SEGMENT INFORMATION

We have organized our operations into three segments: North America, International, and AWS. 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. In Q1 2017, we combined stock-based compensation and “Other operating expense, net” with operating expenses in our presentation of segment results. The results of Whole Foods Market are included in our North America and International segments based on physical location. 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 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 primarily consists 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 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			2016			2017
North America
Net sales	$	63,708		$	79,785		$	106,110
Operating expenses	62,283			77,424			103,273
Operating income	$	1,425		$	2,361		$	2,837
International
Net sales	$	35,418		$	43,983		$	54,297
Operating expenses	36,117			45,266			57,359
Operating income (loss)	$	(699	)	$	(1,283	)	$	(3,062	)
AWS
Net sales	$	7,880		$	12,219		$	17,459
Operating expenses	6,373			9,111			13,128
Operating income	$	1,507		$	3,108		$	4,331
Consolidated
Net sales	$	107,006		$	135,987		$	177,866
Operating expenses	104,773			131,801			173,760
Operating income	2,233			4,186			4,106
Total non-operating income (expense)	(665		)	(294		)	(300		)
Provision for income taxes	(950		)	(1,425		)	(769		)
Equity-method investment activity, net of tax	(22		)	(96		)	(4		)
Net income	$	596		$	2,371		$	3,033

Net sales by groups of similar products and services is as follows (in millions):



	Year Ended December 31,
	2015		2016		2017
Net Sales:
Online stores (1)	$	76,863	$	91,431	$	108,354
Physical stores (2)	—		—		5,798
Third-party seller services (3)	16,086		22,993		31,881
Subscription services (4)	4,467		6,394		9,721
AWS	7,880		12,219		17,459
Other (5)	1,710		2,950		4,653
Consolidated	$	107,006	$	135,987	$	177,866

___________________

(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, music, videos, games, 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.


(3)	Includes commissions, related fulfillment and shipping fees, and other third-party seller services.


(4)	Includes annual and monthly fees associated with Amazon Prime membership, as well as audiobook, e-book, digital video, digital music, and other non-AWS subscription services.


(5)	Includes sales not otherwise included above, 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		2016		2017
United States	$	70,537	$	90,349	$	120,486
Germany	11,816		14,148		16,951
United Kingdom	9,033		9,547		11,372
Japan	8,264		10,797		11,907
Rest of world	7,356		11,146		17,150
Consolidated	$	107,006	$	135,987	$	177,866

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		2016		2017
North America (1)	$	16,772	$	22,225	$	35,844
International (1)	7,754		10,429		18,014
AWS (2)	9,787		12,698		18,660
Corporate	30,434		38,050		58,792
Consolidated	$	64,747	$	83,402	$	131,310

___________________


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


(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		2016		2017
North America	$	6,707	$	10,143	$	20,401
International	2,266		3,448		7,425
AWS	8,356		10,300		14,885
Corporate	4,509		5,223		6,155
Consolidated	$	21,838	$	29,114	$	48,866

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



	Year Ended December 31,
	2015		2016		2017
North America (1)	$	2,485	$	5,132	$	13,200
International (1)	658		1,680		5,196
AWS (2)	4,681		5,193		9,190
Corporate	1,801		1,580		2,197
Consolidated	$	9,625	$	13,585	$	29,783

___________________


(1)	Includes property and equipment added under capital leases of $938 million, $1.5 billion, and $2.9 billion in 2015, 2016, and 2017, and under other financing arrangements of $219 million, $849 million, and $2.9 billion in 2015, 2016, and 2017.


(2)	Includes property and equipment added under capital leases of $3.7 billion, $4.0 billion, and $7.3 billion in 2015, 2016, and 2017, and under finance leases of $81 million, $75 million, and $134 million in 2015, 2016, and 2017.

U.S. property and equipment, net was $16.8 billion, $22.0 billion, and $35.5 billion, in 2015, 2016, and 2017, and rest of world property and equipment, net was $5.0 billion, $7.1 billion, and $13.4 billion in 2015, 2016, and 2017. 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		2016		2017
North America	$	1,551	$	1,971	$	3,029
International	822		930		1,278
AWS	2,576		3,461		4,524
Consolidated	$	4,949	$	6,362	$	8,831