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Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
term commensurate with the estimated expected term. Expected volatility is based on historical volatility over the most recent period commensurate
with the estimated expected term.
The following table sets forth the weighted-average assumptions used to fair value option grants during the years ended December 31, 2013 ,
2012
and 2011 based on its historical experience:
The weighted average estimated fair value of options granted during the years ended December 31, 2013 , 2012 and 2011 was $13.29 , $13.99
and
$14.29 , respectively.
The following table sets forth the total stock-
based compensation expense resulting from stock options, restricted stock awards, and the Employee
Stock Purchase Plan included in the Company’s Consolidated Statements of Operations (in thousands):
The Company recognizes these compensation costs net of the estimated forfeitures on a straight-
line basis over the requisite service period of the
award, which is generally the option vesting term of four years .
Total stock-based compensation cost capitalized in inventory was less than $0.5 million in each of the years ended December 31, 2013 , 2012
and
2011 .
As of December 31, 2013 , $16.7 million
of total unrecognized compensation cost related to stock options is expected to be recognized over a
weighted-average period of 2.3 years . As of December 31, 2013 , $14.0 million of total unrecognized compensation cost related to non-
vested RSUs is
expected to be recognized over a weighted-average period of 3.0 years .
401(k) Plan
In April 2000, the Company adopted the NETGEAR 401(k) Plan to which employees may contribute up to 100%
of salary subject to the legal
maximum. In the first quarter of 2012, the Company began matching 50%
of contributions for employees that remain active with the company through
the end of the fiscal year, up to a maximum of $6,000 in employee contributions. During the years ended December 31, 2013 and 2012
the Company
recognized $1.0 million and $0.7 million , respectively, in expenses related to the 401(k) match. No match was offered in 2011 and thus no
expenses
were recorded related to matching employee contributions during that year.
Note 12. Segment Information, Operations by Geographic Area and Customer Concentration
Operating segments are components of an enterprise about which separate financial information is available and is regularly evaluated by
management, namely the Chief Operating Decision Maker (“CODM”)
of an organization, in order to determine operating and resource allocation
decisions. By this definition, the Company operates in three
specific business units: retail, commercial, and service provider. The retail business unit
consists of high performance, dependable and easy-to-use home
101
Year Ended December 31,
2013 2012 2011
Expected life (in years)
4.4
4.4
4.4
Risk-free interest rate
0.72
%
0.64
%
1.63
%
Expected volatility
48.05
%
52.09
%
50.31
%
Dividend yield
—
—
—
Year Ended December 31,
2013
2012
2011
Cost of revenue
$
1,577
$
1,347
$
999
Research and development
3,943
2,787
2,476
Sales and marketing
5,379
4,751
5,136
General and administrative
6,563
5,487
5,151
Total
$
17,462
$
14,372
$
13,762