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NETGEAR(R) Reports Fourth Quarter and Full Year 2009 Results
Feb 09, 2010 (03:02 PM EST)


- Fourth quarter 2009 net revenue of $218.8 million, as compared to $161.4 million in the comparable prior year quarter, 36% year-over-year growth

- Fourth quarter 2009 non-GAAP net income of $11.8 million, as compared to net loss of $2.5 million in the comparable prior year quarter

- Fourth quarter 2009 non-GAAP diluted earnings per share of $0.34, as compared to diluted loss per share of $0.07 in the comparable prior year quarter

- 2009 net revenue was $686.6 million, as compared to $743.3 million in 2008, 8% year-over-year decline

- 2009 non-GAAP net income of $23.7 million, as compared to $33.0 million in 2008

- 2009 non-GAAP diluted earnings per share of $0.68, as compared to $0.93 in 2008

- Company expects first quarter 2010 net revenue to be in the range of $195 million to $205 million, with non-GAAP operating margin in the range of 10% to 11%

SAN JOSE, Calif., Feb. 9 /PRNewswire-FirstCall/ -- NETGEAR, Inc. (Nasdaq: NTGR), a worldwide provider of technologically innovative, branded networking products, today reported financial results for the fourth quarter and fiscal year ended December 31, 2009.

Net revenue for the fourth quarter ended December 31, 2009 was $218.8 million, as compared to $161.4 million for the fourth quarter ended December 31, 2008, and as compared to $171.1 million in the third quarter ended September 27, 2009.  Net income, computed in accordance with GAAP, for the fourth quarter of 2009 was $7.9 million, or $0.22 per diluted share.  This compared to GAAP net loss of $7.3 million, or $0.21 per diluted share, for the fourth quarter of 2008, and to GAAP net income of $8.5 million, or $0.24 per diluted share, in the third quarter of 2009.  

Gross margin on a non-GAAP basis in the fourth quarter of 2009 was 31.1%, as compared to 31.2% in the year ago comparable quarter, and 33.5% in the third quarter of 2009.  Non-GAAP operating margin was 11.2% in the fourth quarter of 2009, as compared to 5.6% in the fourth quarter of 2008, and 10.6% in the third quarter of 2009. Non-GAAP net income was $0.34 per diluted share in the fourth quarter of 2009, as compared to non-GAAP net loss of $0.07 per diluted share in the fourth quarter of 2008, and non-GAAP net income of $0.31 per diluted share in the third quarter of 2009.  

The differences between GAAP and non-GAAP financial measures include adjustments, net of any tax effect, for in-process research and development and technology license arrangements, amortization of purchased intangibles, stock-based compensation, restructuring, acquisition related compensation, and litigation reserves. The accompanying schedules provide a reconciliation of financial measures computed on a GAAP basis to financial measures computed on a non-GAAP basis.

Net revenue for the full year 2009 was $686.6 million, an 8% decrease as compared to $743.3 million for 2008.  Net income, computed in accordance with GAAP, for 2009 was $9.3 million or $0.27 per diluted share.  This net income was a 49% decrease compared to net income of $18.1 million for 2008.  Earnings per share, computed in accordance with GAAP, was $0.51 per diluted share for the full year 2008.

Non-GAAP net income for the full year 2009 was $23.7 million, a 28% decrease compared to non-GAAP net income of $33.0 million for 2008.  Non-GAAP net income was $0.68 per diluted share for 2009, as compared to $0.93 per diluted share for 2008, a 27% decrease.

Patrick Lo, Chairman and Chief Executive Officer of NETGEAR, commented, "We exceeded expectations and recorded net revenue of $218.8 million in the fourth quarter 2009, a new record for net revenue during any quarter since NETGEAR's inception. Revenue upside was driven by better than planned market share gain in the U.S., European market year-over-year growth and higher than expected revenue contribution from new products. During the fourth quarter, we also were selected to fulfill a one-time $18 million order by a service provider customer. Our net revenue from service providers was approximately 28% of total net revenue in the fourth quarter 2009, as compared to 25% in the third quarter of 2009, and 18% in the fourth quarter of 2008. We are extremely pleased with our fourth quarter 2009 business performance.  

"On the innovation side, we introduced 23 new products during the fourth quarter 2009. Notable new products include a set of next generation HD AV grade Powerline network adapters, the 24 TB Rackmount ReadyNAS® networked storage for growing businesses, and yet another new line of DOCSIS 3.0 cable data WiFi gateways. Additionally, we jointly introduced the NETGEAR exclusive Push2TV™ adapter with Intel®, enabling PC viewing of any Internet multimedia content onto an HDTV wirelessly. In January, at the Consumer Electronics Show in Las Vegas, NETGEAR was the recipient of two Innovation Honoree awards for our home media server, the NETGEAR Stora™, and our 3G/4G modem router."

Christine Gorjanc, Chief Financial Officer of NETGEAR, said, "We ended the fourth quarter of 2009 with $247.1 million in cash, cash equivalents and short-term investments, compared to $203.0 million at the end of the fourth quarter of 2008, and $234.5 million at the end of the third quarter of 2009.  Our net inventory ended at $90.6 million, compared to $112.2 million at the end of the fourth quarter of 2008, and $73.9 million at the end of the third quarter of 2009."

Net revenue by geography comprises gross revenue less such items as marketing incentives paid to customers, sales returns and price protection. The following table shows net revenue by geography for the periods indicated:

    
    
    Net revenue by geography:
                                       Three months ended     
                             ---------------------------------------
                             December       December       September
                                31,            31,            27,   
                               2009           2008           2009   
                             --------       --------       ---------
    
    North America         $104,327  48%    $68,845  43%  $75,408  44%
    
    Europe, Middle-East
     and Africa            $91,177  42%    $76,685  47%   72,590  42%
    
    Asia Pacific           $23,328  10%    $15,829  10%   23,073  14%
                            -----------     ----------    ---------- 
                          $218,832 100%   $161,359 100% $171,071 100%
    
    
                                          Year ended
                                   ------------------------
                                   December        December
                                      31,             31,
                                     2009            2008
                                   --------        --------
    
    North America               $314,392  46%    $297,641  40%
    
    Europe, Middle-East
     and Africa                 $292,182  42%     354,058  48%
    
    Asia Pacific                 $80,021  12%      91,645  12%
                                  ----------      -----------
                                $686,595 100%    $743,344 100%

Looking forward, Mr. Lo added, "We continue to benefit from our unwavering commitment to research and development during the recession, resulting in unprecedented new product introductions in the last 2 quarters with more to come. We entered 2010 with a strong new product lineup and we remain focused on continuously driving growth through new products, leading to gains in our market share globally. In the first quarter of 2010, we intend to roll out another 18-20 new products. Specifically, for the first quarter 2010, we expect net revenue in the range of approximately $195 million to $205 million, with non-GAAP operating margin to be in the range of 10% to 11%."

Investor Conference Call / Webcast Details

NETGEAR will review the fourth quarter and full year 2009 results and discuss management's expectations for the first quarter of 2010 today, Tuesday, February 9, 2010 at 5 p.m. EST (2 p.m. PST). The dial-in number for the live audio call is (201) 689-8560. A live webcast of the conference call will be available on NETGEAR's website at www.netgear.com.  A replay of the call will be available 2 hours following the call through midnight EST (9 p.m. PST) on Tuesday, February 16, 2010 by telephone at (201) 612-7415 and via the web at www.netgear.com. The account number to access the phone replay is 3055 and the conference ID number is 342694.

About NETGEAR, Inc.

NETGEAR (Nasdaq: NTGR) designs innovative, branded technology solutions that address the specific networking, storage, and security needs of small- to medium-sized businesses and home users. The company offers an end-to-end networking product portfolio to enable users to share Internet access, peripherals, files, multimedia content, and applications among multiple computers and other Internet-enabled devices. Products are built on a variety of proven technologies such as wireless, Ethernet and powerline, with a focus on reliability and ease-of-use. NETGEAR products are sold in over 28,000 retail locations around the globe, and via more than 39,000 value-added resellers. The company's headquarters are in San Jose, Calif., with additional offices in 25 countries. NETGEAR is an ENERGY STAR® partner. More information is available by visiting www.netgear.com or calling (408) 907-8000. Follow NETGEAR at http://twitter.com/NETGEAR and http://www.facebook.com/netgear.

NETGEAR, the NETGEAR logo, ReadyNAS, NETGEAR Stora and Push2TV are trademarks or registered trademarks of NETGEAR, Inc. in the United States and/or other countries. Intel is a trademark of Intel Corporation in the United States and other countries. Wi-Fi is a trademark of the Wi-Fi Alliance. The information contained herein is subject to change without notice. NETGEAR shall not be liable for technical or editorial errors or omissions contained herein.  All rights reserved.  

Contact:

Joseph Villalta

The Ruth Group

(646) 536-7003

jvillalta@theruthgroup.com


Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 for NETGEAR, Inc.:

This press release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. The words "anticipate", "expect", "believe", "will", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward-looking statements.  However, the absence of these words does not mean that the statements are not forward-looking.  The forward-looking statements represent NETGEAR, Inc.'s expectations or beliefs concerning future events based on information available at the time such statements were made and include statements, among others, regarding NETGEAR's expected revenue, earnings, gross and operating margin and operating income on both a GAAP and non-GAAP basis, our ability and intent to launch new product offerings and continue product development efforts, current and future demand for the Company's existing and anticipated new products, and our ability to increase market share for the Company's products globally. These statements are based on management's current expectations and are subject to certain risks and uncertainties, including, without limitation, the following: future demand for the Company's products may be lower than anticipated; consumers may choose not to adopt the Company's new product offerings or adopt competing products; product performance may be adversely affected by real world operating conditions; the Company may be unsuccessful or experience delays in manufacturing and distributing its new and existing products; telecommunications service providers may choose to slow their deployment of the Company's products or utilize competing products; the Company may be unable to collect receivables as they become due; the Company may fail to manage costs, including the cost of developing new products and manufacturing and distribution of its existing offerings; the Company may fail to successfully continue to effect operating expense savings; channel inventory information reported is estimated based on the average number of weeks of inventory on hand on the last Saturday of the quarter, as reported by certain of NETGEAR's customers; changes in the level of NETGEAR's cash resources and the Company's planned usage of such resources; changes in the Company's stock price and developments in the business that could increase the Company's cash needs, fluctuations in foreign exchange rates, and the actions and financial health of the Company's customers. Further, certain forward-looking statements are based on assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Further information on potential risk factors that could affect NETGEAR and its business are detailed in the Company's periodic filings with the Securities and Exchange Commission, including, but not limited to, those risks and uncertainties listed in the section entitled "Part II - Item 1A. Risk Factors," pages 36 through 50, in the Company's Quarterly Report on Form 10-Q for the quarter ended September 27, 2009, filed with the Securities and Exchange Commission on November 6, 2009. NETGEAR undertakes no obligation to release publicly any revisions to any forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Information:

To supplement our consolidated financial statements presented on a GAAP basis, NETGEAR uses non-GAAP financial measures, which are adjusted to exclude certain expenses and tax benefits, where applicable.  We believe non-GAAP financial measures are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of NETGEAR's underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for financial measures prepared in accordance with generally accepted accounting principles in the United States.

    
    
                                 NETGEAR, INC.                             
                     CONDENSED CONSOLIDATED BALANCE SHEETS                 
                                 (In thousands)                            
                                  (Unaudited)                              
    
                                                  December 31,  December 31,
                                                         2009          2008
                                                         ----          ----
    ASSETS       
    Current assets:       
        Cash and cash equivalents                    $172,202      $192,839
        Short-term investments                         74,898        10,170
        Accounts receivable, net                      162,853       138,275
        Inventories                                    90,590       112,240
        Deferred income taxes                          13,347        13,129
        Prepaid expenses and other current assets      20,835        22,695
                                                       ------        ------
            Total current assets                      534,725       489,348
    Property and equipment, net                        16,891        20,292
    Intangibles, net                                    8,298        13,311
    Goodwill                                           64,908        61,400
    Other non-current assets                            8,299         1,858
                                                        -----         -----
            Total assets                             $633,121      $586,209
                                                     ========      ========
                                                                           
    LIABILITIES AND STOCKHOLDERS' EQUITY           
    Current liabilities:                                                   
        Accounts payable                              $69,081       $60,073
        Accrued employee compensation                  11,040         7,177
        Other accrued liabilities                      87,894        87,747
        Deferred revenue                               22,106        21,508
        Income taxes payable                            5,488             -
                                                        -----             -
            Total current liabilities                 195,609       176,505
    Non-current income taxes payable                   17,479        12,357
    Other non-current liabilities                       5,880         6,389
                                                        -----         -----
            Total liabilities                         218,968       195,251
    Stockholders' equity:                                                  
        Common stock                                       35            34
        Additional paid-in capital                    280,256       266,070
        Cumulative other comprehensive income              24            67
        Retained earnings                             133,838       124,787
                                                      -------       -------
            Total stockholders' equity                414,153       390,958
                                                      -------       -------
            Total liabilities and 
             stockholders' equity                    $633,121      $586,209
                                                     ========      ========
    
    
    
                                   NETGEAR, INC. 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)
    
                              Three months ended            Year ended 
                        -----------------------------   -------------------
                        December  September  December   December   December
                           31,       27,        31,        31,        31,  
                          2009      2009       2008       2009       2008 
                        --------  ---------  --------   --------   -------- 
            
    Net revenue         $218,832  $171,071   $161,359   $686,595   $743,344 
    Cost of revenue      152,368   115,326    112,900    480,195    502,320 
                         -------   -------    -------    -------    ------- 
    Gross profit          66,464    55,745     48,459    206,400    241,024 
                          ------    ------     ------    -------    ------- 
                                                                
    Operating expenses:                                          
      Research and         
       development         7,854     7,353      8,184     30,056     33,773 
      Sales and
       marketing          30,086    25,710     27,247    106,162    121,687 
      General and                              
       administrative      8,133     8,502      8,495     32,727     31,733 
      Restructuring           11       104        965        809      1,929 
      In-process
       research and
       development and                             
       technology
       license                                                
       arrangements        2,500         -      1,800      2,500      1,800 
      Litigation                                            
       reserves, net          20      (480)       575      2,080        711 
                          ------    ------     ------    -------    ------- 
         Total                                              
          operating                                  
          expenses        48,604    41,189     47,266    174,334    191,633 
                          ------    ------     ------    -------    ------- 
    Income from                                 
     operations           17,860    14,556      1,193     32,066     49,391 
    Interest income           81        66        808        629      4,336 
    Other expense, net      (466)     (266)    (6,560)      (128)    (8,384)
                            ----      ----     ------       ----     ------ 
    Income (loss)
     before income
     taxes                17,475    14,356     (4,559)    32,567     45,343 
    Provision for
     income taxes          9,622     5,826      2,784     23,234     27,293 
                           -----     -----      -----     ------     ------ 
    Net income (loss)     $7,853    $8,530    $(7,343)    $9,333    $18,050 
                          ======    ======    =======     ======    ======= 
                   
    Net income (loss)
     per share:               
      Basic                $0.23     $0.25     $(0.21)     $0.27      $0.51 
                           =====     =====     ======      =====      ===== 
      Diluted              $0.22     $0.24     $(0.21)     $0.27      $0.51 
                           =====     =====     ======      =====      ===== 
                                                 
    Weighted average   
     shares outstanding 
     used to compute   
     net income (loss) 
     per share:        
      Basic               34,657    34,523     34,780     34,485     35,212 
                          ======    ======     ======     ======     ====== 
      Diluted             35,271    34,948     34,780     34,848     35,619 
                          ======    ======     ======     ======     ====== 
         
    Stock-based  
     compensation 
     expense was  
     allocated as 
     follows:     
      Cost of revenue       $240      $239       $207       $959       $864 
      Research and                                   
       development           468       473        719     $1,973      3,218 
      Sales and
       marketing           1,050     1,015        842     $4,147      3,406 
      General and                    
       administrative        973       954        885     $3,945      3,835 
    
    
    
                                   NETGEAR, INC.                        
             NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS   
    Excluding in-process research and development and technology license 
    arrangements, amortization of purchased intangibles, impairment of 
    long-lived assets, stock-based compensation, restructuring, acquisition 
    related compensation, and litigation reserves, net of tax. 
                       (In thousands, except per share data)          
                                    (Unaudited)                       
                                                                     
                               Three months ended             Year ended    
                        -------------------------------   -------------------
                        December   September   December   December   December
                           31,         27,        31,        31,        31,  
                          2009        2009       2008       2009       2008 
                        --------   ---------   --------   --------   --------
                                                                       
    Net revenue         $218,832    $171,071   $161,359   $686,595   $743,344
    Cost of revenue      150,875     113,834    110,978    474,223    496,199
                         -------     -------    -------    -------    -------
    Gross profit          67,957      57,237     50,381    212,372    247,145
                          ------      ------     ------    -------    -------
                                                                             
    Operating                                                                
     expenses:                                                               
      Research and                                                           
       development         7,273       6,880      7,365     27,970     29,768
      Sales and                                                              
       marketing          29,036      24,695     26,405    102,015    118,281
      General and                                                            
       administrative      7,160       7,548      7,610     28,782     27,898
                          ------      ------     ------    -------    -------
        Total                                                                
         operating                                                           
         expenses         43,469      39,123     41,380    158,767    175,947
                          ------      ------     ------    -------    -------
    Income from                                                              
     operations           24,488      18,114      9,001     53,605     71,198
    Interest income           81          66        808        629      4,336
    Other expense, net      (466)       (266)    (6,560)      (128)    (8,384)
                            ----        ----     ------       ----     ------
    Income before                                                            
     income taxes         24,103      17,914      3,249     54,106     67,150
    Provision for                                                            
     income taxes         12,281       6,946      5,756     30,423     34,138
                          ------       -----      -----     ------     ------
    Net income (loss)    $11,822     $10,968    $(2,507)   $23,683    $33,012
                         =======     =======    =======    =======    =======
    Net income (loss) 
     per share:     
      Basic                $0.34       $0.32     $(0.07)     $0.69      $0.94
                           =====       =====     ======      =====      =====
      Diluted              $0.34       $0.31     $(0.07)     $0.68      $0.93
                           =====       =====     ======      =====      =====
                                                                             
    Weighted                                                                 
     average shares                                                          
     outstanding                                                             
     used to compute 
     net income 
     (loss) per share:                    
      Basic               34,657      34,523     34,780     34,485     35,212
                          ======      ======     ======     ======     ======
      Diluted             35,271      34,948     34,780     34,848     35,619
                          ======      ======     ======     ======     ======
    
    
    
                                   NETGEAR, INC. 
              RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES 
                     (In thousands, except per share data) 
                                   (Unaudited) 
    
    STATEMENT OF OPERATIONS DATA: 
                             Three months ended             Year ended      
                      -------------------------------   -------------------
                      December   September   December   December   December  
                         31,         27,        31,        31,        31,    
                        2009        2009       2008       2009       2008 
                      --------   ---------   --------   --------   -------- 
    GAAP gross profit $66,464     $55,745    $48,459   $206,400   $241,024 
        Amortization                                                         
         of intangible                                               
         assets         1,253       1,253      1,108      5,013      4,650 
        Stock-based                                                          
         compensation                                                         
         expense          240         239        207        959        864 
        Impairment                                                           
         of long-lived                                              
         assets             -           -        607          -        607 
                          ---         ---        ---        ---        --- 
    Non-GAAP                                                                 
     gross profit     $67,957     $57,237    $50,381   $212,372   $247,145 
                      =======     =======    =======   ========   ======== 
    Non-GAAP                                                                 
     gross margin        31.1%       33.5%      31.2%      30.9%      33.2%
                                                                             
    GAAP research                                                            
     and development   $7,854      $7,353     $8,184    $30,056    $33,773 
        Stock-based                                                          
         compensation                                                         
         expense         (468)       (473)      (719)    (1,973)    (3,218)
        Acquisition                                                          
         related                                                             
         compensation    (113)          -       (100)      (113)      (787)
                         ----         ---       ----       ----       ---- 
    Non-GAAP                                                                 
     research                                                                
     and development   $7,273      $6,880     $7,365    $27,970    $29,768 
                       ======      ======     ======    =======    ======= 
                                                                             
    GAAP sales                                                               
     and marketing    $30,086     $25,710    $27,247   $106,162   $121,687 
        Stock-based                                                          
         compensation                                                       
         expense       (1,050)     (1,015)      (842)    (4,147)    (3,406)
                       ------      ------       ----     ------     ------ 
    Non-GAAP sales                                                         
     and marketing    $29,036     $24,695    $26,405   $102,015   $118,281 
                      =======     =======    =======   ========   ======== 
                                                                           
    GAAP general and 
     administrative    $8,133      $8,502     $8,495    $32,727    $31,733 
        Stock-based                                                         
         compensation                                                       
         expense         (973)       (954)      (885)    (3,945)    (3,835)
                         ----        ----       ----     ------     ------ 
    Non-GAAP general                                                      
    And administrative $7,160      $7,548     $7,610    $28,782    $27,898 
                       ======      ======     ======    =======    ======= 
                                                                          
    GAAP total                                                            
     operating                                                             
     expenses         $48,604     $41,189    $47,266   $174,334   $191,633 
        Stock-based                                                       
         compensation                                                      
         expense       (2,491)     (2,442)    (2,446)   (10,065)   (10,459)
        Restructuring     (11)       (104)      (965)      (809)    (1,929)
        In-process                                                        
         research and                                                
         development                                              
         and technology                                             
         license                                                  
         arrangements  (2,500)          -     (1,800)    (2,500)    (1,800)
        Acquisition                                                       
         related                                                          
         compensation    (113)          -       (100)      (113)      (787)
        Litigation                                                 
         reserves         (20)        480       (575)    (2,080)      (711)
                          ---         ---       ----     ------       ---- 
    Non-GAAP total                                                        
     operating                                                             
     expenses         $43,469     $39,123    $41,380   $158,767   $175,947 
                      =======     =======    =======   ========   ======== 
    
    
    
                                  NETGEAR, INC.                              
        RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES (CONTINUED)    
                      (In thousands, except per share data)                  
                                   (Unaudited)                               
                                                                             
    STATEMENT OF OPERATIONS DATA (CONTINUED):                                
    
                             Three months ended              Year ended      
                      -------------------------------   ------------------- 
                      December   September   December   December   December  
                         31,         27,        31,        31,        31,    
                        2009        2009       2008       2009       2008 
                       -------   ---------   --------   --------   -------- 
    GAAP operating                                                           
     income           $17,860     $14,556     $1,193    $32,066    $49,391 
        Amortization                                                         
         of intangible        
         assets         1,253       1,253      1,108      5,013      4,650 
        Stock-based                                                          
         compensation                                                         
         expense        2,731       2,681      2,653     11,024     11,323 
        Impairment                                                           
         of long-lived        
         assets             -           -        607          -        607 
        Restructuring      11         104        965        809      1,929 
        In-process                                                           
         research and               
         development                                                         
         and technology                                                    
         license                                                             
         arrangements   2,500           -      1,800      2,500      1,800 
        Acquisition                                                          
         related                                                             
         compensation     113           -        100        113        787 
        Litigation                                                           
         reserves          20        (480)       575      2,080        711 
                           --        ----        ---      -----        --- 
    Non-GAAP                                                                 
     operating income $24,488     $18,114     $9,001    $53,605    $71,198 
                      =======     =======     ======    =======    ======= 
    Non-GAAP                                                                 
     operating margin    11.2%       10.6%       5.6%       7.8%       9.6%
                                                                             
    GAAP net income                                                          
     (loss)            $7,853      $8,530    $(7,343)    $9,333    $18,050 
        Amortization                                                         
         of intangible                                                  
         assets         1,253       1,253      1,108      5,013      4,650 
        Stock-based                                                          
         compensation                                                         
         expense        2,731       2,681      2,653     11,024     11,323 
        Impairment                                                           
         of long-lived                                                  
         assets             -           -        607          -        607 
        Restructuring      11         104        965        809      1,929 
        In-process                                                           
         research                                                            
         and development 
         and technology 
         license 
         arrangements   2,500           -      1,800      2,500      1,800 
        Acquisition                                                          
         related                                                             
         compensation     113           -        100        113        787 
        Litigation                                                           
         reserves          20        (480)       575      2,080        711 
        Tax effect     (2,659)     (1,120)    (2,972)    (7,189)    (6,845)
                       ------      ------     ------     ------     ------ 
    Non-GAAP net                                                             
     income (loss)    $11,822     $10,968    $(2,507)   $23,683    $33,012 
                      =======     =======    =======    =======    ======= 
    
    
    
    NET INCOME (LOSS) PER DILUTED SHARE:                                     
    
                             Three months ended              Year ended      
                      -------------------------------   ------------------- 
                      December   September   December   December   December  
                         31,         27,        31,        31,        31,    
                        2009        2009       2008       2009       2008 
                      --------   ---------   --------   --------   -------- 
    GAAP net income                                                          
     (loss) per                                                              
     diluted share     $0.22       $0.24     $(0.21)     $0.27      $0.51 
        Amortization                                                         
         of intangible               
         assets         0.04        0.04       0.03       0.14       0.13 
        Stock-based                                                          
         compensation                                                         
         expense        0.08        0.08       0.08       0.32       0.32 
        Impairment                                                           
         of long-lived                    
         assets            -           -       0.02          -       0.02 
        Restructuring   0.00        0.00       0.03       0.02       0.05 
        In-process                                                           
         research and
         development                                                         
         and technology                                   
         license                                                             
         arrangements   0.07           -       0.05       0.07       0.05 
        Acquisition                                                          
         related                                                             
         compensation   0.00           -       0.00       0.00       0.02 
        Litigation                                                           
         reserves       0.00       (0.01)      0.02       0.06       0.02 
        Tax effect     (0.07)      (0.04)     (0.09)     (0.20)     (0.19)
                       -----       -----      -----      -----      ----- 
    Non-GAAP                                                                 
    net income (loss)                                                        
     per diluted                                                             
     share             $0.34       $0.31     $(0.07)     $0.68      $0.93 
                       =====       =====     ======      =====      ===== 
    
    
    
                                  NETGEAR, INC.                             
                       SUPPLEMENTAL FINANCIAL INFORMATION                   
                      (In thousands, except per share data)                 
                                   (Unaudited)                              
    
                                           Three months ended               
                            ----------------------------------------------- 
                            December  September    June    March   December 
                               31,        27,       28,      29,      31,   
                              2009       2009      2009     2009     2008
                            --------  ---------    ----    -----   --------
    Cash, cash equivalents    
     and short-term                                                          
     investments           $247,100   $234,540 $224,496 $200,298  $203,009
    Cash, cash equivalents    
     and short-term       
     investments          
     per diluted share        $7.01      $6.71    $6.53    $5.79     $5.84
                          
    Accounts receivable,      
     net                   $162,853   $123,529 $110,231 $127,984  $138,275
    Days sales outstanding    
    (DSO)                        71         66       69       74        81
                                                                            
    Inventories             $90,590    $73,858  $75,039  $92,023  $112,240
    Ending inventory turns      6.7        6.2      5.5      4.7       4.0
                                                                            
    Weeks of channel          
     inventory:                                                              
       U.S. retail channel      6.9       10.0     12.6     10.0       9.6
       U.S. distribution                                                     
        channel                 4.4        5.2      3.8      5.4       5.2
       EMEA distribution                                                     
        channel                 3.4        4.3      5.0      5.6       5.7
       APAC distribution                                                     
        channel                 3.8        5.0      4.8      5.7       6.7
                                                                            
    Deferred revenue        $22,106    $11,355  $15,267  $19,375   $21,508
                                                                            
    Headcount                   586        574      567      568       579
    Non-GAAP Diluted shares  35,271     34,948   34,399   34,602    34,780
    

SOURCE NETGEAR, Inc.