NetFlix 2006 Annual Report Download - page 69

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(in thousands, except share and per share data and percentages)
4. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following:
As of December 31,
2005 2006
Computer equipment ............................ 3years $ 22,549 $ 28,237
Other equipment ............................... 3-5years 19,641 25,000
Computer software, including internal-use software . . . 1-3 years 13,061 16,883
Furniture and fixtures ........................... 3years 1,240 4,855
Leasehold improvements ................. Overlife of lease 2,866 14,389
Capital work-in-progress .................................. 13,266 11,482
Property and equipment, gross .............................. 72,623 100,846
Less: accumulated depreciation ............................. (32,410) (45,343)
Property and equipment, net ............................... $40,213 $ 55,503
Capital work-in-progress consists primarily of approximately $7,787 of capital equipment purchases not yet
in service and approximately $3,276 of leasehold improvements associated with the leasing of the building
adjacent to the Company’s headquarters in Los Gatos, California. The building is expected to be completed in the
first quarter of 2008, at which time the Company will commence amortization of the related leasehold
improvements. The leasehold improvements will be amortized over the shorter of the lease term or the estimated
useful life of the related assets.
Property and equipment included approximately $6,173 of assets under capital leases as of December 31,
2005. These capital leases were fully amortized as of December 31, 2005. The related amortization is included in
depreciation expense.
Computer software included approximately $8,054 and $10,595 of internally incurred capitalized software
development costs as of December 31, 2005 and 2006, respectively. Accumulated amortization of capitalized
software development costs totaled $6,959 and $8,885 as of December 31, 2005 and 2006, respectively.
Accrued Expenses
Accrued expenses consisted of the following:
As of December 31,
2005 2006
Accrued state sales and use tax ............................... $ 6,656 $ 9,019
Accrued payroll and employee benefits ........................ 3,513 5,080
Accrued settlement costs .................................... 8,589 6,615
Other ................................................... 6,805 9,191
Total accrued expenses ..................................... $25,563 $29,905
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