NetFlix 2003 Annual Report Download - page 40

Contractual Obligations
We had no material commitments for capital expenditures as of December 31, 2003. We have obligations
under non-cancelable operating leases and capital leases with various expiration dates through 2006. Future
minimum lease payments under these leases are as follows:
Year Ending December 31,
Capital
Leases
Operating
Leases
(in thousands)
2004 ............................................................... $462 $3,592
2005 ............................................................... 55 2,076
2006 ............................................................... — 175
Total .......................................................... $517 $5,843
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not engage in transactions that generate relationships with
unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special
purpose entities. Accordingly, our operating results, financial condition and cash flows are not subject to off-
balance sheet risks.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we agree to provide
indemnifications of varying scope and terms to business partners and other parties with respect to certain matters,
including, but not limited to, losses arising out of our breach of such agreements and out of intellectual property
infringement claims made by third parties. In addition, we have entered into indemnification agreements with our
directors and certain of our officers that will require us, among other things, to indemnify them against certain
liabilities that may arise by reason of their status or service as directors or officers.
The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated, so the overall
maximum amount of the obligations cannot be reasonably estimated. To date, we have not incurred material
costs as a result of such obligations and have not accrued any liabilities related to such indemnification
obligations in our financial statements.
Recent Accounting Pronouncements
In April 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 149, Amendment of
Statement 133 on Derivative Instruments and Hedging Activities, which amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging
activities under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No. 149 is
generally effective for derivative instruments, including derivative instruments embedded in certain contracts,
entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003. The
adoption of SFAS No. 149 did not have a material impact on our operating results or financial condition.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity, which provides guidance for the classification and measurement
of certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of
the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 did not have a material
impact on our operating results or financial condition.
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