NetFlix 2003 Annual Report Download - page 74

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NETFLIX, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(in thousands, except share, per share and per DVD data)
6. Commitments and Contingencies
Lease Commitments
The Company leases its facilities under non-cancelable operating leases with various expiration dates
through 2006. In addition, the Company has entered into non-cancelable capital leases with various expiration
dates through 2005. Future minimum lease payments under non-cancelable capital and operating leases as of
December 31, 2003 are as follows:
Year Ending December 31,
Capital
Leases
Operating
Leases
2004 ....................................................... $462 $3,592
2005 ....................................................... 55 2,076
2006 ....................................................... — 175
Totalminimumpayments ...................................... 517 $5,843
Less: amount representing interest, at rates ranging from 15%–17% .... (57)
Present value of minimum lease payments ......................... 460
Less: current portion of capital lease obligations .................... (416)
Capital lease obligations, non-current ............................. $ 44
Rent expense associated with the operating leases was $2,450, $2,975 and $3,454 for the years ended
December 31, 2001, 2002 and 2003, respectively.
Litigation
The Company is subject to legal proceedings, claims and litigation arising in the ordinary course of
business. While the outcome of these matters is currently not determinable, management does not expect that the
ultimate costs to resolve these matters will have a material adverse effect on the Company’s financial statements.
7. Redeemable Convertible Preferred Stock
The redeemable convertible preferred stock at December 31, 2001 consisted of the following:
Par
Value
Number of
Shares
Authorized
Number of
Shares
Issued and
Outstanding
Dividends
Per Share
Redemption
and
Liquidation
Value Per
Share
Total
Liquidation
Value
Series B ......... $0.001 5,776,616 5,684,024 $0.08648 $1.08 $ 6,139
Series C ......... 0.001 4,750,000 4,650,269 0.26160 3.27 15,205
Series D ........ 0.001 4,650,000 4,649,927 0.52160 6.52 30,318
Series E ......... 0.001 5,874,199 5,007,530 0.75000 9.38 46,971
Series E-1 ....... 0.001 5,874,199 325,159 0.75000 9.38 3,050
26,925,014 20,316,909 $101,683
These shares automatically converted into 19,319,400 shares of the Company’s common stock upon the
closing of the initial public offering in May 2002.
F-16