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\
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AMAZON.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 7375 91-1646860
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION CLASSIFICATION CODE NUMBER) NUMBER)
OR ORGANIZATION)
</TABLE>
1516 SECOND AVENUE
SEATTLE, WASHINGTON 98101
(206) 622-2335
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JEFFREY P. BEZOS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AMAZON.COM, INC.
1516 SECOND AVENUE
SEATTLE, WASHINGTON 98101
(206) 622-2335
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS SHOULD BE SENT TO:
L. MICHELLE WILSON
PERKINS COIE LLP
1201 THIRD AVENUE, 40TH FLOOR
SEATTLE, WASHINGTON 98101-3099
(206) 583-8888
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number or the earlier effective
registration statement for the same offering. [ ] _______________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
CALCULATION OF REGISTRATION FEE
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<S> <C> <C> <C> <C>
======================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(1) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value
per share..................... 5,000,000 shares $41.7813 $208,906,500 $61,628
======================================================================================================================
</TABLE>
(1) Registration fee enclosed herewith. Estimated solely for purposes of
calculating the registration fee under Rule 457(c) based on the average of
the high ($43.6875) and low ($39.8750) prices (after adjusting for the
registrant's 2-for-1 stock split payable June 1, 1998) for such shares on
the Nasdaq National Market on May 27, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED JUNE 3, 1998
5,000,000 SHARES
AMAZON.COM, INC.
COMMON STOCK
PAR VALUE $0.01
------------------------
Amazon.com, Inc., a Delaware corporation (the "Company"), has registered
5,000,000 shares of its Common Stock, $0.01 par value per share (the "Common
Stock"), which may from time to time be offered by this Prospectus principally
in connection with the acquisition, directly or indirectly, of entities. Such
shares may be issued in exchange for the shares of capital stock (by merger or
otherwise), partnership interests or other assets representing an interest,
direct or indirect, in other companies or other entities, or in exchange for
assets used in or related to the business of such entities. In general, the
terms of such acquisitions will be determined by direct negotiations between
representatives of the Company and the owners of the businesses or properties to
be acquired or, in the case of entities that are more widely held, through
exchange offers to stockholders or documents soliciting the approval of
statutory mergers, consolidations or sales of assets. Underwriting discounts or
commissions will generally not be paid by the Company. Under some circumstances,
however, the Company may issue shares of Common Stock covered by this Prospectus
to pay brokers' commissions incurred in connection with acquisitions.
The Company has filed a Registration Statement on Form S-4 (including all
amendments thereto, the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), with the Securities and Exchange
Commission (the "SEC") covering up to 5,000,000 shares of the Common Stock
offered hereby. This Prospectus does not cover any resale of Common Stock, and
no person is authorized to make use of this Prospectus in connection with any
such resale or distribution.
The Common Stock is quoted on the Nasdaq National Market under the symbol
"AMZN." See "Risk Factors" and "Description of Capital Stock of the Company."
------------------------
AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the SEC. Such reports, proxy and information statements and other
information filed by the Company with the SEC can be inspected and copied at the
public reference facilities of the SEC, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as at the following SEC Regional
Offices: Seven World Trade Center, New York, NY 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, IL 60661-2511. Copies can be obtained
from the SEC by mail at prescribed rates. Requests should be directed to the
SEC's Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549.
The Company has filed the Registration Statement under the Securities Act
covering the securities described herein. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. For
further information, reference is hereby made to the Registration Statement and
the exhibits thereto, which may be inspected without charge at the office of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of which may
be obtained from the SEC at prescribed rates.
The SEC maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants, such as the Company,
that file electronically with the SEC. The address of such site is
http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the SEC by the Company (File No.
000-22513) are incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998;
(3) The Company's Current Reports on Form 8-K filed April 27, 1998, April
28, 1998, May 1, 1998 and May 6, 1998; and
(4) The Company's Registration Statement on Form 8-A filed May 2, 1997.
All documents filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (EXCLUDING EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
THEREIN) ARE AVAILABLE UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE
COMPANY, 1516 SECOND AVENUE, SEATTLE, WASHINGTON 98101 (TELEPHONE NUMBER (206)
622-2335). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE FIVE DAYS PRIOR TO THE DATE ON WHICH A FINAL INVESTMENT DECISION
IS TO BE MADE.
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FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements based on current expectations, estimates and
projections about the Company's industry, management's beliefs and certain
assumptions made by management. All statements, trends, analyses and other
information contained in this Prospectus relative to trends in net sales, gross
margin, anticipated expense levels and liquidity and capital resources, as well
as other statements including, but not limited to, words such as "anticipate,"
"believe," "plan," "estimate," "expect," "seek" and "intend," and other similar
expressions, constitute forward-looking statements. These forward-looking
statements involve risks and uncertainties, and actual results may differ
materially from those anticipated or expressed in such statements. Potential
risks and uncertainties include, among others, those set forth herein under
"Risk Factors," as well as set forth under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Overview," "-- Liquidity and
Capital Resources" and "-- Additional Factors That May Affect Future Results" in
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998
and under "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Overview" and "-- Liquidity and Capital Resources" and
"Business -- Additional Factors That May Affect Future Results" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997. Particular
attention should be paid to the cautionary statements involving the Company's
limited operating history, the unpredictability of its future revenues, the
unpredictable and evolving nature of its business model, the intensely
competitive online commerce and retail book and music industries and the risks
associated with capacity constraints, systems development, management of growth,
acquisitions, any new products and international or domestic business expansion.
Except as required by law, the Company undertakes no obligation to update any
forward-looking statement, whether as a result of new information, future events
or otherwise. Readers, however, should carefully review the factors set forth in
other reports or documents that the Company files from time to time with the
SEC.
THE COMPANY
Amazon.com, Inc. ("Amazon.com" or the "Company") is the leading online
retailer of books. Since opening for business as "Earth's Biggest Bookstore" in
July 1995, Amazon.com has become one of the most widely known, used and cited
commerce sites on the World Wide Web (the "Web"). Amazon.com strives to offer
its customers compelling value through innovative use of technology, broad
selection, high-quality content, a high level of customer service, competitive
pricing and personalized services. The Company offers a catalog of approximately
3.0 million titles, easy-to-use search and browse features, e-mail services,
personalized shopping services, Web-based credit card payment and direct
shipping to customers. The Company currently offers other information-based
products, such as music, and intends over time to expand its catalog into other
product categories. Amazon.com has virtually unlimited online shelf space and
offers customers a vast selection through an efficient search-and-retrieval
interface.
Operating as an online book retailer, Amazon.com has grown rapidly since
first opening its Web site in July 1995. Through March 31, 1998, the Company had
sales of more than $251 million to approximately 2.3 million customer accounts
in over 150 countries. Repeat customers accounted for over 60% of orders in the
quarter ended March 31, 1998. International sales represented 21% of net sales
in the quarter ended March 31, 1998.
Amazon.com's objective is to be the leading online retailer of
information-based products and services, with an initial focus on books and,
more recently, music. The Company's key strategies to attain this goal include:
creating customer loyalty by delivering a compelling value proposition; building
strong brand recognition and maintaining market leadership; continuing to expand
revenue opportunities; creating and executing a superior economic model;
maintaining technology focus and expertise; building strong supplier
relationships; and attracting and retaining exceptional employees.
Amazon.com was incorporated in 1994 in the State of Washington and
reincorporated in 1996 in Delaware. The Company's principal corporate offices
are located in Seattle, Washington. Amazon.com
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completed its initial public offering in May 1997 and its Common Stock is listed
on the Nasdaq National Market under the symbol "AMZN."
"Amazon.com" and "Earth's Biggest Bookstore" are service marks of
Amazon.com, Inc. All other products, company names and logos are marks of their
respective companies.
Information contained on the Company's Web site will not be deemed to be a
part of this Prospectus. As used herein, "titles" offered by the Company means
the number of items offered in the Company catalog and includes books, CDs,
videotapes, audiotapes and other products.
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RISK FACTORS
In addition to the other information contained in this Prospectus,
investors should carefully consider the following risk factors before making an
investment decision concerning the Common Stock. All statements, trend analysis
and other information contained in this Prospectus relative to markets for the
Company's products and trends in net sales, gross margin and anticipated expense
levels, as well as other statements including words such as "anticipate,"
"believe," "plan," "estimate," "expect," "seek" and "intend" and other similar
expressions, constitute forward-looking statements. These forward-looking
statements are subject to business and economic risks, and the Company's actual
results of operations may differ materially from those contained in the
forward-looking statements.
An investment in the Common Stock offered hereby involves a high degree of
risk. The following risk factors, together with the other information set forth
in this Prospectus, should be considered carefully before purchasing the Common
Stock offered hereby.
LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; ANTICIPATED LOSSES
The Company was incorporated in July 1994 and commenced offering products
for sale on its Web site in July 1995. Accordingly, the Company has a limited
operating history on which to base an evaluation of its business and prospects.
The Company's prospects must be considered in light of the risks, expenses and
difficulties frequently encountered by companies in their early stage of
development, particularly companies in new and rapidly evolving markets such as
online commerce. Such risks for the Company include, but are not limited to, an
evolving and unpredictable business model and the management of growth. To
address these risks, the Company must, among other things, maintain and increase
its customer base, implement and successfully execute its business and marketing
strategy and its expansion into new product and geographic markets, continue to
develop and upgrade its technology and transaction-processing systems, improve
its Web site, provide superior customer service and order fulfillment, respond
to competitive developments and attract, retain and motivate qualified
personnel. There can be no assurance that the Company will be successful in
addressing such risks, and the failure to do so could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations.
Since inception, the Company has incurred significant losses, and as of
March 31, 1998 had an accumulated deficit of $42.9 million. The Company believes
that its success will depend in large part on its ability to (i) extend its
brand position, (ii) provide its customers with outstanding value and a superior
shopping experience, and (iii) achieve sufficient sales volume to realize
economies of scale. Accordingly, the Company intends to continue to invest
heavily in marketing and promotion, product development and technology and
operating infrastructure development. The Company also offers attractive pricing
programs, which have reduced its gross margins. Because the Company has
relatively low product gross margins, achieving profitability given planned
investment levels depends on the Company's ability to generate and sustain
substantially increased revenue levels. As a result, the Company believes that
it will continue to incur substantial operating losses for the foreseeable
future and that the rate at which such losses will be incurred may increase
significantly from current levels. In addition, expenses associated with the
amortization of intangibles resulting from the Company's recent acquisitions and
interest expenses related to the Senior Discount Notes (as defined below) will
further affect the Company's net loss. Although the Company has experienced
significant revenue growth in recent periods, such growth rates are not
sustainable and will decrease in the future. In view of the rapidly evolving
nature of the Company's business and its limited operating history, the Company
believes that period-to-period comparisons of its operating results, including
the Company's gross profit and operating expenses as a percentage of net sales,
are not necessarily meaningful and should not be relied on as an indication of
future performance.
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS; SEASONALITY
As a result of the Company's limited operating history and the emerging
nature of the markets in which it competes, the Company is unable to accurately
forecast its revenues. The Company's current and future expense levels are based
largely on its investment plans and estimates of future revenues and are to a
large
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extent fixed. Sales and operating results generally depend on the volume of,
timing of and ability to fulfill orders received, which are difficult to
forecast. The Company may be unable to adjust spending in a timely manner to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall in revenues in relation to the Company's planned expenditures would
have an immediate adverse effect on the Company's business, prospects, financial
condition and results of operations. Further, as a strategic response to changes
in the competitive environment, the Company may from time to time make certain
pricing, service, marketing or acquisition decisions that could have a material
adverse effect on its business, prospects, financial condition and results of
operations. For example, the Company has agreed in certain of its promotional
arrangements with Internet aggregators to make significant fixed payments. There
can be no assurance that these arrangements will generate adequate revenues to
cover the associated expenditures, and any significant shortfall would have a
material adverse effect on the Company's financial condition and results of
operations.
The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of factors, many of which are
outside the Company's control. Factors that may adversely affect the Company's
quarterly operating results include (i) the Company's ability to retain existing
customers, attract new customers at a steady rate and maintain customer
satisfaction, (ii) the Company's ability to acquire product, to maintain
appropriate inventory levels and to manage fulfillment operations, (iii) the
Company's ability to maintain gross margins in its existing business and in
future product lines and markets, (iv) the development, announcement or
introduction of new sites, services and products by the Company and its
competitors, (v) price competition or higher wholesale prices in the industry,
(vi) the level of use of the Internet and online services and increasing
consumer acceptance of the Internet and other online services for the purchase
of consumer products such as those offered by the Company, (vii) the Company's
ability to upgrade and develop its systems and infrastructure, (viii) the
Company's ability to attract new personnel in a timely and effective manner,
(ix) the level of traffic on the Company's Web site, (x) the Company's ability
to manage effectively its development of new business segments and markets, (xi)
the Company's ability to successfully manage the integration of operations and
technology of acquisitions or other business combinations, (xii) technical
difficulties, system downtime or Internet brownouts, (xiii) the amount and
timing of operating costs and capital expenditures relating to expansion of the
Company's business, operations and infrastructure, (xiv) the number of popular
books introduced during the period, (xv) the level of merchandise returns
experienced by the Company, (xvi) governmental regulation and taxation policies,
(xvii) disruptions in service by common carriers due to strikes or otherwise,
and (xviii) general economic conditions and economic conditions specific to the
Internet, online commerce and the book industry.
The Company expects that it will experience seasonality in its business,
reflecting a combination of seasonal fluctuations in Internet usage and
traditional retail seasonality patterns. Internet usage and the rate of Internet
growth may be expected to decline during the summer. Further, sales in the
traditional retail book industry are generally significantly higher in the
fourth calendar quarter of each year.
Due to the foregoing factors, in one or more future quarters the Company's
operating results may fall below the expectations of securities analysts or
investors. In such event, the trading price of the Common Stock would likely be
materially adversely affected.
COMPETITION
The online commerce market, particularly over the Web, is new, rapidly
evolving and intensely competitive. In addition, the retail book and music
industries are intensely competitive. The Company's current or potential
competitors include (i) various online booksellers and vendors of other products
such as CDs and videotapes, including entrants into narrow specialty niches,
(ii) a number of indirect competitors that specialize in online commerce or
derive a substantial portion of their revenues from online commerce, through
which retailers other than the Company may offer products, and (iii) publishers,
distributors and retail vendors of books, music and other products, including
Barnes & Noble, Inc., Bertelsmann AG and other large specialty booksellers and
integrated media corporations, many of which possess significant brand
awareness, sales volume and customer bases. The Company believes that the
principal competitive factors in its market are brand recognition, selection,
personalized services, convenience, price, accessibility, customer service,
quality of search tools, quality of editorial and other site content and
reliability and speed of fulfillment. Many
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of the Company's competitors have longer operating histories, larger customer
bases, greater brand recognition and significantly greater financial, marketing
and other resources than the Company. Certain of the Company's competitors may
be able to secure merchandise from vendors on more favorable terms, devote
greater resources to marketing and promotional campaigns, adopt more aggressive
pricing or inventory availability policies and devote substantially more
resources to Web site and systems development than the Company. Increased
competition may result in reduced operating margins, loss of market share and a
diminished brand franchise. There can be no assurance that the Company will be
able to compete successfully against current and future competitors.
The Company expects that competition in the online commerce market will
intensify in the future. For example, as various market segments obtain large,
loyal customer bases, participants in those segments may seek to leverage their
market power to the detriment of participants in other market segments. In
addition, new technologies and the expansion of existing technologies may
increase the competitive pressures on online retailers, including the Company.
For example, "shopping agent" technologies will permit customers to quickly
compare the Company's prices with those of its competitors. Competitive
pressures created by any one of the Company's competitors, or by the Company's
competitors collectively, could have a material adverse effect on the Company's
business, prospects, financial condition and results of operations.
SYSTEM DEVELOPMENT AND OPERATION RISKS
The Company's revenues depend on the number of visitors who shop on its Web
site and the volume of orders it fulfills. Any system interruptions that result
in the unavailability of the Company's Web site or reduced order fulfillment
performance would reduce the volume of goods sold and the attractiveness of the
Company's product and service offerings. The Company has experienced periodic
system interruptions, which it believes will continue to occur from time to
time. The Company uses an internally developed system for its Web site, search
engine and substantially all aspects of transaction processing, including order
management, cash and credit card processing, purchasing, inventory management
and shipping. The Company will be required to add additional software and
hardware and further develop and upgrade its existing technology,
transaction-processing systems and network infrastructure to accommodate
increased traffic on its Web site and increased sales volume through its
transaction-processing systems. Any inability to do so may cause unanticipated
system disruptions, slower response times, degradation in levels of customer
service, impaired quality and speed of order fulfillment, or delays in reporting
accurate financial information. There can be no assurance that the Company will
be able to accurately project the rate or timing of increases, if any, in the
use of its Web site or in a timely manner to effectively upgrade and expand its
transaction-processing systems or to integrate smoothly any newly developed or
purchased modules with its existing systems. Any inability to do so could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.
Substantially all the Company's computer and communications hardware is
located at a single leased facility in Seattle, Washington. The Company's
systems and operations are vulnerable to damage or interruption from fire,
flood, power loss, telecommunications failure, break-ins, earthquake and similar
events. The Company does not currently have redundant systems or a formal
disaster recovery plan and does not carry sufficient business interruption
insurance to compensate it for losses that may occur. Despite the implementation
of network security measures by the Company, its servers are vulnerable to
computer viruses, physical or electronic break-ins and similar disruptions,
which could lead to interruptions, delays, loss of critical data or the
inability to accept and fulfill customer orders. The occurrence of any of the
foregoing events could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
MANAGEMENT OF POTENTIAL GROWTH
The Company has rapidly and significantly expanded its operations and
anticipates that further expansion will be required to address potential growth
in its customer base, to expand its product and service offerings and its
international operations, and to pursue other market opportunities. The
Company's employee base has similarly expanded, growing from 158 employees as of
December 31, 1996 to 796 employees as of March 31, 1998. The expansion of the
Company's operations and employee base has placed, and is expected to continue
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to place, a significant strain on the Company's management, operational and
financial resources. To manage the expected growth of its operations and
personnel, the Company will be required to improve existing and implement new
transaction-processing, operational and financial systems, procedures and
controls, as well as to expand, train and manage its growing employee base.
There can be no assurance that the Company's current and planned personnel,
systems, procedures and controls will be adequate to support the Company's
future operations, that management will be able to hire, train, retain, motivate
and manage required personnel or that Company management will be able to
successfully identify, manage and exploit existing and potential market
opportunities. If the Company is unable to manage growth effectively, such
inability could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
RISKS OF NEW BUSINESS AREAS
The Company over time intends to expand its operations by promoting new or
complementary products or sales formats and by expanding the breadth and depth
of its product or service offerings. Expansion of the Company's operations in
this manner would require significant additional expenses and development,
operations and editorial resources and would strain the Company's management,
financial and operational resources. Furthermore, the Company may not benefit
from the first-mover advantage that it experienced in the online book market,
and gross margins attributable to new business areas may be lower than those
associated with the Company's existing business activities. There can be no
assurance that the Company will be able to expand its operations in a
cost-effective or timely manner. Furthermore, any new business launched by the
Company that is not favorably received by consumers could damage the Company's
reputation or the Amazon.com brand. The lack of market acceptance of such
efforts or the Company's inability to generate satisfactory revenues from such
expanded services or products to offset their cost could have a material adverse
effect on the Company's business, prospects, financial condition and results of
operations. Gross margins attributable to new business areas may be lower than
those associated with the Company's existing business activities. In particular,
the Company has announced plans to offer music to customers, and anticipates
that music product gross margin, which is expected to be lower than book gross
margin, will affect overall gross margin proportionately to its impact on
product mix.
RISKS OF INTERNATIONAL EXPANSION
The Company expects to expand its presence in foreign markets and has
recently acquired two international online booksellers to accelerate this
expansion. To date, the Company has only limited experience in sourcing,
marketing and distributing products on an international basis and in developing
localized versions of its Web site and other systems. The Company expects to
incur significant costs in establishing international facilities and operations,
in promoting its brand internationally, in developing localized versions of its
Web site and other systems and in sourcing, marketing and distributing products
in foreign markets. There can be no assurance that the Company's international
efforts will be successful. If the revenues resulting from international
activities are inadequate to offset the expense of establishing and maintaining
foreign operations, such inadequacy could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations. In
addition, there are certain risks inherent in doing business on an international
level, such as unexpected changes in regulatory requirements, export and import
restrictions, tariffs and other trade barriers, difficulties in staffing and
managing foreign operations, longer payment cycles, political instability,
fluctuations in currency exchange rates, seasonal reductions in business
activity in other parts of the world and potentially adverse tax consequences,
any of which could adversely effect the success of the Company's international
operations. Furthermore, it is possible that governments in certain foreign
jurisdictions may have or enact legislation with respect to the Internet or
other online services in such areas as content, network security, encryption or
distribution that may effect the Company's ability to conduct business abroad.
There can be no assurance that one or more of such factors would not have a
material adverse effect on the Company's future international operations and,
consequently, on the Company's business, prospects, financial condition and
results of operations.
8
<PAGE> 10
RISKS OF BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES
The Company may choose to expand its operations or market presence by
entering into business combinations, investments, joint ventures or other
strategic alliances with third parties such as the Company's recent acquisition
of three Internet companies. Any such transaction would be accompanied by risks
commonly encountered in such transactions, which could include, among others,
the difficulty of assimilating the operations, technology and personnel of the
combined companies, the potential disruption of the Company's ongoing business,
the inability to retain key technical and managerial personnel, the inability of
management to maximize the financial and strategic position of the Company
through the successful integration of acquired businesses, additional expenses
associated with amortization of acquired intangible assets, the maintenance of
uniform standards, controls and policies and the impairment of relationships
with existing employees and customers. There can be no assurance that the
Company would be successful in overcoming these risks or any other problems
encountered in connection with such business combinations, investments, joint
ventures or other strategic alliances, or that such transactions would not have
a material adverse effect on the Company's business, prospects, financial
condition and results of operations.
RAPID TECHNOLOGICAL CHANGE
To remain competitive, the Company must continue to enhance and improve the
responsiveness, functionality and features of the Amazon.com online store. The
Internet and the online commerce industry are characterized by rapid
technological change, changes in user and customer requirements and preferences,
frequent new products and service introductions embodying new technologies and
the emergence of new industry standards and practices that could render the
Company's existing Web site and proprietary technology and systems obsolete. The
Company's success will depend, in part, on its ability to license leading
technologies useful in its business, enhance its existing services, develop new
services and technology that address the increasingly sophisticated and varied
needs of its prospective customers and respond to technological advances and
emerging industry standards and practices on a cost-effective and timely basis.
The development of a Web site and other proprietary technology entails
significant technical, financial and business risks. There can be no assurance
that the Company will successfully implement new technologies or adapt its Web
site, proprietary technology and transaction-processing systems to customer
requirements or emerging industry standards. If the Company is unable, for
technical, legal, financial or other reasons, to adapt in a timely manner in
response to changing market conditions or customer requirements, such inability
could have a material adverse effect on the Company's business, prospects,
financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the continued
services and on the performance of its senior management and other key
personnel, particularly Jeffrey P. Bezos, its President, Chief Executive Officer
and Chairman of the Board. The Company does not have long-term employment
agreements with any of its key personnel and maintains no "key person" life
insurance policies. The loss of the services of its executive officers or other
key employees could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
RELIANCE ON CERTAIN SUPPLIERS
The Company purchases a substantial majority of its products from two major
vendors, Ingram Book Group ("Ingram") and Baker & Taylor, Inc. Ingram is the
Company's single largest supplier and accounted for 58% and 59% of the Company's
inventory purchases in 1997 and 1996, respectively. The Company has no long-term
contracts or arrangements with any of its vendors that guarantee the
availability of merchandise, the continuation of particular payment terms or the
extension of credit limits. There can be no assurance that the Company's current
vendors will continue to sell merchandise to the Company on current terms or
that the Company will be able to establish new or extend current vendor
relationships to ensure acquisition of merchandise in a timely and efficient
manner and on acceptable commercial terms. If the Company were unable to develop
and maintain relationships with vendors that would allow it to obtain sufficient
quantities of
9
<PAGE> 11
merchandise on acceptable commercial terms, such inability could have a material
adverse effect on the Company's business, prospects, financial condition and
results of operations.
INCREASED LEVERAGE
The Company has significant indebtedness outstanding, principally the
offering of approximately $326 million gross proceeds of 10% Senior Discount
Notes due 2008 (the "Senior Discount Notes"), capitalized lease obligations and
other equipment financing. The Company may incur substantial additional
indebtedness in the future. The level of the Company's indebtedness, among other
things, could (i) make it difficult for the Company to make payments on the
Senior Discount Notes, (ii) make it difficult for the Company to obtain any
necessary financing in the future for working capital, capital expenditures,
debt service requirements or other purposes, (iii) limit the Company's
flexibility in planning for, or reacting to, changes in its business, and (iv)
make it more vulnerable in the event of a downturn in its business. There can be
no assurance that the Company will be able to improve its earnings before fixed
charges or that the Company will be able to meet its debt service obligations,
including its obligations under the Senior Discount Notes. In the event the
Company's cash flow is inadequate to meet its obligations, the Company could
face substantial liquidity problems. If the Company is unable to generate
sufficient cash flow or otherwise obtain funds necessary to make required
payments, or if the Company otherwise fails to comply with the various covenants
in its indebtedness, it would be in default under the terms thereof, which would
permit the holders of such indebtedness to accelerate the maturity of such
indebtedness and could cause defaults under other indebtedness of the Company.
Any such default could have a material adverse effect on the Company's business,
prospects, financial condition and results of operations.
RISKS ASSOCIATED WITH DOMAIN NAMES
The Company currently holds various Web domain names relating to its brand,
including the "Amazon.com" domain name. The acquisition and maintenance of
domain names generally is regulated by governmental agencies and their
designees. For example, in the United States, the National Science Foundation
has appointed Network Solutions, Inc. as the exclusive registrar for the ".com,"
".net" and ".org" generic top-level domains. The regulation of domain names in
the United States and in foreign countries is subject to change. Governing
bodies may establish additional top-level domains, appoint additional domain
name registrars or modify the requirements for holding domain names. As a
result, there can be no assurance that the Company will be able to acquire or
maintain relevant domain names in all countries in which it conducts business.
Furthermore, the relationship between regulations governing domain names and
laws protecting trademarks and similar proprietary rights is unclear. The
Company, therefore, may be unable to prevent third parties from acquiring domain
names that are similar to, infringe upon or otherwise decrease the value of its
trademarks and other proprietary rights. Any such inability could have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations.
10
<PAGE> 12
GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES
The Company is not currently subject to direct regulation by any domestic
or foreign governmental agency, other than regulations applicable to businesses
generally and laws or regulations directly applicable to access to online
commerce. However, due to the increasing popularity and use of the Internet and
other online services, it is possible that a number of laws and regulations may
be adopted with respect to the Internet or other online services covering issues
such as user privacy, pricing, content, copyrights, distribution and
characteristics and quality of products and services. Furthermore, the growth
and development of the market for online commerce may prompt calls for more
stringent consumer protection laws that may impose additional burdens on those
companies conducting business online. The adoption of any additional laws or
regulations may decrease the growth of the Internet or other online services,
which could, in turn, decrease the demand for the Company's products and
services and increase the Company's cost of doing business, or otherwise have a
material adverse effect on the Company's business, prospects, financial
condition and results of operations. Moreover, the applicability to the Internet
and other online services of existing laws in various jurisdictions governing
issues such as property ownership, sales and other taxes, libel and personal
privacy is uncertain and may take years to resolve. Any such new legislation or
regulation, the application of laws and regulations from jurisdictions whose
laws do not currently apply to the Company's business, or the application of
existing laws and regulations to the Internet and other online services could
have a material adverse effect on the Company's business, prospects, financial
condition and results of operations.
RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company has never paid any cash dividends on its Common Stock. The
Company's Board of Directors will determine future dividend policy based on the
Company's results of operation, financial condition, capital requirements and
other circumstances. The Indenture, dated as of May 8, 1998, between the Company
and the Bank of New York, as Trustee (the "Indenture"), relating to the Senior
Discount Notes, prohibits the Company from paying cash dividends on its capital
stock, subject to certain exceptions. It is not anticipated that any cash
dividends will be paid on the Common Stock in the foreseeable future.
11
<PAGE> 13
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the financial statements and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998 and
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
which are incorporated by reference herein. See "Incorporation of Documents by
Reference." The statement of operations data for the quarter ended March 31,
1998 and the balance sheet data at March 31, 1998, with the exception of the
other operating data, are derived from financial statements of the Company,
which are included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, which is incorporated by reference herein. See
"Incorporation of Documents by Reference." The statement of operations data for
each of the years in the three-year period ended December 31, 1997 and the
balance sheet data at December 31, 1997 and 1996, with the exception of the
other operating data, are derived from financial statements of the Company which
have been audited by Ernst & Young LLP, independent auditors, and are included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1997, which is incorporated by reference herein. See "Incorporation of Documents
by Reference." The statement of operations data for the period from July 5, 1994
(inception) to December 31, 1994 and the balance sheet data at December 31, 1995
and 1994, with the exception of the other operating data, are derived from the
financial statements of the Company which were also audited by Ernst & Young
LLP, and are included in the Company's Registration Statement on Form S-1
(Registration No. 333-23795), dated May 15, 1997. The historical results are not
necessarily indicative of future results.
<TABLE>
<CAPTION>
FOR THE PERIOD
THREE MONTHS FROM JULY 5,
ENDED YEAR ENDED DECEMBER 31, 1994 (INCEPTION)
MARCH 31, --------------------------- TO DECEMBER 31,
1998 1997 1996 1995 1994
------------ -------- ------- ------ ----------------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................ $87,375 $147,758 $15,746 $ 511 $ --
Cost of sales............................................ 68,054 118,945 12,287 409 --
------- -------- ------- ------ -------
Gross profit............................................. 19,321 28,813 3,459 102 --
Operating expenses:
Marketing and sales.................................... 19,503 38,964 6,090 200 --
Product development.................................... 6,729 12,485 2,313 171 38
General and administrative............................. 1,963 6,573 1,035 35 14
------- -------- ------- ------ -------
Total operating expenses.......................... 28,195 58,022 9,438 406 52
------- -------- ------- ------ -------
Loss from operations..................................... (8,874) (29,209) (5,979) (304) (52)
Interest income.......................................... 1,640 1,898 202 1 --
Interest expense......................................... (2,025) (279) -- -- --
------- -------- ------- ------ -------
Net loss................................................. $(9,259) $(27,590) $(5,777) $ (303) $ (52)
======= ======== ======= ====== =======
Basic and diluted loss per share(1)........................ $ (0.20) $ (0.64) $ (0.16) $(0.01) $ (0.00)
======= ======== ======= ====== =======
Shares used in computation of basic and diluted loss per
share(1)................................................. 46,622 43,302 37,088 28,788 35,460
======= ======== ======= ====== =======
OTHER OPERATING DATA:
Net cash provided by (used in) operating activities...... $(6,555) $ 3,522 $(1,735) $ (232) $ (24)
Capital expenditures(2).................................. 2,071 11,604 1,214 52 28
EBITDA(3)................................................ (5,451) (22,633) (5,491) (284) (47)
BALANCE SHEET DATA:
Cash and cash equivalents.................................. $98,600 $109,810 $ 6,248 $ 996 $ 52
Working capital (deficiency)............................... 84,415 93,517 2,270 920 (16)
Total assets............................................... 145,007 149,006 8,271 1,084 76
Total debt................................................. 77,386 78,202 -- -- --
Stockholders' equity....................................... 19,827 28,486 3,401 977 8
</TABLE>
- ---------------
(1) As adjusted for the Company's 2-for-1 stock split payable June 1, 1998.
(2) Capital expenditures include assets acquired under capital leases.
(3) Earnings before interest, taxes, depreciation and amortization ("EBITDA") is
provided because it is a commonly accepted financial indicator used by
certain investors and analysts to analyze and compare companies on the basis
of operating performance. EBITDA is presented to enhance the understanding
of the Company's operating results and is not intended to represent cash
flows or results of operations in accordance with generally accepted
accounting principles ("GAAP") for the periods indicated. EBITDA is not a
measurement under GAAP and is not necessarily comparable with similarly
titled measures of other companies. Net cash flows from operating activities
as determined using GAAP are also presented in Other Operating Data.
12
<PAGE> 14
THE OFFERING
This Prospectus relates to up to 5,000,000 shares of Common Stock, which
the Company proposes to issue from time to time in its continuing program of
acquisitions of entities. The consideration for any acquisition may consist of
cash, notes or other evidences of debt, assumptions of liabilities, equity
securities or a combination thereof, as determined from time to time by
negotiations between the Company and the owners of businesses or properties to
be acquired. In general, the terms of acquisitions will be determined by direct
negotiations between the representatives of the Company and the owners of the
businesses or properties to be acquired or, in the case of entities that are
more widely held, through exchange offers to stockholders or documents
soliciting approval of statutory mergers, consolidations or sales of assets.
Underwriting discounts or commissions will generally not be paid by the Company.
Under some circumstances, however, the Company may issue shares of Common Stock
covered by this Prospectus to pay brokers' commissions incurred in connection
with acquisitions.
RESTRICTIONS ON RESALE OF COMMON STOCK
The Common Stock offered hereby has been registered under the Securities
Act, but this registration does not cover resale or distribution by the person
who receives shares of the Common Stock issued by the Company in its
acquisitions. Affiliates of entities acquired by the Company may not sell shares
of Common Stock registered under this Prospectus except pursuant to an effective
registration statement under the Securities Act covering such shares, or in
compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Generally, Rule 145 permits such affiliates to sell such shares immediately
following the acquisition in compliance with certain volume limitations and
manner of sale requirements. Under Rule 145, sales by such affiliates during any
three-month period cannot exceed the greater of (i) 1% of the shares of Common
Stock outstanding (approximately 490,000 shares assuming 49 million shares of
Common Stock remain outstanding) and (ii) the average weekly reported volume of
trading of the Common Stock on all national securities exchanges and/or reported
through the Nasdaq National Market during the four calendar weeks preceding the
proposed sale. These restrictions will cease to apply under most other
circumstances if the affiliate has held the shares of Common Stock for at least
one year, provided that the person or entity is not then an affiliate of the
Company. Individuals who are not affiliates of the entity being acquired will
not be subject to resale restrictions under Rule 145 and may resell shares of
Common Stock immediately following the acquisition without an effective
registration statement under the Securities Act.
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
The authorized capital stock of the Company consists of 300,000,000 shares
of Common Stock, $0.01 par value per share, and 10,000,000 shares of Preferred
Stock, $0.01 par value per share. The following summary of certain provisions of
the Common Stock and Preferred Stock does not purport to be complete and is
subject to, and qualified in its entirety by, the provisions of the Company's
Restated Certificate of Incorporation and the provisions of applicable law.
COMMON STOCK
As of June 1, 1998, there were 49,678,856 shares of Common Stock
outstanding held of record by 385 stockholders. The holders of Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Subject to preferences that may be applicable to any
outstanding shares of Preferred Stock, the holders of Common Stock are entitled
to receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available for the payment of dividends. In the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities and liquidation preferences of any outstanding shares of
Preferred Stock. Holders of Common Stock have no preemptive rights or rights to
convert their Common Stock into any other securities. There are no redemption or
sinking fund provisions applicable to the Common Stock. All outstanding shares
of Common Stock are fully paid and nonassessable,
13
<PAGE> 15
and the shares of Common Stock to be issued pursuant to this Prospectus will be
fully paid and nonassessable. Pursuant to the Indenture, the Company may not
declare or pay any dividend or make any distribution on or with respect to its
capital stock, including Common Stock, subject to certain exceptions.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to issue up to 10,000,000 shares of Preferred Stock in one or more
series and to fix the designations, powers, preferences, privileges and
relative, participating, optional or special rights and the qualifications,
limitations or restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption and liquidation preferences, any or
all of which may be greater than the rights of the Common Stock. The Board of
Directors, without stockholder approval, can issue Preferred Stock with voting,
conversion or other rights that could adversely affect the voting power and
other rights of the holders of Common Stock. Preferred Stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
the Company or make removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the Common Stock, and may adversely affect the voting and other rights of the
holders of Common Stock. The Company currently has no plans to issue any
Preferred Stock. Pursuant to the Indenture, the Company may not declare or pay
any dividend or make any distribution on or with respect to its capital stock,
including Preferred Stock, subject to certain exceptions.
ANTITAKEOVER EFFECTS OF CERTAIN PROVISIONS OF RESTATED CERTIFICATE OF
INCORPORATION AND WASHINGTON LAW
As noted above, the Company's Board of Directors, without stockholder
approval, has the authority under the Company's Restated Certificate of
Incorporation to issue Preferred Stock with rights superior to the rights of the
holders of Common Stock. As a result, Preferred Stock could be issued quickly
and easily, could adversely affect the rights of holders of Common Stock and
could be issued with terms calculated to delay or prevent a change in control of
the Company or make removal of management more difficult.
The laws of the State of Washington, where the Company's principal
executive offices are located, impose restrictions on certain transactions
between certain foreign corporations and significant stockholders. Chapter
23B.19 of the Washington Business Corporation Act (the "WBCA") prohibits a
"Target Corporation," with certain exceptions, from engaging in certain
"Significant Business Transactions" with a person or group of persons that
beneficially owns 10% or more of the voting securities of the Target Corporation
(an "Acquiring Person") for a period of five years after such acquisition,
unless the transaction or acquisition of shares is approved by a majority of the
members of the Target Corporation's board of directors prior to the time of
acquisition. Such prohibited transactions include, among other things, a merger
or consolidation with, disposition of assets to, or issuance or redemption of
stock to or from, the Acquiring Person, termination of 5% or more of the
employees of the Target Corporation as a result of the Acquiring Person's
acquisition of 10% or more of the shares or allowing the Acquiring Person to
receive any disproportionate benefit as a stockholder. After the five-year
period, a Significant Business Transaction may take place as long as it complies
with certain fair price provisions of the statute. A Target Corporation includes
a foreign corporation if (i) the corporation has a class of voting stock
registered pursuant to Section 12 or 15 of the Exchange Act, (ii) the
corporation's principal executive office is located in the State of Washington,
(iii) any of (a) more than 10% of the corporation's stockholders of record are
Washington residents, (b) more than 10% of its shares of record are owned by
Washington residents, or (c) 1,000 or more of its stockholders of record are
Washington residents, (iv) a majority of the corporation's employees are
Washington residents or more than 1,000 Washington residents are employees of
the corporation, and (v) a majority of the corporation's tangible assets are
located in Washington State or the corporation has more than $50 million of
tangible assets located in the state of Washington. A corporation may not "opt
out" of this statute. Depending on whether the Company meets the definition of a
Target Corporation, Chapter 23B.19 of the WBCA may have the effect of delaying,
deferring or preventing a change in control of the Company.
Although Section 203 of the Delaware General Corporation Law (the "DGCL")
generally prohibits Delaware corporations from engaging in certain "Business
Combinations" (as defined therein) with certain "Interested Stockholders" (as
defined therein) for a period of three years unless certain criteria are met,
the
14
<PAGE> 16
Company has expressly elected in its Restated Certificate of Incorporation not
to be governed by Section 203 of the DGCL.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services L.L.C., Ridgefield Park, New Jersey.
NASDAQ NATIONAL MARKET LISTING
The shares of Common Stock being offered hereby have been approved for
listing on the Nasdaq National Market under the symbol "AMZN," subject to
official notice of issuance.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Perkins Coie LLP, 1201 Third Avenue, 40th Floor, Seattle, Washington
98101.
EXPERTS
The financial statements of Amazon.com, Inc. appearing in Amazon.com,
Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1997, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
15
<PAGE> 17
======================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THAT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION WHERE, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Incorporation of Documents by
Reference........................... 2
Forward-Looking Statement............. 3
The Company........................... 3
Risk Factors.......................... 5
Selected Financial Data............... 12
The Offering.......................... 13
Description of Capital Stock of the
Company............................. 13
Legal Matters......................... 15
Experts............................... 15
</TABLE>
======================================================
======================================================
5,000,000 SHARES
AMAZON.COM, INC.
COMMON STOCK
PAR VALUE $0.01
--------------------
PROSPECTUS
--------------------
, 1998
======================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers, as well as other
employees and individuals, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) incurred in connection with the
defense or settlement of such actions, and the statute requires court approval
before there can be any indemnification where the person seeking indemnification
has been found liable to the corporation. The statute provides that it is not
exclusive of other indemnification that may be granted by a corporation's
charter, bylaws, disinterested director vote, stockholder vote, agreement or
otherwise.
Section 10 of the registrant's Bylaws requires indemnification to the full
extent permitted under Delaware law as it now exists or may hereafter be
amended. Subject to any restrictions imposed by Delaware law, the Bylaws provide
an unconditional right to indemnification for all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) actually and reasonably incurred or suffered by
any person in connection with any actual or threatened action, suit or
proceeding, whether civil, criminal, administrative or investigative (including,
to the extent permitted by law, any derivative action) by reason of the fact
that such person is or was serving as a director or officer of the registrant or
that, being or having been a director or officer of the registrant, such person
is or was serving at the request of the registrant as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan.
The Bylaws also provide that the registrant may, by action of its Board of
Directors, provide indemnification to its employees and agents with the same
scope and effect as the foregoing indemnification of directors and officers.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability for (i) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (iii) payments of unlawful dividends or unlawful
stock repurchases or redemptions, or (iv) any transaction from which the
director derived an improper personal benefit.
Article 10 of the registrant's Restated Certificate of Incorporation
provides that to the full extent that the DGCL, as it now exists or may
hereafter be amended, permits the limitation or elimination of the liability of
directors, a director of the registrant shall not be liable to the registrant or
its stockholders for monetary damages for breach of fiduciary duty as a
director. Any amendment to or repeal of such Article 10 shall not adversely
affect any right or protection of a director of the registrant for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
The registrant has entered into certain indemnification agreements with its
officers and directors. The indemnification agreements provide the registrant's
officers and directors with further indemnification to the maximum extent
permitted by the DGCL.
II-1
<PAGE> 19
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibit Index
<TABLE>
<C> <S>
3.1 Restated Certificate of Incorporation.
4.1* Indenture, dated as of May 8, 1998, between the registrant and the Bank
of New York, as Trustee.
4.2* Form of 10% Senior Discount Note due 2008.
4.3* Registration Rights Agreement, entered May 8, 1998, between the
registrant and Morgan Stanley & Co., Incorporated.
5.1 Opinion of Perkins Coie LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1 above).
24.1 Power of Attorney (contained on signature page).
</TABLE>
- ---------------
* Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.
ITEM 22. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows:
(1) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus that is a part of this registration statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) Every prospectus that (i) is filed pursuant to paragraph (1)
immediately preceding or (ii) purports to meet the requirements of Section
10(a)(3) of the Securities Act of 1933 and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of any
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) The undersigned registrant will deliver or cause to be delivered with
the prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, will deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(4) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) The registrant will respond to requests for information that is
incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or
13 of this Form, within one business day of receipt of such request, and to send
the incorporated documents by first-class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding to
the request.
II-2
<PAGE> 20
(6) The registrant will supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration statement
when it became effective, except where the transaction in which the securities
being offered pursuant to the registration statement would itself qualify for an
exemption under Section 5 of the Securities Act of 1933, absent the existence of
other similar (prior or subsequent) transactions.
(7) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(8) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(9) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(10) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of the
offering.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Seattle, State of Washington on May 28, 1998.
AMAZON.COM, INC.
By: /s/ JEFFREY P. BEZOS
--------------------------------------
Jeffrey P. Bezos
Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Jeffrey P. Bezos and Joy D. Covey, and each of them, with full power of
substitution and resubstitution and full power to act without the other, as his
or her true and lawful attorney in fact and agent to act in his or her name,
place, and stead and to execute in the name and on behalf of each person,
individually and in each capacity stated below, and to file, any and all
amendments to this Registration Statement, including any and all post-effective
amendments, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing, ratifying and
confirming all that said attorneys-in-fact and agents or either of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JEFFREY P. BEZOS Chairman of the Board, President and May 28, 1998
- ------------------------------------------------ Chief Executive Officer (Principal
Jeffrey P. Bezos Executive Officer)
/s/ JOY D. COVEY Chief Financial Officer, Vice May 28, 1998
- ------------------------------------------------ President of Finance and
Joy D. Covey Administration and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
/s/ TOM A. ALBERG Director May 28, 1998
- ------------------------------------------------
Tom A. Alberg
/s/ SCOTT D. COOK Director May 28, 1998
- ------------------------------------------------
Scott D. Cook
/s/ L. JOHN DOERR Director May 28, 1998
- ------------------------------------------------
L. John Doerr
/s/ PATRICIA D. STONESIFER Director May 28, 1998
- ------------------------------------------------
Patricia D. Stonesifer
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- ------------
<S> <C> <C>
3.1 Restated Certificate of Incorporation.......................
4.1* Indenture, dated as of May 8, 1998, between the registrant
and the Bank of New York, as Trustee........................
4.2* Form of 10% Senior Discount Note due 2008...................
4.3* Registration Rights Agreement, entered May 8, 1998, between
the registrant and Morgan Stanley & Co., Incorporated.......
5.1 Opinion of Perkins Coie LLP.................................
23.1 Consent of Ernst & Young LLP, Independent Auditors..........
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1
above).
24.1 Power of Attorney (contained on signature page).............
</TABLE>
- ---------------
* Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
AMAZON.COM, INC.
Amazon.com, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby certify:
1. The original Certificate of Incorporation was filed with the
Secretary of State on May 28, 1996.
2. The following Restated Certificate of Incorporation was duly
adopted by the corporation's Board of Directors in accordance with the
provisions of Section 245 of the General Corporation Law of the State of
Delaware and only restates and integrates and does not further amend the
provisions of the corporation's Certificate of Incorporation as heretofore
amended and supplemented, and there is no discrepency between those provisions
and the following.
ARTICLE 1. NAME
The name of this corporation is Amazon.com, Inc.
ARTICLE 2. REGISTERED OFFICE AND AGENT
The address of the registered office of this corporation is 1013
Centre Road, Wilmington, County of New Castle, State of Delaware 19805, and the
name of its registered agent at such address is Corporation Service Company.
ARTICLE 3. PURPOSES
The purpose of this corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE 4. SHARES
The total authorized stock of the corporation shall consist of 300
million shares of Common Stock having a par value of $.01 per share and 10
million shares of Preferred Stock having a par value of $.01 per share.
Authority is hereby expressly granted to the Board of Director to fix by
resolution or resolutions any of the
PAGE 1
<PAGE> 2
designations and the powers, preferences and rights, and the qualifications,
limitations or restrictions which are permitted by Delaware General Corporation
Law in respect of any class or classes of stock or any series of any class of
stock of the corporation. The corporation shall from time to time in accordance
with the laws of the State of Delaware increase the authorized amount of its
Common Stock if at any time the number of shares of Common Stock remaining
unissued and available for issuance shall not be sufficient to permit the
conversion of Preferred Stock.
ARTICLE 5. DIRECTORS
The number of Directors of the corporation shall be determined in the
manner provided by the Bylaws and may be increased or decreased from time to
time in the manner provided therein. Written ballots are not required in the
election of Directors.
ARTICLE 6. BY-LAWS
The Board of Directors shall have the power to adopt, amend or repeal
the Bylaws of the corporation; provided, however, the Board of Directors may not
repeal or amend any bylaw that the stockholders have expressly provided may not
be amended or repealed by the Board of Directors. The stockholders shall also
have the power to adopt, amend or repeal the Bylaws for this corporation.
ARTICLE 7. PREEMPTIVE RIGHTS
Preemptive rights shall not exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE 8. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors shall not
exist with respect to shares of stock of this corporation.
ARTICLE 9. AMENDMENTS TO CERTIFICATE OF INCORPORATION
This corporation reserves the right to amend or repeal, by the
affirmative vote of the holders of a majority of the outstanding shares entitled
to vote, any of the provisions contained in this Certificate of Incorporation.
The rights of the stockholders of the corporation are granted subject to this
reservation.
ARTICLE 10. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Delaware General Corporation Law, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of
PAGE 2
<PAGE> 3
the liability of directors, a director of this corporation shall not be liable
to this corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. Any amendment to or repeal of this Article 10
shall not adversely affect any right or protection of a director of this
corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
ARTICLE 11. ACTION BY STOCKHOLDERS WITHOUT A MEETING
Only action properly brought before the stockholders by or at the
direction of the Board of Directors may be taken without a meeting, without
prior notice and without a vote, if a written consent setting forth the action
so taken is signed by the holders of outstanding shares of capital stock
entitled to be voted with respect to the subject matter thereof having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted.
ARTICLE 12. SPECIAL MEETING OF STOCKHOLDERS
The Chairman of the Board of Directors, the Chief Executive Officer,
the President or the Board of Directors may call special meetings of the
stockholders for any purpose. A special meeting of the stockholders shall be
held if the holders of not less than thirty percent (30%) of all the votes
entitled to be cast on any issue proposed to be considered at such special
meeting have dated, signed and delivered to the Secretary one or more written
demands for such meeting, describing the purpose or purposes for which it is to
be held.
ARTICLE 13. BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
The corporation expressly elects not to be governed by Section 203(a)
of Title 8 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the corporation has caused this Restated
Certificate of Incorporation to be signed by its duly authorized officer this
29th day of May, 1998.
AMAZON.COM, INC.
/s/ ALAN CAPLAN
-----------------------------------------------
Alan Caplan, Vice President, General
Counsel and Assistant Secretary
PAGE 3
<PAGE> 1
Exhibit 5.1
[PERKINS COIE LLP LETTERHEAD]
June 2, 1998
Amazon.com, Inc.
1516 Second Avenue, 4th Floor
Seattle, WA 98101
Ladies and Gentlemen:
We have acted as counsel to you in connection with the proceedings
for the authorization and issuance by Amazon.com, Inc. (the "Company") of up to
5,000,000 shares (the "Shares") of the Company's common stock, $.01 par value
per share (the "Common Stock") and the preparation and filing of a registration
statement on Form S-4 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Securities Act"), which you are filing with the
Securities and Exchange Commission with respect to the Shares.
We have examined the Registration Statement and such documents and
records of the Company and other documents as we have deemed necessary for the
purpose of this opinion. Based upon the foregoing, we are of the opinion that
upon the happening of the following events:
(a) the filing and effectiveness of the Registration Statement
and any amendments thereto,
(b) due execution by the Company and registration by its
registrar of the Shares,
(c) the offering and sale of the Shares as contemplated by the
Registration Statement, and
(d) receipt by the Company of the consideration required for
the Shares contemplated by the Registration Statement,
the Shares will be duly authorized, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and any amendment thereto, including any and all
post-effective amendments, and to the reference to our firm in the prospectus of
the Registration
<PAGE> 2
Amazon.com, Inc.
June 2, 1998
Page 2
Statement under the heading "Legal Matters." In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act.
Very truly yours,
/s/ PERKINS COIE LLP
<PAGE> 1
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts" in the Registration Statement (Form S-4) and related
Prospectus of Amazon.com, Inc. for the registration of 5,000,000 shares of its
common stock and to the incorporation by reference therein of our report dated
January 19, 1998, with respect to the financial statements and schedule of
Amazon.com, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Seattle, Washington
June 2, 1998
