TiVo 2013 Annual Report Download - page 51

Table of Contents
the we were not required to perform the second step of the analysis, and no goodwill impairment charges were recorded.
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Purchased intangibles are definite-lived intangible assets which are amortized on a straight-line basis over their estimated useful lives.
Useful lives generally range from two to seven years. Purchased intangibles include intangible assets subject to amortization, such as patent
rights and developed technology. We review long-lived assets for impairment whenever events or changes in circumstances indicate that the
carrying amount of such assets may not be recoverable. We measure recoverability of long-lived assets by comparing the carrying amount of
the asset group to the future undiscounted net cash flows expected to be generated by those assets. If such assets are considered to not be
recoverable, we recognize an impairment charge for the amount by which the carrying amounts of the assets exceeds the fair value of the
assets. Fair value is estimated based on discounted future cash flows.
The Company recognized non-cash impairment charges of $4.8 million of which $4.5 million in the three and twelve months ended
January 31, 2014 related to intangible assets acquired as part of the TRA acquisition. The lower than expected profitability indicated that the
carrying value of these assets exceeded their estimated fair values as determined by future discounted cash flow projections. When projecting
the stream of future cash flows associated with TRA for purposes of determining long-lived asset recoverability, management makes
assumptions, incorporating market conditions, sales growth rates, gross profit, and operating expenses.
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We make certain estimates in determining income tax expense for financial statement purposes. These estimates occur in the
calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and
financial statement purposes. From time-to-time, we evaluate the expected realization of our deferred tax assets and determine whether a
valuation allowance needs to be established or released. In determining the need for and amount of our valuation allowance, we assess the
likelihood that we will be able to recover our deferred tax assets using historical levels of income and estimates of future income. Our
estimates of future income include our internal projections and various internal estimates and certain external sources which we believe to
be reasonable but that are unpredictable and inherently uncertain. We also consider the jurisdictional mix of income and loss, changes in tax
regulations in the period the changes are enacted and the type of deferred tax assets and liabilities. In assessing whether a valuation
allowance needs to be established or released, we use judgment in considering the cumulative effect of negative and positive evidence and
the weight given to the potential effect of the evidence. Recent historical income or loss and future projected operational results have the most
influence on our determinations of whether a deferred tax valuation allowance is required or not.
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In June 2013, the Financial Accounting Standards Board ratified Emerging Issues Task Force (EITF) Issue 13-C, “Presentation of an
Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” which
concludes an unrecognized tax benefit should be presented as a reduction of a deferred tax asset when settlement in this manner is available
under the tax law. We will adopt this amendment as of the fiscal quarter ending April 30, 2014. We do not believe that the impact of adopting
this amendment will be significant on our results of operations and financial condition.
Results of Operations
Net Revenues.
Our net revenues for the fiscal years ended January 31, 2014, 2013, and 2012 as a percentage of total net revenues were as follows:
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  

Service revenues $138,835 34%$133,725 44%$131,341 55%
Technology revenues $165,630 41%$ 101,592 33%$58,945 25%
Hardware revenues $ 101,788 25%$68,591 23%$ 47,893 20%
Net revenues $406,253 100%$303,908 100%$ 238,179 100%
Change from same prior year period 34% 28% 8%
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