Netgear 2008 Annual Report Download - page 72

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Table of Contents
Other accrued liabilities consist of the following:
Note 4—Restructuring:
The Company accounts for its restructuring plans under SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal
Activities” (“SFAS 146”). The Company presents expenses related to restructuring as a separate line item in its Consolidated Statements of
Operations.
On July 25, 2008, the Company ceased using buildings leased in Santa Clara and Fremont, California, and consolidated all personnel and
operations from those locations to a new corporate headquarters in San Jose, California. The Company expects to sublease the majority of the
formerly occupied Santa Clara space through the end of the operating lease, which extends to December 2010. However, payments from
sublessee arrangements will not completely offset the payments of $3.5 million due under the original leases. The Company recognized
$964,000 in expenses related to future lease payments on the vacated facilities in the year ended December 31, 2008.
The following is a summary of the accrued restructuring charges related to ceasing use of certain buildings:
Additionally, on November 12, 2008, the Company terminated the employment of approximately 35 individuals. The Company recognized
$965,000 in expenses related to this restructuring in the year ended December 31, 2008, of which $94,000 is accrued and not yet paid as of
December 31, 2008. The Company expects to pay the $94,000 in the first quarter of 2009.
Note 5—Net Income Per Share:
Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares
outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average
number of shares of common stock and potentially dilutive common stock outstanding during the period.
Potentially dilutive common shares include outstanding stock options and unvested restricted stock awards, which are reflected in diluted
net income per share by application of the treasury stock method. Under the treasury stock method, the amount that the employee must pay for
exercising stock options, the amount of stock-based compensation cost for future services that the Company has not yet recognized, and the
amount of tax benefit that would be recorded in additional paid-in capital upon exercise are assumed to be used to repurchase shares.
70
December 31,
2008
2007
(In thousands)
Sales and marketing programs
$
33,584
$
39,796
Warranty obligation
28,607
27,557
Freight
3,546
4,728
Other
22,010
17,389
Other accrued liabilities
$
87,747
$
89,470
Accrued
Restructuring
Charges at
December 31,
2007
Initial
Accrual
Recognition
Adjustment
to Initial
Accrual
Recognition
Ongoing
Exit
Expense
Present
Value
Accretion
Cash
Payments
Accrued
Restructuring
Charges at
December 31,
2008
(In thousands)
Abandonment of excess leased
facilities
$
—
$
955
$
(21
)
$
12
$
18
$
(610
)
$
354
Current portion
$
—
$
264
Long
-
term portion
$
—
$
90