NetFlix 2007 Annual Report Download - page 64

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Taxes. Specifically, the pronouncement prescribes a recognition threshold and a measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
The interpretation also provides guidance on the related derecognition, classification, interest and penalties,
accounting for interim periods, disclosure and transition of uncertain tax positions. The interpretation was
effective for fiscal years beginning after December 15, 2006. The adoption of this standard did not have a
material effect on our financial position or results of operations.
2. Short-term Investments
At December 31, 2007, short-term investments were classified as available-for-sale securities and are
reported at fair value as follows:
Gross
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
(in thousands)
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . $ 36,445 $ 315 $ (85) $ 36,675
Government and agency securities . . . . . . . . . . . . . 130,884 2,155 (33) 133,006
Asset and mortgage backed securities . . . . . . . . . . . 37,842 307 (127) 38,022
$205,171 $2,777 $(245) $207,703
The Company recognized gross realized gains of $0.7 million and gross realized losses of $0.05 million
during 2007 from the sales of available-for-sale securities. The Company recognized interest income related to
available-for-sale securities of $9.6 million during 2007. Realized gains and losses and interest income are
included in interest and other income (expense).
The estimated fair value of short-term investments by contractual maturity as of December 31, 2007 is as
follows:
(in thousands)
Duewithinoneyear.............................................. $ 22,950
Due after one year and through 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165,695
Due after 5 years and through 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,950
Dueafter10years ............................................... 16,108
Totalshort-terminvestments ....................................... $207,703
As the portfolio has been in existence for less than one year as of December 31, 2007, there are no
investments which have been in a continuous loss position for more than twelve months.
3. Balance Sheet Components
Content Library, Net
Content library and accumulated amortization consisted of the following:
As of December 31,
2007 2006
(in thousands)
Content library, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 698,704 $ 484,034
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . (566,249) (379,126)
Contentlibrary,net ..................................... $132,455 $104,908
F-13