TiVo 2006 Annual Report Download - page 99

Table of Contents
The tax effects of temporary differences that give rise to significant portions of the Company's deferred tax assets are presented below:
Fiscal Year Ended January 31,
2007 2006
(In thousands)
Deferred tax assets:
Net operating loss & credits $ 159,436 $ 168,594
Deferred revenue and rent 48,977 51,299
Capitalized research 44,757 36,694
Other 12,647 4,265
Total deferred tax assets 265,817 260,852
Valuation allowance (265,817) (260,852)
Net deferred tax assets (liabilities) $ — $ —
Management has established a valuation allowance for the portion of deferred tax assets for which realization is uncertain. The net change in the total
valuation allowance for the years ended January 31, 2007, 2006, and 2005 was an increase of $5.0 million, $17.6 million, and $25.7 million, respectively.
As of January 31, 2007, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $407.0 million
and $182.0 million, respectively, available to reduce future income subject to income taxes. Of these amounts $20.0 million represents federal and state tax
deductions from stock option compensation.
The federal net operating loss carryforwards expire beginning in 2012 through 2027. During fiscal year ended January 31, 2007, approximately $79
million of state net operating loss carryforwards expired unutilized. The remaining state net operating loss carryforwards expire beginning in 2012 through
2017.
As of January 31, 2007, unused research and development tax credits of approximately $8.3 million and $9.4 million, respectively are available to
reduce future federal and California income taxes. The federal research credit carryforwards will begin to expire if not utilized by 2012. California research
and experimental tax credits carryforward indefinitely until utilized.
Federal and state laws impose substantial restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an "ownership
change," as defined in Section 382 of the Internal Revenue Code. The Company has not yet determined whether an ownership change occurred due to
significant stock transactions in each of the reporting years disclosed. If an ownership change has occurred, utilization of the net operating loss and tax credit
carryforwards could be significantly reduced.
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