NetFlix 2013 Annual Report Download - page 61

were issued at par and were senior unsecured obligations of the Company. Interest was payable semi-annually at
a rate of 8.50% per annum on May 15 and November 15 of each year, commencing on May 15, 2010.
The 8.50% Notes were repayable in whole or in part upon the occurrence of a change of control, at the option of
the holders, at a purchase price in cash equal to 101% of the principal plus accrued interest. The Company could
redeem the 8.50% Notes prior to November 15, 2013 in whole or in part at a redemption price of 100% of the
principal plus accrued interest, plus a “make-whole” premium.
In February 2013, the Company issued $500.0 million aggregate principal amount of 5.375% senior notes
due 2021 (the “5.375% Notes”). The 5.375% Notes were issued at par and are senior unsecured obligations of the
Company. Interest is payable semi-annually at a rate of 5.375% per annum on February 1 and August 1 of each
year, commencing on August 1, 2013. The 5.375% Notes are repayable in whole or in part upon the occurrence
of a change of control, at the option of the holders, at a purchase price in cash equal to 101% of the principal plus
accrued interest. The Company may redeem the 5.375% Notes prior to maturity in whole or in part at an amount
equal to the principal amount thereof plus accrued and unpaid interest plus a make-whole payment equivalent to
the present value of the remaining interest payments through maturity.
The 5.375% Notes include, among other terms and conditions, limitations on the Company’s ability to
create, incur or allow certain liens; enter into sale and lease-back transactions; create, assume, incur or guarantee
additional indebtedness of the Company’s subsidiaries; and consolidate or merge with, or convey, transfer or
lease all or substantially all of the Company’s and its subsidiaries assets, to another person. At December 31,
2013 the Company was in compliance with these covenants.
In the first quarter of 2013, the Company used $224.5 million of the net proceeds of the 5.375% Notes to
redeem the outstanding $200.0 million aggregate principal amount of 8.50% Notes and pursuant to the make-whole
provision in the Indenture governing the 8.50% Notes, paid a $19.4 million premium and $5.1 million of accrued
and unpaid interest. The Company recognized a loss on extinguishment of debt of $25.1 million related to
redemption of the 8.50% Notes which included the write off of unamortized debt issuance costs of $4.2 million.
Based on quoted market prices in less active markets (a Level 2 input for this financial instrument), the fair
value of the 5.375% Notes as of December 31, 2013 was approximately $506.3 million.
6. Commitments and Contingencies
Streaming Content
At December 31, 2013, the Company had $7.3 billion of obligations comprised of $1.8 billion included in
“Current content liabilities” and $1.3 billion of “Non-current content liabilities” on the Consolidated Balance
Sheets and $4.2 billion of obligations that are not reflected on the Consolidated Balance Sheet.
At December 31, 2012, the Company had $5.6 billion of obligations comprised of $1.3 billion included in
“Current content liabilities” and $1.1 billion of “Non-current content liabilities” on the Consolidated Balance
Sheets and $3.2 billion of obligations that are not reflected on the Consolidated Balance Sheet.
The expected timing of payments for these streaming content obligations is as follows:
As of December 31,
2013 2012
(in thousands)
Less than one year .................................... $2,972,325 $2,299,562
Due after one year and through 3 years .................... 3,266,907 2,715,294
Due after 3 years and through 5 years ..................... 929,645 540,346
Due after 5 years ..................................... 83,284 78,483
Total streaming content obligations ...................... $7,252,161 $5,633,685
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