Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 11, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | NTGR | ||
Entity Registrant Name | NETGEAR, Inc. | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Central Index Key | 0001122904 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Smaller Reporting Company | false | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Tax Identification Number | 77-0419172 | ||
Entity File Number | 000-50350 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 350 East Plumeria Drive | ||
Entity Address, City or Town | San Jose | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 95134 | ||
City Area Code | (408) | ||
Local Phone Number | 907-8000 | ||
Security Exchange Name | NASDAQ | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Interactive Data Current | Yes | ||
Entity Common Stock, Shares Outstanding (In shares) | 29,453,998 | ||
Entity Public Float | $ 447 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement for the Registrant's 2020 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 190,208 | $ 201,047 |
Short-term investments | 5,499 | 73,317 |
Accounts receivable, net of allowance for doubtful accounts of $1,079 and $1,254 as of December 31, 2019 and December 31, 2018, respectively | 277,168 | 303,667 |
Inventories | 235,489 | 243,871 |
Prepaid expenses and other current assets | 35,745 | 35,997 |
Total current assets | 744,109 | 857,899 |
Property and equipment, net | 17,683 | 20,177 |
Operating lease right-of-use assets, net | 28,917 | 0 |
Intangibles, net | 10,104 | 17,146 |
Goodwill | 80,721 | 80,721 |
Other non-current assets | 74,279 | 67,433 |
Total assets | 955,813 | 1,043,376 |
Current liabilities: | ||
Accounts payable | 80,531 | 139,748 |
Accrued employee compensation | 20,024 | 31,666 |
Other accrued liabilities | 189,547 | 199,472 |
Deferred revenue | 6,450 | 11,086 |
Income taxes payable | 1,839 | 2,020 |
Total current liabilities | 298,391 | 383,992 |
Non-current income taxes payable | 15,307 | 19,600 |
Non-current operating lease liabilities | 25,434 | 0 |
Other non-current liabilities | 7,988 | 12,232 |
Total liabilities | 347,120 | 415,824 |
Commitments and contingencies (Note 10) | ||
Stockholders’ equity: | ||
Preferred stock: $0.001 par value; 5,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock: $0.001 par value; 200,000,000 shares authorized; shares issued and outstanding: 29,925,008 and 31,562,358 as of December 31, 2019 and 2018, respectively | 30 | 32 |
Additional paid-in capital | 831,365 | 793,585 |
Accumulated other comprehensive income (loss) | 21 | (15) |
Accumulated deficit | (222,723) | (166,050) |
Total stockholders’ equity | 608,693 | 627,552 |
Total liabilities and stockholders’ equity | $ 955,813 | $ 1,043,376 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts of $1,079 and $1,254 as of December 31, 2019 and December 31, 2018, respectively | $ 1,079 | $ 1,254 |
Preferred Stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 29,925,008 | 31,562,358 |
Common stock, shares outstanding (in shares) | 29,925,008 | 31,562,358 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | |||
Net revenue | $ 998,763 | $ 1,058,816 | $ 1,039,169 |
Cost of revenue | 704,535 | 717,118 | 731,453 |
Gross profit | 294,228 | 341,698 | 307,716 |
Operating expenses: | |||
Research and development | 77,982 | 82,416 | 71,893 |
Sales and marketing | 138,150 | 152,569 | 138,679 |
General and administrative | 49,432 | 64,857 | 54,346 |
Other operating expenses, net | 2,476 | 3,142 | 245 |
Total operating expenses | 268,040 | 302,984 | 265,163 |
Income from operations | 26,188 | 38,714 | 42,553 |
Interest income, net | 2,539 | 3,980 | 2,114 |
Other income (expense), net | 844 | 510 | 1,557 |
Income before income taxes | 29,571 | 43,204 | 46,224 |
Provision for income taxes | 3,780 | 25,878 | 57,357 |
Net income (loss) from continuing operations | 25,791 | 17,326 | (11,133) |
Net income (loss) from discontinued operations, net of tax | 0 | (35,655) | 30,569 |
Net income (loss) | 25,791 | (18,329) | 19,436 |
Net loss attributable to non-controlling interest in discontinued operations | 0 | (9,167) | 0 |
Net income (loss) attributable to NETGEAR, Inc. | $ 25,791 | $ (9,162) | $ 19,436 |
Net income (loss) per share - basic: | |||
Income (loss) from continuing operations | $ 0.83 | $ 0.55 | $ (0.35) |
Income (loss) from discontinued operations attributable to NETGEAR, Inc. | 0 | (0.84) | 0.96 |
Net income (loss) attributable to NETGEAR, Inc. | 0.83 | (0.29) | 0.61 |
Net income (loss) per share - diluted: | |||
Income (loss) from continuing operations | 0.81 | 0.52 | (0.35) |
Income (loss) from discontinued operations attributable to NETGEAR, Inc. | 0 | (0.80) | 0.96 |
Net income (loss) attributable to NETGEAR, Inc. | $ 0.81 | $ (0.28) | $ 0.61 |
Weighted average shares used to compute net income (loss) per share: | |||
Basic | 30,936 | 31,626 | 32,097 |
Diluted | 31,965 | 33,137 | 32,097 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income (loss) | $ 25,791 | $ (18,329) | $ 19,436 |
Other comprehensive income (loss), before tax: | |||
Change in unrealized gains and losses on derivatives | 30 | 834 | (3,068) |
Change in unrealized gains and losses on available-for-sale investments | 16 | 128 | (115) |
Other comprehensive income (loss), before tax | 46 | 962 | (3,183) |
Tax benefit (provision) related to derivatives | (6) | (76) | 352 |
Tax benefit (provision) related to available-for-sale investments | (4) | (50) | 42 |
Other comprehensive income (loss), net of tax | 36 | 836 | (2,789) |
Comprehensive income (loss) | 25,827 | (17,493) | 16,647 |
Comprehensive loss attributable to non-controlling interest, net of tax | 0 | (9,165) | 0 |
Comprehensive income (loss) attributable to NETGEAR, Inc. | $ 25,827 | $ (8,328) | $ 16,647 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Non-Controlling Interest [Member] |
Beginning balance at Dec. 31, 2016 | $ 796,819 | $ 33 | $ 566,307 | $ 1,938 | $ 228,541 | |
Beginning balance (in shares) at Dec. 31, 2016 | 32,958,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Change in unrealized gains and losses on available-for-sale investments, net of tax | (73) | (73) | ||||
Change in unrealized gains and losses on derivatives, net of tax | (2,716) | (2,716) | ||||
Net income (loss) | 19,436 | 19,436 | ||||
Net loss attributable to non-controlling interest | 0 | |||||
Stock-based compensation | 22,147 | 22,147 | ||||
Repurchase of common stock | $ (113,161) | $ (2) | (113,159) | |||
Repurchase of common stock (in shares) | (2,400,000) | (2,378,000) | ||||
Restricted stock unit withholdings | $ (6,415) | (6,415) | ||||
Restricted stock unit withholdings (in shares) | (135,000) | (135,000) | ||||
Issuance of common stock under stock-based compensation plans | $ 14,356 | 14,356 | ||||
Issuance of common stock under stock-based compensation plans (in shares) | 875,000 | |||||
Cumulative-effect adjustment from adoption of ASU | 92 | 327 | (235) | |||
Ending balance at Dec. 31, 2017 | 730,485 | $ 31 | 603,137 | (851) | 128,168 | |
Ending balance (in shares) at Dec. 31, 2017 | 31,320,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Change in unrealized gains and losses on available-for-sale investments, net of tax | 78 | 78 | ||||
Change in unrealized gains and losses on derivatives, net of tax | 758 | 758 | ||||
Net income (loss) | (9,162) | (9,162) | ||||
Net loss attributable to non-controlling interest | (9,167) | $ (9,167) | ||||
Stock-based compensation | 31,966 | 31,966 | ||||
Stock-based compensation for Arlo's shares | 942 | 942 | ||||
Noncontrolling Interest, Increase from Sale of Parent Equity Interest | 170,246 | 146,088 | 24,158 | |||
Repurchase of common stock | $ (30,000) | (30,000) | ||||
Repurchase of common stock (in shares) | (500,000) | (473,000) | ||||
Restricted stock unit withholdings | $ (8,065) | (8,065) | ||||
Restricted stock unit withholdings (in shares) | (138,000) | (138,000) | ||||
Issuance of common stock under stock-based compensation plans | $ 12,395 | $ 1 | 12,394 | |||
Issuance of common stock under stock-based compensation plans (in shares) | 853,000 | |||||
Distribution of Arlo | (271,517) | (255,584) | $ (15,933) | |||
Cumulative-effect adjustment from adoption of ASU | 8,593 | 8,593 | ||||
Ending balance at Dec. 31, 2018 | 627,552 | $ 32 | 793,585 | (15) | (166,050) | |
Ending balance (in shares) at Dec. 31, 2018 | 31,562,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Change in unrealized gains and losses on available-for-sale investments, net of tax | 12 | 12 | ||||
Change in unrealized gains and losses on derivatives, net of tax | 24 | 24 | ||||
Net income (loss) | 25,791 | 25,791 | ||||
Net loss attributable to non-controlling interest | 0 | |||||
Stock-based compensation | 29,137 | 29,137 | ||||
Repurchase of common stock | $ (75,946) | $ (3) | (75,943) | |||
Repurchase of common stock (in shares) | (2,400,000) | (2,406,000) | ||||
Restricted stock unit withholdings | $ (6,521) | (6,521) | ||||
Restricted stock unit withholdings (in shares) | (198,000) | (198,000) | ||||
Issuance of common stock under stock-based compensation plans | $ 8,644 | $ 1 | 8,643 | |||
Issuance of common stock under stock-based compensation plans (in shares) | 967,000 | |||||
Ending balance at Dec. 31, 2019 | $ 608,693 | $ 30 | $ 831,365 | $ 21 | $ (222,723) | |
Ending balance (in shares) at Dec. 31, 2019 | 29,925,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Cash flows from operating activities: | |||
Net income (loss) | $ 25,791 | $ (18,329) | $ 19,436 |
Net (income) loss from discontinued operations | 0 | 35,655 | (30,569) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 19,406 | 18,851 | 22,529 |
Stock-based compensation | 29,137 | 26,461 | 18,969 |
Deferred income taxes | (1,379) | 2,459 | 21,119 |
Provision for excess and obsolete inventory | 3,878 | 2,904 | 2,866 |
Other | 29 | 116 | 46 |
Changes in assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | 26,500 | (43,055) | (23,121) |
Inventories | 4,504 | (85,064) | 34,336 |
Prepaid expenses and other assets | (1,654) | (12,114) | 4,604 |
Accounts payable | (56,614) | 45,503 | (432) |
Accrued employee compensation | (11,642) | 7,145 | (5,278) |
Other accrued liabilities | (16,603) | 15,589 | 15,109 |
Deferred revenue | (3,354) | 5,759 | 2,440 |
Income taxes payable | (4,474) | (16,939) | 18,293 |
Net cash provided by (used in) continuing operating activities | 13,525 | (15,059) | 100,347 |
Net cash used in discontinued operating activities | 0 | (88,152) | (12,823) |
Net cash provided by (used in) operating activities | 13,525 | (103,211) | 87,524 |
Cash flows from investing activities: | |||
Purchases of short-term investments | (1,617) | (81,814) | (136,556) |
Proceeds from maturities of short-term investments | 70,790 | 137,058 | 135,549 |
Purchases of property and equipment | (14,230) | (12,251) | (10,140) |
Purchases of long-term investments | (5,484) | (1,091) | (4,400) |
Proceeds from sale of long-term investments | 0 | 624 | 0 |
Payments made in connection with business acquisitions, net of cash acquired | 0 | (14,352) | 0 |
Net cash provided by (used in) continuing investing activities | 49,459 | 28,174 | (15,547) |
Net cash used in discontinued investing activities | 0 | (71,363) | (4,271) |
Net cash provided by (used in) investing activities | 49,459 | (43,189) | (19,818) |
Cash flows from financing activities: | |||
Repurchases of common stock | (75,946) | (30,000) | (113,161) |
Restricted stock unit withholdings | (6,521) | (8,065) | (6,415) |
Proceeds from exercise of stock options | 5,027 | 6,841 | 9,508 |
Proceeds from issuance of common stock under employee stock purchase plan | 3,617 | 5,554 | 4,764 |
Net cash used in continuing financing activities | (73,823) | (25,670) | (105,304) |
Net cash provided by discontinued financing activities | 0 | 170,247 | 0 |
Net cash provided by (used in) financing activities | (73,823) | 144,577 | (105,304) |
Net decrease in cash and cash equivalents | (10,839) | (1,823) | (37,598) |
Cash and cash equivalents, at beginning of period | 201,047 | 202,870 | 240,468 |
Cash and cash equivalents, at end of period | 190,208 | 201,047 | 202,870 |
Supplemental Cash Flow Information: | |||
Cash paid for income taxes | 8,876 | 23,220 | 32,090 |
Non-cash investing and financing activities: | |||
Change in accounts payable and other accrued liabilities relating to property and equipment additions | (4,360) | 2,604 | 638 |
Fair value of contingent consideration in connection with business acquisition in other accrued liabilities | $ 0 | $ 5,953 | $ 0 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
The Company and Summary of Significant Accounting Policies | 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 company that delivers innovative, advanced networking technologies and Internet connected products to consumers, businesses, and service providers. The Company’s products are designed to simplify and improve people’s lives. The Company’s goal is to enable people to collaborate and connect to a world of information and entertainment. The Company is dedicated to delivering innovative and advanced connected solutions ranging from mobile and cloud-based services for enhanced control and security, to smart networking products, video over Ethernet for Pro AV applications, easy-to-use WiFi solutions and performance gaming routers to enhance console, online and cloud game play. On February 6, 2018, the Company announced that its Board of Directors had unanimously approved the pursuit of a separation of its smart camera business, Arlo, from NETGEAR (the “Separation”) to be effected by way of an initial public offering ("IPO") and spin-off ("the Spin-Off"). On December 31, 2018, the Company completed the Spin-Off of Arlo Technologies, Inc. (“Arlo”), a majority owned subsidiary and reporting segment of NETGEAR at the time. Arlo’s historical financial results for periods prior to the Spin-Off are reflected in the consolidated financial statements as discontinued operations. For further details, refer to Note 3, Discontinued Operations. 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”), broadband service providers and its webstore at www.netgear.com 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 U.S. generally accepted accounting principles ("GAAP") 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. Significant Accounting Policies Cash and cash equivalents The Company considers all highly liquid investments with an original maturity or a remaining 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. Investments Short-term investments are partially comprised of marketable and convertible debt securities that consist of government and private company debts with an original maturity or a remaining maturity at the time of purchase, of greater than three months and no more than 12 months. These debt 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. Short-term investments also include marketable securities related to deferred compensation under the Company’s Deferred Compensation Plan. Mutual funds are the only investments allowed in the Company's Deferred Compensation Plan and the investments are held in a grantor trust formed by the Company. The Company has classified these investments as trading securities as the grantor trust actively manages the asset allocation to match the participants’ notional fund allocations. These securities are recorded at fair market value with unrealized gains and losses included in other income (expense), net. Long-term investments are comprised of equity investments without readily determinable fair values and are included in Other non-current assets on the consolidated balance sheets. The Company does not have a controlling interest or the ability to exercise significant influence over these investees and these investments do not have readily determinable fair values. Equity investments without readily determinable fair values are accounted for at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Such changes in the basis of the equity investment are recognized in Other income (expense), net in the consolidated statements of operations. Certain risks and uncertainties The Company's products are concentrated in the networking and smart connected industries, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. The success of the Company depends on management's ability to anticipate and/or to respond quickly and adequately to such changes. Any significant delays in the development or introduction of products could have a material adverse effect on the Company's business and operating results. The Company relies on a limited number of third parties to manufacture all of its products. If any of the Company's third-party manufacturers cannot or will not manufacture its products in required volumes, on a cost-effective basis, in a timely manner, or at all, the Company will have to secure additional manufacturing capacity. Any interruption or delay in manufacturing could have a material adverse effect on the Company's business and operating results. Derivative financial instruments The Company uses foreign currency forward contracts that generally mature within six months of inception to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, cost of revenue, operating expenses, and on certain existing assets and liabilities. Under its foreign currency risk management strategy, the Company utilizes derivative instruments to reduce the impact of currency exchange rate movements on the Company's operating results by offsetting gains and losses on the forward contracts with increases or decreases in foreign currency transactions. The Company does not use derivative financial instruments for speculative purposes. The Company accounts for its derivative instruments as either assets or liabilities and records them at fair value. Derivatives that are not de signated as hedges under the authoritative guidance for derivatives and hedging are adjusted to fair value through earnings. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the gain s or loss es on the derivative instrument are reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into the same line item in the statement of operations as the hedged transaction, and in the same period that the hedged transaction e ffects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. The Company believes that there is minimal credit risk associated with the investment of its cash and cash equivalents and short-term investments, due to the restrictions placed on the type of investment that can be entered into under the Company's investment policy. The Company's short-term investments consist of investment-grade securities, and the Company's cash and investments are held and managed by recognized financial institutions. The Company's customers are primarily distributors as well as retailers and broadband service providers who sell or distribute the products to a large group of end-users. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company regularly performs credit evaluations of the Company's customers' financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks and current economic conditions that may affect customers' ability to pay. The Company does not require collateral from its customers. As of December 31, 2019, Best Buy, Inc. and affiliates, Amazon and affiliates and Walmart and affiliates accounted for approximately 34%, 13% and 10% of the Company's total accounts receivable, respectively. As of December 31, 2018, Best Buy, Inc. and affiliates, and Amazon and affiliates accounted for 31%, and 13% of the Company's total accounts receivable, respectively. No other customers accounted for 10% or greater of the Company's total accounts receivable. The Company is exposed to credit loss in the event of nonperformance by counterparties to the foreign currency forward contracts used to mitigate the effect of foreign currency exchange rate changes. The Company believes the counterparties for its outstanding contracts are large, financially sound institutions and thus, the Company does not anticipate nonperformance by these counterparties. In the event of turbulence or the onset of a financial crisis in financial markets, the failure of counterparties cannot be ruled out. Fair value measurements The carrying amounts of the Company's financial instruments, including cash equivalents, short-term investments, accounts receivable, and accounts payable approximate their fair values due to their short maturities. Foreign currency forward contracts are recorded at fair value based on observable market data. Refer to Note 14, Fair Value Measurements, Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers' financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, and geographic or country-specific risks and economic conditions that may affect a customer's ability to pay. The allowance for doubtful accounts is reviewed quarterly and adjusted if necessary based on the Company's assessments of its customers' ability to pay. If the financial condition of the Company's customers should deteriorate or if actual defaults are higher than the Company's historical experience, additional allowances may be required, which could have an adverse impact on operating expenses. Inventories Inventories consist primarily of finished goods which are valued at the lower of cost and net realizable value, with cost being determined using the first-in, first-out method. On a quarterly basis, the Company assesses the value of the inventory and write down its value for estimated excess and obsolete inventory based upon assumptions about the future demand by reviewing inventory quantities on hand and on order under non-cancelable purchase commitments in comparison to the Company’s estimated forecast of product demand to determine what inventory, if any, is not saleable at or above cost. The Company’s analysis is primarily based on the demand forecast which takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of the lease term or 5 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. Leases The Company determines if an arrangement is a lease or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other accrued liabilities, and operating lease liabilities on the consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain office leases, the Company accounts for the lease and non-lease components as a single lease component to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. Lease expense is recognized on a straight-line basis over the lease term. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on a benchmark interest rate adjusted for its specific credit risk. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Goodwill Goodwill represents the purchase price over estimated fair value of net assets of businesses acquired in a business combination. Goodwill acquired in a business combination is not amortized, but instead tested for impairment at least annually on the first day of the fourth quarter. Should certain events or indicators of impairment occur between annual impairment tests, the Company performs the impairment test as those events or indicators occur. Examples of such events or circumstances include the following: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in the business climate; and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying value. The qualitative assessment considers the following factors: macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company's share price. If the reporting unit does not pass the qualitative assessment, the Company estimates its fair value and compares the fair value with the carrying value of its reporting unit, including goodwill. If the fair value is greater than the carrying value of its reporting unit, no impairment is recorded. If the fair value is less than the carrying value, an impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The impairment charge would be recorded to earnings in the consolidated statements of operations. Intangibles, net Purchased intangibles with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from three to ten years. Finite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Revenue Recognition On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods (ASC 605). The adoption did not have a significant impact to the nature and timing of the Company’s revenues, results of operations, cash flows and statement of financial position. Under 606, revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration, and the Company expects to be entitled to in exchange for those goods or services. The majority of revenue comes from product sales, consisting of sales of Connected Home and SMB hardware products to customers (retailers, distributors and service providers). Revenue is recognized at a point in time when control of the goods are transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract. The amount recognized reflects the consideration the Company expects to be entitled to in exchange for the transferred goods. Revenue for subscription sales is generally recognized over time on a ratable basis over the contract term beginning on the date that the service is expected to be delivered. The subscription contracts are generally for 30 days or 12 months in length, billed in advance. Additionally, the Company sells technical support services and extended warranty which consist of telephone and internet access to technical support personnel, hardware replacement and updates to software features. All such service or support sales are typically recognized using an output measure of progress by looking at the time elapsed as the contracts generally provide the customer equal benefit throughout the contract period because the Company transfers control evenly by providing a stand-ready service. The Company also sells services bundled with hardware products and accounts for these sales in line with the multiple performance obligations guidance. We combine contracts with a customer if contracts are negotiated with a single commercial substance or contain price dependencies. Revenue from all sales types is recognized at the transaction price, the amount which the Company expects to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives and price protection related to current period product revenue. The Company’s standard obligation to its direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, the Company estimates variable consideration at the expected value which is based on management's analysis of historical data, channel inventory levels, current economic trends and changes in customer demand for the Company's products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice. The Company continues to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with Multiple Performance Obligations Some of the Company's contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, networking hardware with embedded software, various software subscription services and support. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software on most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Service included with certain hardware products is considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. For products, the estimated standalone selling price of the hardware is directly observable from sales of those products based on a range of prices. Standalone selling price of the service is estimated using an adjusted market approach. This may include using information such as prices charged for similar offerings and other observable inputs. Revenue is recognized for each distinct performance obligation as control is transferred to the customer. In general, the hardware is recognized at time of shipping or delivery, while services and support are delivered over the stated service or support period. Hardware products bundled with services are recognized at the time control of the product transfers to the customer and the transaction price allocated to service is recognized over the estimated period the services are expected to be provided on a straight-line basis beginning when the customer is expected to activate their account. For products sold with third-party services where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. We recognize revenue on a net basis when we are acting as an agent between the customer and the vendor. Certain judgments are involved in determining when the Company obtains control, such as determining the responsible party for fulfillment of the services, whether we have inventory risk before the service is transferred or if we have discretion to establish pricing for the third-party services. Warranties Hardware products regularly include warranties to the end customers that consist of bug fixes, minor updates such that the product continues to function according to published specs in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services beyond the assurance that the product will continue working as specified. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranty is accrued as expense in accordance with authoritative guidance. Extended warranties are sold separately and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized over the life of the contract. Shipping and Handling Shipping and handling fees billed to customers are included in Net revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where the Company gives a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Net revenue. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. Shipping and handling costs associated with outbound freight totaled $8.7 million, $9.5 million and $8.6 million in the years ended December 31, 2019, 2018 and 2017 respectively. Research and development Costs incurred in the research and development of new products are charged to expense as incurred. Advertising costs Advertising costs are expensed as incurred. Total advertising and promotional expenses were $21.3 million, $24.7 million, and $23.2 million in the years ended December 31, 2019, 2018 and 2017 respectively. Income taxes The Company accounts for income taxes under an asset and liability approach. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences resulting from different treatment for tax versus accounting for certain items, such as accruals and allowances not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. The Company must then assess the likelihood that the Company's deferred tax assets will be recovered from future taxable income and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance. The Company’s assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing its future taxable income on a jurisdictional basis, the Company considers the effect of its transfer pricing policies on that income. The Tax Act introduced a new tax on global intangible low-taxed income (GILTI) effective as of January 1, 2018. The Company’s policy is to treat GILTI as a period cost if and when incurred. In the ordinary course of business there is inherent uncertainty in assessing the Company's income tax positions. The Company assesses its tax positions and records benefits for all years subject to examination based on management's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recorded in the financial statements. Where applicable, associated interest and penalties have also been recognized as a component of income tax expense. Net income per share Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock awards, and issuances of shares under the Employee Stock Purchase Plan, which are reflected in diluted net income per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income per share when their effect is anti-dilutive. Stock-based compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options and the shares offered under the Employee Stock Purchase Plan (“ESPP”) is estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to restricted stock units (“RSUs”) is based on the closing fair market value of the Company’s common stock on the date of grant. The compensation expense for equity awards is recognized over the vesting period of the award under a graded vesting method. Forfeitures are accounted for as they occur. All excess tax benefits and tax deficiencies arising from stock awards vesting or settlement are recorded as income tax expense or benefit rather than in equity. Refer to Note 12, Employee Benefit Plans, Comprehensive income Comprehensive income consists of net income and other gains and losses affecting stockholder's equity that the Company excluded from net income, including gains and losses related to fair value of short-term investments and the effective portion of cash flow hedges that were outstanding as of the end of the year. Foreign currency translation and re-measurement The Company's functional currency is the U.S. dollar for all of its international subsidiaries. Foreign currency transactions of international subsidiaries are re-measured into U.S. dollars at the end-of-period exchange rates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets. Revenue is re-measured at average exchange rates in effect during each period. Expenses are re-measured at average exchange rates in effect during each period, except for expenses related to non-monetary assets, which are re-measured at historical exchange rates. Gains and losses arising from foreign currency transactions are included in Other income (expense), net. Recent accounting pronouncements Accounting Pronouncement Recently Adopted ASU 2016-02 In February 2016, FASB issued ASU 2016-02, "Leases" (Topic 842), which requires a lessee to recognize on the balance sheets a right-of-use asset, representing its right to use the underlying asset for the lease term, and a corresponding lease liability. The liability is equal to the present value of lease payments while the right-of-use asset is based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees. The Company adopted the new standard effective January 1, 2019 and was required to record a lease asset and lease liability related to its operating leases. The Company elected to utilize the alternative modified transition method, under which the cumulative-effect adjustment to the opening balance is recognized on the date of adoption while comparative prior periods continue to be reported under the guidance in effect prior to January 1, 2019. Accordingly, the Company did not restate or make related disclosures under the new standard for comparative prior periods in the period of adoption, and the Company applied the new lease standard prospectively to leases existing or commencing on or after January 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the standard to not (1) reassess whether any expired or existing contracts are conside |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | Note 2. Revenue Recognition Revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Transaction Price Allocated to the Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as of the end of the reporting period. Unsatisfied and partially unsatisfied performance obligations consist of contract liabilities, in-transit orders with destination terms, and non-cancellable backlog. Non-cancellable backlog includes goods and services for which customer purchase orders have been accepted and that are scheduled or in the process of being scheduled for shipment. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2019: 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 42,767 $ 1,046 $ 1,024 $ 44,837 Contract Costs Costs to fulfill a contract are capitalized when they relate directly to an existing contract or specific anticipated contract, generate or enhance resources that will be used to fulfill performance obligations and are recoverable. These costs include direct cost incurred at inception of a contract which enables the fulfillment of the performance obligation and totaled $1.5 million and $7.4 million as of December 31, 2019 and 2018, respectively. There was no impairment of capitalized contract costs in the fiscal years of 2019 and 2018. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that otherwise would have been recognized is one year or less. These costs are included in Sales and marketing and General and administrative expenses. If the incremental direct costs of obtaining a contract, which consist of sales commissions, relate to a service recognized over a period longer than one year, costs are deferred and amortized in line with the related services over the period of benefit. Deferred commissions are classified as non-current based on the original amortization period of over one year. As of December 31, 2019 and 2018, there were no deferred commissions. Contract Balances The Company records accounts receivable when it has an unconditional right to consideration. Contract liabilities are recorded when cash payments are received or due in advance of performance. Contract liabilities consist of advance payments and deferred revenue, where the Company has unsatisfied performance obligations. Contract liabilities are mainly classified as Deferred revenue on the consolidated balance sheets. Payment terms vary by customer. The time between invoicing and when payment is due is not significant. For certain products or services and customer types, payment is required before the products or services are delivered to the customer. The following table reflects the contract balances as of December 31, 2019 and 2018 and January 1, 2018, respectively: Balance Sheet Location December 31, 2019 December 31, 2018 January 1, 2018(*) (In thousands) Accounts receivable, net Accounts receivable, net $ 277,168 $ 303,667 $ 260,404 Contract liabilities - current Deferred revenue $ 6,450 $ 11,086 $ 5,357 Contract liabilities - non-current Other non-current liabilities $ 2,061 $ 779 $ 728 * Includes the adjustments made upon ASC 606 adoption using the modified retrospective method. The difference in the balances of the Company’s contract assets and liabilities as of December 31, 2019 and December 31, 2018 primarily results from the timing difference between the Company’s performance and the customer’s payment. During the years ended December 31, 2019 and 2018, $14.5 million and $14.8 $9.0 million $4.4 million There were no significant changes in estimates during the period s that would affect the contract balances. Disaggregation of Revenue In the following tables, net revenue is disaggregated by geographic region and sales channel. The Company conducts business across three geographic regions: Americas; Europe, Middle-East and Africa (“EMEA”); and Asia Pacific ("APAC"). The tables also include reconciliations of the disaggregated revenue by reportable segment. The Company operates and reports in two segments: Connected Home, and . Year Ended December 31, 2019 2018 2017 (1) Connected Home SMB Total Connected Home SMB Total Connected Home SMB Total Geographic regions: Americas $ 529,982 $ 123,024 $ 653,006 $ 576,476 $ 124,217 $ 700,693 $ 547,314 $ 117,775 $ 665,089 EMEA 91,586 108,513 200,099 97,979 109,620 207,599 93,438 103,636 197,074 APAC 89,823 55,835 145,658 96,605 53,919 150,524 127,509 49,497 177,006 Total $ 711,391 $ 287,372 $ 998,763 $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 Sales channels: Service provider $ 128,852 $ 4,465 $ 133,317 $ 156,671 $ 3,624 $ 160,295 $ 190,186 $ 3,268 $ 193,454 Non-service provider 582,539 282,907 865,446 614,389 284,132 898,521 578,075 267,640 845,715 Total $ 711,391 $ 287,372 $ 998,763 $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 (1) Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2019 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | Note 3. Discontinued Operations On February 6, 2018, the Company announced that its Board of Directors had unanimously approved the pursuit of a separation of its smart camera business “Arlo” from NETGEAR (the “Separation”) to be effected by way of initial public offering (“IPO”) and spin-off. On August 2, 2018, Arlo Technologies, Inc. (“Arlo”) and NETGEAR announced the pricing of Arlo's initial public offering (“IPO”) at a price to the public of $16.00 per share, subsequently listing on the New York Stock Exchange on August 3, 2018 under the symbol "ARLO". On August 7, Arlo completed the IPO and generated proceeds of approximately $170.2 million, net of offering costs, which Arlo used for its general corporate purposes. Upon completion of the IPO, Arlo common stock outstanding amounted to 74,247,000 shares, of which NETGEAR held 62,500,000 shares, representing approximately 84.2% of the outstanding shares of Arlo common stock. On December 31, 2018, NETGEAR completed the distribution of these 62,500,000 shares of common stock of Arlo (the “Distribution”). After the completion of the Distribution, NETGEAR no longer owns any shares of Arlo common stock. The Distribution took place by way of a pro rata common stock dividend to each NETGEAR stockholder of record on the record date of the Distribution, December 17, 2018, and NETGEAR stockholders received 1.980295 shares of Arlo common stock for every share of NETGEAR common stock held as of the record date. Upon completion of the Distribution, the Company ceased to own a controlling financial interest in Arlo and Arlo's assets, liabilities, operating results and cash flows for all periods presented have been classified as discontinued operations within the Consolidated Financial Statements. In connection with Arlo's Separation, the Company incurred Separation expense of $34.2 million since commencing in December 2017. Separation expense primarily consists of third-party advisory, consulting, legal and professional services, IT costs and employee bonuses directly related to the separation, as well as other items that are incremental and one-time in nature that are related to the separation. The majority of these costs are reflected in the Company's consolidated statement of operations as discontinued operations for all periods presented. In addition, in the third fiscal quarter of 2018, the Company contributed $70.0 million in cash to Arlo and provided for, among other things, the transfer from NETGEAR to Arlo of assets and the assumption by Arlo of liabilities comprising its business effected through a master separation agreement between NETGEAR and Arlo. The master separation agreement governs the separation of Arlo's business from NETGEAR as well as various interim arrangements. In connection with these arrangements, during the third and fourth quarter of 2018, NETGEAR recorded a reduction to operating expenses of $ 6.3 million relating to the transition services, which are reflected in the Company's consolidated statement of operations as discontinued operations for the periods presented. In the third quarter of 2018, NETGEAR provided billing and collection services to Arlo in respect of its trade receivables and trade payments. As of December 31, 2018, NETGEAR had a net liability to Arlo of $ 12.2 million relating to these transition service, billing and collection services, and the net liability was classified within accounts payable on the consolidated balance sheets. The Company does not expect the amounts relating to such services to be material after the Distribution. Additionally, the Company entered into certain other agreements that provide a framework for the relationship between NETGEAR and Arlo after the separation, including a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property rights cross-license agreement, and a registration rights agreement. The financial results of Arlo through the Distribution date are presented as income (loss) from discontinued operations, net of tax, in the consolidated statements of operations. The following table presents financial results of Arlo: Year Ended December 31, 2018 2017 (In thousands) Net revenue $ 464,649 $ 367,751 Cost of net revenue 372,843 279,425 Gross profit 91,806 88,326 Operating expenses: Research and development 48,696 22,710 Sales and marketing 39,713 19,490 General and administrative 17,762 691 Separation expense 31,583 1,384 Litigation reserves, net — 28 Total operating expenses 137,754 44,303 Income (loss) from operations of discontinued operations (45,948 ) 44,023 Interest income, net 1,239 — Other income (expense), net (41 ) 467 Income (loss) from discontinued operations before income taxes (44,750 ) 44,490 Provision (benefit) for income taxes (9,095 ) 13,921 Income (loss) from discontinued operations, net of tax $ (35,655 ) $ 30,569 |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Business Acquisitions | Note 4. Business Acquisition Meural Inc. On August 6, 2018, the Company acquired Meural Inc. ("Meural"), a New York based startup focused on producing and developing hardware and cloud platform capabilities for the digital distribution of curated artwork. Meural aims to provide a premium product to customers and to complement sales of digital canvasses with subscription services by offering customers the ability to subscribe to a large library of curated artworks. The Company believes that the acquisition enables it to enter a new and growing product category focused on consumer lifestyle and enhance its portfolio of hardware and service offerings. Prior to the business acquisition, the Company had an investment in Meural since 2017. The total purchase consideration was $22.2 million, which consisted of $14.4 million of cash, which was paid in the third quarter of 2018, $1.5 million due to the Company's settlement in its prior equity interest in Meural, and the acquisition date fair value of contingent consideration of $6.3 million. The merger agreement provides for the payment of contingent consideration to each selling shareholder of Meural based on the achievement of certain technical and service revenue milestones through August 6, 2023, with a maximum payout of $3.5 million on each of two milestones. The valuation of the contingent consideration was derived using estimates of the probability of achievement within specified time periods, in a scenario based model for the technical milestone; and using an option pricing model in a risk neutral framework using a Monte Carlo simulation, based on projections of future service revenues for the service revenue milestone. As of the acquisition date, the fair value of such contingent consideration payable to Meural’s external shareholders was determined to be $5.9 million and included in Other non-current liabilities on the consolidated balance sheets. As of December 31, 2019 and 2018, there were no material changes in the range of expected outcomes and the fair value of the contingent consideration from the acquisition date. Refer to Note 14, Fair Value Measurements for further details The purchase price allocation was as follows (in thousands): Cash and cash equivalents $ 20 Accounts receivable 209 Inventories 760 Prepaid expenses and other current assets 500 Property and equipment 16 Intangibles 4,800 Non-current deferred income taxes 815 Goodwill 16,407 Accounts payable (1,317 ) Other accrued liabilities (35 ) Total $ 22,175 The $16.4 million of goodwill recorded on the acquisition of Meural is not deductible for U.S. federal or U.S. state income tax purposes. The goodwill was generated as a result of the anticipated synergies, expected to be derived through selling Meural’s products and services through NETGEAR’s established worldwide sales channel and customer base. The goodwill was assigned to the Company's Connected Home segment. In connection with the acquisition, the Company recorded $0.8 million of deferred tax assets net of deferred tax liabilities. The deferred tax assets were recorded for the tax benefit of the net operating losses as of the date of the acquisition after consideration of limitations on their use under U.S. Internal Revenue Code section 382. The deferred tax assets were reduced by deferred tax liabilities for the book basis of intangible assets for which the Company has no tax basis. The Company designated $3.0 million of the acquired intangibles as developed technology. The valuation was derived using an income approach, based on the present value of the estimated future cash flows derived from projections of future operations attributable to the developed technology, discounted at a rate of 16.0% and are being amortized over an estimated useful life of seven years. The Company designated $0.6 million of the acquired intangibles as trade name, $0.6 million as customer relationships and $0.6 million as playlist database. The valuations of these intangibles were derived using variations of the income approach for the trade name and customer relationships, and replacement cost method for the playlist database. The valuations were based on certain key assumptions like the royalty rate, revenue and cash flows derived from projections of future operations and discount rates ranging from 16.0% to 19.0%. The intangible assets are being amortized over estimated useful lives of three years, two years and seven years for trade name, customer relationships and playlist database, respectively. |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Note 5. Balance Sheet Components Available-for-sale short-term investments As of December 31, 2019 December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ — $ — $ — $ — $ 70,330 $ 1 $ (17 ) $ 70,314 Certificates of deposits 149 — — 149 149 — — 149 Convertible debt 1,326 — — 1,326 — — — — Total $ 1,475 $ — $ — $ 1,475 $ 70,479 $ 1 $ (17 ) $ 70,463 The Company’s short-term investments are primarily comprised of marketable and convertible debt securities that are classified as available-for-sale and with an original maturity or remaining maturity at the time of purchase of greater than three months and no more than twelve months. Accordingly, none of the available-for-sale investments have unrealized losses greater than twelve months. Inventories As of December 31, 2019 December 31, 2018 (In thousands) Raw materials $ 28,871 $ 3,427 Finished goods 206,618 240,444 Total $ 235,489 $ 243,871 The Company records provisions for excess and obsolete inventory based on assumptions about future demand and market conditions and the amounts incurred were $3.9 million, $2.9 million and $2.9 million for the years ended December 31, 2019, 2018 and 2017, respectively. While management believes the estimates and assumptions underlying its current forecasts are reasonable, there is risk that additional charges may be necessary if current forecasts are greater than actual demand. Property and equipment, net As of December 31, 2019 December 31, 2018 (In thousands) Computer equipment $ 9,883 $ 9,205 Furniture, fixtures and leasehold improvements 18,623 18,286 Software 27,865 28,065 Machinery and equipment 59,637 60,552 Total property and equipment, gross 116,008 116,108 Accumulated depreciation and amortization (98,325 ) (95,931 ) Total $ 17,683 $ 20,177 Depreciation and amortization expense pertaining to property and equipment was $12.3 million, $10.5 million and $11.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. Intangibles, net As of December 31, 2019 As of December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 59,799 $ (57,406 ) $ 2,393 $ 59,799 $ (56,978 ) $ 2,821 Customer contracts and relationships 56,800 (50,297 ) 6,503 56,800 (44,280 ) 12,520 Other 10,345 (9,137 ) 1,208 10,345 (8,540 ) 1,805 Total $ 126,944 $ (116,840 ) $ 10,104 $ 126,944 $ (109,798 ) $ 17,146 Amortization of purchased intangibles in the years ended December 31, 2019, 2018 and 2017 was $7.0 million, $8.3 million and $11.0 million, respectively. No impairment charges were recorded in the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, estimated amortization expense related to finite-lived intangibles for each of the next five years and thereafter is as follows (in thousands): 2020 $ 6,205 2021 2,044 2022 527 2023 514 2024 514 Thereafter 300 Total estimated amortization expense $ 10,104 Goodwill The changes in the carrying amount of goodwill during the years ended December 31, 2019 and 2018 are as follows: Connected Home SMB Total (In thousands) As of December 31, 2017 $ 28,035 $ 36,279 $ 64,314 Goodwill from acquisition of Meural 16,407 - 16,407 As of December 31, 2018 $ 44,442 $ 36,279 $ 80,721 As of December 31, 2019 $ 44,442 $ 36,279 $ 80,721 The Company identified the reporting units for the purpose of goodwill impairment testing as Connected Home, and SMB and performed a qualitative test for goodwill impairment of the two reporting units as of the first day of the fourth quarter, or September 30, 2019. Based upon the results of the qualitative testing, the respective fair values of the two reporting units were substantially in excess of these reporting units’ carrying values. The Company believes that it is more-likely-than-not that the fair value of these reporting units are greater than their respective carrying values and therefore performing the next step of impairment test for these reporting units was unnecessary. No Other non-current assets As of December 31, 2019 December 31, 2018 (In thousands) Non-current deferred income taxes $ 58,930 $ 57,557 Long-term investments 8,147 2,886 Other 7,202 6,990 Total $ 74,279 $ 67,433 Equity investments without readily determinable fair values The total carrying value of equity investments without readily determinable fair values during the years ended December 31, 2019 and 2018 are as follows (in thousands): Carrying value, as of December 31, 2017 $ 4,505 Additions 1,091 Reclassification of original investment in Meural due to acquisition (1,500 ) Impairment (1,400 ) Upward adjustments for observable price changes 190 Carrying value, as of December 31, 2018 2,886 Additions 5,484 Downward adjustments for observable price changes (223 ) Carrying value, as of December 31, 2019 $ 8,147 For the equity investments without readily determinable fair values as of December 31, 2019, cumulative downward adjustments for price changes and impairment was $1.6 million and cumulative upward adjustments for price changes was $0.2 million. Other accrued liabilities As of December 31, 2019 December 31, 2018 (In thousands) Current operating lease liabilities $ 9,357 $ — Sales and marketing 85,605 91,548 Warranty obligations 10,556 14,412 Sales returns (1) 52,612 46,318 Freight and duty 5,633 10,586 Other 25,784 36,608 Total $ 189,547 $ 199,472 (1) Inventory expected to be received from future sales returns amounted to $26.8 million and $23.8 million as of December 31, 2019 and 2018, respectively. Provisions to write down expected returned inventory to net realizable value amounted to $14.9 million and $14.2 million as of December 31, 2019 and December 31, 2018. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 6. Derivative Financial Instruments The Company’s subsidiaries have material future cash flows related to revenue and expenses denominated in currencies other than the U.S. dollar, the Company’s functional currency worldwide. The Company executes currency forward contracts that typically mature in less than 6 months to mitigate its currency risk, in currencies including Australian dollars, British pounds, euros, Canadian dollar, and Japanese yen. The Company does not enter into derivatives transactions for trading or speculative purposes. The Company’s foreign currency forward contracts do not contain any credit-risk-related contingent features. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any individual counter-party. T he Company continuously evaluates the credit quality of its counter-party financial institutions and does not consider non-performance a material risk . The Company may choose not to hedge certain foreign exchange exposures for a variety of reasons, including, but not limited to, materiality, accounting considerations or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in foreign exchange rates. The Company’s accounting policies for these instruments are based on whether the instruments are designated as hedge or non-hedge instruments in accordance with the authoritative guidance for derivatives and hedging. The Company records all derivatives on the balance sheets at fair value. Cash flow hedge gains and losses are recorded in other comprehensive income ("OCI") until the hedged item is recognized in earnings. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in Other income (expense), net in the consolidated statements of operations. Cash flow hedges To help manage the exposure of operating margins to fluctuations in foreign currency exchange rates, the Company hedges a portion of its anticipated foreign currency revenue, costs of revenue and certain operating expenses. These hedges are designated at the inception of the hedge relationship as cash flow hedges under the authoritative guidance for derivatives and hedging. Effectiveness of the hedge relationships are tested at least quarterly both prospectively and retrospectively using regression analysis to ensure that the hedge relationship has been effective and is likely to remain effective in the future. The Company typically executes ten forward contracts per quarter with maturities under six months and with USD notional amounts less than $6.0 million each that are designated as cash flow hedges. The Company expects to reclassify to earnings all of the amounts recorded in OCI associated with its cash flow hedges over the next twelve months. OCI associated with cash flow hedges of foreign currency revenue, cost of revenue and operating expenses are recognized in the same period and in the same line item in the statement of operations as hedged item. The Company did not recognize any material net gains or losses related to anticipated transactions that failed to occur during the year ended December 31, 2019, 2018 and 2017. Non-designated hedges The Company enters into non-designated hedges under the authoritative guidance for derivatives and hedging to manage the exposure of non-functional currency monetary assets and liabilities not already hedged by de-designated cash flow hedges. The non-designated hedges are generally expected to offset the changes in value of its net non-functional currency asset and liability position resulting from foreign exchange rate fluctuations. The Company adjusts its non-designated hedges monthly and typically executes about ten non-designated forwards per quarter with maturities less than three months and a USD notional amount generally less than $2.0 million. Fair Value of Derivative Instruments The fair values of the Company’s derivative instruments and the line items on the consolidated balance sheets to which they were recorded as of December 31, 2019, and 2018, are summarized as follows: Balance Sheet December 31, Balance Sheet December 31, Location 2019 2018 Location 2019 2018 (In thousands) (In thousands) Derivatives not designated as hedging instruments Prepaid expenses and other current assets $ 109 $ 784 Other accrued liabilities $ 493 $ 331 Derivatives designated as hedging instruments Prepaid expenses and other current assets 43 2 Other accrued liabilities 32 37 Total $ 152 $ 786 $ 525 $ 368 Refer to Note 14, Fair Value Measurements, in Notes to Consolidated Financial Statements for detailed disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures. Offsetting Derivative Assets and Liabilities The Company has entered into master netting arrangements which allow net settlements under certain conditions. Although netting is permitted, it is currently the Company's policy and practice to record all derivative assets and liabilities on a gross basis on the consolidated balance sheets. As of December 31, 2019, the Company holds and reports $0.5 million of gross liabilities and $0.2 million of gross assets, net of offset, the Company holds $0.3 million of liabilities and no assets. Effect of Derivative Contracts on Consolidated Statement of Operations and Accumulated Other Comprehensive Income The effect of the Company’s derivative instruments on AOCI and the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 are summarized as follows: Year Ended December 31, 2019 2019 2018 2017 Derivatives designated as hedging instruments: Cash flow hedges Foreign currency forward contracts: Gains (Losses) recognized in other comprehensive income- Effective Portion $ 1,565 $ 1,416 $ (7,785 ) Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion (1) Net revenue $ 1,929 $ 665 $ (5,786 ) Cost of revenue $ (12 ) $ (9 ) $ 18 Research and development $ (57 ) $ 83 $ 130 Sales and marketing $ (284 ) $ (102 ) $ 788 General and administrative $ (41 ) $ (53 ) $ 133 Derivatives not designated as hedging instruments: Gains (Losses) recognized in Other income (expense), net $ 1,307 $ 3,870 $ (5,085 ) (1) Stockholders' Equity |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Note 7. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock awards, and issuances of shares under the Employee Stock Purchase Plan (the "ESPP"), which are reflected in diluted net income per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income per share when their effect is anti-dilutive. Net income (loss) per share for the years ended December 31, 2019, 2018 and 2017 was as follows: Year Ended December 31, 2019 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) from continuing operations $ 25,791 $ 17,326 $ (11,133 ) Net income (loss) from discontinued operations — (35,655 ) 30,569 Net income (loss) 25,791 (18,329 ) 19,436 Less: Net loss attributable to non-controlling interest in discontinued operations — (9,167 ) — Net income (loss) attributable to NETGEAR, Inc. $ 25,791 $ (9,162 ) $ 19,436 Denominator: Weighted average common shares - basic 30,936 31,626 32,097 Potentially dilutive common share equivalent 1,029 1,511 — Weighted average common shares - dilutive 31,965 33,137 32,097 Basic net income (loss) per share Net income (loss) from continuing operations $ 0.83 $ 0.55 $ (0.35 ) Net income (loss) from discontinued operations attributable to NETGEAR, Inc. — (0.84 ) 0.96 Net income (loss) attributable to NETGEAR, Inc. $ 0.83 $ (0.29 ) $ 0.61 Diluted net income (loss) per share Net income (loss) from continuing operations $ 0.81 $ 0.52 $ (0.35 ) Net income (loss) from discontinued operations attributable to NETGEAR, Inc. — (0.80 ) 0.96 Net income (loss) attributable to NETGEAR, Inc. $ 0.81 $ (0.28 ) $ 0.61 Anti-dilutive employee stock-based awards, excluded 1,066 815 279 |
Other Income (Expense), Net
Other Income (Expense), Net | 12 Months Ended |
Dec. 31, 2019 | |
Other Income And Expenses [Abstract] | |
Other Income (Expense), Net | Note 8. Other Income (Expense), Net Other income (expense), net consisted of the following: Year Ended December 31, 2019 2018 2017 Foreign currency transaction gain (loss), net $ (697 ) $ (2,675 ) $ 5,292 Foreign currency contract gain (loss), net 1,307 3,968 (3,879 ) Other 234 (783 ) 144 Total $ 844 $ 510 $ 1,557 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes Income before income taxes and the provision for income taxes consisted of the following: Year Ended December 31, 2019 2018 2017 (In thousands) United States $ 16,035 $ 32,237 $ 36,461 International 13,536 10,967 9,763 Total $ 29,571 $ 43,204 $ 46,224 Year Ended December 31, 2019 2018 2017 (In thousands) Current: U.S. Federal $ 4,761 $ (587 ) $ 25,733 State 791 (2,338 ) 2,435 Foreign (386 ) 4,267 1,545 5,166 1,342 29,713 Deferred: U.S. Federal (574 ) 20,930 27,936 State 104 2,514 190 Foreign (916 ) 1,092 (482 ) (1,386 ) 24,536 27,644 Total $ 3,780 $ 25,878 $ 57,357 Net deferred tax assets consisted of the following: Year Ended December 31, 2019 2018 (In thousands) Deferred Tax Assets: Accruals and allowances $ 20,743 $ 20,765 Net operating loss carryforwards 1,267 1,673 Stock-based compensation 6,381 5,734 Deferred rent — 1,296 Operating lease liability 6,456 — Deferred revenue 1,449 1,100 Tax credit carryforwards 896 1,661 Acquired intangibles 31,708 31,902 Depreciation and amortization 1,639 866 Other 1,080 — Total deferred tax assets 71,619 64,997 Deferred Tax Liabilities: Right of use asset (5,218 ) — Other (1,053 ) (706 ) Total deferred tax liabilities (6,271 ) (706 ) Valuation Allowance (1) (6,418 ) (6,734 ) Net deferred tax assets $ 58,930 $ 57,557 (1) Management's judgment is required in determining the Company's provision for income taxes, its deferred tax assets and any valuation allowance recorded against its deferred tax assets. As of December 31, 2019, a valuation allowance of $6.4 million was placed against California deferred tax assets and certain federal tax attributes since the recovery of the assets is uncertain. There was a valuation allowance of $6.7 million placed against deferred tax assets as of December 31, 2018. Accordingly, the valuation allowance decreased $0.3 million during 2019. In management's judgment it is more likely than not that the remaining deferred tax assets will be realized in the future as of December 31, 2019, and as such no valuation allowance has been recorded against the remaining deferred tax assets. The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows: Year Ended December 31, 2019 2018 2017 Tax at federal statutory rate 21.0 % 21.0 % 35.0 % State, net of federal benefit 2.4 % 1.5 % 1.0 % Impact of international operations (0.8 %) 1.9 % (8.8 )% Stock-based compensation 10.7 % (0.3 )% (3.9 )% Tax credits (5.9 )% (2.6 )% (2.0 )% Valuation allowance 0.9 % 1.4 % — % Impact of the Tax Act — % (15.4 )% 104.6 % Base Erosion Anti-Abuse Tax 7.2 % — % — % Write-off of future tax benefits related to Arlo — % 52.2 % — % Transaction costs (2.5 %) — % — % Recognition of previously unrecognized tax benefits (20.6 %) — % — % Others 0.4 % 0.2 % (1.8 )% Provision for income taxes 12.8 % 59.9 % 124.1 % On January 1, 2017, the Company adopted ASU 2016-09, "Improvements to Employee Share-Based Payment Accounting" (Topic 718) upon which all income tax benefits are recorded in income tax expense. As a result of changes in fair value of available-for-sale securities and foreign currency hedging, income tax (provision) benefits of $(0.01) million, $(0.1) million, and $0.4 million were recorded in comprehensive income related to the years ended December 31, 2019, 2018, and 2017, respectively. As of December 31, 2019, the Company has approximately $6.0 million of acquired federal net operating loss carry forwards as well as $0.9 million of California tax credits carryforwards. All of the losses are subject to annual usage limitations under Internal Revenue Code Section 382. The federal losses expire in different years beginning in fiscal 2021. The California tax credit carryforwards have no expiration. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with SAB 118, the Company recorded a provisional income tax expense of $48.3 million in the fourth fiscal quarter of 2017, the period in which the legislation was enacted. The provisional estimate included $26.6 million related to the re-measurement of its net deferred tax assets at a U.S. federal statutory rate that was reduced from 35% to 21%, and $21.7 million related to the transition tax on the mandatory deemed repatriation of foreign earnings. The Company completed its analysis of the impact of U.S. Tax Reform in the fourth quarter of 2018. The Company completed the computation of the transition tax as part of the 2017 income tax returns filing and reduced the provisional amount by $6.7 million. The Company elected to pay the liability for the transition tax on the mandatory deemed repatriation of foreign earnings in installments. As of December 31, 2019 and December 31, 2018, $6.5 million and $6.5 million of the transition tax related liability was included in non-current income taxes payable on our consolidated balance sheet. In addition, certain new complex tax rules related to the taxation of foreign earnings (Global Intangible Low-Taxed Income “GILTI”, Foreign Derived Intangible Income “FDII” and Base Erosion and Anti-abuse Tax “BEAT”) became effective as of January 1, 2018. The GILTI provision imposes taxes on foreign earnings in excess of a deemed return on tangible assets. The Company made the accounting policy election to record the GILTI tax in the period it occurs. The Company has evaluated these provisions and recorded a detriment of $1.7 million, in relation to GILTI, FDII and BEAT for the year ended December 31, 2019. The Company files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, or local income tax examinations for years before 2014. The Company is no longer subject to foreign income tax examinations before 2004. The Italian Tax Authority (ITA) has audited the Company’s 2004 through 2012 tax years. The Company is currently in litigation with the ITA with respect to all of these years. During 2019, the German Tax Authority (GTA) concluded a broad based audit of fiscal years 2014 through 2016, which covered income tax, trade tax, payroll tax, and VAT tax. Formal notification was received with no changes to the corporate income or trade tax liability related to the years under examination by the German Tax Authority. Accordingly, we have released all associated tax liabilities previously reserved. During 2016, the United Kingdom HMRC (Her Majesty’s Revenue and Customs) initiated an audit of the Company’s 2014 and 2015 tax years. They subsequently added the 2016 and 2017 years to their query. In the third quarter of 2019, the Company settled the dispute with HMRC. The Company released the associated net reserves and paid the final assessment in November, 2019. Additionally, in December, 2017 the French Tax Authority commenced an audit of the Company’s 2015 and 2016 tax years. During the first quarter of 2019, the audit was settled with no changes to Income tax. Accordingly, the Company released the associated tax reserves. The Company has limited audit activity in various states and other foreign jurisdictions. Due to the uncertain nature of ongoing tax audits, the Company has recorded its liability for uncertain tax positions as part of its long-term liability as payments cannot be anticipated over the next 12 months. The existing tax positions of the Company continue to generate an increase in the liability for uncertain tax positions. The liability for uncertain tax positions may be reduced for liabilities that are settled with taxing authorities or on which the statute of limitations could expire without assessment from tax authorities. The possible reduction in liabilities for uncertain tax positions resulting from the expiration of statutes of limitation in multiple jurisdictions in the next 12 months is approximately $0.6 million, excluding the interest, penalties and the effect of any related deferred tax assets or liabilities. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows: Federal, State, and Foreign Tax (In thousands) Balance as of December 31, 2016 $ 12,965 Additions based on tax positions related to the current year 938 Additions for tax positions of prior years 32 Reductions for tax positions of prior years (1,477 ) Reductions due to lapse of applicable statutes (899 ) Adjustments due to foreign exchange rate movement 1,008 Balance as of December 31, 2017 $ 12,567 Additions based on tax positions related to the current year 637 Additions for tax positions of prior years 280 Reductions for tax positions of prior years (116 ) Reductions due to lapse of applicable statutes (999 ) Adjustments due to foreign exchange rate movement (386 ) Balance as of December 31, 2018 $ 11,983 Additions based on tax positions related to the current year 385 Additions for tax positions of prior years 996 Settlements (705 ) Reductions for tax positions of prior years (3,440 ) Reductions due to lapse of applicable statutes (609 ) Adjustments due to foreign exchange rate movement 459 Balance as of December 31, 2019 $ 9,069 The total amount of net UTB that, if recognized would affect the effective tax rate as of December 31, 2019 is $6.7 million. The ending net UTB results from adjusting the gross balance at December 31, 2019 for items such as U.S. federal and state deferred tax, interest, and deductible taxes. The net UTB is included as a component of non-current income taxes payable within the consolidated balance sheets. The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2019, 2018, and 2017, total interest and penalties expensed were $(1.4) million, $0.1 million, and $(0.4) million, respectively. As of December 31, 2019 and 2018, accrued interest and penalties on a gross basis was $2.0 million, and $3.4 million, respectively. Included in accrued interest are amounts related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company has not provided deferred taxes on earnings of $5.1 million of undistributed earnings of foreign subsidiaries that are indefinitely reinvested outside of the U.S. The Company estimates that if these earnings were repatriated to the U.S., it would result in approximately $1.1 million in associated tax without consideration of foreign tax credits. Determination of foreign tax credit limitations depends on a number of factors which cannot be estimated. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 10. Commitments and Contingencies Purchase Obligations The Company has entered into various inventory-related purchase agreements with suppliers. Generally, under these agreements, 50% of orders are cancelable by giving notice 46 to 60 days prior to the expected shipment date and 25% of orders are cancelable by giving notice 31 to 45 days prior to the expected shipment date. Orders are non-cancelable within 30 days prior to the expected shipment date. For those orders not governed by master purchase agreements, the commitments are governed by the commercial terms on the Company's purchase orders subject to acknowledgment from its suppliers. As of December 31, 2019, the Company had approximately $85.3 million in non-cancelable purchase commitments with suppliers. The Company establishes a loss liability for all products it does not expect to sell for which it has committed purchases from suppliers. Such losses have not been material to date. From time to time, the Company’s suppliers procure unique complex components on the Company's behalf. If these components do not meet specified technical criteria or are defective, the Company should not be obligated to purchase the materials. However, disputes may arise as a result and significant resources may be spent resolving such disputes. Non-Trade Commitments As of December 31, 2019, the Company had long term, non-cancellable purchase commitments of $17.4 million pertaining to non-trade activities. Warranty Obligations Changes in the Company's warranty obligations, which is included in Other accrued liabilities on the consolidated balance sheets, were as follows: Year Ended December 31, 2019 2018 2017 Balance as of beginning of the period $ 14,412 $ 44,068 $ 42,571 Reclassified to sales returns upon adoption of ASC 606 — (29,147 ) (1) — Provision for warranty liability made during the period 7,050 12,783 91,384 Settlements made during the period (10,906 ) (13,292 ) (89,887 ) Balance at end of period $ 10,556 $ 14,412 $ 44,068 (1) Upon adoption of ASC 606 on January 1, 2018, certain warranty reserve balances totaling $29.1 million were reclassified to sales returns as these liabilities are payable to the Company's customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return. Guarantees and Indemnifications The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a Director and Officer Insurance Policy that enables it to recover a portion of any future amounts paid. As a result of its insurance policy coverage, the Company believes the fair value of each indemnification agreement is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2019. In its sales agreements, the Company typically agrees to indemnify its direct customers, distributors and resellers (the “Indemnified Parties”) for any expenses or liability resulting from claimed infringements by the Company's products of patents, trademarks or copyrights of third parties that are asserted against the Indemnified Parties, subject to customary carve outs. The terms of these indemnification agreements are generally perpetual after execution of the agreement. The maximum amount of potential future indemnification is generally unlimited. From time to time, the Company receives requests for indemnity and may choose to assume the defense of such litigation asserted against the Indemnified Parties. The Company believes the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2019. Employment Agreements The Company has signed various change in control and severance agreements with key executives. Upon a termination without cause or resignation with good reason, executive officers would be entitled to (1) cash severance equal to the executive officer’s annual base salary, and, for the Chief Executive Officer, an additional amount equal to his target annual bonus, (2) 12 months of health benefits continuation and (3) accelerated vesting of any unvested equity awards that would have vested during the 12 months following the termination date. Upon a termination without cause or resignation with good reason that occurs during the one month prior to or 12 months following a change in control of the Company, executive officers would be entitled to (1) cash severance equal to a multiple (2x for the Chief Executive Officer and 1x for all other executive officers) of the sum of the executive officer’s annual base salary and target annual bonus, (2) a number of months ( 24 for the Chief Executive Officer and 12 for other executive officers) of health benefits continuation and (3) accelerated vesting of all outstanding, unvested equity awards. Severance is conditioned upon the execution and non-revocation of a release of claims. The change in control and severance agreements do not provide for any excise tax gross ups. If the merger-related payments or benefits of the executive officer are subject to the 20 % excise tax under Section 4999 of the tax code, then the executive officer will either receive all such payments and benefits subject to the excise tax or such payments and benefits will be reduced so that the excise tax does not apply, whichever approach yields the best after-tax outcome for the executive officer. The Company had no liabilities recorded for these agreements as of December 31, 2019. Litigation and Other Legal Matters The Company is involved in disputes, litigation, and other legal actions, including, but not limited to, the matters described below. In all cases, at each reporting period, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. In such cases, the Company accrues for the amount, or if a range, the Company accrues the low end of the range, only if there is not a better estimate than any other amount within the range, as a component of legal expense within litigation reserves, net. The Company monitors developments in these legal matters that could affect the estimate the Company had previously accrued. In relation to such matters, the Company currently believes that there are no existing claims or proceedings that are likely to have a material adverse effect on its financial position within the next twelve months, or the outcome of these matters is currently not determinable. There are many uncertainties associated with any litigation, and these actions or other third-party claims against the Company may cause the Company to incur costly litigation and/or substantial settlement charges. In addition, the resolution of any intellectual property litigation may require the Company to make royalty payments, which could have an adverse effect in future periods. If any of those events were to occur, the Company's business, financial condition, results of operations, and cash flows could be adversely affected. The actual liability in any such matters may be materially different from the Company's estimates, which could result in the need to adjust the liability and record additional expenses. Agenzia Entrate Provincial Revenue Office 1 of Milan v. NETGEAR International, Inc. In November 2012, the Italian tax police began a comprehensive tax audit of NETGEAR International, Inc.’s Italian Branch. The scope of the audit initially was from 2004 through 2011 and was subsequently expanded to include 2012. The tax audit encompassed Corporate Income Tax (IRES), Regional Business Tax (IRAP) and Value-Added Tax (VAT). In December 2013, December 2014, August 2015, and December 2015 an assessment was issued by Inland Revenue Agency, Provincial Head Office No. 1 of Milan-Auditing Department (Milan Tax Office) for the 2004 tax year, the 2005 through 2007 tax years, the 2008 through 2010 tax years, and the 2011 through 2012 tax years, respectively. In May 2014, the Company filed with the Provincial Tax Court of Milan an appeal brief, including a Request for Hearing in Open Court and Request for Suspension of the Tax Assessment for the 2004 year. The hearing was held and decision was issued on December 19, 2014. The Tax Court decided in favor of the Company and nullified the assessment by the Inland Revenue Agency for 2004. The Inland Revenue Agency appealed the decision of the Tax Court on June 12, 2015. The Company filed its counter appeal with respect to the 2004 year during September 2015. On February 26, 2016, the Regional Tax Court conducted the appeals hearing for the 2004 year, ruling in favor of the Company. On June 13, 2016, the Inland Revenue Agency appealed the decision to the Supreme Court. The Company filed a counter appeal on July 23, 2016 and is awaiting scheduling of the hearing. In June 2015, the Company filed with the Provincial Tax Court of Milan an appeal brief including a Request for Hearing in Open Court and Request for Suspension of the Tax Assessment for the 2005 through 2006 tax years. The hearing for suspension was held and the Request for Suspension of payment was granted. The hearing for the validity of the tax assessment for 2005 and 2006 was held in December 2015 with the Provincial Tax Court issuing its decision in favor of the Company. The Inland Revenue Agency filed its appeal with the Regional Tax Court. The Company filed its counter brief on September 30, 2016 and the hearing was held on March 22, 2017. A decision favorable to the Company was issued by the Court on July 5, 2017. The Italian Tax Authority has appealed the decision to the Supreme Court and the Company has responded with a counter appeal brief on December 3, 2017 and awaits scheduling of the hearing. The hearing for the validity of the tax assessment for 2007 was held on March 10, 2016 with the Provincial Tax Court who issued its decision in favor of the Company on April 7, 2016. The Inland Revenue Agency has filed its appeal to the Regional Tax Court and the Company has submitted its counter brief. The hearing was held on November 17, 2017 and the Company received a positive decision on December 11, 2017. On June 11, 2018, the Italian government filed its appeal brief with the Supreme Court, and the Company filed its counter brief on July 12, 2018 and awaits scheduling the hearing. With respect to 2008 through 2010, the Company filed its appeal briefs with the Provincial Tax Court in October 2015 and the hearing for the validity of the tax assessments was held on April 21, 2016. A decision favorable to the Company was issued on May 12, 2016. The Inland Revenue Agency has filed its appeal to the Regional Tax Court. The Company filed its counter brief on February 5, 2017. The hearing was held on May 21, 2018, and the Company received a favorable decision on June 12, 2018. On October 14, 2019, Milan Tax Office filed an appeal with the Supreme Court. The Company filed its counter brief with the Supreme Court on November 22, 2019 and awaits scheduling of the hearing. With respect to 2011 through 2012, the Company has filed its appeal brief on February 26, 2016 with the Provincial Tax Court to contest the relevant tax assessments. The hearing for suspension was held and the Request for Suspension of payment was granted. On October 13, 2016, the Company filed its final brief with the Provincial Tax Court. The hearing was held on October 24, 2016 and a decision favorable to the Company was issued by the Court. The Inland Revenue Agency appealed the decision before the Regional Tax Court. The Regional Tax Court heard the case on February 26, 2019 for both years and issued a decision favorable to the Company on March 11, 2019. On October 14, 2019, Milan Tax Office filed an appeal with the Supreme Court. The Company filed its counter brief with the Supreme Court on November 22, 2019. With regard to all tax years, it is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. Via Vadis v. NETGEAR, Inc. On August 22, 2014, the Company was sued by Via Vadis, LLC and AC Technologies, S.A. (“Via Vadis”), in the Western District of Texas. The complaint alleges that the Company’s ReadyNAS and Stora products “with built-in BitTorrent software" allegedly infringe three related patents of Via Vadis (U.S. Patent Nos. 7,904,680, RE40, 521, and 8,656,125). Via Vadis filed similar complaints against Belkin, Buffalo, Blizzard, D-Link, and Amazon. By referring to “built-in BitTorrent software,” the Company believes that the complaint is referring to the BitTorrent Sync application, which was released by BitTorrent Inc. in spring of 2014. At a high-level, the application allows file synchronization across multiple devices by storing the underlying files on multiple local devices, rather than on a centralized server. The Company’s ReadyNAS products do not include BitTorrent software when sold. The BitTorrent application is provided as one of a multitude of potential download options, but the software itself is not included on the Company’s devices when shipped. Therefore, the only viable allegation at this point is an indirect infringement allegation. On November 10, 2014, the Company answered the complaint denying that it infringes the patents in suit and also asserting the affirmative defenses that the patents in suit are invalid and barred by the equitable doctrines of laches, waiver, and/or estoppel. On February 6, 2015, the Company filed its motion to transfer venue from the Western District of Texas to the Northern District of California with the Court; on February 13, 2015, Via Vadis filed its opposition to the Company’s motion to transfer; and on February 20, 2015, the Company filed its reply brief on its motion to transfer. In early April 2015, the Company received the plaintiff’s infringement contentions, and on June 12, 2015, the defendants served invalidity contentions. On July 30, 2015, the Court granted the Company’s motion to transfer venue to the Northern District of California. In addition, the Company learned that Amazon and Blizzard filed petitions for the inter partes reviews (“IPRs”) for the patents in suit. On October 30, 2015, the Company and Via Vadis filed a joint stipulation requesting that the Court vacate all deadlines and enter a stay of all proceedings in the case pending the Patent Trial and Appeal Board’s final non-appealable decision on the IPRs initiated by Amazon and Blizzard. On November 2, 2015, the Court granted the requested stay. On March 8, 2016, the Patent Trial and Appeal Board issued written decisions instituting the IPRs jointly filed by Amazon and Blizzard. In early March of 2017, The Patent Trial and Appeal Board (PTAB) issued various decisions regarding Amazon’s and Blizzard’s IPRs of the patents in suit. One of the IPRs of the '125 patent resulted in a finding by the PTAB that Amazon and Blizzard had had failed to show invalidity. The second IPR on the '125 patent, however, resulted in cancellation of all claims asserted in Via Vadis’s suit against the Company. Reissue '521 did not have any claims found invalid by the PTAB, and some dependent claims of the '680 patent survived the IPRs, and some claims of the '680 patent were canceled. Via Vadis has completed its appeal of the PTAB decisions on the IPRs, which were affirmed by the Federal Circuit. Meanwhile, the W.D. Texas Court issued a claim construction order finding the '680 patent indefinite. The parties in the W.D. of Texas case lifted their stay and Via Vadis filed a motion for reconsideration of the Court’s finding of indefiniteness, which the Court has denied. On August 8, 2019, Via Vadis filed its notice of appeal to the Federal Circuit in the W.D. Texas cases. The Company’s case in N.D. California will remain stayed during the pendency of the appeal. It is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. Chrimar Systems, Inc. v NETGEAR, Inc. On July 1, 2015, the Company was sued by a non-practicing entity named Chrimar Systems, Inc., doing business as CMS Technologies and Chrimar Holding Company, LLC (collectively, “CMS”), in the Eastern District of Texas for allegedly infringing four patents-U.S. Patent Nos. 8,155,012 (the “'012 Patent”), entitled “System and method for adapting a piece of terminal equipment”; 8,942,107 (the “'107 Patent”), entitled “Piece of ethernet terminal equipment”; 8,902,760 (the “'760 Patent”), entitled “Network system and optional tethers”; and 9,019,838 (the “'838 Patent”), entitled “Central piece of network equipment” (collectively “patents-in-suit”). The patents-in-suit relate to using or embedding an electrical DC current or signal into an existing Ethernet communication link in order to transmit additional data about the devices on the communication link, and the specifications for the patents are identical. It appears that CMS has approximately 40 active cases in the Eastern District of Texas, as well as some cases in the Northern District of California on the patents-in-suit and the parent patent to the patents-in-suit. The Company answered the complaint on September 15, 2015. On November 24, 2015, CMS served its infringement contentions on the Company, and CMS is generally attempting to assert that the patents in suit cover the Power over Ethernet standard (802.3af and 802.3at) used by certain of the Company's products. On December 3, 2015, the Company filed with the Court a motion to transfer venue to the District Court for the Northern District of California and their memorandum of law in support thereof. On December 23, 2015, CMS filed its response to the Company’s motion to transfer, and, on January 8, 2016, the Company filed its reply brief in support of its motion to transfer venue. On January 15, 2016, the Court granted the Company’s motion to transfer venue to the District Court for the Northern District of California. The initial case management conference in the Northern District of California occurred on May 13, 2016, and on August 19, 2016, the parties exchanged preliminary claim constructions and extrinsic evidence. On August 26, 2016, the Company and three defendants in other Northern District of California CMS cases (Juniper Networks, Inc., Ruckus Wireless, Inc., and Fortinet, Inc.) submitted motions to stay their cases. The defendants in part argued that stays were appropriate pending the resolution of the currently-pending IPRs of the patents-in-suit before the Patent Trial and Appeal Board (PTAB), including four IPR Petitions filed by Juniper. On September 9, 2016, CMS submitted its opposition to the motions to stay the cases. On September 26, 2016, the Court ordered the cases stayed in their entirety, until the PTAB reaches institution decisions with respect to Juniper’s four pending IPR petitions. Juniper’s four IPR petitions were instituted by the PTAB in January 2017, and the Company subsequently moved to join the IPR petitions as an “understudy” to Juniper, only assuming a more active role in the petitions in the event Juniper settles with CMS. For all four patents in suit against the Company, the PTAB ordered that (a) the Petitioners’ (the Company, Ruckus, and Brocade) Motion for Joinder to the Juniper IPRs is granted; (b) the Petitioners IPRs are instituted on the same grounds as in the Juniper ‘IPRs and Petitioners are joined with the Juniper IPRs; and (c) all further filings by Petitioners in the joined proceedings will be in the Juniper IPRs. On December 21, 2017, the PTAB issued the first of the four Final Written Decisions in the IPRs filed by the Company on the patents in suit, ruling that the claims of the ‘107 Patent asserted by Chrimar were invalid. This was quickly followed by two more Final Written Decisions -- on January 3, 2018, the ’838 patent’s asserted claims were ruled invalid, and on January 23, 2018 the ‘012 patent’s asserted claims were ruled invalid. Chrimar has 30 days from each Final Written Decision to seek a rehearing at the PTAB and 63 days from each to file an appeal. On April 26, 2018, the PTAB issued its decision invalidating all of the claims of the ‘760 patent challenged in the IPR. The PTAB’s reasoning was similar to the reasoning set forth in the PTAB’s previous decisions on the 012, 107 and 838 patents. The ‘760 patent claims were, however, amended by Chrimar during the pendency of the ‘760 IPR, and the PTAB did not rule on the validity of the amended claims, as they were not challenged in the original IPR Petitions (they couldn’t have been because the Chrimar amendments had not yet happened). On June 6, 2018, Chrimar's appeals on all 4 written decisions by the USPTO invalidating all challenged claims were consolidated. The parties have completed briefing the matter and are awaiting schedule for oral argument before the Federal Circuit. On September 3, 2019, the Company and other defendants conducted their oral argument before the Federal Circuit Court of Appeals. On September 19, 2019, the Federal Circuit affirmed the USPTO’s decisions on defendants’ IPRs invalidating all of the challenged claims. On December 19, 2019, Chrimar petitioned the Supreme Court to review the Federal Circuit Court’s decision invalidating all of the challenged claims in the IPRs. The Company and co-defendants are awaiting the Supreme Court’s decision on whether to take the case up on appeal. On January 17, 2020, the parties filed a Case Management Conference Statement before the district court in response to a court order, and Chrimar is requesting permission to amend its Complaint to add new patents and new claims that were not previously asserted, including claims that Chrimar amended during an ex parte reexam of the ’760 patent during the pendency of the IPRs. The Court held a case management conference on January 24, 2020 and allowed Plaintiff to file its third amended complaint on February 7, 2020. The Company has until February 28, 2020 to file its answer or motion(s). It is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. Vivato v. NETGEAR, Inc. On April 19, 2017, the Company was sued by XR Communications (d/b/a) Vivato (“Vivato”) in the United States District Court, Central District of California. Based on its complaint, Vivato purports to be a research and development and product company in the WiFi area, but it appears that Vivato is not currently a manufacturer of commercial products. The three (3) patents that Vivato asserts against the Company are U.S. Patent Nos. 7,062,296, 7,729,728, and 6,611,231. The ’296 and ’728 patents are entitled “Forced Beam Switching in Wireless Communication Systems Having Smart Antennas.” The ’231 patent is entitled “Wireless Packet Switched Communication Systems and Networks Using Adaptively Steered Antenna Arrays.” Vivato also has recently asserted the same patents in the Central District of California against D-Link, Ruckus, and Aruba, among others. According to the complaint, the accused products include WiFi access points and routers supporting MU-MIMO, including without limitation access points and routers utilizing the IEEE 802.11ac-2013 standard. The accused technology is standards-based, and more specifically, based on the transmit beamforming technology in the 802.11ac WiFi standard. The Company answered an amended complaint on July 7, 2017. In its answer, the Company objected to venue and recited that objection as a specific affirmative defense, so as to expressly reserve the same. The Company also raised several other affirmative defenses in its answer. On August 28, 2017, the Company submitted its initial disclosures to the plaintiff. The initial scheduling conference was on October 2, 2017, and the Court set five day jury trial for March 19, 2019 for the leading Vivato/D-Link case, meaning the Company’s trial date will be at some point after March 19, 2019. On March 20, 2018, the Company and other defendants in the various Vivato cases moved the Court to stay the case pending various IPRs filed on all of the patents in suit. Every asserted claim of all three patents-in-suit is now subject to challenge in IPRs that are pending before the U.S. Patent and Trial Appeal Board (“PTAB”). In particular, the Company, Belkin, and Ruckus are filing one set of IPRs on the three patents in suit; Cisco is filing another set of independent IPRs on the three patents in suit; and Aruba is filing yet another set of independent IPRs on the three patents in suit. On April 11, 2018, the Court granted the motion to stay pending filing of the IPRs. On May 3, 2018, the Company and other defendants filed their IPRs. The PTAB instituted the IPRs for the ’296 and ’728 patents, but not the ’231 patent from the Ruckus and Belkin set of petitions. However, the Cisco IPR for the ’231 patent was instituted. Vivato has proposed amendments to its claims and the parties have completed briefing the matter before the PTAB. In July and August of 2019, the Company and other defendants had two oral arguments before the PTAB regarding the ’296 and ’728 patents. The PTAB denied institution of petition for the’231 Patent. On October 10, 2019, the PTAB issued a Final Written Decision invalidating all of the original claims at issue in the ’296 Patent and denied Vivato’s motion to amend (the claims). In November 2019, the PTAB issued a Final Written Decision invalidating all of the challenged claims in the ’728 Patent. In the meantime, the PTAB’s Final Written Decision in the Cisco IPR of the’231 Patent found the claims to be valid and Cisco is appealing the finding. The Company anticipates that the Company’s case will remain stayed through Cisco’s appeal. It is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. Hera Wireless v. NETGEAR, Inc. On July 14, 2017, the Company was sued by Sisvel (via Hera Wireless) in the District of Delaware on three related patents allegedly covering the 802.11n standard. Similar complaints were filed against Amazon, ARRIS, Belkin, Buffalo, and Roku. On December 12, 2017, the Company answered the complaint, denying why each claim limitation of the patents in suit were allegedly met and asserting various affirmative defenses, including invalidity and noninfringement. A proposed joint Scheduling Order was submitted to the Court on January 24, 2018 with trial proposed for March of 2020. On February 27, 2018, Hera Wireless identified the accused products and the asserted claims, alleging that any 802.11n compliant product infringes, and identified only the Company’s Orbi and WND930 products with particularity. Hera Wireless’ infringement contentions were submitted on April 28, 2018. Discovery is ongoing. On June 28, 2018, the Company and other defendants submitted invalidity contentions. The Company along with other defendants jointly filed IPRs challenging three of the patents in suit on July 18, 2018. On September 14, 2018, the Company and other defendants jointly filed a second set of IPRs with the USPTO challenging the remaining six patents asserted in the Amended Complaint. The Patent Trial and Appeal Board (PTAB) has instituted all of the IPRs on the patents-in-suit. On February 3, 2020, the PTAB issued a Final Written Decision, cancelling all claims of U.S. Patent No. 8,934,851. The PTAB also denied Hera’s request to amend the claims in that Patent. PTAB decisions on the other IPR’s will trickle in over the next few months. The district court case remains stayed in the meantime. It is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. Modern Telecom Systems (MTS) v. NETGEAR, Inc. On August 3, 2018, Plaintiff MTS filed a patent infringement lawsuit against NETGEAR in the District of Delaware. MTS accuses all of NETGEAR’s routers that are compliant with those 802.11 standards of infringing U.S. Patent No. 6,504,886 (“the ’886 Patent”), and specifically identifies NETGEAR’s Nighthawk X10 Smart WiFi Router. The Company filed its Answer on January 4, 2019. The Company’s case was consolidated with ARRIS / Ruckus and Brother. In March 2019, the Company joined a motion for judgment on the pleadings that the patent-in-suit is invalid under Section 101 led by Arris. The motion remains pending and the claim construction phase of the case is upcoming. The parties have settled, and the case was dismissed on December 17, 2019 with non-material impact on the Company. John Pham v. Arlo Technologies, Inc., NETGEAR Inc., et al., and other related actions On January 9, 2019 and January 10, 2019, February 1, 2019 and February 8, 2019, the Company was sued in four separate securities class action suits in Superior Court of California, County of Santa Clara, along with Arlo Technologies, individuals, and underwriters involved in the spin-off of Arlo. Two more similar state actions have been filed against Arlo Technologies Inc. et al.. In total, six putative class action complaints have now been filed in California state court in Santa Clara County. The Company is named as a defendant in five of the six lawsuits. The complaints generally allege that Arlo’s IPO materials contained false and misleading statements, hiding problems with Arlo’s Ultra product. These claims are styled as violations of Sections 11, 12(a), and 15 of the Securities Act of 1933. There is also a putative class action pending in federal court in the Northern District of California, on behalf of the same class of plaintiffs, making very similar claims. The Company is not presently named in the federal action. Defendants filed motions to stay the state court actions in deference to the federal court action. The court held a hearing on April 26, 2019 to consider whether to consolidate the six lawsuits and appoint a “lead plaintiff” and another hearing on May 31, 2019 to consider defendants’ motions to stay the state court cases. On June 21, 2019, the California state court judge granted the Company’s motion to stay the state court case pending the outcome of the federal case. The case will now proceed only in federal court. On August 6, 2019, all the defendants, including NETGEAR, filed a motion to dismiss the federal court action. Plaintiffs filed their opposition brief on September 6, 2019 and defendants filed a reply on October 4, 2019. The motion is set for hearing on December 5, 2019. The state court action remains stayed pending the outcome of the federal action. On November 18, 2019, the parties participated in mediation, but did not settle the case. On December 5, 2019, the court held a hearing on the defendants’ motion to dismiss, and on December 19, 2019, granted that motion as to all counts, with leave to amend. The Parties are currently discussing settlement. On February 14, 2020, the Court granted the Parties’ stipulation to stay proceedings to permit filing of a motion for preliminary approval for classwide settlement. It is too early to reasonably estimate any financial impact to the Company resulting from these matters. China Patent Matters - Beijing and Heifei Municipalities On or around May 14, 2019, NETGEAR Beijing Network Technology Co. Ltd (“Beijing WOFE”) received notice from the Beijing Municipal IP Office (BMIPO) that petitioner Global Innovation Aggregators, a Delaware registered company (“Patentee”), filed two patent infringement complaints against Beijing WOFE, alleging infringement of two patents: China Patent Nos. CN100502338C and CN103138979B. The accused products were certain Company routers sold in China. Patentee alleges that the Dynamic Quality of Service (“QoS”) or dynamic bandwidth adjustment and allocation functionality in the routers infringes CN100502338C, and the parental control functionality infringes CN103138979B. The Company hired local counsel who has responded to the Beijing matters and separately filed invalidation actions against both patents. On or around July 2, 2019, the Company received notice that the Patentee also filed petitions against a NETGEAR reseller, Heifei Wanghang Network Technology Co., Ltd., before the Heifei Municipal IP Office, asserting the same patents against the Company’s routers. The Com |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders Equity Note [Abstract] | |
Stockholders' Equity | Note 11. Stockholders’ Equity Stock Repurchases From time to time, the Company's Board of Directors has authorized programs under which the Company may repurchase shares of its common stock, depending on market conditions, in the open market or through privately negotiated transactions. Under the authorizations, 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 the Company’s common stock. On July 19, 2019, the Company's Board of Directors approved an increase in the number of shares of common stock authorized for repurchase under the Company's stock repurchase program of up to an incremental 4.5 million shares. As of December 31, 2019, 3.6 million shares remained authorized for repurchase under the repurchase program. The Company repurchased, as reported based on trade date, approximately 2.4 million shares of common stock at a cost of $75.9 million, approximately 0.5 million shares of common stock at a cost of $30.0 million and approximately 2.4 million shares of common stock at a cost of $113.2 million, during the years ended December 31, 2019, 2018 and 2017, respectively. The Company repurchased, as reported based on trade date, approximately 198,000 shares of common stock at a cost of $6.5 million, approximately 138,000 shares of common stock at a cost of $8.1 million and 135,000 shares of common stock at a cost of $6.4 million, to administratively facilitate the withholding and subsequent remittance of personal income and payroll taxes for individuals receiving RSUs during the year ended December 31, 2019, 2018 and 2017, respectively. These shares were retired upon repurchase. The Company’s policy related to repurchases of its common stock is to charge the excess of cost over par value to retained earnings. All repurchases were made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Accumulated Other Comprehensive Income (Loss) The following table sets forth the changes in accumulated other comprehensive income ("AOCI") by component during the years ended December 31, 2019, 2018 and 2017: Unrealized gains (losses) on available -for-sale investments Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2016 $ (31 ) $ 2,230 $ (261 ) $ 1,938 Other comprehensive income (loss) before reclassifications (115 ) (10,692 ) 3,062 (7,745 ) Less: Amount reclassified from accumulated other comprehensive income — (7,624 ) 2,668 (4,956 ) Net current period other comprehensive income (loss) (115 ) (3,068 ) 394 (2,789 ) Balance as of December 31, 2017 $ (146 ) $ (838 ) $ 133 $ (851 ) Other comprehensive income (loss) before reclassifications 128 1,422 (249 ) 1,301 Less: Amount reclassified from accumulated other comprehensive income — 588 (123 ) 465 Net current period other comprehensive income (loss) 128 834 (126 ) 836 Distribution of Arlo — (4 ) 4 — Balance as of December 31, 2018 $ (18 ) $ (8 ) $ 11 $ (15 ) Other comprehensive income (loss) before reclassifications 16 1,565 (332 ) 1,249 Less: Amount reclassified from accumulated other comprehensive income — 1,535 (322 ) 1,213 Net current period other comprehensive income (loss) 16 30 (10 ) 36 Balance as of December 31, 2019 $ (2 ) $ 22 $ 1 $ 21 The following tables provide details about significant amounts reclassified out of each component of AOCI for the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 (In thousands) Amount Reclassified from AOCI Gains (losses) on cash flow hedge: Foreign currency forward contracts Affected line item in the statement of operations Net revenue $ 1,929 $ 665 $ (5,786 ) Cost of revenue (12 ) (9 ) 18 Research and development (57 ) 83 130 Sales and marketing (284 ) (102 ) 788 General and administrative (41 ) (53 ) 133 Total from continuing operations before tax 1,535 584 (4,717 ) Tax impact from continuing operations (322 ) (123 ) 1,651 Total, from continuing operations net of tax 1,213 461 (3,066 ) Total, from discontinued operations net of tax — 4 (1,890 ) Total, net of tax $ 1,213 $ 465 $ (4,956 ) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits And Share Based Compensation [Abstract] | |
Employee Benefit Plans | Note 12. Employee Benefit Plans 2003 Stock Plan In April 2003, the Company adopted the 2003 Stock Plan (the “2003 Plan”). The 2003 Plan provided for the granting of stock options to employees and consultants of the Company. During the second fiscal quarter of 2013, the Company's 2003 Stock Plan expired. No further equity awards can be granted under the 2003 Plan. Outstanding awards under the 2003 Stock Plan remain subject to the terms and conditions of the 2003 plan. 2006 Long Term Incentive Plan In April 2006, the Company adopted the 2006 Long Term Incentive Plan (the “2006 Plan”). The 2006 Plan provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSU”) performance awards and other stock awards, to eligible directors, employees and consultants of the Company. The Company's 2006 Plan expired on April 13, 2016 by its terms. No further equity awards can be granted under the 2006 Plan. Outstanding awards under the 2006 Stock Plan remain subject to the terms and conditions of the 2006 plan. 2016 Equity Incentive Plan In April 2016, the Company's Board of Directors adopted the 2016 Equity Incentive Plan (the "2016 Plan") which was approved by the Company's stockholders at the 2016 Annual Meeting of Stockholders on June 3, 2016. The 2016 Plan provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units to eligible directors, employees and consultants of the Company. The original maximum aggregate number of shares that could be issued under the 2016 Plan was 2.5 million Shares, plus (i) any shares that were available for grant under the Company’s 2006 Plan as of immediately prior to the 2006 Plan's expiration by its terms, which was 699,827 shares, plus (ii) any shares granted under the 2006 Plan that expire, are forfeited to or repurchased by the Company. In May 2018, the Company adopted amendments to the 2016 Plan which increased the number of shares of the Company’s common stock that may be issued under the 2016 plan by an additional 1.7 million shares. In January 2019, the Company received the approval from its Compensation Committee to increase the number of shares that the Company may be issued under the 2016 plan to a new total of 3.1 million shares, pursuant to the adjustment provisions of the 2016 Plan as a result of the Distribution. As of December 31, 2019, approximately 1.6 million shares remained available for future grants under the 2016 Plan. Options granted generally vest over four years with the first tranche at the end of twelve months from the date of grant and the remaining shares vesting monthly over the remaining three years. Options granted generally expire in 10 years from the date of grant. RSUs granted generally vest in annual installments over four years Any shares subject to restricted stock, restricted stock units, performance units, or performance shares awarded under the 2016 Plan will be counted against the shares available for issuance under the 2016 Plan as one and fifty-eight hundredths (1.58) shares for every one share subject to such awards. Additionally, any shares that are tendered by a participant of the 2016 Plan or retained by the Company as full or partial payment to the Company for the purchase of an award or to satisfy tax withholding obligations in connection with an award shall no longer again be made available for issuance under the 2016 Plan. Employee Stock Purchase Plan The Company sponsors an Employee Stock Purchase Plan (the “ESPP”), pursuant to which eligible employees may contribute up to 10% of compensation, subject to certain income limits, to purchase shares of the Company’s common stock. Prior to February 16, 2016, employees could purchase stock semi-annually at a price equal to 85% of the fair market value on the purchase date. Beginning February 16, 2016, the terms of the plan include a look-back feature that enables employees to purchase stock semi-annually at a price equal to 85% of the lesser of the fair market value at the beginning of the offering period or the purchase date. The duration of each offering period is generally six-months. In April 2016, the Company approved an amendment to the plan to increase the number of shares of common stock authorized for sale under the plan by 1.0 million shares to a total of 2.0 million shares. For the years ended December 31, 2019, 2018, and 2017, the Company recognized ESPP compensation expense of $ million, $ million and $ million, respectively. Approximately shares of common stock were purchased at an average exercise price of $ in the year ended December 31, 2019. As of December 31, 2019, million shares were reserved for future issuance under the ESPP. Option Activity Stock option activity during the year ended December 31, 2019 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2018 1,969 $ 25.30 Granted 502 26.61 Exercised (250 ) 20.08 Cancelled (16 ) 36.27 Expired (17 ) 36.81 Outstanding as of December 31, 2019 2,188 $ 26.03 6.10 $ 4,171 As of December 31, 2019 Vested and expected to vest 2,188 $ 26.03 6.10 $ 4,171 Exercisable Options 1,411 $ 23.96 4.60 $ 4,153 The aggregate intrinsic values in the table above represent the total pre-tax intrinsic values (the difference between the Company’s closing stock price on the last trading day of 2019, or December 31, 2019, and the exercise price, multiplied by the number of shares underlying the in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. This amount changes based on the fair market value of the Company’s stock. Total intrinsic value of options exercised for the year ended December 31, 2019, 2018, and 2017 was $3.5 million, $11.0 million and $7.7 million, respectively. The total fair value of options vested during the years ended December 31, 2019, 2018, and 2017 was $4.1 million, $3.8 million and $3.8 million, respectively. The following table summarizes significant ranges of outstanding and exercisable stock options as of December 31, 2019: Options Outstanding Options Exercisable Range of Exercise Prices Shares Outstanding Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Per Share Shares Exercisable Weighted- Average Exercise Price Per Share (In thousands) (In years) (In dollars) (In thousands) (In dollars) $12.34 - $19.32 452 3.86 $ 18.82 452 $ 18.82 $19.33 - $23.48 559 3.95 $ 21.65 542 $ 21.59 $23.77 - $25.37 293 6.85 $ 25.36 188 $ 25.36 $26.61 - $26.61 503 8.91 $ 26.61 37 $ 26.61 $29.23 - $41.67 381 7.63 $ 40.76 192 $ 40.80 $12.34 - $41.67 2,188 6.10 $ 26.03 1,411 $ 23.96 RSU Activity RSU activity during the year ended December 31, 2019 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Average Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2018 1,627 $ 34.31 Granted 709 31.33 Vested (594 ) 31.35 Cancelled (155 ) 35.67 Outstanding as of December 31, 2019 1,587 $ 33.95 1.36 $ 38,895 The total fair value of RSUs vested during the years ended December 31, 2019, 2018 and 2017 was $19.4 million, $25.7 million and $19.5 million, respectively. The grant date fair value of RSUs vested during the years ended December 31, 2019, 2018 and 2017 was $18.6 million, $18.1 million and $14.6 million, respectively. Valuation and Expense Information The Company measures stock-based compensation at the grant date based on the estimated fair value of the award. Estimated compensation cost relating to RSUs is based on the closing fair market value of the Company’s common stock on the date of grant. The fair value of options granted and the purchase rights granted under the ESPP is estimated on the date of grant using a Black-Scholes-Merton option valuation model that uses the assumptions noted in the following table. The estimated expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk free interest rate of options granted and the purchase rights granted under the ESPP is based on the implied yield currently available on U.S. Treasury securities with a remaining term commensurate with the estimated expected term. Expected volatility of options granted under the 2016 Plan and the purchase rights granted under the ESPP is based on historical volatility over the most recent period commensurate with the estimated expected term. The following table sets forth the weighted-average assumptions used to estimate the fair value of option grants and purchase rights granted under the ESPP during the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 2019 2018 2017 Stock Options ESPP Expected life (in years) 6.2 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 1.85 % 2.36 % 1.66 % 2.06 % 2.00 % 0.93 % Expected volatility 33.9 % 31.1 % 31.6 % 43.90 % 37.9 % 29.7 % Dividend yield — — — — — — The weighted average estimated fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $9.72, $20.63 and $12.35, respectively. The following table sets forth the stock-based compensation expense resulting from stock options, RSUs, and the ESPP included in the Company’s consolidated statements of operations: Year Ended December 31, 2019 2018 2017 (In thousands) Cost of revenue $ 2,843 $ 2,435 $ 1,406 Research and development 6,532 4,283 2,968 Sales and marketing 9,069 8,267 5,481 General and administrative 10,693 11,476 9,114 Total $ 29,137 $ 26,461 $ 18,969 The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the award vesting term of four years. Forfeitures are accounted for as they occur. Total stock-based compensation cost capitalized in inventory was less than $0.8 million in the years ended December 31, 2019, 2018 and 2017. As of December 31, 2019, $7.8 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.1 years and $41.3 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.2 years. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Note 13. Segment Information 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 has identified its CEO as the CODM. The Company operates and reports in two segments: Connected Home, and SMB. • Connected Home: Focused on consumers and consists of high-performance, dependable and easy-to-use WiFi internet networking solutions such as WiFi mesh systems, routers, 4G/5G mobile products, smart devices such as Meural digital canvasses, and services offering consumers a range of parental controls and cyber security for their home networks; and • SMB: Focused on small and medium-sized businesses and consists of business networking, wireless LAN, storage, and security solutions that bring enterprise-class functionality to small and medium-sized businesses at an affordable price. The Company believes that this structure reflects its current operational and financial management, and provides the best structure for the Company to focus on growth opportunities while maintaining financial discipline. The leadership team of each segment is focused on product development efforts, both from a product marketing and engineering standpoint, to service the unique needs of their customers. The results of the reportable segments are derived directly from the Company’s management reporting system. The results are based on the Company’s method of internal reporting and are not necessarily in conformity with accounting principles generally accepted in the United States. Management measures the performance of each segment based on several metrics, including contribution income. Segment contribution income includes all product line segment revenues less the related cost of sales, research and development and sales and marketing costs. Contribution income is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Certain operating expenses are not allocated to segments because they are separately managed at the corporate level. These unallocated indirect costs include corporate costs, such as corporate research and development, corporate marketing expense and general and administrative costs, amortization of intangibles, stock-based compensation expense, separation expense, change in fair value of contingent consideration, restructuring and other charges, litigation reserves, net, interest income, net and other income (expense), net. The CODM does not evaluate operating segments using discrete asset information. Financial information for each reportable segment and a reconciliation of segment contribution income to income before income taxes is as follows: Year ended December 31, 2019 2018 2017 (In thousands, except percentage data) Net Revenue: Connected Home $ 711,391 $ 771,060 $ 768,261 SMB 287,372 287,756 270,908 Total net revenue $ 998,763 $ 1,058,816 $ 1,039,169 Contribution Income: Connected Home $ 67,775 $ 96,340 $ 83,870 Contribution margin 9.5 % 12.5 % 10.9 % SMB $ 67,282 $ 70,142 $ 63,865 Contribution margin 23.4 % 24.4 % 23.6 % Total segment contribution income $ 135,057 $ 166,482 $ 147,735 Corporate and unallocated costs (70,525 ) (90,186 ) (75,305 ) Amortization of intangibles (1) (6,731 ) (7,979 ) (10,663 ) Stock-based compensation expense (29,137 ) (26,461 ) (18,969 ) Separation expense (264 ) (929 ) — Change in fair value of contingent consideration 25 — — Restructuring and other charges (2,077 ) (2,198 ) (97 ) Litigation reserves, net (160 ) (15 ) (148 ) Interest income, net 2,539 3,980 2,114 Other income (expense), net 844 510 1,557 Income before income taxes $ 29,571 $ 43,204 $ 46,224 (1) Amount excludes amortization expense related to patents within purchased intangibles in cost of revenue. Operations by Geographic Region For reporting purposes revenue is generally attributed to each geographic region based on the location of the customer. The following table shows net revenue by geography for the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 (In thousands) United States (U.S.) $ 637,566 $ 686,145 $ 648,152 Americas (excluding U.S.) 15,440 14,548 16,937 EMEA 200,099 207,599 197,074 APAC 145,658 150,524 177,006 Total net revenue $ 998,763 $ 1,058,816 $ 1,039,169 Long-lived assets by Geographic Region The Company's long-lived assets, which consist of property and equipment, net and operating lease right-of-use assets, net, are located in the following geographic locations: As of December 31, 2019 2018 (In thousands) United States $ 23,137 $ 4,993 Canada 3,954 4,359 EMEA 3,782 95 China 5,040 7,652 APAC (excluding China) (1) 10,687 3,078 Total $ 46,600 $ 20,177 (1) No individual Significant Customers For the year ended December 31, 2019, the Company had two customers, primarily within the Connected Home segment, that each individually accounted for 16% of net revenue. The Company had two customers, primarily within the Connected Home segment, that accounted for 17% and 15% of net revenue for the year ended December 31, 2018, and 16% and 13% of net revenue for the year ended December 31, 2017, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 14. Fair Value Measurements The Company determines the fair values of its financial instruments based on a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018: As of December 31, 2019 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (In thousands) Assets: Cash equivalents: money-market funds $ 22,105 $ 22,105 $ — $ — Available-for-sale debt investments: convertible debt (1) 1,326 — — 1,326 Available-for-sale investments: certificates of deposit (1) 149 — 149 — Trading securities: mutual funds (1) 4,023 4,023 — — Foreign currency forward contracts (2) 152 — 152 — Total assets measured at fair value $ 27,755 $ 26,128 $ 301 $ 1,326 Liabilities: Foreign currency forward contracts (3) $ 525 $ — $ 525 $ — Contingent consideration (4) 5,928 — — 5,928 Total liabilities measured at fair value $ 6,453 $ — $ 525 $ 5,928 As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (In thousands) Assets: Cash equivalents: money-market funds $ 22,573 $ 22,573 $ — $ — Available-for-sale debt investments: U.S. treasuries (1) 70,314 — 70,314 — Available-for-sale investments: certificates of deposit (1) 149 — 149 — Trading securities: mutual funds (1) 2,854 2,854 — — Foreign currency forward contracts (2) 786 — 786 — Total assets measured at fair value $ 96,676 $ 25,427 $ 71,249 $ — Liabilities: Foreign currency forward contracts (3) $ 368 $ — $ 368 $ — Contingent consideration (4) 5,953 — — 5,953 Total liabilities measured at fair value $ 6,321 $ — $ 368 $ 5,953 (1) Included in Short-term investments on the Company's consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company's consolidated balance sheets. (3) Included in Other accrued liabilities on the Company's consolidated balance sheets. (4) The Company's investments in cash equivalents and trading securities are classified within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company’s available-for-sale marketable investments are classified within Level 2 of the fair value hierarchy because they are valued based on readily available pricing sources for comparable instruments, identical instruments in less active markets, or models using market observable inputs. The Company's foreign currency forward contracts are classified within Level 2 of the fair value hierarchy as they are valued using pricing models that take into account the contract terms as well as currency rates and counterparty credit rates. The Company verifies the reasonableness of these pricing models using observable market data for related inputs into such models. The Company enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher . The Company's contingent consideration resulting from acquisitions and available-for-sale convertible debt securities, which were issued by a privately held company , are classified within Level 3 of the fair value hierarchy as the valuations typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. The carrying value of non-financial assets and liabilities measured at fair value in the financial statements on a recurring basis, including accounts receivable and accounts payable, approximate fair value due to their short maturities. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | Note 15. Leases The Company leases office space, cars, distribution centers and equipment under non-cancellable lease arrangements with various expiration date through December 2026. The leases have remaining lease terms of 1 year to 6 years, some of which include options to extend for up to a further 5 years, and some of which include options to terminate prior to completion of the contractual lease term with or without penalties. The Company determines the duration of the lease arrangement giving thought to whether or not it is reasonably certain that the Company will exercise options to extend or terminate the lease arrangement ahead of its contractual term. The leases do not contain any material residual value guarantees. The components of lease cost were as follows: Year Ended December 31, 2019 (In Thousands) Operating lease cost $ 11,945 Short-term lease cost (1) 1,111 Total lease cost (2) $ 13,056 (1) Includes variable lease cost, which was immaterial. (2) Included in cost of revenue, sales and marketing, research and development and general and administration in the Company’s consolidated statement of operations. Supplemental cash flow information related to leases was as follows: Year Ended December 31, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows relating to operating leases $ 11,652 Lease liabilities arising from obtaining right-of-use assets: Operating leases $ 918 Supplemental balance sheet information related to leases was as follows: As of December 31, 2019 Weighted Average Remaining Lease Term (in years) Operating leases 4.5 Weighted Average Discount Rate Operating leases 3.7 % As of December 31, 2019, maturities of operating lease liabilities were as follows (in thousands): Operating Lease 2020 $ 10,460 2021 8,092 2022 7,028 2023 4,519 2024 4,345 Thereafter 3,374 Total lease payments 37,818 Less imputed interest (3,027 ) Total $ 34,791 Supplemental Information for Comparative Periods As of December 31, 2018, prior to the adoption of ASC 842 Leases Leases 2019 $ 11,900 2020 9,986 2021 7,785 2022 6,856 2023 4,478 Thereafter 7,725 Total future minimum lease payments $ 48,730 Rent expense in the years ended December 31, 2018 and 2017 was $9.4 million and $9.9 million, respectively. |
Restructuring and Other Charges
Restructuring and Other Charges | 12 Months Ended |
Dec. 31, 2019 | |
Restructuring Charges [Abstract] | |
Restructuring and Other Charges | Note 16. Restructuring and Other Charges The Company accounts for its restructuring plans under the authoritative guidance for exit or disposal activities. The Company presents expenses related to restructuring and other charges as a separate line item in the consolidated statements of operations. Accrued restructuring and Other charges are classified within other accrued liabilities on the consolidated balance sheets. Restructuring and other charges recognized in fiscal 2019 and 2018 were primarily for severance, and other costs in relation to certain office closures and downsizes. No significant restructuring and other charges were recognized during fiscal 2017. The following table provides a summary of accrued restructuring and other charge activities for the years ended December 31, 2019, 2018 and 2017: Employee termination charges Lease contract termination and other charges Total (In thousands) Balance as of December 31, 2016 $ 6 1,402 $ 1,408 Additions — 97 97 Cash payments — (370 ) (370 ) Balance as of December 31, 2017 $ 6 $ 1,129 $ 1,135 Additions 1,789 464 2,253 Cash payments (1,010 ) (1,403 ) (2,413 ) Adjustments (10 ) (45 ) (55 ) Balance as of December 31, 2018 $ 775 $ 145 $ 920 Additions 2,082 166 2,248 Cash payments (1,783 ) (215 ) (1,998 ) Adjustments (142 ) (30 ) (172 ) Balance as of December 31, 2019 $ 932 $ 66 $ 998 |
Quarterly Financial Data
Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Quarterly Financial Data | QUARTERLY FINANCIAL DATA (In thousands, except per share amounts) (Unaudited) The following table presents unaudited quarterly financial information for each of the Company’s last eight quarters. This information has been derived from the Company’s unaudited financial statements and has been prepared on the same basis as the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. In the opinion of management, all necessary adjustments, consisting only of normal recurring adjustments, have been included to state fairly the quarterly results. December 31, 2019 September 29, 2019 June 30, 2019 March 31, 2019 Net revenue $ 252,971 $ 265,858 $ 230,852 $ 249,082 Gross profit $ 69,583 $ 77,192 $ 65,445 $ 82,008 Provision (benefit) for income taxes $ 1,045 $ (228 ) $ 756 $ 2,207 Net income (loss) from continuing operations $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) attributable to NETGEAR, Inc. $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) per share - basic: Income (loss) from continuing operations $ (0.01 ) $ 0.41 $ 0.03 $ 0.41 Net income (loss) attributable to NETGEAR, Inc. $ (0.01 ) $ 0.41 $ 0.03 $ 0.41 Net income (loss) per share - diluted: Income (loss) from continuing operations $ (0.01 ) $ 0.39 $ 0.03 $ 0.39 Net income (loss) attributable to NETGEAR, Inc. $ (0.01 ) $ 0.39 $ 0.03 $ 0.39 December 31, 2018 September 30, 2018 July 1, 2018 April 1, 2018 Net revenue $ 288,928 $ 269,411 $ 255,276 $ 245,201 Gross profit $ 90,654 $ 94,445 $ 80,280 $ 76,319 Provision (benefit) for income taxes $ 19,210 $ 5,483 $ 1,271 $ (86 ) Net income (loss) from continuing operations $ (535 ) $ 16,310 $ 533 $ 1,018 Net income (loss) $ (27,839 ) $ 9,150 $ (5,230 ) $ 5,590 Net income (loss) attributable to NETGEAR, Inc. $ (19,471 ) $ 9,949 $ (5,230 ) $ 5,590 Net income (loss) per share - basic: Income (loss) from continuing operations $ (0.02 ) $ 0.51 $ 0.02 $ 0.03 Net income (loss) attributable to NETGEAR, Inc. $ (0.62 ) $ 0.31 $ (0.17 ) $ 0.18 Net income (loss) per share - diluted: Income (loss) from continuing operations $ (0.02 ) $ 0.49 $ 0.02 $ 0.03 Net income (loss) attributable to NETGEAR, Inc. $ (0.62 ) $ 0.30 $ (0.16 ) $ 0.17 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
Valuation And Qualifying Accounts [Abstract] | |
Schedule I I— Valuation and Qualifying Accounts | Schedule II—Valuation a nd Qualifying Accounts (1) Balance at Beginning of Year Other Additions Deductions Balance at End of Year (In thousands) Allowance for doubtful accounts: Year ended December 31, 2019 $ 1,254 $ — $ 21 $ (196 ) $ 1,079 Year ended December 31, 2018 1,050 — 50 154 1,254 Year ended December 31, 2017 1,049 — 99 (98 ) 1,050 Allowance for sales returns: Year ended December 31, 2019 $ — $ — $ — $ — $ — Year ended December 31, 2018 14,321 $ (14,321 ) (2) — — — Year ended December 31, 2017 10,602 — 26,419 (22,700 ) 14,321 Allowance for price protection: Year ended December 31, 2019 $ — $ — $ — $ — $ — Year ended December 31, 2018 3,245 (3,245 ) (2) — — — Year ended December 31, 2017 4,185 — 7,149 (8,089 ) 3,245 (1) Upon Arlo's Distribution on December 31, 2018, Arlo’s historical financial results for periods prior to its Distribution were reflected in our consolidated financial statements as discontinued operations and these schedules represent the results from continuing operations. Refer to Note 3. Discontinued Operations, for additional information on Arlo's Distribution. (2) Upon adoption of ASC 606, allowances for sales returns and price protection were reclassified to current liabilities as these reserve balances are considered refund liabilities. |
The Company and Summary of Si_2
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of presentation | 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 | 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 | Use of estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") 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 | Cash and cash equivalents The Company considers all highly liquid investments with an original maturity or a remaining 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. |
Investments | Investments Short-term investments are partially comprised of marketable and convertible debt securities that consist of government and private company debts with an original maturity or a remaining maturity at the time of purchase, of greater than three months and no more than 12 months. These debt 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. Short-term investments also include marketable securities related to deferred compensation under the Company’s Deferred Compensation Plan. Mutual funds are the only investments allowed in the Company's Deferred Compensation Plan and the investments are held in a grantor trust formed by the Company. The Company has classified these investments as trading securities as the grantor trust actively manages the asset allocation to match the participants’ notional fund allocations. These securities are recorded at fair market value with unrealized gains and losses included in other income (expense), net. Long-term investments are comprised of equity investments without readily determinable fair values and are included in Other non-current assets on the consolidated balance sheets. The Company does not have a controlling interest or the ability to exercise significant influence over these investees and these investments do not have readily determinable fair values. Equity investments without readily determinable fair values are accounted for at cost, less impairment and adjusted for subsequent observable price changes obtained from orderly transactions for identical or similar investments issued by the same investee. Such changes in the basis of the equity investment are recognized in Other income (expense), net in the consolidated statements of operations. |
Certain risks and uncertainties | Certain risks and uncertainties The Company's products are concentrated in the networking and smart connected industries, which are characterized by rapid technological advances, changes in customer requirements and evolving regulatory requirements and industry standards. The success of the Company depends on management's ability to anticipate and/or to respond quickly and adequately to such changes. Any significant delays in the development or introduction of products could have a material adverse effect on the Company's business and operating results. The Company relies on a limited number of third parties to manufacture all of its products. If any of the Company's third-party manufacturers cannot or will not manufacture its products in required volumes, on a cost-effective basis, in a timely manner, or at all, the Company will have to secure additional manufacturing capacity. Any interruption or delay in manufacturing could have a material adverse effect on the Company's business and operating results. |
Derivative financial instruments | Derivative financial instruments The Company uses foreign currency forward contracts that generally mature within six months of inception to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, cost of revenue, operating expenses, and on certain existing assets and liabilities. Under its foreign currency risk management strategy, the Company utilizes derivative instruments to reduce the impact of currency exchange rate movements on the Company's operating results by offsetting gains and losses on the forward contracts with increases or decreases in foreign currency transactions. The Company does not use derivative financial instruments for speculative purposes. The Company accounts for its derivative instruments as either assets or liabilities and records them at fair value. Derivatives that are not de signated as hedges under the authoritative guidance for derivatives and hedging are adjusted to fair value through earnings. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the gain s or loss es on the derivative instrument are reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into the same line item in the statement of operations as the hedged transaction, and in the same period that the hedged transaction e ffects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. |
Concentration of credit risk | Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, short-term investments and accounts receivable. The Company believes that there is minimal credit risk associated with the investment of its cash and cash equivalents and short-term investments, due to the restrictions placed on the type of investment that can be entered into under the Company's investment policy. The Company's short-term investments consist of investment-grade securities, and the Company's cash and investments are held and managed by recognized financial institutions. The Company's customers are primarily distributors as well as retailers and broadband service providers who sell or distribute the products to a large group of end-users. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of the Company's customers to make required payments. The Company regularly performs credit evaluations of the Company's customers' financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic or country-specific risks and current economic conditions that may affect customers' ability to pay. The Company does not require collateral from its customers. |
Fair value measurements | Fair value measurements The carrying amounts of the Company's financial instruments, including cash equivalents, short-term investments, accounts receivable, and accounts payable approximate their fair values due to their short maturities. Foreign currency forward contracts are recorded at fair value based on observable market data. Refer to Note 14, Fair Value Measurements, |
Allowance for doubtful accounts | Allowance for doubtful accounts The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company regularly performs credit evaluations of its customers' financial condition and considers factors such as historical experience, credit quality, age of the accounts receivable balances, and geographic or country-specific risks and economic conditions that may affect a customer's ability to pay. The allowance for doubtful accounts is reviewed quarterly and adjusted if necessary based on the Company's assessments of its customers' ability to pay. If the financial condition of the Company's customers should deteriorate or if actual defaults are higher than the Company's historical experience, additional allowances may be required, which could have an adverse impact on operating expenses. |
Inventories | Inventories Inventories consist primarily of finished goods which are valued at the lower of cost and net realizable value, with cost being determined using the first-in, first-out method. On a quarterly basis, the Company assesses the value of the inventory and write down its value for estimated excess and obsolete inventory based upon assumptions about the future demand by reviewing inventory quantities on hand and on order under non-cancelable purchase commitments in comparison to the Company’s estimated forecast of product demand to determine what inventory, if any, is not saleable at or above cost. The Company’s analysis is primarily based on the demand forecast which takes into account market conditions, product development plans, product life expectancy and other factors. At the point of loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase of the newly established cost basis. |
Property and equipment, net | Property and equipment, net Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of the lease term or 5 years Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. The carrying value of the asset is reviewed on a regular basis for the existence of facts, both internal and external, that may suggest impairment. |
Leases | Leases The Company determines if an arrangement is a lease or contains a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, other accrued liabilities, and operating lease liabilities on the consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. For certain office leases, the Company accounts for the lease and non-lease components as a single lease component to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. Lease expense is recognized on a straight-line basis over the lease term. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on a benchmark interest rate adjusted for its specific credit risk. The operating lease ROU asset includes any lease payments made and excludes lease incentives. |
Goodwill | Goodwill Goodwill represents the purchase price over estimated fair value of net assets of businesses acquired in a business combination. Goodwill acquired in a business combination is not amortized, but instead tested for impairment at least annually on the first day of the fourth quarter. Should certain events or indicators of impairment occur between annual impairment tests, the Company performs the impairment test as those events or indicators occur. Examples of such events or circumstances include the following: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in the business climate; and slower growth rates. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not (that is, a likelihood of more than 50%) that the fair value of the reporting unit is less than its carrying value. The qualitative assessment considers the following factors: macroeconomic conditions, industry and market considerations, cost factors, overall company financial performance, events affecting the reporting units, and changes in the Company's share price. If the reporting unit does not pass the qualitative assessment, the Company estimates its fair value and compares the fair value with the carrying value of its reporting unit, including goodwill. If the fair value is greater than the carrying value of its reporting unit, no impairment is recorded. If the fair value is less than the carrying value, an impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The impairment charge would be recorded to earnings in the consolidated statements of operations. |
Intangibles, net | Intangibles, net Purchased intangibles with finite lives are amortized using the straight-line method over the estimated economic lives of the assets, which range from three to ten years. Finite-lived intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” (Topic 606) (“ASC 606”) and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods (ASC 605). The adoption did not have a significant impact to the nature and timing of the Company’s revenues, results of operations, cash flows and statement of financial position. Under 606, revenue from contracts with customers is recognized when control of the promised goods or services is transferred to the customers, in an amount that reflects the consideration, and the Company expects to be entitled to in exchange for those goods or services. The majority of revenue comes from product sales, consisting of sales of Connected Home and SMB hardware products to customers (retailers, distributors and service providers). Revenue is recognized at a point in time when control of the goods are transferred to the customer, generally occurring upon shipment or delivery dependent upon the terms of the underlying contract. The amount recognized reflects the consideration the Company expects to be entitled to in exchange for the transferred goods. Revenue for subscription sales is generally recognized over time on a ratable basis over the contract term beginning on the date that the service is expected to be delivered. The subscription contracts are generally for 30 days or 12 months in length, billed in advance. Additionally, the Company sells technical support services and extended warranty which consist of telephone and internet access to technical support personnel, hardware replacement and updates to software features. All such service or support sales are typically recognized using an output measure of progress by looking at the time elapsed as the contracts generally provide the customer equal benefit throughout the contract period because the Company transfers control evenly by providing a stand-ready service. The Company also sells services bundled with hardware products and accounts for these sales in line with the multiple performance obligations guidance. We combine contracts with a customer if contracts are negotiated with a single commercial substance or contain price dependencies. Revenue from all sales types is recognized at the transaction price, the amount which the Company expects to be entitled to in exchange for transferring goods or providing services. Transaction price is calculated as selling price net of variable consideration which may include estimates for future returns, sales incentives and price protection related to current period product revenue. The Company’s standard obligation to its direct customers generally provides for a full refund in the event that such product is not merchantable or is found to be damaged or defective. In determining estimates for future returns, the Company estimates variable consideration at the expected value which is based on management's analysis of historical data, channel inventory levels, current economic trends and changes in customer demand for the Company's products. Sales incentives and price protection are determined based on a combination of the actual amounts committed and through estimating future expenditure based upon historical customary business practice. The Company continues to assess variable consideration estimates such that it is probable that a significant reversal of revenue will not occur. Contracts with Multiple Performance Obligations Some of the Company's contracts with customers contain multiple promised goods or services. Such contracts include hardware products with bundled services, networking hardware with embedded software, various software subscription services and support. For these contracts, the Company accounts for the promises separately as individual performance obligations if they are distinct. Performance obligations are determined to be considered distinct if they are both capable of being distinct and distinct within the context of the contract. In determining whether performance obligations meet the criteria for being distinct, the Company considers a number of factors, such as the degree of interrelation and interdependence between obligations, and whether or not the good or service significantly modifies or transforms another good or service in the contract. The embedded software on most of the hardware products is not considered distinct and therefore the combined hardware and incidental software are treated as one performance obligation and recognized at the point in time when control of product transfers to the customer. Service included with certain hardware products is considered distinct and therefore the hardware and service are treated as separate performance obligations. After identifying the separate performance obligations, the transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. Standalone selling prices are generally determined based on the prices charged to customers or using an adjusted market assessment. For products, the estimated standalone selling price of the hardware is directly observable from sales of those products based on a range of prices. Standalone selling price of the service is estimated using an adjusted market approach. This may include using information such as prices charged for similar offerings and other observable inputs. Revenue is recognized for each distinct performance obligation as control is transferred to the customer. In general, the hardware is recognized at time of shipping or delivery, while services and support are delivered over the stated service or support period. Hardware products bundled with services are recognized at the time control of the product transfers to the customer and the transaction price allocated to service is recognized over the estimated period the services are expected to be provided on a straight-line basis beginning when the customer is expected to activate their account. For products sold with third-party services where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. We recognize revenue on a net basis when we are acting as an agent between the customer and the vendor. Certain judgments are involved in determining when the Company obtains control, such as determining the responsible party for fulfillment of the services, whether we have inventory risk before the service is transferred or if we have discretion to establish pricing for the third-party services. Warranties Hardware products regularly include warranties to the end customers that consist of bug fixes, minor updates such that the product continues to function according to published specs in a dynamic environment, and phone support. These standard warranties are assurance type warranties and do not offer any services beyond the assurance that the product will continue working as specified. Therefore, warranties are not considered separate performance obligations in the arrangement. Instead, the expected cost of warranty is accrued as expense in accordance with authoritative guidance. Extended warranties are sold separately and include additional support services. The transaction price for extended warranties is accounted for as service revenue and recognized over the life of the contract. Shipping and Handling Shipping and handling fees billed to customers are included in Net revenue. Shipping and handling costs associated with inbound freight are included in Cost of revenue. In cases where the Company gives a freight allowance to the customer for their own inbound freight costs, such costs are appropriately recorded as a reduction in Net revenue. Shipping and handling costs associated with outbound freight are included in Sales and marketing expenses. The Company has elected to account for shipping and handling activities related to contracts with customers as costs to fulfill the promise to transfer the associated products. |
Research and development | Research and development Costs incurred in the research and development of new products are charged to expense as incurred. |
Advertising costs | Advertising costs |
Income taxes | Income taxes The Company accounts for income taxes under an asset and liability approach. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences resulting from different treatment for tax versus accounting for certain items, such as accruals and allowances not currently deductible for tax purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. The Company must then assess the likelihood that the Company's deferred tax assets will be recovered from future taxable income and to the extent the Company believes that recovery is not more likely than not, the Company must establish a valuation allowance. The Company’s assessment considers the recognition of deferred tax assets on a jurisdictional basis. Accordingly, in assessing its future taxable income on a jurisdictional basis, the Company considers the effect of its transfer pricing policies on that income. The Tax Act introduced a new tax on global intangible low-taxed income (GILTI) effective as of January 1, 2018. The Company’s policy is to treat GILTI as a period cost if and when incurred. In the ordinary course of business there is inherent uncertainty in assessing the Company's income tax positions. The Company assesses its tax positions and records benefits for all years subject to examination based on management's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50 percent likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recorded in the financial statements. Where applicable, associated interest and penalties have also been recognized as a component of income tax expense. |
Net income per share | Net income per share Basic net income per share is computed by dividing the net income for the period by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed by dividing the net income for the period by the weighted average number of shares of common stock and potentially dilutive common stock outstanding during the period. Potentially dilutive common shares include common shares issuable upon exercise of stock options, vesting of restricted stock awards, and issuances of shares under the Employee Stock Purchase Plan, which are reflected in diluted net income per share by application of the treasury stock method. Potentially dilutive common shares are excluded from the computation of diluted net income per share when their effect is anti-dilutive. |
Share-based compensation | Stock-based compensation The Company measures stock-based compensation at the grant date based on the fair value of the award. The fair value of stock options and the shares offered under the Employee Stock Purchase Plan (“ESPP”) is estimated using the Black-Scholes option pricing model. Estimated compensation cost relating to restricted stock units (“RSUs”) is based on the closing fair market value of the Company’s common stock on the date of grant. The compensation expense for equity awards is recognized over the vesting period of the award under a graded vesting method. Forfeitures are accounted for as they occur. All excess tax benefits and tax deficiencies arising from stock awards vesting or settlement are recorded as income tax expense or benefit rather than in equity. Refer to Note 12, Employee Benefit Plans, |
Comprehensive income | Comprehensive income Comprehensive income consists of net income and other gains and losses affecting stockholder's equity that the Company excluded from net income, including gains and losses related to fair value of short-term investments and the effective portion of cash flow hedges that were outstanding as of the end of the year. |
Foreign currency translation and re-measurement | Foreign currency translation and re-measurement The Company's functional currency is the U.S. dollar for all of its international subsidiaries. Foreign currency transactions of international subsidiaries are re-measured into U.S. dollars at the end-of-period exchange rates for monetary assets and liabilities, and at historical exchange rates for non-monetary assets. Revenue is re-measured at average exchange rates in effect during each period. Expenses are re-measured at average exchange rates in effect during each period, except for expenses related to non-monetary assets, which are re-measured at historical exchange rates. Gains and losses arising from foreign currency transactions are included in Other income (expense), net. |
Recent accounting pronouncements | Recent accounting pronouncements Accounting Pronouncement Recently Adopted ASU 2016-02 In February 2016, FASB issued ASU 2016-02, "Leases" (Topic 842), which requires a lessee to recognize on the balance sheets a right-of-use asset, representing its right to use the underlying asset for the lease term, and a corresponding lease liability. The liability is equal to the present value of lease payments while the right-of-use asset is based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees. The Company adopted the new standard effective January 1, 2019 and was required to record a lease asset and lease liability related to its operating leases. The Company elected to utilize the alternative modified transition method, under which the cumulative-effect adjustment to the opening balance is recognized on the date of adoption while comparative prior periods continue to be reported under the guidance in effect prior to January 1, 2019. Accordingly, the Company did not restate or make related disclosures under the new standard for comparative prior periods in the period of adoption, and the Company applied the new lease standard prospectively to leases existing or commencing on or after January 1, 2019. The Company elected the package of practical expedients permitted under the transition guidance within the standard to not (1) reassess whether any expired or existing contracts are considered or contain leases; (2) reassess the lease classification for any expired or existing leases; and (3) reassess the initial direct costs for any existing leases. The Company made an accounting policy election to treat the lease and non-lease components in its office lease contracts as a single performance obligation to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. The Company also made an accounting policy election not to recognize lease liabilities and right-of-use assets for leases with a term of 12 months or less. The Company recognizes these lease payments on a straight-line basis over the lease term. The following table summarizes the impact of adopting ASU 2016-02 on the Company’s consolidated balance sheet for the fiscal year beginning January 1, 2019 as an adjustment to the opening balances: As of As of December 31, 2018 Adjustments January 1, 2019 (In thousands) Assets: Prepaid expenses and other current assets $ 35,997 $ (543 ) $ 35,454 Total current assets $ 857,899 $ (543 ) $ 857,356 Operating lease right-of-use assets, net $ — $ 39,110 $ 39,110 Total assets $ 1,043,376 $ 38,567 $ 1,081,943 Liabilities: Other accrued liabilities $ 199,472 $ 10,909 $ 210,381 Total current liabilities $ 383,992 $ 10,909 $ 394,901 Non-current operating lease liabilities $ — $ 33,823 $ 33,823 Other non-current liabilities $ 12,232 $ (6,165 ) $ 6,067 Total liabilities $ 415,824 $ 38,567 $ 454,391 Total liabilities and stockholders’ equity $ 1,043,376 $ 38,567 $ 1,081,943 The standard did not impact the Company’s statement of operations and cash flows. Accounting Pronouncements Not Yet Effective In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Instruments" (Topic 326), which replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables. Credit losses on available-for-sale debt securities with unrealized losses will be recognized as allowances for credit losses limited to the amount by which fair value is below amortized cost. The Company will adopt the new standard in the first fiscal quarter of 2020. The Company is in the process of finalizing the new credit loss models and updating its controls. Based on the composition of the Company’s investment portfolio, current market conditions, and historical credit loss activity, the Company does not expect that it will have material impacts on its financial position, results of operations or cash flows. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, which removes certain exceptions related to intra-period tax allocations and deferred tax accounting on outside basis differences in foreign subsidiaries and equity method investments. Additionally, it provides other simplifying measures for the accounting for income taxes. ASU 2019-12 is effective for the Company in the first quarter of 2021 and early adoption is permitted. The Company is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows. With the exception of the new standard discussed above, there have been no other new accounting pronouncements that have significance, or potential significance, to the Company's financial position, results of operations and cash flows. |
The Company and Summary of Si_3
The Company and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment, Net | Property and equipment are stated at historical cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets as follows: Computer equipment 2 years Furniture and fixtures 5 years Software 2-5 years Machinery and equipment 2-3 years Leasehold improvements Shorter of the lease term or 5 years |
Schedule of Balance Sheet Impacts from ASU 2016-02 Adoption | The following table summarizes the impact of adopting ASU 2016-02 on the Company’s consolidated balance sheet for the fiscal year beginning January 1, 2019 as an adjustment to the opening balances: As of As of December 31, 2018 Adjustments January 1, 2019 (In thousands) Assets: Prepaid expenses and other current assets $ 35,997 $ (543 ) $ 35,454 Total current assets $ 857,899 $ (543 ) $ 857,356 Operating lease right-of-use assets, net $ — $ 39,110 $ 39,110 Total assets $ 1,043,376 $ 38,567 $ 1,081,943 Liabilities: Other accrued liabilities $ 199,472 $ 10,909 $ 210,381 Total current liabilities $ 383,992 $ 10,909 $ 394,901 Non-current operating lease liabilities $ — $ 33,823 $ 33,823 Other non-current liabilities $ 12,232 $ (6,165 ) $ 6,067 Total liabilities $ 415,824 $ 38,567 $ 454,391 Total liabilities and stockholders’ equity $ 1,043,376 $ 38,567 $ 1,081,943 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Remaining Performance Obligations | The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially unsatisfied as of December 31, 2019: 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 42,767 $ 1,046 $ 1,024 $ 44,837 |
Schedule of Contract Balances | The following table reflects the contract balances as of December 31, 2019 and 2018 and January 1, 2018, respectively: Balance Sheet Location December 31, 2019 December 31, 2018 January 1, 2018(*) (In thousands) Accounts receivable, net Accounts receivable, net $ 277,168 $ 303,667 $ 260,404 Contract liabilities - current Deferred revenue $ 6,450 $ 11,086 $ 5,357 Contract liabilities - non-current Other non-current liabilities $ 2,061 $ 779 $ 728 * Includes the adjustments made upon ASC 606 adoption using the modified retrospective method. |
Schedule of Net Revenue Disaggregated by Geographical Region and Sales Channel | In the following tables, net revenue is disaggregated by geographic region and sales channel. The Company conducts business across three geographic regions: Americas; Europe, Middle-East and Africa (“EMEA”); and Asia Pacific ("APAC"). The tables also include reconciliations of the disaggregated revenue by reportable segment. The Company operates and reports in two segments: Connected Home, and . Year Ended December 31, 2019 2018 2017 (1) Connected Home SMB Total Connected Home SMB Total Connected Home SMB Total Geographic regions: Americas $ 529,982 $ 123,024 $ 653,006 $ 576,476 $ 124,217 $ 700,693 $ 547,314 $ 117,775 $ 665,089 EMEA 91,586 108,513 200,099 97,979 109,620 207,599 93,438 103,636 197,074 APAC 89,823 55,835 145,658 96,605 53,919 150,524 127,509 49,497 177,006 Total $ 711,391 $ 287,372 $ 998,763 $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 Sales channels: Service provider $ 128,852 $ 4,465 $ 133,317 $ 156,671 $ 3,624 $ 160,295 $ 190,186 $ 3,268 $ 193,454 Non-service provider 582,539 282,907 865,446 614,389 284,132 898,521 578,075 267,640 845,715 Total $ 711,391 $ 287,372 $ 998,763 $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 (1) Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The financial results of Arlo through the Distribution date are presented as income (loss) from discontinued operations, net of tax, in the consolidated statements of operations. The following table presents financial results of Arlo: Year Ended December 31, 2018 2017 (In thousands) Net revenue $ 464,649 $ 367,751 Cost of net revenue 372,843 279,425 Gross profit 91,806 88,326 Operating expenses: Research and development 48,696 22,710 Sales and marketing 39,713 19,490 General and administrative 17,762 691 Separation expense 31,583 1,384 Litigation reserves, net — 28 Total operating expenses 137,754 44,303 Income (loss) from operations of discontinued operations (45,948 ) 44,023 Interest income, net 1,239 — Other income (expense), net (41 ) 467 Income (loss) from discontinued operations before income taxes (44,750 ) 44,490 Provision (benefit) for income taxes (9,095 ) 13,921 Income (loss) from discontinued operations, net of tax $ (35,655 ) $ 30,569 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The purchase price allocation was as follows (in thousands): Cash and cash equivalents $ 20 Accounts receivable 209 Inventories 760 Prepaid expenses and other current assets 500 Property and equipment 16 Intangibles 4,800 Non-current deferred income taxes 815 Goodwill 16,407 Accounts payable (1,317 ) Other accrued liabilities (35 ) Total $ 22,175 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Available-for-Sale Short-Term Investments | Available-for-sale short-term investments As of December 31, 2019 December 31, 2018 Cost Unrealized Gains Unrealized Losses Estimated Fair Value Cost Unrealized Gains Unrealized Losses Estimated Fair Value (In thousands) U.S. treasuries $ — $ — $ — $ — $ 70,330 $ 1 $ (17 ) $ 70,314 Certificates of deposits 149 — — 149 149 — — 149 Convertible debt 1,326 — — 1,326 — — — — Total $ 1,475 $ — $ — $ 1,475 $ 70,479 $ 1 $ (17 ) $ 70,463 |
Schedule of Inventories | Inventories As of December 31, 2019 December 31, 2018 (In thousands) Raw materials $ 28,871 $ 3,427 Finished goods 206,618 240,444 Total $ 235,489 $ 243,871 |
Schedule of Property and Equipment, Net | Property and equipment, net As of December 31, 2019 December 31, 2018 (In thousands) Computer equipment $ 9,883 $ 9,205 Furniture, fixtures and leasehold improvements 18,623 18,286 Software 27,865 28,065 Machinery and equipment 59,637 60,552 Total property and equipment, gross 116,008 116,108 Accumulated depreciation and amortization (98,325 ) (95,931 ) Total $ 17,683 $ 20,177 |
Schedule of Intangibles, Net | Intangibles, net As of December 31, 2019 As of December 31, 2018 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 59,799 $ (57,406 ) $ 2,393 $ 59,799 $ (56,978 ) $ 2,821 Customer contracts and relationships 56,800 (50,297 ) 6,503 56,800 (44,280 ) 12,520 Other 10,345 (9,137 ) 1,208 10,345 (8,540 ) 1,805 Total $ 126,944 $ (116,840 ) $ 10,104 $ 126,944 $ (109,798 ) $ 17,146 |
Schedule of Estimated Amortization Expense Related to Intangibles | As of December 31, 2019, estimated amortization expense related to finite-lived intangibles for each of the next five years and thereafter is as follows (in thousands): 2020 $ 6,205 2021 2,044 2022 527 2023 514 2024 514 Thereafter 300 Total estimated amortization expense $ 10,104 |
Schedule Of Goodwill | The changes in the carrying amount of goodwill during the years ended December 31, 2019 and 2018 are as follows: Connected Home SMB Total (In thousands) As of December 31, 2017 $ 28,035 $ 36,279 $ 64,314 Goodwill from acquisition of Meural 16,407 - 16,407 As of December 31, 2018 $ 44,442 $ 36,279 $ 80,721 As of December 31, 2019 $ 44,442 $ 36,279 $ 80,721 |
Schedule of Other Non-Current Assets | Other non-current assets As of December 31, 2019 December 31, 2018 (In thousands) Non-current deferred income taxes $ 58,930 $ 57,557 Long-term investments 8,147 2,886 Other 7,202 6,990 Total $ 74,279 $ 67,433 |
Schedule of Carrying Value of Equity Investments Without Readily Determinable Fair Value | Equity investments without readily determinable fair values The total carrying value of equity investments without readily determinable fair values during the years ended December 31, 2019 and 2018 are as follows (in thousands): Carrying value, as of December 31, 2017 $ 4,505 Additions 1,091 Reclassification of original investment in Meural due to acquisition (1,500 ) Impairment (1,400 ) Upward adjustments for observable price changes 190 Carrying value, as of December 31, 2018 2,886 Additions 5,484 Downward adjustments for observable price changes (223 ) Carrying value, as of December 31, 2019 $ 8,147 |
Schedule of Other Accrued Liabilities | Other accrued liabilities As of December 31, 2019 December 31, 2018 (In thousands) Current operating lease liabilities $ 9,357 $ — Sales and marketing 85,605 91,548 Warranty obligations 10,556 14,412 Sales returns (1) 52,612 46,318 Freight and duty 5,633 10,586 Other 25,784 36,608 Total $ 189,547 $ 199,472 (1) Inventory expected to be received from future sales returns amounted to $26.8 million and $23.8 million as of December 31, 2019 and 2018, respectively. Provisions to write down expected returned inventory to net realizable value amounted to $14.9 million and $14.2 million as of December 31, 2019 and December 31, 2018. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets | The fair values of the Company’s derivative instruments and the line items on the consolidated balance sheets to which they were recorded as of December 31, 2019, and 2018, are summarized as follows: Balance Sheet December 31, Balance Sheet December 31, Location 2019 2018 Location 2019 2018 (In thousands) (In thousands) Derivatives not designated as hedging instruments Prepaid expenses and other current assets $ 109 $ 784 Other accrued liabilities $ 493 $ 331 Derivatives designated as hedging instruments Prepaid expenses and other current assets 43 2 Other accrued liabilities 32 37 Total $ 152 $ 786 $ 525 $ 368 |
Schedule of Company's Derivative Instruments on Accumulated Other Comprehensive Income and the Consolidated Statement of Operations | The effect of the Company’s derivative instruments on AOCI and the consolidated statements of operations for the years ended December 31, 2019, 2018 and 2017 are summarized as follows: Year Ended December 31, 2019 2019 2018 2017 Derivatives designated as hedging instruments: Cash flow hedges Foreign currency forward contracts: Gains (Losses) recognized in other comprehensive income- Effective Portion $ 1,565 $ 1,416 $ (7,785 ) Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion (1) Net revenue $ 1,929 $ 665 $ (5,786 ) Cost of revenue $ (12 ) $ (9 ) $ 18 Research and development $ (57 ) $ 83 $ 130 Sales and marketing $ (284 ) $ (102 ) $ 788 General and administrative $ (41 ) $ (53 ) $ 133 Derivatives not designated as hedging instruments: Gains (Losses) recognized in Other income (expense), net $ 1,307 $ 3,870 $ (5,085 ) (1) Stockholders' Equity |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Net Income (Loss) Per Share | Net income (loss) per share for the years ended December 31, 2019, 2018 and 2017 was as follows: Year Ended December 31, 2019 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) from continuing operations $ 25,791 $ 17,326 $ (11,133 ) Net income (loss) from discontinued operations — (35,655 ) 30,569 Net income (loss) 25,791 (18,329 ) 19,436 Less: Net loss attributable to non-controlling interest in discontinued operations — (9,167 ) — Net income (loss) attributable to NETGEAR, Inc. $ 25,791 $ (9,162 ) $ 19,436 Denominator: Weighted average common shares - basic 30,936 31,626 32,097 Potentially dilutive common share equivalent 1,029 1,511 — Weighted average common shares - dilutive 31,965 33,137 32,097 Basic net income (loss) per share Net income (loss) from continuing operations $ 0.83 $ 0.55 $ (0.35 ) Net income (loss) from discontinued operations attributable to NETGEAR, Inc. — (0.84 ) 0.96 Net income (loss) attributable to NETGEAR, Inc. $ 0.83 $ (0.29 ) $ 0.61 Diluted net income (loss) per share Net income (loss) from continuing operations $ 0.81 $ 0.52 $ (0.35 ) Net income (loss) from discontinued operations attributable to NETGEAR, Inc. — (0.80 ) 0.96 Net income (loss) attributable to NETGEAR, Inc. $ 0.81 $ (0.28 ) $ 0.61 Anti-dilutive employee stock-based awards, excluded 1,066 815 279 |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Income And Expenses [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Other income (expense), net consisted of the following: Year Ended December 31, 2019 2018 2017 Foreign currency transaction gain (loss), net $ (697 ) $ (2,675 ) $ 5,292 Foreign currency contract gain (loss), net 1,307 3,968 (3,879 ) Other 234 (783 ) 144 Total $ 844 $ 510 $ 1,557 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Before Income Taxes | Income before income taxes and the provision for income taxes consisted of the following: Year Ended December 31, 2019 2018 2017 (In thousands) United States $ 16,035 $ 32,237 $ 36,461 International 13,536 10,967 9,763 Total $ 29,571 $ 43,204 $ 46,224 |
Schedule of Components of Income Tax Expense (Benefit) | Year Ended December 31, 2019 2018 2017 (In thousands) Current: U.S. Federal $ 4,761 $ (587 ) $ 25,733 State 791 (2,338 ) 2,435 Foreign (386 ) 4,267 1,545 5,166 1,342 29,713 Deferred: U.S. Federal (574 ) 20,930 27,936 State 104 2,514 190 Foreign (916 ) 1,092 (482 ) (1,386 ) 24,536 27,644 Total $ 3,780 $ 25,878 $ 57,357 |
Schedule of Deferred Tax Assets and Liabilities | Net deferred tax assets consisted of the following: Year Ended December 31, 2019 2018 (In thousands) Deferred Tax Assets: Accruals and allowances $ 20,743 $ 20,765 Net operating loss carryforwards 1,267 1,673 Stock-based compensation 6,381 5,734 Deferred rent — 1,296 Operating lease liability 6,456 — Deferred revenue 1,449 1,100 Tax credit carryforwards 896 1,661 Acquired intangibles 31,708 31,902 Depreciation and amortization 1,639 866 Other 1,080 — Total deferred tax assets 71,619 64,997 Deferred Tax Liabilities: Right of use asset (5,218 ) — Other (1,053 ) (706 ) Total deferred tax liabilities (6,271 ) (706 ) Valuation Allowance (1) (6,418 ) (6,734 ) Net deferred tax assets $ 58,930 $ 57,557 (1) |
Schedule of Effective Income Tax Rate Reconciliation | The effective tax rate differs from the applicable U.S. statutory federal income tax rate as follows: Year Ended December 31, 2019 2018 2017 Tax at federal statutory rate 21.0 % 21.0 % 35.0 % State, net of federal benefit 2.4 % 1.5 % 1.0 % Impact of international operations (0.8 %) 1.9 % (8.8 )% Stock-based compensation 10.7 % (0.3 )% (3.9 )% Tax credits (5.9 )% (2.6 )% (2.0 )% Valuation allowance 0.9 % 1.4 % — % Impact of the Tax Act — % (15.4 )% 104.6 % Base Erosion Anti-Abuse Tax 7.2 % — % — % Write-off of future tax benefits related to Arlo — % 52.2 % — % Transaction costs (2.5 %) — % — % Recognition of previously unrecognized tax benefits (20.6 %) — % — % Others 0.4 % 0.2 % (1.8 )% Provision for income taxes 12.8 % 59.9 % 124.1 % |
Schedule of Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows: Federal, State, and Foreign Tax (In thousands) Balance as of December 31, 2016 $ 12,965 Additions based on tax positions related to the current year 938 Additions for tax positions of prior years 32 Reductions for tax positions of prior years (1,477 ) Reductions due to lapse of applicable statutes (899 ) Adjustments due to foreign exchange rate movement 1,008 Balance as of December 31, 2017 $ 12,567 Additions based on tax positions related to the current year 637 Additions for tax positions of prior years 280 Reductions for tax positions of prior years (116 ) Reductions due to lapse of applicable statutes (999 ) Adjustments due to foreign exchange rate movement (386 ) Balance as of December 31, 2018 $ 11,983 Additions based on tax positions related to the current year 385 Additions for tax positions of prior years 996 Settlements (705 ) Reductions for tax positions of prior years (3,440 ) Reductions due to lapse of applicable statutes (609 ) Adjustments due to foreign exchange rate movement 459 Balance as of December 31, 2019 $ 9,069 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Changes in Warranty Obligations | Changes in the Company's warranty obligations, which is included in Other accrued liabilities on the consolidated balance sheets, were as follows: Year Ended December 31, 2019 2018 2017 Balance as of beginning of the period $ 14,412 $ 44,068 $ 42,571 Reclassified to sales returns upon adoption of ASC 606 — (29,147 ) (1) — Provision for warranty liability made during the period 7,050 12,783 91,384 Settlements made during the period (10,906 ) (13,292 ) (89,887 ) Balance at end of period $ 10,556 $ 14,412 $ 44,068 (1) Upon adoption of ASC 606 on January 1, 2018, certain warranty reserve balances totaling $29.1 million were reclassified to sales returns as these liabilities are payable to the Company's customers and settled in cash or by credit on account. Under ASC 606, these amounts are to be accounted for as sales with right of return. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders Equity Note [Abstract] | |
Schedule of Accumulated Other Comprehensive Income | The following table sets forth the changes in accumulated other comprehensive income ("AOCI") by component during the years ended December 31, 2019, 2018 and 2017: Unrealized gains (losses) on available -for-sale investments Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2016 $ (31 ) $ 2,230 $ (261 ) $ 1,938 Other comprehensive income (loss) before reclassifications (115 ) (10,692 ) 3,062 (7,745 ) Less: Amount reclassified from accumulated other comprehensive income — (7,624 ) 2,668 (4,956 ) Net current period other comprehensive income (loss) (115 ) (3,068 ) 394 (2,789 ) Balance as of December 31, 2017 $ (146 ) $ (838 ) $ 133 $ (851 ) Other comprehensive income (loss) before reclassifications 128 1,422 (249 ) 1,301 Less: Amount reclassified from accumulated other comprehensive income — 588 (123 ) 465 Net current period other comprehensive income (loss) 128 834 (126 ) 836 Distribution of Arlo — (4 ) 4 — Balance as of December 31, 2018 $ (18 ) $ (8 ) $ 11 $ (15 ) Other comprehensive income (loss) before reclassifications 16 1,565 (332 ) 1,249 Less: Amount reclassified from accumulated other comprehensive income — 1,535 (322 ) 1,213 Net current period other comprehensive income (loss) 16 30 (10 ) 36 Balance as of December 31, 2019 $ (2 ) $ 22 $ 1 $ 21 |
Schedule of Reclassification out of AOCI | The following tables provide details about significant amounts reclassified out of each component of AOCI for the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 (In thousands) Amount Reclassified from AOCI Gains (losses) on cash flow hedge: Foreign currency forward contracts Affected line item in the statement of operations Net revenue $ 1,929 $ 665 $ (5,786 ) Cost of revenue (12 ) (9 ) 18 Research and development (57 ) 83 130 Sales and marketing (284 ) (102 ) 788 General and administrative (41 ) (53 ) 133 Total from continuing operations before tax 1,535 584 (4,717 ) Tax impact from continuing operations (322 ) (123 ) 1,651 Total, from continuing operations net of tax 1,213 461 (3,066 ) Total, from discontinued operations net of tax — 4 (1,890 ) Total, net of tax $ 1,213 $ 465 $ (4,956 ) |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefits And Share Based Compensation [Abstract] | |
Schedule of Stock Option Activity | Stock option activity during the year ended December 31, 2019 was as follows: Number of Shares Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2018 1,969 $ 25.30 Granted 502 26.61 Exercised (250 ) 20.08 Cancelled (16 ) 36.27 Expired (17 ) 36.81 Outstanding as of December 31, 2019 2,188 $ 26.03 6.10 $ 4,171 As of December 31, 2019 Vested and expected to vest 2,188 $ 26.03 6.10 $ 4,171 Exercisable Options 1,411 $ 23.96 4.60 $ 4,153 |
Schedule of Ranges of Outstanding And Exercisable Stock Options | The following table summarizes significant ranges of outstanding and exercisable stock options as of December 31, 2019: Options Outstanding Options Exercisable Range of Exercise Prices Shares Outstanding Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Per Share Shares Exercisable Weighted- Average Exercise Price Per Share (In thousands) (In years) (In dollars) (In thousands) (In dollars) $12.34 - $19.32 452 3.86 $ 18.82 452 $ 18.82 $19.33 - $23.48 559 3.95 $ 21.65 542 $ 21.59 $23.77 - $25.37 293 6.85 $ 25.36 188 $ 25.36 $26.61 - $26.61 503 8.91 $ 26.61 37 $ 26.61 $29.23 - $41.67 381 7.63 $ 40.76 192 $ 40.80 $12.34 - $41.67 2,188 6.10 $ 26.03 1,411 $ 23.96 |
Schedule of RSU Activity | RSU activity during the year ended December 31, 2019 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term Average Intrinsic Value (In thousands) (In dollars) (In years) (In thousands) Outstanding as of December 31, 2018 1,627 $ 34.31 Granted 709 31.33 Vested (594 ) 31.35 Cancelled (155 ) 35.67 Outstanding as of December 31, 2019 1,587 $ 33.95 1.36 $ 38,895 |
Schedule of Weighted Average Assumptions | The following table sets forth the weighted-average assumptions used to estimate the fair value of option grants and purchase rights granted under the ESPP during the years ended December 31, 2019, 2018 and 2017: Year Ended December 31, 2019 2018 2017 2019 2018 2017 Stock Options ESPP Expected life (in years) 6.2 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 1.85 % 2.36 % 1.66 % 2.06 % 2.00 % 0.93 % Expected volatility 33.9 % 31.1 % 31.6 % 43.90 % 37.9 % 29.7 % Dividend yield — — — — — — |
Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, RSUs, and the ESPP | The following table sets forth the stock-based compensation expense resulting from stock options, RSUs, and the ESPP included in the Company’s consolidated statements of operations: Year Ended December 31, 2019 2018 2017 (In thousands) Cost of revenue $ 2,843 $ 2,435 $ 1,406 Research and development 6,532 4,283 2,968 Sales and marketing 9,069 8,267 5,481 General and administrative 10,693 11,476 9,114 Total $ 29,137 $ 26,461 $ 18,969 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segments and Reconciliation of Segment Contribution Income to Income Before Income Taxes | Financial information for each reportable segment and a reconciliation of segment contribution income to income before income taxes is as follows: Year ended December 31, 2019 2018 2017 (In thousands, except percentage data) Net Revenue: Connected Home $ 711,391 $ 771,060 $ 768,261 SMB 287,372 287,756 270,908 Total net revenue $ 998,763 $ 1,058,816 $ 1,039,169 Contribution Income: Connected Home $ 67,775 $ 96,340 $ 83,870 Contribution margin 9.5 % 12.5 % 10.9 % SMB $ 67,282 $ 70,142 $ 63,865 Contribution margin 23.4 % 24.4 % 23.6 % Total segment contribution income $ 135,057 $ 166,482 $ 147,735 Corporate and unallocated costs (70,525 ) (90,186 ) (75,305 ) Amortization of intangibles (1) (6,731 ) (7,979 ) (10,663 ) Stock-based compensation expense (29,137 ) (26,461 ) (18,969 ) Separation expense (264 ) (929 ) — Change in fair value of contingent consideration 25 — — Restructuring and other charges (2,077 ) (2,198 ) (97 ) Litigation reserves, net (160 ) (15 ) (148 ) Interest income, net 2,539 3,980 2,114 Other income (expense), net 844 510 1,557 Income before income taxes $ 29,571 $ 43,204 $ 46,224 (1) Amount excludes amortization expense related to patents within purchased intangibles in cost of revenue. |
Schedule of Net Revenue by Geography | The following table shows net revenue by geography for the years ended December 31, 2019, 2018 and 2017 Year Ended December 31, 2019 2018 2017 (In thousands) United States (U.S.) $ 637,566 $ 686,145 $ 648,152 Americas (excluding U.S.) 15,440 14,548 16,937 EMEA 200,099 207,599 197,074 APAC 145,658 150,524 177,006 Total net revenue $ 998,763 $ 1,058,816 $ 1,039,169 |
Schedule of Long-Lived Asset By Geographic Region | The Company's long-lived assets, which consist of property and equipment, net and operating lease right-of-use assets, net, are located in the following geographic locations: As of December 31, 2019 2018 (In thousands) United States $ 23,137 $ 4,993 Canada 3,954 4,359 EMEA 3,782 95 China 5,040 7,652 APAC (excluding China) (1) 10,687 3,078 Total $ 46,600 $ 20,177 (1) No individual |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2019 and 2018: As of December 31, 2019 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (In thousands) Assets: Cash equivalents: money-market funds $ 22,105 $ 22,105 $ — $ — Available-for-sale debt investments: convertible debt (1) 1,326 — — 1,326 Available-for-sale investments: certificates of deposit (1) 149 — 149 — Trading securities: mutual funds (1) 4,023 4,023 — — Foreign currency forward contracts (2) 152 — 152 — Total assets measured at fair value $ 27,755 $ 26,128 $ 301 $ 1,326 Liabilities: Foreign currency forward contracts (3) $ 525 $ — $ 525 $ — Contingent consideration (4) 5,928 — — 5,928 Total liabilities measured at fair value $ 6,453 $ — $ 525 $ 5,928 As of December 31, 2018 Total Quoted market prices in active markets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) (In thousands) Assets: Cash equivalents: money-market funds $ 22,573 $ 22,573 $ — $ — Available-for-sale debt investments: U.S. treasuries (1) 70,314 — 70,314 — Available-for-sale investments: certificates of deposit (1) 149 — 149 — Trading securities: mutual funds (1) 2,854 2,854 — — Foreign currency forward contracts (2) 786 — 786 — Total assets measured at fair value $ 96,676 $ 25,427 $ 71,249 $ — Liabilities: Foreign currency forward contracts (3) $ 368 $ — $ 368 $ — Contingent consideration (4) 5,953 — — 5,953 Total liabilities measured at fair value $ 6,321 $ — $ 368 $ 5,953 (1) Included in Short-term investments on the Company's consolidated balance sheets. (2) Included in Prepaid expenses and other current assets on the Company's consolidated balance sheets. (3) Included in Other accrued liabilities on the Company's consolidated balance sheets. (4) |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Summary of Lease Cost and Supplemental Cash Flow Information | The components of lease cost were as follows: Year Ended December 31, 2019 (In Thousands) Operating lease cost $ 11,945 Short-term lease cost (1) 1,111 Total lease cost (2) $ 13,056 (1) Includes variable lease cost, which was immaterial. (2) Included in cost of revenue, sales and marketing, research and development and general and administration in the Company’s consolidated statement of operations. Supplemental cash flow information related to leases was as follows: Year Ended December 31, 2019 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows relating to operating leases $ 11,652 Lease liabilities arising from obtaining right-of-use assets: Operating leases $ 918 |
Summary of Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases was as follows: As of December 31, 2019 Weighted Average Remaining Lease Term (in years) Operating leases 4.5 Weighted Average Discount Rate Operating leases 3.7 % |
Schedule of Operating Lease Liability Maturities | As of December 31, 2019, maturities of operating lease liabilities were as follows (in thousands): Operating Lease 2020 $ 10,460 2021 8,092 2022 7,028 2023 4,519 2024 4,345 Thereafter 3,374 Total lease payments 37,818 Less imputed interest (3,027 ) Total $ 34,791 |
Schedule of Future Minimum Rental Payments for Operating Leases | As of December 31, 2018, prior to the adoption of ASC 842 Leases Leases 2019 $ 11,900 2020 9,986 2021 7,785 2022 6,856 2023 4,478 Thereafter 7,725 Total future minimum lease payments $ 48,730 |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Restructuring Charges [Abstract] | |
Restructuring and other charge activities | The following table provides a summary of accrued restructuring and other charge activities for the years ended December 31, 2019, 2018 and 2017: Employee termination charges Lease contract termination and other charges Total (In thousands) Balance as of December 31, 2016 $ 6 1,402 $ 1,408 Additions — 97 97 Cash payments — (370 ) (370 ) Balance as of December 31, 2017 $ 6 $ 1,129 $ 1,135 Additions 1,789 464 2,253 Cash payments (1,010 ) (1,403 ) (2,413 ) Adjustments (10 ) (45 ) (55 ) Balance as of December 31, 2018 $ 775 $ 145 $ 920 Additions 2,082 166 2,248 Cash payments (1,783 ) (215 ) (1,998 ) Adjustments (142 ) (30 ) (172 ) Balance as of December 31, 2019 $ 932 $ 66 $ 998 |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Data [Abstract] | |
Quarterly Financial Data | The following table presents unaudited quarterly financial information for each of the Company’s last eight quarters. This information has been derived from the Company’s unaudited financial statements and has been prepared on the same basis as the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. In the opinion of management, all necessary adjustments, consisting only of normal recurring adjustments, have been included to state fairly the quarterly results. December 31, 2019 September 29, 2019 June 30, 2019 March 31, 2019 Net revenue $ 252,971 $ 265,858 $ 230,852 $ 249,082 Gross profit $ 69,583 $ 77,192 $ 65,445 $ 82,008 Provision (benefit) for income taxes $ 1,045 $ (228 ) $ 756 $ 2,207 Net income (loss) from continuing operations $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) attributable to NETGEAR, Inc. $ (420 ) $ 12,529 $ 839 $ 12,843 Net income (loss) per share - basic: Income (loss) from continuing operations $ (0.01 ) $ 0.41 $ 0.03 $ 0.41 Net income (loss) attributable to NETGEAR, Inc. $ (0.01 ) $ 0.41 $ 0.03 $ 0.41 Net income (loss) per share - diluted: Income (loss) from continuing operations $ (0.01 ) $ 0.39 $ 0.03 $ 0.39 Net income (loss) attributable to NETGEAR, Inc. $ (0.01 ) $ 0.39 $ 0.03 $ 0.39 December 31, 2018 September 30, 2018 July 1, 2018 April 1, 2018 Net revenue $ 288,928 $ 269,411 $ 255,276 $ 245,201 Gross profit $ 90,654 $ 94,445 $ 80,280 $ 76,319 Provision (benefit) for income taxes $ 19,210 $ 5,483 $ 1,271 $ (86 ) Net income (loss) from continuing operations $ (535 ) $ 16,310 $ 533 $ 1,018 Net income (loss) $ (27,839 ) $ 9,150 $ (5,230 ) $ 5,590 Net income (loss) attributable to NETGEAR, Inc. $ (19,471 ) $ 9,949 $ (5,230 ) $ 5,590 Net income (loss) per share - basic: Income (loss) from continuing operations $ (0.02 ) $ 0.51 $ 0.02 $ 0.03 Net income (loss) attributable to NETGEAR, Inc. $ (0.62 ) $ 0.31 $ (0.17 ) $ 0.18 Net income (loss) per share - diluted: Income (loss) from continuing operations $ (0.02 ) $ 0.49 $ 0.02 $ 0.03 Net income (loss) attributable to NETGEAR, Inc. $ (0.62 ) $ 0.30 $ (0.16 ) $ 0.17 |
The Company and Summary of Si_4
The Company and Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)Customer | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Significant Accounting Policies [Line Items] | |||
Subscription contracts, typical length | The subscription contracts are generally for 30 days or 12 months in length, billed in advance. | ||
Shipping and handling costs | $ 138,150 | $ 152,569 | $ 138,679 |
Advertising and promotional expenses | $ 21,300 | $ 24,700 | 23,200 |
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible asset, useful life (in years) | 3 years | ||
Maximum | |||
Significant Accounting Policies [Line Items] | |||
Finite-lived intangible asset, useful life (in years) | 10 years | ||
Accounts Receivable | Customer Concentration Risk | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, customer | No other customers accounted for 10% or greater of the Company's total accounts receivable. | ||
Number of customer | Customer | 0 | ||
Accounts Receivable | Customer Concentration Risk | Minimum | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Accounts Receivable | Best Buy Inc | Customer Concentration Risk | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 34.00% | 31.00% | |
Accounts Receivable | Amazon | Customer Concentration Risk | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 13.00% | 13.00% | |
Accounts Receivable | Walmart | Customer Concentration Risk | |||
Significant Accounting Policies [Line Items] | |||
Concentration risk, percentage | 10.00% | ||
Shipping and Handling | |||
Significant Accounting Policies [Line Items] | |||
Shipping and handling costs | $ 8,700 | $ 9,500 | $ 8,600 |
Foreign Exchange Forward | Maximum | |||
Significant Accounting Policies [Line Items] | |||
Derivative, term of contract (in months) | 6 months |
The Company and Summary of Si_5
The Company and Summary of Significant Accounting Policies (Property and Equipment, Net Schedule of Estimated Useful Lives) (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 2 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 3 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 5 years |
The Company and Summary of Si_6
The Company and Summary of Significant Accounting Policies - Balance Sheet Impact of ASU 2016-02 Adoption (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
ASSETS | |||
Prepaid expenses and other current assets | $ 35,745 | $ 35,454 | $ 35,997 |
Total current assets | 744,109 | 857,356 | 857,899 |
Operating lease right-of-use assets, net | 28,917 | 39,110 | 0 |
Total assets | 955,813 | 1,081,943 | 1,043,376 |
Liabilities: | |||
Other accrued liabilities | 189,547 | 210,381 | 199,472 |
Total current liabilities | 298,391 | 394,901 | 383,992 |
Non-current operating lease liabilities | 25,434 | 33,823 | 0 |
Other non-current liabilities | 7,988 | 6,067 | 12,232 |
Total liabilities | 347,120 | 454,391 | 415,824 |
Total liabilities and stockholders’ equity | $ 955,813 | $ 1,081,943 | 1,043,376 |
ASU 2016-02 | |||
ASSETS | |||
Prepaid expenses and other current assets | (543) | ||
Total current assets | (543) | ||
Operating lease right-of-use assets, net | 39,110 | ||
Total assets | 38,567 | ||
Liabilities: | |||
Other accrued liabilities | 10,909 | ||
Total current liabilities | 10,909 | ||
Non-current operating lease liabilities | 33,823 | ||
Other non-current liabilities | (6,165) | ||
Total liabilities | 38,567 | ||
Total liabilities and stockholders’ equity | $ 38,567 |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Remaining Performance Obligations) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Performance obligations, amount | $ 44,837 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Performance obligations, amount | $ 42,767 |
Performance obligations, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Performance obligations, amount | $ 1,046 |
Performance obligations, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Performance obligations, amount | $ 1,024 |
Performance obligations, period |
Revenue Recognition (Schedule_2
Revenue Recognition (Schedule of Remaining Performance Obligations) (Details 1) $ in Thousands | Dec. 31, 2019USD ($) |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Performance obligations, amount | $ 44,837 |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)regionsegment | Dec. 31, 2018USD ($) | |
Revenue From Contract With Customer [Abstract] | ||
Capitalized contract costs | $ 1,500,000 | $ 7,400,000 |
Capitalized contract costs, impairment | 0 | 0 |
Deferred commissions | 0 | 0 |
Revenue deferred due to unsatisfied performance obligations | 14,500,000 | 14,800,000 |
Revenue recognized for satisfaction of performance obligations | 17,900,000 | 9,000,000 |
Contract with Customer, Liability Included In Beginning Balance, Revenue Recognized | $ 9,900,000 | $ 4,400,000 |
Number of geographic regions in which the Company conducts business | region | 3 | |
Number of operating segments | segment | 2 | |
Number of reportable segments | segment | 2 |
Revenue Recognition (Schedule_3
Revenue Recognition (Schedule of Contract Balances) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Jan. 01, 2018 |
Revenue From Contract With Customer [Abstract] | |||
Accounts receivable, net | $ 277,168 | $ 303,667 | $ 260,404 |
Contract liabilities - current | 6,450 | 11,086 | 5,357 |
Contract liabilities - non-current | $ 2,061 | $ 779 | $ 728 |
Revenue Recognition (Schedule_4
Revenue Recognition (Schedule of Net Revenue Disaggregated by Geographical Region and Sales Channel) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | $ 252,971 | $ 265,858 | $ 230,852 | $ 249,082 | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 998,763 | $ 1,058,816 | $ 1,039,169 |
Service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 133,317 | 160,295 | 193,454 | ||||||||
Non-service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 865,446 | 898,521 | 845,715 | ||||||||
Americas | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 653,006 | 700,693 | 665,089 | ||||||||
EMEA | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 200,099 | 207,599 | 197,074 | ||||||||
APAC | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 145,658 | 150,524 | 177,006 | ||||||||
Connected Home | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 711,391 | 771,060 | 768,261 | ||||||||
Connected Home | Service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 128,852 | 156,671 | 190,186 | ||||||||
Connected Home | Non-service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 582,539 | 614,389 | 578,075 | ||||||||
Connected Home | Americas | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 529,982 | 576,476 | 547,314 | ||||||||
Connected Home | EMEA | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 91,586 | 97,979 | 93,438 | ||||||||
Connected Home | APAC | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 89,823 | 96,605 | 127,509 | ||||||||
SMB | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 287,372 | 287,756 | 270,908 | ||||||||
SMB | Service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 4,465 | 3,624 | 3,268 | ||||||||
SMB | Non-service provider | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 282,907 | 284,132 | 267,640 | ||||||||
SMB | Americas | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 123,024 | 124,217 | 117,775 | ||||||||
SMB | EMEA | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | 108,513 | 109,620 | 103,636 | ||||||||
SMB | APAC | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total net revenue | $ 55,835 | $ 53,919 | $ 49,497 |
Discontinued Operations (Narrat
Discontinued Operations (Narrative) (Details) $ / shares in Units, $ in Millions | Aug. 07, 2018USD ($)shares | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)shares | Dec. 31, 2019USD ($) | Sep. 30, 2018USD ($) | Aug. 03, 2018$ / shares |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Distribution of shares outstanding to shareholders, conversion ratio | 1.980295 | |||||
Separation Expense | $ 34.2 | |||||
Transition services benefit | $ 6.3 | |||||
Transition and other services liability | $ 12.2 | $ 12.2 | ||||
Arlo | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Shares, outstanding (in shares) | shares | 74,247,000 | |||||
Arlo | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Shares, outstanding (in shares) | shares | 62,500,000 | |||||
Ownership percentage | 84.20% | |||||
Number of shares distributed (in shares) | shares | 62,500,000 | |||||
Cash consideration | $ 70 | |||||
IPO | Arlo | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Sale of stock, price per share (USD per share) | $ / shares | $ 16 | |||||
Sale of stock, consideration received | $ 170.2 |
Discontinued Operations (Income
Discontinued Operations (Income (Loss) From Discontinued Operations, Net Of Tax) (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating expenses: | ||||
Total operating expenses | $ 6,300 | |||
Income (loss) from discontinued operations, net of tax | $ 0 | $ (35,655) | $ 30,569 | |
Arlo | Discontinued Operations, Disposed of by Spin-off | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net revenue | 464,649 | 367,751 | ||
Cost of net revenue | 372,843 | 279,425 | ||
Gross profit | 91,806 | 88,326 | ||
Operating expenses: | ||||
Research and development | 48,696 | 22,710 | ||
Sales and marketing | 39,713 | 19,490 | ||
General and administrative | 17,762 | 691 | ||
Separation expense | 31,583 | 1,384 | ||
Litigation reserves, net | 0 | 28 | ||
Total operating expenses | 137,754 | 44,303 | ||
Income (loss) from operations of discontinued operations | (45,948) | 44,023 | ||
Interest income, net | 1,239 | 0 | ||
Other income (expense), net | (41) | 467 | ||
Income (loss) from discontinued operations before income taxes | (44,750) | 44,490 | ||
Provision (benefit) for income taxes | (9,095) | 13,921 | ||
Income (loss) from discontinued operations, net of tax | $ (35,655) | $ 30,569 |
Business Acquisitions (Narrativ
Business Acquisitions (Narrative) (Details) - USD ($) | Aug. 06, 2018 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | |||||
Goodwill recorded on acquisition | $ 80,721,000 | $ 80,721,000 | $ 64,314,000 | ||
Meural | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 22,200,000 | ||||
Purchase price, cash paid | $ 14,400,000 | ||||
Prior equity interest settlement | 1,500,000 | ||||
Fair value of contingent considerations | 6,300,000 | ||||
Contingent consideration liability | 5,900,000 | ||||
Goodwill recorded on acquisition | 16,407,000 | ||||
Non-current deferred tax | 815,000 | ||||
Goodwill deductible for income tax purposes | 0 | ||||
Intangibles | 4,800,000 | ||||
Meural | Technology | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 3,000,000 | ||||
Acquired intangible assets, estimated useful life ( in years) | 7 years | ||||
Meural | Trade Names | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 600,000 | ||||
Acquired intangible assets, estimated useful life ( in years) | 3 years | ||||
Meural | Customer Relationships | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 600,000 | ||||
Acquired intangible assets, estimated useful life ( in years) | 2 years | ||||
Meural | Database | |||||
Business Acquisition [Line Items] | |||||
Intangibles | $ 600,000 | ||||
Acquired intangible assets, estimated useful life ( in years) | 7 years | ||||
Meural | Measurement Input, Discount Rate | Minimum | |||||
Business Acquisition [Line Items] | |||||
Intangible Asset, Measurement Input | 16.00% | ||||
Meural | Measurement Input, Discount Rate | Maximum | |||||
Business Acquisition [Line Items] | |||||
Intangible Asset, Measurement Input | 19.00% | ||||
Meural | Measurement Input, Discount Rate | Technology | |||||
Business Acquisition [Line Items] | |||||
Intangible Asset, Measurement Input | 16.00% | ||||
Meural | Technical Milestone | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration liability, maximum amount of each milestone | $ 3,500,000 | ||||
Meural | Service Revenue Milestone | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration liability, maximum amount of each milestone | $ 3,500,000 |
Business Acquisitions (Schedule
Business Acquisitions (Schedule Of Allocation Of Purchase Price) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Aug. 06, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 80,721 | $ 80,721 | $ 64,314 | |
Meural | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 20 | |||
Accounts receivable | 209 | |||
Inventories | 760 | |||
Prepaid expenses and other current assets | 500 | |||
Property and equipment | 16 | |||
Intangibles | 4,800 | |||
Non-current deferred income taxes | 815 | |||
Goodwill | 16,407 | |||
Accounts payable | (1,317) | |||
Other accrued liabilities | (35) | |||
Total | $ 22,175 |
Balance Sheet Components (Sched
Balance Sheet Components (Schedule of Available-for-Sale Short-Term Investments) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost | $ 1,475 | $ 70,479 |
Unrealized Gains | 0 | 1 |
Unrealized Losses | 0 | (17) |
Estimated Fair Value | 1,475 | 70,463 |
U.S. treasuries | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 0 | 70,330 |
Unrealized Gains | 0 | 1 |
Unrealized Losses | 0 | (17) |
Estimated Fair Value | 0 | 70,314 |
Certificates of deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 149 | 149 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | 149 | 149 |
Convertible debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 1,326 | 0 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Estimated Fair Value | $ 1,326 | $ 0 |
Balance Sheet Components (Sch_2
Balance Sheet Components (Schedule of Inventories) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Raw materials | $ 28,871 | $ 3,427 |
Finished goods | 206,618 | 240,444 |
Total | $ 235,489 | $ 243,871 |
Balance Sheet Components (Narra
Balance Sheet Components (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2019USD ($)segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Balance Sheet Related Disclosures [Abstract] | |||
Provisions for excess and obsolete inventory | $ 3,878,000 | $ 2,904,000 | $ 2,866,000 |
Amortization expense | 7,000,000 | 8,300,000 | 11,000,000 |
Intangible assets impairment charges | $ 0 | 0 | 0 |
Number of reportable segments | segment | 2 | ||
Goodwill impairment charges | $ 0 | 0 | $ 0 |
Accumulated goodwill impairment charges | 74,200,000 | $ 74,200,000 | |
Equity securities without readily determinable fair value, cumulative downward adjustments for price change and impairment loss | 1,600,000 | ||
Cumulative upward adjustments for price changes | $ 200,000 |
Balance Sheet Components (Sch_3
Balance Sheet Components (Schedule of Property and Equipment, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Total property and equipment, gross | $ 116,008 | $ 116,108 |
Accumulated depreciation and amortization | (98,325) | (95,931) |
Total | 17,683 | 20,177 |
Computer equipment | ||
Total property and equipment, gross | 9,883 | 9,205 |
Furniture, fixtures and leasehold improvements | ||
Total property and equipment, gross | 18,623 | 18,286 |
Software | ||
Total property and equipment, gross | 27,865 | 28,065 |
Machinery and equipment | ||
Total property and equipment, gross | $ 59,637 | $ 60,552 |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, Other Information) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |||
Depreciation and amortization | $ 12.3 | $ 10.5 | $ 11.5 |
Balance Sheet Components (Sch_4
Balance Sheet Components (Schedule of Intangibles, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Intangible Assets [Line Items] | ||
Gross | $ 126,944 | $ 126,944 |
Accumulated Amortization | (116,840) | (109,798) |
Net | 10,104 | 17,146 |
Technology | ||
Intangible Assets [Line Items] | ||
Gross | 59,799 | 59,799 |
Accumulated Amortization | (57,406) | (56,978) |
Net | 2,393 | 2,821 |
Customer contracts and relationships | ||
Intangible Assets [Line Items] | ||
Gross | 56,800 | 56,800 |
Accumulated Amortization | (50,297) | (44,280) |
Net | 6,503 | 12,520 |
Other | ||
Intangible Assets [Line Items] | ||
Gross | 10,345 | 10,345 |
Accumulated Amortization | (9,137) | (8,540) |
Net | $ 1,208 | $ 1,805 |
Balance Sheet Components (Sch_5
Balance Sheet Components (Schedule of Estimated Amortization Expense Related to Intangibles) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
2020 | $ 6,205 | |
2021 | 2,044 | |
2022 | 527 | |
2023 | 514 | |
2024 | 514 | |
Thereafter | 300 | |
Net | $ 10,104 | $ 17,146 |
Balance Sheet Components (Sch_6
Balance Sheet Components (Schedule Of Goodwill By Segment) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Goodwill [Roll Forward] | |
Goodwill (period start) | $ 64,314 |
Goodwill from acquisition of Meural | 16,407 |
Goodwill (period end) | 80,721 |
Connected Home | |
Goodwill [Roll Forward] | |
Goodwill (period start) | 28,035 |
Goodwill from acquisition of Meural | 16,407 |
Goodwill (period end) | 44,442 |
SMB | |
Goodwill [Roll Forward] | |
Goodwill (period start) | 36,279 |
Goodwill from acquisition of Meural | 0 |
Goodwill (period end) | $ 36,279 |
Balance Sheet Components (Sch_7
Balance Sheet Components (Schedule of Other Non-Current Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | |||
Non-current deferred income taxes | $ 58,930 | $ 57,557 | |
Long-term investments | 8,147 | 2,886 | $ 4,505 |
Other | 7,202 | 6,990 | |
Total | $ 74,279 | $ 67,433 |
Balance Sheet Components (Sch_8
Balance Sheet Components (Schedule of Carrying Value of Equity Investments Without Readily Determinable Fair Value) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | ||
Beginning Balance | $ 2,886 | $ 4,505 |
Additions | 5,484 | 1,091 |
Reclassification of original investment in Meural due to acquisition | (1,500) | |
Impairment | (1,400) | |
Upward adjustments for observable price changes | 190 | |
Downward adjustments for observable price changes | (223) | |
Ending Balance | $ 8,147 | $ 2,886 |
Balance Sheet Components (Sch_9
Balance Sheet Components (Schedule of Other Accrued Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | |||
Current operating lease liabilities | $ 9,357 | $ 0 | |
Sales and marketing | 85,605 | 91,548 | |
Warranty obligations | 10,556 | 14,412 | |
Sales returns | 52,612 | 46,318 | |
Freight and duty | 5,633 | 10,586 | |
Other | 25,784 | 36,608 | |
Total | $ 189,547 | $ 210,381 | $ 199,472 |
Balance Sheet Components (Sc_10
Balance Sheet Components (Schedule of Other Accrued Liabilities) (Parentheticals) (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Balance Sheet Related Disclosures [Abstract] | ||
Inventory expected to be received from future sales returns | $ 26.8 | $ 23.8 |
Provisions to write down expected returned inventory to net realizable value | $ 14.9 | $ 14.2 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Narrative) (Details) | 12 Months Ended | |
Dec. 31, 2019USD ($)derivative_instrument | Dec. 31, 2018USD ($) | |
Derivative [Line Items] | ||
Gross amount assets | $ 152,000 | $ 786,000 |
Foreign currency forward contracts | Derivatives Not Designated as Hedging Instruments | ||
Derivative [Line Items] | ||
Approximate number of derivatives per quarter | derivative_instrument | 10 | |
Foreign currency forward contracts | Cash Flow Hedges | ||
Derivative [Line Items] | ||
Approximate number of derivatives per quarter | derivative_instrument | 10 | |
Estimated term of reclassification from OCI to Income | 12 months | |
Offsetting derivative assets and liabilities | ||
Derivative [Line Items] | ||
Gross amount assets | $ 200,000 | |
Gross amount liabilities | 500,000 | |
Net of offset assets | 0 | |
Net of offset liabilities | $ 300,000 | |
Maximum | Foreign currency forward contracts | ||
Derivative [Line Items] | ||
Term of derivative contracts | 6 months | |
Maximum | Foreign currency forward contracts | Derivatives Not Designated as Hedging Instruments | ||
Derivative [Line Items] | ||
Term of derivative contracts | 3 months | |
Notional amount | $ 2,000,000 | |
Maximum | Foreign currency forward contracts | Cash Flow Hedges | ||
Derivative [Line Items] | ||
Term of derivative contracts | 6 months | |
Notional amount | $ 6,000,000 |
Derivative Financial Instrume_4
Derivative Financial Instruments (Schedule of Fair Values of the Company's Derivative Instruments and the Line Items on the Consolidated Balance Sheets) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | $ 152 | $ 786 |
Gross Amounts of recognized liabilities | 525 | 368 |
Prepaid expenses and other current assets | Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 109 | 784 |
Prepaid expenses and other current assets | Derivatives designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized assets | 43 | 2 |
Other accrued liabilities | Derivatives not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | 493 | 331 |
Other accrued liabilities | Derivatives designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of recognized liabilities | $ 32 | $ 37 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Schedule of Company's Derivative Instruments on Accumulated Other Comprehensive Income and the Consolidated Statement of Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) recognized in other comprehensive income- Effective Portion | $ 1,565 | $ 1,416 | $ (7,785) |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | Net revenue | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion | 1,929 | 665 | (5,786) |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | Cost of revenue | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion | (12) | (9) | 18 |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | Research and development | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion | (57) | 83 | 130 |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | Sales and marketing | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion | (284) | (102) | 788 |
Derivatives designated as hedging instruments | Cash Flow Hedges | Foreign Exchange Forward | General and administrative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) reclassified from accumulated other comprehensive income into Income -Effective Portion | (41) | (53) | 133 |
Derivatives not designated as hedging instruments | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (Losses) recognized in Other income (expense), net | $ 1,307 | $ 3,870 | $ (5,085) |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule of Net Income (Loss) Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||
Net income (loss) from continuing operations | $ (420) | $ 12,529 | $ 839 | $ 12,843 | $ (535) | $ 16,310 | $ 533 | $ 1,018 | $ 25,791 | $ 17,326 | $ (11,133) |
Net income (loss) from discontinued operations | 0 | (35,655) | 30,569 | ||||||||
Net income (loss) | (420) | 12,529 | 839 | 12,843 | (27,839) | 9,150 | (5,230) | 5,590 | 25,791 | (18,329) | 19,436 |
Less: Net loss attributable to non-controlling interest in discontinued operations | 0 | (9,167) | 0 | ||||||||
Net income (loss) attributable to NETGEAR, Inc. | $ (420) | $ 12,529 | $ 839 | $ 12,843 | $ (19,471) | $ 9,949 | $ (5,230) | $ 5,590 | $ 25,791 | $ (9,162) | $ 19,436 |
Denominator: | |||||||||||
Weighted average common shares - basic | 30,936 | 31,626 | 32,097 | ||||||||
Potentially dilutive common share equivalent | 1,029 | 1,511 | 0 | ||||||||
Weighted average common shares - dilutive | 31,965 | 33,137 | 32,097 | ||||||||
Basic net income (loss) per share | |||||||||||
Net income (loss) from continuing operations | $ (0.01) | $ 0.41 | $ 0.03 | $ 0.41 | $ (0.02) | $ 0.51 | $ 0.02 | $ 0.03 | $ 0.83 | $ 0.55 | $ (0.35) |
Net income (loss) from discontinued operations attributable to NETGEAR, Inc. | 0 | (0.84) | 0.96 | ||||||||
Net income (loss) attributable to NETGEAR, Inc. | (0.01) | 0.41 | 0.03 | 0.41 | (0.62) | 0.31 | (0.17) | 0.18 | 0.83 | (0.29) | 0.61 |
Diluted net income (loss) per share | |||||||||||
Net income (loss) from continuing operations | (0.01) | 0.39 | 0.03 | 0.39 | (0.02) | 0.49 | 0.02 | 0.03 | 0.81 | 0.52 | (0.35) |
Net income (loss) from discontinued operations attributable to NETGEAR, Inc. | 0 | (0.80) | 0.96 | ||||||||
Net income (loss) attributable to NETGEAR, Inc. | $ (0.01) | $ 0.39 | $ 0.03 | $ 0.39 | $ (0.62) | $ 0.30 | $ (0.16) | $ 0.17 | $ 0.81 | $ (0.28) | $ 0.61 |
Anti-dilutive employee stock-based awards, excluded | 1,066 | 815 | 279 |
Other Income (Expense), Net (De
Other Income (Expense), Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Income And Expenses [Abstract] | |||
Foreign currency transaction gain (loss), net | $ (697) | $ (2,675) | $ 5,292 |
Foreign currency contract gain (loss), net | 1,307 | 3,968 | (3,879) |
Other | 234 | (783) | 144 |
Total | $ 844 | $ 510 | $ 1,557 |
Income Taxes (Schedule of Incom
Income Taxes (Schedule of Income Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 16,035 | $ 32,237 | $ 36,461 |
International | 13,536 | 10,967 | 9,763 |
Income before income taxes | $ 29,571 | $ 43,204 | $ 46,224 |
Income Taxes (Schedule of Provi
Income Taxes (Schedule of Provision For Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Current: | |||||||||||
U.S. Federal | $ 4,761 | $ (587) | $ 25,733 | ||||||||
State | 791 | (2,338) | 2,435 | ||||||||
Foreign | (386) | 4,267 | 1,545 | ||||||||
Current, Total | 5,166 | 1,342 | 29,713 | ||||||||
Deferred: | |||||||||||
U.S. Federal | (574) | 20,930 | 27,936 | ||||||||
State | 104 | 2,514 | 190 | ||||||||
Foreign | (916) | 1,092 | (482) | ||||||||
Deferred, Total | (1,386) | 24,536 | 27,644 | ||||||||
Provision for income taxes | $ 1,045 | $ (228) | $ 756 | $ 2,207 | $ 19,210 | $ 5,483 | $ 1,271 | $ (86) | $ 3,780 | $ 25,878 | $ 57,357 |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred Tax Assets: | ||
Accruals and allowances | $ 20,743 | $ 20,765 |
Net operating loss carryforwards | 1,267 | 1,673 |
Stock-based compensation | 6,381 | 5,734 |
Deferred rent | 1,296 | |
Operating lease liability | 6,456 | |
Deferred revenue | 1,449 | 1,100 |
Tax credit carryforwards | 896 | 1,661 |
Acquired intangibles | 31,708 | 31,902 |
Depreciation and amortization | 1,639 | 866 |
Other | 1,080 | |
Total deferred tax assets | 71,619 | 64,997 |
Deferred Tax Liabilities: | ||
Right of use asset | (5,218) | |
Other | (1,053) | (706) |
Total deferred tax liabilities | (6,271) | (706) |
Valuation Allowance | (6,418) | (6,734) |
Net deferred tax assets | 58,930 | 57,557 |
Valuation allowance, net of federal tax | $ 5,200 | $ 5,400 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Line Items] | |||||
Valuation allowance | $ 6,734 | $ 6,418 | $ 6,734 | ||
Valuation allowance decreased | 300 | ||||
Net current period other comprehensive income (loss) | $ (10) | $ (126) | $ 394 | ||
Tax at federal statutory rate | 21.00% | 21.00% | 35.00% | ||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense | $ 48,300 | $ 6,500 | $ 6,500 | ||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense related to remeasurement of DTA | 26,600 | ||||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense, deemed repatriation of foreign earnings | $ 21,700 | ||||
Tax Cuts And Jobs Act Of 2017 - provisional income tax expense, adjustment | 6,700 | ||||
Tax Cuts and Jobs Act of 2017, deferred tax liabilities, undistributed foreign earnings, Global Intangible Low-Taxed Income, Foreign Derived Intangible Income and Base Erosion and Anti-abuse (GILTI, FDII and BEAT) | 1,700 | ||||
Possible reduction in liabilities for uncertain tax positions | 600 | ||||
Unrecognized tax benefits that would impact effective tax rate | 6,700 | ||||
Unrecognized tax benefits, income tax penalties and interest expense | (1,400) | 100 | $ (400) | ||
Unrecognized tax benefits, income tax penalties and interest accrued | $ 3,400 | 2,000 | $ 3,400 | ||
Undistributed earnings | 5,100 | ||||
Associated tax without consideration of foreign tax credit | 1,100 | ||||
US Federal | |||||
Income Tax Disclosure [Line Items] | |||||
Operating loss carryforwards | $ 6,000 | ||||
Operating loss carryforwards expiration year | 2021 | ||||
State and Local Jurisdiction | |||||
Income Tax Disclosure [Line Items] | |||||
Tax credit carryforwards | $ 900 | ||||
ITALY | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2004 | ||||
ITALY | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2012 | ||||
GERMANY | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2014 | ||||
GERMANY | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2016 | ||||
UNITED KINGDOM | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2014 | ||||
UNITED KINGDOM | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2017 | ||||
UNITED KINGDOM | Tax Year 2015 | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2015 | ||||
UNITED KINGDOM | Tax Year 2016 | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2016 | ||||
FRANCE | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2015 | ||||
FRANCE | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2016 |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Tax at federal statutory rate | 21.00% | 21.00% | 35.00% |
State, net of federal benefit | 2.40% | 1.50% | 1.00% |
Impact of international operations | (0.80%) | 1.90% | (8.80%) |
Stock-based compensation | 10.70% | (0.30%) | (3.90%) |
Tax credits | (5.90%) | (2.60%) | (2.00%) |
Valuation allowance | 0.90% | 1.40% | 0.00% |
Impact of the Tax Act | 0.00% | (15.40%) | 104.60% |
Base Erosion Anti-Abuse Tax | 7.20% | 0.00% | 0.00% |
Write-off of future tax benefits related to Arlo | 0.00% | 52.20% | 0.00% |
Transaction costs | (2.50%) | 0.00% | 0.00% |
Recognition of previously unrecognized tax benefits | (20.60%) | 0.00% | 0.00% |
Others | 0.40% | 0.20% | (1.80%) |
Provision for income taxes | 12.80% | 59.90% | 124.10% |
Income Taxes (Schedule of Recon
Income Taxes (Schedule of Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 11,983 | $ 12,567 | $ 12,965 |
Additions based on tax positions related to the current year | 385 | 637 | 938 |
Additions for tax positions of prior years | 996 | 280 | 32 |
Settlements | (705) | ||
Reductions for tax positions of prior years | (3,440) | (116) | (1,477) |
Reductions due to lapse of applicable statutes | (609) | (999) | (899) |
Adjustments due to foreign exchange rate movement | 459 | (386) | 1,008 |
Ending balance | $ 9,069 | $ 11,983 | $ 12,567 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Jun. 21, 2019patent | May 14, 2019patent | Sep. 14, 2018patent | Jul. 18, 2018patent | Jan. 03, 2018decision | Dec. 21, 2017decision | Jul. 14, 2017patent | Apr. 19, 2017patent | Aug. 26, 2016petitiondefendant | Jul. 01, 2015patent | Aug. 22, 2014patent | Feb. 08, 2019case | Dec. 31, 2019USD ($)claimcase |
Loss Contingencies [Line Items] | |||||||||||||
Number of days for non-cancellation of purchase obligations prior to expected shipment date | 30 days | ||||||||||||
Non-cancelable purchase commitments with suppliers | $ | $ 85,300,000 | ||||||||||||
Liabilities recorded for director and officer indemnification agreements | $ | 0 | ||||||||||||
Liabilities recorded for customers, distributors, and resellers indemnification agreements | $ | 0 | ||||||||||||
Liabilities for executive's employment agreements | $ | $ 0 | ||||||||||||
Change in control and severance agreements, Termination benefit available term description | one month prior to or 12 months following a change in control | ||||||||||||
Percentage of excise tax rate under Section 4999 of tax code | 20.00% | ||||||||||||
Number of existing cases and proceedings that the Company currently believes are liking to have a material adverse effect on its financial position | claim | claim | 0 | ||||||||||||
The future length the Company currently considered regarding existing cases and proceedings that are likely to have a material adverse effect on it (in months) | 12 months | ||||||||||||
Number of class action lawsuits | case | 6 | ||||||||||||
Netgear and Arlo | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of class action lawsuits | case | 4 | ||||||||||||
NETGEAR | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of class action lawsuits | case | 5 | ||||||||||||
Arlo | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of class action lawsuits | case | 2 | ||||||||||||
Via Vadis v. NETGEAR | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents accused of infringing upon | 3 | ||||||||||||
Chrismar Systems vs. NETGEAR | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents accused of infringing upon | 4 | ||||||||||||
Number of active cases the suing company has | case | 40 | ||||||||||||
Number of defendants | defendant | 3 | ||||||||||||
Number of Final Written Decisions | decision | 2 | 4 | |||||||||||
Period post Final Written Decision to seek rehearing | 30 days | ||||||||||||
Period post Final Written Decision to file appeal | 63 days | ||||||||||||
Chrismar Systems vs. NETGEAR | Juniper | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of inter partes reviews for resolution | petition | 4 | ||||||||||||
Vivato v. NETGEAR | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents under litigation | 3 | ||||||||||||
Hera Wireless v. NETGEAR | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents accused of infringing upon | 6 | 3 | 3 | ||||||||||
China Patent Matters- Bejing and Heifei Municipalities [Member] | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents accused of infringing upon | 2 | ||||||||||||
Aegis 11 S.A. v. NETGEAR [Member] | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Number of patents accused of infringing upon | 3 | ||||||||||||
Chief Executive Officer | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Period of health benefits continuation (in months) | 12 months | ||||||||||||
Accelerated vesting period, unvested equity awards (in months) | 12 months | ||||||||||||
Annual base salary and target annual bonus multiple for cash severance | 200.00% | ||||||||||||
Period of health benefits continuation subsequent to change of company control (in months) | 24 months | ||||||||||||
Other Key Executives | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Annual base salary and target annual bonus multiple for cash severance | 100.00% | ||||||||||||
Period of health benefits continuation subsequent to change of company control (in months) | 12 months | ||||||||||||
46 to 60 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Percentage of cancelable orders | 50.00% | ||||||||||||
31 to 45 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Percentage of cancelable orders | 25.00% | ||||||||||||
Non-Trade Activities | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Long-term, non-cancellable purchase commitments | $ | $ 17,400,000 | ||||||||||||
Minimum | 46 to 60 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Required notice period prior to expected shipment date | 46 days | ||||||||||||
Minimum | 31 to 45 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Required notice period prior to expected shipment date | 31 days | ||||||||||||
Maximum | 46 to 60 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Required notice period prior to expected shipment date | 60 days | ||||||||||||
Maximum | 31 to 45 Days | |||||||||||||
Loss Contingencies [Line Items] | |||||||||||||
Required notice period prior to expected shipment date | 45 days |
Commitments and Contingencies_3
Commitments and Contingencies (Schedule of Changes in Warranty Obligations) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2018 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Balance as of beginning of the period | $ 14,412 | $ 44,068 | $ 42,571 | |
Reclassified to sales returns upon adoption of ASC 606 | 0 | (29,147) | 0 | |
Provision for warranty liability made during the period | 7,050 | 12,783 | 91,384 | |
Settlements made during the period | (10,906) | (13,292) | (89,887) | |
Balance at end of period | 10,556 | 14,412 | $ 44,068 | |
Sales returns | $ 52,612 | $ 46,318 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||
Sales returns | $ 29,100 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jul. 19, 2019 | |
Stockholders Equity Note [Abstract] | ||||
Shares remaining authorized for repurchase (in shares) | 3,600,000 | |||
Stock repurchased (in shares) | 2,400,000 | 500,000 | 2,400,000 | |
Cost of stock repurchased | $ 75,946 | $ 30,000 | $ 113,161 | |
Number of shares authorized to be repurchased | 4,500,000 | |||
RSU withholdings (in shares) | 198,000 | 138,000 | 135,000 | |
RSU withholdings | $ 6,521 | $ 8,065 | $ 6,415 |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule of Changes in Accumulated Other Comprehensive Income by Component) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Estimated tax benefit (provision) | |||
Beginning balance | $ 11 | $ 133 | $ (261) |
Other comprehensive income (loss) before reclassifications | (332) | (249) | 3,062 |
Less: Amount reclassified from accumulated other comprehensive income | (322) | (123) | 2,668 |
Net current period other comprehensive income (loss) | (10) | (126) | 394 |
Distribution of Arlo | 4 | ||
Ending balance | 1 | 11 | 133 |
AOCI, after tax | |||
Beginning balance | 627,552 | 730,485 | 796,819 |
Other comprehensive income (loss) before reclassifications | 1,249 | 1,301 | (7,745) |
Less: Amount reclassified from accumulated other comprehensive income | 1,213 | 465 | (4,956) |
Net current period other comprehensive income (loss) | 36 | 836 | (2,789) |
Distribution of Arlo | 0 | ||
Ending balance | 608,693 | 627,552 | 730,485 |
Unrealized gains (losses) on available-for-sale investments | |||
AOCI, before tax | |||
Beginning balance | (18) | (146) | (31) |
Other comprehensive income (loss) before reclassifications | 16 | 128 | (115) |
Less: Amount reclassified from accumulated other comprehensive income | 0 | 0 | 0 |
Net current period other comprehensive income (loss) | 16 | 128 | (115) |
Distribution of Arlo | 0 | ||
Ending balance | (2) | (18) | (146) |
Unrealized gains (losses) on derivatives | |||
AOCI, before tax | |||
Beginning balance | (8) | (838) | 2,230 |
Other comprehensive income (loss) before reclassifications | 1,565 | 1,422 | (10,692) |
Less: Amount reclassified from accumulated other comprehensive income | 1,535 | 588 | (7,624) |
Net current period other comprehensive income (loss) | 30 | 834 | (3,068) |
Distribution of Arlo | (4) | ||
Ending balance | 22 | (8) | (838) |
AOCI | |||
AOCI, after tax | |||
Beginning balance | (15) | (851) | 1,938 |
Ending balance | $ 21 | $ (15) | $ (851) |
Stockholders' Equity (Schedul_2
Stockholders' Equity (Schedule of Reclassifications out of AOCI) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Net revenue | $ 252,971 | $ 265,858 | $ 230,852 | $ 249,082 | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 998,763 | $ 1,058,816 | $ 1,039,169 |
Cost of revenue | 704,535 | 717,118 | 731,453 | ||||||||
Research and development | 77,982 | 82,416 | 71,893 | ||||||||
Sales and marketing | 138,150 | 152,569 | 138,679 | ||||||||
General and administrative | 49,432 | 64,857 | 54,346 | ||||||||
Income before income taxes | 29,571 | 43,204 | 46,224 | ||||||||
Tax impact from continuing operations | (1,045) | 228 | (756) | (2,207) | (19,210) | (5,483) | (1,271) | 86 | (3,780) | (25,878) | (57,357) |
Net income (loss) from continuing operations | (420) | 12,529 | 839 | 12,843 | (535) | 16,310 | 533 | 1,018 | 25,791 | 17,326 | (11,133) |
Net income (loss) from discontinued operations, net of tax | 0 | (35,655) | 30,569 | ||||||||
Net income (loss) | $ (420) | $ 12,529 | $ 839 | $ 12,843 | $ (27,839) | $ 9,150 | $ (5,230) | $ 5,590 | 25,791 | (18,329) | 19,436 |
Amount Reclassified from AOCI | Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest [Member] | |||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Net revenue | 1,929 | 665 | (5,786) | ||||||||
Cost of revenue | (12) | (9) | 18 | ||||||||
Research and development | (57) | 83 | 130 | ||||||||
Sales and marketing | (284) | (102) | 788 | ||||||||
General and administrative | (41) | (53) | 133 | ||||||||
Income before income taxes | 1,535 | 584 | (4,717) | ||||||||
Tax impact from continuing operations | (322) | (123) | 1,651 | ||||||||
Net income (loss) from continuing operations | 1,213 | 461 | (3,066) | ||||||||
Net income (loss) from discontinued operations, net of tax | 0 | 4 | (1,890) | ||||||||
Net income (loss) | $ 1,213 | $ 465 | $ (4,956) |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | May 31, 2018 | Feb. 15, 2016 | Apr. 30, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation | $ 29,137 | $ 26,461 | $ 18,969 | ||||
Stock-based compensation cost capitalized in inventory | 800 | 800 | 800 | ||||
Share-based Payment Arrangement, Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options, exercises in period, intrinsic value | 3,500 | 11,000 | 7,700 | ||||
Options, vested in period, total fair value | $ 4,100 | $ 3,800 | $ 3,800 | ||||
Weighted average estimated fair value of options granted | $ 9.72 | $ 20.63 | $ 12.35 | ||||
Total unrecognized compensation | $ 7,800 | ||||||
Weighted-average period of recognition of stock based compensation | 2 years 1 month 6 days | ||||||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
RSU aggregate intrinsic value, vested | $ 19,400 | $ 25,700 | $ 19,500 | ||||
RSU fair value, vested | 18,600 | 18,100 | 14,600 | ||||
Total unrecognized compensation | $ 41,300 | ||||||
Weighted-average period of recognition of stock based compensation | 2 years 2 months 12 days | ||||||
2006 Long Term Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expiration date | Apr. 13, 2016 | ||||||
A2016 Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Maximum shares available for issuance (in shares) | 2,500,000 | 3,100,000 | |||||
Additional shares available for issuance (in shares) | 699,827 | ||||||
Number of additional shares reserved for future grant (in shares) | 1,700,000 | 1,600,000 | |||||
A2016 Incentive Plan | Share-based Payment Arrangement, Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting term | 4 years | ||||||
Expiration period | 10 years | ||||||
A2016 Incentive Plan | Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting term | 4 years | ||||||
A2016 Incentive Plan | Restricted Stock, Restricted Stock Units, Performance Units, or Performance Shares | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share conversion ratio | $ 1.58 | ||||||
A2016 Incentive Plan | First Tranche | Share-based Payment Arrangement, Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting term | 12 months | ||||||
A2016 Incentive Plan | Remaining Tranche | Share-based Payment Arrangement, Option | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting term | 3 years | ||||||
Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of additional shares reserved for future grant (in shares) | 1,000,000 | ||||||
Maximum percentage of compensation contributed by employees (in percentage) | 10.00% | ||||||
Purchase percentage of stock at fair market value (in percentage) | 85.00% | ||||||
Number of shares authorized (in shares) | 2,000,000 | ||||||
Stock-based compensation | $ 1,400 | $ 1,400 | $ 1,200 | ||||
Shares purchased under ESPP | 123,000 | ||||||
Weighted average price of shares purchased under ESPP (in dollars per share) | $ 29.41 | ||||||
Number of shares reserved for future grant (in shares) | 600,000 | ||||||
Employee Stock Purchase Plan | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Purchase percentage of stock at fair market value (in percentage) | 85.00% |
Employee Benefit Plans (Schedul
Employee Benefit Plans (Schedule of Stock Option Activity) (Details) - Share-based Payment Arrangement, Option $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of shares, beginning balance (in shares) | shares | 1,969 |
Number of shares, granted (in shares) | shares | 502 |
Number of shares, exercised (in shares) | shares | (250) |
Number of shares, cancelled (in shares) | shares | (16) |
Number of shares, expired (in shares) | shares | (17) |
Number of shares, ending balance (in shares) | shares | 2,188 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Vested and expected to vest (in shares) | shares | 2,188 |
Exercisable (in shares) | shares | 1,411 |
Beginning balance (in dollars per share) | $ / shares | $ 25.30 |
Grants (in dollars per share) | $ / shares | 26.61 |
Exercises (in dollars per share) | $ / shares | 20.08 |
Cancelled (in dollars per share) | $ / shares | 36.27 |
Expired (in dollars per share) | $ / shares | 36.81 |
Ending balance (in dollars per share) | $ / shares | 26.03 |
Vested and expected to vest, weighted average exercise price (in dollars per share) | $ / shares | 26.03 |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 23.96 |
Outstanding, Weighted Average Remaining Contractual Term | 6 years 1 month 6 days |
Vested and expected to vest, weighted average remaining contractual term | 6 years 1 month 6 days |
Exercisable, weighted average remaining contractual term | 4 years 7 months 6 days |
Outstanding, Intrinsic Value | $ | $ 4,171 |
Vested and expected to vest, aggregate intrinsic value | $ | 4,171 |
Exercisable, intrinsic value | $ | $ 4,153 |
Employee Benefit Plans (Sched_2
Employee Benefit Plans (Schedule of Ranges of Outstanding And Exercisable Stock Options) (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2019$ / sharesshares | |
$12.34 - $19.32 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | $ 12.34 |
Exercise price, upper range (USD per share) | $ 19.32 |
Number of outstanding options (in shares) | shares | 452 |
Outstanding options, weighted-average remaining contractual life | 3 years 10 months 9 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 18.82 |
Number of exercisable options (in shares) | shares | 452 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 18.82 |
$19.33 - $23.48 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 19.33 |
Exercise price, upper range (USD per share) | $ 23.48 |
Number of outstanding options (in shares) | shares | 559 |
Outstanding options, weighted-average remaining contractual life | 3 years 11 months 12 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 21.65 |
Number of exercisable options (in shares) | shares | 542 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 21.59 |
$23.77 - $25.37 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 23.77 |
Exercise price, upper range (USD per share) | $ 25.37 |
Number of outstanding options (in shares) | shares | 293 |
Outstanding options, weighted-average remaining contractual life | 6 years 10 months 6 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 25.36 |
Number of exercisable options (in shares) | shares | 188 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 25.36 |
$26.61 - $26.61 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 26.61 |
Exercise price, upper range (USD per share) | $ 26.61 |
Number of outstanding options (in shares) | shares | 503 |
Outstanding options, weighted-average remaining contractual life | 8 years 10 months 28 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 26.61 |
Number of exercisable options (in shares) | shares | 37 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 26.61 |
$29.23 - $41.67 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 29.23 |
Exercise price, upper range (USD per share) | $ 41.67 |
Number of outstanding options (in shares) | shares | 381 |
Outstanding options, weighted-average remaining contractual life | 7 years 7 months 17 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 40.76 |
Number of exercisable options (in shares) | shares | 192 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 40.80 |
$12.34 - $41.67 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 12.34 |
Exercise price, upper range (USD per share) | $ 41.67 |
Number of outstanding options (in shares) | shares | 2,188 |
Outstanding options, weighted-average remaining contractual life | 6 years 1 month 6 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 26.03 |
Number of exercisable options (in shares) | shares | 1,411 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 23.96 |
Employee Benefit Plans (Sched_3
Employee Benefit Plans (Schedule of RSU Activity) (Details) - Restricted Stock Units (RSUs) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Shares | |
Beginning balance (in shares) | shares | 1,627 |
Granted (in shares) | shares | 709 |
Vested (in shares) | shares | (594) |
Cancelled (in shares) | shares | (155) |
Ending balance (in shares) | shares | 1,587 |
Weighted Average Grant Date Fair Value Per Share | |
Beginning Balance (in dollars per share) | $ / shares | $ 34.31 |
Granted (in dollars per share) | $ / shares | 31.33 |
Vested (in dollars per share) | $ / shares | 31.35 |
Cancelled (in dollars per share) | $ / shares | 35.67 |
Ending Balance (in dollars per share) | $ / shares | $ 33.95 |
Weighted Average Remaining Contractual Term | 1 year 4 months 9 days |
Average Intrinsic Value | $ | $ 38,895 |
Employee Benefit Plans (Sched_4
Employee Benefit Plans (Schedule of Valuation and Expense Information) (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Payment Arrangement, Option | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 years 2 months 12 days | 4 years 4 months 24 days | 4 years 4 months 24 days |
Risk-free interest rate | 1.85% | 2.36% | 1.66% |
Expected volatility | 33.90% | 31.10% | 31.60% |
Dividend yield | 0.00% | 0.00% | 0.00% |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected life (in years) | 6 months | 6 months | 6 months |
Risk-free interest rate | 2.06% | 2.00% | 0.93% |
Expected volatility | 43.90% | 37.90% | 29.70% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Employee Benefit Plans (Sched_5
Employee Benefit Plans (Schedule of Total Stock-Based Compensation Expense Resulting from Stock Options, RSUs, and the ESPP) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 29,137 | $ 26,461 | $ 18,969 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 2,843 | 2,435 | 1,406 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 6,532 | 4,283 | 2,968 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | 9,069 | 8,267 | 5,481 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total stock-based compensation | $ 10,693 | $ 11,476 | $ 9,114 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2019Customersegment | Dec. 31, 2018Customer | Dec. 31, 2017Customer | |
Segment Reporting Information [Line Items] | |||
Number of operating segments | 2 | ||
Number of reportable segments | 2 | ||
Connected Home | Net revenue | |||
Segment Reporting Information [Line Items] | |||
Number of customer | Customer | 2 | 2 | 2 |
Connected Home | Net revenue | Customer A | Customer Concentration Risk | Sales Revenue | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 16.00% | 17.00% | 16.00% |
Connected Home | Net revenue | Customer B | Customer Concentration Risk | Sales Revenue | |||
Segment Reporting Information [Line Items] | |||
Concentration risk, percentage | 16.00% | 15.00% | 13.00% |
Segment Information (Schedule o
Segment Information (Schedule of Reportable Segments and Reconciliation of Segment Contribution Income to Income Before Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | ||
Segment Reporting Information [Line Items] | ||||||||||||
Total net revenue | $ 252,971 | $ 265,858 | $ 230,852 | $ 249,082 | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 998,763 | $ 1,058,816 | $ 1,039,169 | |
Total segment contribution income | 135,057 | 166,482 | 147,735 | |||||||||
Corporate and unallocated costs | (70,525) | (90,186) | (75,305) | |||||||||
Amortization of intangibles | [1] | (6,731) | (7,979) | (10,663) | ||||||||
Stock-based compensation expense | (29,137) | (26,461) | (18,969) | |||||||||
Separation expense | (264) | (929) | 0 | |||||||||
Change in fair value of contingent consideration | 25 | 0 | 0 | |||||||||
Restructuring and other charges | (2,077) | (2,198) | (97) | |||||||||
Litigation reserves, net | (160) | (15) | (148) | |||||||||
Interest income, net | 2,539 | 3,980 | 2,114 | |||||||||
Other income (expense), net | 844 | 510 | 1,557 | |||||||||
Income before income taxes | 29,571 | 43,204 | 46,224 | |||||||||
Connected Home | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total net revenue | 711,391 | 771,060 | 768,261 | |||||||||
Total segment contribution income | $ 67,775 | $ 96,340 | $ 83,870 | |||||||||
Segment contribution margin | 9.50% | 12.50% | 10.90% | |||||||||
SMB | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total net revenue | $ 287,372 | $ 287,756 | $ 270,908 | |||||||||
Total segment contribution income | $ 67,282 | $ 70,142 | $ 63,865 | |||||||||
Segment contribution margin | 23.40% | 24.40% | 23.60% | |||||||||
[1] | Amount excludes amortization expense related to patents within purchased intangibles in cost of revenue. |
Segment Information (Schedule_2
Segment Information (Schedule of Net Revenue by Geographic Areas) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | $ 252,971 | $ 265,858 | $ 230,852 | $ 249,082 | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 998,763 | $ 1,058,816 | $ 1,039,169 |
United States (U.S.) | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | 637,566 | 686,145 | 648,152 | ||||||||
Americas (excluding U.S.) | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | 15,440 | 14,548 | 16,937 | ||||||||
EMEA | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | 200,099 | 207,599 | 197,074 | ||||||||
APAC | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total net revenue | $ 145,658 | $ 150,524 | $ 177,006 |
Segment Information (Schedule_3
Segment Information (Schedule of Long-Lived Asset by Geographic Region) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | $ 46,600 | $ 20,177 |
United States (U.S.) | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | 23,137 | 4,993 |
Canada | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | 3,954 | 4,359 |
EMEA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | 3,782 | 95 |
China | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | 5,040 | 7,652 |
APAC (excluding China) | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | $ 10,687 | $ 3,078 |
Segment Information (Schedule_4
Segment Information (Schedule of Long-Lived Asset by Geographic Region) (Parenthetical) (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Maximum | APAC (excluding China) | |
Revenues From External Customers And Long Lived Assets [Line Items] | |
Percentage of total long-lived assets owned | 10.00% |
Fair Value Measurements (Summar
Fair Value Measurements (Summary of Valuation of Company's Financial Instruments by Various Levels) (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 27,755 | $ 96,676 |
Liabilities measured at fair value | 6,453 | 6,321 |
Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 26,128 | 25,427 |
Liabilities measured at fair value | 0 | 0 |
Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 301 | 71,249 |
Liabilities measured at fair value | 525 | 368 |
Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 1,326 | 0 |
Liabilities measured at fair value | 5,928 | 5,953 |
Convertible debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 1,326 | |
Convertible debt | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | |
Convertible debt | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | |
Convertible debt | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 1,326 | |
Cash equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 22,105 | 22,573 |
Cash equivalents | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 22,105 | 22,573 |
Cash equivalents | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Cash equivalents | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Certificates of deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 149 | 149 |
Certificates of deposits | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Certificates of deposits | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 149 | 149 |
Certificates of deposits | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Trading securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 4,023 | 2,854 |
Trading securities | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 4,023 | 2,854 |
Trading securities | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Trading securities | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 152 | 786 |
Liabilities measured at fair value | 525 | 368 |
Foreign currency forward contracts | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Liabilities measured at fair value | 0 | 0 |
Foreign currency forward contracts | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 152 | 786 |
Liabilities measured at fair value | 525 | 368 |
Foreign currency forward contracts | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | 0 |
Liabilities measured at fair value | 0 | 0 |
Contingent Consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 5,928 | 5,953 |
Contingent Consideration | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Contingent Consideration | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | 0 | 0 |
Contingent Consideration | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities measured at fair value | $ 5,928 | 5,953 |
U.S. treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 70,314 | |
U.S. treasuries | Quoted market prices in active markets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 0 | |
U.S. treasuries | Significant other observable inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | 70,314 | |
U.S. treasuries | Significant unobservable inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets measured at fair value | $ 0 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Lessee, Lease, Description [Line Items] | |||
Lease expiration date | December 2026 | ||
Rent expense | $ 9.4 | $ 9.9 | |
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease, remaining lease term | 6 years | ||
Operating lease, renewal term option | 5 years | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease, remaining lease term | 1 year |
Leases (Lease Cost) (Details)
Leases (Lease Cost) (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($) | ||
Leases [Abstract] | ||
Operating lease cost | $ 11,945 | |
Short-term Lease, Cost | 1,111 | [1] |
Total lease cost | $ 13,056 | [2] |
[1] | Includes variable lease cost, which was immaterial. | |
[2] | Included in cost of revenue, sales and marketing, research and development and general and administration in the Company’s consolidated statement of operations. |
Leases (Supplemental Cash Flow
Leases (Supplemental Cash Flow Information) (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash paid for amounts included in the measurement of lease liabilities: | |
Operating cash flows relating to operating leases | $ 11,652 |
Lease liabilities arising from obtaining right-of-use assets: | |
Operating leases | $ 918 |
Leases (Supplemental Balance Sh
Leases (Supplemental Balance Sheet Information) (Details) | Dec. 31, 2019 |
Weighted Average Remaining Lease Term (in years) | |
Operating leases | 4 years 6 months |
Weighted Average Discount Rate | |
Operating leases | 3.70% |
Leases (Maturities of Operating
Leases (Maturities of Operating Lease Liabilities - Topic 842) (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 10,460 |
2021 | 8,092 |
2022 | 7,028 |
2023 | 4,519 |
2024 | 4,345 |
Thereafter | 3,374 |
Total lease payments | 37,818 |
Less imputed interest | (3,027) |
Total | $ 34,791 |
Leases (Future Minimum Lease Pa
Leases (Future Minimum Lease Payments Under Non-cancelable Operating Leases - Prior to Adoption of ASC 842 Leases) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 11,900 |
2020 | 9,986 |
2021 | 7,785 |
2022 | 6,856 |
2023 | 4,478 |
Thereafter | 7,725 |
Total future minimum lease payments | $ 48,730 |
Restructuring and Other Charg_3
Restructuring and Other Charges (Schedule of Restructuring and Other Charge Activities) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | $ 920 | $ 1,135 | $ 1,408 |
Additions | 2,248 | 2,253 | 97 |
Cash payments | (1,998) | (2,413) | (370) |
Adjustments | (172) | (55) | |
Restructuring reserve, ending balance | 998 | 920 | 1,135 |
Employee termination charges | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 775 | 6 | 6 |
Additions | 2,082 | 1,789 | 0 |
Cash payments | (1,783) | (1,010) | 0 |
Adjustments | (142) | (10) | |
Restructuring reserve, ending balance | 932 | 775 | 6 |
Lease contract termination and other charges | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, beginning balance | 145 | 1,129 | 1,402 |
Additions | 166 | 464 | 97 |
Cash payments | (215) | (1,403) | (370) |
Adjustments | (30) | (45) | |
Restructuring reserve, ending balance | $ 66 | $ 145 | $ 1,129 |
Quarterly Financial Data (Detai
Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 29, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Data [Abstract] | |||||||||||
Net revenue | $ 252,971 | $ 265,858 | $ 230,852 | $ 249,082 | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 998,763 | $ 1,058,816 | $ 1,039,169 |
Gross profit | 69,583 | 77,192 | 65,445 | 82,008 | 90,654 | 94,445 | 80,280 | 76,319 | 294,228 | 341,698 | 307,716 |
Provision (benefit) for income taxes | 1,045 | (228) | 756 | 2,207 | 19,210 | 5,483 | 1,271 | (86) | 3,780 | 25,878 | 57,357 |
Net income (loss) from continuing operations | (420) | 12,529 | 839 | 12,843 | (535) | 16,310 | 533 | 1,018 | 25,791 | 17,326 | (11,133) |
Net income (loss) | (420) | 12,529 | 839 | 12,843 | (27,839) | 9,150 | (5,230) | 5,590 | 25,791 | (18,329) | 19,436 |
Net income (loss) attributable to NETGEAR, Inc. | $ (420) | $ 12,529 | $ 839 | $ 12,843 | $ (19,471) | $ 9,949 | $ (5,230) | $ 5,590 | $ 25,791 | $ (9,162) | $ 19,436 |
Basic net income (loss) per share | |||||||||||
Income (loss) from continuing operations | $ (0.01) | $ 0.41 | $ 0.03 | $ 0.41 | $ (0.02) | $ 0.51 | $ 0.02 | $ 0.03 | $ 0.83 | $ 0.55 | $ (0.35) |
Net income (loss) attributable to NETGEAR, Inc. | (0.01) | 0.41 | 0.03 | 0.41 | (0.62) | 0.31 | (0.17) | 0.18 | 0.83 | (0.29) | 0.61 |
Diluted net income (loss) per share | |||||||||||
Income (loss) from continuing operations | (0.01) | 0.39 | 0.03 | 0.39 | (0.02) | 0.49 | 0.02 | 0.03 | 0.81 | 0.52 | (0.35) |
Net income (loss) attributable to NETGEAR, Inc. | $ (0.01) | $ 0.39 | $ 0.03 | $ 0.39 | $ (0.62) | $ 0.30 | $ (0.16) | $ 0.17 | $ 0.81 | $ (0.28) | $ 0.61 |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |||
Allowance for doubtful accounts | |||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||||
Balance at beginning of year | [1] | $ 1,254 | $ 1,050 | $ 1,049 | |
Other | [1] | 0 | 0 | 0 | |
Additions | [1] | 21 | 50 | 99 | |
Deductions | [1] | (196) | 154 | (98) | |
Balance at end of year | [1] | 1,079 | 1,254 | 1,050 | |
Allowance for sales returns | |||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||||
Balance at beginning of year | [1] | 0 | 14,321 | 10,602 | |
Other | [1] | 0 | (14,321) | [2] | 0 |
Additions | [1] | 0 | 0 | 26,419 | |
Deductions | [1] | 0 | 0 | (22,700) | |
Balance at end of year | [1] | 0 | 0 | 14,321 | |
Allowance for price protection | |||||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||||
Balance at beginning of year | [1] | 0 | 3,245 | 4,185 | |
Other | [1] | 0 | (3,245) | [2] | 0 |
Additions | [1] | 0 | 0 | 7,149 | |
Deductions | [1] | 0 | 0 | (8,089) | |
Balance at end of year | [1] | $ 0 | $ 0 | $ 3,245 | |
[1] | Upon Arlo's Distribution on December 31, 2018, Arlo’s historical financial results for periods prior to its Distribution were reflected in our consolidated financial statements as discontinued operations and these schedules represent the results from continuing operations. Refer to Note 3. Discontinued Operations, for additional information on Arlo's Distribution. | ||||
[2] | Upon adoption of ASC 606, allowances for sales returns and price protection were reclassified to current liabilities as these reserve balances are considered refund liabilities. |
Uncategorized Items - ntgr-10k_
Label | Element | Value |
S M B [Member] | ||
Goodwill | us-gaap_Goodwill | $ 36,279,000 |
Connected Home [Member] | ||
Goodwill | us-gaap_Goodwill | $ 44,442,000 |