Netgear 2012 Annual Report Download - page 33

Table of Contents
the value of our cash equivalents and short-
term investments could decline and result in a material impairment, which could have a material adverse
effect on our financial condition and operating results.
Economic conditions, political events, war, terrorism, public health issues, natural disasters and other circumstances could materially
adversely affect us.
Our corporate headquarters are located in Northern California and one of our warehouses is located in Southern California, both of which are
regions known for seismic activity. Significantly all of our critical enterprise-
wide information technology systems, including our main servers, are
currently housed in colocation facilities in Mesa, Arizona. While our critical information technology systems are located at colocation facilities in a
different geographic region in the United States, our headquarters and warehouses remain susceptible to seismic activity so long as they are located in
California. In addition, substantially all of our manufacturing occurs in two geographically concentrated areas in mainland China, where disruptions
from natural disasters, health epidemics and political, social and economic instability may affect the region. If our manufacturers or warehousing
facilities are disrupted or destroyed, we would be unable to distribute our products on a timely basis, which could harm our business.
We depend significantly on worldwide economic conditions and their impact on consumer spending levels, which have recently deteriorated
significantly in many countries and regions, including without limitation the United States, and may remain depressed for the foreseeable future.
Factors that could influence the levels of consumer spending include increases in fuel and other energy costs, conditions in the residential real estate
and mortgage markets, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors affecting consumer
spending behavior.
In addition, war, terrorism, geopolitical uncertainties, public health issues, and other business interruptions have caused and could cause
damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics
providers, manufacturing vendors and customers. Our business operations are subject to interruption by natural disasters, fire, power shortages,
terrorist attacks, and other hostile acts, labor disputes, public health issues, and other events beyond our control. For example, labor disputes at
manufacturing facilities in China occurred in 2010 and have led to workers going on strike. The recent trend of labor unrest could materially affect
our third-
party manufacturers' abilities to manufacture our products. In addition, all of our major direct and indirect suppliers of hard disk drives have
been affected by record flooding in Thailand in the third fiscal quarter of 2011, and they informed us that our supply chain would be constrained for
an indefinite amount of time, up to six months in some cases. Some therefore declared a force majeure event and have stated that, in addition to and
because of the supply constraints, pricing for hard disk drives would increase significantly until they were able to stabilize the situation. As a result,
we experienced increased prices in the cost of hard disk drives and ceased accepting any orders containing ReadyNAS products with hard disk
drives. In addition, all sales and marketing promotions involving ReadyNAS products were terminated temporarily. Further, we declared the
existence of a force majeure event under our contracts with certain customers. Accordingly, our business was harmed. Furthermore, earthquakes and
resultant nuclear threats and tsunamis in Japan in March 2011 caused some disruption to our supply of raw materials and components for our
products and impacted our operating results in Japan.
Such events could decrease demand for our products, make it difficult or impossible for us to make and deliver products to our customers or to
receive components from our suppliers, and create delays and inefficiencies in our supply chain. Should major public health issues, including
pandemics, arise, we could be negatively affected by more stringent employee travel restrictions, additional limitations in freight services,
governmental actions limiting the movement of products between regions, delays in production ramps of new products, and disruptions in the
operations of our manufacturing vendors and component suppliers.
None.
Our principal administrative, sales, marketing and research and development facilities currently occupy approximately 142,700 square feet in
an office complex in San Jose, California, under a lease that expires in March 2018.
Our international headquarters occupy approximately 10,000 square feet in an office complex in Cork, Ireland, under a lease entered into in
February 2006 and expiring in December 2026. Our international sales personnel are based out of local sales offices or home offices in Austria,
Australia, Brazil, Canada, China, Czech Republic, Denmark, France, Germany, Hong Kong, India, Italy, Japan, Korea, Mexico, New Zealand,
Poland, Russia, Singapore, Spain, Sweden, Switzerland, the Netherlands, the United Arab Emirates, and the United Kingdom. We also have
operations personnel using a leased facility in Hong Kong. We also maintain
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Item 1B. Unresolved Staff Comments
Item 2. Properties