Netgear 2012 Annual Report Download - page 53

Table of Contents
2012 . This decrease is primarily attributable to our increased inventory levels to support current and expected demand levels for our products.
We enter into foreign currency forward-
exchange contracts, which typically mature in three to five months, to hedge a portion of our exposure
to foreign currency fluctuations of foreign currency-denominated revenue, costs of revenue, certain operating expenses,
receivables, payables, and
cash balances. We record on the consolidated balance sheet at each reporting period the fair value of our forward-
exchange contracts and record any
fair value adjustments in our Consolidated Statements of Operations and in our Consolidated Balance Sheets. Gains and losses associated with
currency rate changes on hedge contracts that are non-
designated under the authoritative guidance for derivatives and hedging are recorded within
other income (expense), net, offsetting foreign exchange gains and losses on our monetary assets and liabilities. Gains and losses associated with
currency rate changes on hedge contracts that are designated cash flow hedges under the authoritative guidance for derivatives and hedging are
recorded within cumulative other comprehensive income until the related revenue, costs of revenue, or expenses are recognized.
In October 21, 2008, the Board of Directors authorized management to repurchase up to 6,000,000 shares of our outstanding common stock.
Under this authorization, the timing and actual number of shares subject to repurchase are at the discretion of management and are contingent on a
number of factors, such as levels of cash generation from operations, cash requirements for acquisitions and the price of our common stock. We did
not repurchase any shares under this authorization during the years ended December 31, 2012 , 2011 or 2010 .
We also repurchase shares to help administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes
for individuals receiving RSUs throughout the year. We repurchased approximately 22,000 shares, or $850,000
of common stock to facilitate tax
withholdings for RSUs during the year ended December 31, 2012 . Similarly, during the years ended December 31, 2011 and December 31, 2010
,
we repurchased approximately 25,000 shares and 32,000 shares, respectively, or $926,000 and $736,000
of our common stock, respectively, to help
facilitate tax withholding for RSUs. These shares were retired upon repurchase.
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, 2012
, we had a backlog of approximately $104.6 million, compared to approximately $128.5 million as of December 31,
2011
, primarily due to product demand required in the future. 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, 2012 .
49
Less Than 1-3 3-5 More Than
1 Year Years Years 5 Years Total
Operating leases
$
8,192
$
11,907
$
8,201
$
3,517
$
31,817
Purchase obligations
149,603
—
—
—
149,603
$
157,795
$
11,907
$
8,201
$
3,517
$
181,420