Netgear 2008 Annual Report Download - page 26

Table of Contents
information systems, and operational and financial controls. In addition, if we continue to grow, our expenditures will likely be significantly
higher than our historical costs. We may not be able to install adequate controls in an efficient and timely manner as our business grows, and our
current systems may not be adequate to support our future operations. The difficulties associated with installing and implementing new systems,
procedures and controls may place a significant burden on our management, operational and financial resources. In addition, if we grow
internationally, we will have to expand and enhance our communications infrastructure. If we fail to continue to improve our management
information systems, procedures and financial controls or encounter unexpected difficulties during expansion, our business could be harmed.
Governmental regulations of imports or exports affecting Internet security could affect our net revenue.
Any additional governmental regulation of imports or exports or failure to obtain required export approval of our encryption technologies
could adversely affect our international and domestic sales. The United States and various foreign governments have imposed controls, export
license requirements, and restrictions on the import or export of some technologies, especially encryption technology. In addition, from time to
time, governmental agencies have proposed additional regulation of encryption technology, such as requiring the escrow and governmental
recovery of private encryption keys. In response to terrorist activity, governments could enact additional regulation or restriction on the use,
import, or export of encryption technology. This additional regulation of encryption technology could delay or prevent the acceptance and use of
encryption products and public networks for secure communications, resulting in decreased demand for our products and services. In addition,
some foreign competitors are subject to less stringent controls on exporting their encryption technologies. As a result, they may be able to
compete more effectively than we can in the United States and the international Internet security market.
We recently moved into a new corporate headquarters in the third quarter of 2008. If we cannot retain sub lessees for the remaining
lease term of our old facilities, then we will be forced to take an additional charge related to such excess space.
We recently moved into our new corporate headquarters in the third quarter of 2008. The existing lease on our former Santa Clara
corporate headquarters does not expire until the end of 2010 and the existing lease on our Fremont facility does not expire until the end of
October 2009. We have subleased a portion of these facilities and taken a restructuring charge for the balance of the lease costs. If any tenant
moves out or is unable to meet its obligations to us, we would have to record an additional charge associated with such excess space.
We are required to evaluate our internal control under Section 404 of the Sarbanes-
Oxley Act of 2002 and any adverse results from such
evaluation could impact investor confidence in the reliability of our internal controls over financial reporting.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control
over financial reporting. Such report must contain among other matters, an assessment of the effectiveness of our internal control over financial
reporting as of the end of our fiscal year, including a statement as to whether or not our internal control over financial reporting is effective. This
assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by management.
We will continue to perform the system and process documentation and evaluation needed to comply with Section 404, which is both
costly and challenging. During this process, if our management identifies one or more material weaknesses in our internal control over financial
reporting, we will be unable to assert such internal control is effective. If we are unable to assert that our internal control over financial reporting
is effective as of the end of a fiscal year or if our independent registered public accounting firm is unable to express an opinion on the
effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial
reports, which may have an adverse effect on our stock price.
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