UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ____________________________________

FORM 10-Q

____________________________________ 

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to             .

Commission File No. 000-22513

____________________________________

AMAZON.COM, INC.

(Exact name of registrant as specified in its charter)

 ____________________________________

Delaware	91-1646860
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

410 Terry Avenue North, Seattle, Washington 98109-5210

(206) 266-1000

(Address and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share	AMZN	Nasdaq Global Select Market

____________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

506,440,520 shares of common stock, par value $0.01 per share, outstanding as of July 21, 2021

AMAZON.COM, INC.

FORM 10-Q

For the Quarterly Period Ended June 30, 2021

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Statements of Cash Flows	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Balance Sheets	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signatures		45

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2020		2021		2020		2021		2020		2021
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	$	27,505	$	34,155	$	36,410	$	42,377	$	22,965	$	37,842
OPERATING ACTIVITIES:
Net income	5,243		7,778		7,778		15,885		13,180		29,438
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization of property and equipment and capitalized content costs, operating lease assets, and other	5,748		8,038		11,110		15,546		22,843		29,687
Stock-based compensation	2,601		3,591		4,358		5,897		7,977		10,747
Other operating expense (income), net	282		18		348		48		445		(372)
Other expense (income), net	(769)		(1,258)		(204)		(2,714)		(310)		(5,092)
Deferred income taxes	465		701		787		2,404		1,063		1,063
Changes in operating assets and liabilities:
Inventories	(672)		(209)		720		(513)		(1,176)		(4,082)
Accounts receivable, net and other	(2,854)		(4,462)		(1,592)		(6,717)		(6,680)		(13,294)
Accounts payable	8,616		47		573		(8,219)		11,482		8,689
Accrued expenses and other	1,699		(1,685)		(1,063)		(5,745)		1,110		1,071
Unearned revenue	247		156		854		1,056		1,286		1,467
Net cash provided by (used in) operating activities	20,606		12,715		23,669		16,928		51,220		59,322
INVESTING ACTIVITIES:
Purchases of property and equipment	(7,459)		(14,288)		(14,254)		(26,370)		(24,263)		(52,256)
Proceeds from property and equipment sales and incentives	844		1,300		2,212		2,195		4,895		5,080
Acquisitions, net of cash acquired, and other	(118)		(320)		(210)		(950)		(1,385)		(3,066)
Sales and maturities of marketable securities	8,138		13,213		19,764		31,039		34,641		61,512
Purchases of marketable securities	(19,209)		(21,985)		(34,210)		(36,660)		(49,196)		(74,929)
Net cash provided by (used in) investing activities	(17,804)		(22,080)		(26,698)		(30,746)		(35,308)		(63,659)
FINANCING ACTIVITIES:
Proceeds from short-term debt, and other	2,433		1,176		3,050		3,102		4,145		6,848
Repayments of short-term debt, and other	(1,906)		(1,176)		(2,537)		(3,177)		(3,693)		(6,817)
Proceeds from long-term debt	9,918		18,516		9,994		18,627		10,699		19,158
Repayments of long-term debt	(205)		(41)		(241)		(80)		(1,305)		(1,392)
Principal repayments of finance leases	(2,817)		(2,804)		(5,417)		(6,210)		(10,504)		(11,435)
Principal repayments of financing obligations	(15)		(28)		(32)		(95)		(56)		(116)
Net cash provided by (used in) financing activities	7,408		15,643		4,817		12,167		(714)		6,246
Foreign currency effect on cash, cash equivalents, and restricted cash	127		234		(356)		(59)		(321)		916
Net increase (decrease) in cash, cash equivalents, and restricted cash	10,337		6,512		1,432		(1,710)		14,877		2,825
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	37,842	$	40,667	$	37,842	$	40,667	$	37,842	$	40,667

See accompanying notes to consolidated financial statements.

3

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2021		2020		2021
Net product sales	$	50,244	$	58,004	$	92,085	$	115,495
Net service sales	38,668		55,076		72,279		106,103
Total net sales	88,912		113,080		164,364		221,598
Operating expenses:
Cost of sales	52,660		64,176		96,917		126,579
Fulfillment	13,806		17,638		25,337		34,168
Technology and content	10,388		13,871		19,713		26,359
Marketing	4,345		7,524		9,173		13,731
General and administrative	1,580		2,158		3,032		4,145
Other operating expense (income), net	290		11		360		49
Total operating expenses	83,069		105,378		154,532		205,031
Operating income	5,843		7,702		9,832		16,567
Interest income	135		106		337		211
Interest expense	(403)		(435)		(805)		(834)
Other income (expense), net	646		1,261		240		2,958
Total non-operating income (expense)	378		932		(228)		2,335
Income before income taxes	6,221		8,634		9,604		18,902
Provision for income taxes	(984)		(868)		(1,729)		(3,024)
Equity-method investment activity, net of tax	6		12		(97)		7
Net income	$	5,243	$	7,778	$	7,778	$	15,885
Basic earnings per share	$	10.50	$	15.40	$	15.59	$	31.49
Diluted earnings per share	$	10.30	$	15.12	$	15.32	$	30.92
Weighted-average shares used in computation of earnings per share:
Basic	500		505		499		505
Diluted	509		514		508		514

See accompanying notes to consolidated financial statements.

4

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2021		2020		2021
Net income	$	5,243	$	7,778	$	7,778	$	15,885
Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(8), $(17), $13 and $(4)	207		159		(668)		(215)
Net change in unrealized gains (losses) on available-for-sale debt securities:
Unrealized gains (losses), net of tax of $(73), $(2), $(61) and $28	407		(6)		205		(104)
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $4, $0 and $8	(6)		(12)		(6)		(26)
Net unrealized gains (losses) on available-for-sale debt securities	401		(18)		199		(130)
Total other comprehensive income (loss)	608		141		(469)		(345)
Comprehensive income	$	5,851	$	7,919	$	7,309	$	15,540

See accompanying notes to consolidated financial statements.

5

AMAZON.COM, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

	December 31, 2020		June 30, 2021
			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	42,122	$	40,380
Marketable securities	42,274		49,514
Inventories	23,795		24,119
Accounts receivable, net and other	24,542		26,835
Total current assets	132,733		140,848
Property and equipment, net	113,114		133,502
Operating leases	37,553		43,346
Goodwill	15,017		15,350
Other assets	22,778		27,273
Total assets	$	321,195	$	360,319
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	72,539	$	66,090
Accrued expenses and other	44,138		41,007
Unearned revenue	9,708		10,695
Total current liabilities	126,385		117,792
Long-term lease liabilities	52,573		56,297
Long-term debt	31,816		50,279
Other long-term liabilities	17,017		21,148
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock, $0.01 par value:
Authorized shares — 500
Issued and outstanding shares — none	—		—
Common stock, $0.01 par value:
Authorized shares — 5,000
Issued shares — 527 and 530
Outstanding shares — 503 and 506	5		5
Treasury stock, at cost	(1,837)		(1,837)
Additional paid-in capital	42,865		48,724
Accumulated other comprehensive income (loss)	(180)		(525)
Retained earnings	52,551		68,436
Total stockholders’ equity	93,404		114,803
Total liabilities and stockholders’ equity	$	321,195	$	360,319

See accompanying notes to consolidated financial statements.

6

AMAZON.COM, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

Unaudited Interim Financial Information

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2021 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our 2020 Annual Report on Form 10-K.

Principles of Consolidation

The consolidated financial statements include the accounts of Amazon.com, Inc. and its consolidated entities (collectively, the “Company”), consisting of its wholly-owned subsidiaries and those entities in which we have a variable interest and of which we are the primary beneficiary, including certain entities in India and certain entities that support our seller lending financing activities. Intercompany balances and transactions between consolidated entities are eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, commitments and contingencies, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, vendor funding, inventory valuation, collectability of receivables, and valuation and impairment of investments. Actual results could differ materially from these estimates.

Supplemental Cash Flow Information

The following table shows supplemental cash flow information (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,				Twelve Months Ended June 30,
	2020		2021		2020		2021		2020		2021
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on debt	$	139	$	179	$	430	$	455	$	872	$	942
Cash paid for operating leases	1,086		1,577		2,115		3,217		3,929		5,577
Cash paid for interest on finance leases	161		129		329		286		662		569
Cash paid for interest on financing obligations	21		35		43		68		77		127
Cash paid for income taxes, net of refunds	486		1,803		791		2,604		1,221		3,526
Assets acquired under operating leases	3,347		5,578		5,755		9,114		10,530		19,576
Property and equipment acquired under finance leases	3,155		1,642		5,321		3,709		13,110		9,976
Property and equipment acquired under build-to-suit arrangements	482		1,094		861		1,981		1,504		3,387

Earnings Per Share

Basic earnings per share is calculated using our weighted-average outstanding common shares. Diluted earnings per share is calculated using our weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method. In periods when we have a net loss, stock awards are excluded from our calculation of earnings per share as their inclusion would have an antidilutive effect.

7

The following table shows the calculation of diluted shares (in millions):

	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2021	2020	2021
Shares used in computation of basic earnings per share	500	505	499	505
Total dilutive effect of outstanding stock awards	9	9	9	9
Shares used in computation of diluted earnings per share	509	514	508	514

Other Income (Expense), Net

Other income (expense), net, is as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2021		2020		2021
Marketable equity securities valuation gains (losses)	$	235	$	157	$	204	$	81
Equity warrant valuation gains (losses)	418		939		266		1,244
Upward adjustments relating to equity investments in private companies	—		31		—		1,506
Foreign currency gains (losses)	13		110		(209)		79
Other, net	(20)		24		(21)		48
Total other income (expense), net	646		1,261		240		2,958

Inventories

Inventories, consisting of products available for sale, are primarily accounted for using the first-in, first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers, returns to product vendors, or liquidations, and expected recoverable values of each disposition category. The inventory valuation allowance, representing a write-down of inventory, was $2.3 billion and $2.4 billion as of December 31, 2020 and June 30, 2021.

Accounts Receivable, Net and Other

Included in “Accounts receivable, net and other” on our consolidated balance sheets are amounts primarily related to customers, vendors, and sellers. As of December 31, 2020 and June 30, 2021, customer receivables, net, were $14.8 billion and $16.3 billion, vendor receivables, net, were $4.8 billion and $4.2 billion, and seller receivables, net, were $381 million and $646 million. Seller receivables are amounts due from sellers related to our seller lending program, which provides funding to sellers primarily to procure inventory.

We estimate losses on receivables based on expected losses, including our historical experience of actual losses. The allowance for doubtful accounts was $1.1 billion as of December 31, 2020 and June 30, 2021.

Digital Video and Music Content

The total capitalized costs of video, which is primarily released content, and music as of December 31, 2020 and June 30, 2021 were $6.8 billion and $8.6 billion. Total video and music expense was $2.8 billion and $3.1 billion in Q2 2020 and Q2 2021, and $5.2 billion and $6.2 billion for the six months ended June 30, 2020 and 2021.

Unearned Revenue

Unearned revenue is recorded when payments are received or due in advance of performing our service obligations and is recognized over the service period. Unearned revenue primarily relates to prepayments of AWS services and Amazon Prime memberships. Our total unearned revenue as of December 31, 2020 was $11.6 billion, of which $6.7 billion was recognized as revenue during the six months ended June 30, 2021. Included in “Other long-term liabilities” on our consolidated balance sheets was $1.9 billion of unearned revenue as of December 31, 2020 and June 30, 2021.

Additionally, we have performance obligations, primarily related to AWS, associated with commitments in customer contracts for future services that have not yet been recognized in our consolidated financial statements. For contracts with original terms that exceed one year, those commitments not yet recognized were $60.7 billion as of June 30, 2021. The weighted-average remaining life of our long-term contracts is 3.6 years. However, the amount and timing of revenue recognition is largely driven by customer usage, which can extend beyond the original contractual term.

8

Note 2 — FINANCIAL INSTRUMENTS

Cash, Cash Equivalents, Restricted Cash, and Marketable Securities

As of December 31, 2020 and June 30, 2021, our cash, cash equivalents, restricted cash, and marketable securities primarily consisted of cash, AAA-rated money market funds, U.S. and foreign government and agency securities, other investment grade securities, and marketable equity securities. Cash equivalents and marketable securities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and certain marketable equity securities based on quoted prices in active markets for identical assets or liabilities. Other marketable securities were valued either based on recent trades of securities in inactive markets or based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data. We did not hold significant amounts of marketable securities categorized as Level 3 assets as of December 31, 2020 and June 30, 2021.

The following table summarizes, by major security type, our cash, cash equivalents, restricted cash, and marketable securities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy (in millions):

	December 31, 2020		June 30, 2021
	Total Estimated Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Total Estimated Fair Value
Cash	$	10,063	$	10,266	$	—	—		$	10,266
Level 1 securities:
Money market funds	27,430		24,587		—		—		24,587
Equity securities (1)	617								772
Level 2 securities:
Foreign government and agency securities	5,131		1,423		1		—		1,424
U.S. government and agency securities	7,439		6,987		18		(9)		6,996
Corporate debt securities	29,988		39,049		189		(14)		39,224
Asset-backed securities	3,235		4,976		20		(4)		4,992
Other fixed income securities	710		785		6		(1)		790
Equity securities (1)	40								1,133
	$	84,653	$	88,073	$	234	$	(28)	$	90,184
Less: Restricted cash, cash equivalents, and marketable securities (2)	(257)								(290)
Total cash, cash equivalents, and marketable securities	$	84,396							$	89,894

___________________

(1)The related unrealized gain (loss) recorded in “Other income (expense), net” was $235 million and $119 million in Q2 2020 and Q2 2021, and $204 million and $122 million for the six months ended June 30, 2020 and 2021.

(2)We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and marketable securities primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. We classify cash, cash equivalents, and marketable securities with use restrictions of less than twelve months as “Accounts receivable, net and other” and of twelve months or longer as non-current “Other assets” on our consolidated balance sheets. See “Note 4 — Commitments and Contingencies.”

9

The following table summarizes the remaining contractual maturities of our cash equivalents and marketable fixed income securities as of June 30, 2021 (in millions):

	Amortized Cost		Estimated Fair Value
Due within one year	$	50,515	$	50,530
Due after one year through five years	22,210		22,382
Due after five years through ten years	1,445		1,450
Due after ten years	3,637		3,651
Total	$	77,807	$	78,013

Actual maturities may differ from the contractual maturities because borrowers may have certain prepayment conditions.

Equity Warrants and Non-Marketable Equity Investments

We hold equity warrants giving us the right to acquire stock of other companies. As of December 31, 2020 and June 30, 2021, these warrants had a fair value of $3.0 billion and $3.6 billion, and are recorded within “Other assets” on our consolidated balance sheets with gains and losses recognized in “Other income (expense), net” on our consolidated statements of operations. These warrants are primarily classified as Level 2 assets.

As of December 31, 2020 and June 30, 2021, equity investments not accounted for under the equity-method and without readily determinable fair values, had a carrying value of $2.7 billion and $3.7 billion, and are recorded within “Other assets” on our consolidated balance sheets with adjustments recognized in “Other income (expense), net” on our consolidated statements of operations.

Consolidated Statements of Cash Flows Reconciliation

The following table provides a reconciliation of the amount of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the total of the same such amounts shown in the consolidated statements of cash flows (in millions):

	December 31, 2020		June 30, 2021
Cash and cash equivalents	$	42,122	$	40,380
Restricted cash included in accounts receivable, net and other	233		265
Restricted cash included in other assets	22		22
Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows	$	42,377	$	40,667

Note 3 — LEASES

We have entered into non-cancellable operating and finance leases for fulfillment, delivery, office, physical store, data center, and sortation facilities as well as server and networking equipment, vehicles, and aircraft. Gross assets acquired under finance leases, inclusive of those where title transfers at the end of the lease, are recorded in “Property and equipment, net” and were $68.1 billion and $70.2 billion as of December 31, 2020 and June 30, 2021. Accumulated amortization associated with finance leases was $36.5 billion and $39.9 billion as of December 31, 2020 and June 30, 2021.

Lease cost recognized in our consolidated statements of operations is summarized as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2021		2020		2021
Operating lease cost	$	1,149	$	1,662	$	2,217	$	3,218
Finance lease cost:
Amortization of lease assets	2,029		2,489		3,923		4,945
Interest on lease liabilities	156		119		320		251
Finance lease cost	2,185		2,608		4,243		5,196
Variable lease cost	294		415		558		763
Total lease cost	$	3,628	$	4,685	$	7,018	$	9,177

10

Other information about lease amounts recognized in our consolidated financial statements is as follows:

	December 31, 2020		June 30, 2021
Weighted-average remaining lease term – operating leases	10.7 years		10.7 years
Weighted-average remaining lease term – finance leases	6.2 years		6.8 years
Weighted-average discount rate – operating leases	2.5	%	2.4	%
Weighted-average discount rate – finance leases	2.1	%	2.1	%

Our lease liabilities were as follows (in millions):

	December 31, 2020
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	44,833	$	30,437	$	75,270
Less: imputed interest	(5,734)		(2,003)		(7,737)
Present value of lease liabilities	39,099		28,434		67,533
Less: current portion of lease liabilities	(4,586)		(10,374)		(14,960)
Total long-term lease liabilities	$	34,513	$	18,060	$	52,573

	June 30, 2021
	Operating Leases		Finance Leases		Total
Gross lease liabilities	$	51,702	$	27,613	$	79,315
Less: imputed interest	(6,419)		(1,943)		(8,362)
Present value of lease liabilities	45,283		25,670		70,953
Less: current portion of lease liabilities	(5,214)		(9,442)		(14,656)
Total long-term lease liabilities	$	40,069	$	16,228	$	56,297

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Note 4 — COMMITMENTS AND CONTINGENCIES

Commitments

The following summarizes our principal contractual commitments, excluding open orders for purchases that support normal operations and are generally cancellable, as of June 30, 2021 (in millions): 

	Six Months Ended December 31,		Year Ended December 31,
	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt principal and interest	$	1,772	$	2,997	$	4,725	$	7,120	$	3,401	$	56,613	$	76,628
Operating lease liabilities	3,130		6,132		5,709		5,209		4,752		26,770		51,702
Finance lease liabilities, including interest	4,802		8,124		4,362		1,787		1,110		7,428		27,613
Financing obligations, including interest (1)	120		269		273		272		272		4,349		5,555
Leases not yet commenced	713		2,073		2,506		2,650		2,599		29,191		39,732
Unconditional purchase obligations (2)	1,251		5,508		5,062		4,492		4,180		13,617		34,110
Other commitments (3)(4)	2,624		2,993		1,414		1,080		914		11,277		20,302
Total commitments	$	14,412	$	28,096	$	24,051	$	22,610	$	17,228	$	149,245	$	255,642

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(1)Includes non-cancellable financing obligations for fulfillment, sortation, and data center facilities. Excluding interest, current financing obligations of $111 million and $132 million are recorded within “Accrued expenses and other” and $3.4 billion and $3.8 billion are recorded within “Other long-term liabilities” as of December 31, 2020 and June 30, 2021. The weighted-average remaining term of the financing obligations was 19.0 and 18.8 years and the weighted-average imputed interest rate was 3.8% and 3.7% as of December 31, 2020 and June 30, 2021.

(2)Includes unconditional purchase obligations related to certain products offered in our Whole Foods Market stores and long-term agreements to acquire and license digital media content that are not reflected on the consolidated balance sheets. For those digital media content agreements with variable terms, we do not estimate the total obligation beyond any minimum quantities and/or pricing as of the reporting date. Purchase obligations associated with renewal provisions solely at the option of the content provider are included to the extent such commitments are fixed or a minimum amount is specified.

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

(4)Excludes approximately $2.8 billion of accrued tax contingencies for which we cannot make a reasonably reliable estimate of the amount and period of payment, if any.

In addition, in May 2021, we entered into an agreement to acquire MGM Holdings Inc. (“MGM”) for approximately $8.5 billion, including MGM’s debt, subject to customary closing conditions. We expect to fund this acquisition with cash on hand.

Pledged Assets

As of December 31, 2020 and June 30, 2021, we have pledged or otherwise restricted $875 million and $882 million of our cash, cash equivalents, and marketable securities, and certain property and equipment primarily as collateral for real estate, amounts due to third-party sellers in certain jurisdictions, debt, and standby and trade letters of credit. Additionally, we have pledged our cash and seller receivables for debt related to our Credit Facility. See “Note 5 — Debt.”

Other Contingencies

We are disputing claims and denials of refunds or credits related to various indirect taxes (such as sales, value added, consumption, service, and similar taxes), including in jurisdictions in which we already collect and remit these taxes. If the relevant taxing authorities were to prevail, we could be subject to significant additional tax costs. For example, in June 2017, the State of South Carolina issued an assessment for uncollected sales and use taxes for the period from January 2016 to March 2016, including interest and penalties. South Carolina is alleging that we should have collected sales and use taxes on transactions by our third-party sellers. In September 2019, the South Carolina Administrative Law Court ruled in favor of the Department of Revenue and we have appealed the decision to the state Court of Appeals. We believe the assessment is without merit and intend to defend ourselves vigorously in this matter.

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Legal Proceedings

The Company is involved from time to time in claims, proceedings, and litigation, including the matters described in Item 8 of Part II, “Financial Statements and Supplementary Data — Note 7 — Commitments and Contingencies — Legal Proceedings” of our 2020 Annual Report on Form 10-K as supplemented by the following:

On July 16, 2021, the Luxembourg National Commission for Data Protection (the “CNPD”) issued a decision against Amazon Europe Core S.à r.l. claiming that Amazon’s processing of personal data did not comply with the EU General Data Protection Regulation. The decision imposes a fine of €746 million and corresponding practice revisions. We believe the CNPD’s decision to be without merit and intend to defend ourselves vigorously in this matter.

Beginning in March 2020, with Frame-Wilson v. Amazon.com, Inc. filed in the United States District Court for the Western District of Washington, a number of cases have been filed in the U.S. and Canada alleging, among other things, price fixing arrangements between Amazon.com, Inc. and third-party sellers in Amazon’s stores, monopolization and attempted monopolization, and consumer protection and unjust enrichment claims. Some of the cases include allegations of several distinct purported classes, including consumers who purchased a product through Amazon’s stores and consumers who purchased a product offered by Amazon through another e-commerce retailer. The complaints seek billions of dollars of alleged actual damages, treble damages, punitive damages, and injunctive relief. Individuals have also initiated arbitrations based on substantially similar allegations. We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters.

In addition, we are regularly subject to claims, litigation, and other proceedings, including potential regulatory proceedings, involving patent and other intellectual property matters, taxes, labor and employment, competition and antitrust, privacy and data protection, consumer protection, commercial disputes, goods and services offered by us and by third parties, and other matters.

The outcomes of our legal proceedings and other contingencies are inherently unpredictable, subject to significant uncertainties, and could be material to our operating results and cash flows for a particular period. We evaluate, on a regular basis, developments in our legal proceedings and other contingencies that could affect the amount of liability, including amounts in excess of any previous accruals and reasonably possible losses disclosed, and make adjustments and changes to our accruals and disclosures as appropriate. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

See also “Note 7 — Income Taxes.”

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Note 5 — DEBT

As of June 30, 2021, we had $50.7 billion of unsecured senior notes outstanding (the “Notes”). We issued $18.5 billion of Notes in May 2021, of which $1.0 billion was issued for green or social projects, such as projects related to clean transportation, renewable energy, sustainable buildings, affordable housing, or socioeconomic advancement and empowerment, and the remainder for general corporate purposes. We also had other long-term debt and borrowings under our credit facility of $924 million and $1.0 billion as of December 31, 2020 and June 30, 2021. Our total long-term debt obligations are as follows (in millions):

	Maturities (1)	Stated Interest Rates	Effective Interest Rates	December 31, 2020		June 30, 2021
2012 Notes issuance of $3.0 billion	2022	2.50%	2.66%	1,250		1,250
2014 Notes issuance of $6.0 billion	2021 - 2044	3.30% - 4.95%	3.43% - 5.11%	5,000		5,000
2017 Notes issuance of $17.0 billion	2023 - 2057	2.40% - 5.20%	2.56% - 4.33%	16,000		16,000
2020 Notes issuance of $10.0 billion	2023 - 2060	0.40% - 2.70%	0.56% - 2.77%	10,000		10,000
2021 Notes issuance of $18.5 billion	2023 - 2061	0.25% - 3.25%	0.35% - 3.31%	—		18,500
Credit Facility				338		503
Other long-term debt				586		509
Total face value of long-term debt				33,174		51,762
Unamortized discount and issuance costs, net				(203)		(325)
Less current portion of long-term debt				(1,155)		(1,158)
Long-term debt				$	31,816	$	50,279

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(1) The weighted-average remaining lives of the 2012, 2014, 2017, 2020, and 2021 Notes were 1.4, 11.3, 15.7, 18.2, and 14.8 years as of June 30, 2021. The combined weighted-average remaining life of the Notes was 15.1 years as of June 30, 2021.

Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time in whole, or from time to time, in part at specified redemption prices. We are not subject to any financial covenants under the Notes. The estimated fair value of the Notes was approximately $37.7 billion and $54.6 billion as of December 31, 2020 and June 30, 2021, which is based on quoted prices for our debt as of those dates.

We have a $740 million secured revolving credit facility with a lender that is secured by certain seller receivables, which we may from time to time increase in the future subject to lender approval (the “Credit Facility”). The Credit Facility is available until October 2022, bears interest at the London interbank offered rate (“LIBOR”) plus