Netgear 2011 Annual Report Download - page 108

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Table of Contents
The following table sets forth the total stock-based compensation expense resulting from stock options, restricted stock awards, and the
Employee Stock Purchase Plan included in the Company’s Consolidated Statements of Operations (in thousands):
The Company recognizes these compensation costs net of the estimated forfeitures on a straight-line basis over the requisite service period
of the award, which is generally the option vesting term of four years.
Total stock-based compensation cost capitalized in inventory was less than $250,000 in each of the years ended December 31, 2011, 2010
and 2009.
As of December 31, 2011, $21.8 million of total unrecognized compensation cost related to stock options is expected to be recognized over
a weighted-average period of 1.45 years. As of December 31, 2011, $2.5 million of total unrecognized compensation cost related to non-vested
RSUs is expected to be recognized over a weighted-average period of 1.17 years.
401k
In April 2000, the Company adopted the NETGEAR 401(k) Plan to which employees may contribute up to 100% of salary subject to the
legal maximum. Beginning on January 1, 2009 for the first three pay periods of 2009 only, which ended on January 30, 2009, the Company
contributed an amount equal to 100% of the employee contributions up to a maximum of $7,000, for employees that remained active with the
company through December 31, 2009. No match was offered in 2010 and 2011. The Company expensed zero, zero and $508,000 related to the
NETGEAR 401(k) Plan in the years ended December 31, 2011, 2010, and 2009, respectively.
Note 12—Segment Information, Operations by Geographic Area and Customer Concentration
Operating segments are components of an enterprise about which separate financial information is available and is regularly evaluated by
management, namely the Chief Operating Decision Maker (“CODM”) of an organization, in order to determine operating and resource
allocation decisions. By this definition, the Company operated in one business segment through the first fiscal quarter of 2011, which comprised
the development, marketing and sale of networking products for the commercial business and home markets.
In the second fiscal quarter of 2011, the Company made organizational changes that resulted in changes to the way in which the CODM
manages and evaluates the business. The Company’s business is now managed in three specific business units: retail, commercial, and service
provider. The retail business unit consists of high performance, dependable and easy-to-
use home networking, storage and digital media products
to connect people with the Internet and their content and devices. The commercial business unit consists of business networking, storage and
security solutions without the cost and complexity of Big IT. The service provider business unit consists of made-to-order and retail proven,
whole home networking solutions sold to service providers for sale to their customers. Each business unit is managed by a Senior Vice
President/General Manager. There is no change in the CODM before and after the reorganization of the segments.
104
Year Ended December 31,
2011
2010
2009
Cost of revenue
$
999
$
913
$
959
Research and development
2,476
2,271
1,973
Sales and marketing
5,136
4,710
4,147
General and administrative
5,151
4,307
3,945
$
13,762
$
12,201
$
11,024