TiVo 2011 Annual Report Download - page 80

Table of Contents
Level 2 Debt securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable
market data. The Company uses inputs such as broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent
pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input
to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any
material adjustments to such inputs. The Company is ultimately responsible for the financial statements and underlying estimates. The Company did not have
any transfers between Level 1 and Level 2 fair value measurements during the periods presented.
The following tables present reconciliations of financial assets measured at fair value using significant unobservable inputs (Level 3) during the twelve
months ended January 31, 2012 and January 31, 2011:
Auction Rate
Securities Asset-backed
Securities Total
(in thousands)
Balance, January 31, 2011 $ 2,490 $ 2,498 $ 4,988
Purchases — — —
Sales (3,000) (2,500) (5,500)
Total gains (losses) (realized and unrealized) 510 2 512
Balance, January 31, 2012 $ — $ — $ —
Auction Rate
Securities Asset-backed
Securities Total
(in thousands)
Balance, January 31, 2010 $ 4,112 $ — $ 4,112
Purchases — 2,498 2,498
Sales (1,715) — (1,715)
Total gains or losses (realized and unrealized) 93 — 93
Balance, January 31, 2011 $ 2,490 $ 2,498 $ 4,988
Marketable securities measured at fair value using Level 3 inputs are comprised of asset-backed and auction rate securities. Asset-backed securities
values are based on non-binding broker provided price quotes and may not have been corroborated by observable market data. There were no transfers in and
out of Level 1 or 2.
TiVo also has 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, through comparative analysis and analysis of the investee's actual and projected financial
results, the Company determined that an other-than-temporary impairment had occurred and recorded a $3.4 million impairment charge, which is recorded
under Interest expense and other income (expense) on its statement of operations.
Cash equivalents and available-for-sale marketable securities (including auction rate securities and asset-backed securities) are reported at their fair
value. Additionally, carrying amounts of certain of the Company’s financial instruments including accounts receivable, accounts payable, and accrued
expenses approximate their fair value because of their short maturities.
The Company has convertible senior notes for which it is obligated to repay the carrying value, unless the holder agrees to a lesser amount. The carrying
value of these financial liabilities at January 31, 2012 was $172.5 million and the fair value was $207.3 million based on the bond's quoted market price as of
January 31, 2012. There was no debt as of January 31, 2011 . Refer to Note 10. "Convertible Senior Notes" for additional information.
5. BARTER TRANSACTION
During the second quarter of fiscal year 2008, the Company entered into a barter transaction, exchanging TiVo Series2™ standard definition DVR
inventory with a net book value of $2,774,000 for barter credits that are
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