TiVo 2009 Annual Report Download - page 64

Table of Contents
General and administrative expenses consist primarily of employee salaries and related expenses for executive, administrative, accounting, information
technology systems, facility costs, and legal and professional fees. During the fiscal year ended January 31, 2010, the increase of $1.9 million in general and
administrative expenses, as compared to the same prior year period, was largely related to increased legal spending of $2.6 million, which was largely related
to our EchoStar, Verizon, and AT&T litigations and increased non-cash stock compensation expenses of $1.2 million. These increases were partially offset by
a reduction in depreciation expenses of $1.4 million, as fixed assets become fully depreciated, and a reduction in property tax expenses of $862,000, as we
received a refund of previously disputed amount of property taxes that reversed a prior property tax expenses of the same amount taken by us in the quarter
ended April 30, 2008, in the fiscal year ended January 31, 2009. For the fiscal year ending January 31, 2011 we anticipate greater general and administrative
spending due to increased legal activities related our litigations.
In the fiscal year ended January 31, 2009, general and administrative expenses in terms of absolute dollars and percentage of net revenues remained
relatively flat as compared to the fiscal year ended January 31, 2008. In the fiscal year ended January 31, 2009, TiVo had increased legal spending by $1.8
million as compared to the prior fiscal year. However, this increase was offset by a decrease of $613,000 in bad debt expense, a net decrease of $605,000 in
non-cash stock-based compensation expense as fiscal year 2008 included a one-time non-cash charge recorded in fiscal year 2008 for modification of stock-
based awards of a Board member, and $401,000 in non-income tax exposures.
Litigation proceeds. On October 8, 2008, we received $104.6 million from EchoStar of which approximately $87.8 million represents damages through
September 8, 2006 and was recorded as litigation proceeds during the fiscal year ended January 31, 2009. The remaining $16.8 million was recorded in our
consolidated statement of operations as interest income for the fiscal year ended January 31, 2009. We received no such similar award during the fiscal year
ended January 31, 2010.
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, 2010 was $1.0 million or approximately a 44% decrease compared to the $1.8 million from the prior fiscal year. The decrease was a
result of a decrease in the average interest rate earned in the fiscal year ended January 31, 2010 to approximately 0.43% from 1.7% in the prior fiscal year as
we invested our cash, cash equivalents, and short-term investments in more conservative instruments during the entire year given the current market
conditions. Additionally, for the fiscal year ended January 31, 2009 we received $16.8 million in interest related to the litigation proceeds from our EchoStar
litigation. There is no similar interest recorded in the consolidated statement of operations for the fiscal year ended January 31, 2010.
Interest expense and other. Interest and other expense/(benefit) was $(83,000), $553,000, and $102,000, in fiscal years 2010, 2009, and 2008,
respectively. In fiscal year 2010 we sold previously reserved inventory for a benefit of approximately $79,000.
Provision for income taxes Income tax (benefit) provision was $(1.0) million, $1.3 million, and $30,000 in fiscal years 2010, 2009, and 2008,
respectively. The income tax benefit in fiscal year 2010 is due to a refund of previously paid Alternative Minimum Tax ("AMT") as a result of changes in the
tax code passed in November 2009 and refundable research credits. The income tax expense in fiscal years 2009 and 2008 relates to federal AMT, state
income taxes, and foreign withholding taxes. We continue to maintain a full valuation allowance against the remaining deferred tax assets as realization is
dependent upon future earnings, the timing and amount of which are uncertain.
Liquidity and Capital Resources
We have financed our operations and met our capital expenditure requirements primarily from the proceeds from the sale of equity securities and funds
generated from operations. Our cash resources are subject, in part, to the amount and timing of cash received from our subscriptions, licensing and
engineering services customers, and hardware customers. As of January 31, 2010, we had $244.6 million of cash, cash equivalents, and short-term
investments. We believe our cash, cash equivalents and short-term investments, combined with funds generated from operations, provide sufficient resources
to fund operations, capital expenditures, and working capital needs through the next twelve months and beyond.
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