TiVo 2004 Annual Report Download - page 34

Table of Contents
Index to Financial Statements
Contractual Obligations
As of January 31, 2005, we had contractual obligations to make the following cash payments:
Payments Due by Period
Contractual Obligations
Total
Less than
1 year 1-3 years 3-5 years
Over
5 years
(In thousands)
Operating leases $ 6,894 $ 3,326 $ 3,568 $ — —
Bank line of credit 4,500 4,500 — — —
Purchase obligations 15,866 15,866 — — —
Total contractual cash obligations $ 27,260 $ 23,692 $ 3,568 $ — $ —
Other commercial commitments as of January 31, 2005, were as follows:
Total
Less than
1 year 1-3 years 3-5 years
Over
5 years
(In thousands)
Standby letter of credit $ 477 $ — $ 477 $ — $ —
Total commercial commitments $ 477 $ — $ 477 $ — $ —
Off-Balance Sheet Arrangements
As part of our ongoing business, we generally do not engage in transactions that generate relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or special purpose entities. Accordingly, our operating results, financial condition, and
cash flows are not subject to off-balance sheet risks associated with these types of arrangements. We did not have any of these types of off-balance sheet
arrangements at January 31, 2005.
Factors That May Affect Future Operating Results
The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also affect our business.
We have incurred significant net losses and may never achieve profitability.
We have incurred significant net losses and have had substantial negative cash flows. During the fiscal years ended January 31, 2005, 2004, and 2003,
our net loss was $(79.8) million, $(32.0) million, and $(82.3) million, respectively. As of January 31, 2005, we had an accumulated deficit of $(657.1) million.
We expect to incur significant operating expenses over the next several years in connection with the continued development and expansion of our business.
As a result, we expect to continue to incur net losses for the foreseeable future. The size of these net losses depends in part on our subscription revenues and
on our expenses. We will need to generate significant additional revenues to achieve profitability. Consequently, we may never achieve profitability, and even
if we do, we may not sustain or increase profitability on a quarterly or annual basis in the future.
We face intense competition from a number of sources, which may impair our revenues, increase our subscription acquisition cost, and hinder
our ability to generate new subscriptions.
The DVR market is rapidly evolving and we expect to face significant competition. Moreover, the market for in-home entertainment is intensely
competitive and subject to rapid technological change. As a result of this intense competition, we could incur increased subscription acquisition costs that
could adversely affect our ability to reach sustained profitability in the future. If new technologies render the DVR market obsolete, we may be unable to
generate sufficient revenue to cover our expenses and obligations.
We believe that the principal competitive factors in the DVR market are brand recognition and awareness, functionality, ease of use, availability, and
pricing. We currently see two primary categories of DVR competitors: DVRs offered by consumer electronics companies, and DVRs offered by cable and
satellite operators.
Within each of these two categories, the competition can be further segmented into those offering what we define as basic DVR functionality, and those
offering enhanced DVR functionality. Basic DVR functionality includes no or limited program guide data and