NetFlix 2004 Annual Report Download - page 24

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Item 2. Properties
We do not own any real estate. The following table sets forth the location, approximate square footage and
the primary use of each of our principal properties. As of December 31, 2004, all properties were leased under
operating leases.
Location
Estimated
Square
Footage
Lease
Expiration Date Primary Use
Los Gatos, California ....... 66,400 October2006 Corporate offices, general and administrative,
marketing, and technology and development
Beverly Hills, California ..... 4,000 December 2006 Content acquisition, general and administrative
Sunnyvale, California ....... 115,000 April 2009 Central customer service, processing and shipping
center for the San Francisco Bay Area
In addition, our fulfillment operations are located in 30 fulfillment centers that serve major metropolitan
areas throughout the United States and comprise a total of approximately 300,000 square feet. These fulfillment
centers are under relatively short-term lease agreements that expire at various dates through July 2009.
To help meet our future expansion needs, we have entered into a lease for a building currently under
construction in Los Gatos, California. This location will become our new headquarters in or around December
2005 and will include our corporate, general and administrative, marketing, and technology and development
functions. Lease payments will commence in December 2005. This building is leased through 2012 and consists
of approximately 80,000 square feet of office space.
We believe our properties are suitable and adequate for our present needs, and we periodically evaluate
whether additional facilities are necessary.
Item 3. Legal Proceedings
From time to time, in the normal course of business, we are a party to litigation matters and claims,
including claims relating to employee relations and business practices. Litigation can be expensive and disruptive
to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict. Listed
below are material legal proceedings to which we are party. We believe that we have defenses to the cases set
forth below and are vigorously contesting these matters. An unfavorable outcome of any of these matters could
have a material adverse effect on our financial position, liquidity or results of operations.
Between July 22 and September 9, 2004, seven purported securities class action suits were filed in the
United States District Court for the Northern District of California against us and, in the aggregate, Reed
Hastings, W. Barry McCarthy, Jr., and Leslie J. Kilgore. These class action suits were consolidated in January
2005, and a consolidated complaint was filed on February 24, 2005. The complaint alleges violations of certain
federal securities laws, seeking unspecified damages on behalf of a class of purchasers of our common stock
between October 1, 2003 and October 14, 2004. The plaintiffs allege that we made false and misleading
statements and omissions of material facts based on our disclosure regarding churn and delivery speed, claiming
alleged violations by each named defendant of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder and alleged violations by certain of our officers of Section 20A of
Securities Exchange Act of 1934.
On September 14, 2004, BTG International Inc. filed suit against us and other unaffiliated companies in the
United States District Court for the District of Delaware. The complaint alleges that we infringed U.S. Patent No.
5,717,860 entitled “Method and Apparatus for Tracking the Navigation Path of a User on the World Wide Web.”
The complaint also alleges infringement of another patent by certain of the other named defendants, not
including us. The complaint seeks unspecified compensatory and enhanced damages, interest and fees, and to
permanently enjoin the defendants from infringing the patents in the future.
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