NetFlix 2011 Annual Report Download - page 28

Results of Operations
The following table sets forth, for the periods presented, the line items in our Consolidated Statements of
Operations as a percentage of total revenues. The information contained in the table below should be read in
conjunction with the financial statements and notes thereto included in Item 8, Financial Statements and
Supplementary Data of this Annual Report on Form 10-K.
Year Ended December 31,
2011 2010 2009
Revenues ............................................................ 100.0% 100.0% 100.0%
Cost of revenues:
Subscription ...................................................... 55.9 53.4 54.4
Fulfillment expenses ............................................... 7.8 9.4 10.2
Total cost of revenues .......................................... 63.7 62.8 64.6
Operating expenses:
Marketing ....................................................... 12.6 13.6 14.2
Technology and development ........................................ 8.1 7.6 6.9
General and administrative .......................................... 3.6 2.9 2.8
Legal settlement .................................................. 0.3 — —
Total operating expenses ........................................ 24.6 24.1 23.9
Operating income ..................................................... 11.7 13.1 11.5
Other income (expense):
Interest expense ................................................... (0.6) (0.9) (0.4)
Interest and other income ........................................... 0.1 0.2 0.4
Income before income taxes ............................................. 11.2 12.4 11.5
Provision for income taxes .............................................. 4.1 5.0 4.6
Net income ........................................................... 7.1% 7.4% 6.9%
Revenues
We derive our revenues from monthly subscription fees and recognize subscription revenues ratably over
each subscriber’s monthly subscription period. We currently generate substantially all of our revenues in the
United States.
In the Domestic streaming segment, we derive revenues from services consisting solely of streaming content
offered through a subscription plan priced at $7.99 per month. In the Domestic DVD segment, we derive
revenues from our DVDs-by-mail subscription services. The price per plan for DVDs-by-mail varies from $7.99
to $43.99 per month based on the number of DVDs that a subscriber may have out at any given point. Customers
electing access to high definition Blu-ray discs in addition to standard definition DVDs pay a surcharge ranging
from $2 to $4 per month for our most popular plans.
In July 2011, in the United States, we introduced DVD only plans and separated unlimited DVDs-by-mail
and unlimited streaming making it necessary for subscribers who opt to receive both DVDs-by-mail and
streaming to have two separate subscription plans. As subscribers were able to receive both streaming and
DVDs-by-mail under a single hybrid plan prior to the fourth quarter of 2011, it is impracticable to allocate
revenues to the Domestic streaming and Domestic DVD segments prior to the fourth quarter of 2011.
In the International streaming segment, we derive revenues from services consisting solely of streaming
content offered through a subscription plan priced at approximately the equivalent of USD$7.99 per month. In
September 2010, we began international operations in Canada. We expanded to Latin America and the Caribbean
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