TiVo 2011 Annual Report Download - page 68

individual consumers and relate to its subscription, technology, and hardware revenues. Additionally, amounts due from banks for customer credit card, debit
card and EBT transactions that take in excess of three days to process are classified as accounts receivable. As of January 31, 2012 and 2011 the Company
had approximately $105,000 and $173,000, respectively, of unbilled accounts receivable related to long-term development contracts and $5.7 million of
unbilled accounts receivable related to AT&T.
Allowance for doubtful accounts
TiVo 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
allowances based on the age of the receivable. In determining the allowance, 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/Additions (*) Ending Balance
(in thousands)
Allowance for doubtful accounts:
Fiscal year ended:
January 31, 2012 $ 275 $ 476 $ (381) $ 370
January 31, 2011 $ 409 $ 259 $ (393) $ 275
January 31, 2010 $ 770 $ (7) $ (354) $ 409
(*) Deductions/additions 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 accessories 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.
Property and Equipment
Property and equipment are stated at cost less accumulated 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 7 years or the term of the lease
Capitalized software for internal use 1-5 years
Capitalized Software
Software development costs are capitalized when a product’s technological feasibility has been established by completion of a working model of the
product and amortization begins when a product is available for general release to customers. The period between the development of a working model and
the release of the final product to customers is short, and, therefore, the development costs incurred during this short period are immaterial and, as
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