Netgear 2010 Annual Report Download - page 53

Table of Contents
On October 21, 2008, the Board of Directors approved plans to repurchase shares of our common stock in the open market. During the
years ended December 31, 2010 and 2009, we did not repurchase any shares of common stock under this repurchase authorization. As of
December 31, 2010, we were authorized to purchase up to an additional 4.8 million shares under the share repurchase plan. See Note 10 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. Although we did not
repurchase any shares of common stock under this repurchase authorization during the years ended December 31, 2010 and 2009, we
repurchased approximately 32,000 shares or $738,000 of common stock related to the lapse of restricted stock units during the year ended
December 31, 2010.
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, 2010, we had a backlog of approximately $82.4 million, as compared to approximately $65.6 million as of
December 31, 2009, primarily due to supply constraints and greater product demand in the three months ended December 31, 2010. Our backlog
consists of products for which customer purchase orders have been received and that 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, 2010.
We lease office space, cars and equipment under non-cancelable operating leases with various expiration dates through December 2026.
Rent expense was $6.4 million for the year ended December 31, 2010, $6.2 million for the year ended December 31, 2009, and $6.3 million for
the year ended December 31, 2008. The terms of some of the office leases provide for rental payments on a graduated scale. We recognize rent
expense on a straight-line basis over the lease period, and have accrued for rent expense incurred but not paid. The amounts presented are
consistent with contractual terms and are not expected to differ significantly, unless a substantial change in our headcount needs requires us to
exit an office facility early or expand our occupied space.
51
Less Than
1 Year
1
-
3
Years
3
-
5
Years
More Than
5 Years
Total
(In thousands)
Operating leases, net of sublease payments
$
6,401
$
9,877
$
7,874
$
9,635
$
33,787
Purchase obligations
$
160,350
$
—
$
—
$
—
$
160,350
$
166,751
$
9,877
$
7,874
$
9,635
$
194,137