Netgear 2009 Annual Report Download - page 46

Table of Contents
General and Administrative Expense
General and administrative expenses consist of salaries and related expenses for executive, finance and accounting, human resources,
professional fees, allowance for doubtful accounts and other corporate expenses.
2009 General and Administrative Expense Compared to 2008 General and Administrative Expense
General and administrative expenses increased $1.0 million, or 3.1%, to $32.7 million for the year ended December 31, 2009, from $31.7
million for the year ended December 31, 2008. The increase was primarily attributable to increased fees of $1.5 million for outside legal and
other professional services, particularly increased patent litigation defense costs. Furthermore, we experienced increased salary, related payroll,
and other employee costs of $511,000. This increase is primarily due to capitalizing certain employee costs in 2008 in connection with their
involvement in the implementation of new enterprise resource planning software, which lowered total employee costs included in general and
administrative expenses in that year. We did not capitalize any such costs in 2009. Partially offsetting these increases was a decrease of $1.2
million for outside professional services primarily due to decreased information technology consulting. Such consulting expenses were relatively
higher in the year ago period due to our implementation of new enterprise resource planning software in 2008.
2008 General and Administrative Expense Compared to 2007 General and Administrative Expense
General and administrative expenses increased $4.5 million, or 16.6%, to $31.7 million for the year ended December 31, 2008, from $27.2
million for the year ended December 31, 2007. The increase was primarily due to higher outside professional services, due to higher legal
consulting expenses of $3.5 million. Furthermore, stock-based compensation expense increased approximately $1.0 million to $3.8 million for
the year ended December 31, 2008, from $2.8 million for the year ended December 31, 2007. Overall general and administrative compensation
costs were flat, as the increases in salary, related payroll and other employee expenses were offset by a decrease in employee performance
compensation.
Restructuring
In July 2008, we ceased using buildings leased in Santa Clara and Fremont, California, and consolidated all personnel and operations from
those locations to our new corporate headquarters in San Jose, California. During the year ended December 31, 2009, we expensed $809,000
related to these facilities in Santa Clara and Fremont, primarily due to a sub-lessee ceasing to make payments. During the year ended
December 31, 2008, we expensed $964,000 related to these excess facilities. Additionally, we expensed $965,000 during the year ended
December 31, 2008 related to the termination of employment of approximately 35 individuals on November 12, 2008. For a detailed discussion
of our restructuring expenses, please see Note 4 of the Notes to Consolidated Financial Statements.
We did not incur any restructuring expense during the year ended December 31, 2007.
In-process Research and Development
During the year ended December 31, 2008, we expensed $1.8 million for in-process research and development related to intangible assets
purchased in our acquisition of certain assets of CP Secure. See Note 2 of the Notes to Consolidated Financial Statements for additional
information regarding this acquisition. The
44
Year Ended December 31,
2009
Percentage
Change
2008
Percentage
Change
2007
(In thousands, except percentage data)
General and administrative expense
$
32,727
3.1
%
$
31,733
16.6
%
$
27,220
Percentage of net revenue
4.8
%
4.3
%
3.7
%