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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number: 001-35727
Netflix, Inc.
(Exact name of Registrant as specified in its charter)
Delaware77-0467272
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
100 Winchester Circle,Los Gatos,California95032
(Address of principal executive offices)(Zip Code)
(408) 540-3700
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.001 per shareNFLXNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No     
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  
As of June 30, 2021, there were 442,595,888 shares of the registrant’s common stock, par value $0.001, outstanding.



Table of Contents
 
Page
Part I. Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II. Other Information
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents

NETFLIX, INC.
Consolidated Statements of Operations
(unaudited)
(in thousands, except per share data)

Three Months EndedSix Months Ended
June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
Revenues
$7,341,777 $6,148,286 $14,505,059 $11,915,977 
Cost of revenues
4,018,008 3,643,707 7,886,519 7,243,408 
Marketing
603,973 434,370 1,116,485 938,200 
Technology and development
537,321 435,045 1,062,528 888,862 
General and administrative
334,845 277,236 632,041 529,323 
Operating income
1,847,630 1,357,928 3,807,486 2,316,184 
Other income (expense):
Interest expense
(191,322)(189,151)(385,762)(373,234)
Interest and other income (expense)
(62,519)(133,175)206,567 (111,478)
Income before income taxes
1,593,789 1,035,602 3,628,291 1,831,472 
Provision for income taxes(240,776)(315,406)(568,563)(402,209)
Net income
$1,353,013 $720,196 $3,059,728 $1,429,263 
Earnings per share:
Basic
$3.05 $1.63 $6.90 $3.25 
Diluted
$2.97 $1.59 $6.72 $3.15 
Weighted-average shares of common stock outstanding:
Basic
443,159 440,569 443,192 439,961 
Diluted
455,129 453,945 455,385 453,220 










See accompanying notes to the consolidated financial statements.
3

Table of Contents
NETFLIX, INC.
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
Three Months EndedSix Months Ended
June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
Net income$1,353,013 $720,196 $3,059,728 $1,429,263 
Other comprehensive income (loss):
Foreign currency translation adjustments
5,638 12,982 (34,623)(10,551)
Comprehensive income$1,358,651 $733,178 $3,025,105 $1,418,712 
























See accompanying notes to the consolidated financial statements.
4

Table of Contents
NETFLIX, INC.

Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
   
Three Months EndedSix Months Ended
   
June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
Cash flows from operating activities:
Net income$1,353,013 $720,196 $3,059,728 $1,429,263 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Additions to content assets(4,096,750)(2,510,782)(7,381,326)(5,805,057)
Change in content liabilities(312,208)(108,432)(578,248)150,513 
Amortization of content assets2,806,803 2,607,159 5,525,999 5,090,544 
Depreciation and amortization of property, equipment and intangibles38,434 26,661 74,175 55,178 
Stock-based compensation expense101,583 104,210 208,813 201,229 
Foreign currency remeasurement loss (gain) on debt63,074 119,161 (190,256)26,101 
Other non-cash items108,103 70,301 180,760 135,749 
Deferred income taxes51,127 223,308 210,860 269,927 
Changes in operating assets and liabilities:
Other current assets(52,373)3,066 (273,928)(124,287)
Accounts payable72,313 (112,027)(65,000)(261,180)
Accrued expenses and other liabilities(171,430)(105,450)6,467 108,741 
Deferred revenue47,093 42,508 69,372 104,516 
Other non-current assets and liabilities(72,543)(38,803)(133,911)(80,249)
Net cash provided by (used in) operating activities(63,761)1,041,076 713,505 1,300,988 
Cash flows from investing activities:
Purchases of property and equipment(110,278)(141,741)(191,279)(239,756)
Change in other assets(1,000)(260)(5,615)(548)
Net cash used in investing activities(111,278)(142,001)(196,894)(240,304)
Cash flows from financing activities:
Proceeds from issuance of debt 1,009,464  1,009,464 
Debt issuance costs (7,559) (7,559)
Repayments of debt  (500,000) 
Proceeds from issuance of common stock19,749 89,060 67,820 132,754 
Repurchases of common stock(500,022) (500,022) 
Net cash provided by (used in) financing activities(480,273)1,090,965 (932,202)1,134,659 
Effect of exchange rate changes on cash, cash equivalents and restricted cash 23,477 11,819 (18,661)(59,083)
Net increase (decrease) in cash, cash equivalents and restricted cash(631,835)2,001,859 (434,252)2,136,260 
Cash, cash equivalents and restricted cash at beginning of period 8,436,453 5,178,187 8,238,870 5,043,786 
Cash, cash equivalents and restricted cash at end of period $7,804,618 $7,180,046 $7,804,618 $7,180,046 
See accompanying notes to the consolidated financial statements.
5

Table of Contents
NETFLIX, INC.
Consolidated Balance Sheets
(in thousands, except share and par value data)

As of
   
June 30,
2021
December 31,
2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$7,777,530 $8,205,550 
Other current assets
1,826,746 1,556,030 
Total current assets
9,604,276 9,761,580 
Content assets, net
27,291,640 25,383,950 
Property and equipment, net
1,107,437 960,183 
Other non-current assets
2,967,616 3,174,646 
Total assets
$40,970,969 $39,280,359 
Liabilities and Stockholders’ Equity
Current liabilities:
Current content liabilities
$4,197,874 $4,429,536 
Accounts payable
622,931 656,183 
Accrued expenses and other liabilities
1,125,591 1,102,196 
Deferred revenue
1,187,364 1,117,992 
Short-term debt
699,128 499,878 
Total current liabilities
7,832,888 7,805,785 
Non-current content liabilities
2,265,286 2,618,084 
Long-term debt
14,926,889 15,809,095 
Other non-current liabilities
2,082,035 1,982,155 
Total liabilities
27,107,098 28,215,119 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Common stock, $0.001 par value; 4,990,000,000 shares authorized at June 30, 2021 and December 31, 2020; 442,595,888 and 442,895,261 issued and outstanding at June 30, 2021 and December 31, 2020, respectively
3,721,246 3,447,698 
Treasury stock at cost (1,001,565 shares at June 30, 2021)
(500,022) 
Accumulated other comprehensive income9,775 44,398 
Retained earnings
10,632,872 7,573,144 
Total stockholders’ equity
13,863,871 11,065,240 
Total liabilities and stockholders’ equity
$40,970,969 $39,280,359 




See accompanying notes to the consolidated financial statements.
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NETFLIX, INC.
Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands)
Three Months EndedSix Months Ended
 June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
Total stockholders' equity, beginning balances$12,884,080 $8,409,294 $11,065,240 $7,582,157 
Common stock and additional paid-in capital:
Beginning balances
$3,600,084 $2,935,532 $3,447,698 $2,793,929 
Issuance of common stock upon exercise of options
19,579 88,071 64,735 132,655 
Stock-based compensation expense101,583 104,210 208,813 201,229 
Ending balances$3,721,246 $3,127,813 $3,721,246 $3,127,813 
Treasury stock:
Beginning balances
$ $ $ $ 
Repurchases of common stock to be held as treasury stock(500,022) (500,022) 
Ending balances$(500,022)$ $(500,022)$ 
Accumulated other comprehensive income (loss):
Beginning balances
$4,137 $(47,054)$44,398 $(23,521)
Other comprehensive income (loss)5,638 12,982 (34,623)(10,551)
Ending balances$9,775 $(34,072)$9,775 $(34,072)
Retained earnings:
Beginning balances$9,279,859 $5,520,816 $7,573,144 $4,811,749 
Net income
1,353,013 720,196 3,059,728 1,429,263 
Ending balances$10,632,872 $6,241,012 $10,632,872 $6,241,012 
Total stockholders' equity, ending balances
$13,863,871 $9,334,753 $13,863,871 $9,334,753 





















See accompanying notes to the consolidated financial statements.
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NETFLIX, INC.
Notes to Consolidated Financial Statements
(unaudited)

1. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying interim consolidated financial statements of Netflix, Inc. and its wholly owned subsidiaries (the “Company”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S.”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on January 28, 2021. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant items subject to such estimates and assumptions include the content asset amortization policy and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.
The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Interim results are not necessarily indicative of the results for a full year.
There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Recently adopted accounting pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). ASU 2019-12 removes certain exceptions for performing intraperiod tax allocations, recognizing deferred taxes for investments, and calculating income taxes in interim periods. The guidance also simplifies the accounting for franchise taxes, transactions that result in a step-up in the tax basis of goodwill, and the effect of enacted changes in tax laws or rates in interim periods. The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption had no material impact to the Company’s consolidated financial statements.


2. Revenue Recognition
The Company's primary source of revenues is from monthly membership fees. Members are billed in advance of the start of their monthly membership and revenues are recognized ratably over each monthly membership period. Revenues are presented net of the taxes that are collected from members and remitted to governmental authorities. The Company is the principal in all its relationships where partners, including consumer electronics (“CE”) manufacturers, multichannel video programming distributors (“MVPDs”), mobile operators and internet service providers (“ISPs”), provide access to the service as the Company retains control over service delivery to its members. Typically, payments made to the partners, such as for marketing, are expensed. However, if there is no distinct service provided in exchange for the payments made to the partners or if the price that the member pays is established by the partners and there is no standalone price for the Netflix service (for instance, in a bundle), these payments are recognized as a reduction of revenues.
The following tables summarize streaming revenue, paid net membership additions (losses), and paid memberships at end of period by region for the three and six months ended June 30, 2021 and June 30, 2020, respectively:

United States and Canada (UCAN)
As of/ Three Months EndedAs of/ Six Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
 (in thousands)
Revenues$3,234,643 $2,839,670 $6,405,615 $5,542,446 
Paid net membership additions (losses)(433)2,935 15 5,242 
Paid memberships at end of period (1)73,951 72,904 73,951 72,904 


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Europe, Middle East, and Africa (EMEA)
As of/ Three Months EndedAs of/ Six Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
 (in thousands)
Revenues$2,400,480 $1,892,537 $4,744,154 $3,616,011 
Paid net membership additions188 2,749 1,998 9,705 
Paid memberships at end of period (1)68,696 61,483 68,696 61,483 

Latin America (LATAM)
As of/ Three Months EndedAs of/ Six Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
 (in thousands)
Revenues$860,882 $785,368 $1,697,529 $1,578,821 
Paid net membership additions764 1,750 1,121 4,651 
Paid memberships at end of period (1)38,658 36,068 38,658 36,068 

Asia-Pacific (APAC)
As of/ Three Months EndedAs of/ Six Months Ended
 June 30, 2021June 30, 2020June 30, 2021June 30, 2020
 (in thousands)
Revenues$799,480 $569,140 $1,561,894 $1,052,800 
Paid net membership additions1,022 2,657 2,383 6,259 
Paid memberships at end of period (1)27,875 22,492 27,875 22,492 
(1) A paid membership (also referred to as a paid subscription) is defined as a membership that has the right to receive Netflix service following sign-up and a method of payment being provided, and that is not part of a free trial or certain other promotions that may be offered by the Company to new or rejoining members. A membership is canceled and ceases to be reflected in the above metrics as of the effective cancellation date. Voluntary cancellations generally become effective at the end of the prepaid membership period. Involuntary cancellations, as a result of a failed method of payment, become effective immediately. Memberships are assigned to territories based on the geographic location used at time of sign-up as determined by the Company’s internal systems, which utilize industry standard geo-location technology.
Total U.S. revenues, inclusive of DVD revenues not reported in the tables above, were $3.0 billion and $6.0 billion, respectively, for the three and six months ended June 30, 2021, and $2.7 billion and $5.2 billion, respectively, for the three and six months ended June 30, 2020. DVD revenues were $46 million and $96 million, respectively, for the three and six months ended June 30, 2021 and $62 million and $126 million, respectively, for the three and six months ended June 30, 2020.
Deferred revenue consists of membership fees billed that have not been recognized, as well as gift cards and other prepaid memberships that have not been fully redeemed. As of June 30, 2021, total deferred revenue was $1,187 million, the vast majority of which was related to membership fees billed that are expected to be recognized as revenue within the next month. The remaining deferred revenue balance, which is related to gift cards and other prepaid memberships, will be recognized as revenue over the period of service after redemption, which is expected to occur over the next 12 months. The $69 million increase in deferred revenue as compared to the balance of $1,118 million for the year ended December 31, 2020 is a result of the increase in membership fees billed due to increased members and average monthly revenue per paying member.

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3. Earnings Per Share

Basic earnings per share is computed using the weighted-average number of outstanding shares of common stock during the period. Diluted earnings per share is computed using the weighted-average number of outstanding shares of common stock and, when dilutive, potential outstanding shares of common stock during the period. Potential shares of common stock consist of incremental shares issuable upon the assumed exercise of stock options. The computation of earnings per share is as follows:
Three Months EndedSix Months Ended
June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
(in thousands, except per share data)
Basic earnings per share:
Net income
$1,353,013 $720,196 $3,059,728 $1,429,263 
Shares used in computation:
Weighted-average shares of common stock outstanding443,159 440,569 443,192 439,961 
Basic earnings per share$3.05 $1.63 $6.90 $3.25 
Diluted earnings per share:
Net income
$1,353,013 $720,196 $3,059,728 $1,429,263 
Shares used in computation:
Weighted-average shares of common stock outstanding443,159 440,569 443,192 439,961 
Employee stock options11,970 13,376 12,193 13,259 
Weighted-average number of shares
455,129 453,945 455,385 453,220 
Diluted earnings per share$2.97 $1.59 $6.72 $3.15 

Employee stock options with exercise prices greater than the average market price of the common stock were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The following table summarizes the potential shares of common stock excluded from the diluted calculation:
Three Months EndedSix Months Ended
June 30,
2021
June 30,
2020
June 30,
2021
June 30,
2020
(in thousands)
Employee stock options788 39 523 777 
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4. Cash, Cash Equivalents and Restricted Cash

The following tables summarize the Company's cash, cash equivalents, and restricted cash as of June 30, 2021 and December 31, 2020:

 As of June 30, 2021
 Cash and cash equivalentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$4,062,961 $2,689 $24,253 $4,089,903 
Level 1 securities:
Money market funds3,414,146  146 3,414,292 
Level 2 securities:
Foreign Time Deposits300,423   300,423 
$7,777,530 $2,689 $24,399 $7,804,618 

 As of December 31, 2020
 Cash and cash equivalentsOther Current AssetsNon-current AssetsTotal
 (in thousands)
Cash$3,331,860 $1,783 $31,284 $3,364,927 
Level 1 securities:
Money market funds4,573,690  253 4,573,943 
Level 2 securities:
Foreign Time Deposits300,000   300,000 
$8,205,550 $1,783 $31,537 $8,238,870 
Other current assets include restricted cash for deposits related to self insurance. Non-current assets include restricted cash related to letter of credit agreements. The fair value of cash equivalents included in the Level 2 category is based on observable inputs, such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly.
See Note 6 Debt to the consolidated financial statements for further information regarding the fair value of the Company’s senior notes.
There were no material gross realized gains or losses in the three and six months ended June 30, 2021 and 2020, respectively.

11


5. Balance Sheet Components

Content Assets, Net
Content assets consisted of the following:
As of
June 30,
2021
December 31,
2020
(in thousands)
Licensed content, net
$13,111,259 $13,747,607 
Produced content, net
Released, less amortization
5,847,391 5,809,681 
In production
7,348,810 4,827,455 
In development and pre-production
984,180 999,207 
14,180,381 11,636,343 

Content assets, net
$27,291,640 $25,383,950 

As of June 30, 2021, approximately $5,692 million, $3,209 million, and $1,904 million of the $13,111 million unamortized cost of the licensed content is expected to be amortized in each of the next three years.  As of June 30, 2021, approximately $2,233 million, $1,684 million, and $1,026 million of the $5,847 million unamortized cost of the produced content that has been released is expected to be amortized in each of the next three years.
As of June 30, 2021, the amount of accrued participations and residuals was not material.
The following tables represent the amortization of content assets:
Three Months Ended
 June 30,
2021
June 30,
2020
(in thousands)
Licensed content$1,884,638 $1,883,070 
Produced content922,165 724,089 
Total$2,806,803 $2,607,159 

Six Months Ended
 June 30,
2021
June 30,
2020
(in thousands)
Licensed content$3,713,884 $3,743,240 
Produced content1,812,115 1,347,304 
Total$5,525,999 $5,090,544 

12


Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
As of
June 30,
2021
December 31,
2020
Estimated Useful Lives
(in thousands)
Land
$56,066 $50,700 
Buildings
48,007 42,717 30 years
Leasehold improvements
599,574 524,537 Over life of lease
Furniture and fixtures
115,829 110,185 
3 years
Information technology
323,771 283,014 3 years
Corporate aircraft
110,864 110,629 8 years
Machinery and equipment
32,732 34,633 
3-5 years
Capital work-in-progress
373,559 298,558 
Property and equipment, gross
1,660,402 1,454,973 
Less: Accumulated depreciation
(552,965)(494,790)
Property and equipment, net
$1,107,437 $960,183 


Leases
The Company has entered into operating leases primarily for real estate. Operating leases are included in "Other non-current assets" on the Company's Consolidated Balance Sheets, and represent the Company’s right to use the underlying asset for the lease term. The Company’s obligations to make lease payments are included in "Accrued expenses and other liabilities" and "Other non-current liabilities" on the Company's Consolidated Balance Sheets. The Company has entered into various short-term operating leases, primarily for marketing billboards, with an initial term of twelve months or less. These leases are not recorded on the Company's Consolidated Balance Sheets. All operating lease expense is recognized on a straight-line basis over the lease term. Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments.
Information related to the Company's operating right-of-use assets and related operating lease liabilities were as follows:
Three Months Ended
June 30,
2021
June 30,
2020
(in thousands)
Cash paid for operating lease liabilities$79,472 $59,473 
Right-of-use assets obtained in exchange for new operating lease obligations183,351 364,606 
Six Months Ended
June 30,
2021
June 30,
2020
(in thousands)
Cash paid for operating lease liabilities$161,911 $116,963 
Right-of-use assets obtained in exchange for new operating lease obligations232,796 416,430 
As of
June 30,
2021
December 31,
2020
(in thousands)
Operating lease right-of-use assets, net$2,102,676 $2,037,726 
Current operating lease liabilities275,040 256,222 
Non-current operating lease liabilities2,042,067 1,945,631 
Total operating lease liabilities$2,317,107 $2,201,853 
13



Other Current Assets
Other current assets consisted of the following:
As of
June 30,
2021
December 31,
2020
(in thousands)
Trade receivables
$775,222 $610,819 
Prepaid expenses
294,837 203,042 
Other
756,687 742,169 
Total other current assets
$1,826,746 $1,556,030 


6. Debt
As of June 30, 2021, the Company had aggregate outstanding notes of $15,626 million, net of $99 million of issuance costs, with varying maturities (the "Notes"). Of the outstanding balance, $699 million, net of issuance costs, is classified as short-term debt on the Consolidated Balance Sheets. As of December 31, 2020, the Company had aggregate outstanding notes of $16,309 million, net of $107 million of issuance costs. Each of the Notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at fixed rates. A portion of the outstanding Notes is denominated in foreign currency (comprised of €5,170 million) and is remeasured into U.S. dollars at each balance sheet date (with remeasurement loss totaling $63 million for the three months ended June 30, 2021 and remeasurement gain totaling $190 million for the six months ended June 30, 2021).
The following table provides a summary of the Company's outstanding debt and the fair values based on quoted market prices in less active markets as of June 30, 2021 and December 31, 2020:
Principal Amount at ParLevel 2 Fair Value as of
June 30,
2021
December 31,
2020
Issuance DateMaturityJune 30,
2021
December 31,
2020
(in millions)(in millions)
5.375% Senior Notes
$ $500 February 2013February 2021$ $502 
5.500% Senior Notes
700 700 February 2015February 2022721 735 
5.750% Senior Notes
400 400 February 2014March 2024449 449 
5.875% Senior Notes
800 800 February 2015February 2025926 921 
3.000% Senior Notes (1)
557 574 April 2020June 2025607 616 
3.625% Senior Notes
500 500 April 2020June 2025539 535 
4.375% Senior Notes
1,000 1,000 October 2016November 20261,138 1,110 
3.625% Senior Notes (1)
1,540 1,588 May 2017May 20271,774 1,776 
4.875% Senior Notes
1,600 1,600 October 2017April 20281,861 1,807 
5.875% Senior Notes
1,900 1,900 April 2018November 20282,336 2,280 
4.625% Senior Notes (1)
1,303 1,344 October 2018May 20291,631 1,630 
6.375% Senior Notes
800 800 October 2018May 20291,022 995 
3.875% Senior Notes (1)
1,422 1,466 April 2019November 20291,715 1,700 
5.375% Senior Notes
900 900 April 2019November 20291,095 1,061 
3.625% Senior Notes (1)
1,303 1,344 October 2019June 20301,553 1,533 
4.875% Senior Notes
1,000 1,000 October 2019June 20301,190 1,155 
$15,725 $16,416 $18,557 $18,805 
(1) The following Senior Notes have a principal amount denominated in euro: 3.000% Senior Notes for €470 million, 3.625% Senior Notes for €1,300 million, 4.625% Senior Notes for €1,100 million, 3.875% Senior Notes for €1,200 million, and 3.625% Senior Notes for €1,100 million.
In February 2021, the Company repaid upon maturity the $500 million aggregate principal amount of its 5.375% Senior Notes due February 2021.
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The expected timing of principal and interest payments for the Company’s outstanding Notes are as follows:
As of 
June 30,
2021
December 31,
2020
(in thousands)
Less than one year
$1,436,861 $1,264,020 
Due after one year and through three years
1,809,556 2,136,997 
Due after three years and through five years
3,130,845 3,614,906 
Due after five years
14,345,884 14,841,164 
Total debt obligations
$20,723,146 $21,857,087 

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 June 30, 2021 and December 31, 2020, the Company was in compliance with all related covenants.
Revolving Credit Facility
On June 17, 2021, the Company amended its unsecured revolving credit facility ("Revolving Credit Agreement") to, among other things, extend the maturity date from March 29, 2024 to June 17, 2026 and to increase the size of the facility from $750 million to $1 billion. Revolving loans may be borrowed, repaid and reborrowed until June 17, 2026, at which time all amounts borrowed must be repaid. The Company may use the proceeds of future borrowings under the Revolving Credit Agreement for working capital and general corporate purposes. As of June 30, 2021, no amounts have been borrowed under the Revolving Credit Agreement.
The borrowings under the Revolving Credit Agreement bear interest, at the Company’s option, of either (i) a floating rate equal to a base rate (the “Alternate Base Rate”) or (ii) a rate equal to an adjusted London interbank offered rate (the “Adjusted LIBO Rate”), plus a margin of 0.75%. The Alternate Base Rate is defined as the greatest of (A) the rate of interest published by the Wall Street Journal, from time to time, as the prime rate, (B) the federal funds rate, plus 0.500% and (C) the Adjusted LIBO Rate for a one-month interest period, plus 1.00%. The Adjusted LIBO Rate is defined as the London interbank offered rate for deposits in U.S. dollars, for the relevant interest period, adjusted for statutory reserve requirements, but in no event shall the Adjusted LIBO Rate be less than 0.00% per annum. Regulatory authorities that oversee financial markets have announced that after the end of 2021, they would no longer compel banks currently reporting information used to set the Adjusted LIBO Rate to continue to make rate submissions, and that publication of the Adjusted LIBO Rate based upon U.S. Dollars is expected to cease on June 30, 2023. The Revolving Credit Agreement contains customary provisions for the replacement of the Adjusted LIBO Rate with an alternate benchmark rate, including a rate based on the secured overnight financing rate published by the Federal Reserve Bank of New York, as the Adjusted LIBO Rate is phased out in the lending market. The Company does not anticipate that the replacement of the Adjusted LIBO Rate with such alternative benchmark rate, as provided in the Revolving Credit Agreement, will materially impact its liquidity or financial position.
The Company is also obligated to pay a commitment fee on the undrawn amounts of the Revolving Credit Agreement at an annual rate of 0.10%. The Revolving Credit Agreement requires the Company to comply with certain covenants, including covenants that limit or restrict the ability of the Company’s subsidiaries to incur debt and limit or restrict the ability of the Company and its subsidiaries to grant liens and enter into sale and leaseback transactions; and, in the case of the Company or a guarantor, merge, consolidate, liquidate, dissolve or sell, transfer, lease or otherwise dispose of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole. As of June 30, 2021 and December 31, 2020, the Company was in compliance with all related covenants.


7. Commitments and Contingencies

Content
As of June 30, 2021, the Company had $21.9 billion of obligations comprised of $4.2 billion included in "Current content liabilities" and $2.3 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $15.4 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.
As of December 31, 2020, the Company had $19.2 billion of obligations comprised of $4.4 billion included in "Current content liabilities" and $2.6 billion of "Non-current content liabilities" on the Consolidated Balance Sheets and $12.2 billion of obligations that are not reflected on the Consolidated Balance Sheets as they did not yet meet the criteria for asset recognition.
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The expected timing of payments for these content obligations is as follows:
As of 
June 30,
2021
December 31,
2020
(in thousands)
Less than one year
$9,885,589 $8,980,868 
Due after one year and through three years
8,548,463 7,819,563 
Due after three years and through five years
2,688,616 1,973,091 
Due after five years
740,476 445,308 
Total content obligations
$21,863,144 $19,218,830 
Content obligations include amounts related to the acquisition, licensing and production of content. Obligations that are in non-U.S. dollar currencies are translated to the U.S. dollar at period end rates. An obligation for the production of content includes non-cancelable commitments under creative talent and employment agreements as well as other production related commitments. An obligation for the acquisition and licensing of content is incurred at the time the Company enters into an agreement to obtain future titles. Once a title becomes available, a content liability is recorded on the Consolidated Balance Sheets. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. Traditional film output deals, or certain TV series license agreements where the number of seasons to be aired is unknown, are examples of such license agreements. The Company does not include any estimated obligation for these future titles beyond the known minimum amount. However, the unknown obligations are expected to be significant.
Legal Proceedings
From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims, including claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company's view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial position, liquidity or results of operations.
The Company is involved in litigation matters not listed herein but does not consider the matters to be material either individually or in the aggregate at this time. The Company's view of the matters not listed may change in the future as the litigation and events related thereto unfold.
Indemnification
In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company’s breach of such agreements and out of intellectual property infringement claims made by third parties. In these circumstances, payment may be conditional on the other party making a claim pursuant to the procedures specified in the particular contract.
The Company's obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary.
It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.


8. Stockholders’ Equity
Stock Option Plan
In June 2020, the Company's stockholders approved the 2020 Stock Plan, which was adopted by the Company’s Board of Directors in March 2020 subject to stockholder approval. The 2020 Stock Plan is the successor to the 2011 Stock Plan and provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants.
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Table of Contents
A summary of the activities related to the Company’s stock option plans is as follows:
Options Outstanding
Shares
Available
for Grant
Number of
Shares
Weighted-
Average
Exercise Price
(per share)
Balances as of December 31, 202021,702,085 18,676,810 $