TiVo 2006 Annual Report Download - page 54

Table of Contents
Recent Accounting Pronouncements
In September 2006, the SEC released Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 provides interpretive guidance on the SEC's views regarding the process of
quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006. The adoption of SAB 108
did not have a material impact on the Company's consolidated financial statements.
In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" (SFAS 157). SFAS 157 defines fair value, establishes a
framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is
effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is
currently evaluating the impact of adopting SFAS 157 on its consolidated financial statements.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income
Taxes—an interpretation of FASB Statement No. 109." The interpretation contains a two-step approach to recognizing and measuring uncertain tax positions
accounted for in accordance with SFAS No. 109. The first step is to evaluate the tax position for recognition by determining if the weight of available
evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.
The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. FIN 48 is
effective for fiscal years beginning after December 15, 2006, which will be the Company's fiscal year 2008, and is required to be recognized as a change in
accounting principle through a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. The Company estimates that the
adoption of FIN 48 will not have a significant impact on the Company's financial position and results of operations.
In June 2006, the FASB ratified the provisions of Emerging Issues Task Force ("EITF") Issue No. 06-3, "How Taxes Collected from Customers and
Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)." EITF Issue No. 06-3 requires
that the presentation of taxes within revenue-producing transactions between a seller and a customer, including but not limited to sales, use, value added, and
some excise taxes, should be on either a gross (included in revenue and cost) or a net (excluded from revenue) basis. In addition, for any such taxes that are
reported on a gross basis, a company should disclose the amounts of those taxes in interim and annual financial statements for each period for which an
income statement is presented if those amounts are significant. The disclosure of those taxes can be done on an aggregate basis. EITF Issue No. 06-3 is
effective for fiscal years beginning after December 15, 2006, which will be the Company's fiscal year 2008. EITF 06-3 will not impact the method for
recording these sales taxes in the Company's consolidated financial statements as the Company has historically presented sales excluding all taxes and the
Company currently has no plan to change its method of revenue reporting.
Results of Operations
Net Revenues. Our net revenues for the fiscal years ended January 31, 2007, 2006, and 2005 as a percentage of total net revenues were as follows:
Fiscal Year Ended January 31,
2007 2006 2005
(In thousands, except percentages)
Service revenues $ 198,924 77% $ 167,194 85% $ 107,166 62%
Technology revenues $ 19,061 7% $ 3,665 2% 8,310 5%
Hardware revenues $ 88,740 34% $ 72,093 37% 111,275 65%
Rebates, revenue share, and other payments to channel $ (48,136) -18% $ (47,027) -24% (54,696) -32%
Net revenues $ 258,589 100% $ 195,925 100% $ 172,055 100%
Change from same prior-year period 32% 14% 22%
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