revenue from such arrangements is recognized over the subscription period.

Advertising services - We provide advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

Revenue is recognized as ads are delivered based on the number of clicks or impressions.

AWS - Our AWS arrangements include global sales of compute, storage, database, and other services.

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Sales commissions we pay in connection with contracts that exceed one year are capitalized and amortized over the contract term.

Other - Other revenue includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit card agreements.

Other - Other revenue includes sales related to various other offerings, such as certain licensing and distribution of video content, health care services, and shipping services, and our co-branded credit card agreements.

Revenue is recognized when content is licensed or distributed and as or when services are performed.

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Return allowances, which reduce revenue and cost of sales, are estimated using historical experience.

Liabilities for return allowances are included in “Accrued expenses and other” and were $ 859 million, $ 1.0 billion, and $ 1.3 billion as of December 31, 2020, 2021, and 2022.

Liabilities for return allowances are included in “Accrued expenses and other” and were $ 1.0 billion, $ 1.3 billion, and $ 1.4 billion as of December 31, 2021, 2022, and 2023.

Additions to the allowance were $ 5.1 billion, $ 5.5 billion, and $ 5.2 billion and deductions from the allowance were $ 4.9 billion, $ 5.2 billion, and $ 5.1 billion in 2021, 2022, and 2023.

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Fulfillment costs also include amounts paid to third parties that assist us in fulfillment and customer service operations.

Technology and Content

Technology and content costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs.

Technology and Infrastructure

Technology and infrastructure costs include payroll and related expenses for employees involved in the research and development of new and existing products and services, development, design, and maintenance of our stores, curation and display of products and services made available in our online stores, and infrastructure costs.

Infrastructure costs include servers, networking equipment, and data center related depreciation and amortization, rent, utilities, and other expenses necessary to support AWS and other Amazon businesses.

Collectively, these costs reflect the investments we make in order to offer a wide variety of products and services to our customers, including expenditures related to initiatives to build and deploy innovative and efficient software and electronic devices and the development of a satellite network for global broadband service and autonomous vehicles for ride-hailing services.

Technology and content costs are generally expensed as incurred.

Technology and infrastructure costs are generally expensed as incurred.

Sales and Marketing

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Such value is recognized as expense over the service period, net of estimated forfeitures, using the accelerated method.

Under this method, approximately 50 % of the grant date fair value is recognized as expense in the first year of grant for the majority of our stock-based compensation awards.

The accelerated method also adds a higher level of sensitivity and complexity in estimating forfeitures.

If an award is forfeited early in its life, the adjustment to compensation expense is much greater under an accelerated method than under a straight-line method.

The estimated number of stock awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised.

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Other Operating Expense (Income), Net

Other operating expense (income), net, consists primarily of the amortization of intangible assets and, for 2020, a benefit from accelerated vesting of warrants to acquire equity of a vendor partially offset by a lease impairment and, for 2022, $ 1.1 billion of impairments of property and equipment and operating leases.

Other operating expense (income), net, consists primarily of the amortization of intangible assets, and asset impairments for physical store closures in 2022 and for fulfillment network facilities and physical store closures in 2023.

Other Income (Expense), Net

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Total other income (expense), net $ 14,633 $ ( 16,806 ) $ 938

Included in other income (expense), net in 2021 and 2022 is a marketable equity securities valuation gain (loss) of $ 11.8 billion and $( 12.7 ) billion from our equity investment in Rivian Automotive, Inc.

Included in other income (expense), net in 2022 and 2023 is a marketable equity securities valuation gain (loss) of $( 12.7 ) billion and $ 797 million from our equity investment in Rivian Automotive, Inc.

Our investment in Rivian’s preferred stock was accounted for at cost, with adjustments for observable changes in prices or impairments, prior to Rivian’s initial public offering in November 2021, which resulted in the conversion of our preferred stock to Class A common stock.

As of December 31, 2023, we held 158 million shares of Rivian’s Class A common stock, representing an approximate 16 % ownership interest, and an approximate 15 % voting interest.

We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of electric vehicles, and one of our employees serving on Rivian’s board of directors.

We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets.

We determined that we have the ability to exercise significant influence over Rivian through our equity investment, our commercial arrangement for the purchase of electric vehicles and jointly-owned intellectual property, and one of our employees serving on Rivian’s board of directors.

We elected the fair value option to account for our equity investment in Rivian, which is included in “Marketable securities” on our consolidated balance sheets, and had a fair value of $ 2.9 billion and $ 3.7 billion as of December 31, 2022 and December 31, 2023.

The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $ 800 million as of December 31, 2021, which expired in Q1 2022.

Required summarized financial information of Rivian as disclosed in its most recent SEC filings is as follows (in millions):

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We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including recent cumulative loss experience and expectations of future earnings, capital gains and investment in such jurisdiction, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.

We utilize a two-step approach to recognizing and measuring uncertain income tax positions (tax contingencies).

We utilize a two-step approach to recognizing and measuring uncertain income tax positions (income tax contingencies).

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not the position will be sustained on audit, including resolution of related appeals or litigation processes.

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We consider many factors when evaluating our tax positions and estimating our tax benefits, which may require periodic adjustments and which may not accurately forecast actual outcomes.

We include interest and penalties related to our tax contingencies in income tax expense.

We include interest and penalties related to our income tax contingencies in income tax expense.

Fair Value of Financial Instruments

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As of December 31, 2022 and 2023, these warrants had a fair value of $ 2.1 billion and $ 2.2 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.

These warrants are classified as Level 2 and 3 assets.

Cash and Cash Equivalents

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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, 2021 and 2022, customer receivables, net, were $ 20.2 billion and $ 26.6 billion, vendor receivables, net, were $ 5.3 billion and $ 6.9 billion, and seller receivables, net, were $ 1.0 billion and $ 1.3 billion.

Included in “Accounts receivable, net and other” on our consolidated balance sheets are receivables primarily related to customers, vendors, and sellers, as well as prepaid expenses and other current assets.

As of December 31, 2022 and 2023, customer receivables, net, were $ 26.6 billion and $ 34.1 billion, vendor receivables, net, were $ 6.9 billion and $ 8.5 billion, seller receivables, net, were $ 1.3 billion and $ 1.0 billion, and other receivables, net, were $ 3.1 billion and $ 3.3 billion.

Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

Prepaid expenses and other current assets were $ 4.5 billion and $ 5.4 billion as of December 31, 2022 and December 31, 2023.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses.

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We compare the carrying value of each reporting unit and indefinite-lived intangible asset to its estimated fair value and if the fair value is determined to be less than the carrying value, we recognize an impairment loss for the difference.

We estimate the fair value of the reporting units using discounted cash

We estimate the fair value of the reporting units using discounted cash flows.

Forecasts of future cash flows are based on our best estimate of future net sales and operating expenses, based primarily on expected category expansion, pricing, market segment share, and general economic conditions.

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equity warrant assets and certain equity investments;

and satellite network launch services deposits.

satellite network launch services deposits;

and affordable housing loans.

We recognize certain transactions with governments when there is reasonable assurance that incentives included in the agreements, such as cash or certain tax credits, will be received and we are able to comply with any related conditions.

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We review usage and viewing patterns impacting the amortization of capitalized video content on an ongoing basis and reflect any changes prospectively.

Changes in historical and anticipated viewing patterns are lengthening the weighted average life of our capitalized video content.

We anticipate the changes in viewing patterns will positively impact 2023 operating income by approximately $ 1.0 billion, generally ratably throughout the year.

Our produced and licensed video content is primarily monetized together as a unit, referred to as a film group, in each major geography where we offer Amazon Prime memberships.

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Total video and music expense includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content.

We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term fixed income securities.

We generally invest our excess cash in AAA-rated money market funds and investment grade short- to intermediate-term marketable debt securities.

Such investments are included in “Cash and cash equivalents” or “Marketable securities” on the accompanying consolidated balance sheets.

Marketable fixed income securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).” Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs.

Marketable debt securities are classified as available-for-sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).” Each reporting period, we evaluate whether declines in fair value below carrying value are due to expected credit losses, as well as our ability and intent to hold the investment until a forecasted recovery occurs.

Expected credit losses are recorded as an allowance through “Other income (expense), net” on our consolidated statements of operations.

Equity investments in private companies for which we do not have the ability to exercise significant influence are accounted for at cost, with adjustments for observable changes in prices or impairments, and are classified as “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Convertible notes classified as available for sale, equity investments in private companies for which we do not have the ability to exercise significant influence and accounted for at cost, and equity investments accounted for using the equity method of accounting are included within “Other assets” on our consolidated balance sheets.

In Q3 2023, we invested in a $ 1.25 billion note from Anthropic, PBC, which is convertible to equity.

The note is classified as available for sale and reported at fair value with unrealized gains and losses included in “Accumulated other comprehensive income (loss).” The note is classified as a Level 3 asset.

We have an agreement that expires in Q1 2024 to invest up to an additional $ 2.75 billion in a second convertible note.

We also have a commercial arrangement primarily for the provision of AWS cloud services, which includes the use of AWS chips.

Equity investments in private companies for which we do not have the ability to exercise significant influence are accounted for at cost, with adjustments for observable changes in prices or impairments, with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Each reporting period, we perform a qualitative assessment to evaluate whether the investment is impaired.

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Equity investments are accounted for using the equity method of accounting, or at fair value if we elect the fair value option, if the investment gives us the ability to exercise significant influence, but not control, over an investee.

Equity-method

investments are included within “Other assets” on our consolidated balance sheets.

Our share of the earnings or losses as reported by equity-method investees, amortization of basis differences, related gains or losses, and impairments, if any, are recognized in “Equity-method investment activity, net of tax” on our consolidated statements of operations.

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Included in “Accrued expenses and other” on our consolidated balance sheets are liabilities primarily related to leases and asset retirement obligations, tax-related liabilities, current debt, payroll and related expenses, unredeemed gift cards, self-insurance liabilities, customer liabilities, marketing liabilities, acquired digital media content, and other operating expenses.

As of December 31, 2021 and 2022, our liabilities for payroll related expenses were $ 7.4 billion and $ 7.7 billion and our liabilities for unredeemed gift cards were $ 5.2 billion and $ 5.4 billion.

As of December 31, 2022 and 2023, our liabilities for payroll related expenses were $ 7.7 billion and our liabilities for unredeemed gift cards were $ 5.4 billion and $ 5.3 billion.

We reduce the liability for a gift card when redeemed by a customer.

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Changes in the number or costs of claims, healthcare costs, judgment and settlement amounts, associated legal expenses, and other factors could cause actual results to differ materially from these estimates.

As of December 31, 2021 and 2022, our total self-insurance liabilities were $ 2.2 billion and $ 4.0 billion and are included in “Accrued expenses and other” on our consolidated balance sheets.

In the fourth quarter of 2022, we increased our reserves for general, product, and automobile liabilities by $ 1.3 billion primarily driven by changes in our estimates about the costs of asserted and unasserted claims, which was primarily recorded in “Cost of sales” on our consolidated statements of operations and impacted our North America segment.

Increases to our reserves driven by changes in estimates were not material to our consolidated results of operations for the years ended December 31, 2021 and

As of December 31, 2022 and 2023, our total self-insurance liabilities were $ 4.0 billion and $ 6.3 billion and are included in “Accrued expenses and other” on our consolidated balance sheets.

Unearned Revenue

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Other Long-Term Liabilities

Included in “Other long-term liabilities” on our consolidated balance sheets are liabilities primarily related to financing obligations, asset retirement obligations, unearned revenue, tax contingencies, digital video and music content, and deferred tax liabilities.

Included in “Other long-term liabilities” on our consolidated balance sheets are liabilities primarily related to financing obligations, unearned revenue, asset retirement obligations, tax contingencies, digital video and music content, and deferred tax liabilities.

Foreign Currency

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In connection with the settlement and remeasurement of intercompany balances, we recorded gains (losses) of $ 19 million, $ 386 million, and $( 329 ) million in 2021, 2022, and 2023.

Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board issued an Accounting Standards Update (“ASU”) amending existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation.

The ASU is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis.

We are currently evaluating the ASU to determine its impact on our income tax disclosures.

Note 2 — FINANCIAL INSTRUMENTS

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Asset-backed securities 2,721 — ( 149 ) 2,572

Other fixed income securities 688 2 ( 4 ) 686

Equity securities (1)(3) 15,740

Other debt securities 249 — ( 12 ) 237

$ 67,484 $ — $ ( 802 ) $ 70,391

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Asset-backed securities 1,707 — ( 61 ) 1,646

Other fixed income securities 249 — ( 12 ) 237

Other debt securities 108 — ( 4 ) 104

$ 82,971 $ 1 $ ( 347 ) $ 87,283

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___________________

(1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $ 448 million, $ 11.6 billion, and $( 13.6 ) billion for the years ended December 31, 2020, 2021, and 2022.

(2) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable fixed income 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 fixed income 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.

(1) The related unrealized gain (loss) recorded in “Other income (expense), net” was $ 11.6 billion, $( 13.6 ) billion, and $ 1.0 billion for the years ended December 31, 2021, 2022, and 2023.

(2) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable debt 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 debt 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 7 — Commitments and Contingencies.”

(3) Our equity investment in Rivian had a fair value of $ 15.6 billion and $ 2.9 billion as of December 31, 2021 and December 31, 2022, respectively.

The investment was subject to regulatory sales restrictions resulting in a discount for lack of marketability of approximately $ 800 million as of December 31, 2021, which expired in Q1 2022.

The following table summarizes gross gains and gross losses realized on sales of marketable fixed income securities (in millions):

The following table summarizes gross gains and gross losses realized on sales of marketable debt securities (in millions):

Year Ended December 31,

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Realized losses 38 341 67

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of December 31, 2022 (in millions):

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable debt securities as of December 31, 2023 (in millions):

Cost Estimated

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Note 4 — LEASES

We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, data center, physical store, 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 $ 72.2 billion and $ 68.0 billion as of December 31, 2021 and 2022.

We have entered into non-cancellable operating and finance leases for fulfillment network, data center, office, and physical store facilities as well as server and networking equipment, aircraft, and vehicles.

Gross assets acquired under finance leases, including those where title transfers at the end of the lease, are recorded in “ Property and equipment, net ” and were $ 68.0 billion and $ 62.5 billion as of December 31, 2022 and 2023.

Accumulated amortization associated with finance leases was $ 45.2 billion and $ 44.7 billion as of December 31, 2022 and 2023.

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2021 Acquisition Activity

During 2020, we acquired certain companies for an aggregate purchase price of $ 1.2 billion, net of cash acquired, of which $ 1.1 billion was capitalized to in-process research and development intangible assets (“IPR&D”).

2021 Acquisition Activity

During 2021, we acquired certain companies for an aggregate purchase price of $ 496 million, net of cash acquired.

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During 2022, we also acquired certain other companies for an aggregate purchase price of $ 141 million, net of cash acquired.

2023 Acquisition Activity

On February 22, 2023, we acquired 1Life Healthcare, Inc.

(One Medical), for cash consideration of approximately $ 3.5 billion, net of cash acquired, to provide health care options for customers.

The acquired assets primarily consist of $ 1.3 billion of intangible assets and $ 2.5 billion of goodwill, which is allocated to our North America segment.

During 2023, we also acquired certain other companies for an immaterial aggregate purchase price, net of cash acquired.

Pro forma results of operations have not been presented because the effects of the 2023 acquisitions, individually and in the aggregate, were not material to our consolidated results of operations.

Acquisition-related costs were expensed as incurred and were not significant.

In addition, in August 2022, we entered into an agreement to acquire iRobot Corporation, as amended in July 2023, for approximately $ 1.7 billion, including its debt, subject to customary closing conditions.

In January 2024, we and iRobot agreed to terminate the transaction.

The goodwill of the acquired companies is primarily related to expected improvements in technology performance and functionality, as well as sales growth from future product and service offerings and new customers, together with certain intangible assets that do not qualify for separate recognition.

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Note 6 — DEBT

As of December 31, 2022, we had $ 69.5 billion of unsecured senior notes outstanding (the “Notes”), including $ 12.8 billion issued in April 2022 and $ 8.3 billion issued in December 2022 for general corporate purposes, and $ 1.0 billion of borrowings under our secured revolving credit facility.

As of December 31, 2023, we had $ 66.5 billion of unsecured senior notes outstanding (the “Notes”) and $ 682 million of borrowings under our secured revolving credit facility.

Our total long-term debt obligations are as follows (in millions):

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2024 - 2044 3.80 % - 4.95 %

2014 Notes issuance of $ 6.0 billion

3.90 % - 5.12 %

2017 Notes issuance of $ 17.0 billion

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0.88 % - 2.77 %

10,000 10,000

2021 Notes issuance of $ 18.5 billion

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2.83 % - 4.15 %

12,750 12,750

December 2022 Notes issuance of $ 8.3 billion

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The estimated fair value of the Notes was approximately $ 61.4 billion and $ 60.6 billion as of December 31, 2022 and 2023, which is based on quoted prices for our debt as of those dates.

We have a $ 1.5 billion secured revolving credit facility with a lender that is secured by certain seller receivables, which we increased from $ 1.0 billion to $ 1.5 billion in August 2022 and we may from time to time increase in the future subject to lender approval (the “Credit Facility”).

We have a $ 1.5 billion 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 August 2025, bears interest based on the daily Secured Overnight Financing Rate plus 1.25 %, and has a commitment fee of up to 0.45 % on the undrawn portion.

There were $ 803 million and $ 1.0 billion of borrowings outstanding under the Credit Facility as of December 31, 2021 and 2022, which had an interest rate of 1.5 % and 5.6 %, respectively.

As of December 31, 2021 and 2022, we have pledged $ 918 million and $ 1.2 billion of our cash and seller receivables as collateral for debt related to our Credit Facility.

There were $ 1.0 billion and $ 682 million of borrowings outstanding under the Credit Facility as of December 31, 2022 and 2023, which had an interest rate of 5.6 % and 6.6 %, respectively.

As of December 31, 2022 and 2023, we have pledged $ 1.2 billion and $ 806 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, 2022 and 2023.

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Thereafter 39,250

In January 2023, we entered into an $ 8.0 billion unsecured 364-day term loan with a syndicate of lenders (the “Term Loan”), maturing in January 2024 and bearing interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75 %.

The Term Loan was classified as short-term debt and included within “Accrued expenses and other” on our consolidated balance sheets.

As of December 31, 2023, the entire amount of the Term Loan has been repaid.

Dollar and Euro commercial paper programs (the “Commercial Paper Programs”) under which we may from time to time issue unsecured commercial paper up to a total of $ 20.0 billion (including up to € 3.0 billion) at the date of issue, with individual maturities that may vary but will not exceed 397 days from the date of issue.

In March 2022, we increased the size of the Commercial Paper Programs from $ 10.0 billion to $ 20.0 billion.

There were $ 725 million and $ 6.8 billion of borrowings outstanding under the Commercial Paper Programs as of December 31, 2021 and 2022, 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 0.08 % and 4.47 %, respectively.

There were $ 6.8 billion of

borrowings outstanding under the Commercial Paper Programs as of December 31, 2022, 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 4.5 %.

There were no borrowings outstanding under the Commercial Paper Programs as of December 31, 2023.

We use the net proceeds from the issuance of commercial paper for general corporate purposes.

We have a $ 10.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which was amended and restated in March 2022 to increase the borrowing capacity from $ 7.0 billion to $ 10.0 billion and to extend the term to March 2025.

It may be extended for up to three additional one-year terms if approved by the lenders.

In November 2023, we entered into a $ 15.0 billion unsecured revolving credit facility with a syndicate of lenders (the “Credit Agreement”), which replaced the prior amended and restated credit agreement entered into in March 2022.

The Credit Agreement has a term that extends to November 2028 and may be extended for one or more additional one-year terms if approved by the lenders.

The interest rate applicable to outstanding balances under the Credit Agreement is the applicable benchmark rate specified in the Credit Agreement plus 0.45 %, with a commitment fee of 0.03 % on the undrawn portion of the credit facility.

There were no borrowings outstanding under the Credit Agreement as of December 31, 2021 and 2022.

In November 2022, we entered into a $ 10.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “Short-Term Credit Agreement”), which matures in November 2023 and may be extended for one additional period of 364 days if approved by the lenders.

There were no borrowings outstanding under the Credit Agreement or the prior amended and restated credit agreement as of December 31, 2022 and 2023.

In November 2023, we also entered into a $ 5.0 billion unsecured 364-day revolving credit facility with a syndicate of lenders (the “Short-Term Credit Agreement”), which replaced the prior 364-day revolving credit agreement entered into in November 2022.

The Short-Term Credit Agreement matures in October 2024 and may be extended for one additional period of 364 days if approved by the lenders.

The interest rate applicable to outstanding balances under the Short-Term Credit Agreement is the Secured Overnight Financing Rate specified in the Short-Term Credit Agreement plus 0.45 %, with a commitment fee of 0.03 % on the undrawn portion.

There were no borrowings outstanding under the Short-Term Credit Agreement as of December 31, 2022.

There were no borrowings outstanding under the Short-Term Credit Agreement or the prior 364-day revolving credit agreement as of December 31, 2022 and 2023.

We also utilize other short-term credit facilities for working capital purposes.

There were $ 318 million and $ 1.2 billion of borrowings outstanding under these facilities as of December 31, 2021 and 2022, which were included in “Accrued expenses and other” on our consolidated balance sheets.

There were $ 1.2 billion and $ 147 million of borrowings outstanding under these facilities as of December 31, 2022 and 2023, which were included in “Accrued expenses and other” on our consolidated balance sheets.

In addition, we had $ 6.8 billion of unused letters of credit as of December 31, 2023.

In January 2023, we entered into an $ 8.0 billion unsecured 364-day term loan with a syndicate of lenders (the “Term Loan”), which matures in January 2024 and bears interest at the Secured Overnight Financing Rate specified in the Term Loan plus 0.75 %.

If we exercise our option to extend the Term Loan’s maturity to January 2025, the interest rate spread will increase from 0.75 % to 1.05 %.

As of the date of this filing, the entire Term Loan is outstanding.

Note 7 — COMMITMENTS AND CONTINGENCIES

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(1) Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities.

(1) Includes non-cancellable financing obligations for fulfillment network and data center facilities.

Excluding interest, current financing obligations of $ 266 million and $ 271 million are recorded within “Accrued expenses and other” and $ 6.7 billion and $ 6.6 billion are recorded within “Other long-term liabilities” as of December 31, 2022 and 2023.

The weighted-average remaining term of the financing obligations was 18.8 years and 17.9 years and the weighted-average imputed interest rate was 3.2 % and 3.1 % as of December 31, 2021 and 2022.

The weighted-average remaining term of the financing obligations was 17.9 years and 17.0 years and the weighted-average imputed interest rate was 3.1 % as of December 31, 2022 and 2023.

(2) Includes unconditional purchase obligations related to long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets, and certain products offered in our Whole Foods Market stores.

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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.

Renewable energy agreements based on actual generation without a fixed or minimum volume commitment are not included.

These agreements also provide the right to receive renewable energy certificates for no additional consideration.

(3) Includes asset retirement obligations, liabilities associated with digital media content agreements with initial terms greater than one year, and the estimated timing and amounts of payments for rent and tenant improvements associated with build-to-suit lease arrangements that are under construction.

(4) Excludes approximately $ 4.0 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

In July 2022, we entered into an agreement to acquire 1Life Healthcare, Inc.

(One Medical) for approximately $ 3.9 billion, including its debt, subject to customary closing conditions.

In August 2022, we entered into an agreement to acquire iRobot Corporation for approximately $ 1.7 billion, including its debt, subject to customary closing conditions.

We expect to fund these acquisitions with cash on hand.

Excludes approximately $ 5.2 billion of income tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

During 2023, no vendor accounted for 10% or more of our purchases.

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Other Contingencies

We are disputing claims and denials of refunds or credits related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes.

These non-income tax controversies typically relate to (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements.

We are disputing claims and denials of refunds or credits, and monitoring or evaluating potential claims, related to various non-income taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes.

These non-income tax controversies typically include (i) the taxability of products and services, including cross-border intercompany transactions, (ii) collection and withholding on transactions with third parties, including as a result of evolving requirements imposed on marketplaces with respect to third-party sellers, and (iii) the adequacy of compliance with reporting obligations, including evolving documentation requirements.

Due to the inherent complexity and uncertainty of these matters and the judicial and regulatory processes in certain jurisdictions, the final outcome of any such controversies may be materially different from our expectations.

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The complaint alleges, among other things, that the use of “interactive features” on www.amazon.com, including “search suggestions and search results,” infringes U.S.

9,195,507, entitled “Distributed Hypermedia Method and System for Automatically Invoking External Application Providing Interaction and Display of Embedded Objects Within a Hypermedia Document.” The complaint sought a judgment of infringement together with costs and attorneys’ fees.

9,195,507, entitled “Distributed

Hypermedia Method and System for Automatically Invoking External Application Providing Interaction and Display of Embedded Objects Within a Hypermedia Document.” The complaint sought a judgment of infringement together with costs and attorneys’ fees.

In February 2016, Eolas filed an amended complaint seeking, among other things, an unspecified amount of damages.

In February 2017, Eolas alleged in its damages report that in the event of a finding of liability Amazon could be subject to $ 130 to $ 250 million in damages.

In February 2017, Eolas alleged in its damages report that in the event of a finding of liability Amazon could be subject to $ 130 million to $ 250 million in damages.

In April 2017, the case was transferred to the United States District Court for the Northern District of California.

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In June 2022, Eolas filed a notice of appeal.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In February 2024, the United States Court of Appeals for the Federal Circuit affirmed the district court’s judgment.

We dispute the allegations of wrongdoing and will continue to defend ourselves vigorously in this matter.

In May 2018, Rensselaer Polytechnic Institute and CF Dynamic Advances LLC filed a complaint against Amazon.com, Inc.

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7,177,798, entitled “Natural Language Interface Using Constrained Intermediate Dictionary of Results.” The complaint seeks an injunction, an unspecified amount of damages, enhanced damages , an ongoing royalty, interest, attorneys’ fees, and costs.

In March 2023, the plaintiffs alleged in their damages report that in the event of a finding of liability Amazon could be subject to $ 140 million to $ 267 million in damages.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

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The complaint alleges, among other things, that Amazon S3 and DynamoDB infringe U.S.

7,814,170 and 7,103,640, both entitled “Network Distributed Tracking Wire Transfer Protocol”;

7,814,170 and 7,103,640, each entitled “Network Distributed Tracking Wire Transfer Protocol”;

and 7,233,978, entitled “Method and Apparatus for Managing Location Information in a Network Separate from the Data to Which the Location Information Pertains.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief.

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In November 2022, the stay was lifted.

In July 2023, Kove alleged in its damages report that in the event of a finding of liability Amazon Web Services could be subject to $ 517 million to $ 1.03 billion in damages.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

Beginning in June 2019 with Wilcosky v.

Amazon.com, Inc., now pending in the United States District Court for the Northern District of Illinois (“N.D.

Ill.”), private litigants have filed a number of cases in U.S.

federal and state courts, including Hogan v.

Amazon.com, Inc.

Ill.), alleging, among other things, that Amazon’s collection, storage, use, retention, and protection of biometric identifiers violated the Illinois Biometric Information Privacy Act.

The complaints allege purported classes of Illinois residents who had biometric identifiers collected through Amazon products or services, including Amazon Photos, Alexa, AWS cloud services, Ring, Amazon Connect, Amazon’s Flex driver app, and Amazon’s virtual try-on technology.

The complaints seek certification as class actions, unspecified amounts of damages, injunctive relief, attorneys’ fees, costs, and interest.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

Beginning in March 2020 with Frame-Wilson v.

Amazon.com, Inc.

filed in the United States District Court for the Western District of Washington, private litigants have filed a number of cases in the U.S.

filed in the United States District Court for the Western District of Washington (“W.D.

Wash.”), private litigants have filed a number of cases in the U.S.

and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc.

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Some of the private 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, injunctive relief, civil penalties, attorneys’ fees, and costs.

In March 2022 and January 2023, Amazon’s motions to dismiss were granted in part and denied in part in Frame-Wilson and De Coster v.

The complaints seek billions of dollars of alleged damages, treble damages, punitive damages, injunctive relief, civil penalties, attorneys’ fees, and costs.

The Federal Trade Commission and a number of state Attorneys General filed a similar lawsuit in September 2023 in the W.D.

alleging violations of federal antitrust and state antitrust and consumer protection laws.

That complaint alleges, among other things, that Amazon has a monopoly in markets for online superstores and marketplace services, and unlawfully maintains those monopolies through anticompetitive practices relating to our pricing policies, advertising practices, the structure of Prime, and promotion of our own products on our website.

The complaint seeks injunctive and structural relief, an unspecified amount of damages, and costs.

Amazon’s motions to dismiss were granted in part and denied in part in Frame-Wilson in March 2022 and March 2023, De Coster v.

Amazon.com, Inc.

(WD Wash), respectively;

both courts dismissed claims alleging that Amazon’s pricing policies are inherently illegal and denied dismissal of claims alleging that Amazon’s pricing policies are an unlawful restraint of trade.

Wash.) in January 2023, and the California Attorney General’s lawsuit in March 2023.

All three courts dismissed claims alleging that Amazon’s pricing policies are inherently illegal and denied dismissal of claims alleging that Amazon’s pricing policies are an unlawful restraint of trade.

In March 2022, the DC Superior Court dismissed the DC Attorney General’s lawsuit in its entirety;

the dismissal is under appeal as of January 2023.

the dismissal is under appeal.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

In October 2020, BroadbandiTV, Inc.

In October 2020, Broadband iTV, Inc.

filed a complaint against Amazon.com, Inc., Amazon.com Services LLC, and Amazon Web Services, Inc.

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The complaint alleges, among other things, that certain Amazon Prime Video features and services infringe U.S.

9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System for Providing Video-On-Demand Services to TV Services Subscribers”;

9,648,388, 10,546,750, and 10,536,751, each entitled “Video-On-Demand Content Delivery System for Providing Video-On-Demand Services to TV

Services Subscribers”;

10,028,026, entitled “System for Addressing On-Demand TV Program Content on TV Services Platform of a Digital TV Services Provider”;

and 9,973,825, entitled “Dynamic Adjustment of Electronic Program Guide Displays Based on Viewer Preferences for Minimizing Navigation in VOD Program Selection.” The complaint seeks an unspecified amount of damages.

In April 2022, BroadbandiTV alleged in its damages report that, in the event of a finding of liability, Amazon could be subject to $ 166 to $ 986 million in damages.

In April 2022, Broadband iTV alleged in its damages report that in the event of a finding of liability Amazon could be subject to $ 166 million to $ 986 million in damages.

In September 2022, the court granted summary judgment, holding that the patents are invalid.

In October 2022, BroadbandiTV filed a notice of appeal.

In October 2022, Broadband iTV filed a notice of appeal.

We dispute the allegations of wrongdoing and will continue to defend ourselves vigorously in this matter.

In November 2020, the European Commission issued a Statement of Objections alleging that Amazon uses data relating to our marketplace sellers in a manner that infringes EU competition rules.

The Statement of Objections sought to impose unspecified fines and remedial actions.

In December 2022, the European Commission adopted formal commitments without fines, fully resolving the investigation.

In July 2021, the Luxembourg National Commission for Data Protection (the “CNPD”) issued a decision against Amazon Europe Core S.à r.l.

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We believe the CNPD’s decision to be without merit and intend to defend ourselves vigorously in this matter.

In November 2021, Jawbone Innovations, LLC filed a complaint against Amazon.com, Inc.

and Amazon.com Services, Inc.

in the United States District Court for the Eastern District of Texas.

The complaint alleges, among other things, that Amazon Echo smart speakers and displays, Fire TV Cube, and Echo Buds infringe U.S.

7,246,058, entitled “Detecting Voiced and Unvoiced Speech Using Both Acoustic and Nonacoustic Sensors”;

8,019,091, entitled “Voice Activity Detector (VAD)-Based Multiple-Microphone Acoustic Noise Suppression”;

8,280,072, entitled “Microphone Array with Rear Venting”;

8,321,213 and 8,326,611, both entitled “Acoustic Voice Activity Detection (AVAD) for Electronic Systems”;

8,467,543, entitled “Microphone and Voice Activity Detection (VAD) Configurations for Use with Communications Systems”;

8,503,691, entitled “Virtual Microphone Arrays Using Dual Omnidirectional Microphone Array (DOMA)”;

10,779,080, entitled “Dual Omnidirectional Microphone Array (DOMA)”;

and 11,122,357, entitled “Forming Virtual Microphone Arrays Using Dual Omnidirectional Microphone Array (DOMA).” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief.

In November 2022, the case was transferred to the United States District Court for the Northern District of California.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In December 2021, the Italian Competition Authority (the “ICA”) issued a decision against Amazon Services Europe S.à r.l., Amazon Europe Core S.à r.l., Amazon EU S.à r.l., Amazon Italia Services S.r.l., and Amazon Italia Logistica S.r.l.

claiming that certain of our marketplace and logistics practices in Italy infringe EU competition rules.

The decision imposes remedial actions and a fine of € 1.13 billion, which we are paying and will seek to recover pending conclusion of all appeals.

The decision imposes remedial actions and a fine of € 1.13 billion, which we have paid and will seek to recover pending conclusion of all appeals.

We believe the ICA’s decision to be without merit and intend to defend ourselves vigorously in this matter.

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We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

In May 2023, Dialect, LLC filed a complaint against Amazon.com, Inc.

and Amazon Web Services, Inc.

in the United States District Court for the Eastern District for Virginia.

The complaint alleges, among other things, that Amazon’s Alexa-enabled products and services, such as Echo devices, Fire tablets, Fire TV sticks, Fire TVs, Alexa, and Alexa Voice Services, infringe U.S.

7,693,720 and 9,031,845, each entitled “Mobile Systems and Methods for Responding to Natural Language Speech Utterance”;

8,015,006, entitled “Systems and Methods for Processing Natural Language Speech Utterances with Context-Specific Domain Agents”;

8,140,327, entitled “System and Method for Filtering and Eliminating Noise from Natural Language Utterances to Improve Speech Recognition and Parsing”;

8,195,468 and 9,495,957, each entitled “Mobile Systems and Methods of Supporting Natural Language Human-Machine Interactions”;

and 9,263,039, entitled “Systems and Methods for Responding to Natural Language Speech Utterance.” The complaint seeks an unspecified amount of damages, enhanced damages, attorneys’ fees, costs, interest, and injunctive relief.

In November 2023, the court granted in part Amazon’s motion to dismiss Dialect’s complaint and dismissed the ‘845 patent from the case.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in this matter.

Beginning in October 2023, Nokia Technologies Oy and related entities filed complaints alleging infringement of patents related to video-related technologies against Amazon.com, Inc.

and related entities in multiple courts in the United States, India, the United Kingdom, Germany, and Brazil, the Unified Patent Court of the European Union, and the United States International Trade Commission.

The complaints allege, among other things, that certain Amazon Prime Video services and features of Amazon devices carrying the Prime Video app infringe Nokia’s patents;

some of the complaints additionally allege infringement by Freevee, Twitch, and Amazon voice assistants.

The complaints seek, among other things, injunctive relief and, in some cases, unspecified money damages, enhanced damages, attorneys’ fees, costs, interest, and declaratory relief.

These matters are at various procedural stages, with preliminary injunctions issued in certain instances.

We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

In addition, we are regularly subject to claims, li tigation, 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.

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Employees vest in restricted stock unit awards over the corresponding service term, generally between two and five years .

The majority of restricted stock unit awards are granted at the date of hire or in Q2 as part of the annual compensation review and primarily vest semi-annually in Q2 and Q4 of the relevant compensation year.

Stock Award Activity

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Fulfillment 1,946 2,745 3,090

Technology and content 5,061 6,645 10,621

Technology and infrastructure 6,645 10,621 13,434

Sales and marketing 2,530 3,875 4,623

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The estimated forfeiture rate as of December 31, 2021, 2022, and 2023 was 26.5 %, 26.5 %, and 26.1 %.

Changes in our estimates and assumptions relating to forfeitures may cause us to realize material changes in stock-based compensation expense in the future.

During 2021, 2022, and 2023, the fair value of restricted stock units that vested was $ 18.2 billion, $ 12.8 billion, and $ 17.6 billion.

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Note 9 — INCOME TAXES

In 2020, 2021, and 2022, we recorded net tax provision (benefit) of $ 2.9 billion, $ 4.8 billion, and $( 3.2 ) billion.

In 2021, 2022, and 2023, we recorded a net tax provision (benefit) of $ 4.8 billion, $( 3.2 ) billion, and $ 7.1 billion.

taxable income is reduced by accelerated depreciation deductions and increased by the impact of capitalized research and development expenses.

Cash taxes paid, net of refunds, were $ 1.7 billion, $ 3.7 billion, and $ 6.0 billion for 2020, 2021, and 2022.

Cash paid for income taxes, net of refunds, was $ 3.7 billion, $ 6.0 billion, and $ 11.2 billion for 2021, 2022, and 2023.

Certain foreign subsidiary earnings and losses are subject to current U.S.

taxation and the subsequent repatriation of those earnings is not subject to tax in the U.S.

tax rules also provide for enhanced accelerated depreciation deductions by allowing the election of full expensing of qualified property, primarily equipment, through 2022.

Our federal tax provision included a partial election for 2020 and 2021, and a full election for 2022.

tax rules also provide for enhanced accelerated depreciation deductions by allowing us to expense a portion of qualified property, primarily equipment.

These enhanced deductions are scheduled to phase out annually from 2023 through 2026.

Our federal tax provision included a partial accelerated depreciation deduction election for 2021, and a full election for 2022 and 2023.

Effective January 1, 2022, research and development expenses are required to be capitalized and amortized for U.S.

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Income (loss) before income taxes $ 38,151 $ ( 5,936 ) $ 37,557

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows (in millions):

The items accounting for differences between income taxes computed at the federal statutory rate and the provision (benefit) recorded for income taxes are as follows (in millions):

Year Ended December 31,

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(1) Includes non-deductible stock-based compensation and excess tax benefits or shortfalls from stock-based compensation.

Our tax provision includes $ 1.8 billion and $ 1.9 billion of excess tax benefits from stock-based compensation for 2020 and 2021, and a $ 33 million tax shortfall from stock-based compensation for 2022.

Our tax provision includes $ 1.9 billion of excess tax benefits from stock-based compensation for 2021, and $ 33 million and $ 519 million of tax shortfalls from stock-based compensation for 2022 and 2023.

companies are eligible for a deduction that lowers the effective tax rate on certain foreign income.

This regime is referred to as the Foreign-Derived Intangible Income deduction.

Our provision for income taxes in 2021 was higher than in 2020 primarily due to an increase in pretax income.

This was partially offset by an increase in U.S.

federal research and development credits and the impact of the distribution of certain intangible assets from Luxembourg to the U.S.

in Q4 2021, resulting in the utilization of $ 2.6 billion of Luxembourg deferred tax assets previously subject to a valuation allowance.

This regime is referred to as the Foreign-Derived Intangible Income deduction and is dependent on the amount of our U.S.

taxable income.

We generated an income tax benefit in 2022 as compared to a provision for income taxes in 2021 primarily due to a decrease in pretax income and an increase in the foreign income deduction.

This was partially offset by a reduction in excess tax benefits from stock-based compensation and a decrease in the tax impact of foreign earnings and losses driven by a decline in the favorable effects of corporate restructuring transactions.

The foreign income deduction benefit recognized in 2022 reflects a change in our application of tax regulations related to the computation of qualifying foreign income and includes an income tax benefit of approximately $ 655 million related to years prior to 2022.

The foreign income deduction benefit recognized in 2022 reflects a change in our application of tax regulations related to the computation of qualifying foreign income and includes a tax benefit of approximately $ 655 million related to years prior to 2022.

We recorded a provision for income taxes in 2023 as compared to an income tax benefit in 2022 primarily due to an increase in pretax income, a decrease in the tax impact of foreign earnings and losses driven by a decline in the favorable effects of corporate restructuring transactions, and an increase in tax shortfalls from stock-based compensation.

This was partially offset by an increase in federal research and development credits, which included approximately $ 600 million of tax benefit recorded in 2023 related to a change in the estimated qualifying expenditures associated with our 2022 U.S.

federal R&D credit.

We intend to invest substantially all of our foreign subsidiary earnings, as well as our capital in our foreign subsidiaries, indefinitely outside of the U.S.

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Operating lease assets ( 17,140 ) ( 18,648 )

Assets held for investment ( 4,019 ) —

Other items ( 817 ) ( 1,489 )

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If not utilized, a portion of these losses will begin to expire in 2024.

Tax Contingencies

Income Tax Contingencies

We are subject to income taxes in the U.S.

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The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate.

The reconciliation of our tax contingencies is as follows (in millions):

The reconciliation of our income tax contingencies is as follows (in millions):

2021 2022 2023

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(1) As of December 31, 2022, we had approximately $ 4.0 billion of accrued tax contingencies of which $ 2.2 billion, if fully recognized, would decrease our effective tax rate.

(1) As of December 31, 2023, we had approximately $ 5.2 billion of income tax contingencies of which $ 3.3 billion, if fully recognized, would decrease our effective tax rate.

As of December 31, 2022 and 2023, we had accrued interest and penalties, net of federal income tax benefit, related to tax contingencies of $ 103 million and $ 194 million.

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In September 2022, the Luxembourg tax authority (“LTA”) denied the tax basis of certain intangible assets that we distributed from Luxembourg to the U.S.

We believe the LTA’s position is without merit and intend to defend ourselves vigorously in this matter.

In February 2023, we received a decision by the Indian Tax Authority (“ITA”) that tax applies to cloud services fees paid to the U.S.

We will need to remit taxes on the services in question, including for a portion of prior years, until this matter is resolved, which payments could be significant in the aggregate.

We believe the ITA’s decision is without merit, we intend to defend our position vigorously, and we expect to recoup taxes paid.

If this matter is adversely resolved, we would reflect significant additional tax expense, including for taxes previously paid.

When we are assessed by the LTA, we will need to remit taxes related to this matter.

We believe the LTA’s position is without merit, we intend to defend ourselves vigorously in this matter, and we expect to recoup taxes paid.

The Indian tax authority (“ITA”) has asserted that tax applies to cloud services fees paid to Amazon in the U.S.

We will need to remit taxes related to this matter until it is resolved, which payments could be significant in the aggregate.

We believe the ITA’s position is without merit, we are defending our position vigorously in the Indian courts, and we expect to recoup taxes paid.

If this matter is adversely resolved, we could recognize significant additional tax expense, including for taxes previously paid.

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.

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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.

In December 2023, the European Court of Justice affirmed the European Union General Court’s decision.

Changes in tax laws, regulations, administrative practices, principles, and interpretations may impact our tax contingencies.

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North America, International, and AWS.

We allocate to segment results the operating expenses “Fulfillment,” “Technology and content,” “Sales and 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.

We allocate to segment results the operating expenses “Fulfillment,” “Technology and infrastructure,” “Sales and 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 costs recorded in “Technology and infrastructure” are incurred in the U.S.

and are included in our North America and AWS segments.

The majority of infrastructure costs recorded in “Technology and infrastructure” are allocated to the AWS segment based on usage.

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.

Our chief operating decision maker (“CODM”) regularly reviews consolidated net sales, consolidated operating expenses, and consolidated operating income (loss) by segment.

Amounts included in consolidated operating expenses include “Cost of sales,” “Fulfillment,” “Technology and infrastructure,” “Sales and marketing,” “General and administrative,” and “Other operating expense (income), net.” Our CODM manages our business by reviewing annual forecasts and consolidated results by segment on a quarterly basis.

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.

The North America segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services 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.

The International segment primarily consists of amounts earned from retail sales of consumer products (including from sellers) and advertising and subscription services 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.

10 unchanged sentences

Operating expenses 128,711 125,753 133,856

Operating income (loss) $ 717 $ ( 924 ) $ ( 7,746 )

Operating loss $ ( 924 ) $ ( 7,746 ) $ ( 2,656 )

Net sales $ 62,202 $ 80,096 $ 90,757

14 unchanged sentences

Third-party seller services (3) 103,366 117,716 140,053

Subscription services (4) 25,207 31,768 35,218

Advertising services (4) 31,160 37,739 46,906

Subscription services (5) 31,768 35,218 40,209

AWS 62,202 80,096 90,757

5 unchanged sentences

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.”

Digital media content 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.

1 unchanged sentence

(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.

(4) Includes sales of advertising services to sellers, vendors, publishers, authors, and others, through programs such as sponsored ads, display, and video advertising.

(6) Includes sales related to various other offerings, such as certain licensing and distribution of video content and shipping services, and our co-branded credit card agreements.

(5) 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.

(6) Includes sales related to various other offerings, such as certain licensing and distribution of video content, health care services, and shipping services, and our co-branded credit card agreements.

Net sales are attributed to countries primarily based on country-focused online and physical stores or, for AWS purposes, the selling entity.

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___________________

(1) North America and International segment assets primarily consist of property and equipment, operating leases, inventory, and accounts receivable.

(2) AWS segment assets primarily consist of property and equipment and accounts receivable.

(1) North America and International segment assets primarily consist of property and equipment, operating leases, inventory, accounts receivable, and digital video and music content.

(2) AWS segment assets primarily consist of property and equipment, accounts receivable, and operating leases.

Property and equipment, net by segment is as follows (in millions):

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___________________

(1) Includes property and equipment added under finance leases of $ 5.6 billion, $ 3.6 billion, and $ 422 million in 2020, 2021, and 2022, and under build-to-suit lease arrangements of $ 2.7 billion, $ 5.6 billion, and $ 3.2 billion in 2020, 2021, and 2022.

(2) Includes property and equipment added under finance leases of $ 7.7 billion, $ 3.5 billion, and $ 253 million in 2020, 2021, and 2022, and under build-to-suit lease arrangements of $ 130 million, $ 51 million, and $ 20 million in 2020, 2021, and 2022.

(1) Includes property and equipment added under finance leases of $ 3.6 billion, $ 422 million, and $ 525 million in 2021, 2022, and 2023, and under build-to-suit lease arrangements of $ 5.6 billion, $ 3.2 billion, and $ 356 million in 2021, 2022, and 2023.

(2) Includes property and equipment added under finance leases of $ 3.5 billion, $ 253 million, and $ 117 million in 2021, 2022, and 2023, and under build-to-suit lease arrangements of $ 51 million, $ 20 million, and $ 1 million in 2021, 2022, and 2023.

property and equipment, net and operating leases were $ 155.0 billion, $ 180.0 billion, and $ 196.0 billion, as of December 31, 2021, 2022, and 2023, and non-U.S.

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data