Netgear 2009 Annual Report Download - page 88

Table of Contents
Leases
The Company leases office space, cars and equipment under non-cancelable operating leases with various expiration dates through
December 2026. Rent expense in the years ended, December 31, 2009, 2008 and 2007 was $6.2 million, $6.3 million, and $3.4 million,
respectively. The terms of some of the Company’s office leases provide for rental payments on a graduated scale. The Company recognizes rent
expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid.
Future minimum lease payments under non-cancelable operating leases, net of sublease payments, are as follows (in thousands):
Guarantees and Indemnifications
The Company has entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of
orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to
45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. At December 31,
2009, the Company had $81.3 million in non-cancelable purchase commitments with suppliers. The Company establishes a loss liability for all
products it does not expect to sell for which it has committed purchases from suppliers. Such losses have not been material to date.
The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events
or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’
s request in such capacity. The term of the
indemnification period is for the officer’s or director’
s lifetime. The maximum amount of potential future indemnification is unlimited; however,
the Company has a Director and Officer Insurance Policy that limits its exposure and enables it to recover a portion of any future amounts paid.
As a result of its insurance policy coverage, the Company believes the fair value of these indemnification agreements is minimal. Accordingly,
the Company has no liabilities recorded for these agreements as of December 31, 2009.
In its sales agreements, the Company typically agrees to indemnify its direct customers, distributors and resellers for any expenses or
liability resulting from claimed infringements of patents, trademarks or copyrights of third parties. The terms of these indemnification
agreements are generally perpetual any time after execution of the agreement. The maximum amount of potential future indemnification is
unlimited. The Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded
for these agreements as of December 31, 2009.
Note 10—Stockholder’s Equity:
At December 31, 2009, the Company had four stock-based employee compensation plans as described below. The total compensation
expense related to these plans was approximately $11.0 million for the year ended December 31, 2009.
86
Year Ending December 31,
2010
$
5,626
2011
4,238
2012
3,346
2013
3,330
2014
3,385
Thereafter
15,784
Total minimum lease payments
$
35,709