TiVo 2015 Annual Report Download - page 79

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Table of Contents
license arrangement. For instance, some of the Company
’
s large CE licensees entered into agreements for which they had the right to ship an unlimited
number of units over a specified term for a flat fee. The Company recorded the fees associated with these arrangements on a straight
-
line basis over the
specified term. In addition, the Company entered into agreements in which the licensee paid the Company a one
-
time fee for a perpetual license to its DivX
technology. Provided that collectability was reasonably assured, the Company recorded revenue related to these agreements when the agreement was
executed as the Company had no significant continuing obligation and the amounts were fixed and determinable.
Discontinued Operations
-
Rovi Entertainment Store Video Delivery Solution
The Company recognized service fees it received from retailers and others for operating their storefronts on a straight
-
line basis over the period it
provided services. The Company recognized transaction revenue from the sale or rental of individual content titles in the period when the content was
purchased and delivered. Transaction revenue was recorded on a gross basis when the Company was the principal in the transaction and was recorded net
of payments to content owners and others when the Company was acting as an agent. The Company was generally the principal in the transaction when it
was the merchant of record and was licensing the content distribution rights.
Taxes Collected from Customers
The Company reports revenue net of taxes collected from customers and remitted to governmental authorities.
Research and Development
Research and development costs are expensed as incurred.
Advertising Expenses
Advertising costs are expensed as incurred and are presented within Selling, general and administrative expense in the Consolidated Statements of
Operations. Advertising expenses for the years ended December 31, 2015, 2014 and 2013, were
$7.4 million
,
$7.6 million
and
$9.7 million
, respectively.
Restructuring
Management
-
approved restructuring plans can include severance costs to terminate a specified number of employees, infrastructure charges to
vacate facilities and consolidate operations and contract cancellation costs. Restructuring charges are recorded based on estimated employee terminations,
site closure and consolidation plans. Severance and other employee separation costs are accrued under these actions when it is probable that benefits will
be paid and the amount is reasonably estimable.
Equity
-
Based Compensation
Equity
-
based compensation costs are estimated based on the grant date fair value of the award. Equity
-
based compensation cost is recognized
only for those awards expected to meet the service and performance vesting conditions, on a straight
-
line basis, over the requisite service period of the
award. Equity
-
based compensation is estimated based on the aggregate grant for service
-
based awards and at the individual vesting tranche for awards
with performance and/or market conditions. Forfeiture estimates are based on historical experience.
Recent Accounting Pronouncements
Standards Recently Adopted
In November 2015, the Financial Accounting Standards Board (the "FASB") issued guidance that requires deferred tax assets and liabilities to be
presented as noncurrent in a classified statement of financial position. The guidance is effective beginning January 1, 2017, with early adoption permitted.
The guidance can be applied prospectively or retrospectively. The Company elected to early adopt the requirements and apply them retrospectively as of
December 31, 2015
. The adoption resulted in the reclassification of
$18.6 million
of current deferred tax assets, net to noncurrent Deferred tax liabilities, net
in the Consolidated Balance Sheets as of
December 31, 2014
.
In April 2015, the FASB amended its existing accounting standards for the presentation of debt issuance costs in the statement of financial
position. The amendments generally require that debt issuance costs related to a recognized debt
F
-
13