NetFlix 2013 Annual Report Download - page 38

Based on investment positions as of December 31, 2013, a hypothetical 100 basis point increase in interest
rates across all maturities would result in an $8.6 million incremental decline in the fair market value of the
portfolio. As of December 31, 2012, a similar 100 basis point increase in the yield curve would have resulted in a
$1.5 million incremental decline in the fair market value of the portfolio. Such losses would only be realized if
the Company sold the investments prior to maturity.
Foreign Currency Risk
We have foreign currency risk related to our revenues and operating expenses denominated in currencies
other than the U.S. dollar, primarily the Euro, the British Pound, the Canadian Dollar, and the Brazilian Real.
Accordingly, changes in exchange rates may negatively affect our revenue and net income as expressed in U.S.
dollars. We also have foreign currency risk related to foreign currency transactions and monetary assets and
liabilities, including intercompany balances denominated in currencies that are not the functional currency. We
have experienced and will continue to experience fluctuations in our net income as a result of gains (losses) on
these foreign currency transactions and the remeasurement of monetary assets and liabilities. To date, the impacts
of foreign currency exchange rate changes on our revenues and net income have not been material. The volatility
of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
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.
Item 9A. Controls and Procedures
(a) Evaluation of Disclosure 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 defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this
Annual Report on Form 10-K. 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 Annual Report
on Form 10-K were effective in providing reasonable assurance that information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules
and forms, and that such information is accumulated and communicated to our management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosures.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that
our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within Netflix have been detected.
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