This excerpt taken from the NFLX 10-K filed Mar 16, 2006.
The Company is an online movie rental subscription service and substantially all of its revenues are derived from monthly subscription fees. In the third quarter of 2004, the Company prepared to launch its online movie subscription service in the United Kingdom. However, in October 2004, the Company announced its withdrawal from the United Kingdom so that it could focus on defending its market leadership position in the United States.
As a result of the measures it undertook to prepare for the launch of its online subscription service in the United Kingdom, the Company reorganized its business in the third quarter of 2004 into two geographical segments: United States and International. In the fourth quarter of 2004, due to the Companys decision to focus its resources on defending its market leadership position in the United States and to postpone its expansion into the United Kingdom market, the Company reverted to having a single operating segment. Accordingly, as of December 31, 2004 and 2005, the Company was organized in a single operating segment for purposes of making operating decisions and assessing performance in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. As a result, the net loss of $4,626 incurred in its International segment in 2004 is included within the operating results of the United States segment for 2004. The Companys Chief Executive Officer, who is the chief operating decision maker as defined in SFAS No. 131, evaluates performance, makes operating decisions and allocates resources based on financial data consistent with the presentation in the accompanying financial statements.
In conjunction with the closure of its operations in the United Kingdom, the Company incurred charges of approximately $857 in 2004 related to the severance and benefits for the termination of employees and estimated future obligations for non-cancelable lease payments for its facilities in the United Kingdom. The expenses associated with the closure were included in fulfillment, marketing and general and administrative expenses in the Consolidated Statements of Income for 2004. As of December 31, 2004, the remaining obligations of $366
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(in thousands, except share, per share and percentages)
were reflected in accrued expenses in the Consolidated Balance Sheet. There were no remaining obligations at December 31, 2005.