Company Quick10K Filing
Netgear
Price30.96 EPS0
Shares32 P/E148
MCap1,001 P/FCF-28
Net Debt-168 EBIT29
TEV833 TEV/EBIT29
TTM 2019-09-29, in MM, except price, ratios
10-Q 2020-03-29 Filed 2020-05-01
10-K 2019-12-31 Filed 2020-02-18
10-Q 2019-09-29 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-11-02
10-Q 2018-07-01 Filed 2018-08-03
10-Q 2018-04-01 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-02-16
10-Q 2017-10-01 Filed 2017-11-03
10-Q 2017-07-02 Filed 2017-08-04
10-Q 2017-04-02 Filed 2017-05-05
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-10-02 Filed 2016-11-04
10-Q 2016-07-03 Filed 2016-08-05
10-Q 2016-04-03 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-19
10-Q 2015-09-27 Filed 2015-10-30
10-Q 2015-06-28 Filed 2015-07-31
10-Q 2015-03-29 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-20
10-Q 2014-09-28 Filed 2014-11-04
10-Q 2014-06-29 Filed 2014-08-01
10-Q 2014-03-30 Filed 2014-05-06
10-K 2013-12-31 Filed 2014-02-25
10-Q 2013-09-29 Filed 2013-11-05
10-Q 2013-06-30 Filed 2013-08-06
10-Q 2013-03-31 Filed 2013-05-07
10-K 2012-12-31 Filed 2013-02-26
10-Q 2012-09-30 Filed 2012-11-06
10-Q 2012-07-01 Filed 2012-08-08
10-Q 2012-04-01 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-10-02 Filed 2011-11-08
10-Q 2011-07-03 Filed 2011-08-09
10-Q 2011-04-03 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-02-28
10-Q 2010-10-03 Filed 2010-11-10
10-Q 2010-06-27 Filed 2010-08-05
10-Q 2010-03-28 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-03-01
8-K 2020-05-28
8-K 2020-04-18
8-K 2020-01-30
8-K 2020-01-07
8-K 2019-12-09
8-K 2019-11-19
8-K 2019-10-23
8-K 2019-07-24
8-K 2019-05-30
8-K 2019-04-24
8-K 2019-04-19
8-K 2019-02-26
8-K 2019-02-06
8-K 2018-12-31
8-K 2018-12-18
8-K 2018-11-28
8-K 2018-11-20
8-K 2018-10-25
8-K 2018-08-02
8-K 2018-08-02
8-K 2018-07-23
8-K 2018-07-23
8-K 2018-07-19
8-K 2018-07-06
8-K 2018-07-02
8-K 2018-05-31
8-K 2018-04-25
8-K 2018-04-20
8-K 2018-02-06

NTGR 10Q Quarterly Report

Part I: Financial Information
Item 1. Financial Statements
Note 1. The Company and Basis of Presentation
Note 2. Summary of Significant Accounting Policies
Note 3. Revenue
Note 4. Balance Sheet Components
Note 5. Derivative Financial Instruments
Note 6. Net Income (Loss) per Share
Note 7. Income Taxes
Note 8. Commitments and Contingencies
Note 9. Stockholders' Equity
Note 10. Employee Benefit Plans
Note 11. Segment Information
Note 12. Fair Value Measurements
Note 13. Leases
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part Ii: Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ntgr-ex311_40.htm
EX-31.2 ntgr-ex312_39.htm
EX-32.1 ntgr-ex321_38.htm
EX-32.2 ntgr-ex322_37.htm

Netgear Earnings 2020-03-29

Balance SheetIncome StatementCash Flow
1.61.31.00.60.30.02012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22012201420172020
Ops, Inv, Fin

ntgr-10q_20200329.htm
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 29, 2020.

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                    to

 

Commission file number: 000-50350

NETGEAR, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

77-0419172

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

 

 

350 East Plumeria Drive,

 

 

San Jose,

California

 

95134

(Address of principal executive offices)

 

(Zip Code)

 

 

(408)

907-8000

 

(Registrant’s telephone number including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading symbol(s):

 

Name of each exchange on which registered

Common Stock, $0.001 par value

 

NTGR

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large Accelerated filer

 

 

Accelerated filer

 

Non-Accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

The number of outstanding shares of the registrant’s Common Stock, $0.001 par value, was 29,419,020 as of April 24, 2020.

 

 


Table of Contents

TABLE OF CONTENTS

 

PART I: FINANCIAL INFORMATION

Item 1.

Financial Statements

3

 

Unaudited Condensed Consolidated Balance Sheets

3

 

Unaudited Condensed Consolidated Statements of Operations

4

 

Unaudited Condensed Consolidated Statements of Comprehensive Income

5

 

Unaudited Condensed Consolidated Statements of Stockholders' Equity

6

 

Unaudited Condensed Consolidated Statements of Cash Flows

7

 

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

46

Item 4.

Controls and Procedures

46

PART II: OTHER INFORMATION

Item 1.

Legal Proceedings

48

Item 1A.

Risk Factors

48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 3.

Defaults Upon Senior Securities

76

Item 4.

Mine Safety Disclosures

76

Item 5.

Other Information

76

Item 6.

Exhibits

77

Signatures

 

78

 

2


Table of Contents

 

PART I: FINANCIAL INFORMATION

Item 1.

Financial Statements

NETGEAR, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

As of

 

 

 

March 29,

2020

 

 

December 31,

2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

204,292

 

 

$

190,208

 

Short-term investments

 

 

5,422

 

 

 

5,499

 

Accounts receivable, net of allowance for doubtful accounts of $1,076 and $1,079 as of March 29, 2020 and December 31, 2019, respectively

 

 

257,582

 

 

 

277,168

 

Inventories

 

 

180,602

 

 

 

235,489

 

Prepaid expenses and other current assets

 

 

29,749

 

 

 

35,745

 

Total current assets

 

 

677,647

 

 

 

744,109

 

Property and equipment, net

 

 

16,382

 

 

 

17,683

 

Operating lease right-of-use assets, net

 

 

27,567

 

 

 

28,917

 

Intangibles, net

 

 

8,510

 

 

 

10,104

 

Goodwill

 

 

80,721

 

 

 

80,721

 

Other non-current assets

 

 

68,542

 

 

 

74,279

 

Total assets

 

$

879,369

 

 

$

955,813

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

39,213

 

 

$

80,531

 

Accrued employee compensation

 

 

14,208

 

 

 

20,024

 

Other accrued liabilities

 

 

172,908

 

 

 

189,547

 

Deferred revenue

 

 

6,669

 

 

 

6,450

 

Income taxes payable

 

 

1,204

 

 

 

1,839

 

Total current liabilities

 

 

234,202

 

 

 

298,391

 

Non-current income taxes payable

 

 

15,125

 

 

 

15,307

 

Non-current operating lease liabilities

 

 

24,252

 

 

 

25,434

 

Other non-current liabilities

 

 

7,999

 

 

 

7,988

 

Total liabilities

 

 

281,578

 

 

 

347,120

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock

 

 

30

 

 

 

30

 

Additional paid-in capital

 

 

840,641

 

 

 

831,365

 

Accumulated other comprehensive income

 

 

371

 

 

 

21

 

Accumulated deficit

 

 

(243,251

)

 

 

(222,723

)

Total stockholders’ equity

 

 

597,791

 

 

 

608,693

 

Total liabilities and stockholders’ equity

 

$

879,369

 

 

$

955,813

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3


Table of Contents

 

NETGEAR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

March 29,

2020

 

 

March 31,

2019

 

Net revenue

 

$

229,963

 

 

$

249,082

 

Cost of revenue

 

 

163,722

 

 

 

167,074

 

Gross profit

 

 

66,241

 

 

 

82,008

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

19,739

 

 

 

18,832

 

Sales and marketing

 

 

33,031

 

 

 

35,855

 

General and administrative

 

 

13,134

 

 

 

13,117

 

Other operating expenses (income), net

 

 

(332

)

 

 

196

 

Total operating expenses

 

 

65,572

 

 

 

68,000

 

Income from operations

 

 

669

 

 

 

14,008

 

Interest income, net

 

 

262

 

 

 

701

 

Other income (expense), net

 

 

(4,586

)

 

 

341

 

Income (loss) before income taxes

 

 

(3,655

)

 

 

15,050

 

Provision for income taxes

 

 

518

 

 

 

2,207

 

Net income (loss)

 

$

(4,173

)

 

$

12,843

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

Basic

 

$

(0.14

)

 

$

0.41

 

Diluted

 

$

(0.14

)

 

$

0.39

 

Weighted average shares used to compute net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

 

29,583

 

 

 

31,483

 

Diluted

 

 

29,583

 

 

 

32,874

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


Table of Contents

 

NETGEAR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 29,

2020

 

 

March 31,

2019

 

Net income (loss)

 

$

(4,173

)

 

$

12,843

 

Other comprehensive income, before tax:

 

 

 

 

 

 

 

 

Change in unrealized gains and losses on derivatives

 

 

403

 

 

 

23

 

Change in unrealized gains and losses on available-for-sale investments

 

 

 

 

 

15

 

Other comprehensive income, before tax

 

 

403

 

 

 

38

 

Tax provision related to derivatives

 

 

(53

)

 

 

(6

)

Tax provision related to available-for-sale investments

 

 

 

 

 

(3

)

Other comprehensive income, net of tax

 

 

350

 

 

 

29

 

Comprehensive income (loss)

 

$

(3,823

)

 

$

12,872

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Table of Contents

 

NETGEAR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income

 

 

Accumulated

Deficit

 

 

Total

Stockholder's

Equity

 

Balance as of December 31, 2019

 

 

29,925

 

 

$

30

 

 

$

831,365

 

 

$

21

 

 

$

(222,723

)

 

$

608,693

 

Change in unrealized gains and losses on derivatives, net of tax

 

 

 

 

 

 

 

 

 

 

 

350

 

 

 

 

 

 

350

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,173

)

 

 

(4,173

)

Stock-based compensation

 

 

 

 

 

 

 

 

6,336

 

 

 

 

 

 

 

 

 

6,336

 

Repurchase of common stock

 

 

(584

)

 

 

 

 

 

 

 

 

 

 

 

(15,008

)

 

 

(15,008

)

Restricted stock unit withholdings

 

 

(54

)

 

 

 

 

 

 

 

 

 

 

 

(1,347

)

 

 

(1,347

)

Issuance of common stock under stock-based compensation plans

 

 

305

 

 

 

 

 

 

2,940

 

 

 

 

 

 

 

 

 

2,940

 

Balance as of March 29, 2020

 

 

29,592

 

 

$

30

 

 

$

840,641

 

 

$

371

 

 

$

(243,251

)

 

$

597,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Accumulated

Deficit

 

 

Total

Stockholder's

Equity

 

Balance as of December 31, 2018

 

 

31,562

 

 

$

32

 

 

$

793,585

 

 

$

(15

)

 

$

(166,050

)

 

$

627,552

 

Change in unrealized gains and losses on available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

 

12

 

Change in unrealized gains and losses on derivatives, net of tax

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

 

 

 

17

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,843

 

 

 

12,843

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,457

 

 

 

 

 

 

 

 

 

6,457

 

Repurchase of common stock

 

 

(436

)

 

 

 

 

 

 

 

 

 

 

 

(15,000

)

 

 

(15,000

)

Restricted stock unit withholdings

 

 

(89

)

 

 

 

 

 

 

 

 

 

 

 

(3,344

)

 

 

(3,344

)

Issuance of common stock under stock-based compensation plans

 

 

430

 

 

 

 

 

 

4,371

 

 

 

 

 

 

 

 

 

4,371

 

Balance as of March 31, 2019

 

 

31,467

 

 

$

32

 

 

$

804,413

 

 

$

14

 

 

$

(171,551

)

 

$

632,908

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


Table of Contents

 

NETGEAR, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 29,

2020

 

 

March 31,

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(4,173

)

 

$

12,843

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

4,630

 

 

 

5,028

 

Stock-based compensation

 

 

6,336

 

 

 

6,458

 

Impairment of long-term investments

 

 

4,530

 

 

 

 

Deferred income taxes

 

 

1,042

 

 

 

1,148

 

Provision for excess and obsolete inventory

 

 

2,403

 

 

 

945

 

Other

 

 

(222

)

 

 

(141

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

19,586

 

 

 

41,136

 

Inventories

 

 

52,484

 

 

 

6,803

 

Prepaid expenses and other assets

 

 

6,802

 

 

 

453

 

Accounts payable

 

 

(41,488

)

 

 

(68,431

)

Accrued employee compensation

 

 

(5,816

)

 

 

(13,214

)

Other accrued liabilities

 

 

(16,745

)

 

 

(31,371

)

Deferred revenue

 

 

452

 

 

 

1,733

 

Income taxes payable

 

 

(816

)

 

 

(583

)

Net cash provided by (used in) operating activities

 

 

29,005

 

 

 

(37,193

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(126

)

 

 

(146

)

Proceeds from maturities of short-term investments

 

 

145

 

 

 

47,145

 

Purchases of property and equipment

 

 

(1,275

)

 

 

(5,958

)

Purchases of long-term investments

 

 

(250

)

 

 

(5,200

)

Net cash provided by (used in) investing activities

 

 

(1,506

)

 

 

35,841

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Repurchases of common stock

 

 

(15,008

)

 

 

(15,000

)

Restricted stock unit withholdings

 

 

(1,347

)

 

 

(3,344

)

Proceeds from exercise of stock options

 

 

462

 

 

 

2,026

 

Proceeds from issuance of common stock under employee stock purchase plan

 

 

2,478

 

 

 

2,303

 

Net cash used in financing activities

 

 

(13,415

)

 

 

(14,015

)

Net increase (decrease) in cash and cash equivalents

 

 

14,084

 

 

 

(15,367

)

Cash and cash equivalents, at beginning of period

 

 

190,208

 

 

 

201,047

 

Cash and cash equivalents, at end of period

 

$

204,292

 

 

$

185,680

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7


Table of Contents

 

NETGEAR, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1.

The Company and Basis of Presentation

NETGEAR, Inc. (“NETGEAR” or the “Company”) was incorporated in Delaware in January 1996. The Company is a global company that delivers innovative, advanced high performance networking technologies and Internet connected products to consumers, businesses, and service providers. The Company’s products are designed to simplify and improve people’s lives. The Company’s goal is to enable people to collaborate and connect to a world of information and entertainment. The Company is dedicated to delivering innovative and advanced connected solutions ranging from mobile and cloud-based services for enhanced control and security, to smart networking products, video over Ethernet for Pro AV applications, easy-to-use WiFi solutions and performance gaming routers to enhance console, online and cloud game play. The Company's products are built on a variety of technologies such as wireless (WiFi and 4G/5G mobile), Ethernet and powerline, with a focus on reliability and ease-of-use. Additionally, the Company continually invests in research and development to create new technologies and to capitalize on technological inflection points and trends, such as WiFi 6, 5G and Pro-AV. NETGEAR's product line consist 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 the Company’s customers in each geographic region in which they are sold.

The accompanying unaudited condensed consolidated financial statements include the accounts of NETGEAR, Inc. and its wholly owned subsidiaries. They have been prepared in accordance with established guidelines for interim financial reporting and the instructions of Form 10-Q and Article 10 of Regulation S-X. All significant intercompany balances and transactions have been eliminated in consolidation. The balance sheet dated December 31, 2019 has been derived from audited financial statements at such date. These unaudited condensed consolidated financial statements do not include all of the information and footnotes typically found in the audited consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K. In the opinion of management, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments considered necessary to fairly state the Company’s financial position, results of operations, comprehensive income, stockholder's equity and cash flows for the periods indicated. These unaudited condensed consolidated financial statements should be read in conjunction with the notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

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 interim 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.

 

COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and work force participation and created significant volatility and disruption of financial markets. The COVID-19 pandemic may impact the Company’s supply chain to timely produce finished goods, its workforce and the operations of its customers, and is expected to increase airfreight rates. An extended period of global supply chain, workforce availability and economic disruption could significantly affect the Company’s business and statement of financial condition, including the carrying value of long-lived assets, intangibles and goodwill. During the three months ended March 29, 2020, the Company recognized an impairment charge of $4.5 million brought about by triggering events impacting the valuation of a number of its privately held long-term investments, partially due to the onset of the pandemic. While this business disruption is expected to be temporary, the dynamic nature of the virus spread and containment efforts make it difficult to reasonably estimate the impact of COVID-19 on the Company’s business operations, including the duration and impact on overall customer demand at this time.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) the reported amounts of net revenue and expenses during the reported period. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances. As of the date of

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NETGEAR, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

issuance of these condensed consolidated financial statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates, judgments or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the condensed consolidated financial statements as soon as they become known. Actual results could differ materially from those estimates and operating results for the three months ended March 29, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any future period.

 

 

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NETGEAR, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

 

Note 2.

Summary of Significant Accounting Policies

With the exception of the updates to the policy noted below as a result of the adoption of ASU 2016-13 Financial Instruments-Credit Losses as of January 1, 2020, there have been no new or material changes to the significant accounting policies disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Allowance for doubtful accounts

The Company maintains an allowance for doubtful accounts for estimated credit losses resulting from the inability of its customers to make required payments and reviews it quarterly. The Company determines expected credit losses by performing credit evaluations of its customers' financial condition, establishing specific reserves for customers in an adverse financial condition and adjusting for its expectations of changes in conditions that may impact the collectability of outstanding receivables. The Company considers factors such as historical experience, credit quality,