TiVo 2008 Annual Report Download - page 71

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Table of Contents
process, the Company performs periodic evaluations of the relative credit ratings of these financial institutions and issuers of the securities the Company
owns. The Company has not experienced significant credit losses on its cash, cash equivalents, or short-term and long-term investments. The Company
invested in U.S. Treasury bills and money market funds on September 19, 2008 in the amount of $39.7 million which are guaranteed by the U.S. Federal
Government until April 30, 2009. The Company is exposed to credit risk on its investments to the extent of the amount recorded on the consolidated balance
sheet at January 31, 2009.
The majority of the Company's customers are concentrated in the United States. The Company is subject to a minimal amount of credit risk related to
service revenue contracts as these are primarily obtained through credit card sales. The Company sells its TiVo-enabled DVR to retailers under customary
credit terms and generally requires no collateral. The Company's accounts receivable concentrations as of January 31, 2009, 2008, and 2007 were as follows:
As of January 31,
2009 2008 2007
DIRECTV 18% 17% 22%
Best Buy 18% 18% 19%
Comcast 20% 38% 0%
Other customers 44% 27% 59%
Total accounts receivable 100% 100% 100%
The Company is dependent on sole suppliers for several key components, assemblies, and services. The sole supplier of the Company's programming
guide data for the TiVo service is through Tribune Media Services, along with their parent company, Tribune Co. filed Chapter 11 bankruptcy on
December 8, 2008. As a result, Tribune or Tribune Media Services, Inc. could reject the Television Listing Data Agreement and we would be left will an
unsecured claim in Tribune's bankruptcy. If Tribune breaches its obligation to provide us with data, rejects the agreement or otherwise fails to perform its
obligations under our agreement, we would be unable to provide certain aspects of the TiVo service to our customers. We may be unable to secure an
alternate source of guide data on acceptable terms.
The Company does not have a long-term written supply agreement with Broadcom, the sole supplier of the system controller for its DVR. In instances
where a supply agreement does not exist and suppliers fail to perform their obligations, the Company may be unable to find alternative suppliers or deliver its
products and services to its customers on time, if at all.
The TiVo service is enabled through the use of a DVR manufactured for TiVo by a third-party contract manufacturer. The Company also relies on third
parties with whom we outsource supply-chain activities related to inventory warehousing, order fulfillment, distribution, and other direct sales logistics. The
Company cannot be sure that these parties will perform their obligations as expected or that any revenue, cost savings, or other benefits will be derived from
the efforts of these parties. If any of these parties breaches or terminates their agreement with TiVo or otherwise fails to perform their obligations in a timely
manner, the Company may be delayed or prevented from commercializing its products and services.
Recent Accounting Pronouncements
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (revised), "Business Combinations" (SFAS 141R). The
standard changes the accounting for business combinations by requiring that an acquiring entity measure and recognize identifiable assets acquired and
liabilities assumed at the acquisition date fair value with limited exceptions. The changes include the treatment of acquisition-related transaction costs, the
valuation of any noncontrolling interest at acquisition date fair value, the recording of acquired contingent liabilities at acquisition date fair value and the
subsequent re-measurement of such liabilities after the acquisition date, the recognition of capitalized in-process research and development, the accounting for
acquisition-related restructuring cost accruals subsequent to the acquisition date, and the recognition of changes in the acquirer's income tax valuation
allowance. SFAS 141R is effective for fiscal years beginning after December 15, 2008, with early adoption prohibited. The adoption of SFAS 141R is not
expected to have a significant impact on the Company's consolidated financial statements or financial position, but the nature and magnitude of the specific
effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective date.
In February 2008, the FASB issued Financial Staff Positions (FSP) FAS 157-2, "Effective Date of FASB Statement No. 157" (FSP FAS 157-2), which
delays the effective date of SFAS No. 157, "Fair Value Measurement" (SFAS 157), for all nonfinancial assets and nonfinancial liabilities, except those that
are recognized or disclosed at fair value in
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