Netflix (NFLX)

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and distribution centers throughout the U.S. with original lease periods expiring through 2016. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and distribution centers throughout the U.S. with original lease periods expiring through 2013. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease.

In June 2004, we entered into a seven year lease arrangement for our headquarters in Los Gatos, California. In March 2006, we exercised our option to lease over five years an adjacent building. The buildings were completed in the first quarter of 2006 and 2008, respectively, and each building comprises approximately 80,000 square feet of office space. The terms of the lease agreements required our involvement in the construction of certain elements of the buildings. Upon commencement of the lease, we accounted for both of these arrangements as operating leases, whereby the total minimum lease payment obligations under the leases were recognized as monthly rent expense on a straight-line basis over the term of the lease. In June 2008, we concluded that GAAP requires these leases to be treated as financing obligations, and accordingly have corrected our historical accounting. As we are deemed to be the owner (for accounting purposes only) of the buildings subject to the leases during the construction period, we have recorded an asset as well as a corresponding liability for the costs paid by the lessor to construct these buildings. The corrections were deemed immaterial to our financial statements and did not affect the total cash payments we have made or our payment obligations under the lease agreements. See Note 2 to the condensed consolidated financial statements for further discussion.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and distribution centers throughout the U.S. with original lease periods expiring through 2013. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease.

In June 2004, we entered into a seven year lease arrangement for our headquarters in Los Gatos, California. In March 2006, we exercised our option to lease over five years an adjacent building. The buildings were completed in the first quarter of 2006 and 2008, respectively, and each building comprises approximately 80,000 square feet of office space. The terms of the lease agreements required our involvement in the construction of certain elements of the buildings. Upon commencement of the lease, we accounted for both of these arrangements as operating leases, whereby the total minimum lease payment obligations under the leases were recognized as monthly rent expense on a straight-line basis over the term of the lease. In June 2008, we concluded that GAAP requires these leases to be treated as financing obligations, and accordingly have corrected our historical accounting. As we are deemed to be the owner (for accounting purposes only) of the buildings subject to the leases during the construction period, we have recorded an asset as well as a corresponding liability for the costs paid by the lessor to construct these buildings. The corrections were deemed immaterial to our financial statements and did not affect the total cash payments we have made or our payment obligations under the lease agreements. See Note 2 to the condensed consolidated financial statements for further discussion.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and distribution centers throughout the U.S. with original lease periods expiring through 2013. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California. The building was completed in the first quarter of 2008 and comprises approximately 80,000 square feet of office space. The lease has an initial term of five years.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2013. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease at the commencement of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California for our occupancy following its construction. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years. The building is expected to be completed in the first quarter of 2008.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2013. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California for our occupancy following its construction. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years. The building is expected to be completed in the first quarter of 2008.

Operating Leases

We have entered into various non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2013. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years. The building is expected to be completed in the first quarter of 2008.

Operating Leases

We have entered into various other non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2012. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years. Under the terms of the lease agreement, we are obligated to make payments of $6 million toward the construction costs of the building in six monthly installments of $1 million each beginning October 2006. The building is expected to be completed in the first quarter of 2008.

Operating Leases

We have entered into various other non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2012. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters in Los Gatos, California. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years. Under the terms of the lease agreement, we are obligated to make payments of $6 million toward the construction costs of the building in six monthly installments of $1 million each beginning October 2006. The building is expected to be completed in the first quarter of 2008.

Operating Leases

We have entered into various other non-cancelable operating lease agreements for our offices and our distribution centers throughout the U.S. with original lease periods expiring through 2012. We recognize rent expense on our operating leases on a straight-line basis at the commencement of the lease. Certain of these leases have free or escalating rent payment provisions. We recognize rent expense under such leases on a straight-line basis over the term of the lease.

In March 2006, we exercised our option to lease a building adjacent to our headquarters Los Gatos, California. The building will comprise approximately 80,000 square feet of office space and have an initial term of 5 years.