TiVo 2005 Annual Report Download - page 53

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Table of Contents
Our research and development expenses consist primarily of employee salaries, related expenses, and consulting expenses. Research and development
expenses, as a percentage of net revenue decreased 1%, for the fiscal year ended January 31, 2006, as compared to the prior fiscal year. However, in terms of
absolute dollars, research and development increased 9% for the fiscal year ended January 31, 2006, as compared to the prior fiscal year. The absolute dollar
increase in expenses for fiscal year ended January 31, 2006 was due largely to a $2.8 million decrease in research and development expenses allocated to cost
of technology revenues.
Research and development expenses for the fiscal year ended January 31, 2005 increased 70% over the prior fiscal year period primarily due to
increased salary expenses of $5.8 million. The increase is related to an increase in engineering headcount by 21 employees from the fiscal year ended
January 31, 2004 and because fewer engineers were redeployed from research and development activities to engineering services activities.
Sales and marketing expenses.
Fiscal Year Ended January 31,
2006 2005 2004
(In thousands, except percentages)
Sales and marketing expenses $ 35,047 $ 37,367 $ 18,947
Change from same prior-year period -6% 97% -61%
Percentage of net revenues 18% 22% 13%
Sales and marketing expenses consist primarily of employee salaries and related expenses, media advertising (including print, online, radio, and
television), public relations activities, special promotions, trade shows, and the production of product related items, including collateral and videos. Sales and
marketing expenses, as a percentage of net revenue, decreased by 4% for the fiscal year ended January 31, 2006, as compared to the prior fiscal year and, in
terms of absolute dollars decreased by 6% for the fiscal year ended January 31, 2006, as compared to the prior fiscal year. The largest contributor to the
decreased sales and marketing expenses for the fiscal year ended January 31, 2006, in terms of absolute dollars, was advertising expense that decreased by
35% or by $5.6 million from the prior fiscal year. This decrease was offset by $1.4 million for salaries and bonuses due to an increase in regular headcount by
10 employees. In addition we had a $1.3 million increase in public relations and events expense.
Our sales and marketing expenses for the fiscal year ended January 31, 2005 were significantly higher than for the fiscal year ended January 31, 2004
due to our increased investment in subscription acquisition activities. The largest contributor to this increased investment in sales and marketing expenses for
the fiscal year ended January 31, 2005, in terms of absolute dollars, was our advertising expense, including print and radio advertising, which increased by
$15.6 million. For the fiscal year ended January 31, 2004, total advertising expense was $369,000. Another contributor to the fiscal year 2005 increase was
public relations and event expense that increased by 96% or by $1.3 million from the fiscal year ended January 31, 2004.
General and administrative expenses.
Fiscal Year Ended January 31,
2006 2005 2004
(In thousands, except percentages)
General and administrative $ 38,018 $ 16,593 $ 16,296
Change from same prior-year period 129% 2% 13%
Percentage of net revenues 19% 10% 12%
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