TiVo 2015 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2015 TiVo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 141

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141

Table of Contents
ROVI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation and Summary of Significant Accounting Policies
Description of Business
Rovi Corporation (the “Company”
),
a Delaware corporation, is focused on powering entertainment discovery and personalization through product
technology and intellectual property and using data and analytics to monetize interactions across multiple entertainment platforms. The Company provides
a broad set of content discovery solutions that are embedded in our customers' products and services to connect consumers with entertainment, including
device embedded and cloud
-
based interactive program guides (“
IPGs
”
),
natural language conversational voice and text search and recommendation
services and our extensive database of "Metadata" (i.e., descriptive information, promotional images or other content that describes or relates to television
shows, videos, movies, music, books, games or other entertainment content). The Company also offers advertising and a portfolio of data and analytics
products including advertising and programming promotion optimization that enable audience targeting in traditional pay TV advertising along with
subscriber and operator analytic and insight products that service providers can use to unlock the usage patterns and behaviors of pay TV
subscribers. The Company's solutions are deployed globally in the cable, satellite, consumer electronics, entertainment, media and online distribution
markets.
Basis of Presentation and Principles of Consolidation
The accompanying Consolidated Financial Statements include the accounts of Rovi Corporation and subsidiaries and affiliates in which the
Company has a controlling financial interest or is the primary beneficiary after the elimination of intercompany accounts and transactions.
In connection with a review of its operations in 2015, the Company determined certain costs related to the operations of its Product business are
more appropriately reflected in Selling, general and administrative expenses. Accordingly, the Company moved $
1.6 million
in costs from Research and
development expenses to Selling, general and administrative expenses in its Consolidated Statements of Operations for the year ended December 31, 2014 to
be consistent with the 2015 presentation. The Company does not consider this amount to be material.
In March 2014, the Company sold its DivX, MainConcept and Nowtilus businesses. On September 1, 2013, the Company sold its Rovi
Entertainment Store business. On August 15, 2013 the Company sold its Consumer Website business, which includes the SideReel.com and allmusic.com
sites, among others. The results of operations and cash flows of the DivX, MainConcept, Nowtilus, Rovi Entertainment Store and Consumer Website
businesses have been presented in discontinued operations for all periods presented (See Note 3).
Related Party Transaction
During the year ended
December 31, 2015
, the Company paid
$1.5 million
in expenses related to the reimbursement of costs incurred by Engaged
Capital, LLC (
“Engaged”
)
in connection with a contested proxy election. These expenses are included in Selling, general and administrative expenses on the
Consolidated Statements of Operations. Engaged is a related party as Glenn W. Welling is a member of the Company
’
s Board of Directors and is also a
Principal and the Chief Investment Officer at Engaged.
Use of Estimates
The preparation of financial statements in conformity with United States ("U.S.") generally accepted accounting principles ("GAAP") requires
management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and related disclosures at the date of
the financial statements and the reported results of operations for the reporting period. On an ongoing basis, management evaluates its estimates, including
those related to revenue recognition, long
-
lived asset impairment, including goodwill and intangible assets, equity
-
based compensation and income taxes.
Actual results may differ from those estimates.
Business Combinations
The results of operations of acquired businesses are included in the Consolidated Statements of Operations prospectively from the date of
acquisition. The fair value of purchase consideration is allocated to the assets acquired, liabilities
F
-
8