NetFlix 2014 Annual Report Download - page 12

Table of Contents
We could be subject to economic, political, regulatory and other risks arising from our international operations.
Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic
and political risks that may be different from and incremental to those in the U.S. In addition to the risks that we face in the U.S., our
international operations involve risks that could adversely affect our business, including:
Our failure to manage any of these risks successfully could harm our 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. The decision to obtain
additional capital will depend, among other things, on our 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 debt outstanding and may incur additional debt in the future, which may adversely affect our financial condition and future
financial results.
As of December 31, 2014, we had $500 million in 5.375% senior notes and $400 million in 5.75% senior notes. Risks relating to our
long-term indebtedness include:
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• the need to adapt our content and user interfaces for specific cultural and language differences, including licensing a certain portion
of our content library before we have developed a full appreciation for its performance within a given territory;
•
difficulties and costs associated with staffing and managing foreign operations;
•
management distraction;
•
political or social unrest and economic instability;
• compliance with U.S. laws such as the Foreign Corrupt Practices Act, export controls and economic sanctions, and local laws
prohibiting corrupt payments to government officials;
•
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 such as those related to repatriation of cash from foreign jurisdictions into the United States, non-income
related taxes such as value-added tax or other indirect taxes, such as ISS, PIS, COFINS and CIDE in Brazil, changes in tax laws or
their interpretations, or the application of judgment in determining our global provision for income taxes and other tax liabilities
given inter-company transactions and calculations where the ultimate tax determination is uncertain;
• 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 payment processing systems as well as consumer use and acceptance of electronic payment methods, such as payment
cards;
•
new and different sources of competition;
•
low usage and/or penetration 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;
• integration and operational challenges as well as potential unknown liabilities in connection with companies we may acquire or
control; and
•
differing, and often more lenient, laws and consumer understanding/attitudes regarding the illegality of piracy.