Netgear 2012 Annual Report Download - page 62

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
The Company
NETGEAR, Inc. (“NETGEAR” or the “Company”)
was incorporated in Delaware in January 1996. The Company is a global networking
company that delivers innovative products to consumers, businesses and service providers. For consumers, the Company makes high performance,
dependable and easy-to-
use home networking, storage and digital media products to connect people with the Internet and their content and devices.
For businesses, the Company provides networking, storage and security solutions without the cost and complexity of Big IT. The Company also
supplies leading service providers with made-to-
order and retail proven, whole home networking solutions for sale to their customers. The
Company’s products are built on a variety of proven technologies such as wireless, Ethernet and powerline, with a focus on reliability and ease-of-
use. The Company sells products primarily through a global sales channel network, which includes traditional retailers, online retailers, wholesale
distributors, direct market resellers ("DMRs"), value added resellers ("VARs"), and broadband service providers.
Basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-
company accounts and transactions have been eliminated in the consolidation of these subsidiaries.
Fiscal periods
The Company's fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results
on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the
Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could
differ from those estimates.
Reclassifications
In the first quarter of 2011, in order to achieve operational efficiencies, the Company combined its North American, Central American and
South American sales forces to form the Americas territory. Previously North America was its own geographic region and
the Central American and
South American territories were categorized within the Asia Pacific ("APAC") geographic region. Following this change, the Company is organized
into the following three geographic territories: Americas, Europe, Middle-
East and Africa ("EMEA") and APAC. The Company has reclassified its
disclosure of net revenue by geography for prior periods to conform to the current period's presentation. The change did not result in material
differences from what was previously reported.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity at the time of purchase of three months or less to be cash
equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions.
Short-term investments
Short-
term investments are comprised of marketable securities that consist of government securities with an original maturity or a remaining
maturity at the time of purchase, of greater than three months and no more than 12 months. All marketable securities are held in the Company's name
with one high quality financial institution, which acts as the Company's custodian and investment manager. All of the Company's marketable
securities are classified as available-for-
sale securities in accordance with the provisions of the authoritative guidance for investments and are carried
at fair value with unrealized gains and losses reported as a separate component of stockholders' equity.
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