The $25 million explained in the 10Q (was poorly explained in the 8k)
I was wrong ... from reading into the 8k (would be helpful if they put out the 10Q at the same time as the press release). There was a prepayment penalty of $19.4 million for the retirement of the debt. The $4.2 million unamortized loan origination cost is a one-timer as is the prepayment. IMO, the extraordinary part of the earnings (if one is used at all) should be $19.4 million + $4.3 million - tax benefit from the loss. At a 35% tax rate the actual loss from the retirement of debt, not counting interest would be $15.3 million. That plus the $2.7 million in GAAP earnings is $18 million or close enough to $0.31/sh Reed reported. Still not sure where the $25.1 million came from and how it relates to $0.31/sh.
NFLX paid only $9.4 million for the issuance of $500 million in debt (more reasonable than assuming $25 million since the prepayment penalty was not in the 8k).
From the 10Q:
"The Company used $224.5 million of the net proceeds of the 5.375% Notes to redeem the outstanding $200.0 million aggregate principal amount of 8.50% Senior Notes due 2017 (the “8.50% Notes”) and pursuant to the make-whole provision in the Indenture governing the 8.50% Notes, paid a $19.4 million premium and $5.1 million of accrued and unpaid interest. The Company recognized a loss on extinguishment of debt of $25.1 million related to redemption of the 8.50% Notes which included the write off of unamortized debt issuance costs of $4.2 million."