TiVo 2006 Annual Report Download - page 95

Table of Contents
Performance-Based Awards
Under the 1999 Plan, the Company authorized performance-based stock option and restricted stock awards for selected executives and other key
employees. The number of awards to be issued, the grant date and exercise price will be determined in the first quarter of fiscal 2008 based on upon meeting
various departmental and company-wide performance goals for fiscal year 2007. The expected numbers of awards to be issued are 161,000 for stock option
awards and 59,000 shares for restricted stock. The stock option awards will vest 50% one year after issuance and the remaining 50% will vest over the next 12
months. The vesting period for restricted stock awards may vary, but typically will vest after one- or two year period. As of January 31, 2007, total
compensation cost recognized related to these performance-based awards was approximately $511,000. As of January 31, 2007, $701,000 of total
unrecognized compensation cost related to these awards are expected to be recognized over a weighted-average period of 2.05 years.
11. CONVERTIBLE NOTES PAYABLE
On August 28, 2001, the Company closed a private placement of $51.8 million in face value of 7% convertible notes payable due August 15,
2006 and warrants and received cash proceeds, net of issuance costs, of approximately $40.1 million from accredited investors. TiVo received gross cash
proceeds of approximately $36.8 million from non-related party noteholders and $6.9 million from existing stockholders for a total of $43.7 million. In
addition, the Company received non-cash proceeds of $8.1 million in the form of advertising and promotional services from Discovery and NBC, who were
existing stockholders. Debt issuance costs were approximately $3.6 million, resulting in net cash proceeds of approximately $40.1 million. Of the total gross
proceeds of $51.8 million, $8.1 million was recorded as prepaid advertising and promotional services.
The total value of the warrants issued to convertible noteholders in the private placement was $9.6 million and was recorded as a discount on the
convertible notes payable. This discount was amortized to interest expense and other and accreted to the carrying value of the convertible notes payable over
the five-year life of the notes payable or upon conversion, if earlier.
The convertible notes carried a coupon interest rate of 7%. The effective interest rate of the convertible notes, including coupon interest and
amortization of discount, amortization of the beneficial conversion amount and amortization of prepaid debt issuance costs was approximately 58%. The
discount, the beneficial conversion amount and prepaid issuance costs were amortized using the straight-line method over the term of the notes or upon
conversion, if earlier, which approximates the effective interest rate method.
During the fiscal year ended January 31, 2004, the Company issued 2,506,265 shares of common stock as a result of one convertible noteholder,
a related party, converting $10.0 million in face value of convertible notes payable-related parties at the conversion price of $3.99 per share, in accordance
with the terms of the Convertible Notes Payable Indenture.
On November 26, 2004, the Company notified by mail the registered holders of its convertible notes payable that it elected to exercise its option
to redeem all remaining unconverted outstanding notes payable by the redemption date of January 25, 2005.
On January 24, 2005, the Company issued 1,127,819 shares of common stock to a noteholder upon conversion of $4,500,000 aggregate principal
amount of its convertible notes at the then current conversion price of $3.99 per share. Prior to January 24, 2005, on December 21, 2004 and January 19,
2005, the Company had issued 125,313 and 300,751 shares of common stock to two noteholders upon conversion of, respectively, $500,000 and $1,200,000
aggregate principal amounts of their convertible notes at the then current conversion price of $3.99 per share. The issuance of these shares of common stock
was exempt from registration pursuant to Section 3(a)(9) of the Securities Act. On January 25, 2005, the Company redeemed for cash the remaining
$4,250,000 outstanding 7% convertible senior note at a redemption price equal to the aggregate principal amount plus accrued interest up to, but not
including, the redemption date of January 25, 2005. There were no notes outstanding following the redemption date.
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