Amazon.com 2007 Annual Report Download - page 21

Our present and future e-commerce services agreements, other commercial agreements, and strategic
alliances create additional risks such as:
• disruption of our ongoing business, including loss of management focus on existing businesses;
• impairment of other relationships;
• variability in revenue and income from entering into, amending, or terminating such agreements or
relationships; and
• difficulty integrating under the commercial agreements.
Our Business Could Suffer if We Are Unsuccessful in Making, Integrating, and Maintaining Acquisitions
and Investments
We have acquired and invested in a number of companies, and we may acquire or invest in or enter into
joint ventures with additional companies. These transactions create risks such as:
• disruption of our ongoing business, including loss of management focus on existing businesses;
• problems retaining key personnel;
• additional operating losses and expenses of the businesses we acquired or in which we invested;
• the potential impairment of amounts capitalized as intangible assets as part of the acquisition;
• the potential impairment of customer and other relationships of the company we acquired or in which
we invested or our own customers as a result of any integration of operations;
• the difficulty of incorporating acquired technology and rights into our offerings and unanticipated
expenses related to such integration;
• the difficulty of integrating a new company’s accounting, financial reporting, management,
information, human resource and other administrative systems to permit effective management, and the
lack of control if such integration is delayed or not implemented;
• the difficulty of implementing at companies we acquire the controls, procedures and policies
appropriate for a larger public company;
• potential unknown liabilities associated with a company we acquire or in which we invest; and
• for foreign transactions, additional risks related to the integration of operations across different cultures
and languages, and the economic, political, and regulatory risks associated with specific countries.
Finally, as a result of future acquisitions or mergers, we might need to issue additional equity securities,
spend our cash, or incur debt, contingent liabilities, or amortization expenses related to intangible assets, any of
which could reduce our profitability and harm our business.
We Have Foreign Exchange Risk
The results of operations of, and certain of our intercompany balances associated with, our international
websites are exposed to foreign exchange rate fluctuations. Upon translation, operating results may differ
materially from expectations, and we may record significant gains or losses on the remeasurement of
intercompany balances. As we have expanded our international operations, our exposure to exchange rate
fluctuations has increased.
In addition, our 6.875% Premium Adjustable Convertible Securities due 2010 (“6.875% PEACS”) are
denominated in Euros and increases in the Euro relative to the U.S. Dollar increase the U.S. Dollar amount we
owe as interest and principal on the 6.875% PEACS. We also hold cash equivalents and/or marketable securities
primarily in Euros, British Pounds, and Japanese Yen. If the U.S. Dollar strengthens compared to these
currencies, cash equivalents and marketable securities balances, when translated, may be materially less than
expected and vice versa.
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