Netgear 2004 Annual Report Download - page 26

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Table of Contents
The following table sets forth the consolidated statements of operations, expressed as a percentage of net revenue, for the periods
indicated:
Year Ended December31,
2002
2003
2004
Net revenue
100.0
%
100.0
%
100.0
%
Cost of revenue:
Cost of revenue
74.6
72.0
67.9
Amortization of deferred stock-based compensation
0.0
0.0
0.0
Total cost of revenue
74.6
72.0
67.9
Gross margin
25.4
28.0
32.1
Operating expenses:
Research and development
3.1
2.7
2.6
Sales and marketing
13.8
16.4
16.1
General and administrative
3.4
3.0
3.8
Amortization of deferred stock-based compensation:
Research and development
0.1
0.1
0.1
Sales and marketing
0.1
0.2
0.2
General and administrative
0.4
0.2
0.1
Total operating expenses
20.9
22.6
22.9
Income from operations
4.5
5.4
9.2
Extinguishment of debt
—
(2.0
)
—
Other income (expense), net
(0.5
)
(0.2
)
0.3
Income before taxes
4.0
3.2
9.5
Provision (benefit) for income taxes
0.6
(1.2
)
3.4
Net income
3.4
%
4.4
%
6.1
%
Year Ended December31, 2004 Compared to Year Ended December31, 2003
Net Revenue
Net revenue increased $83.8million, or 28%, to $383.1million for the year ended December31, 2004, from $299.3million for the year ended
December31, 2003. The increase in revenue was attributable to increased gross shipments of our broadband and wireless products,
partially offset by increases in provisions made for rebates and cooperative marketing programs associated with increased retail
product sales, sales returns and price protection.
For the year ended December31, 2004 revenue generated within North America, EMEA and Asia Pacific was 53.7%, 37.7% and 8.6%,
respectively. The comparable net revenue for the year ended December31, 2003 was 57.8%, 33.2% and 9.0%, respectively. The increase
in net revenue over the prior year comparable period for each region was 18.9%, 45.4% and 22.1%, respectively. The increase in all
regions was attributable to increased shipment of broadband and wireless products and Ethernet switches, due in part to the
continuous introduction of new products into all channels.
Cost of Revenue and Gross Margin
Cost of revenue increased $44.9million, or 21%, to $260.3million for the year ended December31, 2004 from $215.5million for the year
ended December31, 2003. Our gross margin improved to 32.1% for the year ended December31, 2004, from 28.0% for the year ended
December31, 2003. This improvement in gross
2005. EDGAR Online, Inc.