978-0073526898 Case NFLX 10 Part 1

Type Homework Help

Pages 9

Words 1308

Textbook Equity Valuation and Analysis w/eVal 3rd Edition

Authors Richard Sloan, Russell Lundholm

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Financial Statements ($000s)

inactive

Ticker Industry Code Sector Code

Company Name #NFLX MG743 MG7

Common Shares Outstanding 52,732 (in 000s at most recent fiscal year end)

Estimated Price/Share=$15.99

Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

Fiscal Year End (MM/DD/YYYY ) 1/0/1900 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2029

Income Statement

Sales (Net) 0 75,912 152,806 272,243 506,228 690,495 995,694 1,338,212 1,667,413 1,914,190 2,009,899 2,110,394 2,215,914 2,326,710 2,443,045 2,565,197 2,693,457 2,828,130 2,969,537 3,118,013 3,273,914 3,437,610 3,609,490 3,789,965 3,979,463 4,178,436 4,387,358 4,606,726 4,837,062 5,078,915

Cost of Goods Sold 0 (20,110) (51,659) (97,369) (188,254) (291,389) (460,011) (618,254) (770,345) (884,356) (928,573) (975,002) (1,023,752) (1,074,940) (1,128,687) (1,185,121) (1,244,377) (1,306,596) (1,371,926) (1,440,522) (1,512,548) (1,588,176) (1,667,585) (1,750,964) (1,838,512) (1,930,438) (2,026,959) (2,128,307) (2,234,723) (2,346,459)

Gross Profit 0 55,802 101,147 174,874 317,974 399,106 535,683 719,958 897,068 1,029,834 1,081,326 1,135,392 1,192,162 1,251,770 1,314,358 1,380,076 1,449,080 1,521,534 1,597,611 1,677,491 1,761,366 1,849,434 1,941,906 2,039,001 2,140,951 2,247,999 2,360,399 2,478,419 2,602,339 2,732,456

R&D Expense 0 (17,734) (14,625) (17,884) (22,906) (30,382) (38,832) (52,190) (65,029) (74,653) (78,386) (82,305) (86,421) (90,742) (95,279) (100,043) (105,045) (110,297) (115,812) (121,603) (127,683) (134,067) (140,770) (147,809) (155,199) (162,959) (171,107) (179,662) (188,645) (198,078)

SG&A Expense 0 (44,827) (71,717) (101,527) (187,510) (244,435) (338,536) (454,992) (566,920) (650,825) (683,366) (717,534) (753,411) (791,081) (830,635) (872,167) (915,775) (961,564) (1,009,642) (1,060,125) (1,113,131) (1,168,787) (1,227,227) (1,288,588) (1,353,017) (1,420,668) (1,491,702) (1,566,287) (1,644,601) (1,726,831)

EBITDA 0 (6,759) 14,805 55,463 107,558 124,289 158,315 212,776 265,119 304,356 319,574 335,553 352,330 369,947 388,444 407,866 428,260 449,673 472,156 495,764 520,552 546,580 573,909 602,604 632,735 664,371 697,590 732,469 769,093 807,548

Depreciation & Amortization 0 (29,797) (26,477) (50,991) (88,204) (109,380) (101,324) (140,246) (180,610) (215,220) (235,801) (247,591) (259,970) (272,969) (286,617) (300,948) (315,995) (331,795) (348,385) (365,804) (384,094) (403,299) (423,464) (444,637) (466,869) (490,212) (514,723) (540,459) (567,482) (595,856)

EBIT 0 (36,556) (11,672) 4,472 19,354 14,909 56,991 72,530 84,509 89,136 83,773 87,962 92,360 96,978 101,827 106,918 112,264 117,878 123,771 129,960 136,458 143,281 150,445 157,967 165,866 174,159 182,867 192,010 201,611 211,691

Interest Expense 0 (1,852) (11,972) (417) (170) (52) (73) (101) (130) (155) (170) (178) (187) (196) (206) (217) (227) (239) (251) (263) (276) (290) (305) (320) (336) (353) (370) (389) (408) (429)

Non-Operating Income (Loss) 0 (210) 1,697 2,457 2,592 3,535 5,098 6,852 8,538 9,801 10,291 10,806 11,346 11,913 12,509 13,134 13,791 14,481 15,205 15,965 16,763 17,601 18,481 19,405 20,376 21,395 22,464 23,587 24,767 26,005

EBT 0 (38,618) (21,947) 6,512 21,776 18,393 62,017 79,281 92,917 98,782 93,895 98,590 103,519 108,695 114,130 119,836 125,828 132,119 138,725 145,662 152,945 160,592 168,622 177,053 185,905 195,201 204,961 215,209 225,969 237,268

Income Taxes 0 0 0 0 (181) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Minority Interest in Earnings 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Income (Loss) 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net Income Before Ext. Items 0 (38,618) (21,947) 6,512 21,595 18,393 62,017 79,281 92,917 98,782 93,895 98,590 103,519 108,695 114,130 119,836 125,828 132,119 138,725 145,662 152,945 160,592 168,622 177,053 185,905 195,201 204,961 215,209 225,969 237,268

Ext. Items & Disc. Ops. 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Preferred Dividends 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net Income (available to common) 0 (38,618) (21,947) 6,512 21,595 18,393 62,017 79,281 92,917 98,782 93,895 98,590 103,519 108,695 114,130 119,836 125,828 132,119 138,725 145,662 152,945 160,592 168,622 177,053 185,905 195,201 204,961 215,209 225,969 237,268

Balance Sheet

Operating Cash and Market. Sec. 0 16,131 103,610 135,191 174,461 237,965 343,145 461,187 574,639 659,686 692,670 727,304 763,669 801,852 841,945 884,042 928,244 974,656 1,023,389 1,074,559 1,128,287 1,184,701 1,243,936 1,306,133 1,371,440 1,440,012 1,512,012 1,587,613 1,666,993 1,750,343

Receivables 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Inventories 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Current Assets 0 3,421 3,465 3,755 12,885 17,575 25,343 34,061 42,441 48,722 51,158 53,716 56,402 59,222 62,183 65,292 68,556 71,984 75,583 79,363 83,331 87,497 91,872 96,466 101,289 106,354 111,671 117,255 123,118 129,273

Total Current Assets 0 19,552 107,075 138,946 187,346 255,540 368,489 495,249 617,080 708,408 743,828 781,019 820,070 861,074 904,128 949,334 996,801 1,046,641 1,098,973 1,153,921 1,211,618 1,272,198 1,335,808 1,402,599 1,472,729 1,546,365 1,623,683 1,704,868 1,790,111 1,879,616

PP&E (Net) 0 11,838 15,592 9,772 18,728 25,545 36,836 49,507 61,686 70,816 74,357 78,074 81,978 86,077 90,381 94,900 99,645 104,627 109,859 115,351 121,119 127,175 133,534 140,210 147,221 154,582 162,311 170,427 178,948 187,895

Investments 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Intangibles 0 7,917 6,094 2,948 961 1,311 1,890 2,540 3,165 3,634 3,816 4,006 4,207 4,417 4,638 4,870 5,113 5,369 5,637 5,919 6,215 6,526 6,852 7,195 7,554 7,932 8,329 8,745 9,182 9,642

Other Assets 0 2,323 1,769 24,346 44,758 61,050 88,034 118,318 147,424 169,243 177,705 186,590 195,919 205,715 216,001 226,801 238,141 250,048 262,551 275,678 289,462 303,935 319,132 335,089 351,843 369,435 387,907 407,302 427,667 449,051

Total Assets 0 41,630 130,530 176,012 251,793 343,446 495,249 665,614 829,355 952,100 999,705 1,049,690 1,102,175 1,157,283 1,215,147 1,275,905 1,339,700 1,406,685 1,477,019 1,550,870 1,628,414 1,709,834 1,795,326 1,885,093 1,979,347 2,078,314 2,182,230 2,291,342 2,405,909 2,526,204

Current Debt 0 3,012 1,231 416 68 93 134 180 224 257 270 283 298 313 328 345 362 380 399 419 440 462 485 509 535 561 589 619 650 682

Accounts Payable 0 13,715 20,350 32,654 49,775 77,044 121,628 163,469 203,682 233,827 245,518 257,794 270,684 284,218 298,429 313,350 329,018 345,468 362,742 380,879 399,923 419,919 440,915 462,961 486,109 510,414 535,935 562,732 590,868 620,412

Income Taxes Payable 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Current Liabilities 0 9,481 18,845 29,949 45,067 61,471 88,642 119,135 148,442 170,411 178,931 187,878 197,272 207,136 217,492 228,367 239,785 251,775 264,363 277,581 291,461 306,034 321,335 337,402 354,272 371,986 390,585 410,114 430,620 452,151

Total Current Liabilities 0 26,208 40,426 63,019 94,910 138,608 210,404 282,783 352,347 404,495 424,719 445,955 468,253 491,666 516,249 542,062 569,165 597,623 627,504 658,879 691,823 726,414 762,735 800,872 840,915 882,961 927,109 973,465 1,022,138 1,073,245

Long-Term Debt 0 3,856 460 44 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Liabilities 0240 288 241 600 818 1,180 1,586 1,976 2,269 2,382 2,501 2,626 2,758 2,896 3,040 3,192 3,352 3,520 3,696 3,880 4,074 4,278 4,492 4,717 4,952 5,200 5,460 5,733 6,020

Deferred Taxes 000000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Minority Interest 0 101,830 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Liabilities 0 132,134 41,174 63,304 95,510 139,427 211,584 284,369 354,324 406,763 427,102 448,457 470,880 494,424 519,145 545,102 572,357 600,975 631,024 662,575 695,704 730,489 767,013 805,364 845,632 887,914 932,309 978,925 1,027,871 1,079,265

Preferred Stock 060000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Paid in Common Capital (Net) 0 46,756 248,569 266,001 287,981 317,324 334,954 353,253 354,123 325,645 259,017 189,058 115,601 38,470 (42,516) (127,553) (216,840) (310,593) (409,033) (512,395) (620,925) (734,881) (854,536) (980,173) (1,112,092) (1,250,606) (1,396,047) (1,548,760) (1,709,108) (1,877,474)

Retained Earnings 0 (137,266) (159,213) (153,293) (131,698) (113,305) (51,289) 27,992 120,909 219,691 313,586 412,175 515,694 624,389 738,519 858,355 984,183 1,116,303 1,255,028 1,400,690 1,553,635 1,714,227 1,882,849 2,059,901 2,245,807 2,441,007 2,645,968 2,861,177 3,087,146 3,324,413

Total Common Equity 0 (90,510) 89,356 112,708 156,283 204,019 283,665 381,245 475,032 545,336 572,603 601,233 631,295 662,860 696,003 730,803 767,343 805,710 845,996 888,295 932,710 979,346 1,028,313 1,079,729 1,133,715 1,190,401 1,249,921 1,312,417 1,378,038 1,446,940

Total Liabilities and Equity 0 41,630 130,530 176,012 251,793 343,446 495,249 665,614 829,355 952,100 999,705 1,049,690 1,102,175 1,157,283 1,215,147 1,275,905 1,339,700 1,406,685 1,477,019 1,550,870 1,628,414 1,709,834 1,795,326 1,885,093 1,979,347 2,078,314 2,182,230 2,291,342 2,405,909 2,526,204

Statement of Retained Earnings

Beg. Retained Earnings 0 (137,266) (159,213) (153,293) (131,698) (113,305) (51,289) 27,992 120,909 219,691 313,586 412,175 515,694 624,389 738,519 858,355 984,183 1,116,303 1,255,028 1,400,690 1,553,635 1,714,227 1,882,849 2,059,901 2,245,807 2,441,007 2,645,968 2,861,177 3,087,146

+Net Income (38,618) (21,947) 6,512 21,595 18,393 62,017 79,281 92,917 98,782 93,895 98,590 103,519 108,695 114,130 119,836 125,828 132,119 138,725 145,662 152,945 160,592 168,622 177,053 185,905 195,201 204,961 215,209 225,969 237,268

-Common Dividends 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

+/-Clean Surplus Plug (Ignore) (98,648) 0 (592) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

=End. Retained Earnings 0 (137,266) (159,213) (153,293) (131,698) (113,305) (51,289) 27,992 120,909 219,691 313,586 412,175 515,694 624,389 738,519 858,355 984,183 1,116,303 1,255,028 1,400,690 1,553,635 1,714,227 1,882,849 2,059,901 2,245,807 2,441,007 2,645,968 2,861,177 3,087,146 3,324,413

NETFLIX INC

Industry/Sector Code LookUp

Ratio Analysis

Company Name

NETFLIX INC

Actual Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

Fiscal Year End Date 1/0/1900 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013

Annual Growth Rates

Sales #N/A 101.3% 78.2% 85.9% 36.4% 44.2% 34.4% 24.6% 14.8% 5.0% 5.0% 5.0% 5.0%

Assets #N/A 213.5% 34.8% 43.1% 36.4% 44.2% 34.4% 24.6% 14.8% 5.0% 5.0% 5.0% 5.0%

Common Equity #N/A #N/A 26.1% 38.7% 30.5% 39.0% 34.4% 24.6% 14.8% 5.0% 5.0% 5.0% 5.0%

Earnings #N/A #N/A #N/A 231.6% -14.8% 237.2% 27.8% 17.2% 6.3% -4.9% 5.0% 5.0% 5.0%

Free Cash Flow to Investors #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A 133.5% 5.0% 5.0% 5.0%

Sustainable Growth Rate 3803.6% 6.4% 16.1% 10.2% 25.4% 23.8% 21.7% 19.4% 16.8% 16.8% 16.8% 16.8%

Profitability

Return on Equity 0.853 38.036 0.064 0.161 0.102 0.254 0.238 0.217 0.194 0.168 0.168 0.168 0.168

Return on Equity (b4 non-recurring) 0.849 40.977 0.040 0.141 0.082 0.233 0.218 0.197 0.174 0.150 0.150 0.150 0.150

Return on Net Operating Assets 0.879 (2.692) 0.068 0.161 0.102 0.255 0.239 0.217 0.194 0.168 0.168 0.168 0.168

Basic Dupont Model

Net Profit Margin #DIV/0! (0.509) (0.144) 0.024 0.043 0.027 0.062 0.059 0.056 0.052 0.047 0.047 0.047 0.047

x Total Asset Turnover 3.647 1.775 1.776 2.367 2.320 2.374 2.306 2.231 2.149 2.060 2.060 2.060 2.060

x Total Leverage (0.460) (149.185) 1.517 1.590 1.652 1.720 1.746 1.746 1.746 1.746 1.746 1.746 1.746

= Return on Equity 0.853 38.036 0.064 0.161 0.102 0.254 0.238 0.217 0.194 0.168 0.168 0.168 0.168

Advanced Dupont Model

Net Operating Margin #DIV/0! (0.484) (0.065) 0.025 0.043 0.027 0.062 0.059 0.056 0.052 0.047 0.047 0.047 0.047

x Net Operating Asset Turnover (1.815) 41.238 2.666 3.757 3.831 4.081 4.023 3.893 3.750 3.594 3.594 3.594 3.594

= Return on Net Operating Assets 0.879 (2.692) 0.068 0.161 0.102 0.255 0.239 0.217 0.194 0.168 0.168 0.168 0.168

Net Borrowing Cost (NBC) 0.539 2.796 0.388 0.639 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644

Spread (RNOA - NBC) 0.340 (5.488) (0.320) (0.477) (0.542) (0.389) (0.405) (0.427) (0.450) (0.476) (0.476) (0.476) (0.476)

Financial Leverage (LEV) (0.076) (7.422) 0.011 0.002 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

ROE = RNOA + LEV*Spread 0.853 38.036 0.064 0.161 0.102 0.254 0.238 0.217 0.194 0.168 0.168 0.168 0.168

Margin Analysis

Gross Margin #DIV/0! 0.735 0.662 0.642 0.628 0.578 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538

EBITDA Margin #DIV/0! (0.089) 0.097 0.204 0.212 0.180 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159

EBIT Margin #DIV/0! (0.482) (0.076) 0.016 0.038 0.022 0.057 0.054 0.051 0.047 0.042 0.042 0.042 0.042

Net Operating Margin (b4 non-rec.) #DIV/0! (0.482) (0.076) 0.016 0.038 0.022 0.057 0.054 0.051 0.047 0.042 0.042 0.042 0.042

Net Operating Margin #DIV/0! (0.484) (0.065) 0.025 0.043 0.027 0.062 0.059 0.056 0.052 0.047 0.047 0.047 0.047

Turnover Analysis

Net Operating Asset Turnover (1.815) 41.238 2.666 3.757 3.831 4.081 4.023 3.893 3.750 3.594 3.594 3.594 3.594

Net Working Capital Turnover (41.664) 4.758 3.775 5.996 6.591 7.235 7.217 6.982 6.727 6.447 6.447 6.447 6.447

Avge Days to Collect Receivables 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Avge Inventory Holding Period 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

Avge Days to Pay Payables 124.465 120.344 99.346 79.910 79.428 78.819 84.157 86.980 90.286 94.209 94.209 94.209 94.209

PP&E Turnover 12.825 11.142 21.467 35.525 31.193 31.923 30.997 29.991 28.893 27.690 27.690 27.690 27.690

Analysis of Leverage

-Long-Term Capital Structure

Debt to Equity Ratio #DIV/0! (0.076) 0.019 0.004 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

FFO to Total Debt 27.155 (22.725) 53.423 417.265 1592.406 1445.492 1403.052 1356.908 1306.553 1251.384 1251.384 1251.384 1251.384

CFO to Total Debt 32.913 (18.997) 74.918 504.799 2077.420 2010.492 1808.880 1659.785 1497.086 1318.830 1318.830 1318.830 1318.830

Analysis of Leverage

- Short-Term Liquidity

Current Ratio #DIV/0! 0.746 2.649 2.205 1.974 1.844 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751

Quick Ratio #DIV/0! 0.615 2.563 2.145 1.838 1.717 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631

EBIT Interest Coverage #DIV/0! (19.739) (0.975) 10.724 113.847 288.053 781.493 718.551 650.116 575.436 493.616 493.616 493.616 493.616

EBITDA Interest Coverage #DIV/0! (3.650) 1.237 133.005 632.694 2401.384 2170.896 2107.954 2039.519 1964.839 1883.019 1883.019 1883.019 1883.019

Analysis of Credit Risk

Net Income to Total Assets #DIV/0! -0.928 -0.168 0.037 0.086 0.054 0.125 0.119 0.112 0.104 0.094 0.094 0.094 0.094

implied default probability #DIV/0! 8.3% 8.0% 3.0% 2.0% 2.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

Total Liabilities to Total Assets #DIV/0! 3.174 0.315 0.360 0.379 0.406 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427

implied default probability #DIV/0! 10.0% 2.5% 2.5% 2.5% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Quick Ratio #DIV/0! 0.615 2.563 2.145 1.838 1.717 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631

implied default probability #DIV/0! 5.0% 1.5% 2.0% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

EBIT to Interest Expense #DIV/0! (19.74) (0.97) 10.72 113.85 288.05 781.49 718.55 650.12 575.44 493.62 493.62 493.62 493.62

implied default probability 1.0% 7.5% 8.5% 1.5% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

Inventory Holding Period #DIV/0! 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

implied default probability #DIV/0! 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Annual Sales Growth #N/A 101.3% 78.2% 85.9% 36.4% 44.2% 34.4% 24.6% 14.8% 5.0% 5.0% 5.0% 5.0%

implied default probability #N/A 6.5% 5.0% 6.5% 4.2% 5.0% 4.2% 4.2% 3.0% 3.0% 3.0% 3.0% 3.0%

Average Implied Default Probability #N/A 5.0% 2.8% 2.9% 2.7% 2.8% 2.6% 2.6% 2.4% 2.4% 2.4% 2.4% 2.4%

Fiscal Year 1899 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2029

5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8% 16.8%

0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150 0.150

0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047

2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060 2.060

1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746 1.746

0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047

3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594

0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644 0.644

(0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476) (0.476)

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538 0.538

0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159

0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042 0.042

0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047 0.047

3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594 3.594

6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447 6.447

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209 94.209

27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690 27.690

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384 1251.384

1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830 1318.830

1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751 1.751

1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631

493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616 493.616

1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019 1883.019

0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094 0.094

2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427 0.427

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631 1.631

2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62 493.62

1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4% 2.4%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Cash Flow Analysis ($000)

Company Name NETFLIX INC

Actual Actual Actual Actual Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast

Fiscal Year End Date 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2029

Pro Forma Statement of Cash Flows

Operating:

Net Income (38,618) (21,947) 6,512 21,595 18,393 62,017 79,281 92,917 98,782 93,895 98,590 103,519 108,695 114,130 119,836 125,828 132,119 138,725 145,662 152,945 160,592 168,622 177,053 185,905 195,201 204,961 215,209 225,969 237,268

+Depreciation & Amortization 29,797 26,477 50,991 88,204 109,380 101,324 140,246 180,610 215,220 235,801 247,591 259,970 272,969 286,617 300,948 315,995 331,795 348,385 365,804 384,094 403,299 423,464 444,637 466,869 490,212 514,723 540,459 567,482 595,856

+Increase in Deferred Taxes 00000000000000000000000000000

+Increase in Other Liabilities 240 48 (47) 359 218 362 406 390 292 113 119 125 131 138 145 152 160 168 176 185 194 204 214 225 236 248 260 273 287

+Increase in Minority Interest 101,830 (101,830) 0 0 0000000000000000000000000

+Preferred Dividends 00000000000000000000000000000

=Funds From Operations 93,249 (97,252) 57,456 110,158 127,991 163,702 219,933 273,916 314,295 329,809 346,299 363,614 381,795 400,885 420,929 441,975 464,074 487,278 511,642 537,224 564,085 592,289 621,904 652,999 685,649 719,931 755,928 793,724 833,411

-Increase in Receivables 00000000000000000000000000000

-Increase in Inventory 00000000000000000000000000000

-Increase in Other Current Assets (3,421) (44) (290) (9,130) (4,690) (7,768) (8,718) (8,379) (6,281) (2,436) (2,558) (2,686) (2,820) (2,961) (3,109) (3,265) (3,428) (3,599) (3,779) (3,968) (4,167) (4,375) (4,594) (4,823) (5,064) (5,318) (5,584) (5,863) (6,156)

+Increase in Accounts Payable 13,715 6,635 12,304 17,121 27,269 44,584 41,840 40,213 30,145 11,691 12,276 12,890 13,534 14,211 14,921 15,668 16,451 17,273 18,137 19,044 19,996 20,996 22,046 23,148 24,305 25,521 26,797 28,137 29,543

+Increase in Taxes Payable 00000000000000000000000000000

+Increase in Other Curr. Liabilities 9,481 9,364 11,104 15,118 16,404 27,170 30,493 29,307 21,969 8,521 8,947 9,394 9,864 10,357 10,875 11,418 11,989 12,589 13,218 13,879 14,573 15,302 16,067 16,870 17,714 18,599 19,529 20,506 21,531

=Cash From Operations 113,024 (81,297) 80,574 133,267 166,975 227,689 283,548 335,058 360,128 347,585 364,964 383,212 402,373 422,491 443,616 465,797 489,086 513,541 539,218 566,179 594,488 624,212 655,423 688,194 722,603 758,734 796,670 836,504 878,329

Investing:

-Capital Expenditures (41,635) (30,231) (45,171) (97,160) (116,197) (112,615) (152,917) (192,788) (224,350) (239,341) (251,308) (263,874) (277,068) (290,921) (305,467) (320,740) (336,777) (353,616) (371,297) (389,862) (409,355) (429,823) (451,314) (473,880) (497,573) (522,452) (548,575) (576,003) (604,804)

-Increase in Investments 00000000000000000000000000000

-Purchases of Intangibles (7,917) 1,823 3,146 1,987 (350) (579) (650) (625) (468) (182) (191) (200) (210) (221) (232) (243) (256) (268) (282) (296) (311) (326) (343) (360) (378) (397) (416) (437) (459)

-Increase in Other Assets (2,323) 554 (22,577) (20,412) (16,292) (26,984) (30,284) (29,106) (21,819) (8,462) (8,885) (9,329) (9,796) (10,286) (10,800) (11,340) (11,907) (12,502) (13,128) (13,784) (14,473) (15,197) (15,957) (16,754) (17,592) (18,472) (19,395) (20,365) (21,383)

=Cash From Investing (51,875) (27,854) (64,602) (115,585) (132,839) (140,178) (183,851) (222,519) (246,637) (247,985) (260,384) (273,404) (287,074) (301,428) (316,499) (332,324) (348,940) (366,387) (384,706) (403,942) (424,139) (445,346) (467,613) (490,994) (515,543) (541,321) (568,387) (596,806) (626,646)

Financing:

+Increase in Debt 6,868 (5,177) (1,231) (392) 25 41 46 44 33 13 13 14 15 16 16 17 18 19 20 21 22 23 24 25 27 28 29 31 32

-Dividends Paid on Preferred 00000000000000000000000000000

+Increase in Pref. Stock 6 (6) 0 0 0000000000000000000000000

-Dividends Paid on Common 00000000000000000000000000000

+/-Net Issuance of Common Stock 46,756 201,813 17,432 21,980 29,343 17,629 18,300 870 (28,477) (66,628) (69,959) (73,457) (77,130) (80,987) (85,036) (89,288) (93,752) (98,440) (103,362) (108,530) (113,957) (119,654) (125,637) (131,919) (138,515) (145,441) (152,713) (160,348) (168,366)

+/-Clean Surplus Plug (Ignore) (98,648) 0 (592) 0 0000000000000000000000000

=Cash From Financing (45,018) 196,630 15,609 21,588 29,368 17,670 18,346 914 (28,444) (66,615) (69,946) (73,443) (77,115) (80,971) (85,020) (89,271) (93,734) (98,421) (103,342) (108,509) (113,935) (119,631) (125,613) (131,893) (138,488) (145,413) (152,683) (160,317) (168,333)

Net Change in Cash 16,131 87,479 31,581 39,270 63,504 105,180 118,042 113,452 85,047 32,984 34,634 36,365 38,183 40,093 42,097 44,202 46,412 48,733 51,169 53,728 56,414 59,235 62,197 65,307 68,572 72,001 75,601 79,381 83,350

+ Beginning Cash Balance 0 16,131 103,610 135,191 174,461 237,965 343,145 461,187 574,639 659,686 692,670 727,304 763,669 801,852 841,945 884,042 928,244 974,656 1,023,389 1,074,559 1,128,287 1,184,701 1,243,936 1,306,133 1,371,440 1,440,012 1,512,012 1,587,613 1,666,993

= Ending Cash Balance 16,131 103,610 135,191 174,461 237,965 343,145 461,187 574,639 659,686 692,670 727,304 763,669 801,852 841,945 884,042 928,244 974,656 1,023,389 1,074,559 1,128,287 1,184,701 1,243,936 1,306,133 1,371,440 1,440,012 1,512,012 1,587,613 1,666,993 1,750,343

-Dividends Paid on Preferred 00000000000000000000000000000

+Increase in Preferred Stock 6 (6) 0 0 0000000000000000000000000

+/-Clean Surplus Plug (Ignore) (98,648) 0 (592) 0 0000000000000000000000000

Net Operating Income -36,766 -9,975 6,929 21,764 18,444 62,090 79,382 93,047 98,937 94,065 98,768 103,706 108,891 114,336 120,053 126,055 132,358 138,976 145,925 153,221 160,882 168,926 177,373 186,241 195,553 205,331 215,598 226,378 237,696

+Interest Expense 1,852 11,972 417 170 52 73 101 130 155 170 178 187 196 206 217 227 239 251 263 276 290 305 320 336 353 370 389 408 429

-Tax Shield on Interest 0 0 0 (1) 0000000000000000000000000

+/-Clean Surplus Plug (Ignore) (98,648) 0 (592) 0 0000000000000000000000000

+Dividends on Preferred Stock 00000000000000000000000000000

-Net Issuance of Common Stock (46,756) (201,813) (17,432) (21,980) (29,343) (17,629) (18,300) (870) 28,477 66,628 69,959 73,457 77,130 80,987 85,036 89,288 93,752 98,440 103,362 108,530 113,957 119,654 125,637 131,919 138,515 145,441 152,713 160,348 168,366

-Net Issuance of Debt (6,868) 5,177 1,231 392 (25) (41) (46) (44) (33) (13) (13) (14) (15) (16) (16) (17) (18) (19) (20) (21) (22) (23) (24) (25) (27) (28) (29) (31) (32)

-Net Issuance of Preferred Stock (6) 6 0 0 0000000000000000000000000

=Free Cash Flow to Investors (51,778) (184,658) (15,784) (21,419) (29,316) (17,597) (18,245) (784) 28,599 66,785 70,124 73,630 77,312 81,177 85,236 89,498 93,973 98,672 103,605 108,786 114,225 119,936 125,933 132,229 138,841 145,783 153,072 160,726 168,762

Traditional Computation of FCF:

EBIT (36,556) (11,672) 4,472 19,354 14,909 56,991 72,530 84,509 89,136 83,773 87,962 92,360 96,978 101,827 106,918 112,264 117,878 123,771 129,960 136,458 143,281 150,445 157,967 165,866 174,159 182,867 192,010 201,611 211,691

=Gross Cash Flow (6,969) 16,502 57,920 109,968 127,825 163,413 219,628 273,656 314,157 329,865 346,358 363,676 381,860 400,953 421,001 442,051 464,153 487,361 511,729 537,316 564,181 592,390 622,010 653,110 685,766 720,054 756,057 793,860 833,553

-Increase in Working Capital 3,644 (71,524) (8,463) (16,161) (24,520) (41,194) (54,427) (52,311) (39,214) (15,209) (15,969) (16,767) (17,606) (18,486) (19,410) (20,381) (21,400) (22,470) (23,593) (24,773) (26,012) (27,312) (28,678) (30,112) (31,617) (33,198) (34,858) (36,601) (38,431)

+Increase in Minority Interest 101,830 (101,830) 0 0 0000000000000000000000000

+Increase in Other Liabilities 240 48 (47) 359 218 362 406 390 292 113 119 125 131 138 145 152 160 168 176 185 194 204 214 225 236 248 260 273 287

+/-Clean Surplus Plug (Ignore) (98,648) 0 (592) 0 0000000000000000000000000

+ Non-Current Op. Accruals/NOA #DIV/0! (1.034) (1.087) (1.227) (1.283) (1.137) (0.728) (0.521) (0.313) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106) (0.106)

= Operating Accruals/NOA #DIV/0! (0.874) 0.753 (0.178) 0.869 0.753 0.344 0.246 0.148 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050 0.050

Free Cash Flow to Common Equity

Free Cash Flow to all Investors

Forecasting Assumptions

Company Name NETFLIX INC

Forecast Horizon 5 Years TERMINAL

Estimated Price/Share=$15.99 YEAR

Fiscal Year End Date 1/0/1900 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 12/31/2026 12/31/2027 12/31/2028 12/31/2029

Implied Return on Equity 0.853 38.036 0.064 0.161 0.102 0.254 0.238 0.217 0.194 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168 0.168

Income Statement Assumptions

Sales Growth #DIV/0! 101.3% 78.2% 85.9% 36.4% 44.2% 34.4% 24.6% 14.8% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Cost of Goods Sold/Sales #DIV/0! 26.5% 33.8% 35.8% 37.2% 42.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2% 46.2%

R&D/Sales #DIV/0! 23.4% 9.6% 6.6% 4.5% 4.4% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9% 3.9%

SG&A/Sales #DIV/0! 59.1% 46.9% 37.3% 37.0% 35.4% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0% 34.0%

Dep&Amort/Avge PP&E and Intang. 301.7% 127.8% 296.4% 544.3% 470.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0% 309.0%

Interest Expense/Avge Debt 53.9% 279.8% 38.8% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4% 64.4%

Non-Operating Income/Sales #DIV/0! -0.3% 1.1% 0.9% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

Effective Tax Rate 0.0% 0.0% 0.0% 0.0% 0.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Minority Interest/After Tax Income 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Other Income/Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ext. Items & Disc. Ops./Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Pref. Dividends/Avge Pref. Stock 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Balance Sheet Assumptions:

Working Capital Assumptions

Ending Operating Cash/Sales #DIV/0! 21.2% 67.8% 49.7% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5% 34.5%

Ending Receivables/Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ending Inventories/COGS 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ending Other Current Assets/Sales #DIV/0! 4.5% 2.3% 1.4% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

Ending Accounts Payable/COGS 0.0% 68.2% 39.4% 33.5% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4% 26.4%

Ending Taxes Payable/Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ending Other Current Liabs/Sales #DIV/0! 12.5% 12.3% 11.0% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9% 8.9%

Other Operating Asset Assumptions

Ending Net PP&E/Sales #DIV/0! 15.6% 10.2% 3.6% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7% 3.7%

Ending Investments/Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Ending Intangibles/Sales #DIV/0! 10.4% 4.0% 1.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%

Ending Other Assets/Sales #DIV/0! 3.1% 1.2% 8.9% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8% 8.8%

Other Operating Liability Assumptions

Other Liabilities/Sales #DIV/0! 0.3% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%

Deferred Taxes/Sales #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Financing Assumptions

Current Debt/Total Assets #DIV/0! 7.2% 0.9% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Long-Term Debt/Total Assets #DIV/0! 9.3% 0.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Minority Interest/Total Assets #DIV/0! 244.6% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Preferred Stock/Total Assets #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Dividend Payout Ratio 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Estimated Price/Share=$15.99

Company Name: NETFLIX INC

Required Valuation Parameters (to compute value of common equity):

10.00%

3/1/2005

1.00

Enter Cost of Debt: ----------------------------------------------------------------------------------------------> 8.00%

Enter Cost of Preferred Stock: -----------------------------------------------------------------------------> 9.00%

Implied Cost of Equity Calculator

This calculator solves for the cost of equity capital that generates a given price/share.

To use the calculator, enter a price, hit return and click the 'Calculate' button.

Price/Share = $15.99 1.000000

-------------------------------------------- -------------------------------->

Enter Dilution Factor for Splits Occurring Since Latest Fiscal Year End:

------------>

----------------------------------------------------------------------------->

Optional Valuation Parameters (to compute value to all investors):

---------------------------->

Valuation Parameters

Enter Cost of Equity Capital:

Enter Date of Valuation:

Enter Value of Contingent Claims on Common Equity ($000):

Calculate

Contingent Claims Calculator

(Use this calculator to estimate the value of contingent claims on common equity,

such as employee stock options and convertible bonds)

Current Stock Price $40.00

Exercise Price $40.00

Years to Expiration 5

Standard Deviation of Annual Stock Return 30.00%

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978-0073526898 Case NFLX 10 Part 1

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