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Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
The Company
NETGEAR, Inc. (“NETGEAR” or the “Company”)
was incorporated in Delaware in January 1996. The Company is a global networking company
that delivers innovative products to consumers, businesses and service providers. The Company's products are built on a variety of proven technologies
such as wireless, Ethernet and powerline, with a focus on reliability and ease-of-
use. The product line consists of wired and wireless devices that enable
networking, broadband access and network connectivity. These products are available in multiple configurations to address the needs of the end-
users in
each geographic region in which the Company's products are sold.
The Company operates in three specific business segments: retail, commercial, and service provider. Each business unit is managed by a Senior
Vice President/General Manager. The Company believes this structure enables it to better focus its efforts on the Company's core customer segments
and allows it to be more nimble and opportunistic as a company overall. The retail business unit is focused on individual consumers and consists of high
performance, dependable and easy-to-
use home networking, home video monitoring, storage and digital media products. The commercial business unit
is focused on small and medium size businesses and consists of business networking, storage and security solutions that bring enterprise class
functionality at an affordable price. The service provider business unit is focused on the service provider market and consists of made-to-
order and retail
proven, whole home networking hardware and software solutions, as well as 4G LTE hotspots sold to service providers for sale to their subscribers.
The Company sells networking products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale
distributors, direct market resellers (“DMRs”), value-added resellers (“VARs”), and broadband service providers.
Basis of presentation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-
company
accounts and transactions have been eliminated in the consolidation of these subsidiaries.
Fiscal periods
The Company's fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a
fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest
to the calendar quarter end, with the fourth quarter ending on December 31.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could
differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity at the time of purchase of three months or less to be cash
equivalents. The Company deposits cash and cash equivalents with high credit quality financial institutions.
Short-term investments
Short-
term investments are partially comprised of marketable securities that consist of government securities with an original maturity or a
remaining maturity at the time of purchase, of greater than three months and no more than 12 months. The marketable securities are held in the
Company's name with one high quality financial institution, which acts as the Company's custodian and investment manager. These marketable
securities are classified as available-for-
sale securities in accordance with the provisions of the authoritative guidance for investments and are carried at
fair value with unrealized gains and losses reported as a separate component of stockholders' equity.
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