SEC Comment Letter for AMAZON COM (AMZN) — Jul 12, 2011
AMAZON COM INC
Date: July 12, 2011 · CIK: 0001018724 · Accession: 0000000000-11-041987
AI Filing Summary & Sentiment
Referenced dates: May 31, 2011
Letter
July 12, 2011 Via E-mail Shelly Reynolds Vice President, Worldwide Controller, and Principal Accounting Officer Amazon.com, Inc. 410 Terry Avenue North Seattle, Washington 98109-5210 Re: Amazon.com, Inc. Form 10-K for Fiscal Year Ended December 31, 2010 Filed January 28, 2011 Form 10-Q for Fiscal Quarter Ended March 31, 2010 Filed April 27, 2011 File No. 0-22513
Dear Ms. Reynolds: We have reviewed your response dated J une 22, 2011 and have the following additional comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within te n business days by amending your filings, by providing the requested information, or by advi sing us when you will provide the requested response. If you do not believe our comments apply to your fact s and circumstances or do not believe an amendment is appropriate, pl ease tell us why in your response. After reviewing any amendment to your f ilings and the information you provide in response to these comments, we ma y have additional comments. Form 10-K for Fiscal Year Ended December 31, 2010
Item 8. Financial Statements and Supplementary Data, page 35
Notes to Consolidated Financial Statements, page 41
Note 10 – Segment Information, page 64
1. We reviewed your response to comment ei ght in our letter da ted May 31, 2011. Please tell us the significance of Kindle e-reader re venues and gross profit to your financial results. Please also tell us why Kindle e-reader is simila r to other products included in the electronics and other ge neral merchandise group and should not be separately
Shelly Reynolds Amazon.com, Inc. July 12, 2011 Page 2
disclosed. Finally, pursuant to ASC 280-10-50-40 please disclose revenues from external customers for each product and service or each group of similar products and services or disclose that providing this in formation is impracticable. Item 15. Exhibits, Financial Statement Schedules, page 70
2. We reviewed your response to comment ni ne in our letter dated May 31, 2011. Please tell us the significance of the activity in the accounts receivable and sales return and commission allowances as compared to inco me from operations and/or income before income taxes for each year presented. Form 10-Q for Quarterly Period Ended March 31, 2011
Part I. Financial Information, page 3
Item 1. Financial Statements, page 3
Notes to Consolidated Financial Statements, page 6
Note 3 – Commitments and Contingencies, page 7
Legal Proceedings, page 8
3. It appears that you cannot es timate reasonably possible lo sses or ranges of reasonably possible losses for any of these matters or the matters described under that same subheading in your 2010 Annual Report on Form 10-K. Please provide us with an explanation of the procedures you undertake on a quarterly ba sis to attempt to develop reasonably possible losses or ranges of reasonabl y possible losses. In addition, please tell us if the financial statement impact of the patent infringement cas e settled in April 2011 was material and if so, why the estimated r easonably possible loss or range of reasonably possible loss was not previously disclosed in light of the short time period between the settlement date and the issuance of your financia l statements for the previous fiscal year. Note 9 – Income Taxes, page 10
4. Reference is made to the disclosures regard ing Notices of Proposed Adjustment from the IRS for the 2005 and 2006 calendar years relating to transfer pricing with your foreign subsidiaries. Please explain to us how you cons ider and historically considered transfer pricing when evaluating tax contingencies and the required tax contingency disclosures. In doing so, please tell us when you received the Notices of Proposed Adjustment, the approximate time you learned of the IRS positio n on your transfer pricing, why your tax contingencies at December 31, 2009, December 31, 2010 and March 31, 2011 are significantly less than the approximate $1.5 billion potential federal income tax expense impact disclosed and how you have satisfied the disclosure requirements of ASC 740-10- 50-15d.
Shelly Reynolds Amazon.com, Inc. July 12, 2011 Page 3
You may contact Adam Phippe n, Staff Accountant, at ( 202) 551-3336 or me at (202) 551-3344 if you have questions regarding our comments or any other questions.
Sincerely,
/s/ William H. Thompson
William H. Thompson Accounting Branch Chief
Show Raw Text
July 12, 2011
Via E-mail
Shelly Reynolds Vice President, Worldwide Controller, and Principal Accounting Officer Amazon.com, Inc. 410 Terry Avenue North Seattle, Washington 98109-5210
Re: Amazon.com, Inc.
Form 10-K for Fiscal Year Ended December 31, 2010
Filed January 28, 2011 Form 10-Q for Fiscal Quarter Ended March 31, 2010 Filed April 27, 2011 File No. 0-22513
Dear Ms. Reynolds:
We have reviewed your response dated J une 22, 2011 and have the following additional
comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within te n business days by amending your filings, by
providing the requested information, or by advi sing us when you will provide the requested
response. If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
After reviewing any amendment to your f ilings and the information you provide in
response to these comments, we ma y have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2010
Item 8. Financial Statements and Supplementary Data, page 35
Notes to Consolidated Financial Statements, page 41
Note 10 – Segment Information, page 64
1. We reviewed your response to comment ei ght in our letter da ted May 31, 2011. Please
tell us the significance of Kindle e-reader re venues and gross profit to your financial
results. Please also tell us why Kindle e-reader is simila r to other products included in
the electronics and other ge neral merchandise group and should not be separately
Shelly Reynolds Amazon.com, Inc. July 12, 2011 Page 2
disclosed. Finally, pursuant to ASC 280-10-50-40 please disclose revenues from external
customers for each product and service or each group of similar products and services or
disclose that providing this in formation is impracticable.
Item 15. Exhibits, Financial Statement Schedules, page 70
2. We reviewed your response to comment ni ne in our letter dated May 31, 2011. Please
tell us the significance of the activity in the accounts receivable and sales return and commission allowances as compared to inco me from operations and/or income before
income taxes for each year presented.
Form 10-Q for Quarterly Period Ended March 31, 2011
Part I. Financial Information, page 3
Item 1. Financial Statements, page 3
Notes to Consolidated Financial Statements, page 6
Note 3 – Commitments and Contingencies, page 7
Legal Proceedings, page 8
3. It appears that you cannot es timate reasonably possible lo sses or ranges of reasonably
possible losses for any of these matters or the matters described under that same
subheading in your 2010 Annual Report on Form 10-K. Please provide us with an
explanation of the procedures you undertake on a quarterly ba sis to attempt to develop
reasonably possible losses or ranges of reasonabl y possible losses. In addition, please tell
us if the financial statement impact of the patent infringement cas e settled in April 2011
was material and if so, why the estimated r easonably possible loss or range of reasonably
possible loss was not previously disclosed in light of the short time period between the
settlement date and the issuance of your financia l statements for the previous fiscal year.
Note 9 – Income Taxes, page 10
4. Reference is made to the disclosures regard ing Notices of Proposed Adjustment from the
IRS for the 2005 and 2006 calendar years relating to transfer pricing with your foreign
subsidiaries. Please explain to us how you cons ider and historically considered transfer
pricing when evaluating tax contingencies and the required tax contingency disclosures.
In doing so, please tell us when you received the Notices of Proposed Adjustment, the
approximate time you learned of the IRS positio n on your transfer pricing, why your tax
contingencies at December 31, 2009, December 31, 2010 and March 31, 2011 are significantly less than the approximate $1.5 billion potential federal income tax expense impact disclosed and how you have satisfied the disclosure requirements of ASC 740-10-
50-15d.
Shelly Reynolds Amazon.com, Inc. July 12, 2011 Page 3
You may contact Adam Phippe n, Staff Accountant, at ( 202) 551-3336 or me at (202)
551-3344 if you have questions regarding our comments or any other questions.
Sincerely,
/s/ William H. Thompson
William H. Thompson Accounting Branch Chief