TiVo 2013 Annual Report Download - page 56

Table of Contents
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  
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General and administrative $77,311 $87,075 $ 96,502
Change from same prior year period (11)% (10)% 62%
Percentage of net revenues 19 % 29 % 41%
Litigation expense (included in total general and administrative costs above) $ 24,594 $ 38,055 $ 50,503
Change from same prior year period (35)% (25)% 167%
Percentage of net revenues 6 % 13 % 21%
General and administrative, net of litigation expense $52,717 $ 49,020 $ 45,999
Change from same prior year period 8 % 7 % 13%
Percentage of net revenues 13 % 16 % 19%
General and administrative expenses consist primarily of employee salaries and related expenses for executive, administrative,
accounting, information technology systems, and legal and professional fees. During the fiscal year ended January 31, 2014, general and
administrative expenses decreased by $9.8 million as compared to the same prior year period. This decrease was primarily due to decreased
legal expenses of $13.5 million related to litigation expenses for our patent enforcement cases. This decrease was offset by increases in
headcount and headcount related costs of $5.0 million. We anticipate our general and administrative expenses to decrease in the fiscal year
ending January 31, 2015 due to decreased litigation activities.
During the fiscal year ended January 31, 2013, general and administrative expenses decreased by $9.4 million as compared to the
same prior year period. This decrease was largely related to decreased litigation related spending of $12.4 million due to the number and
timing of our ongoing litigation matters. This decrease was offset by increased headcount and headcount related costs of $3.0 million.
Litigation proceeds. During the fiscal year ended January 31, 2014, 2013 and 2012 we recorded litigation proceeds of $108.1 million,
$78.4 million, and $230.2 million, respectively from our patent infringement settlements.
Effective July 2, 2013, we entered into settlement and patent license agreements with ARRIS Group, Inc. (owner of General Instrument
Corporation, formerly a subsidiary of Motorola Mobility, Inc.), Cisco Systems, Inc. (Cisco), and Google Inc. (Google) (owner of Motorola
Mobility, LLC formerly Motorola Mobility, Inc.) (with the settlement with Arris, Google, and Cisco referred to as the Motorola/Cisco
settlement). Pursuant to the terms of the Motorola/Cisco settlement the parties agreed to settle and dismiss all outstanding litigation between
them, including related litigation involving Time Warner Cable, (as described in our periodic reports filed with the Securities and Exchange
Commission), provide licenses to certain patents between the parties, and release patent infringement claims between the parties with
respect to all outstanding litigation in exchange for a payment of $490.0 million to TiVo by Google and Cisco in connection with the
Motorola/Cisco settlement,
The total consideration of $490.0 million was received during the fiscal year ended January 31, 2014 and was allocated on a relative fair
value basis as $381.1 million to the future licensing revenue element, $752,000 to interest income related to past infringement and $108.1
million to the past infringement and litigation settlement element. The amount related to past infringement and settlement was recorded
under “Litigation proceeds” in the fiscal year ended January 31, 2014. The amount related to interest income was recorded under “Interest
income” in the fiscal year ended January 31, 2014. $381.1 million of license royalties that have been or will be recorded as technology
revenues over the term of the agreements through July 2023.
On September 21, 2012, we entered into a Settlement and Patent License Agreement with Verizon Communications, Inc. (Verizon).
Under the terms of the Agreement, Verizon agreed to pay us a minimum amount of $250.4 million plus incremental monthly fees per DVR
subscriber if Verizon's subscriber base exceeds certain pre-determined levels which increase annually. The initial payment of $100.0 million
was paid to TiVo on September 28, 2012 with the remaining $150.4 million due to us 30 days after the end of each calendar quarter in the
amount of $6.0 million through the calendar quarter ending September 30, 2018.
The total consideration of $250.4 million was allocated on a relative fair value basis as $78.4 million to the past infringement and
litigation settlement element, $568,000 to interest income related to past infringement and $171.4 million to the future base license royalties
element. The amount related to past infringement and settlement was recorded under “Litigation proceeds” in the fiscal year ended January
31, 2013. The amount related to interest income was recorded under “Interest income” in the fiscal year ended January 31, 2013.
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