Amazon.com 2011 Annual Report Download - page 18

• additional operating losses and expenses of the businesses we acquired or in which we invested;
• the potential impairment of tangible assets, such as inventory, and intangible assets and goodwill
acquired in the acquisitions;
• 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
and information security, human resource and other administrative systems to permit effective
management, and the lack of control if such integration is delayed or not implemented;
• for investments in which an investee’s financial performance is incorporated into our financial results,
either in full or in part, the dependence on the investee’s accounting, financial reporting and similar
systems, controls and processes;
• 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.
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. In addition, valuations supporting our acquisitions and
strategic investments could change rapidly given the current global economic climate. We could determine that
such valuations have experienced impairments or other-than-temporary declines in fair value which could
adversely impact our financial results.
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. We also hold cash equivalents and/or marketable securities primarily in Euros,
Japanese Yen, and British Pounds. 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.
The Loss of Key Senior Management Personnel Could Negatively Affect Our Business
We depend on our senior management and other key personnel, particularly Jeffrey P. Bezos, our President,
CEO, and Chairman. We do not have “key person” life insurance policies. The loss of any of our executive
officers or other key employees could harm our business.
We Could Be Harmed by Data Loss or Other Security Breaches
As a result of our services being web-based and the fact that we process, store and transmit large amounts of
data, including personal information, for our customers, failure to prevent or mitigate data loss or other security
breaches could expose us or our customers to a risk of loss or misuse of such information, adversely affect our
operating results, result in litigation or potential liability for us and otherwise harm our business. Although we
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