NetFlix 2012 Annual Report Download - page 44

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market risk due to changes in prevailing interest rates which may cause the principal amount of the investment to
fluctuate. For example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate
and the prevailing interest rate later rises, the value of our investment will decline. At December 31, 2012, our
cash equivalents were generally invested in money market funds, which are not subject to market risk because
the interest paid on such funds fluctuates with the prevailing interest rate. Our short-term investments were
comprised of corporate debt securities, government and agency securities and asset and mortgage-backed
securities.
Changes in interest rates could adversely affect the market value of the securities we hold that are classified
as short-term investments. The table below separates these investments, based on stated maturities, to show the
approximate exposure to interest rates.
(in thousands)
Due within one year .............................................. $ 94,739
Due after one year and through 5 years ............................... 312,096
Due after 5 years and through 10 years ............................... 6,679
Due after 10 years ............................................... 44,273
Total .......................................................... $457,787
A sensitivity analysis was performed on our investment portfolio as of December 31, 2012. The analysis is
based on an estimate of the hypothetical changes in market value of the portfolio that would result from an
immediate parallel shift in the yield curve of various magnitudes. This methodology assumes a more immediate
change in interest rates to reflect the current economic environment.
The following table presents the hypothetical fair values (in $ thousands) of our debt securities classified as
short-term investments assuming immediate parallel shifts in the yield curve of 50 basis points (“BPS”), 100 BPS
and 150 BPS. The analysis is shown as of December 31, 2012:
Fair Value December 31, 2012
(in thousands)
-150 BPS -100 BPS -50 BPS +50 BPS +100 BPS +150 BPS
$475,881 $471,961 $468,041 $460,201 $456,281 $452,361
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements and accompanying notes listed in Part IV, Item 15(a)(1) of this
Annual Report on Form 10-K are included immediately following Part IV hereof and incorporated by reference
herein.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
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