NetFlix 2011 Annual Report Download - page 38

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, 2011. 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, 2011:
Payments due by Period
Contractual obligations (in thousands): Total
Less than
1 year (3) 1-3 years 3-5 years
More than
5 years
8.50% senior notes ............ $ 302,000 $ 17,000 $ 34,000 $ 34,000 $217,000
Convertible notes ............. 200,000 — — — 200,000
Operating lease obligations ..... 59,925 17,599 26,485 13,702 2,139
Lease financing obligations (1) . . 19,267 4,174 6,020 5,886 3,187
Streaming content obligations (2) 3,907,198 797,649 2,384,373 650,480 74,696
Other purchase obligations ...... 262,469 149,700 112,158 611 —
Total ................... $4,750,859 $986,122 $2,563,036 $704,679 $497,022
(1) Represents the lease financing obligations for our Los Gatos, California headquarters.
(2) Streaming content obligations include agreements to acquire and license streaming content that represent
long-term liabilities or that are not reflected on the Consolidated Balance Sheets. For those agreements with
variable terms, we do not estimate what the total obligation may be beyond any minimum quantities and/ or
pricing as of the reporting date. For those agreements that include renewal provisions that are solely at the
option of the content provider, we include the commitments associated with the renewal period to the extent
such commitments are fixed or a minimum amount is specified. For these reasons, the amounts presented in
the table may not provide a reliable indicator of our expected future cash outflows.
We have entered into certain streaming content license agreements that include an unspecified or a
maximum number of titles that we may or may not receive in the future and/or that include pricing
contingent upon certain variables, such as theatrical exhibition receipts for the title. As of the reporting date,
it is unknown whether we will receive access to these titles or what the ultimate price per title will be.
Accordingly such amounts are not reflected in the above contractual obligations table. However, such
amounts are expected to be significant and the expected timing of payment for these commitments could
range from less than one year to more than five years.
(3) For purposes of this table, less than one year does not include liabilities which are reflected on the
Consolidated Balance Sheets as current liabilities. Content accounts payables for instance includes $905.8
million in streaming content obligations not reflected in the above table.
As of December 31, 2011, the Company had gross unrecognized tax benefits of $28.1 million and an
additional $2.4 million for gross interest and penalties classified as “Other non-current liabilities” in the
Consolidated Balance Sheet. At this time, the Company is unable to make a reasonably reliable estimate of the
timing of payments in individual years due to uncertainties in the timing of tax audit outcomes; therefore, such
amounts are not included in the above contractual obligation table.
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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