TiVo 2011 Annual Report Download - page 60

Table of Contents
Payments due by Period
Contractual Obligations Total Less
than 1
year
1-3 years 3-5 years Over 5
years
(In thousands)
Operating leases $ 13,761 $ 2,679 $ 5,604 $ 5,478 $ —
Interest on Convertible Debt 30,954 6,900 13,800 10,254 —
Purchase obligations 21,834 21,834 — — —
Total contractual cash obligations $ 66,549 $ 31,413 $ 19,404 $ 15,732 $ —
Purchase Commitments with Contract Manufacturers and Suppliers. We purchase components from a variety of suppliers and use several contract
manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and
help assure adequate component supply, we enter into agreements with contract manufacturers and suppliers that either allow them to procure inventory based
upon criteria as defined by us or that establish the parameters defining our requirements. In certain instances, these agreements allow us the option to cancel,
reschedule, and adjust our requirements based on our business needs prior to firm orders being placed. The table above displays that portion of our purchase
commitments arising from these agreements that is firm, non-cancelable, and unconditional. If there are unexpected changes to anticipated demand for our
products or in the sales mix of our products, some of the firm, non-cancelable, and unconditional purchase commitments may result in our being committed to
purchase excess inventory.
As of January 31, 2012 , gross unrecognized tax benefits, which if recognized would affect the effective tax rate, were approximately $231,000, which
are classified as long-term liabilities in the consolidated balance sheets. At this time, we are unable to make a reasonably reliable estimate of the timing of
payments in individual years due to uncertainties in the timing of tax audit outcomes and the related ability to use net operating loss or tax credit
carryforwards; therefore, such amounts are not included in the above contractual obligation table.
Off-Balance Sheet Arrangements
As part of our ongoing business, we generally do not engage in transactions that generate relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities. Accordingly, our operating results, financial condition, and
cash flows are not generally subject to off-balance sheet risks associated with these types of arrangements. We did not have any material off-balance sheet
arrangements as of January 31, 2012 .
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. We do not use derivative financial instruments in
our investment portfolio and we conduct transactions in U.S. dollars. We currently invest the majority of our cash in money market funds, investment-grade
government and corporate debt, and investment-grade foreign corporate and government securities. We maintain our investments with two financial
institutions with high credit ratings. As part of our cash management process, we perform periodic evaluations of the relative credit ratings of issuers of these
securities. We have not experienced any credit losses on our cash, cash equivalents, or short and long-term investments. Our investment portfolio only
includes instruments with original maturities of less than two years held for investment purposes, not trading purposes. Due to the short-term nature of our
cash equivalents and short-term investments we do not anticipate any material effect on our portfolio due to fluctuations in interest rates.
TiVo also had a direct investment in a privately-held company accounted for under the cost method, which was periodically assessed for other-than-
temporary impairment. In the fourth quarter of fiscal year 2012, we determined that an other-than-temporary impairment had occurred and recorded a $3.4
million impairment charge.
Our convertible debt has a fixed interest rate and therefore we are not exposed to fluctuations in interest rates on this debt.
The table below presents principal amounts and related weighted average interest rates for our cash and cash equivalents and short-term investments as
of January 31, 2012 and 2011, respectively.
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