Netgear 2004 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2004 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 110

  • 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

Table of Contents
The table below sets forth the percentage of net revenue derived from these major wholesale distributors for the years ended
December31, 2002, 2003 and 2004, respectively.
Year Ended
December31,
2002
2003
2004
Ingram Micro, Inc.
32
%
31
%
27
%
Tech Data Corporation
20
%
15
%
18
%
Total
52
%
46
%
45
%
We derive a substantial portion of our net revenue from international sales. International sales as a percentage of net revenue grew
from 37% in 2002 to 42% in 2003 and 46% in 2004. Sales in EMEA grew from $99.4million in 2003 to $144.6million in 2004, representing
an increase of approximately 45% during that period. We continue to penetrate growing markets such as China, Italy, Japan, Spain and
Sweden. The table below sets forth our net revenue by major geographic region.
Year Ended December31,
Percentage
Percentage
2002
Change
2003
Change
2004
(In thousands)
United States
$
150,096
15
%
$
172,885
19
%
$
205,587
EMEA
68,006
46
%
99,422
45
%
144,590
Asia Pacific and rest of world
19,229
40
%
26,995
22
%
32,962
Total
$
237,331
26
%
$
299,302
28
%
$
383,139
Our net revenue consists of gross product shipments, less allowances for estimated returns for stock rotation and warranty, price
protection, customer rebates, cooperative marketing expenses deemed to be a sales incentive and net changes in deferred revenue.
Revenue from product sales is generally recognized at the time the product is shipped, provided that persuasive evidence of an
arrangement exists, title and risk of loss has transferred to the customer, the sales price is fixed or determinable and collectibility of the
related receivable is reasonably assured. Currently, for some of our international customers, title passes upon delivery to the port of
destination. For select retailers to whom we sell directly, title passes upon their receipt of product or upon our customer’s resale of the
product. At the end of each quarter, we defer revenue related to the product in-transit to some of our international customers and retail
customers that purchase directly from us and for which title and risk of loss have not passed to the customer, and distributor and
reseller channel inventory that we estimate may be returned to us under their stock rotation rights.
Our financial condition and results of operations have been and are likely to continue to be affected by seasonal patterns. In the past,
we have experienced higher net revenue during the second half of the year, with our highest net revenue during the year-end holiday
season. Absent other factors, we would therefore expect higher net revenue in the third and fourth quarter of each year. To the extent
our retail sales increase as a percentage of our net revenue, we expect to experience seasonally higher net revenue as a percentage of
annual net revenue in the third and fourth quarters.
Intense competition and technological advances characterize the small business and home networking markets. As a result, we expect
to experience rapid erosion of average selling prices over the course of the lifecycle of our products due to competitive pricing
2005. EDGAR Online, Inc.