NetFlix 2007 Annual Report Download - page 69

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Further, the Company’s obligations under these agreements may be limited in terms of time and/or amount, and
in some instances, the Company may have recourse against third parties for certain payments made by it under
these agreements. In addition, the Company has entered into indemnification agreements with its directors and
certain of its officers that will require it, among other things, to indemnify them against certain liabilities that
may arise by reason of their status or service as directors or officers. The terms of such obligations vary.
It is not possible to make a reasonable estimate of the maximum potential amount of future payments under
these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and
circumstances involved in each particular agreement. No amount has been accrued in the accompanying financial
statements with respect to these indemnification guarantees.
7. Stockholders’ Equity
On May 3, 2006, the Company issued 3,500,000 shares of common stock upon the closing of a secondary
public offering for net proceeds of $101.1 million.
On April 18, 2007, the Company announced a stock repurchase program allowing the Company to
repurchase up to $100.0 million of its common stock through the end of 2007. During the year ended
December 31, 2007, the Company repurchased 4,733,788 shares of common stock at an average price of $21.09
per share for an aggregate amount of $99.9 million, net of expenses. Stock repurchases are accounted for under
the retirement method as all shares repurchased have been retired. There were no unsettled share repurchases as
of December 31, 2007.
On January 31, 2008, the Company’s Board of Directors authorized a stock repurchase program allowing
the Company to repurchase up to $100.0 million of its common stock through the end of 2008. Under this
program, the Company repurchased 3,847,062 shares of common stock at an average price of $25.96 per share
for an aggregate amount of $99.9 million, net of expenses.
Preferred Stock
The Company has authorized 10,000,000 shares of undesignated preferred stock with par value of $0.001
per share. None of the preferred shares were issued and outstanding at December 31, 2007 and 2006.
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 (“ESPP”), 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% of the outstanding shares of the common stock on the first day of the applicable year;
• 666,666 shares; and
• such other amount as the Company’s Board of Directors may determine.
F-18