NetFlix 2008 Annual Report Download - page 74

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table summarizes stock-based compensation expense, net of tax, related to stock option plans
and employee stock purchases under SFAS 123R which was allocated as follows:
Year Ended December 31,
2008 2007 2006
(in thousands)
Fulfillment expenses ............................... $ 466 $ 427 $ 925
Technology and development ........................ 3,890 3,695 3,608
Marketing ....................................... 1,886 2,160 2,138
General and administrative .......................... 6,022 5,694 6,025
Stock-based compensation expense before income taxes . . 12,264 11,976 12,696
Income tax benefit ................................ (4,585) (4,760) (4,950)
Total stock-based compensation after income taxes ...... $ 7,679 $ 7,216 $ 7,746
8. Income Taxes
The components of provision for income taxes for all periods presented were as follows:
Year Ended December 31,
2008 2007 2006
(in thousands)
Current tax provision:
Federal .................................... $41,883 $37,770 $10,119
State ...................................... 14,585 7,208 4,804
Total current ............................ 56,468 44,978 14,923
Deferred tax provision:
Federal .................................... (3,680) (413) 15,005
State ...................................... (4,314) (248) 1,145
Total deferred ........................... (7,994) (661) 16,150
Provision for income taxes ......................... $48,474 $44,317 $31,073
A reconciliation of the provision for income taxes, with the amount computed by applying the statutory
federal income tax rate to income before provision for income taxes for the three years ended December 31, 2008
is as follows:
Year Ended December 31,
2008 2007 2006
(in thousands)
Expected tax expense at U.S. federal statutory rate of 35% ....... $46,060 $39,025 $28,111
State income taxes, net of Federal income tax effect ............. 5,155 5,818 3,866
Valuation allowance ...................................... — (80) (16)
R&D tax credit .......................................... (3,321) — —
Stock-based compensation ................................. 108 (248) (878)
Other .................................................. 472 (198) (10)
Provision for income taxes ................................. $48,474 $44,317 $31,073
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