NetFlix 2011 Annual Report Download - page 18

• difficulties in understanding and complying with local laws, regulations and customs in foreign
jurisdictions;
• unexpected changes in regulatory requirements;
• less favorable foreign intellectual property laws;
• adverse tax consequences;
• fluctuations in currency exchange rates, which could impact revenues and expenses of our international
operations and expose us to foreign currency exchange rate risk;
• profit repatriation and other restrictions on the transfer of funds;
• differing processing systems as well as consumer use and acceptance of electronic payment methods,
such as credit and debit cards;
• new and different sources of competition;
• low usage of Internet connected consumer electronic devices;
• different and more stringent user protection, data protection, privacy and other laws; and
• availability of reliable broadband connectivity and wide area networks in targeted areas for expansion.
Our failure to manage any of these risks successfully could harm our future international operations and our
overall business, and results of our operations.
We may seek additional capital that may result in stockholder dilution or that may have rights senior to
those of our common stockholders.
From time to time, we may seek to obtain additional capital, either through equity, equity-linked or debt
securities. For example, in the fourth quarter of 2011, we raised $400 million of additional capital through the
sale of $200 million worth of convertible notes in a private placement and $200 million worth of equity through a
public offering. The decision to obtain additional capital will depend, among other things, on our development
efforts, business plans, operating performance and condition of the capital markets. If we raise additional funds
through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or
privileges senior to the rights of our common stock, and our stockholders may experience dilution.
We have issued $400 million in debt offerings and may incur additional debt in the future, which may
adversely affect our financial condition and future financial results.
As of December 31, 2011, we have $200 million in 8.50% senior notes and $200 million in zero coupon
senior convertible notes outstanding. Risks relating to our long-term indebtedness include:
• requiring us to dedicate a portion of our cash flow from operations to payments on our indebtedness,
thereby reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions
and investments and other general corporate purposes;
• limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which
we operate; and
• limiting our ability to borrow additional funds or to borrow funds at rates or on other terms we find
acceptable.
In addition, it is possible that we may need to incur additional indebtedness in the future in the ordinary
course of business. The terms of indentures governing our outstanding senior notes allow us to incur additional
debt subject to certain limitations. If new debt is added to current debt levels, the risks described above could
intensify.
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