NetFlix 2007 Annual Report Download - page 45

Cash used in investing activities increased $52.6 million in 2006 as compared to 2005. Investing activities
primarily consisted of additional titles being purchased for our content library in order to support our larger
subscriber base and purchases of property and equipment in order to support our growing operations. Content
acquisitions were $58.1 million higher in 2006 as compared to 2005 while purchases of property and equipment
were flat.
Financing Activities
Our financing activities consisted primarily of issuance of common stock, repurchases of our common stock
and the excess tax benefit from stock-based compensation. Cash provided by financing activities decreased by
$190.2 million in 2007 as compared to 2006 primarily due to stock repurchases of $99.9 million in 2007 and a
decrease of $103.4 million in issuances of common stock as we had raised $101.1 million in a secondary offering
in 2006. On April 18, 2007, we announced a stock repurchase program allowing us to repurchase up to $100.0
million of our common stock through the end of 2007. As of November 2007, we completed our stock
repurchase program. We did not have any stock repurchases during 2006. This use of cash was offset by the
excess tax benefits from stock-based compensation of $26.2 million.
Cash provided by financing activities increased $112.9 million in 2006 as compared to 2005 primarily due
to the proceeds of $101.1 million from the secondary public offering of our common stock in May 2006, as well
as $13.2 million of tax benefits from stock-based compensation.
Contractual Obligations
For the purposes of this table, contractual obligations for purchases of goods or services are defined as
agreements that are enforceable and legally binding and that specify all significant terms, including: fixed or
minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of
the transaction. The expected timing of payment of the obligations discussed above is estimated based on
information available to us as of December 31, 2007. Timing of payments and actual amounts paid may be
different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some
obligations. The following table summarizes our contractual obligations at December 31, 2007 (in thousands):
Payments due by Period
Contractual obligations (in thousands): Total
Less than
1 year 1-3 Years 3-5 Years
More than
5 years
Operating lease obligations . . . . . . . . . . . $ 54,229 $15,133 $24,232 $14,167 $697
Other purchase obligations (1) . . . . . . . . . 68,702 49,820 16,132 2,750 —
Total . . . . . . . . . . . . . . . . . . . . . . . . . $122,931 $64,953 $40,364 $16,917 $697
(1) Other purchase obligations relate primarily to acquisitions for our content library. Our purchase orders are
based on our current needs and are generally fulfilled by our vendors within short time horizons.
License Agreements
In addition to the above contractual obligations, we have certain license agreements with studios that
include a maximum number of titles that we may or may not receive in the future. Access to these titles is based
on the discretion of the studios and, as such, we may not receive these titles. If we did receive access to the
maximum number of titles, we would incur up to an additional $25.5 million in commitments.
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.
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