Amazon.com 2015 Annual Report Download - page 20

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• 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 and
product and service offerings 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 in foreign currencies including British Pounds, Chinese Yuan, Euros, 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.
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.
We Face Risks Related to System Interruption and Lack of Redundancy
We experience occasional system interruptions and delays that make our websites and services unavailable or slow to
respond and prevent us from efficiently fulfilling orders or providing services to third parties, which may reduce our net sales
and the attractiveness of our products and services. If we are unable to continually add software and hardware, effectively
upgrade our systems and network infrastructure, and take other steps to improve the efficiency of our systems, it could cause
system interruptions or delays and adversely affect our operating results.