Amazon.com 2003 Annual Report Download - page 13

Additional Factors That May Affect Future Results
The following risk factors and other information included in this Annual Report should be carefully
considered. The risks and uncertainties described below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial also may impair our business
operations. If any of the following risks occur, our business, financial condition, operating results, and cash flows
could be materially adversely affected.
We Have an Accumulated Deficit and May Incur Additional Losses
We have incurred significant net losses since we began doing business. As of December 31, 2003, we had
an accumulated deficit of $2.97 billion and our stockholders’ equity was a deficit of $1.04 billion. We have
incurred substantial operating losses since our inception, and although we earned a small amount of net income
in 2003, we may incur losses again in the future.
We Have Significant Indebtedness
As of December 31, 2003, we had long-term indebtedness of $1.95 billion. We make annual or semi-annual
interest payments on the indebtedness under our two convertible notes, which are due in 2009 and 2010.
Although we made debt principal reduction payments in 2003, we may incur substantial additional debt in the
future. Our indebtedness could limit our ability to obtain additional financing for working capital, capital
expenditures, debt service requirements, or other purposes in the future, as needed; to plan for, or react to,
changes in technology and in our business and competition; and to react in the event of an economic downturn.
There is no guarantee that we will be able to meet our debt service obligations. If we are unable to generate
sufficient cash flow or obtain funds for required payments, or if we fail to comply with covenants in our
indebtedness, we will be in default.
See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 17—Subsequent Events.”
We Face Intense Competition
The market segments in which we compete are rapidly evolving and intensely competitive, and we have
many competitors in different industries, including both the retail and e-commerce services industries.
Many of our current and potential competitors have longer operating histories, larger customer bases,
greater brand recognition, and significantly greater financial, marketing, and other resources than we have. They
may be able to secure merchandise from vendors on more favorable terms and may be able to adopt more
aggressive pricing policies. Competitors in both the retail and e-commerce services industries also may be able to
devote more resources to technology development and marketing than we do.
Competition in the e-commerce channel may intensify. Other companies in the retail and e-commerce
service industries may enter into business combinations or alliances that strengthen their competitive positions.
As various Internet market segments obtain large, loyal customer bases, participants in those segments may
expand into the market segments in which we operate. In addition, new and expanded Web technologies may
further intensify the competitive nature of online retail. The nature of the Internet as an electronic marketplace
facilitates competitive entry and comparison shopping and renders it inherently more competitive than
conventional retailing formats. This increased competition may reduce our sales, operating profits, or both.
Our Business Could Suffer if We Are Unsuccessful in Making, Integrating, and Maintaining
Commercial Agreements, Strategic Alliances, and Other Business Relationships
We may enter into commercial agreements, strategic alliances, and other business relationships with other
companies. We have entered into agreements to provide e-commerce services to other businesses and we plan to
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