NetFlix 2006 Annual Report Download - page 62

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data and percentages)
The following table reflects the impact of the reclassification:
Year Ended December 31,
Condensed Consolidated Statements of Cash Flows 2004 2005
Changes in Accounts Payable:
As previously reported ................................................ $ 17,121 $ 13,716
Reclassifications ..................................................... (2,126) (5,470)
As Reclassified ...................................................... $ 14,995 $ 8,246
Cash flows from operating activities:
As previously reported ................................................ $147,571 $ 162,977
Reclassifications ..................................................... (2,302) (5,470)
As Reclassified ...................................................... $145,269 $ 157,507
Purchases of Property and equipment:
As previously reported ................................................ $ (14,962) $ (30,619)
Reclassifications ..................................................... (758) 2,966
As Reclassified ...................................................... $ (15,720) $ (27,653)
Acquisitions of DVD library:
As previously reported ................................................ $(102,971) $(113,950)
Reclassifications ..................................................... 2,884 2,504
As Reclassified ...................................................... $(100,087) $(111,446)
Net cash used in investing activities:
As previously reported ................................................ $ (68,381) $(138,718)
Reclassifications ..................................................... 2,126 5,470
As Reclassified ...................................................... $ (66,255) $(133,248)
The reclassifications did not impact operating income or net income, working capital or net change in cash
and cash equivalents as previously reported.
Fair Value of Financial Instruments
The fair value of the Company’s cash and cash equivalents, accounts payable and accrued expenses
approximates their carrying value due to their short maturity.
Foreign Currency Translation and Transactions
In the third quarter of 2004, the Company prepared to launch its online movie subscription service in the
United Kingdom. However, in October 2004, the Company announced its withdrawal from the United Kingdom
so that it could focus on defending its market leadership position in the United States. The financial statements of
the Company’s United Kingdom subsidiary were prepared in its local currency and translated into U.S. dollars
for reporting purposes. The assets and liabilities are translated at exchange rates in effect at the balance sheet
date, while results of operations are translated at average exchange rates for the respective periods. The
cumulative effects of exchange rate changes on net assets are included as a part of accumulated other
comprehensive income. Net foreign currency transaction gains and losses were not significant for any of the
years presented.
F-9