TiVo 2004 Annual Report Download - page 33

Table of Contents
Index to Financial Statements
Financing Activities
For the fiscal year 2005, the principal source of cash generated from financing activities related to our borrowing under a bank line of credit and the
issuance of common stock through our employee stock purchase plan. These transactions generated $4.5 million and $2.4 million, respectively, for the year
ended January 31, 2005 and 2004. Additionally, $1.7 million was obtained from the issuance of common stock for stock options exercised and $4.3 million
was used as payment for the redemption of all of the remaining outstanding 7% convertible notes.
For fiscal years 2004 and 2003, the principal source of cash generated from financing activities related to the issuance of common stock in registered
public offerings. These transactions generated an aggregate of $101.0 million in cash, less cash financing expense of $843,000 and $25.0 million in cash, less
financing expenses of $650,000 for fiscal years 2004 and 2003, respectively. Additionally, $7.2 million and $1.5 million were obtained from the issuance of
common stock for stock options exercised for fiscal years 2004 and 2003, respectively. The issuance of common stock through our employee stock purchase
plan generated $1.7 million and $1.3 million, respectively, for fiscal years 2004 and 2003.
Financing Agreements
$100 Million Universal Shelf Registration Statement. We have an effective universal shelf registration statement on Form S-3 (No. 333-113719) on
file with the Securities and Exchange Commission under which we may issue up to $100,000,000 of securities, including debt securities, common stock,
preferred stock, and warrants. Depending upon market conditions, we may issue securities under this or future registration statements.
7% Convertible Senior Notes Due 2006. On August 28, 2001, we closed a private placement of $51.8 million in face value of 7% Convertible Senior
Notes due 2006 and received cash proceeds of approximately $43.7 million from investors. In addition, we received non-cash consideration of $8.1 million in
the form of advertising and promotional services from Discovery Communications, Inc. and the National Broadcasting Company, Inc., 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 proceeds of
$51.8 million, $8.1 million was recorded as prepaid advertising and promotional services. As part of the transaction, we paid $5.0 million in October 2001 to
NBC for advertising that ran during the period that began October 1, 2001 and ended March 31, 2002.
During the period beginning on December 30, 2002 and ending on January 28, 2003, we temporarily reduced the conversion price of our convertible
notes from $3.99 to $3.70 per share pursuant to the indenture governing the notes in order to induce early conversions. During this period, $22.7 million in
principal amount of the $43.2 million outstanding principal amount of the notes was converted into an aggregate of 6,135,400 shares of our common stock.
The reduced conversion price resulted in 445,936 shares of common stock being issued in addition to the 5,689,464 shares of common stock that would have
been issuable upon conversion of the $22.7 million principal amount of notes at $3.99 per share. On November 26, 2004, we notified by mail the registered
holders of our 7% Convertible Senior Notes due 2006 that we elected to exercise our option to redeem all remaining outstanding notes. As of October 31 and
November 26, 2004, the aggregate principal amount of the remaining outstanding notes was $10,450,000. Pursuant to our notice and the terms of the
Indenture, the notes were either converted by the noteholders into common stock on or before January 25, 2005 at the effective conversion price of $3.99 per
share or redeemed by us on January 31, 2005 at a redemption price equal to the outstanding principal amount of the notes plus accrued, but unpaid interest to,
but excluding, the redemption date. There were no notes outstanding following January 25, 2005.
Revolving Line of Credit Facility with Silicon Valley Bank. On June 29, 2004, we renewed our loan and security agreement with Silicon Valley Bank
for an additional two years, whereby Silicon Valley Bank agreed to increase the amount of the revolving line of credit it extends to us from a maximum of $6
million to $15 million. The first amendment to the Silicon Valley Bank loan and security agreement also replaces the borrowing base requirement with a
requirement that we maintain a certain pre-determined Tangible Net Worth (as defined in the first amendment). The line of credit remains secured by a first
priority security interest on all of our assets except for our intellectual property. However, our agreement with Silicon Valley Bank also includes a negative
pledge such that we will not, among other things except in accordance with certain enumerated exceptions, sell, transfer, assign, mortgage, pledge, lease, grant
a security interest in, or encumber any of our Intellectual Property without the consent of Silicon Valley Bank. The line of credit now bears interest at the
greater of prime or 4.00% per annum, but in an event of default that is continuing, the interest rate becomes 3.00% above the rate effective immediately before
the event of default. The first amendment also allows us to enter into foreign exchange forward contracts in which we may commit to purchase from or sell to
Silicon Valley Bank a set amount of foreign currency. The loan and security agreement includes, among other terms and conditions, limitations on our ability
to dispose of our assets; merge or consolidate with or into another person or entity; create, incur, assume or be liable for indebtedness (other than certain types
of permitted indebtedness, including existing and subordinated debt and debt to trade creditors incurred in the ordinary course of business); create, incur or
allow any lien on any of our property or assign any right to receive income except for certain permitted liens; make investments; pay dividends; or make
distributions; and contains a requirement that we maintain certain financial ratios. At January 31, 2005, we were in compliance with these covenants and had
$4.5 million outstanding under the line of credit. The outstanding balance was repaid in its entirety in February 2005. The line of credit terminates and any
and all borrowings are due on June 29, 2006, but may be terminated earlier by us without penalty upon written notice and repayment of all amounts borrowed.
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