NetFlix 2008 Annual Report Download - page 76

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NETFLIX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
9. Employee Benefit Plan
The Company maintains a 401(k) savings plan covering substantially all of its employees. Eligible
employees may contribute up to 60% of their annual salary through payroll deductions, but not more than the
statutory limits set by the Internal Revenue Service. The Company matches employee contributions at the
discretion of the Board of Directors. During 2008, 2007 and 2006, the Company’s matching contributions totaled
$2.0 million, $1.5 million and $1.4 million, respectively.
10. Related Party Transaction
In April 2007, Netflix entered into a license agreement with a company in which an employee had a
significant ownership interest at that time. Pursuant to this agreement, Netflix recorded a charge of $2.5 million
in technology and development expense. In January 2008, in conjunction with various arrangements Netflix paid
a total of $6.0 million to this same company, of which $5.7 million was accounted for as an investment under the
cost method. In conjunction with these arrangements, the employee with the significant ownership interest in the
same company terminated his employment with Netflix.
11. Selected Quarterly Financial Data (Unaudited)
As discussed in Note 1, certain amounts as reported in the fiscal 2008 and 2007 Interim Consolidated
Financial Statements have been revised to reflect the correction of immaterial errors associated with lease
accounting and the application of SFAS 63 to streaming content. The selected quarterly financial data shown in
the “As Revised” table reflects the revisions discussed in Note 1.
December 31 September 30 June 30 March 31
AS REVISED (in thousands, except per share amounts)
2008
Total current assets .................................. $361,447 $334,385 $382,852 $353,758
Total assets ........................................ 617,946 578,462 641,899 623,374
Total liabilities and stockholder’s equity ................. 617,946 578,462 641,899 623,374
Net cash provided by operating activities ................. $ 92,100 $ 60,495 $ 67,380 $ 64,062
Net cash provided by (used) in investing activities ......... (57,498) (6,667) (98,928) 18,133
Net cash (used in) provided by financing activities ......... (6,245) (86,593) 6,848 (90,645)
Total revenues ...................................... $359,595 $341,269 $337,614 $326,183
Gross profit ........................................ 126,749 116,773 107,527 103,378
Net income ........................................ 22,732 20,371 26,579 13,344
Net income per share:
Basic ......................................... 0.39 0.34 0.43 0.21
Diluted ....................................... 0.38 0.33 0.42 0.21
Subscribers at end of period ........................... 9,390 8,672 8,411 8,243
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