TiVo 2004 Annual Report Download - page 31

Table of Contents
Index to Financial Statements
General and administrative expenses consist primarily of employee salaries and related expenses for executive, administrative, accounting, information
systems, customer operations personnel, facility costs, and professional fees. General and administrative expenses for the fiscal year ended January 31, 2005
increased 2% compared to the same prior-year period. The increase was primarily due to salaries and wages that increased 16%, or $1.1 million compared to
the same prior-year period primarily due to an increase in accounting and information system headcount of 20 employees. In connection with our ongoing
lawsuits, we have expensed $1.3 million for the fiscal year ended January 31, 2005 for legal expenses in connection with the Sony patent infringement case.
We expect to continue to incur legal expenses for all pending lawsuits, including material amounts related to the Sony patent infringement case. We also
expect we will begin to incur material expenses for the EchoStar Communications patent infringement case in the future. We expect these increased expenses
will likely adversely affect our results of operations, by increasing our operating expenses, adversely impacting our financial position, and diverting additional
cash flows to non-revenue generating activities. General and administrative expenses for the fiscal year 2004 increased compared to the prior fiscal year
primarily due to increased legal expenses of $2.5 million for ongoing and settled lawsuits.
Interest income. Interest income resulting from cash and cash equivalents held in interest bearing accounts and short-term investments for the fiscal
year ended January 31, 2005 tripled the amount of the prior fiscal year. The increase was a result of significantly higher levels of cash during the year. Interest
income for the fiscal year 2003 was largely a result of the receipt of a one-time payment of $3.9 million in interest earned on the restricted cash from the
agreement with AOL was released from the escrow account to us in April 2002.
Interest expense and other. Interest expense and other primarily consists of cash and non-cash charges related to interest expense paid for coupon
interest expense on the convertible notes and interest expense paid to our consumer electronics manufacturers according to negotiated deferred payment
schedules. Interest expense and other for the fiscal year ended January 31, 2005 decreased 43% from the prior fiscal year primarily due to fewer convertible
notes payable that were due interest payments.
Non-cash interest expense for the same period included $3.2 million attributable to the accelerated accretion of the discount due to conversions or
redemptions of the remaining noteholders and $1.6 million attributable to the amortization of the discount pertaining to the value of the beneficial conversion
feature of the convertible notes payable, the amortization of the issuance of warrants to noteholders, and the amortization of debt issuance costs related to the
conversion of the notes of the convertible notes payable, respectively. Non-cash interest expense for the fiscal year ended January 31, 2004 included $4.5
million attributable to the accelerated accretion of the discount due to the conversion of convertible notes held by NBC and $3.6 million from the amortization
of the discount pertaining to the value of the beneficial conversion feature of the convertible notes, the amortization of the issuance of warrants to noteholders,
and the amortization of debt issuance costs related to the conversion of other convertible notes. During fiscal year ended January 31, 2003 non-cash interest
expense was $24.2 million attributable to the amortization of the discount pertaining to the value of the beneficial conversion feature of the convertible notes,
the amortization of the issuance of warrants to noteholders, the value of the additional shares resulting from the temporary incentive conversion price
reduction, and the amortization of debt issuance costs for the convertible notes.
Fiscal Year Ended January 31,
2005
2004 2003
(In thousands)
Total cash interest expense $ 608 $ 1,443 $ 3,345
Total non-cash interest expense 4,854 8,139 24,210
Total interest expense 5,462 9,582 27,555
Total other expenses (3) 5 14
Total interest expense and other $ 5,459 $ 9,587 $ 27,569
Change from prior fiscal year (43)% (65)% 279%
Provision for income taxes. Income tax expense for the fiscal years ended January 31, 2005, 2004, and 2003 was primarily due to franchise taxes paid
to various states and foreign withholding taxes.
Series A convertible preferred stock dividend. Under the terms of the Series A convertible preferred stock, we were previously required to pay
dividends to the Series A convertible preferred stockholders. Pursuant to the terms of the Funds Release Agreement dated April 29, 2002, AOL, the sole
preferred stockholder, waived the preferred dividends and associated rights it was otherwise entitled to effective April 1, 2002. On April 30, 2002, we
repurchased 1.6 million shares of our Series A convertible preferred stock. On September 13, 2002, the remaining 1,111,861 outstanding shares of Series A
convertible preferred stock were converted into an equal number of shares of our common stock. There were no dividends payable for the fiscal years ended
January 31, 2005 and 2004. For the fiscal year ended January 31, 2003, dividends payable were $220,000.
29