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Netflix, Inc.

Profile

100 Winchester Cir.


Los Gatos, CA 95032 United States
Phone : 408-540-3700
Fax : 408-540-3737
http://www.netflix.com
WELCOME

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Table of Contents
Company Overview 1
Key Information 1
Key Financials 1
Company Rankings 1
Key People 2
Company Description 3
Industry Information 4
People 5
People 6
Board Members 8
Biographies 8
Reed Hastings 9
Neil Hunt 9
Leslie J. Kilgore 10
Patricia J. (Patty) McCord 11
Andrew (Andy) Rendich 12
Ted Sarandos 13
Company Financials 13
Financial Summary 13
Annual Income Statement 14
Quarterly Income Statement 15
Annual Balance Sheet 16
Quarterly Balance Sheet 17
Annual Cash Flow 18
Quarterly Cash Flow 19
Earnings Estimates 20
Financial Market Data 21
Historical Financials 22
Competition 23
Competitors List 23
Competitive Landscape 24

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Company Overview
100 Winchester Cir.
Los Gatos, CA 95032 United States
Phone : 408-540-3700
Fax : 408-540-3737
http://www.netflix.com

In a blend of technologies from multiple eras, Netflix steers couch potatoes away from the video store and straight
to the mailbox or PC. Its website (Netflix.com) offers DVD rentals to more than 20 million subscribers for a
monthly fee. Movies are delivered to customers via the US Postal Service or streamed to PCs or TVs. Netflix ships
some 2 million discs daily in the US. It does not charge late fees or have due dates, and its service employs user
ratings to predict individual preferences and make recommendations. Netflix boasts distribution centers in major
US cities. An agreement with TiVo allows TiVo customers with certain DVR models to tap an online Netflix library
of some 12,000 movies and TV shows.

Key Information
DUNS Number 799646716
Location Type Headquarters
Subsidiary Status No
Manufacturer No
Company Type Public
Plant/Facility Size (sq. ft.) 165,000.00
Owns/Rents Owns
Foreign Trade Imports
Accountant KPMG LLP
Total Employees 4,329
1-Year Employee Growth 6.10%
Employees At This Location 166
Year of Founding or Change in Control 1997
Primary Industry 1542:Music, Video, Book & Entertainment Retail
Primary SIC Code 78410000:Video tape rental
Primary NAICS Code 532230:Video Tape and Disc Rental
Latitude/Longitude 37.23883 / -121.95539

Key Financials
Fiscal Year-End December
Sales ($ M) $2,162.63M
1-Year Sales Growth 29.48%
Net Income $160.85M
1-Year Net Income Growth 38.83%
Total Assets $982.07M
Market Value $11,145.19M
Prescreen Score Low Risk

Company Rankings
S&P 500
51 in FORTUNE's Fastest-Growing Companies

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Key People
Name Title

Mr. Reed Hastings Chairman, President, and CEO


Mr. David Wells CFO
Mr. Neil Hunt Chief Product Officer
Ms. Leslie J. Kilgore Chief Marketing Officer
Ms. Patricia J. (Patty) McCord Chief Talent Officer
Mr. Andrew (Andy) Rendich Chief Service and DVD Operations Officer
Mr. Ted Sarandos Chief Content Officer
JC Berger VP and Controller
Ms. Deborah Crawford VP Investor Relations
Ms. Cindy Holland VP Content Acquisition

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Company Description
The TiVo deal is an example of how movie rental is migrating from the mailbox to the set-top box or personal
computer. By bypassing the post office, Netflix customers have instant access to movies and TV episodes for
online viewing. Netflix was an early entrant in the evolving world of Internet video. Its streaming service, launched
in 2007, allows customers to watch select movies and content on the Netflix website via their PCs. Looking to
expand its library of available selections to satisfy the growing appetites of its customers, Netflix has added
content from CBS, Disney, MTV Networks, and Sony. In 2011 it continues to explore agreements with pay TV
channels and networks, such as HBO, as it plans to invest aggressively in streaming content. Also, Netflix is
expanding its online streaming service internationally -- one country at a time. What is fueling the company's
subscriber growth in 2011 is its push for $9.99-per-month subscriptions (for one DVD at a time plus streaming
capabilities) and $7.99-per-month pure streaming plans, expansion into Canada with pure streaming, and the
ability to tap into the now more than a couple hundred Netflix-ready devices on the market.
Building on this service, the DVD rental company, in partnership with Roku, launched a set-top box that allows
subscribers to stream videos from the Netflix website to their TVs. The Netflix box is the first of several devices to
pipe Netflix's streaming service to TV sets. Netflix also is able to stream movies to LG Electronics' Blu-ray DVD
players and VIZIO TVs. The company racked up similar content-delivery deals for TiVo digital video recorders,
Microsoft Xbox 360 and Sony PlayStation 3 game consoles, Samsung Blu-ray players, and Sony's BRAVIA Internet
Video-capable HDTVs.
The recession in the US helped Netflix sign up many new subscribers as more Americans looked to movies for
escapism and stayed at home to save money. As a result, Netflix enlisted more than 3 million new subscribers
during 2010 while lowering its subscriber acquisition and service costs.
Since its founding in 1997 by its chairman and CEO Reed Hastings, Netflix has been battling rival Blockbuster,
which started up its own online rental offerings in 2006. Netflix saw its growth slow in 2007, which it attributes in
part to Blockbuster's aggressive expansion of its online rental business. While Blockbuster's 2010 Chapter 11
bankruptcy filing may ultimately be a plus for Netflix, the company is facing new competitors, including Apple,
Amazon.com, and Google, as a result of the shift to online movie downloads.
In addition, Netflix faces other potential rivals that offer DVD rentals in Europe and online downloads of movies.
Competition from Redbox, which operates DVD-rental kiosks, began to heat up as long ago as 2009. Redbox's $1
DVD rentals and aggressive expansion has Netflix watching its back and proclaiming that kiosks will be its #1
competitor. In turn, Netflix relaunched an ad campaign to offer $8.99 unlimited monthly DVD rentals. Redbox
places its vending-machine-like kiosks outside convenient locales, such as grocery stores, discount stores, and
ubiquitous fast-food restaurants such as McDonald's. Redbox, however, is limited to 200 titles per kiosk and
primarily only recent releases.
While one would think that Netflix generates more of its revenue from sales of recently released movies, the
company uses its recommendation technology to keep the DVD shipments humming and a greater number of its
older DVDs in circulation. In 2009 about 70% of the DVDs shipped were titles with release dates of greater than 13
weeks. Netflix is able to increase demand for older titles that are sitting in its distribution centers by
recommending movies to users as they rate movies seen. Netflix also has leveraged its subscriber base by allowing
companies to place ads in Netflix e-mails and on its signature red mailing envelopes.

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Industry Information
Hoover's Industries
> Retail
> Music, Video, Book & Entertainment Retail ( primary
)
> Nonstore Retail
> Internet Retail
> Media
> Internet Content Providers

Primary SIC Code


78410000 : Video tape rental
Primary NAICS Code
532230 : Video Tape and Disc Rental

Denotes In-depth Industry Insight by Hoover's Editorial Staff

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People
Employees
Title Name Age Salary Bonus

Chairman, President, and CEO Mr. Reed Hastings 50 $1,000,000.00 --


CFO Mr. David Wells -- --
Chief Product Officer Mr. Neil Hunt 49 $800,000.00 --
Chief Marketing Officer Ms. Leslie J. Kilgore 45 $750,000.00 --
Chief Talent Officer Ms. Patricia J. (Patty) 57 -- --
McCord
Chief Service and DVD Operations Mr. Andrew (Andy) Rendich 42 -- --
Officer
Chief Content Officer Mr. Ted Sarandos 46 $900,000.00 --
VP and Controller JC Berger -- --
VP Investor Relations Ms. Deborah Crawford -- --
VP Content Acquisition Ms. Cindy Holland -- --
VP Content Acquisition Ms. Lisa Nishimura -- --
VP Communications Mr. Ken Ross -- --
VP Content Acquisition Ms. Erin Ruane -- --
VP Corporate Communications Mr. Steve Swasey -- --
General Counsel Mr. David Hyman -- --
Director Mr. Richard N. (Rich) 43 -- --
Barton
Director Mr. A. George (Skip) Battle 67 -- --
Director Mr. Charles H. (Charlie) -- --
Giancarlo
Director Mr. Timothy M. (Tim) Haley 56 -- --
Director Mr. Jay C. Hoag 51 -- --
Director Ms. Ann Mather 49 -- --
Regional Manager Lee Hall -- --
Regional Manager Brent Wickens -- --
Director Engineering Andy Atkins -- --
Director-online Partner Marketing Jim Bobowski -- --
Director Of Encoding Engineering George Bruder -- --
And Operations
Art Director/senior Uxd Katie Bush -- --
Director - Investor Relations; Public Deborah Crawford -- --
Relations Manager
Director Content Acquisitions Jeff Egger -- --
Creative Director Barry Enderwick -- --
Director Content Acquisition Pauline Fischer -- --

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Title Name Age Salary Bonus

Director, Content Delivery; Ken Florance -- --


Information Technology Director
Director Business And Legal Affairs Bryony Gagan -- --
Director Of Engineering Api And Michael Hart -- --
Community
Director-test Engineering Gautam Kotwal -- --
Senior Director C S Lewis -- --
Director Engineering-interactive Tv Matt Marenghi -- --
Director Content Acquisition Kelly Merryman -- --
Director, Product Planning Lisa Mesh -- --
Director Of Compliance Eddie Ogihara -- --
Director, Engineering For Business Aroon Ramadoss -- --
Applications; Senior Software
Engineer
Director Of Technical Accounting Renee Rodriguez -- --
And Sec Reporting
Director Cinematch Jon Sanders -- --
Director Data Engineering Eva Tse -- --
Senior Accounting Manager Content Jennifer Anderson -- --
Manager Instant Streaming Saldy Antony -- --
Manager Storage Engineering; Brad Christofferson -- --
Manager, Engineering; Senior
Unix/san System Administrator
Site Content Coordinator Warren Curry -- --
Senior Manager Laurent De Segur -- --
Corporate Accounting Manager Jason Donadio -- --

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Board Members
Title Name Age
Chairman, President, and CEO Mr. Reed Hastings 50
Director Mr. Richard N. (Rich) Barton 43
Director Mr. A. George (Skip) Battle 67
Director Mr. Charles H. (Charlie) Giancarlo
Director Mr. Timothy M. (Tim) Haley 56
Director Mr. Jay C. Hoag 51
Director Ms. Ann Mather 49

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Biographies
Reed Hastings, Age 50

Current Company Titles


Unknown - Present : Chairman, President, and CEO

Current Company Compensation History


Salary Bonus Total
2009 : $1,000,000.00 -- $2,756,268.00
2008 : $994,231.00 -- $2,760,854.00
2007 : $850,000.00 -- --
2006 : $500,000.00 -- --
2004 : $136,154.00 -- --
2003 : $224,615.00 -- --
2002 : $229,762.00 -- --
2001 : $13,800.00 -- --
Other Company Affiliations
Director, Microsoft Corporation

Biography
Reed Hastings co-founded Netflix in 1997 and launched the subscription service in 1999. Netflix
grew to one million subscribers in less than four years, and reached 12.3 million subscribers by
the end of 2009. In nine out of ten surveys since 2005 Netflix has been ranked number one in
customer satisfaction across all of ecommerce by independent researcher ForeSee Results. In
2010, the American Customer Satisfaction Index (ASCI) ranked Netflix number one for
customer satisfaction among all e-retail, e-brokerage and e-travel sites. In the fall of 2005,
Netflix was the winner of Fast Company's national Customers First Award, with Reed appearing
on the cover of the October issue. Also in 2005, Time magazine added Reed to its "Time 100"
list of the 100 most influential global citizens. Newsweek wrote that "Netflix revolutionized the
way we watch movies." In March 2010, Barron¿s included Reed among its 30 most respected
CEOs of the year. In March 2007 Reed was appointed to Microsoft Corp.¿s board of directors
and he was inducted into the Video Business Hall of Fame in December. Earlier in his career,
Reed founded Pure Software, which he built into one of the world¿s 50 largest public software
companies. After a successful public offering and a number of acquisitions, Pure was acquired
by Rational Software in 1997. Reed is an active educational philanthropist and board member of
many non-profits. In addition, he was President of the California State Board of Education from
2000 to 2004. He has led successful statewide political campaigns for more charter public
schools and easier passage of local school bonds. Reed received a BA from Bowdoin College in
1983 and an MSCS degree from Stanford University in 1988. He holds several patents. Between
Bowdoin and Stanford, Reed served in the U.S. Peace Corps as a high school math teacher in
Swaziland.
Source : Company Web Site, 2010

Neil Hunt, Age 49


Title held since 1999 : Chief Product Officer

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Current Company Titles
1999 - Present : Chief Product Officer

Current Company Compensation History


Salary Bonus Total
2009 : $800,000.00 -- $1,510,006.00
2008 : $795,000.00 -- $1,507,164.00
2007 : $670,000.00 -- --
Biography
Hunt has served as Netflix Chief Product Officer since 1999. Neil leads the Web site
development team that has designed and continuously improves the Netflix site, which has
been ranked nine out of 10 times by ForeSee Results as the #1 rated Web site for customer
satisfaction. Neil's focus on customization and personalization ensures every Netflix member a
unique experience every time they visit the site. This includes the movies they see on each
page, the recommendations they receive on movies, and the critical account management tools
they use, such as their dynamic queue to order movies. Proprietary, algorithmically-driven
software provides the service and competitive differentiation that have made Netflix one of the
most prominent and admired brands on the Internet and has helped revolutionize the way
consumers make home entertainment choices. On an average day the site facilitates about two
million Queue adds and processes more than two million movie ratings. Neil is an accomplished
scientist who excels at leading development teams to create powerful software that is reliable
and easy to use. He honed that ability through research at Palo Alto laboratories and a decade
in the software industry. Beginning in 1991, Neil was responsible for the architecture and
evolution of Purify and other developer tools for Pure Software while Netflix CEO Reed
Hastings was its chief executive. Rational Software Corp. acquired the firm in 1997. Neil then
served as director of engineering for Rational, managing development of TeamTest, TestStudio,
Visual Test and other software testing tools. Neil earned his doctorate in computer science
from the University of Aberdeen, U.K., in 1986. During and afterward, he conducted research in
several Palo Alto corporate laboratories. He has a bachelor's degree from the University of
Durham, U.K.
Source : Company Web Site, 2010

Leslie J. Kilgore, Age 45


Title held since 2000 : Chief Marketing Officer
Current Company Titles
2000 - Present : Chief Marketing Officer

Current Company Compensation History


Salary Bonus Total
2009 : $750,000.00 -- $2,074,568.00
2008 : $748,077.00 -- $2,089,703.00
2007 : $700,000.00 -- --
2006 : $650,000.00 -- --

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Salary Bonus Total
2004 : $503,846.00 -- --
2003 : $315,539.00 -- --
2002 : $217,692.00 -- --
2001 : $190,000.00 -- --
Other Company Affiliations
Director, LinkedIn Corporation

Biography
Leslie Kilgore has served as chief marketing officer at Netflix since 2000. Leslie came to the
company with more than a decade of consumer products and e-commerce marketing
experience at premier brands in packaged goods and online retailing. She believes that success
results when superior products and superior value are offered to the consumer and has made
this the underpinning of her career. Rapid, cost-effective subscriber acquisition is Leslie's
principal mission at Netflix. During her tenure, she has grown the Netflix subscriber base from
fewer than 100,000 to 12.3 million by the end of 2009. Since Leslie joined the company, Netflix
has evolved from a Bay Area phenomenon to a nationally distributed service ranked nine out of
10 times since 2005 as the #1 online retailer for customer satisfaction by independent
researchers ForeSee Results and FGI Research. In January 2007 Netflix was named Innovator
of the Year for 2006 by the National Retail Federation and in October 2005 Fast Company
magazine named Netflix the #1 customer experience in American business. Knowing when to
engage marketing channels based on the careful balance of cost and reach has been critical to
growing membership both exponentially and profitably. Beginning first with online advertising
and public relations designed to build off of the virulent enthusiasm of Netflix members and now
including national TV advertising, her efforts have sought to evangelize a better, more
convenient and more cost effective way to rent movies. The success of these efforts are
underscored by the fact that more than 90 percent of trial members convert to paying
subscribers and more than 90 percent of those tell family and friends about the service. As a
brand manager for The Procter & Gamble Co. from 1992 to 1999, Leslie oversaw the $600
million Pantene and the $150 million Head and Shoulders brands. From 1999 to mid-2000, she
served as director of marketing for Amazon.com ¿ responsible for increasing the size, loyalty
and profitability of the customer base ¿ during a time in which online retailing enjoyed explosive
growth and established itself as a mainstream consumer channel. Leslie has a Master's degree
from the Stanford University Graduate School of Business and a Bachelor's degree from The
Wharton School of Business at the University of Pennsylvania.
Source : Company Web Site, 2010

Patricia J. (Patty) McCord, Age 57


Title held since 1998 : Chief Talent Officer
Current Company Titles
1998 - Present : Chief Talent Officer

Biography

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Patty McCord has served as Netflix Chief Talent Officer since 1998. Patty manages Netflix's
unique corporate culture, whose motto is "smart people, hard problems" and has a seemingly
disproportionate ratio of corporate employees (about 500) to total revenue (more than $1.6
billion at the end of 2009). Under Patty's leadership, Netflix attracts and retains a dynamic,
high performance workforce dedicated to superior customer experience, which has propelled
the company to be being named by ForeSee Results as the #1 Web site for customer
satisfaction in nine out of 10 surveys since 2005. Patty believes that deftly managing the talent
mix at Netflix is paramount to the success of the company. To ensure that she has the right mix
of people at Netflix, Patty often asks, "Is what you love doing and what you're extraordinary at
something Netflix needs someone to be great at?" Acknowledging the value of combining data
and values, Patty expects each employee to understand the key business objectives and relate
them to their own work. Metrics are at the core of every department, from customer acquisition
to number of discs shipped to customer demographics. While Patty's department serves as a
conduit for communications between employees and management, she is adamant about
keeping a lean organization in which openness, approachability and honesty are valued above
all else. Patty has more than 17 years of experience in human resources with high-tech
companies in the Silicon Valley. Prior to joining Netflix, Patty served as a consultant to various
start-ups as a principal of Patty McCord Consulting. From 1994 to 1997, she served as director
of human resources at Pure Atria, now Rational Software Corporation, where she managed all
human resources functions and directed all management development programs. From 1992 to
1994, Patty was human resources manager at Borland International, where she implemented a
recruitment strategy to double the engineering staff in one year. Prior to Borland she worked at
Sun Microsystems where she started the Diversity Programs Department.
Source : Company Web Site, 2010

Andrew (Andy) Rendich, Age 42


Title held since 2009 : Chief Service and DVD Operations Officer
Current Company Titles
2009 - Present : Chief Service and DVD Operations Officer
2007 - 2009 : VP Operations

Biography
Andrew Rendich has been with Netflix Inc., based in Los Gatos, Calif., since 1999, rising to head
of operations after serving in a variety of roles ranging from engineering services to executive
management. Since early 2007, Andrew has served as Vice President of Operations in charge
of Operations Engineering, Shipping and Receiving, and Customer Service. He oversees more
than 2,500 employees, including company officers, directors, managers and hourly associates
in 59 shipping and fulfillment centers nationwide and a national call center in Hillsboro, Oregon.
Andrew¿s primary focus is to constantly improve the company¿s DVD rental service through
reducing service errors, such as late shipments and unplayable discs, and lowering costs by
reducing scrap discs and optimizing direct labor. From 2003 to 2007 Andrew served as Vice
President of Systems Development at Netflix, which included the development of all systems
related to the DVD service, ERP, Customer Service and Content Purchasing. Andrew also played
a key role in developing the automation that drives the company's DVD service. Key focuses
were developing and leading a team of world-class engineers, developing a logistics system that
has a very high transactional rate in a short period of time while keeping the systems highly

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reliable, available and cost effective. During Andrew¿s tenure at Netflix, daily DVD shipments
have grown from a few thousand to more than 2 million. Andrew has overseen the development
of automation that speeds up the shipping process, replacing legacy processes that inserted
650 DVDs into a mailer per hour with automation that inserts more than 4,000 an hour, for
example. Andrew also oversees the company¿s liaison with the United States Postal Service,
with which Netflix spends more than $450 million annually to deliver its iconic red envelopes.
Prior to joining Netflix, Andrew spent eight years in engineering management and software
development. He was Director of Engineering at Verax Systems in Rochester NY for five years
where he oversaw the development of the company¿s PC-based statistical process control
software and development of proprietary micro-processor control data collection devices.
Andrew has degrees in Computer Engineering and Computer Science from RIT and Alfred State.
He lives in San Ramon, California with his wife and children.
Source : Company Web Site, 2010

Ted Sarandos, Age 46

Current Company Titles


Unknown - Present : Chief Content Officer

Current Company Compensation History


Salary Bonus Total
2009 : $900,000.00 -- $1,089,714.00
2008 : $896,538.00 -- $1,087,532.00
2007 : $810,000.00 -- --
Biography
Ted Sarandos has led content acquisition for Netflix since 2000. With more than 20 years'
experience in home entertainment, Ted is recognized in the industry as an innovator in film
acquisition and distribution. Ted oversees the Beverly Hills office of Netflix with a staff of 75
people who manage the company's content acquisition through relationships with studios,
networks, film makers and producers. As Netflix has grown to 12.3 million subscribers by the
end of 2009, Ted has established Netflix as a successful film distributor within the
entertainment industry. During Ted's tenure, the Netflix library has increased from 2,000 to
100,000 titles on DVD and more than 17,000 movies and TV episodes available to watch
instantly on the computer and the TV. Ted has enabled Netflix to provide the broadest variety
of films for consumers as well as offer an alternate distribution method for smaller and
independent films that might not otherwise be seen. Ted began his home video career managing
a metropolitan retail chain from 1983 to 1988. He then moved to video distributor ETD, where
he served as Western regional director of sales and operations. Until March 2000, Ted was vice
president of product and merchandising for Video City, where he negotiated the industry's first
DVD revenue sharing agreement and reduced the cost of content from all studios. Ted is a
former chapter president and board member for the Video Software Dealers Association. He
also serves on the Film Advisory Board for Tribeca Film Festival, the retail advisory board for
the Digital Entertainment Group, FIND Advisory Board and MediaRights.org, as well as a serving
as a trustee for International Documentary Association. Ted has been included in Variety's
"Global 50," a list of the 50 most influential people in independent film distribution, as well as

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The Hollywood Reporter's "Indie Power 50." Ted lives in Beverly Hills with his wife Nicole and
two children, Sarah and Tony.
Source : Company Web Site, 2010

Company Financials

Financial Summary
Company Type Public
NASDAQ (GS): NFLX
Headquarters
Fiscal Year-End December
2010 Sales $2,162.63M
1-Year Sales Growth 29.48%
2010 Net Income $160.85M
1-Year Net Income Growth 38.83%
Prescreen Score Low Risk
Auditor KPMG LLP

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Annual Income Statement
All amounts in millions of US Dollars except per share amounts.

Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Revenue 2,162.63 1,670.27 1,364.66 1,205.34 996.66
Cost of Goods Sold 1,357.35 1,079.27 910.23 786.17 626.98
Gross Profit 805.27 591.00 454.43 419.17 369.67
Gross Profit Margin 37.24% 35.38% 33.30% 34.78% 37.09%
SG&A Expense 364.39 289.08 249.38 270.81 261.68
Depreciation and Amortization 338.70 257.53 242.84 224.99 157.14
Operating Income 283.64 191.94 121.51 91.16 64.41
Operating Margin 13.12% 11.49% 8.90% 7.56% 6.46%
Nonoperating Income 0.00 0.00 6.33 14.20 4.80
Nonoperating Expenses (15.94) 0.25 --
Income Before Taxes 267.70 192.19 131.50 111.50 80.32
Income Taxes 106.84 76.33 48.47 44.55 31.24
Net Income After Taxes 160.85 115.86 83.03 66.95 49.08

Continuing Operations 160.85 115.86 83.03 66.95 49.08


Discontinued Operations -- -- -- -- --
Total Operations 160.85 115.86 83.03 66.95 49.08
Total Net Income 160.85 115.86 83.03 66.95 49.08
Net Profit Margin 7.44% 6.94% 6.08% 5.55% 4.92%

Diluted EPS from Continuing Operations 2.96 1.98 1.32 0.97 0.71
Diluted EPS from Total Operations 2.96 1.98 1.32 0.97 0.71
Diluted EPS from Total Net Income 2.96 1.98 1.32 0.97 0.71
Dividends per Share -- -- -- -- --

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Quarterly Income
All amounts in millions of US Dollars except per share amounts.

Quarter Ending Dec 2010 Sep 2010 Jun 2010 Mar 2010 Dec 2009
Revenue 595.92 553.22 519.82 493.67 444.54
Cost of Goods Sold 390.79 344.47 314.93 307.16 275.49
Gross Profit 205.13 208.75 204.88 186.50 169.06
Gross Profit Margin 34.42% 37.73% 39.41% 37.78% 38.03%
SG&A Expense 81.96 98.37 91.65 92.41 84.24
Depreciation and Amortization 338.70 233.43 147.60 73.15 257.53
Operating Income 78.45 69.50 77.34 58.35 53.35
Operating Margin 13.16% 12.56% 14.88% 11.82% 12.00%
Nonoperating Income 0.00 0.00 0.00 0.00 0.00
Nonoperating Expenses (3.89) (4.09) (3.97) (3.99) (2.01)
Income Before Taxes 74.56 65.41 73.37 54.36 51.34
Income Taxes 27.46 27.44 29.85 22.09 20.42
Net Income After Taxes 47.09 37.97 43.52 32.27 30.91

Continuing Operations 47.10 37.97 43.52 32.27 30.91


Discontinued Operations -- -- -- -- --
Total Operations 47.10 37.97 43.52 32.27 30.91
Total Net Income 47.10 37.97 43.52 32.27 30.91
Net Profit Margin 7.90% 6.86% 8.37% 6.54% 6.95%

Diluted EPS from Continuing Operations 0.87 0.70 0.80 0.59 0.55
Diluted EPS from Total Operations 0.87 0.70 0.80 0.59 0.55
Diluted EPS from Total Net Income 0.87 0.70 0.80 0.59 0.55
Dividends per Share -- -- -- -- --

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Annual Balance Sheet
All amounts in millions of US Dollars except per share amounts.

Assets
Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Current Assets
Cash 194.50 134.22 139.88 177.44 400.43
Net Receivables --
Inventories 181.01 37.33 -- -- --
Other Current Assets 265.46 239.46 221.57 239.09 27.99
Total Current Assets 640.97 411.01 361.45 416.53 428.42
Net Fixed Assets 128.57 131.65 124.95 77.33 55.50
Other Noncurrent 212.53 137.07 131.55 153.16 124.86
Total Assets 982.07 679.73 617.95 647.02 608.78

Shareholder's Equity
Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006

Preferred Stock Equity 0.00 0.00 -- -- --


Common Stock Equity 290.16 199.14 347.15 430.75 414.21
Total Equity 290.16 199.14 347.15 430.75 414.21
Shares Outstanding (M) 52.89 52.89 52.89 52.89 52.89

Liabilities
Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Current Liabilities
Accounts Payable 222.82 91.47 100.34 104.44 93.86
Short-Term Debt 2.08 1.41 1.15 --
Other Current Liabilities 163.67 133.48 114.52 108.13 99.58
Total Current Liabilities 388.58 226.37 216.02 212.58 193.45
Long-Term Debt 234.12 236.57 37.99 --
Other Noncurrent 69.20 17.65 16.79 3.69 1.12
Total Liabilities 691.90 480.59 270.79 216.27 194.57

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 16


Quarterly Balance Sheet
All amounts in millions of US Dollars except per share amounts.

Assets
Quarter Ending Dec 2010 Sep 2010 Jun 2010 Mar 2010 Dec 2009
Current Assets
Cash 194.50 113.11 107.33 79.86 134.22
Net Receivables --
Inventories 181.01 138.39 93.12 55.57 37.33
Other Current Assets 265.46 240.75 240.77 244.11 239.46
Total Current Assets 640.97 492.25 441.22 379.54 411.01
Net Fixed Assets 128.57 125.06 123.29 127.17 131.65
Other Noncurrent 212.53 152.98 129.46 141.59 137.07
Total Assets 982.07 770.28 693.97 648.29 679.73

Shareholder's Equity
Quarter Ending Dec 2010 Sep 2010 Jun 2010 Mar 2010 Dec 2009

Preferred Stock Equity 0.00 -- -- -- 0.00


Common Stock Equity 290.16 191.98 176.64 146.74 199.14
Total Equity 290.16 191.98 176.64 146.74 199.14
Shares Outstanding (M) 52.89 52.89 52.89 52.89 52.89

Liabilities
Quarter Ending Dec 2010 Sep 2010 Jun 2010 Mar 2010 Dec 2009
Current Liabilities
Accounts Payable 222.82 170.12 120.03 102.70 91.47
Short-Term Debt 2.08 2.03 1.97 1.92 1.41
Other Current Liabilities 163.67 139.96 136.16 138.83 133.48
Total Current Liabilities 388.58 312.11 258.17 243.45 226.37
Long-Term Debt 234.12 234.66 235.18 235.70 236.57
Other Noncurrent 69.20 31.54 23.98 22.41 17.65
Total Liabilities 691.90 578.31 517.33 501.56 480.59

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 17


Annual Cash Flow
All amounts in millions of US Dollars except per share amounts.

Dec 2010 Dec 2009 Dec 2008 Dec 2007 Dec 2006
Cash and Cash Equivalents at the Beginning 134.22 139.88 177.44 400.43 212.26
of Year
Net Cash Provided in Operating Activities 276.40 325.06 284.04 291.82 247.86
Net Cash Provided by Investing Activities (116.08) (246.08) (144.96) (450.81) (185.87)
Net Cash Provided by Financing Activities (100.04) (84.64) (176.63) (64.00) 126.18
Net Increase/Decrease in Cash and Cash 60.28 (5.66) (37.56) (222.99) 188.17
Equivalents
Cash and Cash Equivalents at the End of 194.50 134.22 139.88 177.44 400.43
Year

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 18


Quarterly Cash Flow
All amounts in millions of US Dollars except per share amounts.

Quarter Ending Dec 2010 Sep 2010 Jun 2010 Mar 2010 Dec 2009
Cash and Cash Equivalents at the Beginning 113.11 107.33 79.86 134.22 55.72
of Year
Net Cash Provided in Operating Activities 276.40 179.68 137.46 75.41 325.06
Net Cash Provided by Investing Activities (116.08) (57.90) (52.29) (39.03) (246.08)
Net Cash Provided by Financing Activities (100.04) (142.90) (112.06) (90.74) (84.64)
Net Increase/Decrease in Cash and Cash 60.28 (21.12) (26.90) (54.36) (5.66)
Equivalents
Cash and Cash Equivalents at the End of 194.50 113.11 107.33 79.86 134.22
Year

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 19


Earning Estimates
Current Quarter Next Quarter Current Year Next Year
Dec 10 Mar 11 Dec 10 Dec 10

Average Estimate $0.71 $0.87 $2.81 $3.88


Number of Analysts 28 19 29 28
High Estimate $0.78 $1.00 $3.04 $4.55
Low Estimate $0.63 $0.76 $2.72 $2.85
Year ago EPS $0.56 $0.59 $1.98 --
Growth Rate 27.10% 48.17% 42.08% 37.89%
Consensus Recommendation Moderate Sell

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 20


Financial Market Data
Current Information
Last Close (04-Mar-2011) $210.72 Price/Sales Ratio 5.29
52-Week High $247.55 Price/Book Ratio 38.46
52-Week Low $67.03 Price/Earnings Ratio 71.43
60-Month Beta 0.48 Price/Cash Flow Ratio 41.32
Market Cap $11,145.19M Return on Assets 19.36%
Shares Outstanding 52.89M Return on Equity 65.75%
Dividend Rate -- Current Ratio 1.65
Dividend Yield 0.00% Long-Term Debt/Equity 0.69
# of Institutional Holders % Owned by Institutions --
Latest Short Interest Ratio 2.28 Latest Net Insider Transactions

Growth 12 Month 36 Month 60 Month

Revenue Growth 29.48% 21.51% 25.95%


EPS Growth 49.49% 45.05% 35.84%
Dividend Growth -- -- --

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 21


Historical Financials
Income Statement
Year Revenue ($ M) Net Income ($ M) Net Profit Margin Employees
Dec 2010 2,162.63 160.85 7.44% 4,329
Dec 2009 1,670.27 115.86 6.94% 4,080
Dec 2008 1,364.66 83.03 6.08% 1,644
Dec 2007 1,205.34 66.95 5.55% 2,670
Dec 2006 996.66 49.08 4.92% 1,300
Dec 2005 682.21 42.03 6.16% 985
Dec 2004 506.23 21.59 4.27% 1,193
Dec 2003 272.24 6.51 2.39% 791
Dec 2002 152.81 (21.95) -- 495
Dec 2001 75.91 (38.62) -- 264

2010 Year-End Financials


Debt Ratio 80.69%
Return on Equity 65.75%
Cash ($ M) 194.50
Current Ratio 1.65
Long-Term Debt ($ M) 234.12
Shares Outstanding (M) 52.89
Dividend Yield 0.00%
Dividend Payout --
Market Cap ($ M) 9,292.88

Stock History
Stock Price ($) P/E Per Share ($)
Year FY High FY Low FY Close High Low Earns. Div. Book Value
Dec 2010 209.24 48.52 175.70 70.69 16.39 2.96 -- 5.49
Dec 2009 61.65 28.78 55.09 31.14 14.54 1.98 -- 3.77
Dec 2008 40.90 17.90 29.89 30.98 13.56 1.32 -- 6.56
Dec 2007 29.14 15.62 26.62 30.04 16.10 0.97 -- 8.14
Dec 2006 33.12 18.12 25.86 46.65 25.52 0.71 -- 7.83
Dec 2005 30.25 8.91 27.06 47.27 13.92 0.64 -- 4.28
Dec 2004 39.77 9.25 12.33 120.52 28.03 0.33 -- 2.95
Dec 2003 30.50 5.34 27.34 305.00 53.35 0.10 -- 2.13
Dec 2002 9.10 2.42 5.51 -- -- -0.78 -- 1.69
Dec 2001 -- -- -- -- -- -10.57 -- --

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 22


Competitors List
Company Gross Revenue Net Profit Net Operating Cash Flow
Margin

Amazon.com (Top Competitor) $34,204.00M 3.37% $3,495.00M


Apple Inc. $65,225.00M 21.81% $18,595.00M
AT&T $124,280.00M 15.98% $34,993.00M
Best Buy $49,694.00M 2.78% $2,206.00M
Blockbuster Inc. (Top Competitor) $4,062.40M (17.70%) $29.30M
Columbia House -- -- --
Comcast $37,937.00M 9.58% $11,179.00M
Cox Communications $8,700.00M -- --
DIRECTV $24,102.00M 9.12% $5,206.00M
DISH Network $12,640.74M 7.79% $2,139.80M
EchoStar $2,350.37M 8.69% $404.02M
Google $29,321.00M 29.01% $11,081.00M
Hastings Entertainment $531.35M 1.29% $26.60M
HBO -- -- --
Hulu $2.90M -- --
Kroger $76,733.00M 0.09% $2,922.00M
Redbox (Top Competitor) -- -- --
Showtime Networks -- -- --
Starz Entertainment -- -- --
Target $65,357.00M 3.81% $5,881.00M
Time Warner Cable $18,868.00M 6.93% $5,218.00M
Verizon $106,565.00M 2.39% $33,363.00M
Wal-Mart $408,214.00M 3.51% $26,249.00M

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 23


Competitive Landscape
Companies listed are Top Competitors.

Key Numbers Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox


Automated Retail,
LLC
Annual Sales ($ M) $2,162.63M $4,062.40M $34,204.00M --
Employees 4,329 33,700
Market Cap ($ M) $9,292.88M -- $81,180.68M --

Profitability Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
Gross Profit Margin 37.24% 53.56% 22.35% -- 30.95% 30.37%
Pre-Tax Profit 12.38% (17.16%) 4.38% -- 4.79% 9.38%
Net Profit Margin 7.44% (17.70%) 3.37% -- 1.14% 4.03%
Return on Equity 65.75% -- 19.01% -- 4.44% 6.11%
Return on Assets 19.36% (41.89%) 7.07% -- 1.90% 1.01%
Return on Invested 33.39% -- 17.90% -- 3.36% 2.79%
Capital

Valuation Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
Price/Sales Ratio 5.29 0.01 2.29 -- 1.02 1.60
Price/Earnings Ratio 71.43 -0.04 68.03 -- 33.00 --
Price/Book Ratio 38.46 -0.05 11.27 -- 3.83 2.31
Price/Cash Flow 41.32 2.14 22.42 -- 12.79 10.91

Operations Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
Days of Sales -- 5.7 13.7 -- 14.3 45.7
Outstanding
Inventory Turnover 12.4 3.1 9.9 -- 4.2 7.0
Days Cost of Goods 29.4 118.8 36.9 -- 86.4 51.9
Sold in Inventory
Asset Turnover 2.6 2.4 2.1 -- 1.7 0.2
Net Receivables -- 63.5 26.6 -- 25.5 8.0
Turnover Flow
Effective Tax Rate 39.91% -- 23.51% -- -- --

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 24


Financial Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
Current Ratio 1.65 1.13 1.33 -- 1.54 1.46
Quick Ratio 0.90 0.29 1.00 -- 0.74 1.37
Leverage Ratio 3.38 -- 2.74 -- 2.38 5.92
Total Debt/ Equity 0.69 -- 0.03 -- 0.32 1.11
Interest Coverage 14.64 (3.80) 39.38 -- 9.49 7.97

Per Share Data Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
Per Share Data $39.82 $16.98 $75.01 -- $36.26 $18.90
Dividend Per Share -- $0.00 -- -- $0.13 $0.53
Cash Flow Per Share $5.09 $0.06 $7.66 -- $2.90 $2.78
Working Capital Per Share $4.77 $0.57 $7.48 -- $4.87 $2.47
Long-Term Debt Per Share $4.43 $3.90 $1.42 -- $2.55 $12.15
Book Value Per Share $5.49 ($2.38) $15.22 -- $9.68 $13.15
Total Assets Per Share $18.57 $7.01 $41.68 -- $22.99 $77.89

Growth Netflix, Inc. Blockbuster Inc. Amazon.com, Inc. Redbox Industry Market
Automated Retail,
LLC
12-Month Revenue 29.48% (23.18%) 39.56% -- 9.86% 1.17%
12-Month Net Income 38.83% -- 27.72% -- 12.04% 23.14%
12-Month EPS Growth 49.49% -- 24.02% -- 9.79% --
12-Month Dividend Growth -- -- -- -- (10.37%) 2.18%
36-Month Revenue Growth 21.51% (9.73%) 32.11% -- 5.64% 0.47%
36-Month Net Income Growth 33.93% -- 34.26% -- 2.39% (6.41%)
36-Month EPS Growth 45.05% -- 31.21% -- 2.42% --
36-Month Dividend Growth -- -- -- -- (3.59%) --

866-541-3770 • HOOVERS.COM Mar 05, 2011 • PAGE 25