TiVo 2006 Annual Report Download - page 61

Table of Contents
Net Cash Used in Operating Activities
The increase in net cash used in operating activities of $36.9 million from fiscal year 2006 to 2007 was largely attributable to the increase in net loss of
$10.8 million, coupled with an increase in inventory expenditures of $20.2 million, and a decrease in cash provided by deferred revenues of $26.1 million, due
to the amortization of product lifetime subscription revenues. These usages were partially offset by an increase in non-cash stock compensation of $14.3
million, and a decrease in payments made to vendors of $6.6 million.
The increase in net cash provided by operating activities from fiscal year 2005 to 2006 was largely attributable to the decrease in net loss incurred
during fiscal year 2006. The primary changes in net loss for the fiscal year ended January 31, 2006 were higher service and technology gross margins of $56.4
million coupled with lower rebates, revenue share, and other payments to channel of $7.7 million, which were partially offset by increased operating expenses
of $22.6 million, as compared to the prior fiscal year.
Cash from deferred revenues increased during the fiscal years 2006 and 2005 because we sold product lifetime subscriptions and received up front
license and engineering services payments. These activities cause us to receive cash payments in advance of providing the services, which we recognize as
deferred revenues. As we no longer offer product lifetime subscriptions for general sale, we expect the amount of deferred revenues attributable to the product
lifetime subscriptions to decrease in the future.
Net Cash Used in Investing Activities
The net cash used in investing activities for fiscal year ended January 31, 2007 was approximately $41.2 million compared to $10.8 million in
fiscal year 2006. This increase was largely due to purchases of property and equipment for $7.3 million to support our business growth, $1.1 million used to
purchase technology utilized within our new TiVo Series2 DT box, $12.0 million for acquisition of intellectual property rights, including licenses to third
party patents, and $28.6 million for purchases of short-term investments. This usage was offset by the sale of short-term investments of $7.9 million.
Net cash used in investing activities for fiscal year 2006 was largely due to the acquisition of intangible assets, including intellectual property rights, for
$3.9 million and purchases of property and equipment of $7.1 million to support our business. Short-term investment purchases were offset by short term
investment sales. The decrease in net cash used in investing in fiscal year 2006 compared to fiscal year 2005 was due to the decrease of $185,000 in short
term investments activities for fiscal year ended January 31, 2006 as compared to the increase of $14.1 million for the fiscal year ending January 31, 2005.
Net Cash Provided by Financing Activities
For the fiscal year ended January 31, 2007, the principal source of cash generated from financing activities related to the issuance of common
stock, of which $64.5 million was the net proceeds of our September 5, 2006 underwritten public offering, $9.1 million was related to stock option exercises,
$3.3 million was from proceeds from warrant exercises, and $2.8 million related to issuances of stock under our employee stock purchase plan. Additionally,
we reacquired 80,503 shares of stock from employees to satisfy $570,000 in tax withholding requirements on newly vested restricted stock grants, and have
paid $641,000 of expenses related to acquiring our line of credit.
For the fiscal year ended January 31, 2006, the principal source of cash generated from financing activities related to the issuance of common stock for
stock options exercised and our employee stock purchase plan. These transactions generated $7.0 million and $2.9 million, respectively. We paid down our
line of credit with Silicon Valley Bank by $8.0 million, which consisted of $4.5 million outstanding as of January 31, 2005 and incremental borrowings
during fiscal year 2006 of $3.5 million.
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