NetFlix 2015 Annual Report Download - page 61

Each of the 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 Notes prior to maturity in whole or in part at an amount equal to the principal amount thereof
plus accrued and unpaid interest and an applicable premium. The 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 certain 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. As of December 31, 2015 and December 31, 2014, the Company
was in compliance with all related covenants.
In November 2011, the Company issued $200.0 million aggregate principal amount of zero coupon senior
convertible notes due on December 1, 2018 (the “Convertible Notes”) in a private placement offering to TCV
VII, L.P., TCV VII(A), L.P., and TCV Member Fund, L.P. A general partner of these funds also serves on the
Company’s Board of Directors, and as such, the issuance of the notes is considered a related party transaction. In
April 2013, the Company elected to cause the conversion of all outstanding Convertible Notes in accordance with
the terms of the Indenture governing such notes. Pursuant to this conversion, the Company issued 16.3 million
shares of common stock to the holders of the Convertible Notes at a conversion ratio of 81.5871 , as adjusted for
the Stock Split. The fair market value of one share of common stock on the date of conversion was $31.00 per
share, as adjusted for the Stock Split.
In November 2009, the Company issued $200.0 million aggregate principal amount of 8.50% senior notes
due November 15, 2017 (the “8.50% Notes”). Interest was payable semi-annually at a rate of 8.50% per annum
on May 15 and November 15 of each year. In the first quarter of 2013, the Company redeemed 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.
6. Commitments and Contingencies
Streaming Content
At December 31, 2015, the Company had $10.9 billion of obligations comprised of $2.8 billion included in
“Current content liabilities” and $2.0 billion of “Non-current content liabilities” on the Consolidated Balance
Sheets and $6.1 billion of obligations that are not reflected on the Consolidated Balance Sheets as they do not yet
meet the criteria for asset recognition.
At December 31, 2014, the Company had $9.5 billion of obligations comprised of $2.1 billion included in
“Current content liabilities” and $1.6 billion of “Non-current content liabilities” on the Consolidated Balance
Sheets and $5.8 billion of obligations that are not reflected on the Consolidated Balance Sheets as they do not yet
meet the criteria for asset recognition.
The expected timing of payments for these streaming content obligations is as follows:
As of December 31,
2015 2014
(in thousands)
Less than one year ................................... $ 4,703,172 $3,747,648
Due after one year and through 3 years ................... 5,249,147 4,495,103
Due after 3 years and through 5 years .................... 891,864 1,164,308
Due after 5 years .................................... 58,048 44,053
Total streaming content obligations ..................... $10,902,231 $9,451,112
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