Following is the income statement for NetFlix Inc. for the year ended December 31, 2011. Prepare forecasted income statements for the company for 2012 and 2013.

NETFLIX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

Year ended December 31,

2011

2010

2009

Revenues

$3,204,577

$2,162,625

$1,670,269

Cost of revenues:

Subscription

1,789,596

1,154,109

909,461

Fulfillment expenses

250,305

203,246

169,810

Total cost of revenues

2,039,901

1,357,355

1,079,271

Gross profit

1,164,676

805,270

590,998

Operating expenses:

Marketing

402,638

293,839

237,744

Technology and development

259,033

163,329

114,542

General and administrative

117,937

64,461

46,773

Legal settlement

9,000

-

-

Total operating expenses

788,608

521,629

399,059

Operating income

376,068

283,641

191,939

Other income (expense):

Interest expense

(20,025)

(19,629)

(6,475)

Interest and other income

3,479

3,684

6,728

Income before income taxes

359,522

267,696

192,192

Provision for income taxes

133,396

106,843

76,332

Net income

$226,126

$160,853

$115,860

Use the following assumptions to develop the forecasted income statements:

Revenue growth

39.0%

Subscription costs to revenues

55.8%

Fulfillment expenses to revenues

7.8%

Marketing expense to revenues

12.6%

Technology and development to revenues

8.1%

General and administrative to revenues

3.7%

Legal settlement

$0

Interest expense

No change

Interest and other income

No change

Provision for income taxes to Income before income taxes

37.1%