NetFlix 2003 Annual Report Download - page 75

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NETFLIX, INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(in thousands, except share, per share and per DVD data)
8. Stockholders’ (Deficit) Equity
The 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
Liquidation
Value Per
Share
Total
Liquidation
Value
Series A .......... $0.001 5,000,000 4,444,545 $0.05000 $0.50 $2,222
Series F ........... 0.001 3,500,000 1,712,954 — — —
8,500,000 6,157,499 $2,222
The Company’s obligation to maintain the studios’ equity interests at 6.02 percent of the Company’s fully
diluted equity securities resulted in the Company issuing 3,492,737 shares of Series F preferred stock to the
studios during 2002 (see Note 3). This obligation terminated immediately prior to the Company’s initial public
offering in May 2002. All the outstanding convertible preferred stock automatically converted into 6,433,480
shares of common stock upon the closing of the initial public offering.
Voting Rights
The holders of each share of common stock shall be entitled to one vote per share on all matters to be voted
upon by the Company’s stockholders.
Employee Stock Purchase Plan
In February 2002, the Company adopted the 2002 Employee Stock Purchase Plan, which reserved a total of
1,166,666 shares of common stock for issuance. The 2002 Employee Stock Purchase Plan also provides for
annual increases in the number of shares available for issuance on the first day of each year, beginning with
2003, equal to the lesser of:
• 2 percent of the outstanding shares of the common stock on the first day of the applicable year;
• 333,333 shares; and
• such other amount as the Company’s Board of Directors may determine.
Under the 2002 Employee Stock Purchase Plan, shares of the Company’s common stock may be purchased
over an offering period with a maximum duration of two years at 85 percent of the lower of the fair market value
on the first day of the applicable offering period or on the last day of the six-month purchase period. Employees
may invest up to 15 percent of their gross compensation through payroll deductions. In no event shall an
employee be permitted to purchase more than 8,334 shares of common stock during any six-month purchase
period. During 2002 and 2003, employees purchased 95,492 and 345,112 shares at average prices of $3.80 and
$3.94 per share, respectively. As of December 31, 2003, 1,392,728 shares were available for future issuance
under the 2002 Employee Stock Purchase Plan.
Stock Option Plans
In December 1997, the Company adopted the 1997 Stock Plan, which was amended and restated in October
2001. The 1997 Stock Plan provides for the issuance of stock purchase rights, incentive stock options or non-
F-17