TiVo 2013 Annual Report Download - page 87

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Table of Contents

 
(in thousands)
Raw Materials $1,858 $3,423
Finished Goods 20,458 11,077
Total Inventory $22,316 $14,500

Accrued liabilities consist of the following:

 

Compensation and vacation $24,755 $23,158
Marketing and promotions 7,793 4,987
Legal services 6,400 10,477
Redeemable gift certificates for subscriptions 2,404 2,428
Interest payable 2,588 2,588
Other 6,264 6,405
Total accrued liabilities  

Product Warranties
The Company’s standard manufacturer's warranty period to consumers for TiVo-enabled DVRs is 90 days for parts and labor from the
date of consumer purchase, and from 91-365 days for parts only. Within the limited warranty period, consumers are offered a no-charge
exchange for TiVo-enabled DVRs returned due to product defect, within 90 days from the date of consumer purchase. Thereafter, consumers
may exchange a TiVo-enabled DVR with a product defect for a charge. As of January 31, 2014 and January 31, 2013, the accrued warranty
reserve was $621,000 and $419,000, respectively. The Company’s accrued warranty reserve is included in accrued liabilities in the
accompanying condensed consolidated balance sheets.
The Company also offers its TiVo-Owned customers separately priced optional 2-year and 3-year extended warranties. The Company
defers and amortizes cost and revenue associated with the sales of these extended warranties over the warranty period or until a warranty is
redeemed. Additionally the Company offers its MSO customers separately priced optional 3-year extended warranties. The Company defers
the revenues associated with sale of these extended warranties over the second and third year of the warranty period. As of January 31,
2014, the extended warranty deferred revenue and cost was $2.0 million and $287,000, respectively. As of January 31, 2013, the extended
warranty deferred revenue and cost was $875,000 and $269,000, respectively.
Purchase Commitments with Contract Manufacturers and Suppliers
The Company purchases components from a variety of suppliers and use several contract manufacturers to provide manufacturing
services for its products. During the normal course of business, in order to manage manufacturing lead times and help ensure adequate
component supply, the Company enters into agreements with the Company's contract manufacturer and suppliers that either allow them to
procure inventory based upon criteria as defined by the Company or that establish the parameters defining the Company’s requirements. A
significant portion of the Company’s reported purchase commitments arising from these agreements consists of firm, noncancelable, and
unconditional purchase commitments. In certain instances, these agreements allow the Company the option to cancel, reschedule, and
adjust the Company’s requirements based on its business needs prior to firm orders being placed. As of January 31, 2014 the Company had
total purchase commitments for inventory of $17.2 million.
Indemnification Arrangements
The Company undertakes indemnification obligations in its ordinary course of business. For instance, the Company has undertaken to
indemnify its underwriters and certain investors in connection with the issuance and
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