Question Details

(solution) At the most recent strategic planning meeting, the board of


At the most recent strategic planning meeting, the board of directors of Amazon.com has voted to issue additional stock to raise capital for major expansions for the company in the next five years. The board is considering $5 million. Take the most recent financial statements and prepare a set of projected financial statements based on the given assumptions. The CEO Jeffery Bezos requests that you prepare a written report (including the financial statements) for him; Amazon 2016 Financials are attached.

A. Generate a projected income statement based on the given scenario.

B. Analyze the impact on the income statement based on the given scenario.

C. Generate a projected statement of retained earnings based on the given scenario.

D. Analyze the impact on the statement of retained earnings based on the given scenario.

E. Generate a projected balance sheet based on the given scenario.

F. Analyze the impact on the balance sheet based on the given scenario.


Document and Entity Information - USD ($)

 

Document Document And Entity Information [Abstract]

 

Document Type

 

Amendment Flag

 

Document Period End Date

 

Document Fiscal Year Focus

 

Document Fiscal Period Focus

 

Trading Symbol

 

Entity Registrant Name

 

Entity Central Index Key

 

Current Fiscal Year End Date

 

Entity Well-known Seasoned Issuer

 

Entity Current Reporting Status

 

Entity Voluntary Filers

 

Entity Filer Category

 

Entity Public Float

 

Entity Common Stock, Shares Outstanding 12 Months Ended

 

Dec. 31, 2015

 

10-K

 

false

 

Dec. 31, 2015

 

2,015 FY

 

AMZN

 

AMAZON COM INC

 

1,018,724

 

--12-31

 

Yes

 

Yes

 

No

 

Large Accelerated Filer Jan. 20, 2016 Jun. 30, 2015 $ 166,381,236,673

 

470,842,035 Consolidated Statements Of Cash Flows - USD ($) $ in Millions

 

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

OPERATING ACTIVITIES:

 

Net income (loss)

 

Adjustments to reconcile net income (loss) to net cash from operating activities:

 

Depreciation of property and equipment, including internal-use software and website

 

development, and other amortization, including capitalized content costs

 

Stock-based compensation

 

Other operating expense (income), net

 

Losses (gains) on sales of marketable securities, net

 

Other expense (income), net

 

Deferred income taxes

 

Excess tax benefits from stock-based compensation

 

Changes in operating assets and liabilities:

 

Inventories

 

Accounts receivable, net and other

 

Accounts payable

 

Accrued expenses and other

 

Additions to unearned revenue

 

Amortization of previously unearned revenue

 

Net cash provided by (used in) operating activities

 

INVESTING ACTIVITIES:

 

Purchases of property and equipment, including internal-use software and website development,

 

net

 

Acquisitions, net of cash acquired, and other

 

Sales and maturities of marketable securities

 

Purchases of marketable securities

 

Net cash provided by (used in) investing activities

 

FINANCING ACTIVITIES:

 

Excess tax benefits from stock-based compensation

 

Proceeds from long-term debt and other

 

Repayments of long-term debt and other

 

Principal repayments of capital lease obligations

 

Principal repayments of finance lease obligations

 

Net cash provided by (used in) financing activities

 

Foreign-currency effect on cash and cash equivalents

 

Net increase (decrease) in cash and cash equivalents

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

Cash paid for interest on long-term debt

 

Cash paid for interest on capital and finance lease obligations

 

Cash paid for income taxes (net of refunds)

 

Assets held under capital leases

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

Property and equipment acquired

 

Assets held under build-to-suit leases

 

SUPPLEMENTAL CASH FLOW INFORMATION: Property and equipment acquired 12 Months Ended

 

Dec. 31, 2015

 

Dec. 31, 2014

 

$ 14,557

 

$ 8,658 Dec. 31, 2013

 

$ 8,084 596 (241) 274 6,281 4,746 3,253 2,119

 

155

 

5

 

245

 

81

 

(119) 1,497

 

129

 

(3)

 

62

 

(316)

 

(6) 1,134

 

114

 

1

 

166

 

(156)

 

(78) (2,187)

 

(1,755)

 

4,294

 

913

 

7,401

 

(6,109)

 

11,920 (1,193)

 

(1,039)

 

1,759

 

706

 

4,433

 

(3,692)

 

6,842 (1,410)

 

(846)

 

1,888

 

736

 

2,691

 

(2,292)

 

5,475 (4,589) (4,893) (3,444) (795)

 

3,025

 

4,091

 

(6,450) (979)

 

3,349

 

2,542

 

(5,065) (312)

 

2,306

 

2,826

 

(4,276) 119

 

353

 

(1,652)

 

(2,462)

 

(121)

 

(3,763)

 

(374)

 

1,333

 

15,890 6

 

6,359

 

(513)

 

(1,285)

 

(135)

 

4,432

 

(310)

 

5,899

 

14,557 78

 

394

 

(231)

 

(775)

 

(5)

 

(539)

 

(86)

 

574

 

8,658 325

 

153

 

273 91

 

86

 

177 97

 

41

 

169 4,717 4,008 1,867 $ 544 $ 920 $ 877 Consolidated Statements Of Operations - USD ($) shares in Millions, $ in Millions

 

Net product sales

 

Net service sales

 

Total net sales

 

Operating expenses:

 

Cost of sales

 

Fulfillment

 

Marketing

 

Technology and content

 

General and administrative

 

Other operating expense (income), net

 

Total operating expenses

 

Income from operations

 

Interest income

 

Interest expense

 

Other income (expense), net

 

Total non-operating income (expense)

 

Income (loss) before income taxes

 

Provision for income taxes

 

Equity-method investment activity, net of tax

 

Net income (loss)

 

Basic earnings per share

 

Diluted earnings per share

 

Weighted-average shares used in computation of earnings per share:

 

Basic

 

Diluted 12 Months Ended

 

Dec. 31, 2015

 

Dec. 31, 2014

 

$ 79,268

 

$ 70,080

 

27,738

 

18,908

 

107,006

 

88,988 Dec. 31, 2013

 

$ 60,903

 

13,549

 

74,452 71,651

 

13,410

 

5,254

 

12,540

 

1,747

 

171

 

104,773

 

2,233

 

50

 

(459)

 

(256)

 

(665)

 

1,568

 

(950)

 

(22)

 

$ 596

 

$ 1.28

 

$ 1.25 62,752

 

10,766

 

4,332

 

9,275

 

1,552

 

133

 

88,810

 

178

 

39

 

(210)

 

(118)

 

(289)

 

(111)

 

(167)

 

37

 

$ (241)

 

$ (0.52)

 

$ (0.52) 54,181

 

8,585

 

3,133

 

6,565

 

1,129

 

114

 

73,707

 

745

 

38

 

(141)

 

(136)

 

(239)

 

506

 

(161)

 

(71)

 

$ 274

 

$ 0.60

 

$ 0.59 467

 

477 462

 

462 457

 

465 Consolidated Statements Of Operations (Parenthetical) - USD ($) $ in Millions

 

Fulfillment

 

Stock-based compensation

 

Marketing

 

Stock-based compensation

 

Technology and content

 

Stock-based compensation

 

General and administrative

 

Stock-based compensation 12 Months Ended

 

Dec. 31, 2015

 

Dec. 31, 2014 Dec. 31, 2013 $ 482 $ 375 $ 294 190 125 88 1,224 804 603 $ 223 $ 193 $ 149 Consolidated Statements of Comprehensive Income - USD ($) $ in Millions

 

Net income (loss)

 

Other comprehensive income (loss):

 

Foreign currency translation adjustments, net of tax of $10, $(3), and $(20)

 

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

 

Unrealized gains (losses), net of tax of $(5), $1, and $3

 

Reclassification adjustment for losses (gains) included in ?Other income (expense), net,? net of tax

 

of $0, $(1), and $(1)

 

Net unrealized gains (losses) on available-for-sale securities

 

Total other comprehensive income (loss)

 

Comprehensive income (loss) 12 Months Ended

 

Dec. 31, 2015

 

Dec. 31, 2014

 

Dec. 31, 2013

 

$ 596

 

$ (241)

 

$ 274

 

(210) (325) 63 (7)

 

5 2

 

(3) (10)

 

1 (2)

 

(212)

 

$ 384 (1)

 

(326)

 

$ (567) (9)

 

54

 

$ 328 Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions

 

Statement of Comprehensive Income [Abstract]

 

Foreign currency translation adjustments, tax

 

Unrealized gains (losses), tax

 

Reclassification adjustment for losses (gains) included in other income (expense), net, tax 12 Months Ended

 

Dec. 31, 2015

 

Dec. 31, 2014

 

$ 10

 

(5)

 

$0 $ (3)

 

1

 

$ (1) Dec. 31, 2013

 

$ (20)

 

3

 

$ (1) Consolidated Balance Sheets - USD ($) $ in Millions

 

Current assets:

 

Cash and cash equivalents

 

Marketable securities

 

Inventories

 

Accounts receivable, net and other

 

Total current assets

 

Property and equipment, net

 

Goodwill

 

Other assets

 

Total assets

 

Current liabilities:

 

Accounts payable

 

Accrued expenses and other

 

Unearned revenue

 

Total current liabilities

 

Long-term debt

 

Other long-term liabilities

 

Commitments and contingencies (Note 7)

 

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 - 494 and 488

 

Outstanding shares - 471 and 465

 

Treasury stock, at cost

 

Additional paid-in capital

 

Accumulated other comprehensive loss

 

Retained earnings

 

Total stockholders? equity

 

Total liabilities and stockholders? equity Dec. 31, 2015 Dec. 31, 2014 $ 15,890

 

3,918

 

10,243

 

6,423

 

36,474

 

21,838

 

3,759

 

3,373

 

65,444 $ 14,557

 

2,859

 

8,299

 

5,612

 

31,327

 

16,967

 

3,319

 

2,892

 

54,505 20,397

 

10,384

 

3,118

 

33,899

 

8,235

 

$ 9,926 16,459

 

9,807

 

1,823

 

28,089

 

8,265

 

$ 7,410 $0

 

5 $0

 

5 (1,837)

 

13,394

 

(723)

 

2,545

 

13,384

 

$ 65,444 (1,837)

 

11,135

 

(511)

 

1,949

 

10,741

 

$ 54,505 Consolidated Balance Sheets (Parenthetical) - $ / shares

 

Statement of Financial Position [Abstract]

 

Preferred stock, par value (in usd per share)

 

Preferred stock, Authorized shares

 

Preferred stock, Issued shares

 

Preferred stock, Outstanding shares

 

Common stock, par value (in usd per share)

 

Common stock, Authorized shares

 

Common stock, Issued shares

 

Common stock, Outstanding shares Dec. 31, 2015 Dec. 31, 2014 $ 0.01

 

500,000,000

 

0

 

0

 

$ 0.01

 

5,000,000,000

 

494,000,000

 

471,000,000 $ 0.01

 

500,000,000

 

0

 

0

 

$ 0.01

 

5,000,000,000

 

488,000,000

 

465,000,000 Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions

 

Beginning Balance (in shares) at Dec. 31, 2012

 

Beginning Balance at Dec. 31, 2012

 

Net income (loss)

 

Total other comprehensive income (loss)

 

Exercise of common stock options (in shares)

 

Exercise of common stock options

 

Excess tax benefits from stock-based compensation

 

Stock-based compensation and issuance of employee benefit plan stock

 

Ending Balance (in shares) at Dec. 31, 2013

 

Ending Balance at Dec. 31, 2013

 

Net income (loss)

 

Total other comprehensive income (loss)

 

Exercise of common stock options (in shares)

 

Exercise of common stock options

 

Excess tax benefits from stock-based compensation

 

Stock-based compensation and issuance of employee benefit plan stock

 

Issuance of common stock for acquisition activity

 

Ending Balance (in shares) at Dec. 31, 2014

 

Ending Balance at Dec. 31, 2014

 

Net income (loss)

 

Total other comprehensive income (loss)

 

Exercise of common stock options (in shares)

 

Exercise of common stock options

 

Excess tax benefits from stock-based compensation

 

Stock-based compensation and issuance of employee benefit plan stock

 

Issuance of common stock for acquisition activity

 

Ending Balance (in shares) at Dec. 31, 2015

 

Ending Balance at Dec. 31, 2015 Total

 

$ 8,192

 

274

 

54 Common Stock

 

454

 

$5 Treasury Stock

 

$ (1,837) Additional Paid-In Capital

 

$ 8,347 5

 

4

 

73

 

1,149

 

9,746

 

(241)

 

(326) 4

 

73

 

1,149

 

459

 

$5 (1,837) 9,573 6

 

2

 

6

 

1,510

 

44

 

10,741

 

596

 

(212) 2

 

6

 

1,510

 

44

 

465

 

$5 (1,837) 11,135 6

 

4

 

119

 

2,131

 

5

 

$ 13,384 4

 

119

 

2,131

 

5

 

471

 

$5 $ (1,837) $ 13,394 Accumulated Other Comprehensive Income (Loss) Retained Earnings $ (239) $ 1,916

 

274 54 (185) 2,190

 

(241) (326) (511) 1,949

 

596 (212) $ (723) $ 2,545 Description of Business and Accounting Policies

 

Accounting Policies [Abstract]

 

Description of Business and Accounting Policies 12 Months Ended

 

Dec. 31, 2015

 

DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES Description of Business Amazon.com

 

opened its virtual doors on the World Wide Web in July 1995. We seek to be Earth?s most

 

customer-centric company. In each of our segments, we serve our primary customer sets,

 

consisting of consumers, sellers, developers, enterprises, and content creators. We serve

 

consumers through our retail websites and focus on selection, price, and convenience. We also

 

manufacture and sell electronic devices. We offer programs that enable sellers to sell their

 

products on our websites and their own branded websites and to fulfill orders through us, and

 

programs that allow authors, musicians, filmmakers, app developers, and others to publish and sell

 

content. We serve developers and enterprises of all sizes through our AWS segment, which

 

provides access to technology infrastructure that enables virtually any type of business. In

 

addition, we provide services, such as advertising services and co-branded credit card agreements.

 

We have organized our operations into three segments: North America, International, and AWS.

 

See ?Note 11?Segment Information.? Prior Period Reclassifications Certain prior period amounts

 

have been reclassified to conform to the current period presentation, including recasting the

 

segment financial information within ?Note 11?Segment Information? as a result of changing our

 

reportable segments to include an AWS segment. Principles of Consolidation The consolidated

 

financial statements include the accounts of Amazon.com, Inc., 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 China (collectively, the ?Company?). 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, determining the selling price of products and services in multiple

 

element revenue arrangements and determining the amortization period of these elements,

 

incentive discount offers, sales returns, vendor funding, stock-based compensation forfeiture rates,

 

income taxes, valuation and impairment of investments, inventory valuation and inventory

 

purchase commitments, collectability of receivables, valuation of acquired intangibles and

 

goodwill, depreciable lives of property and equipment, internal-use software and website

 

development costs, acquisition purchase price allocations, investments in equity interests, and

 

contingencies. Actual results could differ materially from those estimates. 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. In 2014, we excluded stock awards of 17 million .

 

The following table shows the calculation of diluted shares (in millions): Year Ended December 31,

 

2015 2014 2013 Shares used in computation of basic earnings per share 467 462 457 Total dilutive Cash, Cash Equivalents, and Marketable Securities

 

Investments, Debt and Equity Securities [Abstract]

 

Cash, Cash Equivalents, and Marketable Securities 12 Months Ended

 

Dec. 31, 2015

 

CASH, CASH EQUIVALENTS, AND MARKETABLE SECURITIES As of December 31, 2015 and 2014 , our

 

cash, cash equivalents, and marketable securities primarily consisted of cash, U.S. and foreign

 

government and agency securities, AAA-rated money market funds, and other investment grade

 

securities. Cash equivalents and marketable securities are recorded at fair value. The following

 

table summarizes, by major security type, our cash, cash equivalents, 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, 2015 Cost or Amortized Cost Gross Unrealized Gains Gross

 

Unrealized Losses Total Estimated Fair Value Cash $ 6,201 $ ? $ ? $ 6,201 Level 1 securities:

 

Money market funds 8,025 ? ? 8,025 Equity securities 4 11 ? 15 Level 2 securities: Foreign

 

government and agency securities 49 ? ? 49 U.S. government and agency securities 5,171 1 (5 )

 

5,167 Corporate debt securities 479 ? (2 ) 477 Asset-backed securities 118 ? (1 ) 117 Other fixed

 

income securities 42 ? ? 42 $ 20,089 $ 12 $ (8 ) $ 20,093 Less: Restricted cash, cash equivalents,

 

and marketable securities (1) (285 ) Total cash, cash equivalents, and marketable securities $

 

19,808 December 31, 2014 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses

 

Total Estimated Fair Value Cash $ 4,155 $ ? $ ? $ 4,155 Level 1 securities: Money market funds

 

10,718 ? ? 10,718 Equity securities 2 2 ? 4 Level 2 securities: Foreign government and agency

 

securities 80 ? ? 80 U.S. government and agency securities 2,407 1 (2 ) 2,406 Corporate debt

 

securities 401 1 (1 ) 401 Asset-backed securities 69 ? ? 69 Other fixed income securities 33 ? ?

 

33 $ 17,865 $ 4 $ (3 ) $ 17,866 Less: Restricted cash, cash equivalents, and marketable securities

 

(1) (450 ) Total cash, cash equivalents, and marketable securities $ 17,416 ___________________

 

(1) We are required to pledge or otherwise restrict a portion of our cash, cash equivalents, and

 

marketable securities as collateral for standby and trade letters of credit, guarantees, debt, real

 

estate leases, and amounts due to third-party sellers in certain jurisdictions. 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 7?Commitments and Contingencies.? The

 

following table summarizes gross gains and gross losses realized on sales of available-for-sale

 

marketable securities (in millions): Year Ended December 31, 2015 2014 2013 Realized gains $ 2 $

 

8 $ 6 Realized losses 7 5 7 The following table summarizes the contractual maturities of our cash

 

equivalents and marketable fixed-income securities as of December 31, 2015 (in millions):

 

Amortized Cost Estimated Fair Value Due within one year $ 12,533 $ 12,531 Due after one year

 

through five years 1,086 1,084 Due after five years through ten years 96 95 Due after ten years 169

 

167 Total $ 13,884 $ 13,877 Actual maturities may differ from the contractual maturities because

 

borrowers may have certain prepayment conditions. Property and Equipment

 

Property, Plant and Equipment [Abstract]

 

Property and Equipment 12 Months Ended

 

Dec. 31, 2015

 

PROPERTY AND EQUIPMENT Property and equipment, at cost, consisted of the following (in

 

millions): December 31, 2015 2014 Gross property and equipment (1): Land and buildings $ 9,770

 

$ 7,150 Equipment and internal-use software (2) 18,417 14,213 Other corporate assets 334 304

 

Construction in progress 1,532 1,063 Gross property and equipment 30,053 22,730 Total

 

accumulated depreciation (1) 8,215 5,763 Total property and equipment, net $ 21,838 $ 16,967

 

___________________ (1) Excludes the original cost and accumulated depreciation of fullydepreciated assets. (2) Includes internal-use software of $1.4 billion and $1.3 billion as of

 

December 31, 2015 and 2014 . Depreciation expense on property and equipment was $4.9 billion ,

 

$3.6 billion , and $2.5 billion , which includes amortization of property and equipment acquired

 

under capital leases of $2.7 billion , $1.5 billion , and $826 million for 2015 , 2014 , and 2013 .

 

Gross assets recorded under capital leases were $12.0 billion and $7.9 billion as of December 31,

 

2015 and 2014 . Accumulated depreciation associated with capital leases was $5.4 billion and $3.3

 

billion as of December 31, 2015 and 2014 . We capitalize construction in progress and record a

 

corresponding long-term liability for build-to-suit lease agreements where we are considered the

 

owner, for accounting purposes, during the construction period. For buildings under build-to-suit

 

lease arrangements where we have taken occupancy, which do not qualify for sales recognition

 

under the sale-leaseback accounting guidance, we determined that we continue to be the deemed

 

owner of these buildings. This is principally due to our significant investment in tenant

 

improvements. As a result, the buildings are being depreciated over the shorter of their useful lives

 

or the related leases? terms. Additionally, certain build-to-suit lease arrangements and finance

 

leases provide purchase options. Upon occupancy, the long-term construction obligations are

 

considered long-term finance lease obligations with amounts payable during the next 12 months

 

recorded as ?Accrued expenses and other.? Gross assets remaining under finance leases were $2.0

 

billion and $1.4 billion as of December 31, 2015 and 2014 . Accumulated depreciation associated

 

with finance leases was $199 million and $87 million as of December 31, 2015 and 2014 . Acquisitions, Goodwill, and Acquired Intangible Assets

 

Acquisitions, Goodwill, and Acquired Intangible Assets [Abstract]

 

Acquisitions Goodwill And Intangible Assets 12 Months Ended

 

Dec. 31, 2015

 

ACQUISITIONS, GOODWILL, AND ACQUIRED INTANGIBLE ASSETS 2015 Acquisition Activity During

 

2015 , we acquired certain companies for an aggregate purchase price of $690 million . The

 

primary reasons for these acquisitions, none of which was individually material to our consolidated

 

financial statements, were to acquire technologies and know-how to enable Amazon to serve

 

customers more effectively. Acquisition-related costs were expensed as incurred and not

 

significant. The aggregate purchase price of these acquisitions was allocated as follows (in

 

millions): Purchase Price Cash paid, net of cash acquired $ 599 Stock options and restricted stock

 

units assumed 5 Indemnification holdback 86 $ 690 Allocation Goodwill $ 482 Intangible assets (1):

 

Marketing-related 3 Contract-based 1 Technology-based 208 Customer-related 18 230 Property

 

and equipment 4 Deferred tax assets 55 Other assets acquired 53 Deferred tax liabilities (85 )

 

Other liabilities assumed (49 ) $ 690 ___________________ (1) Acquired intangible assets have

 

estimated useful lives of between one and six years, with a weighted-average amortization period

 

of five years. The fair value of assumed stock options, estimated using the Black-Scholes model,

 

and restricted stock units of $9 million will be expensed over the remaining service period. We

 

determined the estimated fair value of identifiable intangible assets acquired primarily by using the

 

income approach. These assets are included within ?Other assets? on our consolidated balance

 

sheets and are being amortized to operating expenses on a straight-line basis over their estimated

 

useful lives. Pro Forma Financial Information ? 2015 Acquisition Activity (unaudited) The acquired

 

companies were consolidated into our financial statements starting on their respective acquisition

 

dates. The aggregate net sales and operating income (loss) of the companies acquired was $23

 

million and $(112) million for 2015 . The following financial information, which excludes certain

 

acquired companies for which the pro forma impact is not meaningful, presents our results as if

 

the acquisitions during 2015 had occurred at the beginning of 2014 (in millions): Year Ended

 

December 31, 2015 2014 Net sales $ 107,054 $ 89,039 Net income (loss) $ 576 $ (311 ) 2014

 

Acquisition Activity On September 25, 2014 , we acquired Twitch Interactive, Inc. (?Twitch?) for

 

approximately $842 million in cash, as adjusted for the assumption of options and other items.

 

During 2014, we acquired certain other companies for an aggregate purchase price of $20 million .

 

We acquired Twitch because of its user community and the live streaming experience it provides.

 

The primary reasons for our other 2014 acquisitions were to acquire technologies and know-how

 

to enable Amazon to serve customers more effectively. Acquisition-related costs were expensed as

 

incurred and not significant. The aggregate purchase price of these acquisitions was allocated as

 

follows (in millions): Purchase Price Cash paid, net of cash acquired $ 813 Stock options assumed

 

44 Indemnification holdback 5 $ 862 Allocation Goodwill $ 707 Intangible assets (1): Marketingrelated 23 Contract-based 1 Technology-based 33 Customer-related 173 230 Property and

 

equipment 16 Deferred tax assets 64 Other assets acquired 34 Deferred tax liabilities (88 ) Other

 

liabilities assumed (101 ) $ 862 ___________________ (1) Acquired intangible assets have

 

estimated useful lives of between one and five years, with a weighted-average amortization period

 

of five years. The fair value of assumed stock options of $39 million , estimated using the Black- Long-Term Debt

 

Debt Disclosure [Abstract]

 

Long-Term Debt 12 Months Ended

 

Dec. 31, 2015

 

LONG-TERM DEBT In December 2014 and November 2012, we issued $6.0 billion and $3.0 billion

 

of unsecured senior notes as described in the table below (collectively, the ?Notes?). As of

 

December 31, 2015 and 2014 , the unamortized discount on the Notes was $89 million and $96

 

million . We also have other long-term debt with a carrying amount, including the current portion,

 

of $312 million and $881 million as of December 31, 2015 and 2014 . The face value of our total

 

long-term debt obligations is as follows (in millions): December 31, 2015 2014 0.65% Notes due on

 

November 27, 2015 $ ? $ 750 1.20% Notes due on November 29, 2017 (1) 1,000 1,000 2.50%

 

Notes due on November 29, 2022 (1) 1,250 1,250 2.60% Notes due on December 5, 2019 (2) 1,000

 

1,000 3.30% Notes due on December 5, 2021 (2) 1,000 1,000 3.80% Notes due on December 5,

 

2024 (2) 1,250 1,250 4.80% Notes due on December 5, 2034 (2) 1,250 1,250 4.95% Notes due on

 

December 5, 2044 (2) 1,500 1,500 Other long-term debt 312 881 Total debt 8,562 9,881 Less

 

current portion of long-term debt (238 ) (1,520 ) Face value of long-term debt $ 8,324 $ 8,361

 

_____________________________ (1) Issued in November 2012, effective interest rates of the

 

2017 and 2022 Notes were 1.38% and 2.66% . (2) Issued in December 2014, effective interest rates

 

of the 2019, 2021, 2024, 2034, and 2044 Notes were 2.73% , 3.43% , 3.90% , 4.92% , and 5.11% .

 

Interest on the Notes issued in 2014 is payable semi-annually in arrears in June and December .

 

Interest on the Notes issued in 2012 is payable semi-annually in arrears in May and November . 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 proceeds from the

 

Notes are used for general corporate purposes. The estimated fair value of the Notes was

 

approximately $8.5 billion and $9.1 billion as of December 31, 2015 and 2014 , which is based on

 

quoted prices for our publicly-traded debt as of those dates. The other debt, including the current

 

portio...

 


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