Netgear 2013 Annual Report Download - page 77

Download and view the complete annual report

Please find page 77 of the 2013 Netgear annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company purchased finite-lived intangible assets of $64.2 million and indefinite-lived assets of $9.5 million
, as a result of its acquisition of
AirCard and Arada during the second quarter of 2013. For further discussion regarding the AirCard and Arada acquisitions, see Note 2,
Business
Acquisitions
. In addition, the Company purchased $0.3 million in patents during the second quarter of 2013.
As of December 31, 2013 , the Company had $0.1 million in indefinite-
lived intangible assets. This balance relates to the remaining IPR&D assets
acquired in connection with the Company's acquisition of AirCard. IPR&D assets represent IPR&D projects that have not reached technical feasibility
and are required to be classified as indefinite-
lived assets until the successful completion or abandonment of the associated research and development
efforts. Accordingly, during the development period after the date of acquisition, these assets will not be amortized. When the asset reaches technical
feasibility, the Company will determine the useful life of the asset, reclassify the asset out of IPR&D, and begin amortization. Development costs
incurred after acquisition on acquired IPR&D projects are expensed as incurred. As of December 31, 2013 , $7.4 million
of the IPR&D had reached
technical feasibility and as a result, was reclassified from IPR&D to technology. In addition, $2.0 million of IPR&D projects were abandoned during the
third quarter of 2013. The Company expects to complete the remaining IPR&D by the second quarter of 2014, for an estimated future cost to complete
of $0.2 million .
Amortization of purchased intangible assets in the years ended December 31, 2013 , 2012 and 2011 was $15.5 million , $4.9 million and
$4.8
million , respectively. In the year ended December 31, 2013, the Company recorded an impairment charge of $2.0 million
due to the abandonment of
IPR&D discussed above. No impairment charges were recorded in the years ended December 31, 2012 and 2011 .
Estimated amortization expense related to finite-lived intangibles for each of the next five years and thereafter is as follows:
Goodwill
The changes in the carrying amount of goodwill during the years ended December 31, 2013 and 2012 are as follows:
74
Gross
Accumulated
Amortization
Net
December 31, 2012
Technology
32,259
$
(22,065
)
$
10,194
Customer contracts and relationships
16,000
(3,301
)
12,699
Other
6,870
(3,142
)
3,728
Finite-lived intangibles, net
55,129
(28,508
)
26,621
Indefinite-lived intangible assets
1,000
—
1,000
Total purchased intangible assets, net
56,129
$
(28,508
)
$
27,621
Year Ending December 31, Amount
2014
17,875
2015
17,258
2016
16,896
2017
11,361
2018
7,859
Thereafter
12,769
Total expected amortization expense
84,018