NetFlix 2009 Annual Report Download - page 73

NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
6. Guarantees—Intellectual Property Indemnification Obligations
In the ordinary course of business, the Company has entered into contractual arrangements under which it
has agreed 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 the Company’s breach of such
agreements and out of intellectual property infringement claims made by third parties.
The Company’s obligations under these agreements may be limited in terms of time or amount, and in some
instances, the Company may have recourse against third parties for certain payments. 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 August 6, 2009, the Company announced that its Board of Directors authorized a stock repurchase plan
that enables the Company to repurchase up to $300 million of its common stock through the end of 2010. The
timing and actual number of shares repurchased will depend on various factors including price, corporate and
regulatory requirements, alternative investment opportunities and other market conditions. Under this program,
the Company repurchased 3,197,459 shares of common stock at an average price of approximately $47 per share
for an aggregate amount of $149 million. Of this amount, 1,480,000 shares repurchased were initially held as
treasury stock and accordingly repurchases were accounted for at cost under the treasury method. These shares
were subsequently retired. The remaining 1,717,459 shares repurchased have also been retired. Subsequent to
December 31, 2009, the Company repurchased 1,010,000 shares of common stock at an average price of
approximately $62 for an aggregate amount of $62.4 million. The timing and actual number of shares
repurchased will depend on various factors including price, corporate and regulatory requirements, alternative
investment opportunities and other market conditions.
On January 26, 2009, the Company announced that its Board of Directors authorized a stock repurchase
program for 2009. Under this program, the Company repurchased 4,173,855 shares of common stock at an
average price of approximately $42 per share for an aggregate amount of approximately $175 million. Shares
repurchased under this program were initially held as treasury stock and accordingly repurchases were accounted
for at cost under the treasury method. These shares were subsequently retired. This program terminated on
August 6, 2009.
On March 5, 2008, the Company’s Board of Directors authorized a stock repurchase program allowing the
Company to repurchase up to $150 million of its common stock through the end of 2008. Under this program, the
Company repurchased 3,491,084 shares of common stock at an average price of approximately $29 per share for
an aggregate amount of $100 million. Shares repurchased under this program were initially held as treasury stock
and accordingly repurchases were accounted for under the treasury method. These shares have been subsequently
retired.
On January 31, 2008, the Company’s Board of Directors authorized a stock repurchase program allowing
the Company to repurchase up to $100 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 approximately $26 per share
for an aggregate amount of $100 million. Shares repurchased under this program have been retired.
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