TiVo 2011 Annual Report Download - page 73

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churn rate per month, increase the cost and decrease the availability of potential sources of financing, and increase the Company’s exposure to losses from bad
debts, any of which could have an adverse impact on the Company’s financial condition and operating results.
Financial instruments that potentially subject the Company to a concentration of credit risk principally consist of cash, cash equivalents, short-term and
long-term investments, and trade receivables. The Company currently invests the majority of its cash in high-grade government and corporate debt and
maintains them with two financial institutions with high credit ratings. As part of its cash management 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 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 DVRs to retailers under customary
credit terms and generally requires no collateral. The Company's significant revenue concentrations as of January 31, 2012, 2011, and 2010 were as follows:
Fiscal Year Ended January 31,
2012 2011 2010
DISH 14% * *
* Less than 10%.
The Company’s accounts receivable concentrations as of January 31, 2012 and 2011 were as follows:
As of January 31,
2012 2011
AT&T 22% *
Suddenlink 12% *
DIRECTV 11% 14%
RCN 11% *
Virgin Media 11% *
Comcast * 16%
Other customers 33% 70%
Total accounts receivable 100% 100%
* Less than 10%.
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 it outsources 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 June 2011, the FASB issued an amendment to an existing accounting standard which requires companies to present net income and other
comprehensive income in one continuous statement or in two separate, but consecutive, statements. In addition, in December 2011, the FASB issued an
amendment to an existing accounting standard which defers the requirement to present components of reclassifications of other comprehensive income
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