Document And Entity Information
Document And Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 15, 2019 | Jul. 01, 2018 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | NETGEAR, INC | ||
Entity Central Index Key | 1,122,904 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Smaller Reporting Company | false | ||
Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding (in shares) | 31,505,702 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 958.3 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 201,047 | $ 202,727 |
Short-term investments | 73,317 | 126,926 |
Accounts receivable, net | 303,667 | 255,118 |
Inventories | 243,871 | 162,942 |
Prepaid expenses and other current assets | 35,997 | 24,826 |
Current assets of discontinued operations | 0 | 243,125 |
Total current assets | 857,899 | 1,015,664 |
Property and equipment, net | 20,177 | 17,349 |
Intangibles, net | 17,146 | 20,640 |
Goodwill | 80,721 | 64,314 |
Other non-current assets | 67,433 | 49,471 |
Non-current assets of discontinued operations | 0 | 41,126 |
Total assets | 1,043,376 | 1,208,564 |
Current liabilities: | ||
Accounts payable | 139,748 | 91,205 |
Accrued employee compensation | 31,666 | 24,520 |
Other accrued liabilities | 199,472 | 149,821 |
Deferred revenue | 11,086 | 21,212 |
Income taxes payable | 2,020 | 7,015 |
Current liabilities of discontinued operations | 0 | 130,663 |
Total current liabilities | 383,992 | 424,436 |
Non-current income taxes payable | 19,600 | 31,544 |
Other non-current liabilities | 12,232 | 8,766 |
Non-current liabilities of discontinued operations | 0 | 13,333 |
Total liabilities | 415,824 | 478,079 |
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: 31,562,358 and 31,319,578 as of December 31, 2018 and 2017, respectively | 32 | 31 |
Additional paid-in capital | 793,585 | 603,137 |
Accumulated other comprehensive loss | (15) | (851) |
Retained earnings (losses) | (166,050) | 128,168 |
Total stockholders’ equity | 627,552 | 730,485 |
Total liabilities and stockholders’ equity | $ 1,043,376 | $ 1,208,564 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
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) | 31,562,358 | 31,319,578 |
Common stock, shares outstanding (in shares) | 31,562,358 | 31,319,578 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Income Statement [Abstract] | |||||
Net revenue | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Cost of revenue | 717,118 | 731,453 | 769,543 | ||
Gross profit | 341,698 | 307,716 | 373,902 | ||
Operating expenses: | |||||
Research and development | 82,416 | 71,893 | 70,904 | ||
Sales and marketing | 152,569 | 138,679 | 139,591 | ||
General and administrative | 64,857 | 54,346 | 53,996 | ||
Separation Expense | 929 | 0 | 0 | ||
Restructuring and other charges | 2,198 | 97 | 3,841 | ||
Litigation reserves, net | 15 | 148 | 73 | ||
Total operating expenses | 302,984 | 265,163 | 268,405 | ||
Income from operations | 38,714 | 42,553 | 105,497 | ||
Interest income | 3,980 | 2,114 | 1,164 | ||
Other income (expense), net | 510 | 1,557 | (166) | ||
Income from continuing operations before income taxes | 43,204 | 46,224 | 106,495 | ||
Provision for income taxes | 25,878 | 57,357 | 36,183 | ||
Net income (loss) from continuing operations | 17,326 | (11,133) | 70,312 | ||
Net income (loss) from discontinued operations, net of tax | (35,655) | 30,569 | 5,539 | ||
Net income (loss) | (18,329) | 19,436 | 75,851 | ||
Net loss attributable to non-controlling interest in discontinued operations | (9,167) | 0 | 0 | ||
Net income (loss) attributable to NETGEAR, Inc. | $ (9,162) | $ 19,436 | $ 75,851 | ||
Net income (loss) per share - basic: | |||||
Income (loss) per share - basic, continuing operations (in dollars per share) | $ 0.55 | $ (0.35) | $ 2.15 | ||
Income (loss) per share - basic, discontinued operations (in dollars per share) | (0.84) | 0.96 | 0.17 | ||
Net income (loss) attributable to Netgear per share - basic (in dollars per share) | (0.29) | 0.61 | 2.32 | ||
Net income (loss) per share - diluted: | |||||
Income (loss) per share - diluted, continuing operations (in dollars per share) | 0.52 | (0.35) | 2.08 | ||
Income (loss) per share - diluted, discontinued operations (in dollars per share) | (0.80) | 0.96 | 0.17 | ||
Net income (loss) attributable to Netgear per share - diluted (in dollars per share) | $ (0.28) | $ 0.61 | $ 2.25 | ||
Weighted average shares used to compute net income (loss) per share: | |||||
Basic (in shares) | 31,626 | 32,097 | 32,758 | ||
Diluted (in shares) | 33,137 | 32,097 | 33,728 | ||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (18,329) | $ 19,436 | $ 75,851 |
Other comprehensive income (loss), before tax: | |||
Unrealized gains (losses) on derivative instruments | 834 | ||
Unrealized gains (losses) on derivative instruments | (3,068) | 2,187 | |
Unrealized gains (losses) on available-for-sale securities | 128 | (115) | 33 |
Other comprehensive income (loss), before tax | 962 | (3,183) | 2,220 |
Tax benefit (provision) related to derivative instruments | (76) | ||
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax | (352) | 273 | |
Tax benefit (provision) related to available-for-sale securities | (50) | 42 | (12) |
Other comprehensive income (loss), net of tax | 836 | (2,789) | 1,935 |
Comprehensive income (loss) | (17,493) | 16,647 | 77,786 |
Comprehensive loss attributable to non-controlling interest, net of tax | (9,165) | 0 | 0 |
Comprehensive income (loss) attributable to NETGEAR, Inc. | $ (8,328) | $ 16,647 | $ 77,786 |
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 (Losses) | Non-controlling Interest |
Beginning balance (in shares) at Dec. 31, 2015 | 32,601,000 | |||||
Beginning balance at Dec. 31, 2015 | $ 708,710 | $ 33 | $ 513,047 | $ 3 | $ 195,627 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | 21 | 21 | ||||
Change in unrealized gains and losses on derivatives, net of tax | 1,914 | 1,914 | ||||
Net income (loss) attributable to NETGEAR, Inc. | 75,851 | 75,851 | ||||
Stock-based compensation expense | $ 19,180 | 19,180 | ||||
Repurchases of common stock (in shares) | (900,000) | (894,000) | ||||
Repurchases of common stock | $ (38,252) | $ (1) | (38,251) | |||
Restricted stock unit withholdings (in shares) | (105,000) | (105,000) | ||||
Restricted stock unit withholdings | $ (4,686) | (4,686) | ||||
Issuance of common stock under stock-based compensation plans (in shares) | 1,356,000 | |||||
Issuance of common stock under stock-based compensation plans | 31,627 | $ 1 | 31,626 | |||
Income tax impact associated with stock option exercises | 2,454 | 2,454 | ||||
Net loss attributable to non-controlling interest in discontinued operations | 0 | |||||
Ending balance (in shares) at Dec. 31, 2016 | 32,958,000 | |||||
Ending balance at Dec. 31, 2016 | 796,819 | $ 33 | 566,307 | 1,938 | 228,541 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting principle in the period of adoption | 92 | 327 | (235) | |||
Change in unrealized gains and losses on available-for-sale securities, net of tax | (73) | (73) | ||||
Change in unrealized gains and losses on derivatives, net of tax | (2,716) | (2,716) | ||||
Net income (loss) attributable to NETGEAR, Inc. | 19,436 | 19,436 | ||||
Stock-based compensation expense | $ 22,147 | 22,147 | ||||
Repurchases of common stock (in shares) | (2,400,000) | (2,378,000) | ||||
Repurchases of common stock | $ (113,161) | $ (2) | (113,159) | |||
Restricted stock unit withholdings (in shares) | (135,000) | (135,000) | ||||
Restricted stock unit withholdings | $ (6,415) | (6,415) | ||||
Issuance of common stock under stock-based compensation plans (in shares) | 875,000 | |||||
Issuance of common stock under stock-based compensation plans | 14,356 | 14,356 | ||||
Net loss attributable to non-controlling interest in discontinued operations | 0 | |||||
Ending balance (in shares) at Dec. 31, 2017 | 31,320,000 | |||||
Ending balance at Dec. 31, 2017 | 730,485 | $ 31 | 603,137 | (851) | 128,168 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of new accounting principle in the period of adoption | 8,593 | 8,593 | ||||
Change in unrealized gains and losses on available-for-sale securities, net of tax | 78 | 78 | ||||
Net income (loss) attributable to NETGEAR, Inc. | (9,162) | (9,162) | ||||
Stock-based compensation expense | $ 31,966 | 31,966 | ||||
Repurchases of common stock (in shares) | (500,000) | (473,000) | ||||
Repurchases of common stock | $ (30,000) | (30,000) | ||||
Restricted stock unit withholdings (in shares) | (138,000) | (138,000) | ||||
Restricted stock unit withholdings | $ (8,065) | (8,065) | ||||
Issuance of common stock under stock-based compensation plans (in shares) | 853,000 | |||||
Issuance of common stock under stock-based compensation plans | 12,395 | $ 1 | 12,394 | |||
Change in unrealized gains and losses on derivatives, net of tax | 758 | 758 | ||||
Net loss attributable to non-controlling interest in discontinued operations | (9,167) | (9,167) | ||||
Stock-based compensation expense for Arlo's shares | 942 | 942 | ||||
Sale of Arlo's common stock | 170,246 | 146,088 | 24,158 | |||
Distribution of Arlo | (271,517) | (255,584) | (15,933) | |||
Ending balance (in shares) at Dec. 31, 2018 | 31,562,000 | |||||
Ending balance at Dec. 31, 2018 | $ 627,552 | $ 32 | $ 793,585 | $ (15) | $ (166,050) | $ 0 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Cash flows from operating activities: | |||
Net income (loss) | $ (18,329) | $ 19,436 | $ 75,851 |
Net (income) loss from discontinued operations | 35,655 | (30,569) | (5,539) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 18,851 | 22,529 | 29,932 |
Purchase premium amortization/discount accretion on investments, net | (745) | 46 | 167 |
Stock-based compensation | 26,461 | 18,969 | 17,141 |
Income tax impact associated with stock option exercises | 0 | 0 | 2,160 |
Gains /charges related to long-term investments | 861 | 0 | 0 |
Deferred income taxes | 2,459 | 21,119 | 869 |
Changes in assets and liabilities, net of effect of acquisitions: | |||
Accounts receivable | (43,055) | (23,121) | 23,132 |
Inventories | (82,160) | 37,202 | (12,648) |
Prepaid expenses and other assets | (12,114) | 4,604 | 8,691 |
Accounts payable | 45,503 | (432) | 9,816 |
Accrued employee compensation | 7,145 | (5,278) | 3,701 |
Other accrued liabilities | 15,589 | 15,109 | (17,766) |
Deferred revenue | 5,759 | 2,440 | (4,560) |
Income taxes payable | (16,939) | 18,293 | 3,870 |
Net cash provided by (used in) continuing operating activities | (15,059) | 100,347 | 134,817 |
Net cash used in discontinued operating activities | (88,152) | (12,823) | (16,636) |
Net cash provided by (used in) operating activities | (103,211) | 87,524 | 118,181 |
Cash flows from investing activities: | |||
Purchases of short-term investments | (81,814) | (136,556) | (144,271) |
Proceeds from maturities of short-term investments | 137,058 | 135,549 | 115,291 |
Purchases of property and equipment | (12,251) | (10,140) | (10,231) |
Purchases of long-term investments | (1,091) | (4,400) | 0 |
Proceeds from sale of long-term investments | 624 | 0 | 0 |
Payments made in connection with business acquisitions, net of cash acquired | (14,352) | 0 | 0 |
Net cash provided by (used in) continuing investing activities | 28,174 | (15,547) | (39,211) |
Net cash used in discontinued investing activities | (71,363) | (4,271) | (9,548) |
Net cash used in investing activities | (43,189) | (19,818) | (48,759) |
Cash flows from financing activities: | |||
Repurchases of common stock | (30,000) | (113,161) | (38,252) |
Restricted stock unit withholdings | (8,065) | (6,415) | (4,686) |
Proceeds from exercise of stock options | 6,841 | 9,508 | 28,147 |
Proceeds from issuance of common stock under employee stock purchase plan | 5,554 | 4,764 | 3,892 |
Net cash used in continuing financing activities | (25,670) | (105,304) | (10,899) |
Net cash provided by discontinued financing activities | 170,247 | 0 | 0 |
Net cash provided by (used in) financing activities | 144,577 | (105,304) | (10,899) |
Net increase (decrease) in cash and cash equivalents | (1,823) | (37,598) | 58,523 |
Cash and cash equivalents, at beginning of year | 202,870 | 240,468 | 181,945 |
Cash and cash equivalents, at end of year | 202,870 | 240,468 | |
Cash and cash equivalents, at end of year | 201,047 | 202,727 | |
Cash paid for income taxes | 23,220 | 32,090 | 35,149 |
Non-cash Investing And Financing Activities [Abstract] | |||
Additions to property and equipment included in accounts payable and other accrued liabilities | 2,604 | 638 | 744 |
Estimated fair value of contingent consideration in connection with business acquisition in other accrued liabilities | $ 5,953 | $ 0 | $ 0 |
The Company and Summary of Sign
The Company and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Summary of Significant Accounting Policies | 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 networking and Internet connected products to consumers and businesses. The Company's products are built on a variety of proven technologies such as wireless (Wi-Fi and 4G/5G mobile), Ethernet and powerline, with a focus on reliability and ease-of-use. The product line consists of devices that create and extend wired and wireless networks as well as devices that provide a special function and attach to the network, such as smart digital canvasses and services. These products are available in multiple configurations to address the changing needs of our customers in each geographic region in which the Company's products are sold. 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 and NETGEAR announced the pricing of Arlo's IPO and subsequently listed on the New York Stock Exchange on August 3, 2018 under the symbol "ARLO". Upon completion of the IPO on August 7, 2018, the Company held 62,500,000 shares of Arlo common stock, representing approximately 84.2% of the outstanding shares. On December 31, 2018, the Company completed the distribution of these 62,500,000 shares to its stockholders (the “Distribution”) and no longer owns any shares of Arlo common stock. Upon completion of the Distribution, the Company ceased to own a controlling financial interest in Arlo and Arlo’s historical financial results for periods presented are reflected in our consolidated financial statements as discontinued operations. For further details, refer to Note 3, Discontinued Operations, As of December 31, 2018 upon completion of the Distribution, the Company operates and reports in two segments: Connected Home, and Small and Medium Business ("SMB"). 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. Each segment contains leadership focused on the product development efforts, both from a product marketing and engineering standpoint, to service the unique needs of their customers. Connected Home segment focuses on consumers and consists of high-performance, dependable and easy-to-use 4G/5G mobile, Wi-Fi internet networking solutions and smart devices such as Orbi Voice smart speakers and Meural digital canvas; and SMB segment focuses on small and medium-sized businesses and consists of business networking, storage, wireless LAN and security solutions that bring enterprise-class functionality to small and medium-sized businesses at an affordable price. The Company sells networking products through multiple sales channels worldwide, including traditional retailers, online retailers, wholesale distributors, direct market resellers (“DMRs”), value-added resellers (“VARs”), and broadband service providers. Basis of presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and transactions have been eliminated in the consolidation of these subsidiaries. Fiscal periods The Company's fiscal year begins on January 1 of the year stated and ends on December 31 of the same year. The Company reports its results on a fiscal quarter basis rather than on a calendar quarter basis. Under the fiscal quarter basis, each of the first three fiscal quarters ends on the Sunday closest to the calendar quarter end, with the fourth quarter ending on December 31. Use of estimates The preparation of financial statements in conformity with 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 debt securities that consist of government 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. The marketable debt securities are held in the Company's name with one high quality financial institution, which acts as the Company's custodian and investment manager. These marketable 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 are also comprised of 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 to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses, and on certain existing assets and liabilities. Foreign currency forward contracts generally mature within six months of inception. 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 defined as hedges in the authoritative guidance for derivatives and hedging must be adjusted to fair value through earnings. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For derivatives designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. 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. The Company secures credit insurance for certain customers in international and domestic markets. As of December 31, 2018 , Best Buy, Inc. and affiliates, and Amazon and affiliates accounted for approximately 31% and 13% of the Company's total accounts receivable, respectively. As of December 31, 2017 , Best Buy, Inc. and affiliates, Amazon and affiliates, and Walmart and affiliates accounted for 28% , 12% and 12% 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 additional 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, in Notes to Consolidated Financial Statements for disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures. 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. The Company writes down its inventories based on estimated excess and obsolete inventories determined primarily by the demand forecast but 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. 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). Upon adoption, the majority of sales revenue continues to be recognized when control of the product transfers to a customer upon shipment or delivery. The primary change from ASC 605 to ASC 606 relates to the establishment of liability estimates for channel rebates and discounts upon revenue recognition on the basis of customary business practice. Under ASC 605, the Company recorded estimated reductions to revenues for sales incentives at the later of when the related revenue was recognized or when the program was offered to the customer or end consumer. Under ASC 606, the Company is required to estimate for rebates and discounts ahead of commitment date if customary business practice creates an implied expectation that such activities will occur in the future. Further, under ASC 606, deferred revenue balances are to be booked at an amount that reflects only the amounts expected to be received for future obligations. As such, an adjustment was made to allocate variable consideration to deferred revenue. Additionally, the balance sheet presentation of certain reserve balances previously shown net within accounts receivable are now presented as refund liabilities within current liabilities. Deferrals for undelivered shipments with destination shipping terms are now removed from receivables and deferred revenue. 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, 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 made available to the customers at the time of registration. 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 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 amounts 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. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that are planned and controlled by the Company. However, 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 that is included with certain hardware products, mainly Arlo systems, 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 Arlo systems, standalone selling price of the hardware is directly observable from add-on camera and base station sales. Standalone selling price of the service is estimated using an adjusted market approach. Revenue is then 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 or the estimated useful life. For Arlo systems, the hardware is recognized at the time control of the product transfers to the customer and the transaction price allocated to service is recognized over the estimated useful life of the system, beginning when the customer is expected to activate their account. Useful life of the systems is determined by industry norms, frequency of new model releases, and user history. 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 $9.5 million , $8.6 million and $9.0 million in the years ended December 31, 2018 , 2017 and 2016 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 $24.7 million , $23.2 million , and $18.7 million in the years ended December 31, 2018 , 2017 and 2016 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 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, for a further discussion on stock-based compensation. 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 2014-09 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers" (Topic 606). The revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("ASC 605") is superseded by Topic 606 ("ASC 606"). ASC 606 requires the recognition of revenue when promised goods or services are transferred to custome |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Adoption of ASC 606 On January 1, 2018, the Company adopted ASC 606 and applied this guidance to those contracts which were not completed at the date of adoption using the modified retrospective method. The Company recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings. 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. The majority of sales revenue continues to be recognized when control of the product transfers to a customer upon shipment or delivery. The primary impact of adopting ASC 606 relates to the establishment of liability estimates for channel rebates and discounts upon revenue recognition on the basis of customary business practice. Under ASC 606, the Company is required to estimate for rebates and discounts ahead of commitment date if customary business practice creates an implied expectation that such activities will occur in the future. The Company utilizes channel rebates and discounts to stimulate end user demand. Consequently, this change in guidance results in an adjustment to the statement of financial position to accelerate the recording of a liability for yet to be committed channel marketing rebates and discounts upon adoption. Further, under ASC 606, deferred revenue balances are to be booked at an amount that reflects only the amounts expected to be received for future obligations. As such, an adjustment was made to allocate variable consideration to deferred revenue. Additionally, the balance sheet presentation of certain reserve balances previously shown net within accounts receivable are now presented as refund liabilities within current liabilities. Deferrals for undelivered shipments with destination shipping terms are now removed from receivables and deferred revenue. The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheets for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances: As of Adjustments As of December 31, January 1, (In thousands) Assets: Accounts receivable, net $ 255,118 $ 5,286 $ 260,404 Inventories $ 162,942 $ (1,991 ) $ 160,951 Current assets of discontinued operations $ 243,125 $ 450 $ 243,575 Total current assets $ 1,015,664 $ 3,745 $ 1,019,409 Other non-current assets $ 49,471 $ 2,904 $ 52,375 Non-current assets of discontinued operations $ 41,126 $ 1,440 $ 42,566 Total assets $ 1,208,564 $ 8,089 $ 1,216,653 Liabilities: Accounts payable $ 91,205 $ (108 ) $ 91,097 Other accrued liabilities $ 149,821 $ 32,110 $ 181,931 Deferred revenue $ 21,212 $ (15,855 ) $ 5,357 Income taxes payable $ 7,015 $ 55 $ 7,070 Current liabilities of discontinued operations $ 130,663 $ 4,666 $ 135,329 Total current liabilities $ 424,436 $ 20,868 $ 445,304 Other non-current liabilities $ 8,766 $ (35 ) $ 8,731 Non-current liabilities of discontinued operations $ 13,333 $ (241 ) $ 13,092 Total liabilities $ 478,079 $ 20,592 $ 498,671 Stockholders’ equity: Retained earnings $ 128,168 $ (12,503 ) $ 115,665 The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheets as of December 31, 2018 : As of December 31, 2018 As reported Adjustments Balance without adoption of ASC 606 (In thousands) Assets Accounts receivable, net $ 303,667 $ (5,776 ) $ 297,891 Inventories $ 243,871 $ 2,419 $ 246,290 Other non-current assets $ 67,433 $ (2,811 ) $ 64,622 Liabilities: Accounts payable $ 139,748 $ 67 $ 139,815 Other accrued liabilities $ 199,472 $ (32,803 ) $ 166,669 Deferred revenue $ 11,086 $ 13,795 $ 24,881 Income taxes payable $ 2,020 $ 4 $ 2,024 Other non-current liabilities $ 12,232 $ 36 $ 12,268 Stockholders’ equity: Retained losses $ (166,050 ) $ 12,733 $ (153,317 ) The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated statement of operations for the fiscal year ended December 31, 2018 : Year Ended December 31, 2018 As reported Adjustments Balance without adoption of ASC 606 (In thousands) Net revenue $ 1,058,816 $ 2,247 $ 1,061,063 Cost of revenue $ 717,118 $ (252 ) $ 716,866 Gross profit $ 341,698 $ 2,499 $ 344,197 Provision for income taxes $ 25,878 $ (2,536 ) $ 23,342 Net income from continuing operations $ 17,326 $ 5,035 $ 22,361 Net loss from discontinued operations, net of tax $ (35,655 ) $ 5,721 $ (29,934 ) Net loss $ (18,329 ) $ 10,756 $ (7,573 ) Net loss attributable to non-controlling interest in discontinued operations (9,167 ) 598 (8,569 ) Net income (loss) attributable to NETGEAR, Inc. $ (9,162 ) $ 10,158 $ 996 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, 2018 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 53,945 $ 923 $ 904 $ 55,772 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 $7.4 million as of December 31, 2018 . There was no impairment of capitalized contract costs in the fiscal year of 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, 2018 deferred commissions were not significant. 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 changes in contract balances for the fiscal year ended December 31, 2018 : Balance Sheet Location December 31, 2018 January 1, 2018 (*) $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 303,667 $ 260,404 $ 43,263 16.6 % Contract liabilities - current Deferred revenue $ 11,086 5,357 $ 5,729 106.9 % Contract liabilities - non-current Other non-current liabilities $ 779 $ 728 $ 51 7.0 % * Includes the adjustments made upon ASC 606 adoption using the modified retrospective method. During the fiscal year ended December 31, 2018 , contract liabilities increased primarily due to consideration being received in advance of performance. During the fiscal year ended December 31, 2018 , $14.8 million of revenue was deferred due to unsatisfied performance obligations. During the fiscal year 2018 , $9.0 million of revenue was recognized for the satisfaction of performance obligations over time. $4.4 million of this recognized revenue was included in the contract liability balance at the beginning of the period. There were no significant changes in estimates during the period 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. Sales and usage-based taxes are excluded from net revenue. Year Ended December 31, 2018 2017 (*) 2016 (*) Connected Home SMB Total Connected Home SMB Total Connected Home SMB Total Geographic regions: Americas $ 576,476 $ 124,217 $ 700,693 $ 547,314 $ 117,775 $ 665,089 $ 595,606 $ 139,374 $ 734,980 EMEA 97,979 109,620 207,599 93,438 103,636 197,074 110,941 106,613 217,554 APAC 96,605 53,919 150,524 127,509 49,497 177,006 140,382 50,529 190,911 Total net revenue $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 $ 846,929 $ 296,516 $ 1,143,445 Sales channels: Service provider $ 156,671 $ 3,624 $ 160,295 $ 190,186 $ 3,268 $ 193,454 $ 249,980 $ 4,175 $ 254,155 Non-service provider 614,389 284,132 898,521 578,075 267,640 845,715 596,949 292,341 889,290 Total net revenue $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 $ 846,929 $ 296,516 $ 1,143,445 _________________________ * 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, 2018 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 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 $33.9 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, on the consolidated statement of operations. The following table presents financial results of Arlo: Year Ended December 31, 2018 2017 2016 (In thousands) Net revenues $ 464,649 $ 367,751 $ 184,853 Cost of net revenues 372,843 279,425 146,570 Gross profit 91,806 88,326 38,283 Operating expenses: Research and development 48,696 22,710 18,463 Sales and marketing 39,713 19,490 10,764 General and administrative 17,762 691 487 Separation expense 31,583 1,384 — Restructuring and other charges — — 40 Litigation reserves, net — 28 — Total operating expenses 137,754 44,303 29,754 Income (loss) from operations of discontinued operations (45,948 ) 44,023 8,529 Interest income 1,239 — — Other income (expense), net (41 ) 467 45 Income (loss) from discontinued operations before income taxes (44,750 ) 44,490 8,574 Provision (benefit) for income taxes (9,095 ) 13,921 3,035 Income (loss) from discontinued operations, net of tax $ (35,655 ) $ 30,569 $ 5,539 The following table presents the aggregate carrying amounts of the classes of assets and liabilities of the discontinued operations of Arlo: As of December 31, 2017 (In thousands) Carrying amounts of assets included as part of discontinued operations Cash and cash equivalents $ 143 Accounts receivable, net 157,680 Inventories 82,952 Prepaid expenses and other current assets 2,350 Current assets classified as discontinued operations 243,125 Property and equipment, net 3,311 Intangibles, net 4,348 Goodwill 21,149 Other non-current assets 12,318 Non-current assets classified as discontinued operations 41,126 Total assets classified as discontinued operations on the consolidated balance sheet $ 284,251 Carrying amounts of liabilities included as part of discontinued operations: Accounts payable $ 20,711 Accrued employee compensation 3,231 Other accrued liabilities 72,649 Deferred revenue 34,072 Current liabilities classified as discontinued operations 130,663 Other non-current liabilities 13,333 Non-current liabilities classified as discontinued operations 13,333 Total liabilities classified as discontinued operations on the consolidated balance sheet $ 143,996 |
Business Acquisitions
Business Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Business Acquisitions | 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. The fair value of such contingent consideration payable to Meural’s external shareholders is determined to be $5.9 million a nd is included in Other non-current liabilities on the consolidated balance sheets. As of December 31, 2018, there were no significant changes in the range of expected outcomes for the contingent consideration from the acquisition date.The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting. The results of Meural have been included in the consolidated financial statements since the date of acquisition. Pro forma results of operations for the acquisition are not presented as the financial impact to the Company's consolidated results of operations is not material. The purchase price allocation is subject to certain post-closing adjustments and 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 purchase price $ 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. T he 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. T he 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 of the acquired intangibles as customer relationship and $0.6 million of the acquired intangibles 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, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components Available-for-sale short-term investments As of December 31, 2018 December 31, 2017 Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cost Unrealized Gain Unrealized Loss Estimated Fair Value (In thousands) U.S. treasuries $ 70,330 $ 1 $ (17 ) $ 70,314 $ 124,816 $ — $ (146 ) $ 124,670 Certificates of deposits 149 — — 149 162 — — 162 Total $ 70,479 $ 1 $ (17 ) $ 70,463 $ 124,978 $ — $ (146 ) $ 124,832 The Company’s short-term investments are primarily comprised of marketable securities that are classified as available-for-sale and consist of government securities 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 securities have unrealized losses greater than 12 months. Equity investments without readily determinable fair values As noted above, the Company adopted ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities" on January 1, 2018. The Company's equity investments without determinable fair values amounted to $2.9 million and $4.5 million as of December 31, 2018 and 2017 , respectively. $1.4 million of impairment charges and $0.2 million upward adjustments for observable price changes were recognized during the fiscal year ended December 31, 2018 and there were no impairments recognized during the years ended December 31, 2017 and 2016 . Accounts receivable, net As of December 31, 2018 December 31, 2017 (In thousands) Gross accounts receivable $ 304,921 $ 273,734 Allowance for doubtful accounts (1,254 ) (1,050 ) Allowance for sales returns — * (14,321 ) Allowance for price protection — * (3,245 ) Total allowances (1,254 ) (18,616 ) Total accounts receivable, net $ 303,667 $ 255,118 _________________________ * 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. Refer to Note 2. Revenue Recognition , for additional information on the adoption impact. Inventories As of December 31, 2018 December 31, 2017 (In thousands) Raw materials $ 3,427 $ 4,465 Finished goods 240,444 158,477 Total inventories $ 243,871 $ 162,942 The Company records provisions for excess and obsolete inventory based on assumptions about future demand and marketing conditions. 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, 2018 December 31, 2017 (In thousands) Computer equipment $ 9,205 $ 10,065 Furniture, fixtures and leasehold improvements 18,286 21,464 Software 28,065 28,817 Machinery and equipment 60,552 56,423 Total property and equipment, gross 116,108 116,769 Accumulated depreciation and amortization (95,931 ) (99,420 ) Total property and equipment, net $ 20,177 $ 17,349 Depreciation and amortization expense pertaining to property and equipment was $10.5 million , $11.5 million and $13.9 million for the years ended December 31, 2018 , 2017 and 2016 , respectively. Intangibles, net As of December 31, 2018 As of December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 59,799 $ (56,978 ) $ 2,821 $ 56,799 $ (56,383 ) $ 416 Customer contracts and relationships 56,800 (44,280 ) 12,520 56,200 (37,130 ) 19,070 Other 10,345 (8,540 ) 1,805 9,145 (7,991 ) 1,154 Total intangibles, net 126,944 (109,798 ) 17,146 $ 122,144 $ (101,504 ) $ 20,640 Amortization of purchased intangibles in the years ended December 31, 2018 , 2017 and 2016 was $8.3 million , $11.0 million and $15.7 million , respectively. No impairment charges were recorded in the years ended December 31, 2018 , 2017 and 2016 . As of December 31, 2018, estimated amortization expense related to finite-lived intangibles for each of the next five years and thereafter is as follows (in thousands): 2019 $ 7,042 2020 6,205 2021 2,044 2022 527 2023 514 Thereafter 814 Total estimated amortization expense $ 17,146 Goodwill As of December 31, 2018 upon completion of the Distribution, the Company operates and reports in two segments: Connected Homes and SMB. The changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 are as follows: Connected Home SMB Total (In thousands) As of January 1, 2017 $ 28,035 $ 36,279 $ 64,314 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 On completion of the Arlo IPO on August 7, 2018, the Company evaluated the goodwill relating to the Arlo segment for impairment by comparing its fair value as evidenced by the quoted market price during the IPO with its carrying value, and concluded that the fair value of the Arlo reporting unit was not less than its carrying amount. Therefore, no goodwill impairment was recognized. The Company completed its annual impairment test of goodwill as of the first day of the fourth fiscal quarter of 2018 , or October 1, 2018 . In anticipation of the Distribution of its shareholding in Arlo Technologies, Inc., the Company elected to bypass the qualitative assessment and proceeded directly to a quantitative impairment test to determine if the goodwill for the remaining two segments, or reporting units, i.e. Connected Home and SMB, was impaired by comparing each reporting unit’s fair value with its carrying amount. The fair value of the reporting unit was determined by the income approach. Under the income approach, the Company calculated the fair value based on the present value of the estimated cash flows. Cash flow projections were based on management's estimates of revenue growth rates and net operating income margins, taking into consideration market and industry conditions. The discount rate used was based on the weighted-average cost of capital adjusted for the risk, size premium, and business-specific characteristics related to the business's ability to execute on the projected cash flows. Other unobservable inputs used to measure the fair value included a normalized working capital level, capital expenditures assumptions, and terminal growth rates. The results of the quantitative test indicated that the fair value of the reporting units, Connected Home and SMB, exceeds their carrying amounts, respectively. Therefore, as of December 31, 2018, the Company determined that the goodwill for the reporting units was not impaired. No goodwill impairment was recognized in the years ended December 31, 2018 , 2017 or 2016 . Accumulated goodwill impairment charges for the years ended December 31, 2018 and 2017 , was $74.2 million and $74.2 million , respectively. During the year ended December 31, 2018 , in conjunction with the Company's quantitative impairment assessment for goodwill, other long-lived assets, including property and equipment and intangibles, were assessed for recoverability, including the depreciation and amortization policies for the long-lived asset groups and their respective useful lives. The results of the assessment did not indicate that the carrying amount of the long-lived assets may not be recoverable from their undiscounted cash flows. Therefore, as of December 31, 2018 , the Company determined that the long-lived assets were not impaired. No impairment to its long-lived assets was recognized in the years ended December 31, 2018 , 2017 and 2016 . Charges related to the impairment of property and equipment were insignificant for the years ended December 31, 2018 , 2017 and 2016 . Other non-current assets As of December 31, 2018 December 31, 2017 (In thousands) Non-current deferred income taxes $ 57,557 $ 38,293 Other 9,876 11,178 Total other non-current assets $ 67,433 $ 49,471 Other accrued liabilities As of December 31, 2018 December 31, 2017 (In thousands) Sales and marketing $ 91,548 $ 64,540 Warranty obligation 14,412 * 44,068 Sales returns 46,318 * — Freight and duty 10,586 6,705 Other 36,608 34,508 Total other accrued liabilities $ 199,472 $ 149,821 ________________________ * 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. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments The Company’s subsidiaries have had, and will continue to have material future cash flows, including revenue and expenses, which are denominated in currencies other than the Company’s functional currency. The Company and all its subsidiaries designate the U.S. dollar as the functional currency. Changes in exchange rates between the Company’s functional currency and other currencies in which the Company transacts business will cause fluctuations in cash flow expectations and cash flow realized or settled. Accordingly, the Company uses derivatives to mitigate its business exposure to foreign exchange risk. The Company enters into foreign currency forward contracts in Australian dollars, British pounds, Euros, Canadian dollar, and Japanese yen to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses and existing assets and liabilities. 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 is exposed to credit losses in the event of nonperformance by the counter-parties of its forward contracts. The Company enters into derivative contracts with high-quality financial institutions and limits the amount of credit exposure to any one counter-party. In addition, the derivative contracts typically mature in less than six months and the Company continuously evaluates the credit standing of its counter-party financial institutions. The counter-parties to these arrangements are large highly rated financial institutions and the Company 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 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. 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, 2018 , and 2017 , are summarized as follows: Derivative Assets Balance Sheets Location December 31, Balance Sheets Location December 31, 2018 2017 2018 2017 (In thousands) (In thousands) Derivative contracts not designated as hedging instruments Prepaid expenses and other current assets $ 784 $ 1,314 Other accrued liabilities $ 331 $ 7,128 Derivative contracts designated as hedging instruments Prepaid expenses and other current assets 2 485 Other accrued liabilities 37 1,064 Total $ 786 $ 1,799 $ 368 $ 8,192 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. The following tables set forth the offsetting of derivative assets as of December 31, 2018 and 2017 : As of December 31, 2018 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Assets Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 323 $ — $ 323 $ (64 ) $ — $ 259 Wells Fargo 463 — 463 (298 ) — 165 Total $ 786 $ — $ 786 $ (362 ) $ — $ 424 As of December 31, 2017 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Assets Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 1,664 $ — $ 1,664 $ (1,664 ) $ — $ — Wells Fargo 135 — 135 (135 ) — — Total $ 1,799 $ — $ 1,799 $ (1,799 ) $ — $ — The following tables set forth the offsetting of derivative liabilities as of December 31, 2018 and 2017 : As of December 31, 2018 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 64 $ — $ 64 $ (64 ) $ — $ — J.P. Morgan Chase 6 — 6 — — 6 Wells Fargo 298 — 298 (298 ) — — Total $ 368 $ — $ 368 $ (362 ) $ — $ 6 As of December 31, 2017 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 7,815 $ — $ 7,815 $ (1,664 ) $ — $ 6,151 Wells Fargo 377 — 377 (135 ) — 242 Total $ 8,192 $ — $ 8,192 $ (1,799 ) $ — $ 6,393 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 is 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 hedges portions of its anticipated foreign currency exposure less than six months. The Company enters into about 10 forward contracts per quarter with an average size of approximately $7.0 million USD equivalent related to its cash flow hedging program. The effects of the Company's cash flow hedges on the consolidated statements of operations for the fiscal years ended December 31, 2018 , 2017 and 2016 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2018 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,058,816 $ 717,118 $ 82,416 $ 152,569 $ 64,857 Gains (losses) on cash flow hedge $ 665 $ (9 ) $ 83 $ (102 ) $ (53 ) Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2017 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,039,169 $ 731,453 $ 71,893 $ 138,679 $ 54,346 Gains (losses) on cash flow hedge $ (5,786 ) $ 18 $ 130 $ 788 $ 133 Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2016 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,143,445 $ 769,543 $ 70,904 $ 139,591 $ 53,996 Gains (losses) on cash flow hedge $ 850 $ (6 ) $ (55 ) $ (189 ) $ (30 ) 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 is recognized as a component of net revenue in the same period the related revenue is recognized. OCI associated with cash flow hedges of foreign currency costs of revenue and operating expenses are recognized as a component of cost of revenue and operating expenses in the same period and in the same statements of operations line item as the related costs of revenue and operating expenses are recognized. Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur within the designated hedge period or if not recognized within 60 days following the end of the hedge period. Deferred gains and losses in OCI with such derivative instruments are reclassified immediately into earnings through Other income (expense), net. Any subsequent changes in fair value of such derivative instruments are reflected in current earnings unless they are also re-designated as hedges of other transactions. The Company did not recognize any material net gains or losses related to the loss of hedge designation on discontinued cash flow hedges during the years ended December 31, 2018 , 2017 and 2016 . The pre-tax effects of the Company’s derivative instruments on OCI and the consolidated statements of operations for the years ended December 31, 2018 , 2017 and 2016 are summarized as follows: Derivatives Designated as Hedging Instruments Year Ended December 31, 2018 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ 1,416 Net revenue $ 665 Foreign currency forward contracts — Cost of revenue (9 ) Foreign currency forward contracts — Research and development 83 Foreign currency forward contracts — Sales and marketing (102 ) Foreign currency forward contracts — General and administrative (53 ) Total $ 1,416 $ 584 _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. Derivatives Designated as Hedging Instruments Year Ended December 31, 2017 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ (7,785 ) Net revenue $ (5,786 ) Foreign currency forward contracts — Cost of revenue 18 Foreign currency forward contracts — Research and development 130 Foreign currency forward contracts — Sales and marketing 788 Foreign currency forward contracts — General and administrative 133 Total $ (7,785 ) $ (4,717 ) _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. Derivatives Designated as Hedging Instruments Year Ended December 31, 2016 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ 2,757 Net revenue $ 850 Foreign currency forward contracts — Cost of revenue (6 ) Foreign currency forward contracts — Research and development (55 ) Foreign currency forward contracts — Sales and marketing (189 ) Foreign currency forward contracts — General and administrative (30 ) Total $ 2,757 $ 570 _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. 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 held on its financial statements to fluctuations in foreign currency exchange rates, as well as to reduce volatility in other income and expense. 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. Foreign currency denominated accounts receivable and payable are hedged with non-designated hedges when the related anticipated foreign revenue and expenses are recognized in the Company’s financial statements. The Company also hedges certain non-functional currency monetary assets and liabilities that may not be incorporated into the cash flow hedge program. The Company adjusts its non-designated hedges monthly and enters into about ten non-designated derivatives per quarter. The average size of its non-designated hedges is approximately $2.0 million USD equivalent and these hedges range from one to three months in duration. The effects of the Company’s derivatives not designated as hedging instruments in other income (expense), net in the consolidated statements of operations for the years ended December 31, 2018 , 2017 and 2016 , are as follows: Year ended December 31, Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative 2018 2017 2016 (In thousands) Foreign currency forward contracts Other income (expense), net $ 3,870 $ (5,085 ) $ 3,280 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing the net income (loss) attributable to NETGEAR, Inc. 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 attributable to NETGEAR, Inc. 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) attributable to NETGEAR, Inc. per share for the years ended December 31, 2018 , 2017 and 2016 was as follows: Year Ended December 31, 2018 2017 2016 (In thousands, except per share data) Numerator: Net income (loss) from continuing operations $ 17,326 $ (11,133 ) $ 70,312 Net income (loss) from discontinued operations (35,655 ) 30,569 5,539 Net income (loss) (18,329 ) 19,436 75,851 Less: Net loss attributable to non-controlling interest in discontinued operations (9,167 ) — — Net income (loss) attributable to NETGEAR, Inc. $ (9,162 ) $ 19,436 $ 75,851 Denominator: Weighted average common shares - basic 31,626 32,097 32,758 Potentially dilutive common share equivalent 1,511 — 970 Weighted average common shares - dilutive 33,137 32,097 33,728 Basic net income (loss) per share Net income (loss) from continuing operations $ 0.55 $ (0.35 ) $ 2.15 Net income (loss) from discontinued operations attributable to NETGEAR, Inc. (0.84 ) 0.96 0.17 Net income (loss) attributable to NETGEAR, Inc. $ (0.29 ) $ 0.61 $ 2.32 Diluted net income (loss) per share Net income (loss) from continuing operations $ 0.52 $ (0.35 ) $ 2.08 Net income (loss) from discontinued operations attributable to NETGEAR, Inc. (0.80 ) 0.96 0.17 Net income (loss) attributable to NETGEAR, Inc. $ (0.28 ) $ 0.61 $ 2.25 Anti-dilutive employee stock-based awards, excluded 815 279 258 |
Other Income (Expense), Net
Other Income (Expense), Net | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Other Income (Expense), Net | Other Income (Expense), Net Other income (expense), net consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Foreign currency transaction gain (loss), net $ (2,675 ) $ 5,292 $ (3,323 ) Foreign currency contract gain (loss), net 3,968 (3,879 ) 3,597 Other (783 ) 144 (440 ) Total $ 510 $ 1,557 $ (166 ) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income before income taxes and the provision for income taxes consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) United States $ 32,237 $ 36,461 $ 89,877 International 10,967 9,763 16,618 Total $ 43,204 $ 46,224 $ 106,495 Year Ended December 31, 2018 2017 2016 (In thousands) Current: U.S. Federal $ (587 ) $ 25,733 $ 28,796 State (2,338 ) 2,435 2,412 Foreign 4,267 1,545 4,130 1,342 29,713 35,338 Deferred: U.S. Federal 20,930 27,936 1,139 State 2,514 190 762 Foreign 1,092 (482 ) (1,056 ) 24,536 27,644 845 Total $ 25,878 $ 57,357 $ 36,183 Net deferred tax assets consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Deferred Tax Assets: Accruals and allowances $ 20,765 $ 16,629 Net operating loss carryforwards 1,673 50 Stock-based compensation 5,734 5,634 Deferred rent 1,296 1,977 Deferred revenue 1,100 1,459 Tax credit carryforwards 1,661 974 Acquired intangibles 31,902 15,598 Depreciation and amortization 866 904 Total deferred tax assets 64,997 43,225 Deferred Tax Liabilities: Other (706 ) (362 ) Total deferred tax liabilities (706 ) (362 ) Valuation Allowance (1) (6,734 ) (4,570 ) Net deferred tax assets $ 57,557 $ 38,293 _________________________ (1) Valuation allowance is presented gross. The valuation allowance net of the federal tax effect is $5.4 million and $3.6 million for the years ended December 31, 2018 and 2017 , respectively. 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, 2018 , a valuation allowance of $6.7 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 $4.6 million placed against deferred tax assets as of December 31, 2017 . Accordingly, the valuation allowance increased $2.2 million during 2018 . 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, 2018 , 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, 2018 2017 2016 Tax at federal statutory rate 21.0 % 35.0 % 35.0 % State, net of federal benefit 1.5 % 1.0 % 1.8 % Impact of international operations 1.9 % (8.8 )% (2.8 )% Stock-based compensation (0.3 )% (3.9 )% 1.2 % Tax credits (2.6 )% (2.0 )% (0.9 )% Valuation allowance 1.4 % — % — % Impact of the Tax Act (15.4 )% 104.6 % — % Write-off of future tax benefits related to Arlo 52.2 % — % — % Others 0.2 % (1.8 )% (0.3 )% Provision for income taxes 59.9 % 124.1 % 34.0 % Income tax benefits (provision) in the amount of $2.2 million related to stock options was credited to additional paid-in capital during the years ended December 31, 2016. 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 $(0.1) million , $0.4 million , and $(0.3) million were recorded in comprehensive income related to the years ended December 31, 2018 , 2017 , and 2016 , respectively. As of December 31, 2018 , the Company has approximately $8.0 million of acquired federal net operating loss carry forwards as well as $1.7 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, 2018 and December 31, 2017, $6.5 million and $17.5 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 $0.4 million and a benefit of $(0.7) million in relation to GILTI and FDII respectively, resulting on a net benefit of $(0.3) million . The Company is not subject to BEAT for the year ended in December 31st, 2018. 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. The German Tax Authority (GTA) is currently conducting a broad based audit of fiscal years 2014 through 2016 , which will cover income tax, trade tax, payroll tax, and VAT tax. 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 have since added the 2016 year to their query. Additionally, in December, 2017 the French Tax Authority commenced an audit of the Company’s 2015 and 2016 tax years. 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 $1.1 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, 2015 $ 12,830 Additions based on tax positions related to the current year 1,523 Additions for tax positions of prior years 45 Reductions for tax positions of prior years (237 ) Reductions due to lapse of applicable statutes (627 ) Adjustments due to foreign exchange rate movement (569 ) 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 The total amount of net UTB that, if recognized would affect the effective tax rate as of December 31, 2018 is $9.6 million . The ending net UTB results from adjusting the gross balance at December 31, 2018 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, 2018 , 2017 , and 2016 , total interest and penalties expensed were $0.1 million , $(0.4) million , and $0.6 million , respectively. As of December 31, 2018 and 2017 , accrued interest and penalties on a gross basis was $3.4 million , and $3.3 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 changed its indefinite reinvestment assertion on overseas earning with the exception of earnings in Taiwan related to its research and development facility. Accordingly, the Company recorded foreign withholding tax of $1.0 million on earnings of approximately $188.4 million through December 31, 2018. The Company does not anticipate additional US tax on the repatriation of these earnings. Further, no foreign tax credits have been recognized, as their benefit is uncertain. |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | Commitments and Contingencies Leases The Company leases office space, cars and equipment under operating leases, some of which are non-cancelable, with various expiration dates through December 2026 . Rent expense in the years ended of December 31, 2018 , 2017 , and 2016 was $9.4 million , $9.9 million , and $9.5 million , respectively. The terms of some of the Company’s office leases provide for rental payments on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. As of December 31, 2018 , future minimum lease payments under non-cancelable operating leases are as follows (in thousands): 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 Purchase Obligations The Company has entered into various master purchase agreements for inventory 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, 2018 , the Company had approximately $156.2 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, 2018 , the Company had long term, non-cancellable purchase commitments of $17.4 million pertaining to non-trade activities. Warranty Obligation Changes in the Company's warranty obligation, which is included in Other accrued liabilities on the consolidated balance sheets, were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Balance at the beginning of the year $ 44,068 $ 42,571 $ 50,216 Reclassified to sales returns upon adoption of ASC 606 (29,147 ) * — — Provision for warranty obligations made during the year 12,783 91,384 86,610 Settlements made during the year (13,292 ) (89,887 ) (94,255 ) Balance at the end of year $ 14,412 $ 44,068 $ 42,571 ________________________ * 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, 2018 . 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 f these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of December 31, 2018 . 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 ( 2 x for the Chief Executive Officer and 1 x 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. The Company had no liabilities recorded for these agreements as of December 31, 2018 . 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. Ericsson v. NETGEAR, Inc. On September 14, 2010, Ericsson Inc. and Telefonaktiebolaget LM Ericsson (collectively “Ericsson”) filed a patent infringement lawsuit against the Company and defendants D-Link Corporation, D-Link Systems, Inc., Acer, Inc., Acer America Corporation, and Gateway, Inc. in the U.S. District Court, Eastern District of Texas alleging that the defendants infringe certain Ericsson patents. The Company has been accused of infringing eight U.S. patents: 5,790,516 (the “‘516 Patent”); 6,330,435 (the “‘435 Patent”); 6,424,625 (the “‘625 Patent”); 6,519,223 (the “‘223 Patent”); 6,772,215 (the “‘215 Patent”); 5,987,019 (the “‘019 Patent”); 6,466,568 (the “‘568 Patent”); and 5,771,468 (the “'468 Patent"). Ericsson generally alleged that the Company and the other defendants infringe the Ericsson patents through the defendants' IEEE 802.11-compliant products. In addition, Ericsson alleged that the Company infringed the claimed methods and apparatuses of the '468 Patent through the Company's PCMCIA routers. On June 22, 2012, Intel filed its Complaint in Intervention, meaning that Intel also became a defendant. During litigation, Ericsson (a) dismissed the '468 Patent with prejudice and gave the Company a covenant not to sue as to products in the marketplace now or in the past, (b) dropped the '516 Patent and (c) dropped the '223 Patent, except for those products that use Intel chips. A jury trial occurred in the Eastern District of Texas from June 3 through June 13, 2013. After hearing the evidence, the jury found no infringement of the '435 and '223 Patents, and the jury found infringement of claim 1 of the '625 Patent, claims 1 and 5 of the '568 Patent, and claims 1 and 2 of the '215 Patent. The jury also found that there was no willful infringement by any defendant. Additionally, the jury found no invalidity of the asserted claims of the '435 and '625 Patents. The jury assessed the following damages against the defendants: D-Link: $435,000 ; NETGEAR: $3,555,000 ; Acer/Gateway: $1,170,000 ; Dell: $1,920,000 ; Toshiba: $2,445,000 ; Belkin: $600,000 . The damages awards equated to 15 cents per unit for each accused 802.11 device sold by each defendant ( 5 cents per patent). The Company and other defendants appealed the jury verdict. On December 4, 2014, the Federal Circuit issued its opinion and order in the appeal. The Federal Circuit vacated the entirety of the $3.6 million jury verdict against the Company and other defendants’ damages awards and also vacated the ongoing 15 cent s per unit royalty verdict, finding that the District Court had not properly instructed the jury on royalty rates and Ericsson’s licensing promises. While the Federal Circuit found the district court had inadequate jury instructions, it held that there was enough evidence for the jury to find infringement of two claims of U.S. Patent Number 6,466,568 and two claims of U.S. Patent Number 6,772,215, but reversed the lower court’s decision not to grant a noninfringement judgment as a matter of law regarding the third patent, U.S. Patent Number 6,424,625, finding that no reasonable jury could find that the ‘625 Patent was infringed by the defendants. The case was remanded for further proceedings. In September 2013, Broadcom filed petitions in the USPTO at the Patent Trial and Appeal Board (PTAB) seeking inter partes review (“IPR”) of Ericsson’s three patents that the jury found were infringed by the Company and other defendants. On March 6, 2015, the PTAB invalidated all the claims of these three patents that were asserted against the Company and other defendants, ruling these claims were anticipated or obvious in light of prior art. This PTAB decision comes on top of the Federal Circuit decision (a) vacating the jury verdict after finding that the district court had not properly instructed the jury on royalty rates and Ericsson’s licensing promises, and (b) ruling that no reasonable jury could have found the ‘625 Patent infringed. Accordingly, the Company has reversed the accruals related to this case. Ericsson appealed the PTAB’s Broadcom IPR decision to the Federal Circuit and also requested that the PTAB reconsider its decision. The PTAB denied Ericsson’s request for reconsideration. On appeal to the Federal Circuit, Ericsson argued that the PTAB’s determination that Broadcom had timely filed its IPR petitions was improper, as it was in privity with the defendants, and that the PTAB should not have invalidated the claims of the '625 Patent, the '568 Patent, and '215 Patent. The Federal Circuit upheld the invalidity of the patents’ claims, as previously determined by the PTAB, and ruled that Ericsson could not appeal the timeliness of Broadcom’s IPR petitions. Ericsson petitioned the Federal Circuit for an en banc rehearing of the Federal Circuit's panel decision that Broadcom was timely in bringing its IPRs, and the Federal Circuit agreed to the en banc rehearing. On January 8, 2018, the Federal Circuit sitting en banc ruled that the timeliness of Broadcom’s IPR petitions was an appealable issue. Following this en banc decision finding that PTAB decisions on privity are appealable, on April 20, 2018, the original three judge panel upheld its prior finding of invalidity and found that Broadcom was not in privity with the defendants in the district court case, and had timely filed its IPR petitions. In response, Ericsson filed another motion for an en banc hearing of this decision. On August 14, 2018, the Federal Circuit denied Ericsson’s motions for rehearing and rehearing en banc. On January 7, 2019, the US Supreme Court denied certiorari to hear the final appeal of the case. This case is now closed. The Company does not infringe any valid Ericsson patent. 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 of 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. The decision has yet to be served to the Tax Office. The enactment of recent legislative actions that introduced a tax amnesty program (Law n. 136/2018) had the effect of suspending the Court decision for nine months. Accordingly, this effectively extends the Tax Office deadline for filing its appeal from January 12, 2019 to November 19, 2019. Other than the extension of the deadline, the impact of the amnesty program on the Company is unclear. 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 on April 19, 2017. The Company filed its counter brief on June 16, 2017 and awaits the scheduling of the hearing. 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. The Northern District of California case against the Company remains stayed. 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. 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 Wi-Fi 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 Wi-Fi 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 Wi-Fi 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. Discovery in this case is ongoing. 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 case is stayed. 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 3 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 6 patents asserted in the Amended Complaint. It is too early to reasonably estimate any financial impact to the Company resulting from this litigation matter. MyMail v. NETGEAR, Inc. On August 25, 2017, the non-practicing entity MyMail Ltd. (“MyMail”) sued the Company for patent infringement in the District of Delaware. This is MyMail’s third round of cases, starting in November 2016, and, in this round, MyMail also filed against Ricoh, Panasonic, Acer, and TCL Communications. MyMail is accusing essentially all the Company’s routers and range extenders of infringing claim 5 of U.S. Patent 8,732,318 (the ‘318 patent), entitled “Method of Connecting a User to a Network.” Claim 5 of the ’318 Patent describes a method for modifying network access information and then accessing the network using the modified information. MyMail is specifically accusing the Wi-Fi Protected Setup (WPS) function of the accused routers and range extenders. On December 7, 2017, the Company answered the complaint. In addition to denying that each claim limitation of patents in suit is met, the Company also asserted various affirmative defenses, including invalidity and noninfringement. The parties submitted their jointly proposed scheduling order to the Court on January 11, 2018, which the Court generally adopted in its Scheduling Order of January 17, 2018. The Scheduling Order set the trial to begin on December 2, 2019. Discovery is ongoing. On February 19, 2018, MyMail submitted its list of accused products. Most Arlo-branded products and the Company’s router products were listed. MyMail’s initial infringement contentions were submitted on April 20, 2018. The parties have settled and the case was dismissed on January 22, 2019, |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2018 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | 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. As of December 31, 2018 , 1.5 million shares remained authorized for repurchase under the repurchase program. The Company repurchased, as reported based on trade date, shares of approximately 0.5 million common stock at a cost of $30.0 million during the year ended December 31, 2018 . During the years ended December 31, 2017 and 2016 , the Company repurchased, as reported based on trade date, approximately 2.4 million shares of common stock at a cost of $113.2 million and approximately 0.9 million shares of common stock at a cost of $38.3 million , respectively. The Company repurchased, as reported based on trade date, approximately 138,000 shares of common stock at a cost of $8.1 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, 2018 . Similarly, during the years ended December 31, 2017 and 2016 , the Company repurchased, as reported based on trade date, approximately 135,000 shares of common stock at a cost of $6.4 million and 105,000 shares of common stock at a cost of $4.7 million , respectively, to facilitate tax withholding for RSUs. 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, 2018 , 2017 and 2016 : Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2015 $ (64 ) $ 43 $ 24 $ 3 Other comprehensive income (loss) before reclassifications 33 3,007 (572 ) 2,468 Less: Amount reclassified from accumulated other comprehensive income — 820 (287 ) 533 Net current period other comprehensive income (loss) 33 2,187 (285 ) 1,935 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 ) The following tables provide details about significant amounts reclassified out of each component of accumulated other comprehensive income for the years ended December 31, 2018 , 2017 and 2016 : Year Ended December 31, Details about Accumulated Other Comprehensive Income Components 2018 2017 2016 Amount Reclassified from AOCI Affected Line Item in the Statements of Operations Amount Reclassified from AOCI Affected Line Item in the Statements of Operations Amount Reclassified from AOCI Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency forward contracts $ 665 Net revenue $ (5,786 ) Net revenue $ 850 Net revenue Foreign currency forward contracts (9 ) Cost of revenue 18 Cost of revenue (6 ) Cost of revenue Foreign currency forward contracts 83 Research and development 130 Research and development (55 ) Research and development Foreign currency forward contracts (102 ) Sales and marketing 788 Sales and marketing (189 ) Sales and marketing Foreign currency forward contracts (53 ) General and administrative 133 General and administrative (30 ) General and administrative Total, from continuing operations before income taxes 584 Total from continuing operations before tax (4,717 ) Total from continuing operations before tax 570 Total from continuing operations before tax Tax impact from continuing operations (123 ) Tax impact from continuing operations 1,651 Tax impact from continuing operations (200 ) Tax impact from continuing operations Total, from continuing operations net of tax 461 Total, from continuing operations net of tax (3,066 ) Total, from continuing operations net of tax 370 Total, from continuing operations net of tax Total, from discontinued operations net of tax 4 Total, from discontinued operations net of tax (1,890 ) Total, from discontinued operations net of tax 163 Total, from discontinued operations net of tax Total, net of tax $ 465 $ (4,956 ) $ 533 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits and Share-based Compensation, Noncash [Abstract] | |
Employee Benefit Plans | 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, 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. Award vesting periods for this plan are generally four years . 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. As of December 31, 2018 , upon the Distribution, approximately 1.7 million shares remained available for future grants under the 2016 Plan. 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. Options granted under the 2016 Plan may be either incentive stock options or nonstatutory stock options. Incentive stock options (“ISO”) may be granted only to Company employees (including officers and directors who are also employees). Nonstatutory stock options (“NSO”) may be granted to Company employees, directors and consultants. Options may be granted for periods of up to ten years and at prices no less than the estimated fair value of the common stock on the date of grant. In addition, the exercise price of an ISO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. Options granted under the 2016 Plan generally vest over four years , the first tranche at the end of twelve months and the remaining shares underlying the option vesting monthly over the remaining three years . Stock Appreciation Rights may be granted under the 2016 Plan subject to the terms specified by the plan administrator, provided that the term of any such right may not exceed ten years from the date of grant. The exercise price may not be less than the fair market value of the Company’s common stock on the date of grant. Restricted stock awards may be granted under the 2016 Plan subject to the terms specified by the plan administrator. The period over which any restricted award may fully vest is generally no less than three years . Restricted stock awards are nonvested stock awards that may include grants of restricted stock or grants of restricted stock units. Restricted stock awards are rights to acquire or purchase shares that generally are subject to transferability and forfeitability restrictions for a specified period. Restricted stock has the same voting rights as other common stock and is considered to be currently issued and outstanding. Restricted stock units do not have the voting rights of common stock, and the shares underlying the restricted stock units are not considered issued and outstanding. The Company expenses the cost of the restricted stock awards, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which the restrictions lapse. Performance units and performance shares are awards that result in a payment to a participant only if specified performance objectives or other vesting provisions are achieved during a specified performance period. Each performance unit will have an initial value established by the Administrator on or before the grant date. Each performance share will have an initial value equal to the fair market value of a share on the grant date. The plan administrator will determine the number of performance awards that will be granted and will establish the performance goals and other conditions for payment of such performance awards. The period of measuring the achievement of performance goals will be specified by an award agreement. Other stock or cash awards may be granted under the 2016 Plan subject to the terms specified by the plan administrator. 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. Any shares of common stock subject to an award that is forfeited, settled in cash, expires or is otherwise settled without the issuance of shares shall again be available for awards under the 2016 Plan. 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, 2018 , 2017 , and 2016 , the Company recognized ESPP compensation expense of $1.4 million , $1.2 million and $1.1 million , respectively. 124,000 shares of common stock were purchased at an average exercise price of $54.40 in fiscal 2018 . As of December 31, 2018 , 0.7 million shares were reserved for future issuance under the ESPP. Modifications of Equity Awards In connection with Arlo's Distribution on December 31, 2018, under the provisions of the existing plans, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement (equitable adjustment) to preserve the intrinsic value of the awards immediately before and after the Distribution. Upon the Distribution, employees holding stock options and restricted stock units ("RSUs") denominated in pre-Distribution NETGEAR stock received a number of otherwise-similar awards in post-Distribution NETGEAR stock and/or Arlo stock based on the conversion ratios outlined for each group of employees in the Employee Matters Agreement that the Company entered into in connection with the Distribution. For purposes of the vesting of these equity awards, continued employment or service with NETGEAR or with Arlo is treated as continued employment for purposes of both NETGEAR's and Arlo's equity awards and the vesting terms of each converted grant remained unchanged. As of December 31, 2018, the employees participating in the ESPP plan were all NETGEAR employees. There were no changes to the plan terms described above with the exception that the price on the grant date, or August 16, 2018, was adjusted to exclude the value of Arlo based on the conversion ratios applied to other equity awards. Due to the modification of the equity awards as a result of the Distribution, the Company compared the fair value of the outstanding equity awards immediately before and after the Distribution and no incremental fair value was recognized as a result of the above adjustments due to immateriality. Option Activity Stock option activity during the year ended December 31, 2018 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, 2017 1 1,879 $ 34.08 Granted 1 378 69.70 Exercised 1 (289 ) 23.76 Expired 1 (6 ) 21.45 Equitable adjustment - options granted 2 1,969 25.30 Equitable adjustment - options cancelled 2 (1,962 ) 42.50 Outstanding as of December 31, 2018 1,969 $ 25.30 6.29 $ 17,338 As of December 31, 2018 Vested and expected to vest 1,969 $ 25.30 6.29 $ 17,338 Exercisable Options 1,230 $ 20.53 4.94 $ 14,511 _________________________ (1) Weighted average exercise price was calculated using exercise price prior to the Distribution. (2) The equitable adjustments represented equity awards modifications upon the Distribution discussed above. The aggregate intrinsic values in the table above represent the total pre-tax intrinsic values (the difference between the Company’s adjusted closing stock price on the last trading day of 2018 , or December 31, 2018, and the adjusted exercise price per the equity awards modification described above, 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, 2018 . The Company’s adjusted closing price on December 31, 2018 was calculated by Nasdaq to exclude the value of Arlo following the Distribution. 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, 2018 , 2017 , and 2016 was $11.0 million , $7.7 million and $14.5 million , respectively. The total fair value of options vested during the years ended December 31, 2018 , 2017 , and 2016 was $3.8 million , $3.8 million and $4.2 million , respectively. The following table summarizes significant ranges of outstanding and exercisable stock options as of December 31, 2018 : 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) $7.28 - $19.32 512 5.05 $ 18.47 479 $ 18.46 $19.33 - $20.98 418 3.12 20.04 417 20.04 $21.86 - $25.37 633 7.58 24.36 328 24.00 $29.23 - $38.32 50 9.27 34.68 6 29.23 $41.67 - $41.67 356 9.07 41.67 — — $7.28 - $41.67 1,969 6.29 $ 25.30 1,230 $ 20.53 RSU Activity RSU activity during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2017 1 1,130 $ 43.22 Granted 1 971 67.78 Vested 1 (439 ) 41.24 Cancelled 1 (89 ) 55.66 Equitable adjustment - granted 2 1,627 34.31 Equitable adjustment - cancelled 2 (1,573 ) $ 58.23 Outstanding as of December 31, 2018 1,627 $ 34.31 _________________________ (1) Weighted average grant date fair value was calculated using grant date fair value prior to the Distribution. (2) The equitable adjustments represented equity awards modifications upon the Distribution discussed above. The total fair value of RSUs vested during the years ended December 31, 2018 , 2017 and 2016 was $25.7 million , $19.5 million and $15.4 million , respectively. The grant date fair value of RSUs vested during the years ended December 31, 2018 , 2017 and 2016 was $18.1 million , $14.6 million and $10.8 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. Prior to February 16, 2016, the fair value of ESPP is based on the 15% discount at purchase, since the price of the shares is determined at the purchase date. The fair value of options granted and the shares offered under the ESPP commencing February 16, 2016 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 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 option grants and purchase rights granted under the ESPP during the years ended December 31, 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 2018 2017 2016 Stock Options ESPP Expected life (in years) 4.4 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 2.36 % 1.66 % 1.28 % 2.00 % 0.93 % 0.43 % Expected volatility 31.1 % 31.6 % 35.4 % 37.9 % 29.7 % 38.3 % Dividend yield — — — — — — The above table does not include the impacts of the equitable adjustment resulting from the Distribution discussed above. The weighted average estimated fair value of options granted during the years ended December 31, 2018 , 2017 and 2016 was $20.63 , $12.35 and $12.28 , respectively. The following table sets forth the stock-based compensation expense resulting from stock options, restricted stock awards, and the Employee Stock Purchase Plan included in the Company’s consolidated statements of operations: Year Ended December 31, 2018 2017 2016 (In thousands) Cost of revenue $ 2,435 $ 1,406 $ 1,473 Research and development 4,283 2,968 2,726 Sales and marketing 8,267 5,481 4,934 General and administrative 11,476 9,114 8,008 Total $ 26,461 $ 18,969 $ 17,141 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 $0.7 million in the years ended December 31, 2018 , 2017 and 2016 . As of December 31, 2018 , $8.5 million of unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 2.5 years. As of December 31, 2018 , $45.5 million of unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted-average period of 2.5 years. If there are any modifications or cancellations of the underlying unvested awards, we may be required to accelerate, increase or cancel all or a portion of the remaining unearned stock-based compensation expense. 401(k) Plan In April 2000, the Company adopted the NETGEAR 401(k) Plan to which employees may contribute up to 100% of salary subject to the legal maximum. In the first fiscal quarter of 2012, the Company began matching 50% of contributions for employees that remain active with the Company through the end of the fiscal year, up to a maximum of $6,000 in employee contributions. During the years ended December 31, 2018 , 2017 and 2016 the Company recognized $0.9 million , $0.8 million and $0.8 million , respectively, in expenses related to the 401(k) match. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | 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. As of December 31, 2018 upon completion of the Distribution, 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 4G/5G mobile, Wi-Fi internet networking solutions and smart devices such as Orbi Voice smart speakers and Meural digital canvas; and • SMB: Focused on small and medium-sized businesses and consists of business networking, storage, wireless LAN 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 focused on the 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 expenses, restructuring and other charges, litigation reserves, net, interest income 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, 2018 2017 2016 (In thousands, except percentage data) Net revenue: Connected Home 771,060 768,261 846,929 SMB 287,756 270,908 296,516 Total net revenue $ 1,058,816 $ 1,039,169 $ 1,143,445 Contribution income: Connected Home 96,340 83,870 138,997 Connected Home contribution margin 12.5 % 10.9 % 16.4 % SMB 70,142 63,865 72,539 SMB contribution margin 24.4 % 23.6 % 24.5 % Total segment contribution income 166,482 147,735 211,536 Corporate and unallocated costs (90,186 ) (75,305 ) (69,623 ) Amortization of intangibles (1) (7,979 ) (10,663 ) (15,361 ) Stock-based compensation expense (26,461 ) (18,969 ) (17,141 ) Separation expenses (929 ) — — Restructuring and other charges (2,198 ) (97 ) (3,841 ) Litigation reserves, net (15 ) (148 ) (73 ) Interest income 3,980 2,114 1,164 Other income (expense), net 510 1,557 (166 ) Income before income taxes $ 43,204 $ 46,224 $ 106,495 _________________________ (1) Amount excludes amortization expense related to patents within purchased intangibles in cost of revenue. The following table shows net revenue from service provider customers within each of the reportable segments for the periods indicated: Year Ended December 31, 2018 2017 2016 (In thousands) Connected Home 156,671 190,186 249,980 SMB 3,624 3,268 4,175 Total service provider net revenue $ 160,295 $ 193,454 $ 254,155 Operations by Geographic Region The Company conducts business across three geographic regions: Americas, EMEA and APAC. Net revenue consists of gross product shipments and service revenue, less allowances for estimated sales returns for stock rotation and warranty, price protection, end-user customer rebates and other channel sales incentives deemed to be a reduction of net revenue per the authoritative guidance for revenue recognition, and net changes in deferred revenue. 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, 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 (In thousands) United States (U.S.) $ 686,145 $ 648,152 $ 713,178 Americas (excluding U.S.) 14,548 16,937 21,802 EMEA 207,599 197,074 217,554 APAC 150,524 177,006 190,911 Total net revenue $ 1,058,816 $ 1,039,169 $ 1,143,445 Long-lived assets by Geographic Area Long-lived assets include purchased intangibles, goodwill and property and equipment. The Company's property and equipment are located in the following geographic locations: As of December 31, 2018 December 31, 2017 December 31, 2016 (In thousands) United States $ 4,993 $ 7,735 $ 9,274 Canada 4,359 1,745 2,745 EMEA 95 140 206 China 7,652 5,130 4,218 APAC (excluding China) 3,078 2,599 1,704 Total property and equipment, net $ 20,177 $ 17,349 $ 18,147 Significant Customers Two customers, primarily within the Connected Home segment, accounted for 17% and 15% of net revenue in the year ended December 31, 2018 , respectively. Two customers, primarily within the Connected Home segment, accounted for 16% and 13% of net revenue in the year ended December 31, 2017 , respectively. Two customers, primarily within the Connected Home segment, accounted for 15% and 12% of net revenue in the year ended December 31, 2016 , respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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, 2018 and 2017 : 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) Included in Other non-current accrued liabilities on the Company’s consolidated balance sheets. The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with the acquisition of Meural that is contingent upon the achievement of certain technical and service revenue milestones. Refer to Note 4, Business Acquisition , regarding detailed disclosures on the determination of fair value of the contingent consideration. As of December 31, 2017 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 $ 12,606 $ 12,606 $ — $ — Available-for-sale debt investments: U.S. treasuries (1) 124,670 — 124,670 — Available-for-sale investments: certificates of deposit (1) 162 — 162 — Trading securities: mutual funds (1) 2,094 2,094 — — Foreign currency forward contracts (2) 1,799 — 1,799 — Total assets measured at fair value $ 141,331 $ 14,700 $ 126,631 $ — Liabilities: Foreign currency forward contracts (3) $ 8,192 $ — $ 8,192 $ — Total liabilities measured at fair value $ 8,192 $ — $ 8,192 $ — _________________________ (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. The Company's investments in cash equivalents and available-for-sale 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 enters into foreign currency forward contracts with only those counterparties that have long-term credit ratings of A-/A3 or higher. 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. Additionally, the Company includes an adjustment for non-performance risk in the recognized measure of fair value of derivative instruments. As of December 31, 2018 and 2017 , the adjustment for non-performance risk did not have a material impact on the fair value of the Company's foreign currency forward contracts. 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. |
Restructuring and Other Charges
Restructuring and Other Charges | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring Charges [Abstract] | |
Restructruring and Other Charges | 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 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. Restructuring and other charges recognized in 2016 related primarily to resize our former commercial segment and former service provider segment. Charges incurred in 2016 primarily related to severance, other one-time termination benefits and other associated costs. Amounts attributable to lease contract termination charges will be paid over the remaining lease term until January 2022 . The following table provides a summary of accrued restructuring and other charges activity for the years ended December 31, 2018 , 2017 and 2016 : Employee termination charges Lease contract termination and other charges Total (In thousands) Balance as of December 31, 2015 $ 13 $ 1,253 $ 1,266 Additions (1) 3,086 629 3,715 Cash payments (2,902 ) (480 ) (3,382 ) Adjustments (191 ) — (191 ) 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 _________________________ (1) Total restructuring and other charges recognized in the Company's consolidated statements of operations for the year ended December 31, 2016 included non-cash charges and adjustments, net of $0.3 million . This amount has been excluded from the table above. |
Quarterly Financial Data
Quarterly Financial Data | 12 Months Ended |
Dec. 31, 2018 | |
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, September 30, July 1, April 1, Net revenue $ 288,928 $ 269,411 $ 255,276 $ 245,201 Gross profit $ 90,654 $ 94,445 $ 80,280 $ 76,319 Provision 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 from continuing operations $ (0.02 ) $ 0.49 $ 0.02 $ 0.03 Net income (loss) per share attributable to NETGEAR, Inc. $ (0.62 ) $ 0.30 $ (0.16 ) $ 0.17 December 31, October 1, July 2, April 2, Net revenue $ 274,149 $ 251,950 $ 251,685 $ 261,385 Gross profit $ 76,129 $ 76,096 $ 75,380 $ 80,111 Provision for income taxes $ 48,496 $ 950 $ 3,061 $ 4,850 Net income (loss) from continuing operations $ (41,778 ) $ 9,624 $ 9,989 $ 11,032 Net income (loss) $ (31,934 ) $ 20,794 $ 14,582 $ 15,994 Net income (loss) attributable to NETGEAR, Inc. $ (31,934 ) $ 20,794 $ 14,582 $ 15,994 Net income (loss) per share - basic: Income from continuing operations $ (1.33 ) $ 0.30 $ 0.31 $ 0.33 Net income (loss) attributable to NETGEAR, Inc. $ (1.02 ) $ 0.66 $ 0.45 $ 0.49 Net income (loss) per share - diluted: Income from continuing operations $ (1.33 ) $ 0.30 $ 0.30 $ 0.32 Net income (loss) attributable to NETGEAR, Inc. $ (1.02 ) $ 0.64 $ 0.44 $ 0.47 |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2018 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule I I— Valuation and Qualifying Accounts | Schedule II—Valuation and Qualifying Accounts* Balance at Beginning of Year Other Additions Deductions Balance at End of Year (In thousands) Allowance for doubtful accounts: Year ended December 31, 2018 $ 1,050 $ — $ 50 $ 154 $ 1,254 Year ended December 31, 2017 1,049 — 99 (98 ) 1,050 Year ended December 31, 2016 1,049 — 60 (60 ) 1,049 Allowance for sales returns: Year ended December 31, 2018 $ 14,321 $ (14,321 ) ** $ — $ — $ — Year ended December 31, 2017 10,602 — 26,419 (22,700 ) 14,321 Year ended December 31, 2016 14,298 — 19,892 (23,588 ) 10,602 Allowance for price protection: Year ended December 31, 2018 $ 3,245 $ (3,245 ) ** $ — $ — $ — Year ended December 31, 2017 4,185 — 7,149 (8,089 ) 3,245 Year ended December 31, 2016 2,107 — 11,728 (9,650 ) 4,185 |
The Company and Summary of Si_2
The Company and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
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 debt securities that consist of government 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. The marketable debt securities are held in the Company's name with one high quality financial institution, which acts as the Company's custodian and investment manager. These marketable 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 are also comprised of 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 to manage the exposures to foreign exchange risk related to expected future cash flows on certain forecasted revenue, costs of revenue, operating expenses, and on certain existing assets and liabilities. Foreign currency forward contracts generally mature within six months of inception. 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 defined as hedges in the authoritative guidance for derivatives and hedging must be adjusted to fair value through earnings. For derivative instruments that hedge the exposure to variability in expected future cash flows that are designated as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated other comprehensive income in stockholders' equity and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The ineffective portion of the gain or loss on the derivative instrument is recognized in current earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. For derivatives designated as cash flow hedges, changes in the time value are excluded from the assessment of hedge effectiveness and are recognized in earnings. |
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. The Company secures credit insurance for certain customers in international and domestic markets. |
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, in Notes to Consolidated Financial Statements for disclosures regarding fair value measurements in accordance with the authoritative guidance for fair value measurements and disclosures. |
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. The Company writes down its inventories based on estimated excess and obsolete inventories determined primarily by the demand forecast but 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. |
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). Upon adoption, the majority of sales revenue continues to be recognized when control of the product transfers to a customer upon shipment or delivery. The primary change from ASC 605 to ASC 606 relates to the establishment of liability estimates for channel rebates and discounts upon revenue recognition on the basis of customary business practice. Under ASC 605, the Company recorded estimated reductions to revenues for sales incentives at the later of when the related revenue was recognized or when the program was offered to the customer or end consumer. Under ASC 606, the Company is required to estimate for rebates and discounts ahead of commitment date if customary business practice creates an implied expectation that such activities will occur in the future. Further, under ASC 606, deferred revenue balances are to be booked at an amount that reflects only the amounts expected to be received for future obligations. As such, an adjustment was made to allocate variable consideration to deferred revenue. Additionally, the balance sheet presentation of certain reserve balances previously shown net within accounts receivable are now presented as refund liabilities within current liabilities. Deferrals for undelivered shipments with destination shipping terms are now removed from receivables and deferred revenue. 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, 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 made available to the customers at the time of registration. 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 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 amounts 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. Typically variable consideration does not need to be constrained as estimates are based on predictive historical data or future commitments that are planned and controlled by the Company. However, 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 that is included with certain hardware products, mainly Arlo systems, 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 Arlo systems, standalone selling price of the hardware is directly observable from add-on camera and base station sales. Standalone selling price of the service is estimated using an adjusted market approach. Revenue is then 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 or the estimated useful life. For Arlo systems, the hardware is recognized at the time control of the product transfers to the customer and the transaction price allocated to service is recognized over the estimated useful life of the system, beginning when the customer is expected to activate their account. Useful life of the systems is determined by industry norms, frequency of new model releases, and user history. 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 Advertising costs are expensed as incurred. |
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 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. |
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 2014-09 In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU 2014-09, "Revenue from Contracts with Customers" (Topic 606). The revenue recognition requirements in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition ("ASC 605") is superseded by Topic 606 ("ASC 606"). ASC 606 requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. On January 1, 2018, the Company adopted ASC 606 and applied this guidance to the contracts which were not completed at the date of adoption using the modified retrospective method. Refer to Note 2. Revenue Recognition , for further details. ASU 2016-01 In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities" (Subtopic 825-10), which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This guidance requires equity investments to be measured at fair value with changes in fair value recognized in net income. This guidance simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. This guidance also clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. The Company adopted the guidance effective January 1, 2018. The adoption did not have a material impact to the Company. The Company believes the most significant impact will be that the adoption of the new guidance could increase the volatility of its Other income (expense), net, as a result of the re-measurement of its equity investments without readily determinable fair values upon the occurrence of observable price changes and impairments. ASU 2016-15 In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments" (Topic 230), which clarifies the classification of certain cash receipts and cash payments in the statement of cash flows, including settlement of contingent consideration arising from a business combination, insurance settlement proceeds, and distributions from certain equity method investees. The adoption of the guidance is required to be applied retrospectively and is effective for the Company in the first fiscal quarter of 2018. The Company adopted the guidance effective January 1, 2018 and applied to the business combination transactions occurring on or after the adoption date. The adoption did not have material impacts on its financial position, results of operations or cash flows. ASU 2016-16 In October 2016, the FASB issued ASU 2016-16, "Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory" (Topic 740), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. This removes the exception to postpone recognition until the asset has been sold to an outside party. ASU 2016-16 is effective for the Company in the first fiscal quarter of 2018 and early adoption is permitted. The Company adopted the new standard effective January 1, 2018. Upon adoption, the Company has recorded a deferred tax asset of $18.4 million resulting from differences in the tax basis of assets and the consolidated book basis of assets resulting from intra-entity transfers of intangible assets. The recognition of the deferred tax asset resulted in an increase to retained earnings upon adoption. Further, the adoption of the standard increased tax expense by an approximate $1.1 million in 2018, but fluctuate over time due to different lives of the intangibles. There is no material impact on the Company's cash flows. ASU 2017-01 In January 2017, the FASB issued ASU 2017-01, "Business Combinations: Clarifying the Definition of a Business" (Topic 805), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets; if so, the set of transferred assets and activities is not a business. The Company adopted the guidance effective January 1, 2018 and applied it prospectively to the transactions occurring on or after the adoption date. The adoption did not have material impacts on its financial position, results of operations or cash flows. ASU 2017-09 In May 2017, the FASB issued ASU 2017-09, "Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting" (Topic 718), which amends the considerations for determining what events require modification accounting. This new guidance requires an entity to consider the fair value of an award before and after modification, the vesting conditions of the modified award and the classification of the modified award as an equity instrument. ASU 2017-09 is effective for the Company in the first fiscal quarter of 2018 and early adoption is permitted. The Company adopted the guidance effective January 1, 2018, and applied it prospectively to the awards modified on or after the adoption date. The adoption did not have material impacts on its financial position, results of operations or cash flows. ASU 2017-12 In August 2017, the FASB issued ASU 2017-12, "Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities" (Topic 815), which expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance also makes certain targeted improvements to simplify the application of hedge accounting guidance, ease the administrative burden of hedge documentation requirements and assessing hedge effectiveness and ease the reporting on hedge ineffectiveness. ASU 2017-12 is effective for the Company in the first fiscal quarter of 2019 and early adoption is permitted. Entities should apply the guidance to existing cash flow and net investment hedge relationships using a modified retrospective approach with a cumulative effect adjustment recorded to opening retained earnings on the date of adoption. The guidance also provides transition relief to make it easier for entities to apply certain amendments to existing hedges where the hedge documentation needs to be modified. The Company early adopted the new guidance effective January 1, 2018. The adoption did not impact opening retained earnings or have a material impact on the Company's consolidated financial statements. Additionally, upon adoption, the Company simplified its hedge accounting application by electing to include time value on currency cash flow hedge relationships prospectively. ASU 2018-02 In February 2018, the FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", which permits companies to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. ASU 2018-02 is effective for the Company in the first fiscal quarter of 2019 and early adoption is permitted. Entities have the option to reclassify these amounts rather than require reclassification and also have the option to apply the guidance retrospectively or at the beginning of the period of adoption. The Company early adopted the new guidance effective January 1, 2018. Upon adoption, the Company has recognized immaterial adjustments to retained earnings at the beginning of the period of adoption. ASU 2018-15 In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, which align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). ASU 2018-15 is effective for the Company beginning in the first fiscal quarter of 2022, with early adoption permitted. The Company early adopted the guidance in the fourth fiscal quarter of 2018. The adoption did not have material impacts on its financial position, results of operations or cash flows. Accounting Pronouncements Not Yet Effective ASU 2016-02 In February 2016, FASB issued ASU 2016-02, "Leases" (Topic 842), which requires lessees 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 for all leases with terms greater than twelve months. The liability will be equal to the present value of lease payments while the right-of-use asset will be based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees. Upon adoption, the Company will be required to record a lease asset and lease liability related to its operating leases. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, which provides an alternative modified transition method. Under this method, the cumulative-effect adjustment to the opening balance of retained earnings is recognized on the date of adoption with comparative prior periods not restated. ASU 2016-02 is effective for the Company in the first fiscal quarter of 2019, with early adoption permitted. The Company is in the process of adopting the new standard effective January 1, 2019 and will elect to utilize the FASB approved option for transition relief with adoption occurring through a cumulative-effect adjustment as of January 1, 2019. Accordingly, the Company will not restate or provide disclosures under the new standard for comparative periods before January 1, 2019. The Company will also elect certain other practical expedients permitted under the transition guidance and has substantially completed its evaluation of the effect that the adoption of this guidance will have on its financial statements. In connection with the adoption of the new guidance, the Company expects to recognize right-of-use (ROU) assets in the range of $35 million to $40 million , and lease liabilities in the range of $40 million to $45 million on its statement of financial position for operating leases, with limited impact to its results of operations and cash flows. The Company believes that substantially all of its undiscounted future minimum operating lease commitments based on its lease portfolio that was not recognized on its consolidated balance sheet as of December 31, 2018 and as disclosed in Note 10, Commitments and Contingencies, to the consolidated financial statements, will be subject to the new standard. The Company expects to finalize the adoption, including implementation of the lease software, controls, processes and procedures, and prepare the necessary disclosures required under the new standard during the first fiscal quarter of 2019. ASU 2016-13 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. ASU 2016-13 is effective for the Company beginning in the first fiscal quarter of 2020 and early adoption is permitted. T he Company continues to assess the potential impact of the new guidance on its financial position, results of operations or cash flows, including accounting policies, processes, and systems. With the exception of the new standards 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, 2018 | |
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 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Impacts of Adopting ASC 606 | The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheets for the fiscal year beginning January 1, 2018 as an adjustment to the opening balances: As of Adjustments As of December 31, January 1, (In thousands) Assets: Accounts receivable, net $ 255,118 $ 5,286 $ 260,404 Inventories $ 162,942 $ (1,991 ) $ 160,951 Current assets of discontinued operations $ 243,125 $ 450 $ 243,575 Total current assets $ 1,015,664 $ 3,745 $ 1,019,409 Other non-current assets $ 49,471 $ 2,904 $ 52,375 Non-current assets of discontinued operations $ 41,126 $ 1,440 $ 42,566 Total assets $ 1,208,564 $ 8,089 $ 1,216,653 Liabilities: Accounts payable $ 91,205 $ (108 ) $ 91,097 Other accrued liabilities $ 149,821 $ 32,110 $ 181,931 Deferred revenue $ 21,212 $ (15,855 ) $ 5,357 Income taxes payable $ 7,015 $ 55 $ 7,070 Current liabilities of discontinued operations $ 130,663 $ 4,666 $ 135,329 Total current liabilities $ 424,436 $ 20,868 $ 445,304 Other non-current liabilities $ 8,766 $ (35 ) $ 8,731 Non-current liabilities of discontinued operations $ 13,333 $ (241 ) $ 13,092 Total liabilities $ 478,079 $ 20,592 $ 498,671 Stockholders’ equity: Retained earnings $ 128,168 $ (12,503 ) $ 115,665 The following table summarizes the impacts of adopting ASC 606 on the Company’s consolidated balance sheets as of December 31, 2018 : As of December 31, 2018 As reported Adjustments Balance without adoption of ASC 606 (In thousands) Assets Accounts receivable, net $ 303,667 $ (5,776 ) $ 297,891 Inventories $ 243,871 $ 2,419 $ 246,290 Other non-current assets $ 67,433 $ (2,811 ) $ 64,622 Liabilities: Accounts payable $ 139,748 $ 67 $ 139,815 Other accrued liabilities $ 199,472 $ (32,803 ) $ 166,669 Deferred revenue $ 11,086 $ 13,795 $ 24,881 Income taxes payable $ 2,020 $ 4 $ 2,024 Other non-current liabilities $ 12,232 $ 36 $ 12,268 Stockholders’ equity: Retained losses $ (166,050 ) $ 12,733 $ (153,317 ) The following tables summarize the impacts of adopting ASC 606 on the Company’s consolidated statement of operations for the fiscal year ended December 31, 2018 : Year Ended December 31, 2018 As reported Adjustments Balance without adoption of ASC 606 (In thousands) Net revenue $ 1,058,816 $ 2,247 $ 1,061,063 Cost of revenue $ 717,118 $ (252 ) $ 716,866 Gross profit $ 341,698 $ 2,499 $ 344,197 Provision for income taxes $ 25,878 $ (2,536 ) $ 23,342 Net income from continuing operations $ 17,326 $ 5,035 $ 22,361 Net loss from discontinued operations, net of tax $ (35,655 ) $ 5,721 $ (29,934 ) Net loss $ (18,329 ) $ 10,756 $ (7,573 ) Net loss attributable to non-controlling interest in discontinued operations (9,167 ) 598 (8,569 ) Net income (loss) attributable to NETGEAR, Inc. $ (9,162 ) $ 10,158 $ 996 |
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, 2018 : 1 year 2 years Greater than 2 years Total (In thousands) Performance obligations $ 53,945 $ 923 $ 904 $ 55,772 |
Schedule of Changes in Contract Balances | The following table reflects the changes in contract balances for the fiscal year ended December 31, 2018 : Balance Sheet Location December 31, 2018 January 1, 2018 (*) $ change % change (In thousands) Accounts receivable, net Accounts receivable, net $ 303,667 $ 260,404 $ 43,263 16.6 % Contract liabilities - current Deferred revenue $ 11,086 5,357 $ 5,729 106.9 % Contract liabilities - non-current Other non-current liabilities $ 779 $ 728 $ 51 7.0 % * 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. Sales and usage-based taxes are excluded from net revenue. Year Ended December 31, 2018 2017 (*) 2016 (*) Connected Home SMB Total Connected Home SMB Total Connected Home SMB Total Geographic regions: Americas $ 576,476 $ 124,217 $ 700,693 $ 547,314 $ 117,775 $ 665,089 $ 595,606 $ 139,374 $ 734,980 EMEA 97,979 109,620 207,599 93,438 103,636 197,074 110,941 106,613 217,554 APAC 96,605 53,919 150,524 127,509 49,497 177,006 140,382 50,529 190,911 Total net revenue $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 $ 846,929 $ 296,516 $ 1,143,445 Sales channels: Service provider $ 156,671 $ 3,624 $ 160,295 $ 190,186 $ 3,268 $ 193,454 $ 249,980 $ 4,175 $ 254,155 Non-service provider 614,389 284,132 898,521 578,075 267,640 845,715 596,949 292,341 889,290 Total net revenue $ 771,060 $ 287,756 $ 1,058,816 $ 768,261 $ 270,908 $ 1,039,169 $ 846,929 $ 296,516 $ 1,143,445 _________________________ * 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, 2018 | |
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, on the consolidated statement of operations. The following table presents financial results of Arlo: Year Ended December 31, 2018 2017 2016 (In thousands) Net revenues $ 464,649 $ 367,751 $ 184,853 Cost of net revenues 372,843 279,425 146,570 Gross profit 91,806 88,326 38,283 Operating expenses: Research and development 48,696 22,710 18,463 Sales and marketing 39,713 19,490 10,764 General and administrative 17,762 691 487 Separation expense 31,583 1,384 — Restructuring and other charges — — 40 Litigation reserves, net — 28 — Total operating expenses 137,754 44,303 29,754 Income (loss) from operations of discontinued operations (45,948 ) 44,023 8,529 Interest income 1,239 — — Other income (expense), net (41 ) 467 45 Income (loss) from discontinued operations before income taxes (44,750 ) 44,490 8,574 Provision (benefit) for income taxes (9,095 ) 13,921 3,035 Income (loss) from discontinued operations, net of tax $ (35,655 ) $ 30,569 $ 5,539 The following table presents the aggregate carrying amounts of the classes of assets and liabilities of the discontinued operations of Arlo: As of December 31, 2017 (In thousands) Carrying amounts of assets included as part of discontinued operations Cash and cash equivalents $ 143 Accounts receivable, net 157,680 Inventories 82,952 Prepaid expenses and other current assets 2,350 Current assets classified as discontinued operations 243,125 Property and equipment, net 3,311 Intangibles, net 4,348 Goodwill 21,149 Other non-current assets 12,318 Non-current assets classified as discontinued operations 41,126 Total assets classified as discontinued operations on the consolidated balance sheet $ 284,251 Carrying amounts of liabilities included as part of discontinued operations: Accounts payable $ 20,711 Accrued employee compensation 3,231 Other accrued liabilities 72,649 Deferred revenue 34,072 Current liabilities classified as discontinued operations 130,663 Other non-current liabilities 13,333 Non-current liabilities classified as discontinued operations 13,333 Total liabilities classified as discontinued operations on the consolidated balance sheet $ 143,996 |
Business Acquisitions (Tables)
Business Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The purchase price allocation is subject to certain post-closing adjustments and 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 purchase price $ 22,175 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule Of Available-For-Sale Short-Term | As of December 31, 2018 December 31, 2017 Cost Unrealized Gain Unrealized Loss Estimated Fair Value Cost Unrealized Gain Unrealized Loss Estimated Fair Value (In thousands) U.S. treasuries $ 70,330 $ 1 $ (17 ) $ 70,314 $ 124,816 $ — $ (146 ) $ 124,670 Certificates of deposits 149 — — 149 162 — — 162 Total $ 70,479 $ 1 $ (17 ) $ 70,463 $ 124,978 $ — $ (146 ) $ 124,832 |
Schedule Of Accounts Receivable And Related Allowances | Accounts receivable, net As of December 31, 2018 December 31, 2017 (In thousands) Gross accounts receivable $ 304,921 $ 273,734 Allowance for doubtful accounts (1,254 ) (1,050 ) Allowance for sales returns — * (14,321 ) Allowance for price protection — * (3,245 ) Total allowances (1,254 ) (18,616 ) Total accounts receivable, net $ 303,667 $ 255,118 _________________________ * 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. Refer to Note 2. Revenue Recognition , for additional information on the adoption impact. |
Schedule Of Inventories | Inventories As of December 31, 2018 December 31, 2017 (In thousands) Raw materials $ 3,427 $ 4,465 Finished goods 240,444 158,477 Total inventories $ 243,871 $ 162,942 |
Schedule Of Property And Equipment, Net | Property and equipment, net As of December 31, 2018 December 31, 2017 (In thousands) Computer equipment $ 9,205 $ 10,065 Furniture, fixtures and leasehold improvements 18,286 21,464 Software 28,065 28,817 Machinery and equipment 60,552 56,423 Total property and equipment, gross 116,108 116,769 Accumulated depreciation and amortization (95,931 ) (99,420 ) Total property and equipment, net $ 20,177 $ 17,349 |
Schedule Of Purchased Intangibles, Net | Intangibles, net As of December 31, 2018 As of December 31, 2017 Gross Accumulated Amortization Net Gross Accumulated Amortization Net (In thousands) Technology $ 59,799 $ (56,978 ) $ 2,821 $ 56,799 $ (56,383 ) $ 416 Customer contracts and relationships 56,800 (44,280 ) 12,520 56,200 (37,130 ) 19,070 Other 10,345 (8,540 ) 1,805 9,145 (7,991 ) 1,154 Total intangibles, net 126,944 (109,798 ) 17,146 $ 122,144 $ (101,504 ) $ 20,640 |
Schedule Of Estimated Amortization Expense Related To Intangibles | As of December 31, 2018, estimated amortization expense related to finite-lived intangibles for each of the next five years and thereafter is as follows (in thousands): 2019 $ 7,042 2020 6,205 2021 2,044 2022 527 2023 514 Thereafter 814 Total estimated amortization expense $ 17,146 |
Schedule Of Goodwill | The changes in the carrying amount of goodwill during the years ended December 31, 2018 and 2017 are as follows: Connected Home SMB Total (In thousands) As of January 1, 2017 $ 28,035 $ 36,279 $ 64,314 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 |
Schedule of Other Assets, Noncurrent | Other non-current assets As of December 31, 2018 December 31, 2017 (In thousands) Non-current deferred income taxes $ 57,557 $ 38,293 Other 9,876 11,178 Total other non-current assets $ 67,433 $ 49,471 |
Schedule Of Other Accrued Liabilities | Other accrued liabilities As of December 31, 2018 December 31, 2017 (In thousands) Sales and marketing $ 91,548 $ 64,540 Warranty obligation 14,412 * 44,068 Sales returns 46,318 * — Freight and duty 10,586 6,705 Other 36,608 34,508 Total other accrued liabilities $ 199,472 $ 149,821 ________________________ * 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. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 , and 2017 , are summarized as follows: Derivative Assets Balance Sheets Location December 31, Balance Sheets Location December 31, 2018 2017 2018 2017 (In thousands) (In thousands) Derivative contracts not designated as hedging instruments Prepaid expenses and other current assets $ 784 $ 1,314 Other accrued liabilities $ 331 $ 7,128 Derivative contracts designated as hedging instruments Prepaid expenses and other current assets 2 485 Other accrued liabilities 37 1,064 Total $ 786 $ 1,799 $ 368 $ 8,192 |
Schedule of Offsetting of Derivative Assets | The following tables set forth the offsetting of derivative assets as of December 31, 2018 and 2017 : As of December 31, 2018 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Assets Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 323 $ — $ 323 $ (64 ) $ — $ 259 Wells Fargo 463 — 463 (298 ) — 165 Total $ 786 $ — $ 786 $ (362 ) $ — $ 424 As of December 31, 2017 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Assets Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Assets Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 1,664 $ — $ 1,664 $ (1,664 ) $ — $ — Wells Fargo 135 — 135 (135 ) — — Total $ 1,799 $ — $ 1,799 $ (1,799 ) $ — $ — |
Schedule of Offsetting of Derivative Liabilities | The following tables set forth the offsetting of derivative liabilities as of December 31, 2018 and 2017 : As of December 31, 2018 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 64 $ — $ 64 $ (64 ) $ — $ — J.P. Morgan Chase 6 — 6 — — 6 Wells Fargo 298 — 298 (298 ) — — Total $ 368 $ — $ 368 $ (362 ) $ — $ 6 As of December 31, 2017 Gross Amounts Not Offset on the Consolidated Balance Sheets Gross Amounts of Recognized Liabilities Gross Amounts Offset on the Consolidated Balance Sheets Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets Financial Instruments Cash Collateral Pledged Net Amount (In thousands) Bank of America $ 7,815 $ — $ 7,815 $ (1,664 ) $ — $ 6,151 Wells Fargo 377 — 377 (135 ) — 242 Total $ 8,192 $ — $ 8,192 $ (1,799 ) $ — $ 6,393 |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] | The effects of the Company's cash flow hedges on the consolidated statements of operations for the fiscal years ended December 31, 2018 , 2017 and 2016 are summarized as follows: Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2018 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,058,816 $ 717,118 $ 82,416 $ 152,569 $ 64,857 Gains (losses) on cash flow hedge $ 665 $ (9 ) $ 83 $ (102 ) $ (53 ) Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2017 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,039,169 $ 731,453 $ 71,893 $ 138,679 $ 54,346 Gains (losses) on cash flow hedge $ (5,786 ) $ 18 $ 130 $ 788 $ 133 Location and Amount of Gains (Losses) Recognized in Income on Cash Flow Hedges Year Ended December 31, 2016 Net revenue Cost of revenue Research and development Sales and marketing General and administrative (In thousands) Statements of operations $ 1,143,445 $ 769,543 $ 70,904 $ 139,591 $ 53,996 Gains (losses) on cash flow hedge $ 850 $ (6 ) $ (55 ) $ (189 ) $ (30 ) |
Schedule Of Company's Derivative Instruments On Other Comprehensive Income And The Consolidated Statement Of Operations | The pre-tax effects of the Company’s derivative instruments on OCI and the consolidated statements of operations for the years ended December 31, 2018 , 2017 and 2016 are summarized as follows: Derivatives Designated as Hedging Instruments Year Ended December 31, 2018 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ 1,416 Net revenue $ 665 Foreign currency forward contracts — Cost of revenue (9 ) Foreign currency forward contracts — Research and development 83 Foreign currency forward contracts — Sales and marketing (102 ) Foreign currency forward contracts — General and administrative (53 ) Total $ 1,416 $ 584 _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. Derivatives Designated as Hedging Instruments Year Ended December 31, 2017 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ (7,785 ) Net revenue $ (5,786 ) Foreign currency forward contracts — Cost of revenue 18 Foreign currency forward contracts — Research and development 130 Foreign currency forward contracts — Sales and marketing 788 Foreign currency forward contracts — General and administrative 133 Total $ (7,785 ) $ (4,717 ) _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. Derivatives Designated as Hedging Instruments Year Ended December 31, 2016 Gains (Losses) Recognized in OCI - Effective Portion Location of Gains (Losses) Reclassified from OCI into Income - Effective Portion Gains (Losses) Reclassified from OCI into Income - Effective Portion (1) (In thousands) Cash flow hedges: Foreign currency forward contracts $ 2,757 Net revenue $ 850 Foreign currency forward contracts — Cost of revenue (6 ) Foreign currency forward contracts — Research and development (55 ) Foreign currency forward contracts — Sales and marketing (189 ) Foreign currency forward contracts — General and administrative (30 ) Total $ 2,757 $ 570 _________________________ (1) Refer to Note 11, Stockholders' Equity , which summarizes the accumulated other comprehensive income activity related to derivatives. |
Schedule Of Derivatives Not Designated As Hedging Instruments | The effects of the Company’s derivatives not designated as hedging instruments in other income (expense), net in the consolidated statements of operations for the years ended December 31, 2018 , 2017 and 2016 , are as follows: Year ended December 31, Derivatives Not Designated as Hedging Instruments Location of Gains (Losses) Recognized in Income on Derivative 2018 2017 2016 (In thousands) Foreign currency forward contracts Other income (expense), net $ 3,870 $ (5,085 ) $ 3,280 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Schedule Of Net Income Per Share | Net income (loss) attributable to NETGEAR, Inc. per share for the years ended December 31, 2018 , 2017 and 2016 was as follows: Year Ended December 31, 2018 2017 2016 (In thousands, except per share data) Numerator: Net income (loss) from continuing operations $ 17,326 $ (11,133 ) $ 70,312 Net income (loss) from discontinued operations (35,655 ) 30,569 5,539 Net income (loss) (18,329 ) 19,436 75,851 Less: Net loss attributable to non-controlling interest in discontinued operations (9,167 ) — — Net income (loss) attributable to NETGEAR, Inc. $ (9,162 ) $ 19,436 $ 75,851 Denominator: Weighted average common shares - basic 31,626 32,097 32,758 Potentially dilutive common share equivalent 1,511 — 970 Weighted average common shares - dilutive 33,137 32,097 33,728 Basic net income (loss) per share Net income (loss) from continuing operations $ 0.55 $ (0.35 ) $ 2.15 Net income (loss) from discontinued operations attributable to NETGEAR, Inc. (0.84 ) 0.96 0.17 Net income (loss) attributable to NETGEAR, Inc. $ (0.29 ) $ 0.61 $ 2.32 Diluted net income (loss) per share Net income (loss) from continuing operations $ 0.52 $ (0.35 ) $ 2.08 Net income (loss) from discontinued operations attributable to NETGEAR, Inc. (0.80 ) 0.96 0.17 Net income (loss) attributable to NETGEAR, Inc. $ (0.28 ) $ 0.61 $ 2.25 Anti-dilutive employee stock-based awards, excluded 815 279 258 |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Nonoperating Income (Expense) | Other income (expense), net consisted of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Foreign currency transaction gain (loss), net $ (2,675 ) $ 5,292 $ (3,323 ) Foreign currency contract gain (loss), net 3,968 (3,879 ) 3,597 Other (783 ) 144 (440 ) Total $ 510 $ 1,557 $ (166 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 2017 2016 (In thousands) United States $ 32,237 $ 36,461 $ 89,877 International 10,967 9,763 16,618 Total $ 43,204 $ 46,224 $ 106,495 |
Schedule of Components of Income Tax Expense (Benefit) | Year Ended December 31, 2018 2017 2016 (In thousands) Current: U.S. Federal $ (587 ) $ 25,733 $ 28,796 State (2,338 ) 2,435 2,412 Foreign 4,267 1,545 4,130 1,342 29,713 35,338 Deferred: U.S. Federal 20,930 27,936 1,139 State 2,514 190 762 Foreign 1,092 (482 ) (1,056 ) 24,536 27,644 845 Total $ 25,878 $ 57,357 $ 36,183 |
Schedule of Deferred Tax Assets and Liabilities | Net deferred tax assets consisted of the following: Year Ended December 31, 2018 2017 (In thousands) Deferred Tax Assets: Accruals and allowances $ 20,765 $ 16,629 Net operating loss carryforwards 1,673 50 Stock-based compensation 5,734 5,634 Deferred rent 1,296 1,977 Deferred revenue 1,100 1,459 Tax credit carryforwards 1,661 974 Acquired intangibles 31,902 15,598 Depreciation and amortization 866 904 Total deferred tax assets 64,997 43,225 Deferred Tax Liabilities: Other (706 ) (362 ) Total deferred tax liabilities (706 ) (362 ) Valuation Allowance (1) (6,734 ) (4,570 ) Net deferred tax assets $ 57,557 $ 38,293 |
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, 2018 2017 2016 Tax at federal statutory rate 21.0 % 35.0 % 35.0 % State, net of federal benefit 1.5 % 1.0 % 1.8 % Impact of international operations 1.9 % (8.8 )% (2.8 )% Stock-based compensation (0.3 )% (3.9 )% 1.2 % Tax credits (2.6 )% (2.0 )% (0.9 )% Valuation allowance 1.4 % — % — % Impact of the Tax Act (15.4 )% 104.6 % — % Write-off of future tax benefits related to Arlo 52.2 % — % — % Others 0.2 % (1.8 )% (0.3 )% Provision for income taxes 59.9 % 124.1 % 34.0 % |
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, 2015 $ 12,830 Additions based on tax positions related to the current year 1,523 Additions for tax positions of prior years 45 Reductions for tax positions of prior years (237 ) Reductions due to lapse of applicable statutes (627 ) Adjustments due to foreign exchange rate movement (569 ) 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 |
Commitments And Contingencies (
Commitments And Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | As of December 31, 2018 , future minimum lease payments under non-cancelable operating leases are as follows (in thousands): 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 |
Schedule of Product Warranty Liability | Changes in the Company's warranty obligation, which is included in Other accrued liabilities on the consolidated balance sheets, were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Balance at the beginning of the year $ 44,068 $ 42,571 $ 50,216 Reclassified to sales returns upon adoption of ASC 606 (29,147 ) * — — Provision for warranty obligations made during the year 12,783 91,384 86,610 Settlements made during the year (13,292 ) (89,887 ) (94,255 ) Balance at the end of year $ 14,412 $ 44,068 $ 42,571 ________________________ * 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, 2018 | |
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, 2018 , 2017 and 2016 : Unrealized gains (losses) on available-for-sale securities Unrealized gains (losses) on derivatives Estimated tax benefit (provision) Total (In thousands) Balance as of December 31, 2015 $ (64 ) $ 43 $ 24 $ 3 Other comprehensive income (loss) before reclassifications 33 3,007 (572 ) 2,468 Less: Amount reclassified from accumulated other comprehensive income — 820 (287 ) 533 Net current period other comprehensive income (loss) 33 2,187 (285 ) 1,935 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 ) |
Schedule of Reclassification out of Accumulated Other Comprehensive Income | The following tables provide details about significant amounts reclassified out of each component of accumulated other comprehensive income for the years ended December 31, 2018 , 2017 and 2016 : Year Ended December 31, Details about Accumulated Other Comprehensive Income Components 2018 2017 2016 Amount Reclassified from AOCI Affected Line Item in the Statements of Operations Amount Reclassified from AOCI Affected Line Item in the Statements of Operations Amount Reclassified from AOCI Affected Line Item in the Statements of Operations (In thousands) Gains (losses) on cash flow hedge: Foreign currency forward contracts $ 665 Net revenue $ (5,786 ) Net revenue $ 850 Net revenue Foreign currency forward contracts (9 ) Cost of revenue 18 Cost of revenue (6 ) Cost of revenue Foreign currency forward contracts 83 Research and development 130 Research and development (55 ) Research and development Foreign currency forward contracts (102 ) Sales and marketing 788 Sales and marketing (189 ) Sales and marketing Foreign currency forward contracts (53 ) General and administrative 133 General and administrative (30 ) General and administrative Total, from continuing operations before income taxes 584 Total from continuing operations before tax (4,717 ) Total from continuing operations before tax 570 Total from continuing operations before tax Tax impact from continuing operations (123 ) Tax impact from continuing operations 1,651 Tax impact from continuing operations (200 ) Tax impact from continuing operations Total, from continuing operations net of tax 461 Total, from continuing operations net of tax (3,066 ) Total, from continuing operations net of tax 370 Total, from continuing operations net of tax Total, from discontinued operations net of tax 4 Total, from discontinued operations net of tax (1,890 ) Total, from discontinued operations net of tax 163 Total, from discontinued operations net of tax Total, net of tax $ 465 $ (4,956 ) $ 533 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Employee Benefits and Share-based Compensation, Noncash [Abstract] | |
Schedule Of Stock Option Activity | Stock option activity during the year ended December 31, 2018 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, 2017 1 1,879 $ 34.08 Granted 1 378 69.70 Exercised 1 (289 ) 23.76 Expired 1 (6 ) 21.45 Equitable adjustment - options granted 2 1,969 25.30 Equitable adjustment - options cancelled 2 (1,962 ) 42.50 Outstanding as of December 31, 2018 1,969 $ 25.30 6.29 $ 17,338 As of December 31, 2018 Vested and expected to vest 1,969 $ 25.30 6.29 $ 17,338 Exercisable Options 1,230 $ 20.53 4.94 $ 14,511 _________________________ (1) Weighted average exercise price was calculated using exercise price prior to the Distribution. (2) The equitable adjustments represented equity awards modifications upon the Distribution discussed above. |
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, 2018 : 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) $7.28 - $19.32 512 5.05 $ 18.47 479 $ 18.46 $19.33 - $20.98 418 3.12 20.04 417 20.04 $21.86 - $25.37 633 7.58 24.36 328 24.00 $29.23 - $38.32 50 9.27 34.68 6 29.23 $41.67 - $41.67 356 9.07 41.67 — — $7.28 - $41.67 1,969 6.29 $ 25.30 1,230 $ 20.53 |
Schedule Of RSU Activity | RSU activity during the year ended December 31, 2018 was as follows: Number of Shares Weighted Average Grant Date Fair Value Per Share (In thousands) (In dollars) Outstanding as of December 31, 2017 1 1,130 $ 43.22 Granted 1 971 67.78 Vested 1 (439 ) 41.24 Cancelled 1 (89 ) 55.66 Equitable adjustment - granted 2 1,627 34.31 Equitable adjustment - cancelled 2 (1,573 ) $ 58.23 Outstanding as of December 31, 2018 1,627 $ 34.31 _________________________ (1) Weighted average grant date fair value was calculated using grant date fair value prior to the Distribution. (2) The equitable adjustments represented equity awards modifications upon the Distribution discussed above. |
Schedule Of Valuation And Expense Information | The following table sets forth the weighted-average assumptions used to estimate the fair value option grants and purchase rights granted under the ESPP during the years ended December 31, 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 2018 2017 2016 Stock Options ESPP Expected life (in years) 4.4 4.4 4.4 0.5 0.5 0.5 Risk-free interest rate 2.36 % 1.66 % 1.28 % 2.00 % 0.93 % 0.43 % Expected volatility 31.1 % 31.6 % 35.4 % 37.9 % 29.7 % 38.3 % Dividend yield — — — — — — |
Schedule Of Total Stock-Based Compensation Expense Resulting From Stock Options, Restricted Stock Awards, And The Employee Stock Purchase Plan | The following table sets forth the stock-based compensation expense resulting from stock options, restricted stock awards, and the Employee Stock Purchase Plan included in the Company’s consolidated statements of operations: Year Ended December 31, 2018 2017 2016 (In thousands) Cost of revenue $ 2,435 $ 1,406 $ 1,473 Research and development 4,283 2,968 2,726 Sales and marketing 8,267 5,481 4,934 General and administrative 11,476 9,114 8,008 Total $ 26,461 $ 18,969 $ 17,141 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Schedule Of Reportable Segment 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, 2018 2017 2016 (In thousands, except percentage data) Net revenue: Connected Home 771,060 768,261 846,929 SMB 287,756 270,908 296,516 Total net revenue $ 1,058,816 $ 1,039,169 $ 1,143,445 Contribution income: Connected Home 96,340 83,870 138,997 Connected Home contribution margin 12.5 % 10.9 % 16.4 % SMB 70,142 63,865 72,539 SMB contribution margin 24.4 % 23.6 % 24.5 % Total segment contribution income 166,482 147,735 211,536 Corporate and unallocated costs (90,186 ) (75,305 ) (69,623 ) Amortization of intangibles (1) (7,979 ) (10,663 ) (15,361 ) Stock-based compensation expense (26,461 ) (18,969 ) (17,141 ) Separation expenses (929 ) — — Restructuring and other charges (2,198 ) (97 ) (3,841 ) Litigation reserves, net (15 ) (148 ) (73 ) Interest income 3,980 2,114 1,164 Other income (expense), net 510 1,557 (166 ) Income before income taxes $ 43,204 $ 46,224 $ 106,495 |
Schedule of Service Provider Customers Revenue by Reporting Segments [Table Text Block] | The following table shows net revenue from service provider customers within each of the reportable segments for the periods indicated: Year Ended December 31, 2018 2017 2016 (In thousands) Connected Home 156,671 190,186 249,980 SMB 3,624 3,268 4,175 Total service provider net revenue $ 160,295 $ 193,454 $ 254,155 |
Schedule Of Net Revenue By Geography | The following table shows net revenue by geography for the years ended December 31, 2018 , 2017 and 2016 : Year Ended December 31, 2018 2017 2016 (In thousands) United States (U.S.) $ 686,145 $ 648,152 $ 713,178 Americas (excluding U.S.) 14,548 16,937 21,802 EMEA 207,599 197,074 217,554 APAC 150,524 177,006 190,911 Total net revenue $ 1,058,816 $ 1,039,169 $ 1,143,445 |
Schedule Of Long-Lived Asset By Geography | The Company's property and equipment are located in the following geographic locations: As of December 31, 2018 December 31, 2017 December 31, 2016 (In thousands) United States $ 4,993 $ 7,735 $ 9,274 Canada 4,359 1,745 2,745 EMEA 95 140 206 China 7,652 5,130 4,218 APAC (excluding China) 3,078 2,599 1,704 Total property and equipment, net $ 20,177 $ 17,349 $ 18,147 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block] | The following tables summarize assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017 : 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) Included in Other non-current accrued liabilities on the Company’s consolidated balance sheets. The contingent consideration represents the estimated fair value of the additional variable cash consideration payable in connection with the acquisition of Meural that is contingent upon the achievement of certain technical and service revenue milestones. Refer to Note 4, Business Acquisition , regarding detailed disclosures on the determination of fair value of the contingent consideration. As of December 31, 2017 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 $ 12,606 $ 12,606 $ — $ — Available-for-sale debt investments: U.S. treasuries (1) 124,670 — 124,670 — Available-for-sale investments: certificates of deposit (1) 162 — 162 — Trading securities: mutual funds (1) 2,094 2,094 — — Foreign currency forward contracts (2) 1,799 — 1,799 — Total assets measured at fair value $ 141,331 $ 14,700 $ 126,631 $ — Liabilities: Foreign currency forward contracts (3) $ 8,192 $ — $ 8,192 $ — Total liabilities measured at fair value $ 8,192 $ — $ 8,192 $ — _________________________ (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. |
Restructuring and Other Charg_2
Restructuring and Other Charges (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring Charges [Abstract] | |
Restructuring and other charges | The following table provides a summary of accrued restructuring and other charges activity for the years ended December 31, 2018 , 2017 and 2016 : Employee termination charges Lease contract termination and other charges Total (In thousands) Balance as of December 31, 2015 $ 13 $ 1,253 $ 1,266 Additions (1) 3,086 629 3,715 Cash payments (2,902 ) (480 ) (3,382 ) Adjustments (191 ) — (191 ) 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 _________________________ (1) Total restructuring and other charges recognized in the Company's consolidated statements of operations for the year ended December 31, 2016 included non-cash charges and adjustments, net of $0.3 million . This amount has been excluded from the table above. |
Quarterly Financial Data (Table
Quarterly Financial Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Data [Abstract] | |
Quarterly Financial Information | 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, September 30, July 1, April 1, Net revenue $ 288,928 $ 269,411 $ 255,276 $ 245,201 Gross profit $ 90,654 $ 94,445 $ 80,280 $ 76,319 Provision 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 from continuing operations $ (0.02 ) $ 0.49 $ 0.02 $ 0.03 Net income (loss) per share attributable to NETGEAR, Inc. $ (0.62 ) $ 0.30 $ (0.16 ) $ 0.17 December 31, October 1, July 2, April 2, Net revenue $ 274,149 $ 251,950 $ 251,685 $ 261,385 Gross profit $ 76,129 $ 76,096 $ 75,380 $ 80,111 Provision for income taxes $ 48,496 $ 950 $ 3,061 $ 4,850 Net income (loss) from continuing operations $ (41,778 ) $ 9,624 $ 9,989 $ 11,032 Net income (loss) $ (31,934 ) $ 20,794 $ 14,582 $ 15,994 Net income (loss) attributable to NETGEAR, Inc. $ (31,934 ) $ 20,794 $ 14,582 $ 15,994 Net income (loss) per share - basic: Income from continuing operations $ (1.33 ) $ 0.30 $ 0.31 $ 0.33 Net income (loss) attributable to NETGEAR, Inc. $ (1.02 ) $ 0.66 $ 0.45 $ 0.49 Net income (loss) per share - diluted: Income from continuing operations $ (1.33 ) $ 0.30 $ 0.30 $ 0.32 Net income (loss) attributable to NETGEAR, Inc. $ (1.02 ) $ 0.64 $ 0.44 $ 0.47 |
The Company and Summary of Si_4
The Company and Summary of Significant Accounting Policies (Narrative) (Details) $ in Thousands | Dec. 31, 2018USD ($)shares | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 01, 2019USD ($) | Aug. 07, 2018shares | Jan. 01, 2018USD ($) |
Significant Accounting Policies [Line Items] | |||||||
Number of operating segments | segment | 2 | ||||||
Number of reportable segments | segment | 2 | ||||||
Subscription contracts, typical length | The subscription contracts are generally for 30 days or 12 months in length, billed in advance. | ||||||
Shipping and handling costs | $ 152,569 | $ 138,679 | $ 139,591 | ||||
Advertising and promotional expenses | 24,700 | 23,200 | 18,700 | ||||
Deferred tax asset | $ 57,557 | $ 57,557 | $ 38,293 | ||||
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 | Best Buy Inc | Customer Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 31.00% | 28.00% | |||||
Accounts Receivable | Amazon | Customer Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 13.00% | 12.00% | |||||
Accounts Receivable | Walmart | Customer Concentration Risk | |||||||
Significant Accounting Policies [Line Items] | |||||||
Concentration risk, percentage | 12.00% | ||||||
Accounting Standards Update 2016-16 | |||||||
Significant Accounting Policies [Line Items] | |||||||
Deferred tax asset | $ 18,400 | ||||||
Increase in tax expense | $ 1,100 | ||||||
Shipping and Handling | |||||||
Significant Accounting Policies [Line Items] | |||||||
Shipping and handling costs | $ 9,500 | $ 8,600 | $ 9,000 | ||||
Foreign currency forward contracts | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Derivative, term of contract (in months) | 6 months | ||||||
Scenario, Forecast | Accounting Standards Update 2016-02 | Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Expected right-of-use assets impact | $ 35,000 | ||||||
Expected lease liability impact | 40,000 | ||||||
Scenario, Forecast | Accounting Standards Update 2016-02 | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Expected right-of-use assets impact | 40,000 | ||||||
Expected lease liability impact | $ 45,000 | ||||||
Arlo | |||||||
Significant Accounting Policies [Line Items] | |||||||
Shares, outstanding (in shares) | shares | 62,500,000 | ||||||
Ownership percentage | 84.20% | ||||||
Number of shares distributed (in shares) | shares | 62,500,000 |
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, 2018 | |
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 |
Revenue Recognition (Balance Sh
Revenue Recognition (Balance Sheet Impact) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets: | |||
Accounts receivable, net | $ 303,667 | $ 260,404 | $ 255,118 |
Inventories | 243,871 | 160,951 | 162,942 |
Current assets of discontinued operations | 0 | 243,575 | 243,125 |
Total current assets | 857,899 | 1,019,409 | 1,015,664 |
Other non-current assets | 67,433 | 52,375 | 49,471 |
Non-current assets of discontinued operations | 0 | 42,566 | 41,126 |
Total assets | 1,043,376 | 1,216,653 | 1,208,564 |
Liabilities: | |||
Accounts payable | 139,748 | 91,097 | 91,205 |
Other accrued liabilities | 199,472 | 181,931 | 149,821 |
Deferred revenue | 11,086 | 5,357 | 21,212 |
Income taxes payable | 2,020 | 7,070 | 7,015 |
Current liabilities of discontinued operations | 0 | 135,329 | 130,663 |
Total current liabilities | 383,992 | 445,304 | 424,436 |
Other non-current liabilities | 12,232 | 8,731 | 8,766 |
Non-current liabilities of discontinued operations | 0 | 13,092 | 13,333 |
Total liabilities | 415,824 | 498,671 | 478,079 |
Stockholders’ equity: | |||
Retained earnings | (166,050) | 115,665 | $ 128,168 |
Adjustments | Accounting Standards Update 2014-09 | |||
Assets: | |||
Accounts receivable, net | (5,776) | 5,286 | |
Inventories | 2,419 | (1,991) | |
Current assets of discontinued operations | 450 | ||
Total current assets | 3,745 | ||
Other non-current assets | (2,811) | 2,904 | |
Non-current assets of discontinued operations | 1,440 | ||
Total assets | 8,089 | ||
Liabilities: | |||
Accounts payable | 67 | (108) | |
Other accrued liabilities | (32,803) | 32,110 | |
Deferred revenue | 13,795 | (15,855) | |
Income taxes payable | 4 | 55 | |
Current liabilities of discontinued operations | 4,666 | ||
Total current liabilities | 20,868 | ||
Other non-current liabilities | 36 | (35) | |
Non-current liabilities of discontinued operations | (241) | ||
Total liabilities | 20,592 | ||
Stockholders’ equity: | |||
Retained earnings | 12,733 | $ (12,503) | |
Balance without adoption of ASC 606 | |||
Assets: | |||
Accounts receivable, net | 297,891 | ||
Inventories | 246,290 | ||
Other non-current assets | 64,622 | ||
Liabilities: | |||
Accounts payable | 139,815 | ||
Other accrued liabilities | 166,669 | ||
Deferred revenue | 24,881 | ||
Income taxes payable | 2,024 | ||
Other non-current liabilities | 12,268 | ||
Stockholders’ equity: | |||
Retained earnings | $ (153,317) |
Revenue Recognition (Income Sta
Revenue Recognition (Income Statement Impact) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Cost of revenue | 717,118 | 731,453 | 769,543 | ||||||||||
Gross profit | 90,654 | 94,445 | 80,280 | 76,319 | 76,129 | 76,096 | 75,380 | 80,111 | 341,698 | 307,716 | 373,902 | ||
Provision for income taxes | 19,210 | 5,483 | 1,271 | (86) | 48,496 | 950 | 3,061 | 4,850 | 25,878 | 57,357 | 36,183 | ||
Net income from continuing operations | (535) | 16,310 | 533 | 1,018 | (41,778) | 9,624 | 9,989 | 11,032 | 17,326 | (11,133) | 70,312 | ||
Net income (loss) from discontinued operations, net of tax | (35,655) | 30,569 | 5,539 | ||||||||||
Net income (loss) | (27,839) | 9,150 | (5,230) | 5,590 | $ (31,934) | $ 20,794 | $ 14,582 | $ 15,994 | (18,329) | 19,436 | 75,851 | ||
Net loss attributable to non-controlling interest in discontinued operations | (9,167) | 0 | 0 | ||||||||||
Net income (loss) attributable to NETGEAR, Inc. | $ (19,471) | $ 9,949 | $ (5,230) | $ 5,590 | (9,162) | $ 19,436 | $ 75,851 | ||||||
Adjustments | Accounting Standards Update 2014-09 | |||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Net revenue | 2,247 | ||||||||||||
Cost of revenue | (252) | ||||||||||||
Gross profit | 2,499 | ||||||||||||
Provision for income taxes | (2,536) | ||||||||||||
Net income from continuing operations | 5,035 | ||||||||||||
Net income (loss) from discontinued operations, net of tax | 5,721 | ||||||||||||
Net income (loss) | 10,756 | ||||||||||||
Net loss attributable to non-controlling interest in discontinued operations | 598 | ||||||||||||
Net income (loss) attributable to NETGEAR, Inc. | 10,158 | ||||||||||||
Balance without adoption of ASC 606 | |||||||||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |||||||||||||
Net revenue | 1,061,063 | ||||||||||||
Cost of revenue | 716,866 | ||||||||||||
Gross profit | 344,197 | ||||||||||||
Provision for income taxes | 23,342 | ||||||||||||
Net income from continuing operations | 22,361 | ||||||||||||
Net income (loss) from discontinued operations, net of tax | (29,934) | ||||||||||||
Net income (loss) | (7,573) | ||||||||||||
Net loss attributable to non-controlling interest in discontinued operations | (8,569) | ||||||||||||
Net income (loss) attributable to NETGEAR, Inc. | $ 996 | ||||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Revenue Recognition (Schedule o
Revenue Recognition (Schedule of Remaining Performance Obligations) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Revenue from Contract with Customer [Abstract] | |
Performance obligations, amount | $ 55,772 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations, amount | $ 53,945 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations , period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01 | |
Revenue from Contract with Customer [Abstract] | |
Performance obligations, amount | $ 904 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations , period | 2 years |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligations , period |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)region | Dec. 31, 2018USD ($) | Dec. 31, 2018USD ($)regions | |
Revenue from Contract with Customer [Abstract] | |||
Capitalized contract costs | $ 7,400,000 | $ 7,400,000 | $ 7,400,000 |
Capitalized contract costs, impairment | 0 | ||
Revenue deferred due to unsatisfied performance obligations | 14,800,000 | ||
Revenue recognized for satisfaction of performance obligations over time | 9,000,000 | ||
Recognized revenue that was included in contract liability balance at beginning of period | $ 4,400,000 | ||
Number of geographic regions in which the Company conducts business | 3 | 3 |
Revenue Recognition (Schedule_2
Revenue Recognition (Schedule of Changes in Contract Balances and Impacts of Entries to Adopt ASC 606) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue from Contract with Customer [Abstract] | |||
Accounts receivable, net | $ 303,667 | $ 260,404 | $ 255,118 |
Accounts receivable, net $ change | $ 43,263 | ||
Accounts receivable, net % change | 16.60% | ||
Contract liabilities - current | $ 11,086 | 5,357 | $ 21,212 |
Contract liabilities - current, $ change | $ 5,729 | ||
Contract liabilities - current, % change | 106.90% | ||
Contract liabilities - non-current | $ 779 | $ 728 | |
Contract liabilities - non-current, $ change | $ 51 | ||
Contract liabilities - non-current, % change | 7.00% |
Revenue Recognition (Schedule_3
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, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | [1] | Dec. 31, 2016 | [1] | |
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | $ 1,143,445 | ||
Service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 160,295 | 193,454 | 254,155 | ||||||||||
Non-service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 898,521 | 845,715 | 889,290 | ||||||||||
Americas | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 700,693 | 665,089 | 734,980 | ||||||||||
EMEA | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 207,599 | 197,074 | 217,554 | ||||||||||
APAC | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 150,524 | 177,006 | 190,911 | ||||||||||
Connected Home | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 771,060 | 768,261 | 846,929 | ||||||||||
Connected Home | Service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 156,671 | 190,186 | 249,980 | ||||||||||
Connected Home | Non-service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 614,389 | 578,075 | 596,949 | ||||||||||
Connected Home | Americas | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 576,476 | 547,314 | 595,606 | ||||||||||
Connected Home | EMEA | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 97,979 | 93,438 | 110,941 | ||||||||||
Connected Home | APAC | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 96,605 | 127,509 | 140,382 | ||||||||||
SMB | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 287,756 | 270,908 | 296,516 | ||||||||||
SMB | Service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 3,624 | 3,268 | 4,175 | ||||||||||
SMB | Non-service provider | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 284,132 | 267,640 | 292,341 | ||||||||||
SMB | Americas | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 124,217 | 117,775 | 139,374 | ||||||||||
SMB | EMEA | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | 109,620 | 103,636 | 106,613 | ||||||||||
SMB | APAC | |||||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||||
Net revenue | $ 53,919 | $ 49,497 | $ 50,529 | ||||||||||
[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 (Narrat
Discontinued Operations (Narrative) (Details) $ / shares in Units, $ in Millions | Dec. 31, 2018USD ($)shares | Aug. 07, 2018USD ($)shares | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 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 | 1.980295 | |||||
Separation Expense | $ 33.9 | |||||
Transition services benefit | $ (6.3) | $ 6.3 | ||||
Transition and other services liability | $ 12.2 | $ 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 | |||||
Cash consideration | $ 70 | |||||
Arlo | IPO | ||||||
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 | |||||
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 |
Discontinued Operations (Income
Discontinued Operations (Income (Loss) From Discontinued Operations, Net Of Tax) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Operating expenses: | |||||
Total operating expenses | $ 6,300 | $ (6,300) | |||
Income (loss) from discontinued operations, net of tax | $ (35,655) | $ 30,569 | $ 5,539 | ||
Arlo | Discontinued Operations, Disposed of by Spin-off | |||||
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract] | |||||
Net revenues | 464,649 | 367,751 | 184,853 | ||
Cost of net revenues | 372,843 | 279,425 | 146,570 | ||
Gross profit | 91,806 | 88,326 | 38,283 | ||
Operating expenses: | |||||
Research and development | 48,696 | 22,710 | 18,463 | ||
Sales and marketing | 39,713 | 19,490 | 10,764 | ||
General and administrative | 17,762 | 691 | 487 | ||
Separation expense | 31,583 | 1,384 | 0 | ||
Restructuring and other charges | 0 | 0 | 40 | ||
Litigation reserves, net | 0 | 28 | 0 | ||
Total operating expenses | 137,754 | 44,303 | 29,754 | ||
Income (loss) from operations of discontinued operations | (45,948) | 44,023 | 8,529 | ||
Interest income | 1,239 | 0 | 0 | ||
Other (expense) | (41) | ||||
Other income | 467 | 45 | |||
Income (loss) from discontinued operations before income taxes | (44,750) | 44,490 | 8,574 | ||
Provision (benefit) for income taxes | (9,095) | 13,921 | 3,035 | ||
Income (loss) from discontinued operations, net of tax | $ (35,655) | $ 30,569 | $ 5,539 |
Discontinued Operations (Carryi
Discontinued Operations (Carrying Amounts Of Assets Included As Part of Discontinued Operations) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Carrying amounts of assets included as part of discontinued operations | |||
Cash and cash equivalents | $ 143 | ||
Accounts receivable, net | 157,680 | ||
Inventories | 82,952 | ||
Prepaid expenses and other current assets | 2,350 | ||
Current assets classified as discontinued operations | $ 0 | $ 243,575 | 243,125 |
Property and equipment, net | 3,311 | ||
Intangibles, net | 4,348 | ||
Goodwill | 21,149 | ||
Other non-current assets | 12,318 | ||
Non-current assets classified as discontinued operations | 0 | 42,566 | 41,126 |
Total assets classified as discontinued operations on the consolidated balance sheet | 284,251 | ||
Carrying amounts of liabilities included as part of discontinued operations: | |||
Accounts payable | 20,711 | ||
Accrued employee compensation | 3,231 | ||
Other accrued liabilities | 72,649 | ||
Deferred revenue | 34,072 | ||
Current liabilities classified as discontinued operations | 0 | 135,329 | 130,663 |
Other non-current liabilities | 13,333 | ||
Non-current liabilities classified as discontinued operations | $ 0 | $ 13,092 | 13,333 |
Total liabilities classified as discontinued operations on the consolidated balance sheet | $ 143,996 |
Business Acquisitions (Narrativ
Business Acquisitions (Narrative) (Details) | Aug. 06, 2018USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Business Acquisition [Line Items] | |||||
Fair value of contingent consideration | $ 5,953,000 | $ 0 | $ 0 | ||
Goodwill | 80,721,000 | $ 64,314,000 | $ 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 consideration | 6,300,000 | $ 5,900,000 | |||
Goodwill | 16,407,000 | ||||
Goodwill deductible for income tax purposes | 0 | ||||
Non-current deferred income taxes | 815,000 | ||||
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 | ||||
Minimum | Measurement Input, Discount Rate | Meural | |||||
Business Acquisition [Line Items] | |||||
Intangible Asset, Measurement Input | 0.160 | ||||
Maximum | Measurement Input, Discount Rate | Meural | |||||
Business Acquisition [Line Items] | |||||
Intangible Asset, Measurement Input | 0.190 | ||||
Technical Milestone | Meural | |||||
Business Acquisition [Line Items] | |||||
Contingent consideration liability, maximum amount of each milestone | $ 3,500,000 | ||||
Service Revenue Milestone | Meural | |||||
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, 2018 | Aug. 06, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 80,721 | $ 64,314 | $ 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 purchase price | $ 22,175 |
Balance Sheet Components (Sched
Balance Sheet Components (Schedule Of Available-For-Sale Short-Term) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Securities, Available-for-sale [Line Items] | ||
Cost | $ 70,479 | $ 124,978 |
Unrealized Gain | 1 | 0 |
Unrealized Loss | (17) | (146) |
Estimated Fair Value | 70,463 | 124,832 |
U.S. treasuries | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 70,330 | 124,816 |
Unrealized Gain | 1 | 0 |
Unrealized Loss | (17) | (146) |
Estimated Fair Value | 70,314 | 124,670 |
Certificates of deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 149 | 162 |
Unrealized Gain | 0 | 0 |
Unrealized Loss | 0 | 0 |
Estimated Fair Value | $ 149 | $ 162 |
Balance Sheet Components (Narra
Balance Sheet Components (Narrative) (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Balance Sheet Related Disclosures [Abstract] | |||
Equity securities without readily determinable fair values | $ 2,900,000 | $ 4,500,000 | |
Gain (impairment charges) related to long-term investment | 1,400,000 | 0 | $ 0 |
Upward adjustments for observable price changes | 200,000 | ||
Amortization expense | 8,300,000 | 11,000,000 | 15,700,000 |
Intangible assets impairment charges | $ 0 | 0 | 0 |
Number of reportable segments | segment | 2 | ||
Number of operating segments | segment | 2 | ||
Goodwill impairment charges | $ 0 | 0 | $ 0 |
Accumulated goodwill impairment charges | $ 74,200,000 | $ 74,200,000 |
Balance Sheet Components (Sch_2
Balance Sheet Components (Schedule Of Accounts Receivable And Related Allowances) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Gross accounts receivable | $ 304,921 | $ 273,734 | |
Receivables allowance | (1,254) | (18,616) | |
Total accounts receivable, net | 303,667 | $ 260,404 | 255,118 |
Allowance for doubtful accounts | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables allowance | $ (1,254) | (1,050) | |
Allowance for sales returns | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables allowance | (14,321) | ||
Allowance for price protection | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Receivables allowance | $ (3,245) |
Balance Sheet Components (Sch_3
Balance Sheet Components (Schedule Of Inventories) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | |||
Raw materials | $ 3,427 | $ 4,465 | |
Finished goods | 240,444 | 158,477 | |
Total inventories | $ 243,871 | $ 160,951 | $ 162,942 |
Balance Sheet Components (Sch_4
Balance Sheet Components (Schedule Of Property And Equipment, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Total property and equipment, gross | $ 116,108 | $ 116,769 | |
Accumulated depreciation and amortization | (95,931) | (99,420) | |
Total property and equipment, net | 20,177 | 17,349 | $ 18,147 |
Computer equipment | |||
Total property and equipment, gross | 9,205 | 10,065 | |
Furniture, fixtures and leasehold improvements | |||
Total property and equipment, gross | 18,286 | 21,464 | |
Software | |||
Total property and equipment, gross | 28,065 | 28,817 | |
Machinery and equipment | |||
Total property and equipment, gross | $ 60,552 | $ 56,423 |
Balance Sheet Components (Prope
Balance Sheet Components (Property and Equipment, other information) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Depreciation | $ 10.5 | $ 11.5 | $ 13.9 |
Balance Sheet Components (Sch_5
Balance Sheet Components (Schedule Of Intangibles, Net) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Purchased Intangible Assets [Line Items] | ||
Gross | $ 126,944 | $ 122,144 |
Accumulated Amortization | (109,798) | (101,504) |
Total estimated amortization expense | 17,146 | 20,640 |
Technology | ||
Purchased Intangible Assets [Line Items] | ||
Gross | 59,799 | 56,799 |
Accumulated Amortization | (56,978) | (56,383) |
Total estimated amortization expense | 2,821 | 416 |
Customer contracts and relationships | ||
Purchased Intangible Assets [Line Items] | ||
Gross | 56,800 | 56,200 |
Accumulated Amortization | (44,280) | (37,130) |
Total estimated amortization expense | 12,520 | 19,070 |
Other | ||
Purchased Intangible Assets [Line Items] | ||
Gross | 10,345 | 9,145 |
Accumulated Amortization | (8,540) | (7,991) |
Total estimated amortization expense | $ 1,805 | $ 1,154 |
Balance Sheet Components (Sch_6
Balance Sheet Components (Schedule Of Estimated Amortization Expense Related To Intangibles) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | ||
2,019 | $ 7,042 | |
2,020 | 6,205 | |
2,021 | 2,044 | |
2,022 | 527 | |
2,023 | 514 | |
Thereafter | 814 | |
Total estimated amortization expense | $ 17,146 | $ 20,640 |
Balance Sheet Components (Sch_7
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_8
Balance Sheet Components (Schedule of Other Non-Current Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Balance Sheet Related Disclosures [Abstract] | |||
Non-current deferred income taxes | $ 57,557 | $ 38,293 | |
Other | 9,876 | 11,178 | |
Total other non-current assets | $ 67,433 | $ 52,375 | $ 49,471 |
Balance Sheet Components (Sch_9
Balance Sheet Components (Schedule Of Other Accrued Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Balance Sheet Components [Line Items] | |||
Sales and marketing | $ 91,548 | $ 64,540 | |
Warranty obligation | 14,412 | 44,068 | |
Sales returns | 46,318 | 0 | |
Freight and duty | 10,586 | 6,705 | |
Other | 36,608 | 34,508 | |
Total other accrued liabilities | 199,472 | $ 181,931 | $ 149,821 |
Accounting Standards Update 2014-09 | Adjustments | |||
Balance Sheet Components [Line Items] | |||
Sales returns | 29,100 | ||
Total other accrued liabilities | $ (32,803) | $ 32,110 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Narrative) (Details) - Foreign currency forward contracts $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($)derivative_instrument | |
Maximum | |
Derivative [Line Items] | |
Derivative, term of contract (in months) | 6 months |
Cash Flow Hedges | |
Derivative [Line Items] | |
Approximate number of derivatives per quarter (in derivatives) | derivative_instrument | 10 |
Derivative, average size of contracts | $ | $ 7 |
Estimated term of reclassification from OCI to earnings (in months) | 12 months |
Hedge period of forecasted hedge transaction (in days) | 60 days |
Cash Flow Hedges | Maximum | |
Derivative [Line Items] | |
Derivative, term of contract (in months) | 6 months |
Derivative contracts not designated as hedging instruments | |
Derivative [Line Items] | |
Approximate number of derivatives per quarter (in derivatives) | derivative_instrument | 10 |
Derivative, average size of contracts | $ | $ 2 |
Derivative contracts not designated as hedging instruments | Maximum | |
Derivative [Line Items] | |
Derivative, term of contract (in months) | 3 months |
Derivative contracts not designated as hedging instruments | Minimum | |
Derivative [Line Items] | |
Derivative, term of contract (in months) | 1 month |
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, 2018 | Dec. 31, 2017 |
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of Recognized Assets | $ 786 | $ 1,799 |
Gross Amounts of Recognized Liabilities | 368 | 8,192 |
Prepaid expenses and other current assets | Derivative contracts not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of Recognized Assets | 784 | 1,314 |
Prepaid expenses and other current assets | Derivative contracts designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of Recognized Assets | 2 | 485 |
Other accrued liabilities | Derivative contracts not designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | 331 | 7,128 |
Other accrued liabilities | Derivative contracts designated as hedging instruments | ||
Derivatives, Fair Value [Line Items] | ||
Gross Amounts of Recognized Liabilities | $ 37 | $ 1,064 |
Derivative Financial Instrume_5
Derivative Financial Instruments (Schedule Of Offsetting Of Derivative Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | $ 786 | $ 1,799 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented on the Consolidated Balance Sheets | 786 | 1,799 |
Financial Instruments | (362) | (1,799) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 424 | 0 |
Bank of America | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 323 | 1,664 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented on the Consolidated Balance Sheets | 323 | 1,664 |
Financial Instruments | (64) | (1,664) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 259 | 0 |
Wells Fargo | ||
Offsetting of Derivative Assets [Line Items] | ||
Gross Amounts of Recognized Assets | 463 | 135 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Assets Presented on the Consolidated Balance Sheets | 463 | 135 |
Financial Instruments | (298) | (135) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 165 | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments (Schedule Of Offsetting Of Derivate Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | $ 368 | $ 8,192 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets | 368 | 8,192 |
Financial Instruments | (362) | (1,799) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 6 | 6,393 |
Bank of America | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 64 | 7,815 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets | 64 | 7,815 |
Financial Instruments | (64) | (1,664) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | 0 | 6,151 |
J.P. Morgan Chase | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 6 | |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | |
Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets | 6 | |
Financial Instruments | 0 | |
Cash Collateral Pledged | 0 | |
Net Amount | 6 | |
Wells Fargo | ||
Offsetting Liabilities [Line Items] | ||
Gross Amounts of Recognized Liabilities | 298 | 377 |
Gross Amounts Offset on the Consolidated Balance Sheets | 0 | 0 |
Net Amounts Of Liabilities Presented on the Consolidated Balance Sheets | 298 | 377 |
Financial Instruments | (298) | (135) |
Cash Collateral Pledged | 0 | 0 |
Net Amount | $ 0 | $ 242 |
Derivative Financial Instrume_7
Derivative Financial Instruments (Schedule Of Effects and Locations of Gains or Losses Recognized in Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Cost of revenue | 717,118 | 731,453 | 769,543 | ||||||||||
Research and development | 82,416 | 71,893 | 70,904 | ||||||||||
Sales and marketing | 152,569 | 138,679 | 139,591 | ||||||||||
General and administrative | 64,857 | 54,346 | 53,996 | ||||||||||
Foreign currency forward contracts | Net revenue | |||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Gains (losses) on cash flow hedge | 665 | (5,786) | 850 | ||||||||||
Foreign currency forward contracts | Cost of revenue | |||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Gains (losses) on cash flow hedge | (9) | 18 | (6) | ||||||||||
Foreign currency forward contracts | Research and development | |||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Gains (losses) on cash flow hedge | 83 | 130 | (55) | ||||||||||
Foreign currency forward contracts | Sales and marketing | |||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Gains (losses) on cash flow hedge | (102) | 788 | (189) | ||||||||||
Foreign currency forward contracts | General and administrative | |||||||||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||||||||
Gains (losses) on cash flow hedge | $ (53) | $ 133 | $ (30) | ||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Derivative Financial Instrume_8
Derivative Financial Instruments (Schedule Of Company's Derivative Instruments On Other Comprehensive Income And The Consolidated Statement Of Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Unrealized gains (losses) on derivative instruments | $ (3,068) | $ 2,187 | |
Gains (losses) reclassified from OCI into income - effective portion | $ 584 | (4,717) | 570 |
Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Unrealized gains (losses) on derivative instruments | 1,416 | ||
Unrealized gains (losses) on derivative instruments | (8) | 3 | |
Net revenue | Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) reclassified from OCI into income - effective portion | 665 | (5,786) | 850 |
Cost of revenue | Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) reclassified from OCI into income - effective portion | (9) | 18 | (6) |
Research and development | Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) reclassified from OCI into income - effective portion | 83 | 130 | (55) |
Sales and marketing | Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) reclassified from OCI into income - effective portion | (102) | 788 | (189) |
General and administrative | Foreign currency forward contracts | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) reclassified from OCI into income - effective portion | $ (53) | $ 133 | $ (30) |
Derivative Financial Instrume_9
Derivative Financial Instruments (Schedule Of Derivatives Not Designated As Hedging Instruments) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other income (expense), net | Foreign currency forward contracts | Derivative contracts not designated as hedging instruments | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gains (losses) on cash flow hedge | $ 3,870 | $ (5,085) | $ 3,280 |
Net Income (Loss) Per Share (Sc
Net Income (Loss) Per Share (Schedule Of Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Numerator: | |||||||||||
Net income (loss) from continuing operations | $ (535) | $ 16,310 | $ 533 | $ 1,018 | $ (41,778) | $ 9,624 | $ 9,989 | $ 11,032 | $ 17,326 | $ (11,133) | $ 70,312 |
Net income (loss) from discontinued operations, net of tax | (35,655) | 30,569 | 5,539 | ||||||||
Net income (loss) | (27,839) | 9,150 | (5,230) | 5,590 | $ (31,934) | $ 20,794 | $ 14,582 | $ 15,994 | (18,329) | 19,436 | 75,851 |
Net loss attributable to non-controlling interest in discontinued operations | (9,167) | 0 | 0 | ||||||||
Net income (loss) attributable to NETGEAR, Inc. | $ (19,471) | $ 9,949 | $ (5,230) | $ 5,590 | $ (9,162) | $ 19,436 | $ 75,851 | ||||
Denominator: | |||||||||||
Weighted average common shares - basic (in shares) | 31,626 | 32,097 | 32,758 | ||||||||
Potentially dilutive common share equivalent (in shares) | 1,511 | 0 | 970 | ||||||||
Weighted average common shares - dilutive (in shares) | 33,137 | 32,097 | 33,728 | ||||||||
Basic net income (loss) per share | |||||||||||
Net income (loss) from continuing operations per share - basic (in dollars per share) | $ (0.02) | $ 0.51 | $ 0.02 | $ 0.03 | $ (1.33) | $ 0.30 | $ 0.31 | $ 0.33 | $ 0.55 | $ (0.35) | $ 2.15 |
Net income (loss) from discontinued operation attributable to NETGEAR, Inc. - basic (in dollars per share) | (0.84) | 0.96 | 0.17 | ||||||||
Net income (loss) attributable to Netgear per share - basic (in dollars per share) | (0.62) | 0.31 | (0.17) | 0.18 | (1.02) | 0.66 | 0.45 | 0.49 | (0.29) | 0.61 | 2.32 |
Diluted net income (loss) per share | |||||||||||
Net income (loss) from continuing operations - diluted (in dollars per share) | (0.02) | 0.49 | 0.02 | 0.03 | (1.33) | 0.30 | 0.30 | 0.32 | 0.52 | (0.35) | 2.08 |
Net income (loss) from discontinued operations attributable to NETGEAR, Inc. - diluted (in dollars per share) | (0.80) | 0.96 | 0.17 | ||||||||
Net income (loss) attributable to Netgear per share - diluted (in dollars per share) | $ (0.62) | $ 0.30 | $ (0.16) | $ 0.17 | $ (1.02) | $ 0.64 | $ 0.44 | $ 0.47 | $ (0.28) | $ 0.61 | $ 2.25 |
Anti-dilutive employee stock-based awards, excluded (in shares) | 815 | 279 | 258 |
Other Income (Expense), Net (De
Other Income (Expense), Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other Income and Expenses [Abstract] | |||
Foreign currency transaction gain (loss), net | $ (2,675) | $ 5,292 | $ (3,323) |
Foreign currency contract gain (loss), net | 3,968 | (3,879) | 3,597 |
Other | (783) | 144 | (440) |
Total | $ 510 | $ 1,557 | $ (166) |
Income Taxes (Schedule of Incom
Income Taxes (Schedule of Income Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
United States | $ 32,237 | $ 36,461 | $ 89,877 |
International | 10,967 | 9,763 | 16,618 |
Income from continuing operations before income taxes | $ 43,204 | $ 46,224 | $ 106,495 |
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, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||||||||||
U.S. Federal | $ (587) | $ 25,733 | $ 28,796 | ||||||||
State | (2,338) | 2,435 | 2,412 | ||||||||
Foreign | 4,267 | 1,545 | 4,130 | ||||||||
Current, Total | 1,342 | 29,713 | 35,338 | ||||||||
Deferred: | |||||||||||
U.S. Federal | 20,930 | 27,936 | 1,139 | ||||||||
State | 2,514 | 190 | 762 | ||||||||
Foreign | 1,092 | (482) | (1,056) | ||||||||
Deferred, Total | 24,536 | 27,644 | 845 | ||||||||
Provision for income taxes | $ 19,210 | $ 5,483 | $ 1,271 | $ (86) | $ 48,496 | $ 950 | $ 3,061 | $ 4,850 | $ 25,878 | $ 57,357 | $ 36,183 |
Income Taxes (Schedule of Defer
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Tax Assets: | ||
Accruals and allowances | $ 20,765 | $ 16,629 |
Net operating loss carryforwards | 1,673 | 50 |
Stock-based compensation | 5,734 | 5,634 |
Deferred rent | 1,296 | 1,977 |
Deferred revenue | 1,100 | 1,459 |
Tax credit carryforwards | 1,661 | 974 |
Acquired intangibles | 31,902 | 15,598 |
Depreciation and amortization | 866 | 904 |
Total deferred tax assets | 64,997 | 43,225 |
Deferred Tax Liabilities: | ||
Other | (706) | (362) |
Total deferred tax liabilities | (706) | (362) |
Valuation allowance | (6,734) | (4,570) |
Net deferred tax assets | 57,557 | 38,293 |
Valuation allowance, net of federal tax | $ 5,400 | $ 3,600 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Line Items] | |||||
Valuation allowance | $ 6,734,000 | $ 4,570,000 | $ 6,734,000 | $ 4,570,000 | |
Valuation allowance increase | 2,200,000 | ||||
Income tax impact associated with stock option exercises | 0 | 0 | $ 2,160,000 | ||
Net current period other comprehensive income (loss) | (126,000) | 394,000 | (285,000) | ||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense | 48,300,000 | 6,500,000 | 17,500,000 | ||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense related to remeasurement of DTA | 26,600,000 | ||||
Tax Cuts and Jobs Act of 2017 - provisional income tax expense, deemed repatriation of foreign earnings | 21,700,000 | ||||
Tax Cuts And Jobs Act Of 2017 - provisional income tax expense, adjustment | 6,700,000 | ||||
Tax Cuts and Jobs Act of 2017, deferred tax liabilities, undistributed foreign earnings, global intangible low-taxed income (GILTI) | 400,000 | 400,000 | |||
Tax Cuts and Jobs Act of 2017, deferred tax assets, undistributed foreign earnings, foreign derived intangible income (FDII) | (700,000) | (700,000) | |||
Tax Cuts and Jobs Act of 2017, deferred tax assets, undistributed foreign earnings, global intangible low-taxed income and foreign derived intangible income (GILTI & FDII) | (300,000) | (300,000) | |||
Possible reduction in liabilities for uncertain tax positions | 1,100,000 | 1,100,000 | |||
Unrecognized tax benefits that would impact effective tax rate | 9,600,000 | 9,600,000 | |||
Unrecognized tax benefits, income tax penalties and interest expense | 100,000 | (400,000) | $ 600,000 | ||
Unrecognized tax benefits, income tax penalties and interest accrued | 3,400,000 | $ 3,300,000 | 3,400,000 | $ 3,300,000 | |
Foreign Earnings Repatriated | 1,000,000 | ||||
Total foreign earnings | 188,400,000 | ||||
US Federal | |||||
Income Tax Disclosure [Line Items] | |||||
Operating loss carryforwards | 8,000,000 | $ 8,000,000 | |||
Operating loss carryforwards expiration year | 2,021 | ||||
State and Local Jurisdiction | |||||
Income Tax Disclosure [Line Items] | |||||
Tax credit carryforwards | $ 1,700,000 | $ 1,700,000 | |||
ITALY | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,004 | ||||
ITALY | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,012 | ||||
GERMANY | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,014 | ||||
GERMANY | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,016 | ||||
UNITED KINGDOM | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,014 | ||||
UNITED KINGDOM | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,016 | ||||
FRANCE | Earliest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,015 | ||||
FRANCE | Latest Tax Year | |||||
Income Tax Disclosure [Line Items] | |||||
Income tax examination, year under examination | 2,016 |
Income Taxes (Schedule of Effec
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Tax at federal statutory rate | 21.00% | 35.00% | 35.00% |
State, net of federal benefit | 1.50% | 1.00% | 1.80% |
Impact of international operations | 1.90% | (8.80%) | (2.80%) |
Stock-based compensation | (0.30%) | (3.90%) | 1.20% |
Tax credits | (2.60%) | (2.00%) | (0.90%) |
Valuation allowance | 1.40% | 0.00% | 0.00% |
Impact of the Tax Act | (15.40%) | 104.60% | 0.00% |
Write-off of future tax benefits related to Arlo | 52.20% | 0.00% | 0.00% |
Others | 0.20% | (1.80%) | (0.30%) |
Provision for income taxes | 59.90% | 124.10% | 34.00% |
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, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 12,567 | $ 12,965 | $ 12,830 |
Additions based on tax positions related to the current year | 637 | 938 | 1,523 |
Additions for tax positions of prior years | 280 | 32 | 45 |
Reductions for tax positions of prior years | (116) | (1,477) | (237) |
Reductions due to lapse of applicable statutes | (999) | (899) | (627) |
Adjustments due to foreign exchange rate movement | (386) | 1,008 | (569) |
Ending balance | $ 11,983 | $ 12,567 | $ 12,965 |
Commitments And Contingencies_2
Commitments And Contingencies (Narrative) (Details) | Jun. 13, 2013USD ($) | Dec. 31, 2018USD ($)claimspatentcase | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2014USD ($)$ / products | Jun. 30, 2013$ / products | Sep. 14, 2010patents |
Loss Contingencies [Line Items] | |||||||
Rent expense | $ 9,400,000 | $ 9,900,000 | $ 9,500,000 | ||||
Number of days for non-cancellation of purchase obligations prior to expected shipment date (in days) | 30 days | ||||||
Non-cancelable purchase commitments | $ 156,200,000 | ||||||
Liability for director and officer indemnification agreements | 0 | ||||||
Liability for customers, distributors, and resellers indemnification agreements | $ 0 | ||||||
Period following change of company control executive officer termination entitlements (in months) | 12 months | ||||||
Liabilities for executive's employment agreements | $ 0 | ||||||
Number of exiting cases and proceedings that the Company currently believes are liking to have a material adverse effect on its financial position | claims | 0 | ||||||
The future legnth the Company currently considered regarding existing cases and proceedings that are likely to have a material advese effect on it (in months) | 12 months | ||||||
Number of patents company is accused of infringing (in patents) | patents | 8 | ||||||
Reasonable and nondiscriminatory (RAND) royalty rate (USD per unit) | $ / products | 15 | ||||||
Estimated future RAND royalty rate 2018 through 2020 (USD per unit) | $ / products | 5 | ||||||
Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Foregone colleting verdict amount | $ 3,600,000 | ||||||
Foregone reasonable and nondiscriminatory (RAND) royalty rate (USD per unit) | $ / products | 0.15 | ||||||
Chrismar Systems vs. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Number of patents company is accused of infringing (in patents) | patent | 4 | ||||||
Number of active cases the suing company has | case | 40 | ||||||
Vivato v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Number of patents company is accused of infringing (in patents) | patent | 3 | ||||||
Hera Wireless v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Number of patents company is accused of infringing (in patents) | patent | 3 | ||||||
D-Link | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | $ 435,000 | ||||||
NETGEAR | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | 3,555,000 | ||||||
Acer Gateway | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | 1,170,000 | ||||||
Dell | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | 1,920,000 | ||||||
Toshiba | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | 2,445,000 | ||||||
Belkin | Ericsson v. NETGEAR | |||||||
Loss Contingencies [Line Items] | |||||||
Loss contingency, damages awarded | $ 600,000 | ||||||
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] | |||||||
Purchase Commitment, Including Long-term, Remaining Minimum Amount Committed | $ 17,400,000 | ||||||
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 | ||||||
Minimum | 46 To 60 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to the expected shipment date (in days) | 46 days | ||||||
Minimum | 31 To 45 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to the expected shipment date (in days) | 31 days | ||||||
Maximum | 46 To 60 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to the expected shipment date (in days) | 60 days | ||||||
Maximum | 31 To 45 Days | |||||||
Loss Contingencies [Line Items] | |||||||
Required notice period prior to the expected shipment date (in days) | 45 days | ||||||
Earliest Tax Year | ITALY | |||||||
Loss Contingencies [Line Items] | |||||||
Income tax examination, year under examination | 2,004 | ||||||
Latest Tax Year | ITALY | |||||||
Loss Contingencies [Line Items] | |||||||
Income tax examination, year under examination | 2,012 |
Commitments And Contingencies_3
Commitments And Contingencies (Schedule of Future Minimum Lease Paynments) (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 11,900 |
2,020 | 9,986 |
2,021 | 7,785 |
2,022 | 6,856 |
2,023 | 4,478 |
Thereafter | 7,725 |
Total future minimum lease payments | $ 48,730 |
Commitments And Contingencies_4
Commitments And Contingencies (Product Warranty Liability) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Product Warranties Disclosures [Abstract] | |||
Sales returns | $ 46,318 | $ 0 | |
Balance at the beginning of the year | 44,068 | 42,571 | $ 50,216 |
Reclassified to sales returns upon adoption of ASC 606 | (29,147) | ||
Provision for warranty obligations made during the year | 12,783 | 91,384 | 86,610 |
Settlements made during the year | (13,292) | (89,887) | (94,255) |
Balance at the end of year | $ 14,412 | $ 44,068 | $ 42,571 |
Stockholders' Equity (Narrative
Stockholders' Equity (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stockholders' Equity Note [Abstract] | |||
Remaining number of shares authorized to be repurchased (in shares) | 1,500,000 | ||
Repurchases of common stock (in shares) | 500,000 | 2,400,000 | 900,000 |
Repurchases of common stock, value | $ 30,000 | $ 113,161 | $ 38,252 |
Restricted stock unit withholdings (in shares) | 138,000 | 135,000 | 105,000 |
Restricted stock unit withholdings | $ 8,065 | $ 6,415 | $ 4,686 |
Stockholders' Equity (Schedule
Stockholders' Equity (Schedule Of Changes in Accumulated Other Comprehensive Income by Component Net of Tax) (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Tax [Roll Froward] | |||
AOCI tax, beginning balance | $ 133,000 | $ (261,000) | $ 24,000 |
Other comprehensive income (loss) before reclassifications | (249,000) | 3,062,000 | (572,000) |
Less: Amount reclassified from accumulated other comprehensive income | (123,000) | 2,668,000 | (287,000) |
Net current period other comprehensive income (loss) | (126,000) | 394,000 | (285,000) |
Distribution of Arlo | 4,000 | ||
AOCI tax, ending balance | 11,000 | 133,000 | (261,000) |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (851,000) | ||
Beginning balance | 730,485,000 | 796,819,000 | 708,710,000 |
Other comprehensive income (loss) before reclassifications | 1,301,000 | (7,745,000) | 2,468,000 |
Less: Amount reclassified from accumulated other comprehensive income | 465,000 | (4,956,000) | 533,000 |
Net current period other comprehensive income (loss) | 836,000 | (2,789,000) | 1,935,000 |
Distribution of Arlo | 0 | ||
Ending balance | (15,000) | (851,000) | |
Ending balance | 627,552,000 | 730,485,000 | 796,819,000 |
Unrealized gains (losses) on available-for-sale securities | |||
Accumulated Other Comprehensive Income (Loss), Before Tax [Roll Forward] | |||
AOCI before tax, beginning | (146,000) | (31,000) | (64,000) |
Other comprehensive income (loss) before reclassifications | 128,000 | (115,000) | 33,000 |
Less: Amount reclassified from accumulated other comprehensive income | 0 | 0 | 0 |
Net current period other comprehensive income (loss) | 128,000 | (115,000) | 33,000 |
Distribution of Arlo | 0 | ||
AOCI before tax, ending | (18,000) | (146,000) | (31,000) |
Unrealized gains (losses) on derivatives | |||
Accumulated Other Comprehensive Income (Loss), Before Tax [Roll Forward] | |||
AOCI before tax, beginning | (838,000) | 2,230,000 | 43,000 |
Other comprehensive income (loss) before reclassifications | 1,422,000 | (10,692,000) | 3,007,000 |
Less: Amount reclassified from accumulated other comprehensive income | 588,000 | (7,624,000) | 820,000 |
Net current period other comprehensive income (loss) | 834,000 | (3,068,000) | 2,187,000 |
Distribution of Arlo | (4,000) | ||
AOCI before tax, ending | (8,000) | (838,000) | 2,230,000 |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 1,938,000 | 3,000 | |
Beginning balance | (851,000) | 1,938,000 | 3,000 |
Ending balance | 1,938,000 | ||
Ending balance | $ (15,000) | $ (851,000) | $ 1,938,000 |
Stockholders' Equity (Schedul_2
Stockholders' Equity (Schedule of Reclassifications Out Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Cost of revenue | 717,118 | 731,453 | 769,543 | ||||||||||
Research and development | 82,416 | 71,893 | 70,904 | ||||||||||
Sales and marketing | 152,569 | 138,679 | 139,591 | ||||||||||
General and administrative | 64,857 | 54,346 | 53,996 | ||||||||||
Income from continuing operations before income taxes | 43,204 | 46,224 | 106,495 | ||||||||||
Provision for income taxes | 19,210 | 5,483 | 1,271 | (86) | 48,496 | 950 | 3,061 | 4,850 | 25,878 | 57,357 | 36,183 | ||
Net income (loss) from continuing operations | (535) | 16,310 | 533 | 1,018 | (41,778) | 9,624 | 9,989 | 11,032 | 17,326 | (11,133) | 70,312 | ||
Net income (loss) from discontinued operations, net of tax | (35,655) | 30,569 | 5,539 | ||||||||||
Net income (loss) | $ (27,839) | $ 9,150 | $ (5,230) | $ 5,590 | $ (31,934) | $ 20,794 | $ 14,582 | $ 15,994 | (18,329) | 19,436 | 75,851 | ||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest | |||||||||||||
Reclassification Out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||||
Net revenue | 665 | (5,786) | 850 | ||||||||||
Cost of revenue | (9) | 18 | (6) | ||||||||||
Research and development | 83 | 130 | (55) | ||||||||||
Sales and marketing | (102) | 788 | (189) | ||||||||||
General and administrative | (53) | 133 | (30) | ||||||||||
Income from continuing operations before income taxes | 584 | (4,717) | 570 | ||||||||||
Provision for income taxes | (123) | 1,651 | (200) | ||||||||||
Net income (loss) from continuing operations | 461 | (3,066) | 370 | ||||||||||
Net income (loss) from discontinued operations, net of tax | 4 | (1,890) | 163 | ||||||||||
Net income (loss) | $ 465 | $ (4,956) | $ 533 | ||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Apr. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2019 | May 31, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting term | 4 years | |||||
Employee stock purchase plan, offering period | 6 months | |||||
Stock-based compensation | $ 26,461,000 | $ 18,969,000 | $ 17,141,000 | |||
Stock-based compensation cost capitalized in inventory | $ 700,000 | 700,000 | 700,000 | |||
Maximum percentage contribution of salary by employees | 100.00% | |||||
Employer matching contribution, percent of employees' gross pay | 50.00% | |||||
Maximum contribution by employer, value | $ 6,000 | |||||
Cost recognized | $ 900,000 | 800,000 | 800,000 | |||
Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of additional shares authorized (in shares) | 1,000,000 | |||||
Number of shares authorized (in shares) | 2,000,000 | |||||
Shares purchased under ESPP | 124,000 | |||||
Weighted average price of shares purchased under ESPP (in dollars per share) | $ 54.40 | |||||
Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Options, exercises in period, intrinsic value | $ 11,000,000 | 7,700,000 | 14,500,000 | |||
Options, vested in period, total fair value | $ 3,800,000 | $ 3,800,000 | $ 4,200,000 | |||
Weighted average estimated fair value of options granted | $ 20.63 | $ 12.35 | $ 12.28 | |||
Total unrecognized compensation | $ 8,500,000 | |||||
Weighted-average period of recognition of stock based compensation (in days) | 2 years 6 months | |||||
RSUs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
RSU aggregate intrinsic value, vested | $ 25,700,000 | $ 19,500,000 | $ 15,400,000 | |||
RSU fair value, vested | 18,100,000 | 14,600,000 | 10,800,000 | |||
Total unrecognized compensation | $ 45,500,000 | |||||
Weighted-average period of recognition of stock based compensation (in days) | 2 years 6 months | |||||
2006 Long Term Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expiration date | Apr. 13, 2016 | |||||
2016 Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting term | 4 years | |||||
Maximum shares available for issuance (in shares) | 2,500,000 | |||||
Additional shares avaialbe for issuance (in shares) | 699,827 | |||||
Number of shares reserved for future grant (in shares) | 1,700,000 | 1,700,000 | ||||
Minimum percentage of exercise price granted to ten percentage of shareholders | 110.00% | |||||
Share conversion ratio | $ 1.58 | |||||
2016 Incentive Plan | Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting term | 4 years | |||||
Options grant period | 10 years | |||||
2016 Incentive Plan | SARs | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Term of stock appreciation rights from date of grant | 10 years | |||||
2016 Incentive Plan | First Tranche | Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting term | 12 months | |||||
2016 Incentive Plan | Remaining Tranche | Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting term | 3 years | |||||
2016 Incentive Plan | Minimum | RSAs | ||||||
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 shares reserved for future grant (in shares) | 700,000 | |||||
Maximum percentage of compensation contributed by employees (in percentage) | 10.00% | |||||
Purchase percentage of stock at fair market value (in percentage) | 85.00% | |||||
Stock-based compensation | $ 1,400,000 | $ 1,200,000 | $ 1,100,000 | |||
Discount from market price | 15.00% | |||||
Subsequent Event | 2016 Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Maximum shares available for issuance (in shares) | 3,100,000 |
Employee Benefit Plans (Schedul
Employee Benefit Plans (Schedule Of Stock Option Activity) (Details) - Stock Options $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of shares, beginning balance (in shares) | shares | 1,879 |
Number of shares, granted (in shares) | shares | 378 |
Number of shares, exercised (in shares) | shares | (289) |
Number of shares, expired (in shares) | shares | (6) |
Number of shares, granted, equitable adjustment, net (in shares) | shares | 1,969 |
Number of shares, cancelled, equitable adjustment (in shares) | shares | (1,962) |
Number of shares, ending balance (in shares) | shares | 1,969 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Beginning Balance (in dollars per share) | $ / shares | $ 34.08 |
Grants (in dollars per share) | $ / shares | 69.70 |
Exercises (in dollars per share) | $ / shares | 23.76 |
Expired (in dollars per share) | $ / shares | 21.45 |
Grants, equitable adjustment, net (in dollars per share) | $ / shares | 25.30 |
Cancelled, equitable adjustment, net (in dollars per share) | $ / shares | 42.50 |
Ending Balance (in dollars per share) | $ / shares | $ 25.30 |
Outstanding, Weighted Average Remaining Contractual Term | 6 years 3 months 14 days |
Outstanding, Intrinsic Value | $ | $ 17,338 |
Vested and expected to vest (in shares) | shares | 1,969 |
Vested and expected to vest, weighted average exercise price (in dollars per share) | $ / shares | $ 25.30 |
Vested and expected to vest, weighted average remaining contractual term | 6 years 3 months 14 days |
Vested and expected to vest, aggregate intrinsic value | $ | $ 17,338 |
Exercisable (in shares) | shares | 1,230 |
Exercisable, weighted average exercise price (in dollars per share) | $ / shares | $ 20.53 |
Exercisable, weighted average remaining contractual term | 4 years 11 months 8 days |
Exercisable, intrinsic value | $ | $ 14,511 |
Employee Benefit Plans (Sched_2
Employee Benefit Plans (Schedule of Ranges of Outstanding And Exercisable Stock Optoins) (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Number of outstanding options (in shares) | shares | 1,969 |
Outstanding options, weighted-average remaining contractual life | 6 years 3 months 14 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 25.30 |
Number of exercisable options (in shares) | shares | 1,230 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 20.53 |
$7.28 - $19.32 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 7.28 |
Exercise price, upper range (USD per share) | $ 19.32 |
Number of outstanding options (in shares) | shares | 512 |
Outstanding options, weighted-average remaining contractual life | 5 years 18 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 18.47 |
Number of exercisable options (in shares) | shares | 479 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 18.46 |
$19.33 - $20.98 | |
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) | $ 20.98 |
Number of outstanding options (in shares) | shares | 418 |
Outstanding options, weighted-average remaining contractual life | 3 years 1 month 13 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 20.04 |
Number of exercisable options (in shares) | shares | 417 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 20.04 |
$21.86 - $25.37 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 21.86 |
Exercise price, upper range (USD per share) | $ 25.37 |
Number of outstanding options (in shares) | shares | 633 |
Outstanding options, weighted-average remaining contractual life | 7 years 6 months 29 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 24.36 |
Number of exercisable options (in shares) | shares | 328 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 24 |
$29.23 - $38.32 | |
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) | $ 38.32 |
Number of outstanding options (in shares) | shares | 50 |
Outstanding options, weighted-average remaining contractual life | 9 years 3 months 7 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 34.68 |
Number of exercisable options (in shares) | shares | 6 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 29.23 |
$41.67 - $41.67 | |
Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercise price, lower range (USD per share) | 41.67 |
Exercise price, upper range (USD per share) | $ 41.67 |
Number of outstanding options (in shares) | shares | 356 |
Outstanding options, weighted-average remaining contractual life | 9 years 25 days |
Outstanding options, weighted- average exercise price per share (in dollars per share) | $ 41.67 |
Number of exercisable options (in shares) | shares | 0 |
Exercisable options, weighted-average exercise price (in dollars per share) | $ 0 |
Employee Benefit Plans (Sched_3
Employee Benefit Plans (Schedule Of RSU Activity) (Details) - RSUs shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Equity Instruments Other than Options, Nonvested [Roll Forward] | |
Beginning balance (in shares) | shares | 1,130 |
RSUs granted (in shares) | shares | 971 |
RSUs vested (in shares) | shares | (439) |
RSUs cancelled (in shares) | shares | (89) |
RSUs granted, equitable adjustment (in shares) | shares | 1,627 |
RSUs cancelled, equitable adjustment (in shares) | shares | (1,573) |
Ending balance (in shares) | shares | 1,627 |
Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Beginning balance (in dollars per share) | $ / shares | $ 43.22 |
RSUs granted (in dollars per share) | $ / shares | 67.78 |
RSUs vested (in dollars per share) | $ / shares | 41.24 |
RSUs cancelled (in dollars per share) | $ / shares | 55.66 |
RSUs granted, equitable adjustment (in dollars per share) | $ / shares | 34.31 |
RSUs cancelled, equitable adjustment (in dollars per share) | $ / shares | 58.23 |
Ending balance (in dollars per share) | $ / shares | $ 34.31 |
Employee Benefit Plans (Sched_4
Employee Benefit Plans (Schedule Of Valuation And Expense Information) (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock Options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 4 years 4 months 24 days | 4 years 4 months 24 days | 4 years 4 months 24 days |
Risk free interest rate | 2.36% | 1.66% | 1.28% |
Expected volatility rate | 31.10% | 31.60% | 35.40% |
Dividend yield (in percentage) | 0.00% | 0.00% | 0.00% |
ESPP | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 6 months | 6 months | 6 months |
Risk free interest rate | 2.00% | 0.93% | 0.43% |
Expected volatility rate | 37.90% | 29.70% | 38.30% |
Dividend yield (in percentage) | 0.00% | 0.00% | 0.00% |
Employee Benefit Plans (Sched_5
Employee Benefit Plans (Schedule Of Total Stock-Based Compensation Expense Resulting) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 26,461 | $ 18,969 | $ 17,141 |
Cost of revenue | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 2,435 | 1,406 | 1,473 |
Research and development | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 4,283 | 2,968 | 2,726 |
Sales and marketing | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 8,267 | 5,481 | 4,934 |
General and administrative | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 11,476 | $ 9,114 | $ 8,008 |
Segment Information (Narrative)
Segment Information (Narrative) (Details) | 12 Months Ended | |||||
Dec. 31, 2018 | Dec. 31, 2018region | Dec. 31, 2018segment | Dec. 31, 2018regions | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of reportable segments | 2 | |||||
Number of operating segments | 2 | |||||
Number of geographic regions in which the Company conducts business | 3 | 3 | ||||
Connected Home | Net revenue | Customer A | ||||||
Concentration risk, percentage | 17.00% | 16.00% | 15.00% | |||
Connected Home | Net revenue | Customer B | ||||||
Concentration risk, percentage | 15.00% | 13.00% | 12.00% |
Segment Information (Schedule O
Segment Information (Schedule Of Reportable Segment And Reconciliation Of Segment Contribution Income To Income Before Income Taxes) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Segment Reporting Information [Line Items] | |||||||||||||
Total net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Total segment contribution income | 166,482 | 147,735 | 211,536 | ||||||||||
Corporate and unallocated costs | (90,186) | (75,305) | (69,623) | ||||||||||
Amortization of intangibles | (7,979) | (10,663) | (15,361) | ||||||||||
Stock-based compensation expense | (26,461) | (18,969) | (17,141) | ||||||||||
Separation Expense | (929) | 0 | 0 | ||||||||||
Restructuring and other charges | (2,198) | (97) | (3,841) | ||||||||||
Litigation reserves, net | (15) | (148) | (73) | ||||||||||
Interest income | 3,980 | 2,114 | 1,164 | ||||||||||
Other income (expense), net | 510 | 1,557 | (166) | ||||||||||
Income from continuing operations before income taxes | 43,204 | 46,224 | 106,495 | ||||||||||
Connected Home | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Total net revenue | 771,060 | 768,261 | [1] | 846,929 | [1] | ||||||||
Total segment contribution income | $ 96,340 | $ 83,870 | $ 138,997 | ||||||||||
Segment contribution margin (in percentage) | 12.50% | 10.90% | 16.40% | ||||||||||
SMB | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Total net revenue | $ 287,756 | $ 270,908 | [1] | $ 296,516 | [1] | ||||||||
Total segment contribution income | $ 70,142 | $ 63,865 | $ 72,539 | ||||||||||
Segment contribution margin (in percentage) | 24.40% | 23.60% | 24.50% | ||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Segment Information (Schedule_2
Segment Information (Schedule Of Net Revenue from Service Provider Customers by Segment) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Connected Home | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 771,060 | 768,261 | [1] | 846,929 | [1] | ||||||||
SMB | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 287,756 | 270,908 | [1] | 296,516 | [1] | ||||||||
Service Provider | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 160,295 | 193,454 | 254,155 | ||||||||||
Service Provider | Connected Home | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 156,671 | 190,186 | 249,980 | ||||||||||
Service Provider | SMB | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | $ 3,624 | $ 3,268 | $ 4,175 | ||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Segment Information (Schedule_3
Segment Information (Schedule Of Net Revenue By Geographic Region) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
United States (U.S.) | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 686,145 | 648,152 | 713,178 | ||||||||||
Americas (excluding U.S.) | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 14,548 | 16,937 | 21,802 | ||||||||||
EMEA | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | 207,599 | 197,074 | [1] | 217,554 | [1] | ||||||||
APAC | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Net revenue | $ 150,524 | $ 177,006 | $ 190,911 | ||||||||||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Segment Information (Schedule_4
Segment Information (Schedule Of Long-Lived Asset By Geographic Areas) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | $ 20,177 | $ 17,349 | $ 18,147 |
United States (U.S.) | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | 4,993 | 7,735 | 9,274 |
Canada | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | 4,359 | 1,745 | 2,745 |
EMEA | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | 95 | 140 | 206 |
China | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | 7,652 | 5,130 | 4,218 |
APAC (excluding China) | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Long-lived assets | $ 3,078 | $ 2,599 | $ 1,704 |
Fair Value Measurements (Summar
Fair Value Measurements (Summary Of Valuation Of Company's Financial Instruments By Various Levels) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | $ 96,676 | $ 141,331 |
Liabilities, fair value disclosure | 6,321 | 8,192 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 25,427 | 14,700 |
Liabilities, fair value disclosure | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 71,249 | 126,631 |
Liabilities, fair value disclosure | 368 | 8,192 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Liabilities, fair value disclosure | 5,953 | 0 |
Cash Equivalents | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 22,573 | 12,606 |
Cash Equivalents | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 22,573 | 12,606 |
Cash Equivalents | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Cash Equivalents | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
U.S. Treasuries | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 70,314 | 124,670 |
U.S. Treasuries | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
U.S. Treasuries | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 70,314 | 124,670 |
U.S. Treasuries | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Certificates of deposits | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 149 | 162 |
Certificates of deposits | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Certificates of deposits | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 149 | 162 |
Certificates of deposits | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Mutual Funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2,854 | 2,094 |
Mutual Funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2,854 | 2,094 |
Mutual Funds | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Mutual Funds | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Contingent Consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 5,953 | |
Contingent Consideration | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Contingent Consideration | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Contingent Consideration | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 5,953 | |
Foreign currency forward contracts | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 786 | 1,799 |
Liabilities, fair value disclosure | 368 | 8,192 |
Foreign currency forward contracts | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Liabilities, fair value disclosure | 0 | 0 |
Foreign currency forward contracts | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 786 | 1,799 |
Liabilities, fair value disclosure | 368 | 8,192 |
Foreign currency forward contracts | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Liabilities, fair value disclosure | $ 0 | $ 0 |
Restructuring and Other Charg_3
Restructuring and Other Charges (Narrative) (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Facility Closing | |
Restructuring Cost and Reserve [Line Items] | |
Completion Date | Jan. 31, 2022 |
Restructuring and Other Charg_4
Restructuring and Other Charges (Schedule of Restructuring and Other Charges) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, begining balance | $ 1,135 | $ 1,408 | $ 1,266 |
Additions | 2,253 | 97 | 3,715 |
Cash payments | (2,413) | (370) | (3,382) |
Adjustments | (55) | (191) | |
Non cash charges and adjustments, net | 300 | ||
Restructuring reserve, ending balance | 920 | 1,135 | 1,408 |
Employee termination charges | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, begining balance | 6 | 6 | 13 |
Additions | 1,789 | 0 | 3,086 |
Cash payments | (1,010) | 0 | (2,902) |
Adjustments | (10) | (191) | |
Restructuring reserve, ending balance | 775 | 6 | 6 |
Lease contract termination and other charges | |||
Restructuring Reserve [Roll Forward] | |||
Restructuring reserve, begining balance | 1,129 | 1,402 | 1,253 |
Additions | 464 | 97 | 629 |
Cash payments | (1,403) | (370) | (480) |
Adjustments | (45) | 0 | |
Restructuring reserve, ending balance | $ 145 | $ 1,129 | $ 1,402 |
Quarterly Financial Data (Detai
Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jul. 01, 2018 | Apr. 01, 2018 | Dec. 31, 2017 | Oct. 01, 2017 | Jul. 02, 2017 | Apr. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |||
Quarterly Financial Data [Abstract] | |||||||||||||
Net revenue | $ 288,928 | $ 269,411 | $ 255,276 | $ 245,201 | $ 274,149 | $ 251,950 | $ 251,685 | $ 261,385 | $ 1,058,816 | $ 1,039,169 | [1] | $ 1,143,445 | [1] |
Gross profit | 90,654 | 94,445 | 80,280 | 76,319 | 76,129 | 76,096 | 75,380 | 80,111 | 341,698 | 307,716 | 373,902 | ||
Provision for income taxes | 19,210 | 5,483 | 1,271 | (86) | 48,496 | 950 | 3,061 | 4,850 | 25,878 | 57,357 | 36,183 | ||
Net income from continuing operations | (535) | 16,310 | 533 | 1,018 | (41,778) | 9,624 | 9,989 | 11,032 | 17,326 | (11,133) | 70,312 | ||
Net income (loss) | (27,839) | 9,150 | (5,230) | 5,590 | $ (31,934) | $ 20,794 | $ 14,582 | $ 15,994 | (18,329) | 19,436 | 75,851 | ||
Net income (loss) attributable to NETGEAR, Inc. | $ (19,471) | $ 9,949 | $ (5,230) | $ 5,590 | $ (9,162) | $ 19,436 | $ 75,851 | ||||||
Net income (loss) per share - basic: | |||||||||||||
Income (loss) per share - basic, continuing operations (in dollars per share) | $ (0.02) | $ 0.51 | $ 0.02 | $ 0.03 | $ (1.33) | $ 0.30 | $ 0.31 | $ 0.33 | $ 0.55 | $ (0.35) | $ 2.15 | ||
Net income (loss) attributable to Netgear per share - basic (in dollars per share) | (0.62) | 0.31 | (0.17) | 0.18 | (1.02) | 0.66 | 0.45 | 0.49 | (0.29) | 0.61 | 2.32 | ||
Net income (loss) per share - diluted: | |||||||||||||
Income (loss) per share - diluted, continuing operations (in dollars per share) | (0.02) | 0.49 | 0.02 | 0.03 | (1.33) | 0.30 | 0.30 | 0.32 | 0.52 | (0.35) | 2.08 | ||
Net income (loss) attributable to Netgear per share - diluted (in dollars per share) | $ (0.62) | $ 0.30 | $ (0.16) | $ 0.17 | $ (1.02) | $ 0.64 | $ 0.44 | $ 0.47 | $ (0.28) | $ 0.61 | $ 2.25 | ||
[1] | Prior period amounts have not been adjusted to conform with ASC 606 as the Company adopted ASC 606 under the modified retrospective method. |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of year | $ 1,050 | $ 1,049 | $ 1,049 |
Other | 0 | 0 | 0 |
Additions | 50 | 99 | 60 |
Deductions | 154 | (98) | (60) |
Balance at end of year | 1,254 | 1,050 | 1,049 |
Allowance for sales returns | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of year | 14,321 | 10,602 | 14,298 |
Other | (14,321) | 0 | 0 |
Additions | 0 | 26,419 | 19,892 |
Deductions | 0 | (22,700) | (23,588) |
Balance at end of year | 0 | 14,321 | 10,602 |
Allowance for price protection | |||
SEC Schedule, 12-09, Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at beginning of year | 3,245 | 4,185 | 2,107 |
Other | (3,245) | 0 | 0 |
Additions | 0 | 7,149 | 11,728 |
Deductions | 0 | (8,089) | (9,650) |
Balance at end of year | $ 0 | $ 3,245 | $ 4,185 |
Uncategorized Items - ntgr-2018
Label | Element | Value |
Connected Home [Member] | ||
Goodwill | us-gaap_Goodwill | $ 28,035,000 |
SMB [Member] | ||
Goodwill | us-gaap_Goodwill | $ 36,279,000 |