Rosetta Stone 2011 Annual Report Download - page 74

Table of Contents
During the last three years, inflation and changing prices have not had a material effect on our business and we do not expect that inflation or changing
prices will materially affect our business in the foreseeable future.
Off-Balance Sheet Arrangements
We do not engage in any off-balance sheet financing arrangements. We do not have any interest in entities referred to as variable interest entities, which
include special purpose entities and other structured finance entities.
Contractual Obligations
The following table summarizes our contractual obligations at December 31, 2011 and the effect such obligations are expected to have on our liquidity
and cash flow in future periods.
Total Less than
1 Year 1 - 3 Years 3 - 5 Years More than 5 Years
(in thousands)
Long-term debt $ — $ — $ — $ — $ —
Operating lease obligations 13,086 6,616 6,084 386 —
Total $ 13,086 $ 6,616 $ 6,084 $ 386 $ —
The operating lease obligations reflected in the table above include our corporate office leases and site licenses for our kiosks.
Recent Accounting Pronouncements
Accounting Standards Update No. 2011-05—Comprehensive Income (Topic 220). Under the amendments to Topic 220, an entity has the option to
present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous
statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net
income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount
for comprehensive income. This Update eliminates the option to present the components of other comprehensive income as part of the statement of changes in
stockholders' equity. The amendments in this update do not change the items that must be reported in other comprehensive income or when an item of other
comprehensive income must be reclassified to net income, thus the adoption of such standard will not have a material impact on our reported results of
operations and financial position.
In September 2011, the FASB issued new guidance on goodwill impairment testing (ASU 2011-08, Intangibles—Goodwill and Other (Topic 350):
Testing Goodwill for Impairment), effective for calendar years beginning after December 15, 2011. Early adoption is permitted. The objective of this standard
is to simplify how an entity tests goodwill for impairment. The amendments in this standard will allow an entity to first assess qualitative factors to determine
whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it needs to perform the
quantitative two-step goodwill impairment test. Only if an entity determines, based on qualitative assessment, that it is more likely than not that a reporting
unit's fair value is less than its carrying value will it be required to calculate the fair value of the reporting unit. We intend to adopt this new guidance
beginning fiscal year 2012.
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