TiVo 2015 Annual Report Download - page 53

Table of Contents
significant decline in our stock price or if market multiples for comparable publicly
- traded companies decrease, an impairment of goodwill could result, the
effect of which could be material.
We have not recorded a goodwill impairment charge for continuing operations as a result of an interim or annual impairment test during the years
ended December 31, 2015, 2014 and 2013 .
Impairment of Long - Lived Assets
Long - lived assets, such as property and equipment and finite - lived intangible assets, are assessed for potential impairment whenever events or
changes in circumstances (collectively, “triggering events” ) indicate the carrying amount of an asset group may not be recoverable. An asset group is
established by identifying the lowest level of cash flows generated by a group of assets that are largely independent of the cash flows of other assets and
could include assets used across multiple businesses or segments. Once a triggering event has been identified, the impairment test employed is based on
whether the intent is to continue to use the asset group or to hold the asset group for sale. For assets held for use, recoverability is assessed based on the
estimated undiscounted future cash flows expected to result from the use and eventual disposition of the asset group. If the undiscounted future cash
flows are less than the carrying amount of the asset group, the asset group is impaired. The amount of impairment, if any, is measured as the difference
between the carrying amount of the asset group and its fair value. The impairment is allocated to the long - lived assets of the asset group on a pro rata basis
using their relative carrying amounts, but only to the extent the carrying amount of each asset exceeds its fair value.
For assets held for sale, to the extent the carrying amount is greater than the asset group ’ s fair value less costs to sell, an impairment loss is
recognized for the difference. Assets held for sale are separately presented in the Consolidated Balance Sheets at the lower of their carrying amount or fair
value less cost to sell, and are no longer depreciated.
Determining whether a long - lived asset group is impaired requires various estimates, assumptions and judgments, including whether a triggering
event has occurred and the identification of appropriate asset groups. When we are required to estimate the fair value of a long
- lived asset group, we
generally use a discounted cash flow technique. Significant estimates, assumptions and judgments inherent in the discounted cash flow technique include
the amount and timing of the future cash flows associated with the asset group, the expected long - term growth rate, income tax rates and economic and
market conditions, as well as risk - adjusted discount rates. If we establish different asset groups or utilize different valuation methodologies or assumptions,
the impairment test results could differ.
Equity
- Based Compensation
We recognize the grant date fair value of equity - based awards as compensation on a straight - line basis over the requisite service period of the
award. We estimate the fair value of stock options and employee stock purchase plan shares using the Black - Scholes - Merton option pricing formula which
uses complex and subjective inputs, such as the expected volatility of our common stock over the expected term of the award and projected employee
exercise behavior. We estimate expected volatility using a combination of historical volatility and implied volatility derived from publicly - traded options on
our common stock. When historical data is available and relevant, the expected term of the award is estimated based on the average term from historical
experience. When there is insufficient historical data to provide a reasonable basis on which to estimate the expected term, we use the average of the
vesting period and the contractual term of the award to estimate the expected term of the award.
We estimate the fair value of restricted stock and restricted stock units subject to service or performance conditions as the market value of our
common stock on the date of grant and we use a Monte Carlo simulation to estimate the fair value of restricted stock units subject to market conditions.
The number of awards expected to be forfeited during the requisite service period is estimated at the time of grant. We use historical data to
estimate pre - vesting forfeitures and record equity - based compensation only for those awards for which the requisite service is expected to be rendered.
Forfeiture estimates are revised during the requisite service period and the effect of changes in the number of awards expected to be forfeited is recorded as
a cumulative adjustment in the period estimates are revised.
The estimated fair value of our equity - based compensation awards is subject to significant estimates, assumptions and judgments. Changing the
terms of our equity
- based compensation awards, granting new forms of awards, changing the number of awards granted, changes in the price of our
common stock or the historical or implied volatility derived from publicly - traded options on our common stock, or adjusting our forfeiture assumptions, may
cause us to realize material changes in equity - based compensation in the future.
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