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Table of Contents
TiVO INC.
NOTES TO CONSOLIDATED STATEMENTS
1. NATURE OF OPERATIONS
TiVo Inc. (together with its subsidiaries "the Company" or "TiVo") was incorporated in August 1997 as a Delaware corporation and is located in
Alviso, California. TiVo is a provider of technology and services for advanced television solutions including digital video recorders ("DVR"s). The
subscription-based TiVo service ("TiVo service") improves home entertainment by providing consumers with an easy way to record, watch, and control
television. TiVo also provides a unique platform for advertising and audience research measurement services. The Company conducts its operations through
one reportable segment.
The Company is subject to a number of risks, including delays in product and service developments; competitive service offerings; lack of market
acceptance; uncertainty of future profitability; the dependence on third parties for manufacturing, marketing, and sales support, as well as third-party rollout
schedules, software development issues for third-party products which contain its technology; intellectual property claims by and against the Company; access
to television programming including digital cable signals in connection with CableCARD and switched digital technologies; dependence on its relationships
with third-party service providers such as Comcast and Seven/Hybrid TV (Australia and New Zealand) and in the future DIRECTV, Cox, and Virgin Media
(U.K.) for subscription growth; and the Company's ability to sustain and grow its subscription base. The Company anticipates that its business will continue to
be seasonal and expects to generate a significant portion of its new subscriptions during and immediately after the holiday shopping season. However, as a
result of the recent national and global economic downturn and overall consumer spending decline the Company is cautious about its subscription growth in
the near term.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All inter-company accounts and
transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and judgments affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, the Company evaluates its estimates, including
those related to estimated lives of product lifetime subscriptions, total estimated cost of engineering service agreements, product returns, inventories and
related reserves, warranty obligations, contingencies, stock compensation, assessment of other-than-temporary impairment of investments, and litigation. The
Company bases estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances. Illiquid
credit markets and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and
their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates resulting from
continuing changes in the economic environment will be reflected in the financial statements in future periods.
Cash and Cash Equivalents
The Company considers investments with a maturity of three months or less when purchased to be cash equivalents. The majority of payments due
from banks for third-party credit card, debit card and electronic benefit transactions ("EBT") process within 24-72 hours, except for transactions occurring on
a Friday, which are generally processed the following Monday. All credit card, debit card and EBT transactions that process in less than three days are
classified as cash and cash equivalents. Amounts due from banks for these transactions classified as cash totaled $2.2 million and $1.8 million at January 31,
2010 and 2009, respectively.
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