NetFlix 2015 Annual Report Download - page 58

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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 following table
summarizes the potential common shares excluded from the diluted calculation, as adjusted for the Stock Split:
Year ended December 31,
2015 2014 2013
(in thousands)
Employee stock options ........................................... 517 917 1,386
Stock-Based Compensation
The Company grants fully vested non-qualified stock options to its employees on a monthly basis. 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 8 to the consolidated financial statements for
further information regarding stock-based compensation.
2. Reclassifications
In addition to the retrospective adoption of ASU 2015-03 and ASU 2015-17 as detailed in Note 1, certain
prior year amounts have been reclassified to conform to the current year presentation in the consolidated
financial statements.
Specifically, the Company reclassified prepaid content from “Other current assets” on the Consolidated
Balance Sheets to “Current content assets, net”. The reclassifications for the years ended December 31, 2014 and
2013, were $40.4 million and $40.9 million respectively. The Company also reclassified the change in prepaid
content of $0.4 million and $19.1 million for the years ended December 31, 2014 and 2013, respectively, from
“Other current assets” to “Additions to streaming content assets” on the Consolidated Statements of Cash Flows.
3. Short-term Investments
The Company’s investment policy is consistent with the definition of available-for-sale securities. The
Company does not buy and hold securities principally for the purpose of selling them in the near future. The
Company’s policy is focused on the preservation of capital, liquidity and return. From time to time, the Company
may sell certain securities but the objectives are generally not to generate profits on short-term differences in
price. The following tables summarize, by major security type, the Company’s assets that are measured at fair
value on a recurring basis and are categorized using the fair value hierarchy and where they are classified on the
Consolidated Balance Sheets.
As of December 31, 2015
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
Cash and cash
equivalents
Short-term
investments
Non-current
assets (1)
(in thousands)
Cash .................. $1,708,220 $— $ — $1,708,220 $1,706,592 $ — $1,628
Level 1 securities:
Money market
funds ........... 107,199 — — 107,199 102,738 — 4,461
Level 2 securities:
Corporate debt
securities ........ 240,867 154 (409) 240,612 — 240,612 —
Government
securities ........ 235,252 — (1,046) 234,206 — 234,206 —
Agency securities . . . 26,576 — (9) 26,567 — 26,567 —
Total ................. $2,318,114 $154 $(1,464) $2,316,804 $1,809,330 $501,385 $6,089
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