TiVo 2006 Annual Report Download - page 76

Table of Contents
considered to be other-than temporary and, if appropriate, the investments are written down to their estimated fair value. Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale securities are included in the Company's consolidated statements of operations.
Unrealized gains and unrealized losses deemed temporary are included in other comprehensive income (loss). The cost of securities sold is based on the
specific identification method. Interest and dividends on securities classified as available-for-sale are included in interest income in the consolidated
statements of operations.
Allowance for doubtful accounts
TiVo also maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. The Company reviews its trade
receivable by aging category to identify significant customers with known disputes or collection issues. For accounts not specifically identified, the Company
provides reserves based on the age of the receivable. In determining the reserve, the Company makes judgments about the credit-worthiness of significant
customers based on ongoing credit evaluations. TiVo also considers its historical level of credit losses and current economic trends that might impact the level
of future credit losses.
Beginning
Balance
Charged to
Operating
Expenses Deductions(*)
Ending
Balance
Allowance for doubtful accounts:
Year Ended:
January 31, 2007 $ 56 $ 718 $ (503) $ 271
January 31, 2006 104 373 (421) $ 56
January 31, 2005 17 248 (161) $ 104
(*) Deductions related to the allowance for doubtful accounts represent amounts written off against the allowance, less recoveries.
Inventories and Inventory Valuation
Inventories consist primarily of finished DVR units and are stated at the lower of cost or market on an aggregate basis, with cost determined
using the first-in, first-out method. The Company performs a detailed assessment of excess and obsolete inventory and purchase commitments at each balance
sheet date, which includes a review of, among other factors, demand requirements and market conditions. Based on this analysis, the Company records
adjustments, when appropriate, to reflect inventory of finished products and materials on hand at lower of cost or market and to reserve for products and
materials which are not forecasted to be used in future production. As of January 31, 2007, the Company had impaired $2.0 million in inventory and reserved
approximately $500,000 for excess non-cancelable purchase commitments. Should actual market conditions differ from the Company's estimates, the
Company's future results of operations could be materially affected.
Property and Equipment
Property and equipment are stated at cost less depreciation. Maintenance and repair expenditures are expensed as incurred.
Depreciation is computed using the straight-line method over estimated useful lives as follows:
Furniture and fixture 3-5 years
Computer and office equipment 3-5 years
Lab equipment 3 years
Leasehold improvements The shorter of 4 years or the term of the lease
Capitalized software for internal use 1-5 years
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