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Table of Contents
NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS— (Continued)
stock as quoted on any established stock exchange or a national market system, provided, however, that (i)the exercise price of an ISO
and NSO shall not be less than the estimated fair value of the shares on the date of grant, respectively, and (ii)the exercise price of an
ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant,
respectively. To date, options granted generally vest over four years, the first trancheat the end of twelve months and the remaining
options vesting monthly over the remaining three years.
Stock based compensation
For financial reporting purposes, the Company determined that the estimated value of the common stock determined in anticipation of
the Company’s initial public offering was in excess of the exercise price, which was deemed to be the fair market value as of the dates
of grant. In connection with the grants of such options, the Company recorded deferred stock based compensation of $6.7million,
$1.0million and ($678,000) for the years ended December31, 2002, 2003 and 2004, respectively. For the years ended December31, 2002,
2003 and 2004, respectively, the amortization of non-cash deferred stock-based compensation in those years was $1.7million,
$1.8million and $1.7million, respectively.
Activity under the Company’s Stock Option Plans is set forth as follows:
Year Ended December31,
2002
2003
2004
Average
Average
Average
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
Options outstanding
at January 1
4,706,349
$
5.40
6,433,092
$
4.68
6,561,693
$
5.39
Options
granted
2,470,041
3.99
654,735
12.14
614,602
13.60
Options
exercised
—
—
(141,896
)
5.67
(2,796,428
)
4.64
Options
cancelled
(743,298
)
6.88
(384,238
)
4.93
(232,778
)
7.41
Outstanding at end
of period
6,433,092
4.68
6,561,693
5.39
4,147,089
7.00
Options exercisable
at end of period
3,256,417
4.69
4,654,024
4.88
2,644,063
5.29
Additional information regarding stock options outstanding under the Company’s Stock Option Plans as of December31, 2004 is as
follows:
Options Outstanding
Weighted
Options Exercisable
Average
Remaining
Weighted
Weighted
Contractual
Average
Average
2005. EDGAR Online, Inc.