Netgear 2008 Annual Report Download - page 48

Table of Contents
We enter into foreign currency forward-exchange contracts, which typically mature in three months, to hedge a portion of our exposure to
foreign currency fluctuations of foreign currency-denominated receivables, payables, and cash balances. We record on the consolidated balance
sheet at each reporting period the fair value of our forward-exchange contracts and record any fair value adjustments in our Consolidated
Statements of Operations. Gains and losses associated with currency rate changes on contracts are recorded within other income (expense), net,
offsetting gains and losses on our monetary assets and liabilities.
On October 21, 2008, the Board of Directors approved plans to purchase shares of our common stock in the open market. During the year
ended December 31, 2008, we purchased approximately 1.2 million shares of our common stock in the open market for cash of $12.2 million. As
of December 31, 2008, we were authorized to purchase up to an additional 4.8 million shares under the share repurchase plan. See Note 9 of the
Notes to Consolidated Financial Statements for a discussion of the accounting for our common stock repurchases. The stock repurchase
authorization does not have an expiration date and the pace of repurchase activity will depend on various factors including, but not limited to,
such factors as levels of cash generation from operations, cash requirements for acquisitions, and current stock price.
Based on our current plans and market conditions, we believe that our existing cash, cash equivalents and short-term investments will be
sufficient to satisfy our anticipated cash requirements for the foreseeable future. However, we cannot be certain that our planned levels of
revenue, costs and expenses will be achieved. If our operating results fail to meet our expectations or if we fail to manage our inventory,
accounts receivable or other assets, we could be required to seek additional funding through public or private financings or other arrangements.
In addition, as we continue to expand our product offerings, channels and geographic presence, we may require additional working capital. In
such event, adequate funds may not be available when needed or may not be available on favorable or commercially acceptable terms, which
could have a negative effect on our business and results of operations.
Backlog
As of December 31, 2008, we had a backlog of approximately $37.7 million compared to approximately $37.8 million as of December 31,
2007. Our backlog consists of products for which customer purchase orders have been received and which are scheduled or in the process of
being scheduled for shipment. While we expect to fulfill the order backlog within the current year, most orders are subject to rescheduling or
cancellation with little or no penalties. Because of the possibility of customer changes in product scheduling or order cancellation, our backlog as
of any particular date may not be an indicator of net sales for any succeeding period.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
The following table describes our commitments to settle non-cancelable lease and purchase commitments as of December 31, 2008.
We lease office space, cars and equipment under non-cancelable operating leases with various expiration dates through December 2026.
Rent expense was $6.3 million for the year ended December 31, 2008, $3.4 million for the year ended December 31, 2007, and $2.2 million for
the year ended December 31, 2006. The terms of some of the office leases provide for rental payments on a graduated scale. We recognize rent
expense
46
Less Than
1 Year
1
-
3
Years
3
-
5
Years
More Than
5 Years
Total
(In thousands)
Operating leases, net of sublease payments
$
5,589
$
7,922
$
16,716
$
6,176
$
36,403
Purchase obligations
$
26,777
$
—
$
—
$
—
$
26,777
$
32,366
$
7,922
$
16,716
$
6,176
$
63,180