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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1999
REGISTRATION NO. 333-74435
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMAZON.COM, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 91-1646860
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (IRS EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
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1516 SECOND AVENUE, 4TH FLOOR
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, 4TH FLOOR
SEATTLE, WASHINGTON 98101
(206) 622-2335
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
SCOTT L. GELBAND
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 this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [
] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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 SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
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The information in this prospectus is not complete and may be changed. The
selling holders may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer of sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 13, 1999
$1,250,000,000
AMAZON.COM, INC.
4 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2009
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Holders of our 4 3/4% Convertible Subordinated Notes due 2009 may offer for
sale the notes and the shares of our common stock into which the notes are
convertible at various times at market prices prevailing at the time of sale or
at privately negotiated prices. The selling holders may sell the notes or the
common stock to or through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, concessions or commissions.
Interest is payable in arrears on February 1 and August 1 of each year,
beginning on August 1, 1999. The notes will mature on February 1, 2009 unless
earlier converted or redeemed. The notes are unsecured and rank below our
existing and future indebtedness.
The holders of the notes may convert any portion of a note (in multiples of
$1,000) into common stock, at a conversion price of $156.055 per share, subject
to adjustment in certain events. Our common stock is quoted on the Nasdaq
National Market under the symbol "AMZN." On May 12, 1999, the closing price of
the common stock was $142.9375 per share.
We may redeem any portion of the notes at any time prior to February 6,
2002, at a redemption price equal to $1,000 per note plus accrued and unpaid
interest to the redemption date if (1) the closing price of our common stock has
exceeded 150% of the conversion price for at least 20 trading days in any
consecutive 30-day period ending on the trading day prior to the mailing of the
notice of redemption and (2) the shelf registration statement covering resales
of the notes and the common stock is effective and expected to remain effective
and available for use for the 30 days following the redemption dates. If we
redeem the notes under these circumstances, we will make an additional
"make-whole" payment on the redeemed notes equal to $212.60 per $1,000 note,
minus the amount of any interest we actually paid on the note prior to the date
the notice was mailed. We must make these "make-whole" payments on all notes
called for redemption, including notes converted after the date the notice was
mailed.
We do not intend to apply for listing of the notes on any securities
exchange or for quotation through any automated quotation system. The notes are
eligible for trading in the Private Offerings, Resale and Trading through
Automated Linkages ("Portal") market of the National Association of Securities
Dealers, Inc. The notes are not expected to remain eligible for trading on the
Portal system and a trading market may not develop for the notes.
We will not receive any proceeds from the sale of the notes and the common
stock into which the notes are convertible by the selling holders. We will pay
all expenses (other than selling commissions and fees and stock transfer taxes)
of the registration and sale of the notes and the common stock.
INVESTING IN THE NOTES OR THE COMMON STOCK INTO WHICH THE NOTES ARE
CONVERTIBLE INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE
4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS DATED , 1999
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TABLE OF CONTENTS
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PAGE
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Forward-Looking Information................................. 1
How to Obtain More Information.............................. 1
Amazon.com.................................................. 3
Risk Factors................................................ 3
Ratio of Earnings to Fixed Charges.......................... 12
Description of Notes........................................ 12
United States Federal Income Tax Consequences............... 20
Use of Proceeds............................................. 24
Description of Capital Stock................................ 24
Selling Holders............................................. 25
Plan of Distribution........................................ 33
Legal Matters............................................... 35
Experts..................................................... 35
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FORWARD-LOOKING INFORMATION
This prospectus includes "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. This Act provides a "safe
harbor" for forward-looking statements to encourage companies to provide
prospective information about themselves so long as they identify these
statements as forward-looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected results. All statements other than statements of historical fact we
make in this prospectus or in any document incorporated by reference are
forward-looking. In particular, the statements herein regarding industry
prospects and our future results of operations or financial position are
forward-looking statements. Forward-looking statements reflect our current
expectations and are inherently uncertain. Our actual results may differ
significantly from our expectations. The section entitled "Risk Factors"
describes some, but not all, of the factors that could cause these differences.
HOW TO OBTAIN MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. You may read any document we file at the SEC's public
reference rooms in Washington, D.C., Chicago, Illinois and New York, New York.
Please call the SEC toll free at 1-800-SEC-0330 for information about its public
reference rooms. You may also read our filings at the SEC's Web site at
http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
in the registration statement. We have omitted certain parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's public
reference facilities or Web site. Our statements in this prospectus about the
contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
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The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it. This means that we can disclose important
information to you by referring you to those documents. This information we
incorporate by reference is considered a part of this prospectus, and later
information we file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 until this offering is completed:
- Our Annual Report on Form 10-K for the year ended December 31, 1998;
- Our Current Reports on Form 8-K filed on August 27, 1998, October 26,
1998, January 5, 1999, January 27, 1999, January 28, 1999, January 29,
1999, and February 4, 1999, March 29, 1999, March 30, 1999, April 27,
1999, April 29, 1999 and May 12, 1999; and
- The description of the common stock in our Registration Statement on Form
8-A filed on May 2, 1997, under Section 12(g) of the Exchange Act.
You may obtain copies of these documents, other than exhibits, free of
charge by contacting our corporate secretary at our principal offices, which are
located at 1516 Second Avenue, Seattle, Washington 98101, telephone number (206)
622-2335.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. The selling holders are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of the document.
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AMAZON.COM
Amazon.com is the Internet's number one book, music and video retailer.
Amazon.com, one of the most widely known, used and cited commerce sites on the
Web, offers more than 4.7 million book, music CD, video, DVD, computer game and
other titles and a free electronic greeting card service. Amazon.com also
provides a community of on-line shoppers an easy and safe way to purchase and
sell a large selection of products through Amazon.com Auctions. We offer our
customers a superior shopping experience by providing value and a high level of
customer service. We are a proven technology leader; we developed electronic
commerce innovations such as 1-Click ordering, personalized shopping services
and easy-to-use search and browse features.
We were incorporated in 1994 in the state of Washington and reincorporated
in 1996 in the state of Delaware. Our principal corporate offices are located in
Seattle, Washington. Our mailing address and telephone number are 1516 Second
Avenue, Seattle, Washington 98101, (206) 622-2335.
Information contained on our Web site is not a part of this prospectus.
We have adjusted all of the information in this prospectus to reflect a
2-for-1 split of our common stock on June 1, 1998 and a 3-for-1 split of our
common stock on January 4, 1999.
Amazon.com, Amazon.co.uk, Amazon.de, Internet Movie Database, Earth's
Biggest Bookstore and 1-Click are either registered trademarks or trademarks of
Amazon.com or its affiliates. All other names mentioned in this prospectus or in
the documents incorporated by reference may be trademarks of their respective
owners.
RISK FACTORS
You should carefully consider the following risk factors and the other
information in this prospectus before investing in the notes.
WE HAVE A LIMITED OPERATING HISTORY
We incorporated in July 1994 and began offering products for sale on our
Web site in July 1995. Accordingly, we have a relatively short operating history
upon which you can evaluate our business and prospects. You should consider our
prospects in light of the risks, expenses and difficulties frequently
encountered by early-stage online commerce companies. As an early-stage online
commerce company, we have an evolving and unpredictable business model, we face
intense competition, we must effectively manage our growth and we must respond
quickly to rapid changes in customer demands and industry standards. We may not
succeed in addressing these challenges and risks.
WE HAVE AN ACCUMULATED DEFICIT AND ANTICIPATE FURTHER LOSSES
We have incurred significant losses since we began doing business. As of
March 31, 1999, we had an accumulated deficit of $223.7 million. To succeed we
must invest heavily in marketing and promotion and in developing our product,
technology and operating infrastructure. In addition, the expenses associated
with our recent acquisitions, and interest expense related to our outstanding
notes, will adversely affect our operating results.
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Our aggressive pricing programs have resulted in relatively low product gross
margins, so we need to generate and sustain substantially higher revenues in
order to become profitable. Although our revenues have grown, we cannot sustain
our current rate of growth. Our percentage growth rate will decrease in the
future. For these reasons we believe that we will continue to incur substantial
operating losses for the foreseeable future, and these losses may be
significantly higher than our current losses.
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN
QUARTERLY OPERATING RESULTS; SEASONALITY; CONSUMER TRENDS
Due to our limited operating history and the unpredictability of our
industry, we cannot accurately forecast our revenues. We base our current and
future expense levels on our investment plans and estimates of future revenues.
Our expenses are to a large extent fixed. We may not be able to adjust our
spending quickly if our revenues fall short of our expectations. Further, we may
make pricing, purchasing, service, marketing, acquisition or financing decisions
that could adversely affect our business results.
Our quarterly operating results will fluctuate for many reasons, including:
- our ability to retain existing customers, attract new customers and
satisfy our customers' demand,
- our ability to acquire merchandise, manage our inventory and fulfill
orders,
- changes in gross margins of our current and future products, services and
markets,
- introduction of our new sites, services and products or those of
competitors,
- changes in usage of the Internet and online services and consumer
acceptance of the Internet and online commerce,
- timing of upgrades and developments in our systems and infrastructure,
- the level of traffic on our Web sites,
- the effects of acquisitions and other business combinations, and related
integration,
- technical difficulties, system downtime or Internet brownouts,
- introductions of popular books, music selections and other products or
services,
- our level of merchandise returns, and
- disruptions in service by common shipping carriers due to strikes or
otherwise.
The popularity of our auction services and certain items offered through
our auction services may vary over time due to perceived scarcity, subjective
value, "fads" and consumer trends in general. If the popularity of our auction
services or the items that are listed for sale declines, our revenues from our
auction services will fall.
Both seasonal fluctuations in Internet usage and traditional retail
seasonality may affect our business. Internet usage generally declines during
the summer. Sales in the traditional retail book and music industries usually
increase significantly in the fourth calendar quarter of each year.
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For these reasons, you should not rely on period-to-period comparisons of
our financial results to forecast our future performance. Our future operating
results may fall below the expectations of securities analysts or investors,
which would likely cause the trading price of our outstanding notes and our
common stock to decline.
INTENSE COMPETITION
The online commerce market is new, rapidly evolving and intensely
competitive. In addition, the retail book, music and video industries are
intensely competitive. Our current or potential competitors include:
- online booksellers and vendors of other products such as CDs, videotapes
and DVDs,
- a number of indirect competitors, including Web portals and Web search
engines, such as Yahoo! Inc. and America Online, Inc., that are involved
in online commerce, either directly or in collaboration with other
retailers,
- online auction services, including eBay, Inc. and Yahoo! Auctions run by
Yahoo!,
- publishers, distributors and retail vendors of books, music, video and
other products, including Barnes & Noble, Inc., Bertelsmann AG and other
large specialty booksellers and media corporations, many of which possess
significant brand awareness, sales volume and customer bases, and
- traditional retailers who currently sell, or who may sell, products or
services through the Internet.
We believe that the principal competitive factors in our 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 of our current and potential competitors have longer operating
histories, larger customer bases, greater brand recognition and significantly
greater financial, marketing and other resources than we have. They may be able
to secure merchandise from vendors on more favorable terms and may be able to
adopt more aggressive pricing or inventory policies. They also can devote more
resources to technology development and marketing than we can. We also expect to
experience increased competition from online commerce sites that provide goods
and services at or near cost, relying on advertising revenues to achieve
profitability.
As the online commerce market continues to grow, other companies may enter
into business combinations or alliances that strengthen their competitive
positions. For example, in late 1998, (1) Bertelsmann AG announced that it
purchased a 50% interest in Barnes & Noble's online venture, barnesandnoble.com
inc., and intends to launch online stores in several countries, (2) Barnes &
Noble announced its pending acquisition of Ingram Book Group, currently our
largest single supplier, and (3) online music retailers CDnow, Inc. and N2K Inc.
announced a merger. We may not be able to compete successfully against these and
future competitors.
Competition in the Internet and online commerce markets probably will
intensify. As various Internet market segments obtain large, loyal customer
bases, participants in those segments may use their market power to expand into
the markets in which we operate. In
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addition, new and expanded Web technologies may increase the competitive
pressures on online retailers. For example, "shopping agent" technologies permit
customers to quickly compare our prices with those of our competitors. This
increased competition may reduce our operating margins, diminish our market
share or impair the value of our brand.
RISKS OF SYSTEM INTERRUPTION
Customer access to our Web sites directly affects the volume of orders we
fulfill and thus affects our revenues. We experience occasional system
interruptions that make our Web sites unavailable or prevent us from efficiently
fulfilling orders, which may reduce the volume of goods we sell and the
attractiveness of our products and services. These interruptions will continue.
We need to add additional software and hardware and upgrade our systems and
network infrastructure to accommodate increased traffic on our Web sites and
increased sales volume. Without these upgrades, we face additional system
interruptions, slower response times, diminished customer service, impaired
quality and speed of order fulfillment, and delays in our financial reporting.
We cannot accurately project the rate or timing of any increases in traffic or
sales volume on our Web sites and, therefore, the integration and timing of
these upgrades are uncertain.
We maintain substantially all of our computer and communications hardware
at a single leased facility in Seattle, Washington. Our systems and operations
could be damaged or interrupted by fire, flood, power loss, telecommunications
failure, break-ins, earthquake and similar events. We do not have backup systems
or a formal disaster recovery plan and we may not have sufficient business
interruption insurance to compensate us for losses from a major interruption.
Computer viruses, physical or electronic break-ins and similar disruptions could
cause system interruptions, delays, and loss of critical data and could prevent
us from providing services and accepting and fulfilling customer orders.
WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH
We have rapidly and significantly expanded our operations and will further
expand our operations to address potential growth of our product and service
offerings and customer base. We will expand our product and service offerings
and our international operations and will pursue other market opportunities. We
need to expand significantly our distribution center network and improve our
transaction-processing, operational and financial systems, procedures and
controls. This expansion will continue to place a significant strain on our
management, operational facilities and financial resources. Because it is
difficult to predict sales increases, and lead times for developing distribution
centers are long, we may over-expand our facilities, which may result in excess
inventory, warehousing, fulfillment and distribution capacity. We also need to
expand, train and manage our employee base. Our current and planned personnel,
systems, procedures and controls may not be adequate to support and effectively
manage our future operations. We may not be able to hire, train, retain,
motivate and manage required personnel or to successfully identify, manage and
exploit market opportunities, which may limit our growth.
RISK OF ENTERING NEW BUSINESS AREAS
We intend to expand our operations by promoting new or complementary
products, services or sales formats and by expanding our product or service
offerings. This will require significant additional expense and could strain our
management, financial and
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operational resources. We cannot expect to benefit in these new markets from the
first-to-market advantage that we experienced in the online book market. Our
gross margins in these new business areas may be lower than our existing
business activities. We may not be able to expand our operations in a
cost-effective or timely manner. Any new business that our customers do not
receive favorably could damage our reputation and the Amazon brand.
RISK OF INTERNATIONAL EXPANSION
We plan to expand our presence in foreign markets. We have relatively
little experience in purchasing, marketing and distributing products or services
for these markets and may not benefit from any first-to-market advantages. It
will be costly to establish international facilities and operations, promote our
brand internationally, and develop localized Web sites and stores and other
systems. We may not succeed in our efforts in these countries. If revenues from
international activities do not offset the expense of establishing and
maintaining foreign operations, our business, prospects, financial condition and
operating results will suffer.
As the international online commerce market continues to grow, competition
in this market will likely intensify. In addition, governments in foreign
jurisdictions may regulate Internet or other online services in such areas as
content, privacy, network security, encryption or distribution. This may affect
our ability to conduct business internationally.
RISKS OF BUSINESS COMBINATIONS AND STRATEGIC ALLIANCES
We may expand our operations or market presence by entering into business
combinations, investments, joint ventures or other strategic alliances with
other companies. These transactions create risks such as:
- difficulty assimilating the operations, technology and personnel of the
combined companies;
- disruption of our ongoing business;
- problems retaining key technical and managerial personnel;
- expenses associated with amortization of goodwill and other purchased
intangible assets;
- additional operating losses and expenses of acquired businesses; and
- impairment of relationships with existing employees, customers and
business partners.
We may not succeed in addressing these risks. In addition, the businesses
we acquire may incur operating losses.
RAPID TECHNOLOGICAL CHANGE
Technology in the online commerce industry changes rapidly. Customer
functionality requirements and preferences also change. Competitors often
introduce new products and services with new technologies. These changes and the
emergence of new industry standards and practices could render our existing Web
sites and proprietary technology
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obsolete. To succeed we must enhance our Web site responsiveness, functionality
and features, acquire and license leading technologies, enhance our existing
services, develop new services and technology and respond to technological
advances and emerging industry standards and practices on a cost-effective and
timely basis. We may not be able to adapt quickly enough to changing customer
requirements and industry standards.
WE DEPEND ON KEY PERSONNEL
We depend on the continued services and performance of our senior
management and other key personnel, particularly Jeffrey P. Bezos, our
president, chief executive officer and chairman of the board. We do not have
long-term employment agreements with any of our key personnel, and 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 RELY ON A SMALL NUMBER OF SUPPLIERS
We purchase a majority of our products from three major vendors, Ingram,
Baker & Taylor, Inc. and Valley Media, Inc. In late 1998, Barnes & Noble, one of
our largest competitors, announced an agreement to purchase Ingram. Ingram is
our single largest supplier and supplied approximately 40% of our inventory
purchases in 1998 and approximately 60% of our inventory purchases in 1997.
Although we increased our direct purchasing from manufacturers during 1998, we
continue to purchase a majority of our products from these three suppliers. We
do not have long-term contracts or arrangements with most of our vendors to
guarantee the availability of merchandise, particular payment terms or the
extension of credit limits. Our current vendors may stop selling merchandise to
us on acceptable terms. We may not be able to acquire merchandise from other
suppliers in a timely and efficient manner and on acceptable terms.
WE ARE HIGHLY LEVERAGED
We have significant indebtedness. As of March 31, 1999, we were indebted
under senior discount notes, convertible subordinated notes, capitalized lease
obligations and other asset financing totaling approximately $1.5 billion. We
may incur substantial additional debt in the future. Our indebtedness could:
- make it difficult to make principal and interest payments on the
convertible subordinated notes and the senior discount notes;
- make it difficult to obtain necessary financing for working capital,
capital expenditures, debt service requirements or other purposes;
- limit our flexibility in planning for, or reacting to, changes in our
business and competition; and
- make it more difficult for us to react in the event of an economic
downturn.
We may not be able to meet our debt service obligations. If our cash flow
is inadequate to meet our obligations, we may face substantial liquidity
problems. If we are unable to generate sufficient cash flow or obtain funds for
required payments, or if we fail to comply with other covenants in our
indebtedness, we will be in default. This would permit our creditors to
accelerate the maturity of our indebtedness.
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RISKS ASSOCIATED WITH DOMAIN NAMES
We hold rights to various Web domain names, including "Amazon.com,"
"Amazon.co.uk" and "Amazon.de." Governmental agencies typically regulate domain
names. These regulations are subject to change. We may not be able to acquire or
maintain appropriate domain names in all countries in which we do business.
Furthermore, regulations governing domain names may not protect our trademarks
and similar proprietary rights. We may be unable to prevent third parties from
acquiring domain names that are similar to, infringe upon or diminish the value
of our trademarks and other proprietary rights.
GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES
At this time, we face general business regulations and laws or regulations
regarding taxation and access to online commerce. For example, expanding our
distribution center network or other aspects of our business may result in
additional sales and other tax obligations. Regulatory authorities may adopt
specific laws and regulations governing the Internet or online commerce. These
regulations may cover taxation, user privacy, pricing, content, copyrights,
distribution, electronic contracts and characteristics and quality of products
and services. Changes in consumer protection laws also may impose additional
burdens on companies conducting business online. In addition, many states
currently regulate "auctions" and "auctioneers" in conducting auctions and may
regulate online auction services. These laws or regulations may impede the
growth of the Internet or other online services. This could, in turn, diminish
the demand for our products and services and increase our cost of doing
business. Moreover, it is not clear how existing laws governing issues such as
property ownership, sales and other taxes, libel and personal privacy apply to
the Internet and online commerce. Unfavorable resolution of these issues may
harm our business.
RISKS RELATED TO AUCTION SERVICES
We may be unable to prevent users of our auction services from selling
unlawful goods, or from selling goods in an unlawful manner. We may face civil
or criminal liability for unlawful activities by our online auction users. Any
costs we incur as a result of liability relating to the sale of unlawful goods
or the unlawful sale of goods could harm our business.
In running our auction services, we rely on sellers of goods to make
accurate representations and provide reliable delivery and on buyers to pay the
agreed purchase price. We do not take responsibility for delivery of payment or
goods to any users of our services. While we can suspend or terminate the
accounts of users who fail to fulfill their delivery obligations to other users,
we cannot require users to make payments or deliver goods. We do not compensate
users who believe they have been defrauded by other users except through our
limited guarantee program.
RISK OF UNCERTAIN PROTECTION OF INTELLECTUAL PROPERTY
Third parties that license our proprietary rights, such as trademarks,
patented technology or copyrighted material, may take actions that diminish the
value of our proprietary rights or reputation. In addition, the steps we take to
protect our proprietary rights may not be adequate and third parties may
infringe or misappropriate our copyrights, trademarks, trade dress, patents and
similar proprietary rights. Other parties may claim
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that we infringed their proprietary rights. We have been subject to claims, and
expect to continue to be subject to legal proceedings and claims, regarding
alleged infringement by us and our licensees of the trademarks and other
intellectual property rights of third parties. Such claims, whether or not
meritorious, may result in the expenditure of significant financial and
managerial resources. Most recently, Amazon Bookstore, Inc. filed suit against
us alleging trademark infringement and unfair competition under state and
federal law. Amazon Bookstore is seeking injunctive relief against our use of
the marks Amazon.com, Amazon.com Books and Amazon Books, the cancellation of our
federal trademark registrations, damages, profits, treble damages, costs and
attorneys' fees. We have only recently been served with the complaint and are
assessing the claim.
RISKS OF YEAR 2000 NONCOMPLIANCE
We have developed a plan to modify our information technology to recognize
the year 2000 and have begun converting our critical data-processing systems. We
have initiated formal communications with our significant suppliers and service
providers to determine the extent to which our systems may be vulnerable if they
fail to address and correct their own Year 2000 issues. We cannot guarantee that
the systems of suppliers or other companies on which we rely will be Year 2000
compliant. Their failure to convert their systems could disrupt our systems. In
addition, the computer systems necessary to maintain the viability of the
Internet or any of the Web sites that direct consumers to our online stores may
not be Year 2000 compliant. Finally, computers used by our customers to access
our online stores may not be Year 2000 compliant, delaying our customers'
purchases of our products. We are in the process of developing a formal
contingency plan. We cannot guarantee that our systems will be Year 2000
compliant or that the Year 2000 problem will not adversely affect our business,
which includes limiting or precluding customer purchases.
OUR STOCK PRICE IS HIGHLY VOLATILE
The trading price of our common stock fluctuates significantly. For
example, during the 52-week period ended May 12, 1999 (as adjusted for the
2-for-1 split of our common stock on June 1, 1998 and 3-for-1 split of our
common stock on January 4, 1999), the reported closing price of our common stock
on the Nasdaq National Market was as high as $210.125 and as low as $13.646 per
share. Trading prices of the notes and the common stock may fluctuate in
response to a number of events and factors, such as:
- quarterly variations in operating results;
- announcements of innovations;
- new products, services and strategic developments by us or our
competitors, or business combinations and investments by us or our
competitors;
- changes in our operating expense levels or losses;
- changes in financial estimates and recommendations by securities
analysts;
- performance by other online commerce companies; and
- news reports relating to trends in the Internet, book, music, video or
other product or service industries.
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<PAGE> 13
Any of these events may cause our stock price to fall, which may adversely
affect our business and financing opportunities. In addition, the stock market
in general and the market prices for Internet-related companies in particular
have experienced significant volatility that often has been unrelated to such
companies' operating performance. These broad market and industry fluctuations
may adversely affect the trading price of the notes and our common stock,
regardless of our operating performance.
THE NOTES ARE SUBORDINATED TO OUR SERVICE DEBT
The notes are unsecured and rank below our existing and future
indebtedness. In the event of our bankruptcy, liquidation or reorganization or
acceleration of the notes due to an event of default, we will pay our
obligations on the notes only after we have paid all of our senior indebtedness
in full. Our assets may not be sufficient to cover amounts due on any of the
notes. The notes also will be effectively subordinated to the liabilities,
including trade payables, of any of our subsidiaries.
As of March 31, 1999, we had approximately $291.0 million of outstanding
senior indebtedness. The indenture relating to the notes does not prohibit us
from incurring additional senior indebtedness or other indebtedness. Additional
indebtedness and other liabilities could prevent us from meeting our obligations
on the notes. From time to time we and our subsidiaries likely will incur
additional indebtedness, including senior indebtedness. See "Description of
Notes -- Subordination of Notes."
LIMITATIONS ON REDEMPTION OF NOTES
Under limited circumstances, you may require us to redeem all or a portion
of your notes. We cannot guarantee that we will have sufficient funds to pay the
redemption price for the notes. The indenture relating to our senior discount
notes prohibits us from paying the redemption price while the senior discount
notes are outstanding. Future credit agreements may contain similar restrictions
and provisions. If we cannot purchase or redeem the notes, we will need to seek
the consent of our lenders to repurchase or attempt to refinance the borrowings
that prohibit the repurchase. We may be unable to obtain their consent or a
refinancing arrangement. In that case, our failure to redeem tendered notes
would constitute an event of default under the indenture relating to the notes,
which might cause a default under the terms of our other indebtedness. The
subordination provisions in the indenture would likely restrict payments to the
holders of notes. See "Description of Notes -- Redemption at Option of the
Holder."
ABSENCE OF PUBLIC MARKET FOR THE NOTES AND RESTRICTIONS ON RESALE
The initial purchasers of the notes, though they have advised us that they
intend to make a market in the notes, are not obligated to do so and may
discontinue market-making at any time without notice. Their market-making
activity will be subject to the limits imposed by the securities laws. We cannot
guarantee that the market for the notes will be maintained. The trading price of
notes may decline if there ceases to be an active trading market for them. We do
not intend to apply for listing of the notes on any securities exchange. See
"Description of Notes -- Registration Rights of the Noteholders" and "Plan of
Distribution."
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<PAGE> 14
RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)
<TABLE>
<CAPTION>
THREE PERIOD FROM
MONTHS JULY 5, 1994
ENDED FOR THE YEARS ENDED DECEMBER 31, (INCEPTION) TO
MARCH 31, -------------------------------------- DECEMBER 31,
1999 1998 1997 1996 1995 1994
--------- --------- -------- ------- ----- --------------
<S> <C> <C> <C> <C> <C> <C>
Deficiency of earnings
available to cover fixed
charges(*)................. $(61,667) $(124,546) $(31,020) $(6,246) $(303) $(52)
</TABLE>
- -------------------------
(*) Earnings consist of net loss plus fixed charges. Fixed charges consist of
interest expense, including amortization of debt issuance costs, and that
portion of rental expense we believe to be representative of interest.
DESCRIPTION OF NOTES
The notes are issued under an indenture dated as of February 3, 1999
between Amazon.com and The Bank of New York, as trustee. You may request a copy
of the indenture from the trustee. This section summarizes the provisions of the
notes and the indenture and the related Registration Rights Agreement. You
should refer to these documents for more detailed information.
GENERAL
We issued $1,250,000,000 aggregate principal amount of the notes. The notes
are unsecured general obligations of Amazon.com and rank below our other
obligations. Holders of the notes may convert them into common stock. The notes
are issued only in multiples of $1,000 and mature on February 1, 2009 unless
earlier converted or redeemed.
The indenture does not contain any financial covenants and does not
restrict us from paying dividends, incurring indebtedness or issuing or
repurchasing our other securities. The indenture does not protect you in the
event of a highly leveraged transaction or a change in control except in limited
circumstances as described below.
The notes will bear 4 3/4% annual interest from February 3, 1999 or from
the most recent payment date on which we have paid interest. We will make
interest payments semi-annually on February 1 and August 1, beginning on August
1, 1999, generally to record holders at the close of business on the preceding
January 15 or July 15. With some exceptions, we will pay interest at the time of
redemption to the person entitled to receive the principal. If a note is
converted into common stock during the period from, but excluding, a record date
to, but excluding, the interest payment date and the note has been called for
redemption during that period, or is to be redeemed during that period, we will
not pay interest on the note. In every other case of conversion between the
record date and the interest payment date, the person submitting the note for
conversion must provide us with funds equal to the interest we must pay on the
principal amount converted. See "-- Conversion of Notes."
We will pay interest at the office we maintain for that purpose in the
Borough of Manhattan, The City of New York. Initially, this will be an office or
agency of the trustee. We may pay interest (1) by check, (2) for a holder of
notes with an aggregate principal amount in excess of $10.0 million, by wire
transfer in immediately available funds, or
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<PAGE> 15
(3) by transfer to an account located in the United States. We will make
payments to the Depository Trust Company by wire transfer of immediately
available funds to the account of the Depository Trust Company or its nominee.
We will compute interest on the basis of a 360-day year comprised of twelve
30-day months.
FORM, DENOMINATION AND REGISTRATION
We will issue the notes in fully registered form, without coupons, in
integral multiples of $1,000.
GLOBAL NOTES, BOOK-ENTRY FORM
The notes that were sold to qualified institutional buyers are evidenced by
global notes and were deposited with, or on behalf of, the Depository Trust
Company and registered in the name of Cede & Co. as the DTC's nominee. Except as
set forth below, a global note may be transferred, in whole or in part, only to
another nominee of the DTC or to a successor of the DTC or the successor's
nominee.
Qualified institutional buyers may hold their interests in a global note
directly through the DTC if they are participants in the DTC, or indirectly
through organizations that are participants in the DTC. Transfers between
participants will be effected in accordance with the DTC's rules and will be
settled in clearing house funds.
Qualified institutional buyers who are not DTC participants may own
interests in global notes only through DTC participants or certain banks,
brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with the DTC participant. So long as Cede, as
the nominee of the DTC, is the registered owner of a global note, we will
consider Cede for all purposes to be the sole holder of the global note. Except
as provided below, owners of beneficial interests in a global note will not have
certificates registered in their names, will not receive physical delivery of
certificates in definitive registered form, and will not be considered the
holders of the notes.
We will pay interest on and the redemption price or repurchase price of a
global note to Cede, as the registered owner, by wire transfer of immediately
available funds on each interest payment, redemption or repurchase date. We and
the trustee have no responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
global note.
The DTC has informed us that its practice is to credit participants'
accounts on the payment date with payments in amounts proportionate to their
beneficial interests in the global note, unless it has reason to believe that it
will not receive payment. Only DTC participants are responsible for payments to
owners of beneficial interests held through them.
Because the DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants and certain banks, a person having a beneficial
interest in the principal amount represented by a global note may be unable to
pledge its interest to persons or entities that do not participate in the DTC
system, due to the lack of a physical certificate evidencing its interest.
We are not responsible for the performance by the DTC or its participants
or indirect participants of their obligations. The trustee is also not
responsible for such performance. The DTC has advised us that it will take any
action permitted to be taken by a holder of
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<PAGE> 16
notes, only at the direction of one or more participants with an interest in a
global note, and only with respect to the principal amount as to which the
participants have given it a direction.
The DTC has advised us that it is a limited purpose trust company organized
under the laws of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to the accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and may include certain other organizations
such as the initial purchasers. Certain participants (or their representatives),
together with other entities, own the DTC. Indirect access to the DTC system is
available to others such as banks, brokers, dealers and trust companies that
clear through, or maintain a custodial relationship with, a participant, either
directly or indirectly.
Although the DTC has agreed to the foregoing procedures to facilitate
transfers of interests in global notes among participants, it has no obligation
to perform or continue to perform these procedures. These procedures may be
discontinued at any time. If the DTC is at any time unwilling or unable to
continue as depositary, and we do not appoint a successor depositary within 90
days, we will issue the notes in definitive registered form in exchange for
global notes.
CERTIFICATED NOTES
Notes that were sold to institutional accredited investors, as defined in
Rule 501(a) (1), (2), (3) or (7) under the Securities Act, were issued in
definitive registered form and are not represented by a global note. Qualified
institutional buyers may request that we issue certificated notes in exchange
for notes represented by a global note.
CONVERSION OF NOTES
You may convert any portion of a note, in multiples of $1,000, into common
stock, at an initial conversion price of $156.055 per share. Except as described
below, we will not make any payment or other adjustment on conversion for
interest accrued on the notes or for dividends on the common stock. If you
convert any notes not called for redemption during the period from, but
excluding, an interest payment record date to, but excluding, the interest
payment date, you must provide us with funds equal to the interest we must pay
on the principal amount you convert. We will not issue fractional shares of
common stock upon conversion of notes. Instead, we will pay a cash adjustment
based on the closing price of common stock on the last business day prior to the
conversion. Conversion rights on notes called for redemption will expire at the
close of business on the business day preceding the redemption date unless we
default in paying the redemption price. If you exercise your option to require
redemption you may convert your note only if you withdraw your election to
require redemption.
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<PAGE> 17
We will adjust the conversion price of $156.055 per share of common stock
if certain events occur, including:
- issuance of common stock as a dividend or distribution on the common
stock;
- subdivisions and combinations of the common stock;
- issuance to all holders of common stock of rights or warrants to purchase
common stock;
- distribution to all holders of common stock of capital stock (other than
our common stock), debt instruments or assets;
- distributions of cash, other than certain quarterly cash dividends on the
common stock;
- payment on a tender offer or exchange offer by us or one of our
subsidiaries for all or any portion of the common stock if the payment
exceeds the current market price of the common stock on the trading day
prior to the last date for tenders or exchanges; and
- payment on certain tender offers or exchange offers by a third party if,
as of the closing date of the offer, our board of directors does not
recommend rejection of the offer.
If we reclassify the common stock, complete a consolidation, merger or
combination of Amazon.com or sell Amazon.com to another person and the holders
of common stock receive stock, other securities, other property or assets with
respect to or in exchange for their common stock, the holders of notes may
convert them into the consideration they would have received if they had
converted their notes immediately prior to the transaction.
If the event requiring an adjustment to the conversion price is a taxable
event for common stockholders, the adjustment may be taxed as a dividend. In
certain other circumstances, the absence of an adjustment may result in a
taxable dividend to the holders of common stock. See "United States Federal
Income Tax Consequences."
We may reduce the conversion price by any amount for any period of at least
20 days. If we do so, we will give you at least 15 days' notice. We may, at our
option, make additional reductions in the conversion price to avoid or diminish
any income tax to holders of common stock resulting from any dividend or
distribution of stock. See "United States Federal Income Tax Consequences."
We will not make any adjustment in the conversion price unless it would
adjust the conversion price by at least 1%. We will carry forward any adjustment
we decline to make and will include it in any future adjustment.
PROVISIONAL REDEMPTION BY AMAZON.COM
We may redeem any portion of the notes at any time prior to February 6,
2002, at a redemption price equal to $1,000 per note plus accrued and unpaid
interest to the redemption date if (1) the closing price of the common stock has
exceeded 150% of the conversion price for at least 20 trading days in any
consecutive 30-trading day period ending on the trading day prior to the mailing
of the notice of redemption and (2) the shelf registration statement covering
resales of the notes and the common stock is effective
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<PAGE> 18
and expected to remain effective and available for use for the 30 days following
the redemption date.
If we redeem the notes under these circumstances, we will make an
additional "make whole" payment on the redeemed notes equal to $212.60 per
$1,000 note, minus the amount of any interest we actually paid on the note prior
to the date we mailed the notice. We must make these "make-whole" payments on
all notes called for redemption, including notes converted after the date we
mailed the notice.
OPTIONAL REDEMPTION BY AMAZON.COM
The notes are not entitled to any sinking fund. At any time on or after
February 6, 2002, we may redeem any portion of the notes on at least 30 days'
notice at the following prices (expressed as a percentage of the principal
amount), together with accrued interest to, but excluding, the redemption date:
If redeemed during the period beginning February 6, 2002 and ending on
February 1, 2003 at a redemption price of 103.325%, and if redeemed during the
12-month period beginning:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
---- ----------------
<S> <C>
February 1, 2003............................... 102.850%
February 1, 2004............................... 102.375
February 1, 2005............................... 101.900
February 1, 2006............................... 101.425
February 1, 2007............................... 100.950
February 1, 2008............................... 100.475
</TABLE>
and 100% at February 1, 2009. Accrued interest due on the redemption date will
be paid to the record holder.
If we redeem less than all of the outstanding notes, the trustee will
select the notes to be redeemed in multiples of $1,000 by lot, pro rata or any
other method the trustee considers fair and appropriate. If a portion of your
notes is selected for partial redemption and you convert a portion of the notes,
the portion selected for redemption will be converted.
We may not give notice of any redemption if we have defaulted in payment of
interest and the default is continuing.
REDEMPTION AT OPTION OF THE HOLDER
The indenture defines a "fundamental change" as any transaction or event in
which substantially all of our common stock is exchanged for, converted into,
acquired for or constitutes solely the right to receive consideration, whether
by means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise, that is not all or
substantially all common stock listed, or upon consummation of or immediately
following such transaction or event that will be listed, on a United States
national securities exchange or approved for quotation on the Nasdaq National
Market or any similar United States system of automated dissemination of
quotations of securities prices.
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<PAGE> 19
If a fundamental change occurs, we must mail a notice to you by the tenth
day after the fundamental change occurs advising you of your redemption right.
If a fundamental change occurs, you may require us to redeem any portion of
your notes 30 days after our notice of the fundamental change. We will redeem
the notes in multiples of $1,000 at a price equal to 100% of the principal
amount plus accrued interest to (but excluding) the date of redemption.
To exercise your redemption right, you must deliver to us, on or before the
30th day after the date of our notice, written notice of your exercise, together
with the notes to be redeemed, duly endorsed for transfer.
The redemption rights of the holders of notes could discourage a potential
acquirer. The fundamental change feature is not the result of our knowledge of
any specific effort to obtain control of Amazon.com by means of a merger, tender
offer, solicitation or otherwise. This feature is also not the result of any
plan to adopt a series of anti-takeover defenses. The term fundamental change is
limited to certain specified transactions and may not include other events that
might adversely affect our financial condition. These provisions may not afford
the holders of the notes protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction.
We cannot guarantee that we will have sufficient funds to pay the
redemption price for all notes tendered for redemption. The indenture for our
senior discount notes prohibits us from paying the redemption price while the
senior discount notes are outstanding. Future credit agreements could prohibit
us from purchasing or redeeming any notes. If we cannot redeem the notes, we
will need to seek the consent of our existing lenders to the purchase of the
notes or we could refinance our borrowing. If we do not obtain a consent or
repay our borrowings, we will not be able to purchase or redeem the notes. This
would cause an event of default under the indenture relating to the notes, and
may cause a default under the terms of our other indebtedness. This may prevent
us from making any payments on the notes.
SUBORDINATION OF NOTES
The notes are subordinated to the prior payment in full of all of our
senior debt. The notes also are effectively subordinated to all indebtedness of
any of our subsidiaries.
If we dissolve, wind up, liquidate or reorganize our business, we will
repay the senior indebtedness before we pay the principal, premium or interest
on the notes. If the notes are accelerated because of an event of default, we
will first pay the holders of any senior indebtedness in full for all of our
obligations under the senior indebtedness before we can pay the holders of the
notes. The indenture requires us to notify promptly the holders of senior
indebtedness if payment of the notes accelerates because of an event of default.
We may not make any payment on the notes (including upon redemption) if (1)
we default in the payment of the principal, premium, interest, rent or other
obligations under our senior indebtedness and such default continues or (2) any
other default occurs and continues under certain senior indebtedness that
permits a holder of that debt to accelerate its maturity. We will resume
payments on the notes (1) in case of a payment default, on the date on which the
default is cured or waived and (2) in case of other default, the earlier of the
date on which we cure the default or receive a waiver and 179 days after the
date the trustee receives the notice of default, if the maturity of the senior
indebtedness has not accelerated.
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<PAGE> 20
If the trustee or any holder of the notes receives any payment or
distribution, then he or she must hold the payment or distribution in trust for
the benefit of holders of senior indebtedness to the extent necessary to pay in
full all senior indebtedness remaining unpaid.
In the event of our bankruptcy, dissolution or reorganization, holders of
senior indebtedness may receive more, ratably, and holders of the notes may
receive less, ratably, than our other creditors.
As of March 31, 1999, we had approximately $291.0 million of outstanding
senior indebtedness. The indenture does not prevent us from incurring additional
senior or subordinated debt.
We will pay the trustee reasonable compensation and will indemnify the
trustee against certain losses, liabilities or expenses it may incur in
performing its duties. The trustee's claims for payments will generally be
senior to the claims of the holders of the notes.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The indenture defines an event of default as:
- default in payment of the principal of or premium on the notes;
- default for 30 days in payment of any installment of interest on the
notes;
- failure for 60 days after notice from the trustee or the holders of at
least 25% in principal amount of the notes to comply with any other
covenants in the notes or the indenture; or
- certain events involving our bankruptcy, insolvency or reorganization.
The trustee may withhold notice to the holders of the notes of any default,
except in payment of principal, premium or interest on the notes, if the trustee
considers it in its interest to do so.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in principal amount of the notes may declare the principal, premium
and accrued interest on the notes to be due and payable immediately. If we
experience bankruptcy or insolvency, these obligations automatically become
immediately due and payable. However, if we cure all defaults other than
nonpayment and meet certain other conditions, the acceleration may be canceled
and past defaults may be waived by the holders of a majority of the principal
amount of the notes.
Payments of principal, premium or interest that are not made when due will
accrue interest at a 4 3/4% annual rate from the date on which the payment was
required.
No holder of notes may pursue any remedy under the indenture, except in the
case of a default in the payment of principal, premium or interest on the notes,
unless:
- he or she has previously given the trustee written notice of a continuing
event of default,
- the holders of at least 25% in principal amount of the notes make a
written request and offer reasonable indemnity to the trustee to pursue
the remedy,
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<PAGE> 21
- the trustee does not receive an inconsistent direction from the holders
of a majority in principal amount of the notes, and
- the trustee fails to comply with the request within 60 days after
receipt.
MODIFICATION OF THE INDENTURE
With the consent of the holders of a majority in principal amount of the
notes, we may modify the indenture or the rights of the holders of the notes. No
such modification will, without the consent of the holder of each affected note:
- extend the fixed maturity of any note;
- reduce the rate or extend the time for payment of interest of any note;
- reduce the principal or premium of any note;
- reduce any amount payable upon redemption of any note;
- change our obligation to redeem any note upon any fundamental change in a
manner adverse to the holders of the notes;
- impair the right of a holder to institute suit for payment on the notes;
- change the currency in which any note is payable;
- impair the right to convert any note into common stock; or
- modify the subordination provisions of the indenture in a manner adverse
to the holders of any note in any material respect.
No modification may reduce the percentage of notes required for consent to
any modification without the consent of the holders of all of the outstanding
notes. The indenture permits some modifications without the consent of the
holders of the notes.
REGISTRATION RIGHTS OF THE HOLDERS OF THE NOTES
Under a Registration Rights Agreement, we are required to keep the shelf
registration statement of which this prospectus is a part effective until the
earlier of (1) the sale of all the securities registered under this prospectus
and (2) the expiration of the holding period for the securities held by people
or entities that are not deemed to be our affiliates under Rule 144(k) under the
Securities Act. We may suspend the use of this prospectus under certain
circumstances relating to pending corporate developments, public filings with
the SEC and similar events for a period not to exceed 60 days in any three-month
period or not to exceed an aggregate of 90 days in any 12-month period. We must
pay predetermined liquidated damages (1) for the notes, at a rate per annum
equal to 0.5% of the principal amount of the notes and (2) for any shares of
common stock issued on conversion of the notes, at a rate per annum equal to
0.5% of the conversion price, if the prospectus is unavailable for periods in
excess of those permitted above.
A holder who sells notes and common stock issued upon conversion of the
notes pursuant to this prospectus generally must be named as a selling
stockholder, deliver this prospectus to purchasers and be bound by certain
provisions of the Registration Rights Agreement. We will pay all expenses of the
shelf registration statement, provide to each
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<PAGE> 22
registered holder copies of such prospectus and take certain other actions as
are required to permit unrestricted resales of the notes and the common stock.
You may request a copy of the Registration Rights Agreement from the
trustee.
INFORMATION CONCERNING THE TRUSTEE
We have appointed the Bank of New York, as trustee under the indenture, as
paying agent, conversion agent, registrar and custodian with regard to the
notes. The Bank of New York also acts as trustee for our senior discount notes.
RATING OF NOTES
Moody's has assigned a rating of Caa3 to the notes and Standard & Poor's
has assigned a rating of CCC+ to the notes. The market price of the notes and
the common stock could be materially adversely affected if rating agencies
assign the notes a rating lower than that expected by investors.
UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES
This section summarizes the material United States federal income tax
consequences of purchasing, owning, and disposing of the notes and common stock
into which you may convert the notes. This is not a complete analysis of all the
potential tax consequences that you may need to consider before investing based
on your particular circumstances. This summary is based on the Internal Revenue
Code of 1986, as amended, the applicable treasury regulations promulgated or
proposed under the Code, judicial authority and current administrative rulings
and practice. All of these may change, possibly on a retroactive basis.
This summary deals only with beneficial owners who hold notes and common
stock as "capital assets" and does not address tax consequences under special
tax rules. Special tax rules may apply to banks, tax-exempt organizations,
pension funds, insurance companies, dealers in securities or foreign currencies,
persons participating in a hedging transaction or a "straddle" or "conversion
transaction" for tax purposes, or persons that have a "functional currency"
other than the U.S. dollar. This discussion does not address the tax
consequences to holders who are not U.S. persons.
This summary discusses the tax consequences to holders who purchase the
notes at their "issue price" (the first price at which a substantial portion of
the notes is sold to the public) and generally does not discuss the tax
consequences to subsequent purchasers of the notes. We have not sought any
ruling from the Internal Revenue Service with respect to the statements and
conclusions in the following summary. We cannot guarantee that the IRS will
agree with these statements and conclusions.
Before you invest in these securities, you should consult your own tax
advisor to determine how the United States federal income and estate tax laws
apply to your particular situation and for information about any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction or under any applicable tax treaty.
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<PAGE> 23
PAYMENT OF INTEREST
You generally must include interest on a note in your income as ordinary
income at the time you receive or accrue interest depending on your method of
accounting for United States federal income tax purposes. We must pay liquidated
damages to holders of the notes in certain circumstances. According to treasury
regulations, the possibility of an additional payment on the notes will not
affect the amount of interest income you recognize if there is only a remote
chance as of the date the debt obligations are issued that you will receive the
payments. We believe that the likelihood that we will pay liquidated damages is
remote. Therefore, we do not intend to treat the potential payment as part of
the yield to maturity of any note. Notwithstanding the above, if we pay
liquidated damages, you would treat these payments as interest income when you
receive them. Although not free from doubt, we intend to take the position that
the likelihood of payment of the make-whole payment is remote, and likewise do
not intend to treat the possibility of our paying the make-whole payment as
affecting the yield to maturity of any note. Similarly, we intend to take the
position that the likelihood of a redemption or a repurchase upon a fundamental
change is remote, and likewise do not intend to treat the possibility of a
redemption or repurchase as affecting the yield to maturity of any note.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Except as described below under "Market Discount" and under "Conversion of
the Notes," you generally will recognize capital gain or loss on the sale,
exchange or redemption of a note equal to the difference between (1) the amount
of cash proceeds and the fair market value of any property you receive on the
sale, exchange or redemption (except any portion that is accrued interest
income, which is taxable as ordinary income) and (2) your adjusted tax basis in
the note. Your adjusted tax basis generally will equal the cost of the note to
you, less any principal payments you have received. This capital gain or loss
will be long-term if you have held the note for more than one year and will be
short-term if you have held the note one year or less. Long-term capital gains
for noncorporate taxpayers, including individuals, are taxed at a maximum rate
of 20%, and short-term capital gains are taxed at a maximum rate of 39.6%.
Corporate taxpayers pay a maximum regular tax rate of 35% on all capital gains
and ordinary income.
MARKET DISCOUNT
Generally, the market discount rules discussed below do not apply if you
acquired a note when we originally issued them. These rules apply, however, to
any note you purchased at original issue if your tax basis in the note is less
than the note's issue price and to any note you purchased after original issue
at a price less than its stated redemption price at maturity.
You should treat gain on the disposition, including a redemption, of a note
that has accrued market discount as ordinary income, not capital gain, to the
extent of the accrued market discount if the discount exceeds the statutory de
minimis amount. "Market discount" is the excess, if any, of (1) the stated
redemption price at maturity over (2) the tax basis of the note in your hands
immediately after you acquired it.
Unless you elect otherwise, the accrued market discount is the market
discount multiplied by a fraction, the numerator of which is the number of days
you have held the note and the denominator of which is the number of days
between the date you acquired the note and its maturity date. If you acquire a
note at market discount you may be
21
<PAGE> 24
required to defer the deduction of all or a portion of the interest on any
indebtedness you incurred or maintained to carry the note until you dispose of
it in a taxable transaction.
If you dispose of a note you acquired at market discount in any transaction
other than a sale, exchange or involuntary conversion, even if the transaction
is otherwise nontaxable (for example, a gift), you will be considered to have
realized an amount equal to the fair market value of the note. Accordingly, you
must recognize as ordinary income any accrued market discount to the extent of
the deemed gain.
You may elect to include the market discount in income as it accrues,
either on a straight-line basis or on a constant interest rate basis. This
election would apply to all market discount obligations you acquired on or after
the first day of the first taxable year to which your election applies. You may
revoke this election only with the consent of the IRS. If you elect to include
market discount in income currently, the rules regarding ordinary income
recognition from sales and other position transactions and to deferral of
interest deductions will not apply to you.
CONSTRUCTIVE DIVIDENDS ON THE NOTES
The conversion price of our notes may change under certain circumstances.
In such a case, you may be treated as having received a constructive
distribution whether or not you ever exercise your conversion privilege. The
constructive distribution will be taxed as ordinary income, subject to a
possible dividends received deduction if you are a corporate holder, to the
extent of our current and/or accumulated earnings and profits, if, and to the
extent that, the adjustment in the conversion price increases your proportionate
interest in the fully diluted common stock. Moreover, common stockholders
themselves will generally be treated as having received a constructive
distribution if there is not a full adjustment to the conversion price of our
notes to reflect a stock dividend or other event increasing the proportionate
interest of the common stockholders in our assets or earnings and profits. In
such an event, the constructive distribution will be taxable as ordinary income,
subject to a possible dividends received deduction if you are a corporate
holder, to the extent of our current and/or accumulated earnings and profits.
Under these circumstances, it is possible that you could be required to pay tax
even though you did not receive any cash or other property.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on conversion of
a note into common stock, except for any cash you receive instead of a
fractional share of common stock. Your tax basis in the common stock will be the
same as your adjusted tax basis in the note at the time of conversion, reduced
by any basis allocable to any fractional share interest for which you received
cash. For capital gains purposes, your holding period for the common stock will
generally include the holding period of the note you converted.
You should treat cash you receive instead of a fractional share of common
stock as a payment in exchange for the fractional share of common stock. This
will generally result in capital gain or loss (measured by the difference
between the cash you received for the fractional share and your adjusted tax
basis in the fractional share).
22
<PAGE> 25
DIVIDENDS ON COMMON STOCK
Generally, distributions are treated as a dividend and taxed as ordinary
income, to the extent of our current or accumulated earnings and profits.
Thereafter, distributions are treated as a tax-free return of capital to the
extent of your tax basis in the common stock, and thereafter as gain from the
sale or exchange of such stock.
A dividend distribution to a corporate holder may qualify for the 70%
dividends received deduction if the holder owns less than 20% of the voting
power and value of our stock, not counting non-voting, non-convertible,
non-participating preferred stock. A corporate holder that owns 20% or more of
the voting power and value of our stock, other than non-voting, non-convertible
non-participating preferred stock, generally will qualify for an 80% dividends
received deduction.
SALE OF COMMON STOCK
On the sale or exchange of common stock, you generally will recognize
capital gain or loss equal to the difference between (1) the amount of cash and
the fair market value of any property received on the sale or exchange and (2)
your adjusted tax basis in the common stock. This capital gain or loss will be
long-term if you have held the stock for more than one year and will be
short-term if you have held the stock for one year or less. Long-term capital
gains for noncorporate taxpayers, including individuals, are taxed at a maximum
rate of 20%, and short-term capital gains at a maximum rate of 39.6%. A holder's
basis and holding period in common stock received upon conversion of a note are
determined as discussed above under "Conversion of the Notes." Corporate
taxpayers pay a maximum regular tax rate of 35% on all capital gains and
ordinary income.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
In general we must report to the Internal Revenue Service payments of
principal, premium, and interest on a note, payments of dividends on common
stock, payments of the proceeds of the sale of a note and payments of the
proceeds of the sale of common stock. The payer must withhold backup withholding
tax at the rate of 31% if:
- the payee fails to furnish a taxpayer identification number to the payer
or establish an exemption from backup withholding;
- the IRS notifies the payer that the number furnished by the payee is
incorrect;
- a payee has underreported interest, dividends or original issue discount;
or
- the payee has failed to certify under the penalty of perjury that he or
she is not subject to backup withholding under the Code.
Certain holders, including all corporations, are exempt from such backup
withholding. You may credit any amounts withheld under the backup withholding
rules against your United States federal income tax, and you may receive a
refund if you furnish the required information to the IRS.
The Treasury Department has issued new regulations which make certain
modifications to the withholding, backup withholding and information reporting
rules described above. The new regulations attempt to unify certification
requirements and modify reliance standards. The new regulations will generally
be effective for payments made after
23
<PAGE> 26
December 31, 1999, subject to certain transition rules. Prospective investors
are urged to consult their tax advisors regarding the new regulations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes and the common
stock into which the notes are convertible by the selling holders.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock 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. If approved at the annual meeting of stockholders,
scheduled for May 20, 1999, we will amend our restated certificate of
incorporation such that our authorized capital stock will consist of
1,500,000,000 shares of common stock and 150,000,000 shares of preferred stock.
The following summary of certain provisions of the common stock and preferred
stock is not complete and is subject to, and qualified in its entirety by, the
provisions of our restated certificate of incorporation.
DESCRIPTION OF THE COMMON STOCK
Under our current restated certificate of incorporation, we may issue up to
300,000,000 shares of our common stock (up to 1,500,000,000 shares if the
amendment is approved by our stockholders). Holders of common stock are entitled
to one vote per share on all matters submitted to a vote of stockholders.
Subject to preferences that may apply to our preferred stock, the holders of
common stock receive ratably any dividends that may be declared by our board of
directors. In the event of a liquidation, dissolution or winding up of
Amazon.com, the holders of common stock will share equally and ratably in all
assets remaining after we pay liabilities and liquidation preferences to holders
of preferred stock. Holders of common stock have no preemptive rights or rights
to convert their common stock into any other securities. The common stock is
neither redeemable nor subject to call. No sinking fund provisions apply to the
common stock. All outstanding shares of common stock are fully paid and
nonassessable.
Washington law imposes restrictions on some transactions between a
corporation and certain significant shareholders. Chapter 23B.19 of the
Washington Business Corporation Act prohibits a "target corporation," with some
exceptions, from engaging in certain significant business transactions with an
"acquiring person," which is defined as a person or group of persons that
beneficially owns 10% or more of the voting securities of the target
corporation, 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 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
24
<PAGE> 27
- allowing the acquiring person to receive any disproportionate benefit as
a shareholder.
After the five-year period, a "significant business transaction" may occur,
as long as it complies with certain "fair price" provisions of the statute. A
corporation may not opt out of this statute. This provision may have the effect
of delaying, deterring or preventing a change in control of Amazon.com.
Section 203 of the Delaware General Corporation Law generally prohibits
Delaware corporations from engaging in some "business combinations" with some
"interested stockholders" for a period of three years unless certain criteria
are met. We have expressly elected in our restated certificate of incorporation
not to be governed by Section 203.
DESCRIPTION OF THE PREFERRED STOCK
Our current restated certificate of incorporation permits us to issue up to
10,000,000 shares of our preferred stock (up to 150,000,000 shares if the
amendment is approved by our stockholders), in one or more series and with
rights, preferences, privileges and restrictions that may be fixed or designated
by our board of directors without any further action by our stockholders. The
board of directors, without stockholder approval, can issue preferred stock with
voting, conversion, dividend, redemption, liquidation 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 Amazon.com or make removal of management
more difficult. Additionally, the issuance of preferred stock may have the
effect of decreasing the market price of our common stock, and may adversely
affect the voting and other rights of the holders of common stock. We have no
plans to issue any preferred stock at this time.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, Ridgefield Park, New Jersey.
SELLING HOLDERS
The notes were originally issued by Amazon.com and sold by the initial
purchasers in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by such initial purchasers to be
qualified institutional buyers or other institutional accredited investors.
Selling holders, which term includes their transferees, pledgees or donees or
their successors, may from time to time offer and sell pursuant to this
prospectus any or all of the notes and common stock into which the notes are
convertible.
The following table sets forth information, as of May 12, 1999, with
respect to the selling holders and the respective principal amounts of notes
beneficially owned by each selling holder that may be offered pursuant to this
prospectus. The information is based on information provided by or on behalf of
the selling holders. The selling holders may offer all, some or none of the
notes or common stock into which the notes are convertible. Because the selling
holders may offer all or some portion of the notes or the common stock, no
estimate can be given as to the amount of the notes or the common stock that
25
<PAGE> 28
will be held by the selling holders upon termination of any such sales. In
addition, the selling holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their notes since the date on which
they provided the information regarding their notes in transactions exempt from
the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
AAM/Zazove Institutional Income
Fund, L.P.................... $ 4,000,000 25,631 25,631
Advantus Capital Management,
Inc.......................... 1,500,000 9,611 9,611
AFTRA Health Fund.............. 600,000 3,844 3,844
AIG/National Union Fire
Insurance -- FRIC............ 1,020,000 6,536 6,536
AIM Balanced Fund.............. 10,000,000 64,079 64,079
AIM Capital Strategic Income... 500,000 3,203 3,203
AIM Charter Fund............... 70,000,000 448,559 448,559
AIM Global Income.............. 500,000 3,203 3,203
AIM High Yield Fund............ 13,500,000 86,507 86,507
AIM High Yield II.............. 70,000 448 448
AIM Income Fund................ 2,500,000 16,019 16,019
AIM VI Balanced Fund........... 60,000 384 384
AIM VI Diversified Income...... 500,000 3,203 3,203
AIM VI Growth & Income Fund.... 15,000,000 96,119 96,119
Alexandra Global Investment
Fund 1 Ltd................... 9,500,000 60,875 60,875
Allstate Insurance Company..... 8,000,000 51,263 51,263
Alta Partners Holdings, LDC.... 8,500,000 54,467 54,467
Amoco Corporation Master Trust
for Employee Pension Plans... 1,454,000 9,317 9,317
Argent Classic Convertible
Arbitrage Fund
(Bermuda) L.P................ 12,000,000 76,895 76,895
Aristeia International, Ltd.... 3,273,000 20,973 20,973
Aristeia Trading, L.L.C........ 2,287,000 14,655 14,655
Arkansas Teachers Retirement... 2,119,000 13,578 13,578
Arpeggio Fund, LP.............. 700,000 4,485 4,485
BancBoston Robertson
Stephens..................... 10,000,000 64,079 64,079
Bancroft Convertible Fund,
Inc.......................... 500,000 3,203 3,203
Bankers Life & Casualty Co. --
Convertible.................. 2,000,000 12,815 12,815
Banque Paribos, London......... 9,000,000 57,671 57,671
Baptist Health of South
Florida...................... 188,000 1,204 1,204
Bear Stearns Securities
Corp......................... 62,250,000 398,897 398,897
Bear, Stearns & Co............. 12,000,000 76,895 76,895
Black Diamond Offshore, Ltd.... 2,655,000 17,013 17,013
BNP Arbitrage SNC.............. 3,000,000 31,238 19,223
Bond Series Fund -- Oppenheimer
Convertible Securities
Fund......................... 5,883,000 37,698 37,698
Boston Museum of Fine Arts..... 131,000 839 839
</TABLE>
26
<PAGE> 29
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Brown & Williamson Tobacco
Corp. Master Retirement
Trust........................ 200,000 1,281 1,281
Calamos Strategic Income
Fund......................... 55,000 352 352
California Public Employees
Retirement System............ 5,000,000 32,039 32,039
Carrigaholt Capital
(Bermuda) L.P. .............. 2,500,000 16,019 16,019
Castle Convertible Fund,
Inc.......................... 1,500,000 9,611 9,611
Century National Insurance
Co........................... 300,000 1,922 1,922
Christian Science Trustees for
Gifts and Endowments......... 340,000 2,178 2,178
Chrysler Corporation Master
Retirement Trust............. 3,975,000 25,471 25,471
CIBC Wood Gundy International
Arbitrage Corp............... 2,000,000 12,815 12,815
CIBC World Markets............. 2,000,000 12,815 12,815
Commerzbank A.G................ 17,000,000 108,935 108,935
Conseco Direct Life Insurance
Co........................... 600,000 3,844 3,844
Convexity Partners L.P......... 1,400,000 8,971 8,971
CPR (USA)...................... 691,000 4,427 4,427
David Lipscomb University
General Endowment Fund....... 130,000 833 833
D.E. Shaw Securities L.P....... 1,550,000 9,932 9,932
Declaration of Trust for the
Defined Benefit Plans of ICI
American Holdings Inc........ 940,000 6,023 6,023
Declaration of Trust for the
Defined Benefit Plans of
ZENECA Holdings Inc.......... 630,000 4,037 4,037
Delaware Group Premium Fund,
Inc. Convertible Securities
Series....................... 155,000 993 993
Delaware PERS.................. 1,530,000 9,804 9,804
Delaware State Employees'
Retirement Fund.............. 1,270,000 8,138 8,138
Deutsche Bank Securities....... 89,400,000 572,874 572,874
Donaldson, Lufkin & Jenrette
Securities Corp.(3).......... 12,000,000 76,895 76,895
Double Black Diamond Offshore,
LDC.......................... 4,494,000 28,797 28,797
Elliot Associates, L.P......... 6,500,000 41,651 41,651
Ellsworth Convertible Growth
and Income Fund, Inc......... 500,000 3,203 3,203
Employers' Reinsurance
Corporation.................. 599,000 3,838 3,838
Engineers Joint Pension Fund... 354,000 2,268 2,268
Equitable Life Assurance
Separate
Account -- Balanced.......... 175,000 1,121 1,121
</TABLE>
27
<PAGE> 30
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Equitable Life Assurance
Separate Account --
Convertibles................. 2,670,000 17,109 17,109
Fidelity Advisor Series II:
Fidelity Advisor Balanced
Fund......................... 2,404,000 15,404 15,404
Fidelity Devonshire Trust:
Fidelity Equity Income
Fund......................... 18,470,000 118,355 118,355
Fidelity Financial Trust:
Fidelity Convertible
Securities Fund.............. 1,452,000 9,304 9,304
Fidelity Management Trust
Company...................... 2,410,000 15,443 15,443
First Church of Christ
Scientist -- Endowment....... 380,000 2,435 2,435
First Mercury Insurance
Company-Total Return......... 20,000 128 128
Forest Alternative Strategies
Fund II LP Series A5I........ 1,100,000 7,048 7,048
Forest Alternative Strategies
Fund II LP Series A5M........ 425,000 2,723 2,723
Forest Alternative Strategies
Fund II LP Series B3......... 250,000 1,601 1,601
Forest Fulcrum Fund LP......... 18,925,000 121,271 121,271
Forest Global Convertible Fund
Series A-5................... 22,700,000 145,461 145,461
Forest Global Convertible Fund
Series B-1................... 75,000 480 480
Forest Performance Fund LP..... 200,000 1,281 1,281
Forum Capital Markets LLC...... 1,660,000 10,637 10,637
Franklin Equity Fund........... 7,000,000 44,855 44,855
Galleon International Fund,
Ltd.......................... 2,647,700 16,966 16,966
Galleon Omni Fund, Ltd......... 135,650 869 869
Galleon Partners, L.P.......... 831,750 5,329 5,329
Galleon Partners II, L.P....... 1,384,900 8,874 8,874
General Motors Employees
Domestic Group Pension
Trust........................ 16,400,000 191,843 105,091
General Motors Employees Global
Group Pension Trust.......... 10,200,000 65,361 65,361
General Motors Employees
Domestic Group Trust......... 9,820,000 62,926 62,926
General Motors Foundation,
Inc.......................... 560,000 4,588 3,588
GLG Market Neutral Fund........ 10,000,000 64,079 64,079
Global Bermuda Limited
Partnership.................. 1,000,000 11,737 6,407
Goldman Sachs & Company........ 29,480,000 188,907 188,907
Grace Brothers Ltd............. 2,500,000 16,019 16,019
Greyhound Lines................ 150,000 961 961
</TABLE>
28
<PAGE> 31
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Greyhound Lines Inc.
Amalgamated CNCL Retirement &
Disability Trust Imperial
Trust dated 3/19/87.......... 75,000 480 480
Growth and Income Portfolio, a
Series of Mitchell Hutchins
Trust........................ 100,000 640 640
Gryphon Domestic III, LLC...... 3,600,000 23,068 23,068
HBK Cayman L.P................. 995,000 6,375 6,375
HBK Offshore Fund Ltd.......... 2,255,000 14,450 14,450
Highbridge Capital
Corporation.................. 29,910,000 191,663 191,663
Hotel Union & Hotel Industry of
Hawaii....................... 464,000 2,973 2,973
Hudson River Trust Balanced
Account...................... 2,270,000 14,546 14,546
Hudson River Trust Growth &
Income Account............... 4,075,000 26,112 26,112
Hudson River Trust Growth
Investors.................... 1,895,000 12,143 12,143
ICI American Holdings Trust.... 675,000 4,325 4,325
InvestCorp SAM Fund Limited.... 6,600,000 42,292 42,292
J.M. Hull Associates, L.P...... 600,000 3,844 3,844
J.P. Morgan & Co. Inc.......... 6,500,000 129,262 41,651
The J.W. McConnell Family
Foundation................... 470,000 3,011 3,011
Jackson Investment Fund Ltd.... 950,000 6,087 6,087
Jeffries & Company Inc......... 15,000 96 96
JMG Convertible Investments,
L.P.......................... 12,500,000 80,999 80,999
Kapiolani Health............... 81,000 519 519
Lakeshore International,
Ltd.......................... 2,000,000 23,485 12,815
Lazard Freres Et Cie........... 700,000 4,485 4,485
LDG Limited.................... 390,000 2,499 2,499
Liberty View Plus Fund......... 559,000 3,582 3,582
The Liverpool Limited
Partnership.................. 1,990,000 12,751 12,751
LLT Limited.................... 950,000 6,087 6,087
Lyxor MasterFund SG Hambros TR
Co. (Jersey) Ltd............. 300,000 1,922 1,922
Mainstay Convertible Fund...... 9,650,000 61,837 61,837
Mainstay Equity Income Fund.... 350,000 2,242 2,242
McMahan Securities Company,
L.P.......................... 2,000,000 12,815 12,815
Medici Partners, L.P........... 1,425,000 9,131 9,131
Memphis Light, Gas & Water
Retirement Fund.............. 1,930,000 12,367 12,367
Merced Partners Limited
Partnership.................. 2,000,000 23,415 12,815
</TABLE>
29
<PAGE> 32
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Merrill Lynch Convertible Fund,
Inc.......................... 1,200,000 7,689 7,689
Merrill Lynch ECS Convertible
Securities Portfolio......... 350,000 2,242 2,242
Merrill Lynch World Income
Fund, Inc.................... 450,000 2,883 2,883
Merrill Lynch, Pierce, Fenner &
Smith Inc.................... 4,954,000 31,745 31,745
Michaelangelo, L.P............. 4,500,000 28,835 28,835
Monumental Life Insurance
Company -- (Teamsters-Camden
Non-Enhanced)................ 7,000,000 44,855 44,855
Moore Global Investments,
Ltd.......................... 7,300,000 46,778 46,778
Morgan Stanley Dean
Witter(3).................... 50,000,000 320,399 320,399
Morgan Stanley Dean Witter
Convertible Securities
Trust(3)..................... 3,500,000 22,427 22,427
Motion Picture Industry Health
Plan-Active Member Fund...... 465,000 2,979 2,979
Motion Picture Industry Health
Plan-Retiree Member Fund..... 235,000 1,505 1,505
Motors Insurance Corporation... 4,040,000 40,888 25,888
Museum of Fine Arts, Boston.... 54,000 346 346
Nalco Chemical Retirement...... 340,000 2,178 2,178
National Bank of Canada........ 700,000 4,485 4,485
NationsBanc Montgomery
Securities LLC............... 12,500,000 80,099 80,099
Navesink Equity Derivatives.... 4,000,000 25,631 25,631
New Hampshire Retirement
System....................... 357,000 2,287 2,287
New York Life Insurance........ 17,000,000 108,935 108,935
New York Life Insurance &
Annuity Corporation.......... 1,500,000 9,611 9,611
New York Life Separate Account
#7........................... 1,500,000 9,611 9,611
Nicholas Applegate Convertible
Fund......................... 4,305,000 27,586 27,586
NMS Services, Inc.............. 25,000,000 160,199 160,199
OCM Convertible Limited
Partnership.................. 150,000 961 961
OCM Convertible Trust.......... 3,980,000 25,503 25,503
Orrington International Fund
Limited...................... 200,000 1,281 1,281
Orrington Investments Limited
Partnership.................. 300,000 1,922 1,922
OZ Master Fund, Ltd. .......... 7,000,000 44,855 44,855
Pacific Life Insurance
Company...................... 1,500,000 9,611 9,611
PaineWebber Growth & Income
Fund, a series of PaineWebber
America Fund................. 5,900,000 37,807 37,807
</TABLE>
30
<PAGE> 33
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Palladin Securities, LLC....... 700,000 4,485 4,485
Parker-Hannifin Corporation.... 85,000 544 544
Partner Reinsurance
Company Ltd.................. 425,000 2,723 2,723
Pepperdine University Pool
A#1.......................... 173,000 1,108 1,108
ProMutual...................... 253,000 1,621 1,621
Putnam Convertible Income --
Growth Trust................. 3,000,000 19,223 19,223
Q Investments, L.P............. 7,285,000 46,682 46,682
R(2) Investments, LDC.......... 12,530,000 80,292 80,292
Ramius Fund, Ltd............... 4,100,000 26,272 26,272
Ramius L.P..................... 4,610,000 29,540 29,540
Raphael, L.P................... 1,800,000 11,534 11,534
RCG Baldwin, L.P............... 2,300,000 14,738 14,738
Remington Investment
Strategies, L.P.............. 1,600,000 10,252 10,252
Rhapsody Fund, LP.............. 1,100,000 7,048 7,048
Rhone-Poulenc Rorer Pension
Plan......................... 117,000 749 749
Sage Capital................... 2,000,000 12,815 12,815
Salomon Brothers Asset
Management, Inc.............. 4,025,000 25,792 25,792
Salomon Smith Barney Inc....... 5,600,000 35,884 35,884
San Diego City Retirement...... 994,000 6,369 6,369
San Diego County Convertible... 1,234,000 7,907 7,907
San Diego County Employees
Retirement Association....... 2,000,000 12,815 12,815
SG Cowen....................... 5,000,000 32,039 32,039
SG Cowen Securities
Corporation.................. 4,000,000 39,784 25,631
SL Holdings LTD................ 1,100,000 7,048 7,048
SoundShore Holdings Ltd........ 8,730,000 55,941 55,941
SoundShore Opportunity Holding
Fund Ltd. ................... 3,480,000 22,299 22,299
Southern Farm Bureau Life
Insurance -- FRIC............ 1,260,000 8,074 8,074
St. Albans Partners Ltd........ 7,300,000 46,778 46,778
Starvest -- Managed............ 215,000 1,377 1,377
Starvest Combined Portfolio.... 1,385,000 8,875 8,875
State Employee's Retirement
Fund of the State of
Delaware..................... 1,395,000 8,939 8,939
State of Connecticut Combined
Investment Funds............. 4,700,000 30,117 30,117
State of Oregon Equity......... 7,675,000 49,181 49,181
Summer Hill Global
Partners L.P................. 130,000 833 833
Susquehanna Capital Group...... 3,350,000 21,466 21,466
The Class IC Company, Ltd...... 500,000 3,203 3,203
The Frist Foundation........... 445,000 2,851 2851
The TCW Group, Inc............. 7,540,000 48,316 48,316
</TABLE>
31
<PAGE> 34
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NOTES BENEFICIALLY COMMON STOCK
OWNED AND OFFERED OWNED PRIOR TO COMMON STOCK
NAME HEREBY(1) THE OFFERING(1)(2) OFFERED HEREBY(2)
---- ------------------- ------------------ -----------------
<S> <C> <C> <C>
Thermo Electron Balanced
Investment Fund.............. 1,020,000 6,536 6,536
Toronto Dominion (New York),
Inc.......................... 5,000,000 32,039 32,039
TQA Leverage Fund, L.P......... 2,340,000 14,994 14,994
TQA Vantage Fund, Ltd.......... 5,400,000 34,603 34,603
TQA Vantage Plus Fund, Ltd..... 720,000 4,613 4,613
Tracor Inc. Employees
Retirement Plan.............. 233,000 1,493 1,493
Travelers: Travelers Equity
Income....................... 60,000 384 384
Triarc Companies, Inc.......... 510,000 3,268 3,268
Tribeca Investments L.L.C...... 32,000,000 205,055 205,055
Triton Capital Investments,
LTD.......................... 16,500,000 105,731 105,731
University of Rochester........ 66,000 422 422
Vanguard Convertible Securities
Fund, Inc.................... 2,755,000 17,654 17,654
Variable Insurance Products
Fund: Equity -- Income
Portfolio.................... 9,060,000 58,056 58,056
Variable Insurance Products
Fund III: Balanced
Portfolio.................... 260,000 1,666 1,666
Viacom Pension Plan Master
Trust........................ 80,000 512 512
Wake Forest University......... 1,175,000 7,529 7,529
Warburg Dillon Read LLC........ 21,990,000 140,911 140,911
Westgate International, L.P.... 8,510,000 54,532 54,532
White River Securities LLC..... 1,000,000 6,407 6,407
Worldwide Transactions Ltd..... 351,000 2,249 2,249
Yield Strategies Fund I, LP.... 1,000,000 6,407 6,407
Zazove Aggressive Growth
Fund......................... 400,000 2,563 2,563
ZENECA Holdings Trust.......... 675,000 4,325 4,325
Ziff Asset Management, L.P..... 2,000,000 21,815 12,815
Zuckerman, Greta............... 150,000 961 961
Any other holder of notes or
future transferee from any
such holder(4)(5)............ 155,826,000 998,665 998,665
-------------- --------- ---------
Total................ $1,250,000,000 8,253,127 8,009,996
============== ========= =========
</TABLE>
- -------------------------
(1) Includes common stock into which the notes are convertible.
(2) Assumes a conversion price of $156.055 per share and a cash payment in lieu
of any fractional interest.
(3) Morgan Stanley & Co. Incorporated and Donaldson, Lufkin & Jenrette
Securities Corp. each acted as placement agent in connection with the offer
and sale of the notes in February 1999. In addition, Morgan Stanley & Co.
Incorporated acted as placement agent in connection with the offer and sale
of senior discount notes in May 1998.
32
<PAGE> 35
(4) Information concerning other selling holders of notes will be set forth in
prospectus supplements from time to time, if required.
(5) Assumes that any other holders of notes or any future transferee from any
such holder does not beneficially own any common stock other than common
stock into which the notes are convertible at the conversion price of
$156.055 per share.
Other than as noted above, none of the selling holders has had any material
relationship with us or our affiliates within the past three years. The selling
holders purchased all of the notes from us in a private transaction on February
3, 1999. All of the notes were "restricted securities" under the Securities Act
prior to this registration.
The selling holders have represented to us that they purchased the shares
for their own account for investment only and not with a view toward selling or
distributing them, except pursuant to sales registered under the Securities Act
or exemptions. We agreed with the selling holders to file the registration
statement to register the resale of the shares. We agreed to prepare and file
all necessary amendments and supplements to the registration statement to keep
it effective until the earlier of (1) February 3, 2001 and (2) the date on which
the notes and the common stock into which the notes are convertible no longer
qualify as "registrable securities" under the Registration Rights Agreement.
Information concerning the selling holders may change from time to time and
any such changed information will be set forth in supplements to this prospectus
if and when necessary. In addition, the per share conversion price, and
therefore the number of shares of common stock issuable upon conversion of the
notes, is subject to adjustment under certain circumstances. Accordingly, the
aggregate principal amount of notes and the number of shares of common stock
into which the notes are convertible may increase or decrease.
PLAN OF DISTRIBUTION
The selling holders and their successors, which term includes their
transferees, pledgees or donees or their successors, may sell the notes and the
common stock into which the notes are convertible directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling holders or
the purchasers, which discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices at
the time of sale, at prices related to such prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices. Such sales may
be effected in transactions, which may involve crosses or block transactions (1)
on any national securities exchange or quotation service on which the notes or
the common stock may be listed or quoted at the time of sale, (2) in the
over-the-counter market, (3) in transactions otherwise than on such exchanges or
services or in the over-the-counter market, (4) through the writing of options,
whether such options are listed on an options exchange or otherwise, or (5)
through the settlement of short sales. In connection with the sale of the notes
and the common stock into which the notes are convertible or otherwise, the
selling holders may enter into hedging transactions with broker-dealers or other
financial institutions which may in turn engage in short sales of the notes or
the common stock into with the notes are convertible and
33
<PAGE> 36
deliver these securities to close out such short positions, or loan or pledge
the notes or the common stock into which the notes are convertible to
broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible offered by them hereby will be
the purchase price of such notes or common stock less discounts and commissions,
if any. Each of the selling holders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any
proposed purchase of notes or common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
such jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under the
Securities Act. Selling holders who are "underwriters" within the meaning of
Section 2(11) of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act. The selling holders have acknowledged that
they understand their obligations to comply with the provisions of the Exchange
Act and the rules thereunder relating to stock manipulation, particularly
Regulation M, and have agreed that they will not engage in any transaction in
violation of such provisions.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder
may not sell any notes or common stock described herein and may not transfer,
devise or gift such securities by other means not described in this prospectus.
To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public offering
prices, the names of any agent, dealer or underwriter, and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement of which this prospectus is a part.
We entered into a Registration Rights Agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under certain circumstances and at certain times. The
Registration Rights Agreement provides for cross-indemnification of the selling
holders and Amazon.com and their
34
<PAGE> 37
respective directors, officers and controlling persons against certain
liabilities in connection with the offer and sale of the notes and the common
stock, including liabilities under the Securities Act. We will pay all of our
expenses and substantially all of the expenses incurred by the selling holders
incident to the offering and sale of the notes and the common stock, provided
that each selling holder will be responsible for payment of commissions,
concessions and discounts of underwriters, broker-dealers or agents.
LEGAL MATTERS
Perkins Coie LLP, Seattle, Washington, will provide Amazon.com with an
opinion as to legal matters in connection with the notes and the common stock
offered by this prospectus.
EXPERTS
The consolidated financial statements of Amazon.com appearing in
Amazon.com's Annual Report (Form 10-K) for the year ended December 31, 1998,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The financial statements of Junglee Corp., incorporated in this prospectus
by reference to Amazon.com's Current Report on Form 8-K filed August 27, 1998,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of e-Niche Incorporated, incorporated
by reference to Amazon.com's Current Report on Form 8-K filed May 12, 1999, have
been audited by PricewaterhouseCoopers LLP, independent accountants, as stated
in their report, which is incorporated herein by reference and has been so
incorporated in reliance on the report of such firm as experts in auditing and
accounting.
The financial statements of Alexa Internet, incorporated by reference to
Amazon.com's Current Report on Form 8-K filed May 12, 1999, have been audited by
PricewaterhouseCoopers LLP, independent accountants, as stated in their report,
which is incorporated herein by reference and has been so incorporated in
reliance on the report of such firm as experts in auditing and accounting.
35
<PAGE> 38
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
We have not authorized any person to give you any information or to make
any representations other than those contained in this prospectus. You should
not rely on any information or representations other than those contained in
this prospectus. This prospectus is not an offer to sell or a solicitation of an
offer to buy any securities other than the convertible subordinated notes and
the common stock into which the notes are convertible. It is not an offer to
sell or a solicitation of an offer to buy securities if the offer or
solicitation would be unlawful. The affairs of Amazon.com may have changed since
the date of this prospectus. You should not assume that the information in this
prospectus is correct at any time subsequent to its date.
$1,250,000,000
AMAZON.COM.LOGO
4 3/4% CONVERTIBLE SUBORDINATED NOTES DUE 2009
-----------------
PROSPECTUS
-----------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 39
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts, payable by the registrant in connection with the sale of
the 4 3/4% Convertible Subordinated Notes due 2009 and the common stock being
registered. All amounts are estimates except the SEC registration fee, the NASD
filing fee and the Nasdaq National Market additional listing fee.
<TABLE>
<S> <C>
SEC registration fee........................................ $347,500
NASD filing fee............................................. --
Nasdaq National Market listing fee.......................... 17,500
Transfer Agent and registrar fees........................... 15,500
Legal fees and expenses..................................... 125,000
Accounting fees and expenses................................ 100,000
Miscellaneous fees and expenses............................. 162,000
--------
Total............................................. $767,500
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify its 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 in which 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,
II-1
<PAGE> 40
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 which 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.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
3.1 Restated Certificate of Incorporation*
3.2 Restated Bylaws**
4.1 Indenture, dated as of February 3, 1999, between Amazon.com,
Inc. and The Bank of New York, as trustee, including the
form of 4 3/4% Convertible Subordinated Note due 2009
attached as Exhibit A thereto****
4.2 Registration Rights Agreement, dated as of February 3, 1999,
by and among Amazon.com, Inc. and the Initial Purchasers***
5.1 Opinion of Perkins Coie LLP, counsel to the registrant,
regarding the legality of the notes and the common stock
into which the notes are convertible****
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)****
23.3 Consent of Deloitte & Touche LLP, independent auditors
23.4 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.5 Consent of PricewaterhouseCoopers LLP, independent
accountants
24.1 Power of Attorney (contained on signature page)****
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the indenture****
</TABLE>
- -------------------------
* Incorporated by reference to the registrant's Registration Statement on
Form S-4 (Registration No. 333-55943), filed with the SEC on June 3, 1998.
II-2
<PAGE> 41
** Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.
*** Incorporated by reference to the registrant's Current Report on Form 8-K
filed with the SEC on February 4, 1999.
**** Previously filed.
ITEM 17. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price, set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) 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.
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference into the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be
II-3
<PAGE> 42
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. 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 Commission such
indemnification is against public policy as expressed in the Securities Act 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 of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
D. The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under Section
310 of the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the Trust Indenture Act.
II-4
<PAGE> 43
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
the requirements for filing on Form S-3 and has duly caused this Amendment No. 1
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Seattle, State of Washington, on May
13, 1999.
AMAZON.COM, INC.
By: /s/ JOY D. COVEY
-----------------------------------
Joy D. Covey
Chief Financial Officer and
Vice President of Finance
and Administration
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed by the
following persons in the capacities indicated on May 13, 1999.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/*/ JEFFREY P. BEZOS Chairman of the Board, President and
- -------------------------------------- Chief Executive Officer (Principal
Jeffrey P. Bezos Executive Officer)
/s/ JOY D. COVEY Chief Financial Officer and Vice
- -------------------------------------- President of Finance and
Joy D. Covey Administration (Principal Financial
and Accounting Officer)
/*/ TOM A. ALBERG Director
- --------------------------------------
Tom A. Alberg
/*/ SCOTT D. COOK Director
- --------------------------------------
Scott D. Cook
/*/ L. JOHN DOERR Director
- --------------------------------------
L. John Doerr
/*/ PATRICIA Q. STONESIFER Director
- --------------------------------------
Patricia Q. Stonesifer
*By: /s/ JOY D. COVEY
---------------------------------
Joy D. Covey
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 44
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<C> <S>
3.1 Restated Certificate of Incorporation*
3.2 Restated Bylaws**
4.1 Indenture, dated as of February 3, 1999, between Amazon.com,
Inc. and The Bank of New York, as trustee, including the
form of 4 3/4% Convertible Subordinated Note due 2009
attached as Exhibit A thereto****
4.2 Registration Rights Agreement, dated as of February 3, 1999,
by and among Amazon.com, Inc. and the Initial Purchasers***
5.1 Opinion of Perkins Coie LLP, counsel to the registrant,
regarding the legality of the notes and the common stock
into which the notes are convertible****
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst & Young LLP, independent auditors
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)****
23.3 Consent of Deloitte & Touche LLP, independent auditors
23.4 Consent of PricewaterhouseCoopers LLP, independent
accountants
23.5 Consent of PricewaterhouseCoopers LLP, independent
accountants
24.1 Power of Attorney (contained on signature page)****
25.1 Form T-1 Statement of Eligibility of The Bank of New York to
act as trustee under the indenture****
</TABLE>
- -------------------------
* Incorporated by reference to the registrant's Registration Statement on
Form S-4 (Registration No. 333-55943), filed with the SEC on June 3, 1998.
** Incorporated by reference to the registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.
*** Incorporated by reference to the registrant's Current Report on Form 8-K
filed with the SEC on February 4, 1999.
**** Previously filed.
<PAGE> 1
EXHIBIT 12
AMAZON.COM, INC.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
PERIOD FROM
THREE MONTHS JULY 5, 1994
ENDED (INCEPTION) TO
MARCH 31, --------------------------------------------- DECEMBER 31,
1999 1998 1997 1996 1995 1994
-------- --------- -------- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Net loss $(61,667) $(124,546) $(31,020) $(6,246) $(303) $(52)
Plus fixed charges:
Interest expense including amortization
of debt issuance costs 16,688 26,639 326 5 -- --
Assumed interest element included in
rent expense(1) 1,692 2,833 700 90 4 --
-------- --------- -------- ------- ----- ----
18,380 29,472 1,026 95 4 --
-------- --------- -------- ------- ----- ----
Adjusted earnings (loss) (43,287) (95,074) (29,994) (6,151) (299) (52)
Fixed charges (18,380) (29,472) (1,026) (95) (4) --
-------- --------- -------- ------- ----- ----
Deficiency of earnings available to
cover fixed charges $(61,667) $(124,546) $(31,020) $(6,246) $(303) $(52)
======== ========= ======== ======= ===== ====
</TABLE>
(1) Total rent expense for the period divided by three. This is the portion of
rental expense which the Company believes to be representative on interest.
<PAGE> 1
Exhibit 23.1
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-74435) and
related Prospectus of Amazon.com, Inc. for the registration of 8,009,996 shares
of common stock in connection with the $1,250,000,000 4 3/4% Convertible
Subordinated Notes due 2009, and to the incorporation by reference therein of
our report dated January 22, 1999, except for Note 11 as to which the date is
February 10, 1999, with respect to the consolidated financial statements and
schedule of Amazon.com, Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
May 11, 1999
<PAGE> 1
EXHIBIT 23.3
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-74435 of Amazon.com, Inc. on Form S-3 of our
report dated February 6, 1998, on the financial statements of Junglee Corp. as
of December 31, 1997 and 1996 and for the year ended December 31, 1997 and for
the period from June 3, 1996 (inception) to December 31, 1996, appearing in the
Current Report on Form 8-K of Amazon.com, Inc. filed August 27, 1998 and to the
reference to us under the heading "Experts" in the Prospectus, which is a part
of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
San Jose, California
May 11, 1999
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EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement on Form S-3 (No. 333-74435) of Amazon.com, Inc. of our
report dated May 3, 1999 relating to the financial statements of e-Niche
Incorporated, which appears in the Current Report on Form 8-K of Amazon.com,
Inc. dated May 12, 1999. We also consent to the reference to us under the
heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
Boston, Massachusetts
May 11, 1999
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in Amendment No. 1 to the
Registration Statement on Form S-3 (No. 333-74435) of Amazon.com, Inc. of our
report dated April 23, 1999 relating to the financial statements of Alexa
Internet which appears in the Form 8-K of Amazon.com, Inc. dated May 12, 1999.
We also consent to the reference to our firm under the caption "Experts".
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
San Francisco, California
May 12, 1999
