NetFlix 2015 Annual Report Download - page 57

Prior to January 1, 2015, the functional currency of certain of the Company’s European entities was the
British pound. The Company changed the functional currency of these entities to the euro effective January 1,
2015 following the redomiciliation of the European headquarters and the launch of the Netflix service in several
significant European countries. The change in functional currency was applied prospectively from January 1,
2015. Monetary assets and liabilities have been remeasured to the euro at current exchange rates. Non-monetary
assets and liabilities have been remeasured to the euro using the exchange rate effective for the period in which
the balance arose. As a result of this change of functional currency, the Company recorded a $21.8 million
cumulative translation adjustment included in other comprehensive loss for year ended December 31, 2015.
The Company remeasures monetary assets and liabilities that are not denominated in the functional currency
at exchange rates in effect at the end of each period. Gains and losses from these remeasurements are recognized
in interest and other income (expense). Foreign currency transactions resulted in losses of $37.3 million , $8.2
million , and $8.4 million for the years ended December 31, 2015, 2014, and 2013 respectively.
Earnings Per Share
In June 2015, the Company’s Board of Directors declared a seven -for-one stock split in the form of a stock
dividend that was paid on July 14, 2015 to all shareholders of record as of July 2, 2015 (“Stock Split”).
Outstanding share and per-share amounts disclosed for all periods provided have been retroactively adjusted
to reflect the effects of the Stock Split.
Basic earnings per share is computed using the weighted-average number of outstanding shares of common
stock during the period. Diluted earnings 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 of shares issuable upon the assumed conversion of the Company’s Convertible
Notes (prior to the conversion of such notes in April 2013) and incremental shares issuable upon the assumed
exercise of stock options. The computation of earnings per share, as adjusted for the Stock Split, is as follows:
Year ended December 31,
2015 2014 2013
(in thousands, except per share data)
Basic earnings per share:
Net income ...................................... $122,641 $266,799 $112,403
Shares used in computation:
Weighted-average common shares outstanding ...... 425,889 420,544 407,385
Basic earnings per share ............................ $ 0.29 $ 0.63 $ 0.28
Diluted earnings per share:
Net income ...................................... $122,641 $266,799 $112,403
Convertible Notes interest expense, net of tax ........... — — 49
Numerator for diluted earnings per share ............... 122,641 266,799 112,452
Shares used in computation:
Weighted-average common shares outstanding ...... 425,889 420,544 407,385
Convertible Notes shares ....................... — — 5,007
Employee stock options ........................ 10,567 11,350 12,935
Weighted-average number of shares .............. 436,456 431,894 425,327
Diluted earnings per share .......................... $ 0.28 $ 0.62 $ 0.26
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