NetFlix 2015 Annual Report Download - page 17

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, 2015, we had $2,400 million aggregate principal amount of senior 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.
It is possible that we may incur additional indebtedness in the future in the ordinary course of business. If
new debt is added to current debt levels, the risks described above could intensify.
We may lose key employees or may be unable to hire qualified employees.
We rely on the continued service of our senior management, including our Chief Executive Officer and co-
founder Reed Hastings, members of our executive team and other key employees and the hiring of new qualified
employees. In our industry, there is substantial and continuous competition for highly-skilled business, product
development, technical and other personnel. We may not be successful in recruiting new personnel and in
retaining and motivating existing personnel, which may be disruptive to our operations.
If memberships to our Domestic DVD segment decline faster than anticipated, our business could be
adversely affected.
The number of memberships to our DVD-by-mail offering is declining, and we anticipate that this decline
will continue. We believe, however, that the domestic DVD business will continue to generate significant
contribution profit for our business. The contribution profit generated by our domestic DVD business will help
provide capital resources to fund our growth internationally. To the extent that the rate of decline in our DVD-by-
mail business is greater than we anticipate, our business could be adversely affected. We do not anticipate
increasing resources to our DVD operations and the technology used in its operations will not be meaningfully
improved. To the extent that we experience service interruptions or other degradations in our DVD-by-mail
service, members’ satisfaction could be negatively impacted and we could experience an increase in DVD-by-
mail member cancellations, which could adversely impact our business.
Changes in U.S. Postal rates or operations could adversely impact our operating results and member
satisfaction.
We rely exclusively on the U.S. Postal Service to deliver DVDs from our shipping centers and to return
DVDs to us from our members. Increases in postage delivery rates, including those resulting from changes to
policies on the requirements of first class mail such as size, weight or machinability, could adversely affect our
Domestic DVD segment’s contribution profit. If the U.S. Postal Service were to implement other changes to
improve its financial position, such as closing mail processing facilities or service reductions, such changes could
lead to a decrease in customer satisfaction and our Domestic DVD segment’s contribution profit could be
adversely affected.
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