Amazon.com 2012 Annual Report Download - page 17

• 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, British Pounds, and Chinese Yuan. 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, including breaches of our vendors’ technology and systems, 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. We use third party technology and systems for a variety of reasons, including,
without limitation, encryption and authentication technology, employee email, content delivery to customers, back-
office support and other functions. Some subsidiaries had past security breaches, and, although they did not have a
material adverse effect on our operating results, there can be no assurance of a similar result in the future. Although
we have developed systems and processes that are designed to protect customer information and prevent data loss
and other security breaches, including systems and processes designed to reduce the impact of a security breach at a
third party vendor, such measures cannot provide absolute security.
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