NetFlix 2009 Annual Report Download - page 80

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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 2009, 2008 and 2007, the Company’s matching contributions totaled
$2.3 million, $2.0 million and $1.5 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. In the fourth quarter of 2009, Netflix sold its investment
in this company to an unrelated party and realized a pre-tax gain of $1.8 million.
11. Selected Quarterly Financial Data (Unaudited)
December 31 September 30 June 30 March 31
2009
Total revenues ...................................... $444,542 423,120 408,509 394,098
Gross profit ........................................ 169,056 147,846 139,266 134,830
Net income ........................................ 30,913 30,141 32,443 22,363
Net income per share:
Basic ......................................... 0.58 0.54 0.56 0.38
Diluted ....................................... 0.56 0.52 0.54 0.37
2008
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
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