Netgear 2013 Annual Report Download - page 79

Download and view the complete annual report

Please find page 79 of the 2013 Netgear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company accounts for its restructuring plans under the authoritative guidance for exit or disposal activities. The Company presents expenses
related to restructuring and other charges as a separate line item in its Consolidated Statements of Operations.
During the year ended December 31, 2013 , the Company incurred restructuring and other charges of $5.4 million
. Restructuring charges consisted
of $3.3 million in severance costs related to the consolidation of certain teams and locations during the fourth quarter of 2013, and $0.2 million
related to
an office lease exit liability related to the AVAAK acquisition. Other charges consisted of $1.9 million
in transition costs related to the AirCard
acquisition. In addition, the Company recorded a restructuring adjustment of $94,000
to decrease the previously recorded severance liability for an
office lease exit related to the AVAAK acquisition and the consolidation of product groups within the commercial business units. The Company expects
to pay the remaining cost related to restructuring over the next three months. Refer to Note 2, Business Acquisitions
for additional information regarding
the AirCard and AVAAK acquisitions. During the year ended December 31, 2012, the Company incurred $1.2 million
in restructuring costs for
employee severance related to the consolidation of product groups within our commercial business unit.
The following tables provide a summary of accrued restructuring and other charges activity:
Note 5. Derivative Financial Instruments
The Company’
s subsidiaries have had, and will continue to have material future cash flows, including revenue and expenses, which are
denominated in currencies other than the Company’
s functional currency. The Company and all its subsidiaries designate the U.S. dollar as the
functional currency. Changes in exchange rates between the Company’
s functional currency and other currencies in which the Company transacts
business will cause fluctuations in cash flow expectations and cash flow realized or settled. Accordingly, the Company uses derivatives to mitigate its
business exposure to foreign exchange risk. The Company enters into foreign currency forward contracts in Australian dollars, British pounds, Euros,
and Japanese yen to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue,
operating expenses and existing assets and liabilities. The Company does not enter into derivatives transactions for trading or speculative purposes.
The Company’s foreign currency forward contracts do not contain any credit-risk-
related contingent features. The Company is exposed to credit
losses in the event of nonperformance by the counter-parties of its forward contracts. The Company enters into derivative contracts with high-
quality
financial institutions and limits the amount of credit exposure to any one counter-
party. In addition, the derivative contracts typically mature in less than
six months and the Company continuously evaluates the credit standing of its counter-party financial institutions. The counter-
parties to these
arrangements are large highly rated financial institutions and the Company does not consider non-performance a material risk.
The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, immateriality,
accounting considerations and the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than
a portion of the financial impact resulting from movements in foreign exchange rates. The Company’
s accounting policies for these instruments are
based on whether the instruments are designated as hedge or non-
hedge instruments in accordance with the authoritative guidance for derivatives and
hedging. The Company records all
76
Accrued Restructuring and
Other Charges at December 31,
2012
Additions
Cash Payments
Adjustments
Accrued Restructuring and
Other Charges at December 31,
2013
(In thousands)
Restructuring
$
999
3,537
$
(3,429
)
$
(94
)
$
1,013
Acquisition transition costs —
1,892
(1,882
)
—
10
Restructuring and other charges
$
999
5,429
$
(5,311
)
$
(94
)
$
1,023
Accrued Restructuring and
Other Charges at December 31,
2011
Additions
Cash Payments
Adjustments
Accrued Restructuring and
Other Charges at December 31,
2012
(In thousands)
Restructuring
$
—
1,190
$
(191
)
$
—
$
999