Segment Information

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

Beginning in the first quarter of 2015, we changed our reportable segments to North America, International, and AWS. These segments reflect the way the Company evaluates its business performance and manages its operations.

We allocate to segment results the operating expenses “Fulfillment,” “Marketing,” “Technology and content,” 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 exclude from our allocations the portions of these operating expense lines attributable to stock-based compensation. We do not allocate the line item “Other operating expense (income), net” to our segment operating results. There are no internal revenue transactions between our reportable segments.

North America

The North America segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through North America-focused websites such as www.amazon.com, www.amazon.ca, and www.amazon.com.mx. This segment includes export sales from these websites.

International

The International segment consists primarily of amounts earned from retail sales of consumer products (including from sellers) and subscriptions through internationally-focused websites such as www.amazon.com.au, www.amazon.com.br, www.amazon.cn, www.amazon.fr, www.amazon.de, www.amazon.in, www.amazon.it, www.amazon.co.jp, www.amazon.nl, www.amazon.es, and www.amazon.co.uk. This segment includes export sales from these internationally-focused websites (including export sales from these sites to customers in the U.S., Mexico, and Canada), but excludes export sales from our North American websites.

AWS

The AWS segment consists of amounts earned from global sales of compute, storage, database, and other AWS service offerings for start-ups, enterprises, government agencies, and academic institutions.

Information on reportable segments and reconciliation to consolidated net income (loss) is as follows (in millions):

	Year Ended December 31,
	2015			2014			2013
North America
Net sales	$	63,708		$	50,834		$	41,410
Segment operating expenses (1)	60,957			49,542			40,244
Segment operating income (loss)	$	2,751		$	1,292		$	1,166
International
Net sales	$	35,418		$	33,510		$	29,934
Segment operating expenses (1)	35,509			33,654			29,780
Segment operating income (loss)	$	(91	)	$	(144	)	$	154
AWS
Net sales	$	7,880		$	4,644		$	3,108
Segment operating expenses (1)	6,017			3,984			2,435
Segment operating income (loss)	$	1,863		$	660		$	673
Consolidated
Net sales	$	107,006		$	88,988		$	74,452
Segment operating expenses (1)	102,483			87,180			72,459
Segment operating income (loss)	4,523			1,808			1,993
Stock-based compensation	(2,119		)	(1,497		)	(1,134		)
Other operating income (expense), net	(171		)	(133		)	(114		)
Income from operations	2,233			178			745
Total non-operating income (expense)	(665		)	(289		)	(239		)
Provision for income taxes	(950		)	(167		)	(161		)
Equity-method investment activity, net of tax	(22		)	37			(71		)
Net income (loss)	$	596		$	(241	)	$	274

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(1) Excludes stock-based compensation and “Other operating expense (income), net,” which are not allocated to segments.

We have aggregated our products and services into groups of similar products and services and provided the supplemental disclosure of net sales (in millions) below. We evaluate whether additional disclosure is appropriate when a product or service category begins to approach a significant level of net sales. For the periods presented, no individual product or service represented more than 10% of net sales.

	Year Ended December 31,
	2015		2014		2013
Net Sales:
Media	$	22,509	$	22,505	$	21,716
Electronics and other general merchandise	75,597		60,886		48,802
AWS	7,880		4,644		3,108
Other (1)	1,020		953		826
	$	107,006	$	88,988	$	74,452

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(1) Includes sales from non-retail activities, such as certain advertising services, and our co-branded credit card agreements.

Net sales generated from our internationally-focused websites are denominated in local functional currencies. Revenues are translated at average rates prevailing throughout the period. Net sales attributed to countries that represent a significant portion of consolidated net sales are as follows (in millions):

	Year Ended December 31,
	2015		2014		2013
United States	$	70,537	$	54,717	$	43,959
Germany	11,816		11,919		10,535
United Kingdom	9,033		8,341		7,291
Japan	8,264		7,912		7,639
Rest of world	7,356		6,099		5,028
Consolidated	$	107,006	$	88,988	$	74,452

Total segment assets exclude corporate assets, such as cash and cash equivalents, marketable securities, other long-term investments, corporate facilities, goodwill and other acquired intangible assets, capitalized internal-use software and website development costs, and tax assets. Technology infrastructure assets are allocated among the segments based on usage, with the majority allocated to the AWS segment. Total segment assets reconciled to consolidated amounts are as follows (in millions):

	December 31,
	2015		2014		2013
North America (1)	$	16,772	$	13,257	$	9,991
International (1)	7,754		6,747		6,199
AWS (2)	9,787		6,981		3,840
Corporate	31,131		27,520		20,129
Consolidated	$	65,444	$	54,505	$	40,159

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

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

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

	December 31,
	2015		2014		2013
North America	$	6,707	$	5,373	$	3,477
International	2,266		2,000		1,549
AWS	8,356		6,043		3,253
Corporate	4,509		3,551		2,670
Consolidated	$	21,838	$	16,967	$	10,949

Total property and equipment additions by segment are as follows (in millions):

	Year Ended December 31,
	2015		2014		2013
North America (1)	$	2,485	$	2,833	$	2,326
International (1)	658		767		851
AWS (2)	4,681		4,295		2,215
Corporate	1,801		1,586		981
Consolidated	$	9,625	$	9,481	$	6,373

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(1) Includes property and equipment added under capital leases of $938 million, $887 million, and $555 million in 2015, 2014, and 2013, and under other financing arrangements of $219 million, $599 million, and $715 million in 2015, 2014, and 2013.

(2) Includes property and equipment added under capital leases of $3.7 billion, $3.0 billion, and $1.3 billion in 2015, 2014, and 2013 and under finance leases of $81 million, $62 million, and $67 million in 2015, 2014, and 2013.

U.S. property and equipment, net was $16.8 billion, $13.1 billion, and $8.4 billion, in 2015, 2014, and 2013, and rest of world property and equipment, net was $5.0 billion, $3.8 billion, and $2.5 billion in 2015, 2014, and 2013. Except for the U.S., property and equipment, net, in any single country was less than 10% of consolidated property and equipment, net.

Depreciation expense, including amortization of capitalized internal-use software and website development costs and other corporate property and equipment depreciation expense, are allocated to all segments based on usage. Total depreciation expense, by segment, is as follows (in millions):

	Year Ended December 31,
	2015		2014		2013
North America	$	1,551	$	1,203	$	914
International	822		740		583
AWS	2,576		1,673		963
Consolidated	$	4,949	$	3,616	$	2,460