================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 11-K
_______________
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File No. 000-22513
A. Full title of the plan and address of the plan:
Amazon.com, Inc. 2001 Stakeholder Trust Plan
1200 12th Avenue South, Suite 1200
Seattle, Washington 98144-2734
Attn: Investments and Administrative Committee
B. Name of issuer of the securities held pursuant to the plan and address of
its principal executive office:
Amazon.com, Inc.
1200 12th Avenue South, Suite 1200
Seattle, Washington 98144-2734
================================================================================
AMAZON.COM, INC. 2001 STAKEHOLDER TRUST PLAN
FORM 11-K
For the Period January 30, 2001 (date of inception) through December 31, 2001
INDEX
Audited Financial Statements:
Report of Ernst & Young LLP, Independent Auditors ......................... 1
Statement of Net Assets Available for Benefits ............................ 2
Statement of Changes in Net Assets Available for Benefits ................. 3
Notes to Financial Statements ............................................. 4
Signatures ................................................................... 8
Exhibit 23 - Consent of Ernst & Young LLP, Independent Auditors .............. 9
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Investments and Administrative Committee
Amazon.com, Inc. 2001 Stakeholder Trust Plan
We have audited the accompanying statement of net assets available for
benefits of Amazon.com, Inc. 2001 Stakeholder Trust Plan as of December 31,
2001, and the related statement of changes in net assets available for benefits
for the period January 30, 2001 (date of inception) through December 31, 2001.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan at
December 31, 2001, and the changes in its net assets available for benefits for
the period January 30, 2001 (date of inception) through December 31, 2001, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Seattle, Washington
March 15, 2002
1
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Statement of Net Assets Available for Benefits
December 31, 2001
ASSETS
Cash $ 36
Investment in Amazon.com, Inc. common stock,
at fair value (149,961 shares at $10.82 per share) 1,622,578
-------------
Total assets 1,622,614
LIABILITIES
Accrued expenses 3,750
-------------
Net assets available for benefits $ 1,618,864
=============
See accompanying notes.
2
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Statement of Changes in Net Assets Available for Benefits
Period January 30, 2001 (date of inception) through December 31, 2001
ADDITIONS:
Investment income (losses):
Unrealized depreciation on Amazon.com, Inc. common stock $ (1,217,383)
Realized loss on sale of Amazon.com, Inc. common stock (2,503)
--------------
(1,219,886)
Employer contributions of Amazon.com, Inc. common stock, at fair value 2,850,000
--------------
Total additions 1,630,114
DEDUCTIONS:
Administrative expenses (11,250)
--------------
Net increase 1,618,864
Net assets available for benefits, at date of inception -
--------------
Net assets available for benefits, at end of period $ 1,618,864
==============
See accompanying notes.
3
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Notes to Financial Statements
December 31, 2001
Note 1 - Description of the Plan and Trust
The following description of the Amazon.com, Inc. 2001 Stakeholder Trust
Plan, as amended (the "Plan"), provides only general information. Participants
should refer to the Plan, the Prospectus and Summary Plan Description (the
"Prospectus") and the Amazon.com, Inc. 2001 Stakeholder Trust (the "Trust") for
a more complete description of the Plan's provisions.
General
The Plan, which was established on January 30, 2001, is an employee welfare
benefit plan that provides benefits for certain eligible U.S. employees of
Amazon.com, Inc. and subsidiaries (the "Company") whose employment was
involuntarily terminated without cause between January 30, 2001 and June 30,
2001 due to a reorganization announced on January 30, 2001. Eligible Plan
participants are described in the Plan. The Plan is subject to certain
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
The Company contributed 132,010 shares of its common stock with a fair
value of $18.938 per share (or $2,500,000) on January 30, 2001 into the Plan.
Additionally, the Company committed to fund a sub-account with 18,481 shares of
its common stock in an amount equal in value to $350,000, which is intended to
help fund future employer-obligated federal and state taxes. In May 2001, the
Trust was established as a grantor trust and Northwestern Trust and Investors
Advisory Company was designated as the trustee, and the common stock previously
designated under the Plan was transferred to the Trust.
The Plan is neither voluntary nor contributory. The Plan was established
and the Company's shares were contributed for the benefit of all Plan
participants, without any payment or contributions being made by participants or
without participants having to elect to participate. The Plan assets may not be
invested in any other security other than Amazon.com, Inc. common stock. The
Company's liability under the Plan is limited to its initial contribution to the
Plan and no additional contributions are required by the Company.
4
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Notes to Financial Statements (Continued)
Benefits
The amount of cash each Plan participant will receive is based on a formula
that assigns a certain number of units to each participant. For former hourly
employees, the number of units equals the product of the participant's hourly
wage rate times their regularly scheduled monthly hours for January 2001. For
former salaried employees, the number of units equals the participant's monthly
base salary for January 2001. At the time the trustee distributes the cash from
selling the shares, each participant will receive the portion of cash as
determined by multiplying the total amount of cash available for distribution by
a fraction, (a) the numerator of which is the number of units assigned to the
individual participant, and (b) the denominator of which is the total number of
units assigned to all participants. A participant may not assign or transfer
their interest in the Plan.
There is a chance that each participant will receive no distribution if, by
August 2003, the Company's common stock is trading at a sufficiently low price
that the sale of the shares does not cover the fees and expenses of the Plan.
Additionally, the assets held by the Plan are subject to the claims of the
Company's creditors in the event of the Company's bankruptcy or insolvency until
paid to Plan participants as specified in the Plan.
Plan Termination
The Plan may not be terminated for any reason at any time prior to August
15, 2003, except as may be required by law. The Company may amend the Plan at
any time. The Company cannot revoke the Trust or withdraw shares before all
payment of benefits have been made to the Plan participants and their
beneficiaries pursuant to the terms of the Plan.
Between August 2, 2003 and August 15, 2003, the trustee will liquidate all
assets held by the Plan for purposes of settling benefit, tax and administrative
obligations. After paying the remaining administrative costs, benefits will be
allocated to each beneficiary according to their relative share of the Plan, net
of applicable tax withholdings for employee-obligated federal and state taxes.
The 18,481 shares in the sub-account will be liquidated and used to fund
employer-obligated federal and state taxes or returned to the Company for
cancellation, in which case the Company shall pay employer-obligated federal and
state taxes.
All benefits will be distributed to beneficiaries in August or September
2003. In the event of death of the participant, benefits will be directed to the
decedent's estate at the time of distribution.
5
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Notes to Financial Statements (Continued)
Administrative Expenses
All administrative expenses incurred are paid by the Plan. The trustee may
liquidate Plan assets from time to time to meet such obligations. All
administrative expenses incurred during the period ended December 31, 2001
related to trustee fees.
Note 2 - Significant Accounting Polices
Basis of Accounting
The financial statements are prepared on the accrual basis of accounting in
accordance with accounting principles generally accepted in the United States.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. All investments are in the
common stock of Amazon.com, Inc. These securities are listed on the Nasdaq
National Market and are valued at the closing market price on the last business
day of the plan year. Sales of common stock are recorded on the trade-date and
gains or losses on sales of securities are determined by the gross proceeds from
the sale, less the historical cost of the securities sold. Net appreciation or
depreciation in the fair value of common stock represents the change in the
market price from the beginning of the period to the end of the year multiplied
by the number of shares held.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the plan
administrator to make estimates that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.
Concentrations of Risk
Since the assets held by the Plan are almost entirely comprised of
Amazon.com common stock, the anticipated assets available for benefits in August
2003 will be the result of the Company's future stock market performance, which
are subject to various risk factors described more fully in the Company's
periodic filings with the Securities and Exchange Commission.
6
Amazon.com, Inc. 2001 Stakeholder Trust Plan
Notes to Financial Statements (Continued)
Note 3 - Investments
The following table sets forth information with respect to the Plan's
investment as of December 31, 2001:
Original Fair Market
Cost at Value at
Number January 30, December 31, Unrealized
of Shares 2001 2001 Depreciation
---------------------------------------------------------
Amazon.com, Inc. common stock:
Participant shares 131,480 $2,489,968 $1,422,614 $(1,067,354)
Sub-account shares 18,481 349,993 199,964 (150,029)
---------------------------------------------------------
149,961 $2,839,961 $1,622,578 $(1,217,383)
=========================================================
During the period January 30, 2001 through December 31, 2001, the Plan sold 530
shares of common stock for $7,536 and recorded a loss on the sale of $2,503.
Proceeds from the sale were used to pay trustee fees.
Note 4 - Income Tax Status
The Trust funding the Plan is a grantor trust under Section 671 of the
Internal Revenue Code (the "Code"); therefore, the income and expenses of the
Trust are included in the taxable income of the Company, who is the grantor. As
an employee welfare benefit plan, the Plan and Trust are required to operate in
conformity with the Code and ERISA. The Company believes the Plan and the Trust
are operating in conformity with the Code and ERISA.
Participants did not incur income taxes when the Company set up the Plan or
when the Company contributed its common stock under the Plan. Instead, the
amount distributed to participants out of the net proceeds from the sale of the
shares will be taxable compensation subject to payroll tax withholding
requirements. Additionally, there were no tax consequences to the Company from
either adopting the Plan or contributing shares of common stock under the Plan.
At the time amounts are paid to participants under the Plan, the Company will be
entitled to a corresponding tax deduction. In addition, the Company will be
responsible for paying employer-obligated federal and state taxes. The Company
intends to pay these taxes with proceeds from the sale of the 18,481 shares of
common stock held in the sub-account, which was set aside for that purpose, or
from the Company's own assets, as elected at the time.
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Investments and Administrative Committee of the Amazon.com, Inc.
2001 Stakeholder Trust Plan have duly caused this annual report to be signed on
its behalf by the undersigned thereunto duly authorized, as of March 28, 2002.
Amazon.com, Inc. 2001 Stakeholder Trust Plan
By: /s/ Mark S. Peek
----------------------------------------
Mark S. Peek
Vice President, Planning and Analysis
and Member of the Investments and
Administrative Committee
8