NetFlix 2007 Annual Report Download - page 65

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Property and Equipment, Net
Property and equipment and accumulated depreciation consisted of the following:
As of December 31,
2007 2006
(in thousands)
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 years $ 35,585 $ 28,237
Other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5 years 41,140 25,000
Computer software, including internal-use software . . . . . 1-3 years 22,058 16,883
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 years 7,882 4,855
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . Over life of lease 18,440 14,389
Capital work-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,452 11,482
Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,557 100,846
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (66,231) (45,343)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 77,326 $ 55,503
Capital work-in-progress consists primarily of approximately $10.2 million of capital expenditures not yet
in service and approximately $8.2 million 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 depreciation of the related leasehold
improvements. The leasehold improvements will be depreciated over the shorter of the lease term or the
estimated useful life of the related assets.
Intangible Assets
Intangible assets and accumulated amortization consisted of the following:
As of December 31,
2007 2006
(in thousands)
Patents,gross............................................... $1,566 $1,066
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (200) (97)
Patents,net ................................................ $1,366 $ 969
The weighted-average remaining estimated lives of the patents are approximately 9 years. The annual
amortization expense of the patents that existed as of December 31, 2007 is expected to be approximately $0.2
million for each of the five succeeding years.
Accrued Expenses
Accrued expenses consisted of the following:
As of December 31,
2007 2006
(in thousands)
Accrued state sales and use tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,469 $ 9,019
Accrued payroll and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . 4,607 5,080
Accruedsettlementcosts.................................... 6,732 6,615
Other ................................................... 15,658 9,191
Totalaccruedexpenses ..................................... $36,466 $29,905
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