Discontinued Operations

6 Months Ended

Jun. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

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. In August 2018, Arlo Technologies, Inc. (“Arlo”) was listed on the New York Stock Exchange under the symbol "ARLO" and completed the IPO. Upon completion of the IPO, NETGEAR held approximately 84.2% of the outstanding shares of Arlo common stock, or 62,500,000 shares. On December 31, 2018, NETGEAR completed the distribution of these 62,500,000 shares of common stock of Arlo (the “Distribution”) and 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 unaudited condensed Consolidated Financial Statements.

The financial results of Arlo through the Distribution date are presented as income (loss) from discontinued operations, net of tax, in the unaudited condensed consolidated statement of operations. The following table presents financial results of Arlo for the three and six months ended July 1, 2018:



	Three Months Ended			Six Months Ended
	July 1, 2018			July 1, 2018
	(In thousands)
Net revenue	$	111,544		$	211,316
Cost of revenue	82,653			154,239
Gross profit	28,891			57,077
Operating expenses:
Research and development	9,996			17,753
Sales and marketing	7,772			13,556
General and administrative	2,078			2,954
Separation expense	11,984			18,768
Total operating expenses	31,830			53,031
Income (loss) from operations of discontinued operations	(2,939		)	4,046
Other income (expense), net	273			339
Income (loss) from discontinued operations before income taxes	(2,666		)	4,385
Provision for income taxes	3,097			5,576
Loss from discontinued operations, net of tax	$	(5,763	)	$	(1,191	)