NetFlix 2005 Annual Report Download - page 68

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NETFLIX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2003 2004 2005
Cash flows from operating activities:
Net income .................................................... $ 6,512 $ 21,595 $ 42,027
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation of property and equipment ......................... 4,720 5,871 9,134
Amortization of DVD library .................................. 43,125 80,346 96,883
Amortization of intangible assets ............................... 3,146 1,987 985
Stock-based compensation expense ............................. 10,719 16,587 14,327
Stock option income tax benefits ............................... — 176 —
Loss on disposal of property and equipment ...................... — 135 —
Loss on disposal of short-term investments ....................... — 274 —
Gain on disposal of DVDs .................................... (1,604) (2,912) (3,588)
Non-cash interest expense .................................... 103 44 11
Deferred taxes ............................................. — — (34,905)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets ...................... (290) (9,130) (4,884)
Accounts payable ......................................... 12,304 17,121 13,716
Accrued expenses ......................................... 2,523 1,506 12,432
Deferred revenue ......................................... 8,581 13,612 16,597
Deferred rent ............................................ (47) 359 242
Net cash provided by operating activities .................... 89,792 147,571 162,977
Cash flows from investing activities:
Purchases of short-term investments ................................ (1,679) (586) —
Proceeds from sale of short-term investments ......................... — 45,013 —
Purchases of property and equipment ............................... (8,872) (14,962) (30,619)
Acquisition of intangible asset ..................................... — — (481)
Acquisitions of DVD library ...................................... (55,620) (102,971) (113,950)
Proceeds from sale of DVDs ...................................... 1,833 5,617 5,781
Deposits and other assets ......................................... (339) (492) 551
Net cash used in investing activities ........................ (64,677) (68,381) (138,718)
Cash flows from financing activities:
Proceeds from issuance of common stock ............................ 6,299 6,035 13,393
Principal payments on notes payable and capital lease obligations ......... (1,334) (436) (79)
Net cash provided by financing activities .................... 4,965 5,599 13,314
Effect of exchange rate changes on cash and cash equivalents ............ — (222) 222
Net increase in cash and cash equivalents ............................ 30,080 84,567 37,795
Cash and cash equivalents, beginning of period ....................... 59,814 89,894 174,461
Cash and cash equivalents, end of period ............................ $89,894 $ 174,461 $ 212,256
Supplemental disclosure:
Cash paid for interest ............................................ $ 312 $ 109 $ 170
Income taxes paid ............................................... — — (977)
Non-cash investing and financing activities:
Net unrealized loss on short term investments ..................... (178) (870) —
See accompanying notes to consolidated financial statements.
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