NetFlix 2003 Annual Report Download - page 55

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As of December 31, 2003, our short-term investments were invested in the Vanguard Short-Term Bond
Index Fun—Admiral Shares (the “Fund”). The target index for the Fund, the Lehman Brothers 1-5 Year
Government/Credit Index, is comprised of U.S Treasury and agency securities and investment-grade corporate
bonds with maturities of one to five years. As of December 31, 2003, the Fund had investments in 517 issues
with an average quality of AAA/AA1, an average duration of 2.5 years and an average maturity of 2.7 years. As
of December 31, 2003, the cost, unrealized gain and market value of our short-term investments were
$44,701,000, $596,000 and $45,297,000, respectively.
The following table presents the hypothetical changes in the fair value of our short-term investments as a
result of changes in interest rates:
Fair Value Given an
Interest Rate Decrease of
“X” Basis Points (“BPS”)
Fair Value
as of
December 31,
2003
Fair Value Given an
Interest Rate Increase of
“X” BPS
(150) BPS (100) BPS (50) BPS 50 BPS 100 BPS 150 BPS
(in thousands)
Short-term investments ......... $46,996 $46,429 $45,863 $45,297 $44,731 $44,165 $43,598
Item 8. Financial Statements and Supplementary Data
See “Financial Statements” beginning on page F-1 and incorporated herein by reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated
the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based
on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures as of the end of the period covered by this report were effective in ensuring that information
required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms. We believe that a control system, no matter how well designed and operated, cannot provide absolute
assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, can be detected within a company.
There was no change in our internal control over financial reporting that occurred during the quarter ended
December 31, 2003 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
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