NetFlix 2008 Annual Report Download - page 43

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, 2008. 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, 2008 (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 .......... $ 30,398 $ 11,137 $13,150 $ 4,672 $1,439
Lease financing obligations .......... 23,930 5,521 11,646 6,763 —
Other purchase obligations (1) ........ 158,739 91,058 62,450 5,231 —
Total ........................ $213,067 $107,716 $87,246 $16,666 $1,439
(1) Other purchase obligations relate primarily to acquisitions for our content library.
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 $14.6 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.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we agree to provide
indemnification of varying scope and terms to business partners and other parties with respect to certain matters,
including, but not limited to, losses arising out of our breach of such agreements and out of intellectual property
infringement claims made by third parties. In these circumstances, payment may be conditional on the other party
making a claim pursuant to the procedures specified in the particular contract. Further, our obligations under
these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse
against third parties for certain payments. In addition, we have entered into indemnification agreements with our
directors and certain of our officers that will require us, 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.
Recent Accounting Pronouncements
In April 2008, the FASB issued FASB Staff Position (“FSP”) No. 142-3, Determination of the Useful Life of
Intangible Assets (“FSP 142-3”). FSP 142-3 amends the factors an entity should consider in developing renewal
or extension assumptions used in determining the useful life of recognized intangible assets under FASB
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