Netgear 2008 Annual Report Download - page 63

Table of Contents
exchange rates for monetary assets and liabilities, and historical exchange rates for nonmonetary assets. Expenses are re-measured at average
exchange rates in effect during each period, except for expenses related to non-monetary assets, which are re-measured at historical exchange
rates. Revenue is re-
measured at average exchange rates in effect during each period. Gains and losses arising from foreign currency transactions
are included in net income and were a net loss of $7.2 million for the year ended December 31, 2008, and net gains of $3.3 million and $2.5
million for the years ended December 31, 2007 and 2006, respectively.
Recent accounting pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”)
No. 157, Fair Value Measurements (
“SFAS 157”),
which defines fair value, establishes a framework for measuring fair value in accordance with
U.S. generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other existing
accounting pronouncements that require or permit fair value measurements, as the FASB previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements.
Effective January 1, 2008, the Company adopted SFAS 157 as it relates to financial assets and liabilities recognized at fair value on a recurring
basis. Additional disclosures required by SFAS 157 are included in Note 12.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—Including an
amendment of FASB Statement No. 115,” (“SFAS 159”) which permits entities to elect to measure many financial instruments and certain other
items at fair value that are not currently required to be measured at fair value. This election is irrevocable. SFAS 159 was effective in the first
quarter of fiscal 2008. The Company has not elected to apply the fair value option to any of its financial instruments.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”) and SFAS No. 160, “Non-
controlling Interests in Consolidated Financial Statements, an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”). SFAS 141R
will have a material impact on future business combinations by the Company as it establishes principles and requirements for how the Company:
(1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in
the acquiree; (2) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and
(3) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business
combination. SFAS 141R requires contingent consideration to be recognized at its fair value on the acquisition date and the recognition of in-
process research and development as an indefinite-lived intangible asset until the development is complete, after which time the related
capitalized costs would be amortized over the expected useful life. If the in-process research and development is subsequently abandoned prior
to completion, the associated capitalized costs would be expensed in such period. SFAS 141R also requires acquisition-related transaction and
restructuring costs to be expensed rather than treated as part of the cost of the acquisition. SFAS 160 will change the accounting and reporting
for minority interests, which will be re-characterized as non-controlling interests and classified as a component of equity. SFAS 141R and SFAS
160 are effective for fiscal years beginning after December 15, 2008. The Company will assess the impact of SFAS 141R if and when future
acquisitions occur. The Company does not expect that the adoption of SFAS 160 will have an impact on the consolidated financial statements.
In February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”),
which delays the effective date of SFAS 157 until January 1, 2009 for all non-financial assets and non-financial liabilities, except for items that
are recognized or disclosed at fair value in the financial statements on a recurring basis. These non-financial items include assets and liabilities
such as reporting units measured at fair value in a goodwill impairment test and non-financial assets acquired and liabilities assumed in a
business combination. The Company does not expect that the adoption of the remainder of SFAS 157 will have an impact on the consolidated
financial statements.
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