TiVo 2004 Annual Report Download - page 32

Table of Contents
Index to Financial Statements
Accretion to redemption value of convertible preferred stock. As a result of our repurchase on April 30, 2002 of 1.6 million shares of our Series A
convertible preferred stock held by AOL for $48.0 million, the associated issuance costs were accreted during the three months ended April 30, 2002.
Liquidity and Capital Resources
We have financed our operations and met our capital expenditure requirements primarily from the proceeds of the sale of equity and debt securities. Our
cash resources are subject, in part, to the amount and timing of cash received from subscriptions, licensing and engineering professional services customers,
and hardware customers. At January 31, 2005, we had $106.3 million of cash and cash equivalents and short-term investments. For the fiscal year ending
January 31, 2006 we plan to focus on improving profitability and cash flow from operations throughout the year. We believe our cash and cash equivalents,
funds generated from operations, and our revolving line of credit facility with Silicon Valley Bank represent sufficient resources to fund operations, capital
expenditures, and working capital needs through the next twelve months.
Statement of Cash Flows Discussion
Our primary sources of liquidity are cash flows provided by operations and by financing activities. Although we currently anticipate these sources of
liquidity will be sufficient to meet our cash needs through the next twelve months, we may require or choose to obtain additional financing. Our ability to
obtain financing will depend, among other things, on our development efforts, business plans, operating performance, and the condition of the capital markets
at the time we seek financing. We cannot assure you that additional financing will be available to us on favorable terms when required, or at all. If we raise
additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights
of our common stock, and our stockholders may experience dilution. Please refer to "Factors That May Affect Future Operating Results" below for further
discussion.
The following table summarizes our cash flow activities:
Fiscal Year Ended January 31,
2005
2004 2003
(In thousands)
Net cash used in operating activities $ (37,214) $ (7,659) $ (33,170)
Net cash used in investing activities (18,099) (3,660) 641
Net cash provided by financing activities 4,348 109,128 26,403
Net Cash Used in Operating Activities
The increase in net cash used in operating activities from fiscal year 2004 to 2005 was primarily attributable to the increase in net loss incurred in fiscal
year 2005 compared to 2004. The primary change in net loss was an increase in sales and marketing expense of $18.4 million related to our increased
advertising activities and consumer rebate expenses of $37.1 million. The increase in net cash used in operations was partially offset by a decrease in
payments for accounts payable and accrued liabilities of $21.1 million during fiscal year 2005 as compared to the same prior-year period and by an increase in
revenues from subscriptions.
The decrease in net cash used in operating activities from fiscal year 2003 to 2004 was primarily attributable to the reduction in net loss incurred in
fiscal year 2004 compared to 2003. The primary change in net loss was continued reductions in sales and marketing expenses for revenue share and subsidy
expense. Also contributing to the reduction in net loss was increased revenue from subscriptions. The decrease in net cash used in operations was partially
offset by the decrease in non-cash interest expense in the fiscal year 2004 because of fewer conversions of convertible notes payable. Non-cash interest
expense included $4.5 million attributable to the accelerated accretion of the discount due to the conversion of convertible notes by NBC during fiscal year
2004.
Cash from deferred revenues has increased because we sell product lifetime subscriptions and receive up front license and engineering professional
services payments. These activities cause us to receive cash payments in advance of providing the services for which the cash is received, which we recognize
as deferred revenues.
Net Cash Used in Investing Activities
The increases in net cash used in investing activities for fiscal years 2005, 2004 and 2003 were primarily attributable to increased purchases and sales of
short-term investments. Additionally, we increased purchases of property and equipment to support our business. During the fiscal year 2004, we acquired
intangible assets in exchange for the issuance of common stock because of the Strangeberry Inc. acquisition and in exchange for the issuance of common
stock for acquisition of patent rights.
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