recorded as a discrete item in the second quarter of 2008 for prior period R&D tax credits.

In 2008, our effective tax rate differed from the federal statutory rate of 35% principally due to state income taxes of $5 million or 4% of income before income tax. This was partially offset by R&D tax credits of $3 million. The decrease in our effective tax rate was primarily attributable to a cumulative benefit recorded as a discrete item in the second quarter of 2008 for prior period R&D tax credits.

Liquidity and Capital Resources

We have generated net cash from operations during each quarter since the second quarter of 2001. Many factors will impact our ability to continue to generate and grow cash from our operations including, but not limited to, the price of our service, the number of subscribers who sign up for our service and the growth or reduction in our subscriber base.

In September 2009, we entered into a credit agreement which provided for a $100 million three-year revolving credit facility. In October 2009, the Company borrowed $20 million under the credit agreement. In November 2009, we issued $200 million of our 8.50% senior notes due in 2017. In connection with the notes offering, we repaid all outstanding amounts under our credit agreement and terminated it. Although we currently anticipate that cash flows from operations, together with our available funds, will be sufficient to meet our cash needs for the foreseeable future, we may require or choose to obtain additional financing. Our ability to obtain additional financing will depend on, among other things, our development efforts, business plans, operating performance and the condition of the capital markets at the time we seek financing.

Our primary source of liquidity has been cash from operations. Additionally, debt financing has also been a source of liquidity in fiscal 2009. Our primary uses of cash include our stock repurchase programs, shipping and packaging expenses, the acquisition of content, capital expenditures related to information technology and automation equipment for operations, marketing and fulfillment expenses.

In addition, on August 6, 2009, we announced that our Board of Directors authorized a stock repurchase program through the end of 2010 allowing us to repurchase $300 million of our common stock of which we have purchased $149.1 million as of December 31, 2009. Subsequent to December 31, 2009, we purchased an additional $62.4 million of our common stock under the program. The timing and actual number of shares repurchased will depend on various factors including price, corporate and regulatory requirements, alternative investment opportunities and other market conditions. The following table highlights selected measures of our liquidity and capital resources as of December 31, 2009, 2008 and 2007:

Operating Activities

During 2009, our operating activities consisted primarily of net income of $115.9 million, increased by non-cash adjustments of $254.9 million and offset by a decrease in net changes in operating assets and liabilities of $45.7 million. The majority of the non-cash adjustments came from the amortization of the content library of