NetFlix 2010 Annual Report Download - page 55

Download and view the complete annual report

Please find page 55 of the 2010 NetFlix annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

Net Income Per Share
Basic net income per share is computed using the weighted-average number of outstanding shares of
common stock during the period. Diluted net income per share is computed using the weighted-average number
of outstanding shares of common stock and, when dilutive, potential common shares outstanding during the
period. Potential common shares consist primarily of incremental shares issuable upon the assumed exercise of
stock options and shares currently purchasable pursuant to the Company’s employee stock purchase plan using
the treasury stock method. The computation of net income per share is as follows:
Year ended December 31,
2010 2009 2008
(in thousands, except per share data)
Basic earnings per share:
Net income ....................................... $160,853 $115,860 $83,026
Shares used in computation:
Weighted-average common shares outstanding ....... 52,529 56,560 60,961
Basic earnings per share ............................. $ 3.06 $ 2.05 $ 1.36
Diluted earnings per share:
Net income ....................................... $160,853 $115,860 $83,026
Shares used in computation:
Weighted-average common shares outstanding ....... 52,529 56,560 60,961
Employee stock options and employee stock purchase
plan shares ................................. 1,775 1,856 1,875
Weighted-average number of shares ............... 54,304 58,416 62,836
Diluted earnings per share ............................... $ 2.96 $ 1.98 $ 1.32
Employee stock options with exercise prices greater than the average market price of the common stock
were excluded from the diluted calculation as their inclusion would have been anti-dilutive. The number of
options excluded are immaterial for all periods presented.
Stock-Based Compensation
The Company grants stock options to its employees on a monthly basis. The Company has elected to grant
all options as fully vested non-qualified stock options. As a result of immediate vesting, stock-based
compensation expense is fully recognized on the grant date, and no estimate is required for post-vesting option
forfeitures. See Note 7 to the consolidated financial statements for further information regarding stock-based
compensation.
F-11