Netgear 2004 Annual Report Download - page 69

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Table of Contents
NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)
Had compensation cost for the Company’s stock-based compensation plans been determined based on the fair value at the grant
dates for the awards under a method prescribed by SFASNo.123, the Company’s net income (loss) would have been adjusted to the
amounts indicated below (in thousands, except per share data):
Year Ended December31,
2002
2003
2004
Net income (loss) attributable to common stockholders, as reported
$
(9,742
)
$
13,097
$
23,465
Add: Employee stock-based compensation included in reported net
income (loss)
1,581
1,773
1,688
Less: Total employee stock-based compensation determined under fair
value method, net of taxes
(5,558
)
(5,846
)
(4,062
)
Adjusted net income (loss) attributable to common stockholders
$
(13,719
)
$
9,024
$
21,091
Basic net income (loss) per share attributable to common stockholders:
As reported
$
(0.46
)
$
0.55
$
0.77
Adjusted
$
(0.65
)
$
0.38
$
0.69
Diluted net income (loss) per share attributable to common stockholders:
As reported
$
(0.46
)
$
0.49
$
0.72
Adjusted
$
(0.65
)
$
0.34
$
0.65
Comprehensive income
Under SFAS130, “Reporting Comprehensive Income,” the Company is required to display comprehensive income and its components
as part of the financial statements. The Company has displayed its comprehensive income as part of the consolidated statements of
stockholders equity (deficit).
Foreign currency translation
The Company uses the U.S.dollar as its functional currency for all of its international subsidiaries. Foreign currency assets and
liabilities are translated into U.S.dollars at the end-of-period exchange rates except for fixed assets, which are translated at historical
exchange rates. Expenses are translated at average exchange rates in effect during each period, except for those expenses related to
balance sheet amounts, which are translated at historical exchange rates. Gains or losses arising from foreign currency transactions are
included in net income and were immaterial for all periods presented.
Recent accounting pronouncements
At its March 2004 meeting, the EITF reached a consensus on recognition and measurement guidance previously discussed under
EITF03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”. The consensus clarifies
the meaning of other-than-temporary impairment and its application to investments classified as either available-for-sale or
held-to-maturity under SFASNo.115, “Accounting for Certain Investments in Debt and Equity Securities,” and investments accounted
for under the cost method or the equity method. In September 2004, the EITF issued EITF03-1-1, “Effective Date of Paragraphs10-20 of
EITF Issue03-1, ‘The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments’”, which delays the
effective date of those paragraphs
48
2005. EDGAR Online, Inc.