NetFlix 2011 Annual Report Download - page 75

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11. Subsequent Event
Subsequent to December 31, 2011, the Company engaged in mediation of a legal claim pending in the
Northern District of California made in January 2011 related to the Company’s compliance with the Video
Privacy Protection Act. This mediation resulted in a settlement of the matter which includes payment of
$9.0 million, which is recognized in the Consolidated Statement of Operations for the year ended December 31,
2011, and is anticipated to be paid in 2012. The Company had previously evaluated this claim and determined it
to be immaterial and that any potential loss was not probable. Accordingly, no amount had been accrued prior to
the mediation and settlement.
12. Selected Quarterly Financial Data (Unaudited)
December 31 September 30 June 30 March 31
(in thousands, except for per share data)
2011
Total revenues ...................................... $875,575 $821,839 $788,610 $718,553
Gross profit ........................................ 300,420 285,222 298,632 280,402
Net income (1) ..................................... 35,219 62,460 68,214 60,233
Net income per share:
Basic ......................................... $ 0.66 $ 1.19 $ 1.30 $ 1.14
Diluted ....................................... 0.64 1.16 1.26 1.11
2010
Total revenues ...................................... $595,922 $553,219 $519,819 $493,665
Gross profit ........................................ 205,132 208,750 204,885 186,503
Net income ........................................ 47,095 37,967 43,519 32,272
Net income per share:
Basic ......................................... $ 0.90 $ 0.73 $ 0.83 $ 0.61
Diluted ....................................... 0.87 0.70 0.80 0.59
(1) Net income for the three months ended December 31, 2011 includes $9.0 million of expense related to a
legal settlement and $9.5 million of expense related to termination benefits associated with the Company’s
retraction of plans to separate and rebrand the DVD-by-mail service. An additional $1.8 million of expense
related to these termination benefits is expected to be recognized in the first quarter of 2012. As of
December 31, 2011, $4.9 million of the costs were included in “Accrued expenses” on the Consolidated
Balance Sheet to be paid in the first quarter of 2012.
See Note 5 to the consolidated financial statements for further information regarding the legal settlement.
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