1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009

Revenues 326,183 337,614 341,269 359,595 394,098 408,509 423,120

Cost of revenues:

Subscription 187,156 193,769 186,573 193,635 215,299 224,858 233,091

Fulfillment expenses 35,649 36,318 37,923 39,211 43,969 44,385 42,183

Total cost of revenues 222,805 230,087 224,496 232,846 259,268 269,243 275,274

Gross Profit 103,378 107,527 116,773 126,749 134,830 139,266 147,846

Operating Expenses:

Technology and development 20,516 22,186 23,368 23,803 24,200 27,119 30,014

Marketing 54,936 39,984 49,217 55,576 62,242 46,231 58,556

General and administrative 13,816 13,419 11,742 10,685 13,014 13,252 11,543

Gain on disposal of DVDs -833 -2,263 -1,628 -1,603 -1,097 -118 -1,604

Total operating expenses 88,435 73,326 82,699 88,461 98,359 86,484 98,509

Operating Income 14,943 34,201 34,074 38,288 36,471 52,782 49,337

Other income (expense):

Interest expense on lease financing

n/a -681 -677 -1,100 -670 -674 -674
obligations

Interest and other income (expense) 7,660 2,404 1,536 852 1,610 866 1,808

Income before income taxes 22,603 35,924 34,933 38,040 37,411 52,974 50,471

Provision for income taxes 9,225 9,345 14,562 15,342 15,048 20,531 20,330

Net income 13,378 26,579 20,371 22,698 22,363 32,443 30,141

Net income per share:

Basic $0.21 $0.43 $0.34 $0.38 $0.38 $0.56 $0.98

Diluted $0.21 $0.42 $0.34 $0.38 $0.37 $0.54 $0.95

Weighted average common shares

outstanding:

Basic 62,776 61,782 60,408 60,961 58,734 57,872 61,651

Diluted 64,840 63,857 62,272 62,836 60,709 59,660 63,658

Stock-based compensation included in

expense line items:

Fulfillment expenses 106 108 126 126 120 102 340

Technology and development 996 849 950 1,095 1,071 1,190 2,795

Marketing 509 455 460 462 443 458 1,424

General and administrative 1,519 1,493 1,499 1,491 1,498 1,528 4,511
4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011

444,542 493,665 519,819 553,219 595,922 718,553 788,610 821,839

231,598 259,560 265,387 292,406 336,756 376,992 428,203 471,823

43,888 47,602 49,547 52,063 54,034 61,159 61,775 64,794

275,486 307,162 314,934 344,469 390,790 438,151 489,978 536,617

169,056 186,503 204,885 208,750 205,132 280,402 298,632 285,222

33,209 37,399 37,863 42,108 45,959 50,905 57,865 69,480

70,715 75,219 74,533 81,238 62,849 104,259 94,983 89,108

13,524 17,193 17,119 17,135 19,108 22,998 30,670 29,792

-1,741 -1,653 -1,972 -1,232 -1,237 n/a n/a n/a

115,707 128,158 127,543 139,249 126,679 178,162 183,518 188,380

53,349 58,345 77,342 69,501 78,453 102,240 115,114 96,842

-4,457 -4,959 -4,893 -4,945 -4,832 -4,865 -5,303 -4,915

2,444 972 921 853 938 865 1,013 1,696

51,336 54,358 73,370 65,409 74,559 98,240 110,824 93,623

20,423 22,086 29,851 27,442 27,464 38,007 42,610 31,163

30,913 32,272 43,519 37,967 47,095 60,233 68,214 62,460

$0.13 $0.61 $0.83 $0.73 $0.89 $1.14 $1.30 $1.19

$0.12 $0.59 $0.80 $0.70 $0.87 $1.11 $1.26 $1.16

56,560 52,911 52,486 52,142 52,529 52,759 52,470 52,569

58,416 54,775 54,324 53,931 54,304 54,246 53,909 53,870

n/a 176 307 323 n/a n/a n/a n/a

n/a 1,869 2,376 2,694 n/a n/a n/a n/a

n/a 643 756 777 n/a n/a n/a n/a

n/a 2,814 3,489 3,502 n/a n/a n/a n/a

 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009

Assets

Cash and cash equivalents 168,989 144,289 111,524 139,881 115,131 87,471 55,717

Short-term investments 126,506 169,175 139,304 157,390 171,358 167,498 99,745

Prepaid expenses 6,780 7,631 9,982 8,122 8,210 11,430 11,947

Prepaid revenue sharing expenses 7,402 14,861 15,274 18,417 13,957 14,671 10,671

Current content library, net 18,691 33,299 33,519 32,937

Deferred tax assets 3,277 3,339 7,023 5,617 5,542 5,594 5,706
Other current assets 13,208 19,859 18,268 13,329 17,383 22,381 18,239

Total current assets 326,162 359,154 301,375 361,447 364,880 342,564 234,962

Content library, net 145,361 126,928 122,558 98,547 105,361 100,316 104,539

Property and equipment, net 86,997 129,553 128,541 124,948 123,817 120,346 122,119

Deferred tax assets 16,767 19,621 19,831 22,409 23,107 17,225 17,244

Other assets 10,391 10,767 10,694 10,595 11,513 11,542 13,267

Total assets 585,678 646,023 582,999 617,946 628,678 591,993 492,131

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable 114,568 109,000 109,277 100,344 112,767 101,634 93,451

Accrued expenses 44,021 27,462 31,625 31,394 32,108 27,782 29,606

Current portion lease financing

n/a 1,029 1,090 1,152 1,215 1,275 1,342
obligations

Deferred revenue 68,375 67,886 65,897 83,127 80,623 80,495 79,123

Total current liabilities 226,964 205,377 207,889 216,017 226,713 211,186 203,522

Long-term debt n/a n/a n/a n/a n/a n/a n/a

Lease financing obligations, excluding

n/a 38,582 38,287 37,988 37,656 37,301 36,940
current portion

Other liabilities 3,281 12,602 11,990 16,786 17,997 19,135 19,467

Total liabilities 230,245 256,561 258,166 270,791 282,366 267,622 259,929

Stockholders' equity:

Common stock 61 62 62 62 63 64 64

Additional paid-in capital 315,321 324,865 331,489 338,577 358,620 375,574 378,549

Treasury stock at cost n/a n/a -90,028 -100,020 -142,739 -215,250 -340,362

Accumulated other comprehensive income 310 -814 -2,410 84 -447 725 552

Retained earnings 39,741 65,349 85,720 108,452 130,815 163,258 193,399

Total stockholders' equity 355,433 389,462 324,833 347,155 346,312 324,371 232,202

Total liabilities and stockholders' equity 585,678 646,023 582,999 617,946 628,678 591,993 492,131
4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011

134,224 79,861 107,327 113,108 194,499 150,419 175,207 159,199

186,018 186,469 171,758 143,705 155,888 192,302 201,200 206,573

n/a 31,704 33,837 59,322 62,217 74,597 59,811 77,146

n/a n/a n/a n/a n/a n/a n/a n/a

37,329 55,566 93,123 138,389 181,006 265,933 499,434 705,398

26,741 n/a n/a n/a n/a n/a n/a n/a

26,701 25,938 35,173 37,723 47,357 38,351 33,792 41,797

411,013 379,538 441,218 492,247 640,967 721,602 969,444 1,190,113

108,810 109,431 94,666 120,047 180,973 197,554 425,246 570,210

131,653 127,165 123,292 125,057 128,570 134,800 136,948 143,993

15,958 18,791 21,951 19,219 17,467 22,452 25,883 28,743

12,300 13,368 12,845 13,713 14,090 13,780 13,172 28,499

679,734 648,293 693,972 770,283 982,067 1,090,188 1,570,693 1,961,558

92,542 102,703 120,031 170,120 222,824 301,009 533,436 750,107

33,387 38,718 34,746 36,974 36,489 44,123 44,137 54,671

1,410 1,917 1,971 2,027 2,083 2,141 2,199 2,259

100,097 100,109 101,419 102,986 127,183 143,045 146,937 160,929

227,436 243,447 258,167 312,107 388,579 490,318 726,709 967,966

200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000

36,572 35,704 35,185 34,659 34,123 33,564 32,986 32,400

16,583 22,407 23,980 31,542 69,201 90,584 276,964 372,840

480,591 501,558 517,332 578,308 691,903 814,466 1,236,659 1,573,206

53 52 52 52 53 52 53 53

n/a n/a n/a n/a 51,622 n/a n/a n/a

n/a n/a n/a n/a n/a n/a n/a n/a

273 487 802 1,279 750 590 884 588

198,817 146,196 175,786 190,644 237,739 275,080 333,097 387,711

199,143 146,735 176,640 191,975 290,164 275,722 334,034 388,352

679,734 648,293 693,972 770,283 982,067 1,090,188 1,570,693 1,961,558

 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009

Cash Flows from operating activities:

Net income 13,378 26,561 20,371 22,732 22,363 32,443

Adjustments to reconcile net income to net cash provided by:

Acquisition of streaming content library n/a n/a n/a n/a -22,091 -9,343

Change in streaming content liabilities n/a n/a n/a n/a 8,560 -10,511

Depreciation / amortization of property and equipment 6,359 7,849 8,643 9,141 9,175 9,013

Amortization of content library 57,570 57,012 47,596 47,579 49,304 53,235

Stock-based compensation expense 3,130 2,905 3,035 3,193 3,132 3,278

Excess tax benefits from stock-based compensation -820 -2,554 -1,093 -753 -3,684 -3,815

Gain on sale of business -6,912 -3,981 -2712 -2,876 n/a n/a

Other non-cash items 139 177 122 185 -2,267 -176

Deferred taxes -836 -2,514 -3,894 -1,172 -1,344 5,898

Changes in operating assets and liabilities:

Prepaid expenses and other current assets 2,562 -10,659 -209 11,038 4,098 -1,613

Content library n/a n/a n/a -11,123 -4,489 -7,232

Accounts payable -1,199 9,124 -1,056 -7917 693 3,685

Accrued expenses 7,827 -14,551 4,730 171 2,945 -34

Deferred revenue -3,290 -489 -1,989 17,232 -2,504 -128

Other assets and liabilities -161 9,035 -313 4,670 1742 602

Net cash provided by operating activities 77,747 77,915 73,231 92,100 65,633 75,302

Cash flows from investing activities

Acquisition of DVD content library -65,123 -55,175 -41,564 -38295 -46,499 -43,224

Purchases of short-term investments -91,954 -65,937 -22,950 -76,118 -52,384 -28,769

Proceeds from sale of short-term investments 175,319 21,682 50,609 59,723 36,933 7,832

Proceeds from maturities of short-term investments n/a n/a n/a n/a 1,330 26,175

Purchases of property and equipment -12,431 -14,662 -9,226 -7,471 -6,572 -6,933

Acquisition of intangible asset n/a -1,000 -62 n/a -200 n/a

Proceeds from sale of DVDs 4,507 5,379 3,787 4,695 2,726 1,159

Investment in business -6,000 n/a n/a n/a n/a n/a

Other assets 8 20 3 -32 -2 11

Net cash provided by (used in) investing acti 4,326 -109,693 -19,403 -57,498 -64,668 -43,749

Cash flows from financing activities:

Principal payments of lease financing obligations n/a -230 -234 -237 -269 -295

Proceeds from issuance of common stock 8,542 4,524 2,576 3,231 13,589 9,778

Excess tax benefits from stock-based compensation 820 2,554 1,093 753 3,684 3,815

Borrowings on line of credit, net issuance costs n/a n/a n/a n/a n/a n/a

Payments on line of credit n/a n/a n/a n/a n/a n/a

Proceeds from issuance of debt, net of issuance costs n/a n/a n/a n/a n/a n/a

Repurchases of common stock -99,885 n/a -90,028 -9,992 -42,719 -72,511

Net cash (used in) provided by financing acti -90,523 7,078 -86,593 -6,245 -25,715 -59,213

Net decrease in cash and cash equivalents -8,450 -24,700 -32,765 28,357 -24,750 -27,660

Cash and cash equivalents, beginning of period 177,439 168,989 144,289 111,524 139,881 115,131

Cash and cash equivalents, end of period 168,989 144,289 111,524 139,881 115,131 87,471
3Q 2009 4Q 2009 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 3Q 2011

30,141 30,913 32,272 43,519 37,967 47,095 60,233 68,214 62,460

-9,998 -22,785 -50,475 -66,157 -115,149 -174,429 -192,307 -612,595 -539,285

-887 -1,176 11,251 18,308 58,638 79,639 82,068 419,832 314,720

9,618 10,238 10,859 9,309 8,678 9,253 9,826 10,182 11,913

56,690 60,261 62,292 65,143 77,146 96,015 112,927 168,466 210,446

3,232 2,976 5,502 6,928 7,296 8,270 12,264 15,536 15,705

-1,600 -3,584 -7,424 -11,182 -16,093 -27,515 -15,654 -17,868 -11,761

n/a -1,783 n/a n/a n/a n/a n/a n/a n/a

-3,349 -1,369 -3,160 -2,900 -1,754 -1,314 -925 -802 -1745

-15 1,789 -2,761 -3,394 3,194 1,999 -4,982 -3,927 -5,281

107 -8,235 -4,963 -2,133 -25,485 -2,895 -12,380 14,787 -17,335

7,518 -1,155 548 -9,211 -3,374 -5,990 9,498 4,660 -8,578

-13,048 10,207 10,688 1,472 -10,914 16,852 14,835 -4,465 -5,422

2,752 7,506 13,746 7,917 18,003 27,543 22,670 17,941 20,920

-1,372 20,974 12 1,310 1,567 24,197 15,862 3,892 13,992

-1,478 1040 3,879 1,323 2,507 -2,003 2,388 2,539 -11,218

78,311 105,817 75,412 60,252 42,227 96,717 116,323 86,392 49,531

-46,273 -57,048 -36,902 -24,191 -29,900 -32,908 -22,119 -19,065 -20,826

-21,006 -125,841 -34,202 -21,795 -15,379 -34,193 -52,266 -40,597 -7,673

85,904 36,037 30,770 32,055 42,238 15,794 14,961 16,510 37

3,480 4,688 4,013 4,310 1,995 5,500 650 15,985 1,805

-9,994 -22,433 -6,393 -5,671 -7,342 -14,431 -16,320 -8,626 -14,080

n/a n/a -130 n/a n/a -375 n/a n/a n/a

3,345 3,934 3,984 3,815 3,109 2,011 n/a n/a n/a

n/a n/a n/a n/a n/a n/a n/a n/a n/a

134 -72 -172 10 -327 419 1,419 844 -844

15,590 -153,252 -39,032 -11,467 -5,606 -58,183 -73,675 -34,949 -41,581

-294 -300 -361 -465 -470 -480 -501 -520 -526

2,725 9,182 9,918 13,109 10,927 15,822 6,762 7,418 4,409

1,600 3,584 7,424 11,182 16,093 27,515 15,654 17,868 11,761

n/a 18,978 n/a n/a n/a n/a n/a n/a n/a

n/a -20,000 n/a n/a n/a n/a n/a n/a n/a

n/a 193,917 n/a n/a n/a n/a n/a n/a n/a

-129,686 -79,419 -107,724 -45,145 -57,390 n/a -108,643 -51,421 -39,602

-125,655 125,942 -90,743 -21,319 -30,840 42,857 -86,728 -26,655 -23,958

-31,754 78,507 -54,363 27,466 5,781 81,391 -44,080 24,788 -16,008

87,471 55,717 134,224 79,861 107,327 113,108 194,499 150,419 175,207

55,717 134,224 79,861 107,327 113,108 $194,499 150,419 175,207 159,199

 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09
DVD only subscribers 0 0 0 0 0 0 0
Streaming only subscribers 0 0 0 0 0 0 0
Both subscribers 8,243,000 8,411,000 8,672,000 9,390,000 10,310,000 10,599,000 11,109,000
Total subscribers 8,243,000 8,411,000 8,672,000 9,390,000 10,310,000 10,599,000 11,109,000
Subscriber acquisition cost $ 29.50 $ 28.89 $ 32.21 $ 26.67 $ 25.79 $ 23.88 $ 26.86

*3Q11 numbers for DVD only, streaming only, and both subscribers are estimates, total subscribers is an accurate number.
 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
0 0 0 0 0 0 0 3,400,000
0 0 0 0 0 4,548,000 6,705,000 9,800,000
12,268,000 13,967,000 15,001,000 16,933,000 20,010,000 19,052,000 18,856,000 11,500,000
12,268,000 13,967,000 15,001,000 16,933,000 20,010,000 23,600,000 25,561,000 25,269,000
$ 25.23 $ 21.54 $ 24.37 $ 19.81 $ 10.87 $ 14.38 $ 15.09 $ 15.25

s an accurate number. 65,911,000

16477750
4Q11 1Q12 2Q12 3Q12

26,253,000 29,139,000 30,118,000

$ 15.62