Calculate the financial ratios such as :Liquidity Ratios, Profitiabilty Ratios, Activity Ratios, Leverage Ratios and another ratios you think it is important make the financial analysis and discussion coparing between two years and your recommendation.
In 2011, Netflix surpassed US$3.2 billion in sales, an annual revenue growth of 50% over 2010 (US$2.1 billion). Subscriber growth was the most important metric for Netflix because its revenue growth was directly correlated to its subscriber growth. Netflix grew from 12 million subscribers in 2009 to 20 million in 2010, and then to 27 million in 2012. International operations were set to expand to become a major source of sales growth for the company in the coming years.
However, by 2012, Netflix faced challenges from its pricing changes in the United States and its expansion into international markets, even stating that it expected revenue per subscriber to drop from its 2011 level of US$11.5634 as subscribers choose the streaming only option of US$7.99 over the more expensive streaming and DVD delivery option. For future revenue growth, Netflix needed to increase its subscribers numbers both domestically and internationally.
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Netflix, Inc. Consolidated Statements of
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Year ended December 31
|
|
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2011
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2010
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2009
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Operations5s (in thousands, except
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Revenues
Cost of revenues:
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$3,204,577
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$2,162,625
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$1,670,269
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|
per-share data)
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Subscription
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1,789,596
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1,154,109
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909,461
|
|
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Fulfillment expenses
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250,305
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203,246
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169,810
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|
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Total cost of revenues
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2,039,901
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1,357,355
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1,079,271
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|
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Gross profit
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1,164,676
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805,270
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590,998
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|
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Operating expenses:
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|
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Marketing
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402,638
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293,839
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237,744
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Technology and development
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259,033
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163,329
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114,542
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General and administrative
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117,937
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64,461
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46,773
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Legal settlement
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9,000
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|
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Total operating expenses
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788,608
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521,629
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399,059
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|
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Operating income
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376,068
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283,641
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191,939
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|
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Other income (expense):
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|
|
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Interest expense
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(20,025)
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(19,629)
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(6,475)
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Interest and other income
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3,479
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3,684
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6,728
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|
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Income before income taxes
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359,522
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267,696
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192,192
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Provision for income taxes
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133,396
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106,843
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76,332
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Net income
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$226,126
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$160,853
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$115,860
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Net income per share:
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|
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Basic
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$4.28
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$3.06
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$2.05
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|
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Diluted
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$4.16
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$2.96
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$1.98
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Weighted-average common shares outstanding:
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Basic
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52,847
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52,529
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56,560
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Diluted
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54,369
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54,304
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58,416
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EXHIBIT 2
Netflix, Inc.
Consolidated
Balance Sheets55
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As of December 31
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2011
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2010
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(in thousands, except share and
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Assets
Current assets:
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|
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per-share data)
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Cash and cash equivalents
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$508,053
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$194,499
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Short-term investments
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289,758
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155,888
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Current content library, net
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919,709
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181,006
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Prepaid content
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56,007
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62,217
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Other current assets
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57,330
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43.621
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|
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Total current assets
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1.830,857
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637,231
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Non-current content library, net
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1,046,934
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180,973
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Property and equipment, net
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136,353
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128,570
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Other non-current assets
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55,052
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35,293
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Total assets
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$3,069,196
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$982,067
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Liabilities and stockholders' equity
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|
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Current liabilities:
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Content accounts payable
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$924,706
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$168,695
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Other accounts payable
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87,860
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54,129
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Accrued expenses
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63,693
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38,572
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Deferred revenue
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148,796
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127,183
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Total current liabilities
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1,225,055
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388,579
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Long-term debt
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200,000
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200,000
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Long-term debt due to related party
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200,000
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-
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Non-current content liabilities
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739,628
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48,179
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Other non-current liabilities
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61,703
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55,145
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Total liabilities
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2,426,386
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691,903
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Commitments and contingencies (Note 5)
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Stockholders' equity:
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Preferred stock, $0.001 par value; 10,000,000 shares authorized at December 31, 2011 and 2010; no shares
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|
|
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issued and outstanding at December 31, 2011 and 2010
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-
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Common stock, $0.001 par value; 160,000,000 shares authorized at December 31, 2011 and 2010; 55,398,615 and 52,781,949 issued and outstanding at December 31, 2011 and 2010, respectively
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55
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53
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Additional paid-in capital
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219,119
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51,622
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Accumulated other comprehensive income
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706
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750
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Retained earnings
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422,930
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237,739
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Total stockholders' equity
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642,810
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290,164
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Total liabilities and stockholders' equity
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$3,069,196
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$982,067
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EXHIBIT 3
Netflix, Inc. Consolidated Statements of Cash Flows55 (in thousands)
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Year Ended December 31
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2011
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2010
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2009
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Cash flows from operating activities:
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|
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Net income
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$226,126
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$160,853
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$115,860
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
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Additions to streaming content library
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(2,320,732)
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(406,210)
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(64,217)
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Change in streaming content liabilities
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1,460,400
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167,836
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(4,014)
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Amortization of streaming content library
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699,128
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158,100
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48,192
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Amortization of DVD content library
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96,744
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142,496
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171,298
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Depreciation and amortization of property, equipment. and intangibles
|
43,747
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38,099
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38,044
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Stock-based compensation expense
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61,582
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27,996
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12,618
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Year Ended December 31
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2011
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2010
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2009
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Excess tax benefits from stock-based compensation
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(45,784)
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(62,214)
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(12,683)
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Other non-cash items
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(4,050)
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(9,128)
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(7,161)
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Deferred taxes
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(18,597)
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(962)
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6,328
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Gain on sale of business
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(1,783)
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Changes in operating assets and liabilities:
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|
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Prepaid content
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6,211
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(35,476)
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(5,643)
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Other current assets
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(4,775)
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(18,027)
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(5,358)
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Other accounts payable
|
24,314
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18,098
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1,537
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Accrued expenses
|
68,902
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67,209
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13,169
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Deferred revenue
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21,613
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27,086
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16,970
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Other non-current assets and liabilities
|
2,883
|
645
|
1,906
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Net cash provided by operating activities
|
317,712
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276,401
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325,063
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Cash flows from investing activities:
|
|
|
|
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Acquisition of DVD content library
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(85,154)
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(123,901)
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(193,044)
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Purchases of short-term investments
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(223,750)
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(107,362)
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(228,000)
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Proceeds from sale of short-term investments
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50,993
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120,857
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166,706
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Proceeds from maturities of short-term investments
|
38,105
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15,818
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35,673
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Purchases of property and equipment
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(49,682)
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(33,837)
|
(45,932)
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Proceeds from sale of business
|
|
|
7,483
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Other assets
|
3,674
|
12,344
|
11,035
|
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Net cash used in investing activities
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(265,814)
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(116,081)
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(246,079)
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Cash flows from financing activities:
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|
|
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Principal payments of lease financing obligations
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(2,083)
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(1,776)
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(1,158)
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Proceeds from issuance of common stock upon exercise of options
|
19,614
|
49,776
|
35,274
|
|
Proceeds from public offering of common stock, net of issuance costs
|
199,947
|
|
|
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Excess tax benefits from stock-based compensation
|
45,784
|
62,214
|
12,683
|
|
Borrowings on line of credit, net of issuance costs
|
|
|
18,978
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Payments on line of credit
|
|
|
(20,000)
|
|
Proceeds from issuance of debt, net of issuance costs
|
198,060
|
|
193,917
|
|
Repurchases of common stock
|
(199,666)
|
(210,259)
|
(324,335)
|
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Net cash provided by (used in) financing activities
|
261,656
|
(100,045)
|
(84,641)
|
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Net increase (decrease) in cash and cash equivalents
|
313,554
|
60,275
|
(5,657)
|
|
Cash and cash equivalents, beginning of year
|
194,499
|
134,224
|
139,881
|
|
Cash and cash equivalents, end of year
|
$508,053
|
S194,499
|
$134,224
|
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Supplemental disclosure:
|
|
|
|
|
Income taxes paid
|
$79,069
|
$56,218
|
$58,770
|
|
Interest paid
|
19,395
|
20,101
|
3,878
|