Netflix (NFLX) 10-K 22 Feb 10 2009 FY Annual report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	Dec. 31, 2009	Dec. 31, 2008
Current assets:
Cash and cash equivalents	$134,224	$139,881
Short-term investments	186,018	157,390
Prepaid expenses	12,491	8,122
Prepaid revenue sharing expenses	17,133	18,417
Current content library, net	37,329	18,691
Other current assets	23,818	16,424
Total current assets	411,013	358,925
Content library, net	108,810	98,547
Property and equipment, net	131,653	124,948
Deferred tax assets	15,958	22,409
Other non-current assets	12,300	10,595
Total assets	679,734	615,424
Current liabilities:
Accounts payable	91,475	100,344
Accrued expenses	33,387	31,394
Current portion of lease financing obligations	1,410	1,152
Deferred revenue	100,097	83,127
Total current liabilities	226,369	216,017
Long-term debt	200,000	0
Lease financing obligations, excluding current portion	36,572	37,988
Other non-current liabilities	17,650	14,264
Total liabilities	480,591	268,269
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2009 and 2008; no shares issued and outstanding at December 31, 2009 and 2008	0	0
Common stock, $0.001 par value; 160,000,000 shares authorized at December 31, 2009 and 2008; 53,440,073 and 58,862,478 issued and outstanding at December 31, 2009 and 2008, respectively	53	62
Additional paid-in capital	0	338,577
Treasury stock at cost (3,491,084 shares at December 31, 2008)	0	(100,020)
Accumulated other comprehensive income	273	84
Retained earnings	198,817	108,452
Total stockholders' equity	199,143	347,155
Total liabilities and stockholders' equity	$679,734	$615,424

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
	Dec. 31, 2009	Dec. 31, 2008
Preferred stock, par value	0.001	0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	0.001	0.001
Common stock, shares authorized	160,000,000	160,000,000
Common stock, issued and outstanding	53,440,073	58,862,478
Treasury stock, shares	0	3,491,084

Statement Of Income

Statement Of Income (USD $)
In Thousands, except Per Share data	12 Months Ended Dec. 31, 2009		12 Months Ended Dec. 31, 2008		12 Months Ended Dec. 31, 2007
Revenues	$1,670,269		$1,364,661		$1,205,340
Cost of revenues:
Subscription	909,461		761,133		664,407
Fulfillment expenses	169,810	[1]	149,101	[1]	121,761	[1]
Total cost of revenues	1,079,271		910,234		786,168
Gross Profit	590,998		454,427		419,172
Operating expenses:
Technology and development	114,542	[1]	89,873	[1]	70,979	[1]
Marketing	237,744	[1]	199,713	[1]	218,212	[1]
General and administrative	51,333	[1]	49,662	[1]	52,404	[1]
Gain on disposal of DVDs	(4,560)		(6,327)		(7,196)
Gain on legal settlement	0		0		(7,000)
Total operating expenses	399,059		332,921		327,399
Operating income	191,939		121,506		91,773
Other income (expense):
Interest expense	(6,475)		(2,458)		(1,188)
Interest and other income (expense)	6,728		12,452		20,340
Income before income taxes	192,192		131,500		110,925
Provision for income taxes	76,332		48,474		44,317
Net income	$115,860		$83,026		$66,608
Net income per share:
Basic	2.05		1.36		0.99
Diluted	1.98		1.32		0.97
Weighted-average common shares outstanding:
Basic	56,560		60,961		67,076
Diluted	58,416		62,836		68,902
[1] Stock-based compensation included in expense line items: Fulfillment expenses $ 380 $ 466 $ 427 Technology and development 4,453 3,890 3,695 Marketing 1,786 1,886 2,160 General and administrative 5,999 6,022 5,694

Statement Of Income (Parentheti

Statement Of Income (Parenthetical) (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Stock-based compensation, Fulfillment expenses	$380	$466	$427
Stock-based compensation, Technology and development	4,453	3,890	3,695
Stock-based compensation, Marketing	1,786	1,886	2,160
Stock-based compensation, General and administrative	$5,999	$6,022	$5,694

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Thousands, except Share data	Common Stock	Additional Paid-in Capital	Treasury Stock	Accumulated Other Comprehensive Income	Retained Earnings (Accumulated Deficit)	Total
Beginning Balance at Dec. 31, 2006	$69	$454,731	$0	$0	($41,182)	$413,618
Beginning Balance (in shares) at Dec. 31, 2006	68,612,463
Net income					66,608	66,608
Unrealized gains on available-for-sale securities, net of taxes				1,611		1,611
Issuance of common stock upon exercise of options (in shares)	828,824
Issuance of common stock upon exercise of options		5,822				5,822
Issuance of common stock under employee stock purchase plan (in shares)	205,416
Issuance of common stock under employee stock purchase plan		3,787				3,787
Repurchases of common stock (in shares)	(4,733,788)
Repurchases of common stock	(4)	(99,854)				(99,858)
Stock-based compensation expense		11,976				11,976
Excess stock option income tax benefits		26,248				26,248
Ending Balance (in shares) at Dec. 31, 2007	64,912,915
Ending Balance at Dec. 31, 2007	65	402,710	0	1,611	25,426	429,812
Net income					83,026	83,026
Unrealized gains on available-for-sale securities, net of taxes				(1,527)		(1,527)
Issuance of common stock upon exercise of options (in shares)	1,056,641
Issuance of common stock upon exercise of options		14,019				14,019
Issuance of common stock under employee stock purchase plan (in shares)	231,068
Issuance of common stock under employee stock purchase plan		4,853				4,853
Repurchases of common stock (in shares)	(3,847,062)
Repurchases of common stock	(3)	(99,881)				(99,884)
Repurchases of common stock to be held in treasury (in shares)	(3,491,084)
Repurchases of common stock to be held in treasury			(100,020)			(100,020)
Stock-based compensation expense		12,264				12,264
Excess stock option income tax benefits		4,612				4,612
Ending Balance (in shares) at Dec. 31, 2008	58,862,478
Ending Balance at Dec. 31, 2008	62	338,577	(100,020)	84	108,452	347,155
Net income					115,860	115,860
Unrealized gains on available-for-sale securities, net of taxes				189		189
Issuance of common stock upon exercise of options (in shares)	1,724,110
Issuance of common stock upon exercise of options	1	29,508				29,509
Issuance of common stock under employee stock purchase plan (in shares)	224,799
Issuance of common stock under employee stock purchase plan		5,765				5,765
Repurchases of common stock (in shares)	(7,371,314)
Repurchases of common stock	(10)	(398,850)	100,020		(25,495)	(324,335)
Stock-based compensation expense		12,618				12,618
Excess stock option income tax benefits		12,382				12,382
Ending Balance (in shares) at Dec. 31, 2009	53,440,073
Ending Balance at Dec. 31, 2009	$53	$0	$0	$273	$198,817	$199,143

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	12 Months Ended Dec. 31, 2009	12 Months Ended Dec. 31, 2008	12 Months Ended Dec. 31, 2007
Cash flows from operating activities:
Net income	$115,860	$83,026	$66,608
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, equipment and intangibles	38,044	32,454	22,219
Amortization of content library	219,490	209,757	203,415
Amortization of discounts and premiums on investments	607	625	24
Amortization of debt issuance costs	1,124	0	0
Stock-based compensation expense	12,618	12,264	11,976
Excess tax benefits from stock-based compensation	(12,683)	(5,220)	(26,248)
Loss (gain) on disposal of property and equipment	254	101	142
Gain on sale of short-term investments	(1,509)	(3,130)	(687)
Gain on disposal of DVDs	(7,637)	(13,350)	(14,637)
Gain on sale of investment in business	(1,783)	0	0
Deferred taxes	6,328	(5,905)	(893)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(11,001)	(4,181)	(3,893)
Content library	(64,217)	(48,290)	(34,821)
Accounts payable	(2,256)	7,111	16,555
Accrued expenses	13,169	(1,824)	32,809
Deferred revenue	16,970	11,462	1,987
Other assets and liabilities	1,685	9,137	2,868
Net cash provided by operating activities	325,063	284,037	277,424
Cash flows from investing activities:
Purchases of short-term investments	(228,000)	(256,959)	(405,340)
Proceeds from sale of short-term investments	166,706	304,163	200,832
Proceeds from maturities of short-term investments	35,673	3,170	0
Purchases of property and equipment	(45,932)	(43,790)	(44,256)
Acquisition of intangible asset	(200)	(1,062)	(550)
Acquisitions of content library	(193,044)	(162,849)	(208,647)
Proceeds from sale of DVDs	11,164	18,368	21,640
Investment in business	0	(6,000)	0
Proceeds from sale of investment in business	7,483	0	0
Other assets	71	(1)	297
Net cash used in investing activities	(246,079)	(144,960)	(436,024)
Cash flows from financing activities:
Principal payments of lease financing obligations	(1,158)	(823)	(390)
Proceeds from issuance of common stock	35,274	18,872	9,609
Excess tax benefits from stock-based compensation	12,683	5,220	26,248
Borrowings on line of credit, net of issuance costs	18,978	0	0
Payments on line of credit	(20,000)	0	0
Proceeds from issuance of debt, net of issuance costs	193,917	0	0
Repurchases of common stock	(324,335)	(199,904)	(99,858)
Net cash used by financing activities	(84,641)	(176,635)	(64,391)
Net decrease in cash and cash equivalents	(5,657)	(37,558)	(222,991)
Cash and cash equivalents, beginning of year	139,881	177,439	400,430
Cash and cash equivalents, end of year	134,224	139,881	177,439
Supplemental disclosure:
Income taxes paid	58,770	40,494	15,775
Interest paid	$3,878	$2,458	$1,188

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies
	12 Months Ended Dec. 31, 2009 USD / shares
Organization and Summary of Significant Accounting Policies	1.Organization and Summary of Significant Accounting Policies Description of Business Netflix, Inc. (the Company) was incorporated on August29, 1997 and began operations on April14, 1998. The Company is a subscription service streaming movies and TV episodes over the Internet and sending DVDs by mail to more than 12million subscribers. The Companys subscribers can instantly watch unlimited movies and TV episodes streamed to their TVs and computers and can receive DVDs delivered quickly to their homes. The Company offers a variety of subscription plans, with no due dates, no late fees, no shipping fees and no pay-per-view fees. Aided by proprietary recommendation and merchandising technology, subscribers can select from a growing library of titles that can be watched instantly and a vast array of titles on DVD. Subscribers can: Watch streaming content without commercial interruption on their computers and TVs. The viewing experience is enabled by Netflix controlled software that can run on a variety of consumer electronics devices (Netflix Ready Devices). These Netflix Ready Devices currently include Blu-ray disc players, Internet-connected TVs, digital video players and game consoles. Receive DVDs by U.S. mail and return them to the Company at their convenience using the Companys prepaid mailers. After a DVD has been returned, the Company mails the next available DVD in a subscribers queue. The Company is organized in a single operating segment. All revenues are currently generated in the United States, and there are no long-lived assets outside the United States. Substantially all revenues are derived from monthly subscription fees. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated. Reclassification Certain prior period amounts have been reclassified to conform to current presentation. These reclassifications did not significantly impact any prior amounts of reported total assets or total liabilities, and did not impact stockholders equity, results of operations or cash flows. Subsequent Events The Company has evaluated subsequent events through February19, 2010, the date which these financial statements were available to be issued. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include the estimate of useful lives and residual value of its content library; the valuation of stock-based compensation; and the recognition and measurement of income tax assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the

Short-term Investments

Short-term Investments
	12 Months Ended Dec. 31, 2009 USD / shares
Short-term Investments	2.Short-term Investments The Companys investment policy is consistent with the definition of available-for-sale securities. The Company does not buy and hold securities principally for the purpose of selling them in the near future. The Companys policy is focused on the preservation of capital, liquidity and return. From time to time, the Company may sell certain securities but the objectives are generally not to generate profits on short-term differences in price. Short-term investments are therefore classified as available-for-sale securities and are reported at fair value as follows: December31, 2009 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Corporate debt securities $ 82,362 $ 915 $ (106 ) $ 83,171 Government and agency securities 96,998 72 (416 ) 96,654 Asset and mortgage backed securities 6,262 143 (212 ) 6,193 $ 185,622 $ 1,130 $ (734 ) $ 186,018 December31, 2008 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in thousands) Corporate debt securities $ 45,482 $ 440 $ (727 ) $ 45,195 Government and agency securities 92,378 1,812 (244 ) 93,946 Asset and mortgage backed securities 19,446 15 (1,212 ) 18,249 $ 157,306 $ 2,267 $ (2,183 ) $ 157,390 The following tables show the gross unrealized losses and fair value of the Companys investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position: As of December31, 2009 Less Than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) Corporate debt securities $ 25,982 $ (106 ) $ $ $ 25,982 $ (106 ) Government and agency securities 85,391 (414 ) 3,279 (2 ) 88,670 (416 ) Asset and mortgage backed securities 280 (1 ) 768 (211 ) 1,048 (212 ) $ 111,653 $ (521 ) $ 4,047 $ (213 ) $ 115,700 $ (734 ) As of December31, 2008 Less Than 12 Months 12 Months or Greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses (in thousands) Corporate debt securities $ 22,806 $ (692 ) $ 1,316 $ (35 ) $ 24,122 $ (727 ) Government and agency securities 12,128 (244 ) 12,128 (244 ) Asset and mortgage backed securities 15,511 (1,212 ) 15,511 (1,212 )

Balance Sheet Components

Balance Sheet Components
	12 Months Ended Dec. 31, 2009 USD / shares
Balance Sheet Components	3.Balance Sheet Components Content Library, Net Content library and accumulated amortization consisted of the following: As of December31, 2009 2008 (in thousands) Content library, gross $ 742,802 $ 637,336 Less: accumulated amortization (596,663 ) (520,098 ) 146,139 117,238 Less: Current content library, net 37,329 18,691 Content library, net $ 108,810 $ 98,547 Property and Equipment, Net Property and equipment and accumulated depreciation consisted of the following: As of December31, 2009 2008 (in thousands) Computer equipment 3years $ 62,132 $ 44,598 Operations and other equipment 5years 65,059 59,061 Software, including internal-use software 1-3 years 35,401 30,060 Furniture and fixtures 3 years 12,421 12,304 Building 30 years 40,681 40,681 Leasehold improvements Overlifeoflease 35,156 33,124 Capital work-in-progress 15,097 3,958 Property and equipment, gross 265,947 223,786 Less: Accumulated depreciation (134,294 ) (98,838 ) Property and equipment, net $ 131,653 $ 124,948 Capital work-in-progress as of December31, 2009 consists primarily of approximately $13.1 million of operations equipment and $1.9 million of software not yet in service, and approximately $0.1 million of leasehold improvements. Other Assets Other assets consisted of the following: As of December31, 2009 2008 (in thousands) Patents, net $ 1,639 $ 1,844 Investment in business 5,700 Restricted cash 2,829 1,929 Debt issuance costs, net 5,966 Other 1,866 1,122 Other assets $ 12,300 $ 10,595 Restricted cash of $2.8 million and $1.9 million, as of December31, 2009 and 2008, respectively, related to workers compensation insurance deposits. Accrued Expenses Accrued expenses consisted of the following: As of December31, 2009 2008 (in thousands) Accrued state sales and use tax $ 11,625 $ 9,127 Accrued payroll and employee benefits 6,427 5,956 Accrued settlement costs 2,409 Accrued interest on debt 2,597 Accrued content acquisition costs 5,810 6,237 Other 6,928 7,665 Total accrued expenses $ 33,387 $ 31,394

Long-term Debt

Long-term Debt
	12 Months Ended Dec. 31, 2009 USD / shares
Long-term Debt	4.Long-term Debt Senior Notes In November 2009, the Company issued $200.0 million aggregate principal amount of 8.50% senior notes due November15, 2017 (the 8.50% Notes). The net proceeds to the Company from the 8.50% Notes were approximately $193.9 million. Debt issuance costs of $6.1 million are recorded in other assets on the consolidated balance sheet and are amortized over the term of the notes as interest expense. The notes were issued at par and are senior unsecured obligations of the Company. Interest is payable semi-annually at a rate of 8.50%per annum on May15 and November15 of each year, commencing on May15, 2010. The 8.50%Notes are repayable in whole or in part upon the occurrence of a change of control, at the option of the holders, at a purchase price in cash equal to 101% of the principal plus accrued interest. Prior to November15, 2012, in the event of a qualified equity offering, the Company may redeem up to 35% of the 8.50%Notes at a redemption price of 108.50% of the principal plus accrued interest. Additionally, the Company may redeem the 8.50%Notes prior to November15, 2013 in whole or in part at a redemption price of 100% of the principal plus accrued interest, plus a make-whole premium. On or after November15, 2013, the Company may redeem the 8.50%Notes in whole or in part at specified prices ranging from 104.25% to 100% of the principal plus accrued interest. The 8.50% Notes include, among other terms and conditions, limitations on the Companys ability to create, incur, assume or be liable for indebtedness (other than specified types of permitted indebtedness); dispose of assets outside the ordinary course (subject to specified exceptions); acquire, merge or consolidate with or into another person or entity (other than specified types of permitted acquisitions); create, incur or allow any lien on any of its property or assign any right to receive income (except for specified permitted liens); make investments (other than specified types of investments); or pay dividends or make distributions (each subject to specified exceptions). At December31, 2009, the Company was in compliance with these covenants. Based on quoted market prices, the fair value of the 8.50% Notes was approximately $207.5 million as of December31, 2009. Credit Agreement In September 2009, the Company entered into a credit agreement which provided for a $100 million three-year revolving line of credit. Loans under the credit agreement bore interest, at the Companys option, at either a base rate determined in accordance with the credit Agreement, plus a spread of 1.75% to 2.25%, or an adjusted LIBOR rate plus a spread of 2.75% to 3.25%. In October 2009, the Company borrowed $20 million under the credit agreement. The proceeds, net of issuance costs, to the Company were approximately $19.0 million. In connection with the issuance of the 8.50% Notes, the Company repaid all outstanding amounts under and terminated the credit agreement. Issuance costs related to the line of credit are included in interest expense.

Commitments and Contingencies

Commitments and Contingencies
	12 Months Ended Dec. 31, 2009 USD / shares
Commitments and Contingencies	5.Commitments and Contingencies The Company leases facilities under non-cancelable operating leases with various expiration dates through 2016. The facilities generally require the Company to pay property taxes, insurance and maintenance costs. Further, several lease agreements contain rent escalation clauses or rent holidays. For purposes of recognizing minimum rental expenses on a straight-line basis over the terms of the leases, the Company uses the date of initial possession to begin amortization, which is generally when the Company enters the space and begins to make improvements in preparation of intended use. For scheduled rent escalation clauses during the lease terms or for rental payments commencing at a date other than the date of initial occupancy, the Company records minimum rental expenses on a straight-line basis over the terms of the leases in the consolidated statements of operations. The Company has the option to extend or renew most of its leases which may increase the future minimum lease commitments. Because the terms of the Companys original facilities lease agreements required the Companys involvement in the construction funding of the buildings at its Los Gatos, California headquarters site, the Company is the deemed owner (for accounting purposes only) of these buildings. Accordingly, the Company recorded an asset of $40.7 million, representing the total costs of the buildings and improvements, including the costs paid by the lessor (the legal owner of the buildings), with corresponding liabilities. Upon completion of construction of each building, the Company did not meet the sale-leaseback criteria for de-recognition of the building assets and liabilities. Therefore the leases are accounted for as financing obligations. Future minimum payments under lease financing obligations and non-cancelable operating leases as of December31, 2009 are as follows: Year Ending December31, Future Minimum Payments (inthousands) 2010 $ 17,214 2011 13,950 2012 11,506 2013 5,064 2014 3,144 Thereafter 1,868 Total minimum payments $ 52,746 Future minimum payments under lease financing obligations as of December31, 2009 total $12.4 million.The lease financing obligation balance at the end of the lease term will be approximately $32.6 million which reflects the net book value of the buildings to be relinquished to the lessor. Rent expense associated with the operating leases was $14.5 million, $13.7 million and $10.6 million for the years ended December31, 2009, 2008 and 2007, respectively. The Company also has $114.8 million of commitments at December31, 2009 related to streaming content license agreements that have been executed but for which the streaming content does not meet asset recognition criteria. Litigation From time to time, in the normal course of its operations, the Company is a party to litigation matters and claims, including claims relating to employee relations and business practices. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceed

Guarantees-Intellectual Propert

Guarantees-Intellectual Property Indemnification Obligations
	12 Months Ended Dec. 31, 2009 USD / shares
Guarantees-Intellectual Property Indemnification Obligations	6.GuaranteesIntellectual Property Indemnification Obligations In the ordinary course of business, the Company has entered into contractual arrangements under which it has agreed to provide indemnification of varying scope and terms to business partners and other parties with respect to certain matters, including, but not limited to, losses arising out of the Companys breach of such agreements and out of intellectual property infringement claims made by third parties. The Companys obligations under these agreements may be limited in terms of time or amount, and in some instances, the Company may have recourse against third parties for certain payments. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require it, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The terms of such obligations vary. It is not possible to make a reasonable estimate of the maximum potential amount of future payments under these or similar agreements due to the conditional nature of the Companys obligations and the unique facts and circumstances involved in each particular agreement. No amount has been accrued in the accompanying financial statements with respect to these indemnification guarantees.

Stockholders' Equity

Stockholders' Equity
	1/1/2009 - 12/31/2009 USD / shares
Stockholders' Equity	7.Stockholders Equity On August6, 2009, the Company announced that its Board of Directors authorized a stock repurchase plan that enables the Company to repurchase up to $300 million of its common stock through the end of 2010. The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions. Under this program, the Company repurchased 3,197,459 shares of common stock at an average price of approximately $47 per share for an aggregate amount of $149 million. Of this amount, 1,480,000 shares repurchased were initially held as treasury stock and accordingly repurchases were accounted for at cost under the treasury method. These shares were subsequently retired. The remaining 1,717,459 shares repurchased have also been retired. Subsequent to December31, 2009, the Company repurchased 1,010,000 shares of common stock at an average price of approximately $62 for an aggregate amount of $62.4million. The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions. On January26, 2009, the Company announced that its Board of Directors authorized a stock repurchase program for 2009. Under this program, the Company repurchased 4,173,855 shares of common stock at an average price of approximately $42 per share for an aggregate amount of approximately $175 million. Shares repurchased under this program were initially held as treasury stock and accordingly repurchases were accounted for at cost under the treasury method. These shares were subsequently retired. This program terminated on August6, 2009. On March5, 2008, the Companys Board of Directors authorized a stock repurchase program allowing the Company to repurchase up to $150 million of its common stock through the end of 2008. Under this program, the Company repurchased 3,491,084 shares of common stock at an average price of approximately $29 per share for an aggregate amount of $100 million. Shares repurchased under this program were initially held as treasury stock and accordingly repurchases were accounted for under the treasury method. These shares have been subsequently retired. On January31, 2008, the Companys Board of Directors authorized a stock repurchase program allowing the Company to repurchase up to $100 million of its common stock through the end of 2008. Under this program, the Company repurchased 3,847,062 shares of common stock at an average price of approximately $26 per share for an aggregate amount of $100 million. Shares repurchased under this program have been retired. On April17, 2007, the Companys Board of Directors authorized a stock repurchase program allowing the Company to repurchase up to $100.0 million of its common stock through the end of 2007. During the year ended December31, 2007, the Company repurchased 4,733,788 shares of common stock at an average price of approximately $21 per share for an aggregate amount of $100 million. Shares repurchased under this program have been re

Income Taxes

Income Taxes
	12 Months Ended Dec. 31, 2009 USD / shares
Income Taxes	8.Income Taxes The components of provision for income taxes for all periods presented were as follows: Year Ended December31, 2009 2008 2007 (in thousands) Current tax provision: Federal $ 55,104 $ 41,883 $ 38,002 State 14,900 12,063 7,208 Total current 70,004 53,946 45,210 Deferred tax provision: Federal 6,568 (3,680 ) (645 ) State (240 ) (1,792 ) (248 ) Total deferred 6,328 (5,472 ) (893 ) Provision for income taxes $ 76,332 $ 48,474 $ 44,317 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 December31, 2009 is as follows: Year Ended December31, 2009 2008 2007 (in thousands) Expected tax expense at U.S. federal statutory rate of 35% $ 67,267 $ 46,060 $ 39,025 State income taxes, net of Federal income tax effect 10,350 5,155 5,818 Valuation allowance (80 ) RD tax credit (1,600 ) (3,321 ) Stock-based compensation (89 ) 108 (248 ) Other 404 472 (198 ) Provision for income taxes $ 76,332 $ 48,474 $ 44,317 The tax effects of temporary differences and tax carryforwards that give rise to significant portions of the deferred tax assets are presented below (in thousands): YearEndedDecember31, 2009 2008 Deferred tax assets: Accruals and reserves $ 1,144 $ 1,378 Depreciation (3,259 ) 2,947 Stock-based compensation 16,824 17,440 RD credits 3,178 2,636 Other 1,166 1,103 Deferred tax assets $ 19,053 $ 25,504 In evaluating its ability to realize the deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results and the forecast of future market growth, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. As of December31, 2009 and 2008, it was considered more likely than not that substantially all deferred tax assets would be realized, and no valuation allowance was recorded. The Company classifies gross interest and penalties and unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year as non-current liabilities in the consolidated balance sheet. As of December31, 2009, the total amount of gross unrecognized tax benefits was $13.2 million, of which $10.7 million, if recognized, would favorably impact the Companys effective tax rate. As of December31, 2008, the Company had $10.9 million gross unrecognized benefits, of which $8.7 million, if recognized, would fav

Employee Benefit Plan

Employee Benefit Plan
	12 Months Ended Dec. 31, 2009 USD / shares
Employee Benefit Plan	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 Companys matching contributions totaled $2.3 million, $2.0 million and $1.5 million, respectively.

Related Party Transaction

Related Party Transaction
	12 Months Ended Dec. 31, 2009 USD / shares
Related Party Transaction	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.

Selected Quarterly Financial Da

Selected Quarterly Financial Data (Unaudited)
	12 Months Ended Dec. 31, 2009 USD / shares
Selected Quarterly Financial Data (Unaudited)	11.Selected Quarterly Financial Data (Unaudited) December31 September30 June30 March31 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

Document Information

Document Information
	12 Months Ended Dec. 31, 2009 USD / shares
Document Type	10-K
Amendment Flag	false
Document Period End Date	2009-12-31

Entity Information

Entity Information (USD $)
	12 Months Ended Dec. 31, 2009	Jan. 31, 2010	Jun. 30, 2009
Trading Symbol	NFLX
Entity Registrant Name	NETFLIX INC
Entity Central Index Key	0001065280
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		53,533,265
Entity Public Float			$1,622,014,793