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TIVO INC (TIVO)
10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/23/2012
Filed Period 01/31/2012

Table of contents

  • Page 1
    TIVO INC (TIVO) 10-K Annual report pursuant to section 13 and 15(d) Filed on 03/23/2012 Filed Period 01/31/2012

  • Page 2
    ...-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2012 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM Commission file number 000-27141 TO TIVO INC...

  • Page 3
    ... 31, 2011, the last business day of the registrant's most recently completed second fiscal quarter, was approximately $1.1 billion (based on the closing sales price of the registrant's common stock on that date as reported in the Nasdaq Global Market). Shares of the registrant's common stock held by...

  • Page 4
    ... Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants of Accounting and Financial Disclosures Controls...

  • Page 5
    ... their impact on our hardware revenues, service revenues, total acquisition costs as well as sales and marketing, subscription acquisition costs, and average revenue per subscription ("ARPU"); • our estimates of the useful life of TiVo-enabled digital video recorders ("DVRs") in connection with...

  • Page 6
    ... expenses, sales and marketing and subscription acquisition costs, and future increases in hardware costs related to supply shortages in the hard disk drive component market; • our expectations regarding our ability to oversee outsourcing of our manufacturing processes and engineering work...

  • Page 7
    ... manufacturing, marketing, and sales support, as well as third-party rollout schedules, software development issues for third-party products which contain our technology; access to television programming including digital cable signals in connection with CableCARDTM and switched digital technologies...

  • Page 8
    ...for solutions that enable viewing when and where convenient for the user across multiple screens. Advanced Television Technology as a Competitive Asset. Nearly all of the major television service providers in the United States including Comcast, DIRECTV, DISH (formerly "EchoStar"), Time-Warner Cable...

  • Page 9
    ... will be focused on broadband functionality, support for additional secondary devices that will enable the TiVo experience on additional consumer screens, and integration of new discovery paradigms like social network recommendations. Develop Solutions for Television Service Providers. Part of our...

  • Page 10
    ... service client software functions on set-top boxes and mobile devices which run the TiVo software. We have enhanced the client software to support multiple services and applications, such as receipt of broadband video content, digital music, and photos. The TiVo client software manages interaction...

  • Page 11
    ...with excess development work to be funded by DIRECTV. DIRECTV also has certain additional annual obligations to market and promote the new HD DIRECTV DVR featuring the TiVo service now that it has launched. Best Buy . Best Buy is one of the largest nationwide retailers of consumer electronics in the...

  • Page 12
    ..., Time Warner Cable, Verizon, and AT&T. These products typically combine pay television reception with DVR functionality; most of these products include multiple tuners, high definition recording, and in some cases multi-room viewing capability. Some of these products are offered at lower prices but...

  • Page 13
    ...on data from digital cable set-top boxes and satellite set-top boxes. The type of research we provide is a discretionary purchase. If advertisers, advertising agencies, and television networks perceive the information provided by these companies to be more valuable, they may invest in those services...

  • Page 14
    ... for financial operations including accounting, tax, treasury, purchasing, internal audit, financial reporting and planning. Ms. Brunelle joined TiVo in April 2005 and served as Vice President, Controller, and Treasurer prior to her promotion. Prior to joining TiVo, Ms. Brunelle held positions at...

  • Page 15
    ... acquired Strangeberry, Inc., a small Palo Alto based technology company specializing in using home network and broadband technologies to create new entertainment experiences on television. On July 16, 2004, TiVo Intl. II, Inc., a wholly owned subsidiary of TiVo Inc., was incorporated in the Cayman...

  • Page 16
    ... Digital Video Distribution System"), and 6,367,078 ("Electronic Program-Guide System with Sideways-Surfing Capability"). On March 15, 2010, Verizon filed an amended answer further alleging infringement by us of U.S. Patent No. 6,381,748 ("Apparatus And Methods For Network Access Using A Set Top Box...

  • Page 17
    ...our products and services into certain markets, or cease operating our business altogether. The emerging advanced-television industry is highly litigious. Additionally, many patents covering interactive television technologies have been granted but have not been commercialized. A number of companies...

  • Page 18
    ...reflected when the conditions become known. Using different cost estimates related to engineering services may produce materially different operating results, in addition to differences in timing and income statement classification of related expenses and revenues. An unfavorable change in estimates...

  • Page 19
    ...from development or subscription fees, in such an event we would be forced to incur unexpected losses. From time to time during development and integration for our television service provider customers, we or our customers may request to revise certain terms of our contracts or statements of work to...

  • Page 20
    ...offered by telecommunications, cable and satellite operators and DVRs and other advanced television solutions (e.g. VOD based services on set-top boxes or other consumer electronic devices (TV, BluRay player, etc.) which stream content remotely) offered by consumer electronics and software companies...

  • Page 21
    ... in a cost-effective manner with these television providers as well as attract and retain customers, in which case, our business, financial condition and results of operations could be harmed. We are currently only able to offer a high definition DVR that has access to digital cable signals. Only...

  • Page 22
    ... of high definition, the use of switched digital technology to deliver encrypted digital television signals, and the failure of cable operators in the future to transmit both an analog and digital transmission thus impacting our Series2 DVRs, increased price sensitivity in the consumer base, any...

  • Page 23
    ... subscription revenues and had made contact with the TiVo service within the prior six-month period. We will continue to monitor the useful life of a TiVo-enabled DVR and the impact of higher churn, increased competition, and compatibility of our existing TiVo units with high-definition programming...

  • Page 24
    ...rejection of our agreement, and the amount of development work required by us to incorporate an alternate source of guide data, we may be subject to a period of time in which we are unable to provide the TiVo service to our customers and distribution partners. In such an event, our business would be...

  • Page 25
    ... work product. As a result our business could be harmed, including our financial results, reputation, and brand. Product defects, system failures, or interruptions to the TiVo service may have a negative impact on our revenues, damage our reputation and decrease our ability to attract new customers...

  • Page 26
    ... partners. These activities require significant time and resources and may require us to develop and promote new ways of generating revenue with established companies in the television industry. These companies include television advertisers, cable and satellite network operators, electronic...

  • Page 27
    ... of our customer support functions. Furthermore, the installation of a CableCARDTM for TiVo customers may be performed by third-party cable operators and TiVo would then be dependent on such parties to timely service new subscribers to enable their receipt of digital and premium cable content. Our...

  • Page 28
    ...cable set-top box and no analog cable transmission is available. The lack of an analog signal being transmitted by the cable operator means that the DVR would only be able to use one tuner to record television although all the model DVRs we currently sell to our customers are high definition digital...

  • Page 29
    ... entertainment companies, including the major television networks. These lawsuits alleged that the competitor's DVRs violate copyright laws by allowing users to skip commercials, delete recordings only when instructed and use the Internet to send recorded materials to other users. TiVo-enabled DVRs...

  • Page 30
    ... if we fail to comply and could adversely impact and/or could require us to change our business. The delivery of television programming, access to television signals by consumer electronics devices, and the collection of viewing information from subscriptions via the TiVo service and a DVR represent...

  • Page 31
    ... information does not identify the individual customer. Privacy concerns, however, could create uncertainty in the marketplace for digital video recording and for our products and services. Changes in our privacy policy could reduce demand for the TiVo service, increase the cost of doing business...

  • Page 32
    ... started to do business in an increasing number of states nationally. By engaging in business activities in these states, we become subject to their various laws and regulations, including requirements to collect sales tax from our sales within those states and the payment of income taxes on revenue...

  • Page 33
    ... of new services and features on the TiVo service; seasonality and other consumer and advertising trends; entering into new or terminating existing strategic partnerships; timing of the roll-out of the TiVo service and delivery of customized set-top boxes to our strategic partners; changes in...

  • Page 34
    ... total office space. Our current facilities lease obligations are subject to periodic increases and we believe that our existing facilities are well maintained and in good operating condition. The Company also has operating leases for sales and administrative office space in New York City, New York...

  • Page 35
    ... to TiVo") plus incremental monthly fees per DVR subscriber if the growth of AT&T's subscriber base exceeds certain pre-determined levels. The first $51.0 million of the Payment to TiVo was paid on January 4, 2012 and the remaining amount is due to TiVo in equal installments 30 days after the end of...

  • Page 36
    ... Channels in a Digital Video Distribution System"); and 6,367,078 ("Electronic Program-Guide System with Sideways-Surfing Capability"). On March 15, 2010, Verizon filed an amended answer further alleging infringement of U.S. Patent No. 6,381,748 ("Apparatus And Methods For Network Access Using A Set...

  • Page 37
    ... Parameter for Displaying or Recording"); 6,028,604 ("User Friendly Remote System Interface Providing Previews of Applications"); and 5,758,258 ("Selective Delivery of Programming for Interactive Televideo System"). On March 3, 2011, TiVo filed a motion to stay this litigation in view of the ITC...

  • Page 38
    ...the symbol "TIVO" since September 30, 1999. Prior to that time, there was no public trading market for our common stock. The following table sets forth, for the periods indicated, the high and low sales prices of our common stock as reported by the Nasdaq Global Market, on any trading day during the...

  • Page 39
    ... purchaser's overallotment option. The notes will pay interest semi-annually at a rate of 4.00% per year and mature on March 15, 2016. These convertible notes have no financial covenants. The notes will be convertible at any time, at the option of the holders, into shares of TiVo's common stock...

  • Page 40
    ... share repurchase program, that became effective on August 29, 2011. During the fiscal year ended January 31, 2012, we did not repurchase any shares under the program. Stock Performance Graph The following table and graph compares the cumulative total stockholder returns for our common stock...

  • Page 41
    ... period. The data set forth below (in thousands, except share and per share data) should be read in conjunction with Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements included in Item 8. "Financial Statements and...

  • Page 42
    ... Year Ended January 31, 2012 Consolidated Statements of Operations Data: Revenues Service revenues Technology revenues Hardware revenues Net revenues Cost and Expenses Cost of service revenues Cost of technology revenues Cost of hardware revenues Research and development Sales and marketing Sales...

  • Page 43
    ... electronic devices and the services that enable their functionality. Our advanced television solutions provide consumers with an easy intuitive way to record, watch, and control television and receive videos, pictures, and movies from cable, broadcast, and broadband sources. We offer features...

  • Page 44
    ... fiscal year 2013 to be consistent with the fiscal year ended January 31, 2012 as we continue to pursue new technological and product developments which include the continued development of whole-home and multi-screen offerings which includes non-DVR STBs and software solutions that extend the TiVo...

  • Page 45
    ... not canceled. We count product lifetime subscriptions in our subscription base until both of the following conditions are met: (i) the period we use to recognize product lifetime subscription revenues ends; and (ii) the related DVR has not made contact to the TiVo service within the prior six month...

  • Page 46
    ...as high definition television recording capabilities in our older model DVRs or access to certain digital television channels or MSO Video On Demand services, as well as increased price sensitivity and installation and CableCARDTM technology limitations, may cause our TiVo-Owned Churn Rate per month...

  • Page 47
    ... directly comparable to the service fees we may receive from these partners on a per subscription basis as the fees that our MSOs pay us may be based upon a specific contractual definition of a subscriber or subscription which may not be consistent with how we define a subscription for our reporting...

  • Page 48
    ... 31, 2011 and we expect this trend to continue through fiscal year 2013. We calculate ARPU per month for MSOs' subscriptions by first subtracting TiVo-Owned-related service revenues (which includes TiVo-Owned subscription service revenues and TiVo-Owned related advertising revenues) from our total...

  • Page 49
    ... DVRs and TiVo service to consumers; arrangements with multiple system operators and broadcasters ("MSOs") which generally include delivery of software customization and set up services, training, post contract support ("PCS"), TiVo-enabled DVRs and TiVo service; and bundled sales of advertising...

  • Page 50
    ... sells the DVR and service directly to end-users through bundled sales programs through the TiVo website. Under these bundled programs, the customer receives a DVR and commits to a minimum subscription period of one to three years or product lifetime and has the option to either pay a monthly fee...

  • Page 51
    ...30 days of the purchase. TiVo establishes allowances for expected product and service returns and these allowances are recorded as a direct reduction of revenues and accounts receivable. Certain payments to retailers and distributors such as market development funds and revenue share are recorded as...

  • Page 52
    ... agreements with MSOs, which typically include software customization and set up services, limited training, PCS, TiVo-enabled DVRs, non-DVR STBs, and TiVo service. We usually incur development cost for which we are in total or in part compensated through service fees received after a solution...

  • Page 53
    ...costs for the TiVo box with higher monthly subscription fees) for TiVo-Owned subscriptions, offset by an increase in revenues from MSOs. Hardware revenues, net of allowance for sales returns and net of revenue share and marketing development fund payments for the twelve months ended January 31, 2011...

  • Page 54
    ... DIRECTV, Virgin, and our other international and domestic projects. The increase of $4.2 million in cost of technology revenues in the fiscal year ended January 31, 2012 related to an increase in the number of customers we were performing development work for in the current year period as compared...

  • Page 55
    ... pricing model which allows a customer to purchase a TiVo box at a lower upfront box price when the customer commits for at least one year to one of our new higher priced service plans. Research and development expenses. Fiscal Year Ended January 31, 2012 Research and development expenses Change...

  • Page 56
    ...million in increased channel support and other related expenses associated with the launch of our Premiere boxes. Sales and marketing, subscription acquisition costs. Fiscal Year Ended January 31, 2012 Sales and marketing, subscription acquisition costs Change from same prior year period Percentage...

  • Page 57
    ..., accounting, information technology systems, facility costs, and legal and professional fees. During the fiscal year ended January 31, 2012 , general and administrative expenses increased by $37.0 million as compared to the same prior year period. In the fiscal year ended January 31, 2012, TiVo...

  • Page 58
    ...option. The notes pay interest semi-annually at a rate of 4.00% per year and mature on March 15, 2016. On May 2, 2011, we received an initial payment of $300 million in cash (with the remaining $200 million to be paid in six equal annual installments of $33.3 million) from DISH Network in connection...

  • Page 59
    ... and development spending and for general corporate purposes, which may include funding sales and marketing expenses, increasing our working capital, making capital expenditures and potentially for strategic acquisitions. Additionally, we had issuance of common stock upon exercise of stock options...

  • Page 60
    ... Manufacturers and Suppliers. We purchase components from a variety of suppliers and use several contract manufacturers to provide manufacturing services for our products. During the normal course of business, in order to manage manufacturing lead times and help assure adequate component supply...

  • Page 61
    ... FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm 61 Consolidated Balance Sheets 62 Consolidated Statements of Operations 63 Consolidated Statements of Stockholders' Equity and Comprehensive Income...

  • Page 62
    ... financial statements based on our audits. We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free...

  • Page 63
    ...share amounts) As of January 31, 2012 ASSETS CURRENT ASSETS Cash and cash equivalents Short-term investments Accounts receivable, net of allowance for doubtful accounts of $370 and $275, respectively Inventories Deferred cost of technology revenues, current Prepaid expenses and other, current Total...

  • Page 64
    ...) Fiscal Year Ended January 31, 2012 Revenues Service revenues Technology revenues Hardware revenues Net revenues Cost of revenues Cost of service revenues Cost of technology revenues Cost of hardware revenues Total cost of revenues Gross margin Research and development Sales and marketing Sales and...

  • Page 65
    ... stock based compensation Net loss Unrealized gain on marketable securities Comprehensive loss BALANCE JANUARY 31, 2011 Issuance of common stock related to exercise of common stock options Issuance of common stock related to employee stock purchase plan Issuance of restricted shares of common stock...

  • Page 66
    ... related to exercise of common stock options Proceeds from issuance of common stock related to employee stock purchase plan Treasury stock - repurchase of stock for tax withholding Payments under capital lease obligation Net cash provided by financing activities NET INCREASE (DECREASE) IN CASH AND...

  • Page 67
    ..., marketing, and sales support, as well as third-party rollout schedules, software development issues for third-party products which contain its technology; intellectual property claims by and against the Company; access to television programming including digital cable signals in connection with...

  • Page 68
    ... to its subscription, technology, and hardware revenues. Additionally, amounts due from banks for customer credit card, debit card and EBT transactions that take in excess of three days to process are classified as accounts receivable. As of January 31, 2012 and 2011 the Company had approximately...

  • Page 69
    ... Company's multiple deliverable revenue arrangements primarily consist of bundled sales of TiVo-enabled DVRs and TiVo service to consumers; arrangements with MSOs which generally include delivery of software customization and set up services, training, post contract support ("PCS"), TiVoenabled DVRs...

  • Page 70
    ...-enabled DVRs and TiVo service The Company sells the DVR and service directly to end-users through bundled sales programs through the TiVo website. Under these bundled programs, the customer receives a DVR and commits to a minimum subscription period of one year for monthly payment plans (monthly...

  • Page 71
    ... to cost of revenues over the same period as revenue. The Company has established VSOE of selling prices for training, DVRs, non-DVR STBs, and maintenance and support based on the price charged in standalone sales of the element or stated renewal rates in the agreement. The BESP of TiVo service is...

  • Page 72
    ... using a Black-Scholes option valuation model and Monte-Carlo valuation model for stock awards with market vesting conditions. TiVo recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award. Advertising Costs The Company expenses...

  • Page 73
    ... 31, 2012 and 2011 were as follows: As of January 31, 2012 AT&T Suddenlink DIRECTV RCN Virgin Media Comcast Other customers Total accounts receivable * Less than 10%. The Company does not have a long-term written supply agreement with Broadcom, the sole supplier of the system controller for its DVR...

  • Page 74
    ... the income statement. We will adopt both standards in the first quarter of fiscal year 2013. In May 2011, the FASB issued a new accounting standard update, which amends the fair value measurement guidance and includes some enhanced disclosure requirements. The most significant change in disclosures...

  • Page 75

  • Page 76
    ... related to the Company's investments in marketable securities designated as available-forsale: $ $ 402,164 $ 46,610 - 470 449,244 $ 123,631 14,585 - 2,490 140,706 2011 As of January 31, 2012 Adjusted Cost Gross Unrealized Gains (in thousands) Certificate of deposit Commercial paper Corporate debt...

  • Page 77
    74

  • Page 78
    ... Asset-backed securities Auction rate securities Total $ 5,088 2,498 - 7,586 $ 5,088 2,498 2,490 10,076 $ 4. FAIR VALUE Assets and liabilities measured and recorded at fair value on a recurring basis consisted of the following types of instruments as of January 31, 2012 and January 31, 2011: 75

  • Page 79
    ... Unobservable Inputs (Level 3) As of January 31, 2011 Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) (in thousands) Assets: Cash equivalents: Commercial paper Money market funds Short-term investments: Certificate of deposit...

  • Page 80
    ... securities values are based on non-binding broker provided price quotes and may not have been corroborated by observable market data. There were no transfers in and out of Level 1 or 2. TiVo also has a direct investment in a privately-held company accounted for under the cost method, which was...

  • Page 81
    ... of advertising, media, and other services. 6. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following: As of January 31, 2012 (In thousands) Furniture and fixtures Computer and office equipment Lab equipment Leasehold improvements Capitalized internal use software Total...

  • Page 82
    ... warranty period, consumers are offered a no-charge exchange for TiVo-enabled DVRs returned due to product defect, within 90 days from the date of consumer purchase. Thereafter, consumers may exchange a TiVo-enabled DVR with a product defect for a charge. As of January 31, 2012 and January 31, 2011...

  • Page 83
    .... In certain instances, these agreements allow the Company the option to cancel, reschedule, and adjust the Company's requirements based on its business needs prior to firm orders being placed. As of January 31, 2012 the Company had total purchase commitments for inventory of $21.8 million...

  • Page 84
    ... Channels in a Digital Video Distribution System"); and 6,367,078 ("Electronic Program-Guide System with Sideways-Surfing Capability"). On March 15, 2010, Verizon filed an amended answer further alleging infringement of U.S. Patent No. 6,381,748 ("Apparatus And Methods For Network Access Using A Set...

  • Page 85
    ... Parameter for Displaying or Recording"); 6,028,604 ("User Friendly Remote System Interface Providing Previews of Applications"); and 5,758,258 ("Selective Delivery of Programming for Interactive Televideo System"). On March 3, 2011, TiVo filed a motion to stay this litigation in view of the ITC...

  • Page 86
    ... marketing, customer service, and product development activities, under a lease that expires on January 31, 2017. The Company also has operating leases for sales and administrative office space in New York City, New York and Chicago, Illinois. The leases generally provide for base monthly payments...

  • Page 87
    ...grant of options to purchase shares of the Company's common stock to non-employee directors at a price equal to the fair market value of the stock at the date of the grant. Initial options granted to new directors vest monthly over two years from the date of grant. Annual options granted to existing...

  • Page 88
    ... awards, stock payment awards, deferred stock awards, performance bonus wards, and performance-based awards. The 2008 Plan allows the grant of options to purchase shares of the Company's common stock to employees and other individuals at a price equal to the fair market value of the common stock at...

  • Page 89
    ..., and $22.4 million for the twelve months ended January 31, 2012, 2011, and 2010, respectively. The following table summarizes information about options outstanding at January 31, 2012: Options Outstanding Range of Exercise Prices Number of Shares Weighted Average Remaining Contractual Life 3.43...

  • Page 90
    ... of 2.00 years. Performance and Market Based Awards In fiscal year 2012, the Company awarded 225,000 shares of restricted stock to the Company's Chief Executive Officer that would vest over a three-year period. The vesting conditions of 150,750 shares are tied to the subscriptions and annual gross...

  • Page 91
    ... Year Ended January 31, 2012 Cost of service revenues Cost of technology revenues Research and development Sales and marketing General and administrative Change in deferred cost of technology revenues Stock-based compensation before income taxes Income tax benefit Total stock-based compensation...

  • Page 92
    ... during the period Subtotal available-for-sale securities Total comprehensive income (loss) 16. INCOME TAXES Income tax (provision) benefit was $(807,000), $(164,000), and $1.0 million in fiscal years 2012, 2011, and 2010, respectively. The income tax expense in fiscal year 2012 is primarily due to...

  • Page 93
    ... of the Company's deferred tax assets are presented below: Fiscal Year Ended January 31, 2012 Deferred tax assets: Net operating loss carryforwards Research and alternative minimum tax credits Deferred revenue and rent Capitalized research Stock based compensation Other Total deferred tax assets...

  • Page 94
    ..., available to reduce future income subject to income taxes. Of these amounts, approximately $54.9 million represent federal and state tax deductions from stock option compensation. The tax benefit from these deductions will be recorded as an adjustment to additional paid-in capital in the year in...

  • Page 95
    ... share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options, stock awards, and performance stock...

  • Page 96
    ... 31, 2012 Unvested restricted stock Options to purchase common stock Potential shares to be issued from ESPP Total 1,007,735 4,286,876 - 5,294,611 2011 4,649,998 12,667,784 82,543 17,400,325 2010 4,467,429 14,918,906 46,922 19,433,257 18. DISH NETWORK CORPORATION On April 29, 2011, TiVo entered...

  • Page 97
    ... the terms of the Agreement, AT&T has agreed to pay TiVo a minimum amount of $215.0 million plus incremental monthly fees per DVR subscriber if AT&T's subscriber base exceeds certain pre-determined levels. The initial payment of $51.0 million was paid to TiVo on January 4, 2012 with the remaining...

  • Page 98
    ... to monthly minimum payments that escalate during the term of the agreement. Due to uncertainties over the ultimate profit margin on the development work, TiVo recognizes revenues and costs for the development of the TiVo service for DIRECTV's broadband-enabled HD DVR based on a zero profit model...

  • Page 99
    ... of Contents 21. SUBSEQUENT EVENTS On March 14, 2012, James Barton resigned from his position as Chief Technology Officer and Senior Vice President for TiVo Inc. effective March 16, 2012. In connection with Mr. Barton's resignation, the Company has entered into a consulting agreement with him to...

  • Page 100
    ... share and share amounts) Revenues Service revenues Technology revenues Hardware revenues Net revenues Cost of revenues Cost of service revenues Cost of technology revenues Cost of hardware revenues Total cost of revenues Gross margin Operating expenses Research and development Sales and marketing...

  • Page 101
    ... controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act (i) is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer...

  • Page 102
    ... control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal...

  • Page 103
    Table of Contents ITEM 9B. None OTHER INFORMATION 100

  • Page 104
    ... to our code of ethics that applies to the Company's Chief Executive Officer, Chief Financial Officer and any other principal financial officer, Controller and any other principal accounting officer, and any other person performing similar functions, including the nature of the waiver and the name...

  • Page 105
    ... PART IV. ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) List the following documents filed as part of the report: (1) All financial statements: Index to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm 61 Consolidated Balance Sheets 62...

  • Page 106
    ... the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized. TIVO INC. Date: March 23, 2012 /S/ THOMAS S. ROGERS Thomas S. Rogers Chief Executive Officer 103

  • Page 107
    ...-effective amendments) to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform...

  • Page 108
    ... Equity Incentive Plan (cash-settled). Form of Senior Vice President Change of Control Terms and Conditions Agreement. Form of Vice President Change of Control Terms and Conditions Agreement. Amended & Restated Development Agreement, dated as of September 2, 2008, between TiVo Inc. and DIRECTV Inc...

  • Page 109
    ... between Best Buy Purchasing LLC and TiVo Inc., effective October 10, 2005. 10.39+ Master Marketing and Development Agreement, effective as of July 7, 2009, between TiVo Inc. and Best Buy Stores, L.P. (incorporated by reference to Exhibit 10.4 of the registrant's Quarterly Report on Form 10-Q filed...

  • Page 110
    .... Management contract or compensatory plan or arrangement. The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K, are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of TiVo Inc...

  • Page 111
    ... STOCK UNIT AWARD AGREEMENT TiVo Inc., a Delaware corporation (the " Company"), pursuant to its 2008 Equity Incentive Award Plan, as amended from time to time (the " Plan"), hereby grants to the individual listed below (" Participant"), an award to receive the number of cash-settled restricted stock...

  • Page 112

  • Page 113
    ... Restricted Stock Unit Award Agreement (this "Agreement ") is attached, TiVo Inc., a Delaware corporation (the "Company "), has granted to Participant the right to receive the number of Restricted Stock Units ("RSUs ") under the Company's 2008 Equity Incentive Award Plan (the "Plan ") set forth...

  • Page 114

  • Page 115
    ... to receive the number of RSUs set forth in the Grant Notice, subject to all of the terms and conditions set forth in this Agreement, the Grant Notice and the Plan (the "RSU Award"). Each RSU represents the right to receive an amount in cash equal to the Fair Market Value of one share of Stock after...

  • Page 116

  • Page 117
    ... a different address for notices to be given to that party. Notices provided for in Participant's Agreement or the Plan shall be given in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to Participant, five (5) days after deposit...

  • Page 118
    3.7 Governing Law; Severability. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of conflicts of laws.

  • Page 119
    ... terms and conditions of this Agreement with respect to such vesting, timing or distribution provisions. 3.12 Limitations Applicable to Section 16 Persons . Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the...

  • Page 120
    ... of such Acquired MVPD Service who at the time of closing [*]; or (ii) becomes a DVR Subscriber to any AT&T Services within [*] after being a customer of another MVPD Service involved in a Subscriber Acquisition Transaction. 1.2. "Advanced Television Field" means any system, apparatus, method, or...

  • Page 121
    ... any services to customers outside of the United States. 1.8. " AT&T Software" means end user software of AT&T or its Subsidiaries, in object code, executable, or binary form, that is provided directly or indirectly by AT&T or its Subsidiaries to AT&T Subscribers to access video programming provided...

  • Page 122
    ...hard disk drive) and [*] such recording and the play back of recorded content. 1.15. "DVR Subscriber" means any AT&T Subscriber: (i) with a DVR for use with the AT&T Service; or (ii) to whom AT&T otherwise makes available the ability to digitally record video programming provided by the AT&T Service...

  • Page 123
    ... available for purchase, by subscribers or customers, multiple channels of video programming, and any Affiliates of Persons providing such services. 1.26. "MVPD Service " means any satellite television service, any cable television service (including Verizon FiOS TV), any IPTV television service...

  • Page 124
    ... such time as such control exists. 1.35. "Taxes" means all applicable sales, use, withholding, excise, value added, and similar taxes, and duties, surcharges, and other charges levied by any governmental authority in connection with the Fees paid or payable under this Agreement. 1.36. time. 1.37...

  • Page 125
    ... application from which the TiVo Patents-In-Suit issued (collectively, " TiVo Related Patents"). 1.41. " TiVo Licensed Products" means implementations of the Advanced Television Field used or incorporated in products or services that are directly or indirectly sold, leased or otherwise provided...

  • Page 126
    ... (c) customers of TiVo Licensed Products prior to the Effective Date from any and all claims, losses, damages, or liability of any kind and nature, at law, in equity, or otherwise, [*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission...

  • Page 127
    ... if it had occurred after the Effective Date. For such purposes, customers of TiVo Licensed Products include direct and indirect customers of such TiVo Licensed Products, including TiVo Distribution Partners who license and distribute the respective TiVo Licensed Products. For the avoidance of doubt...

  • Page 128
    ...for sale, sell, import, and otherwise dispose of TiVo Licensed Products. The license above extends to TiVo Distribution Partners with respect to the reproduction and distribution of TiVo Licensed Products, and to the use of such TiVo Licensed Products (including [*]) by direct and indirect customers...

  • Page 129
    ... the applicable license set forth in this Section 3; provided, however, that the licenses to AT&T and its Subsidiaries shall be subject to the payment obligations in Section 4, including the obligation to make Additional Payments [*] Certain information on this page has been omitted and filed...

  • Page 130
    ... the applicable Patents (as updated by written notice from time to time). The obligations under this Section 3.6 may be satisfied by fixing on such products the word 'patent' or the abbreviation 'pat.' together with an address of a posting on the Internet, accessible to the public without charge for...

  • Page 131
    ... as the "Installment Payments ". 4.2. Additional Monthly DVR Subscriber Fees. If the number of DVR Subscribers on the last day of any month (or partial month in the case of July 2018) during the Term (each a "Calculation Date") exceeds the Threshold Amount, then AT&T shall pay TiVo an amount for...

  • Page 132
    ... and local taxes based solely on TiVo's net income or gross receipts. All payments under this Agreement will be made by AT&T or its U.S. based designee to TiVo or TiVo's U.S. based [*]Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission...

  • Page 133
    ... federal and state income tax purposes, AT&T and TiVo agree that payments under this Agreement shall constitute royalty income (or expense) for the licensed use of technology. 4.4. Breach of Payment Obligation . If the Initial Payment, any Installment Payment, or any Additional Payment is not made...

  • Page 134
    ... terminated as set forth below. 5.2. Termination. (a) If AT&T breaches any of its payment obligations under this Agreement and does not cure by making such payment in full within [*] after notice of such breach from TiVo (including late charges and expenses under Section 4.4), then TiVo shall have...

  • Page 135
    ... in advertising, packaging or other commercial activities related to its products and services licensed under this Agreement, any reference to another Party (or any of its Subsidiaries), its trade names, trademarks or service marks in a manner which would be likely to cause confusion as to source of...

  • Page 136
    ... Party: (i) the terms and conditions of this Agreement, or (ii) the confidential information of the other Party disclosed pursuant to this Agreement and marked as confidential, which in the case of AT&T will include non-public information in reports provided under Section 4.5 marked as confidential...

  • Page 137
    ... reach at least one of the persons listed below within two (2) business days of sending such notice to speak by telephone to indicate that notice has been provided. The receipt of such notice (in the case of delivery by overnight courier service) or, if the addressee refuses to accept the tender of...

  • Page 138
    ... by AT&T and its Subsidiaries to TiVo and its Subsidiaries under this Agreement will remain in effect notwithstanding such assignment. If and [*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been...

  • Page 139
    ... Change of Control shall remain subject to Section 8 and provided further that, with respect to any proceeding under Chapter 11 of the Bankruptcy Code with respect to AT&T, solely if TiVo has received full payment of the Fee. [*]Certain information on this page has been omitted and filed separately...

  • Page 140
    ... Counsel, AT&T Services Inc. Date: January 3, 2012 TIVO INC. By: /s/ Matthew P. Zinn Name: Matthew P. Zinn Title: Senior Vice President, General Counsel, Secretary and Chief Privacy Officer Date: January 3, 2012 [*] Certain information on this page has been omitted and filed separately with the...

  • Page 141
    ...650) 739-7500 Facsimile : (650) 739-7699 Email: [email protected] Email: [email protected] Attorneys for Plaintiffs AT&T ... for Defendant TiVo Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION AT&T INTELLECTUAL PROPERTY L.L.P. ) Case No. 4:10...

  • Page 142
    ...Inc. ("TiVo"), through their counsel of record, that the complaint filed by AT&T and the counterclaims filed by TiVo shall both be dismissed with prejudice. Each party shall bear its own attorneys' fees and costs. A proposed order is set forth below. IT IS SO STIPULATED. Dated: January __, 2012 By...

  • Page 143
    FILER'S ATTESTATION Pursuant to General Order No. 45, Section X, I attest that concurrence in the filing of this document has been obtained from Kevin Cadwell. Dated: January __, 2012 /s/ Samuel Lu Samuel Lu

  • Page 144
    ...HEREBY ORDERS THAT the complaint filed by AT&T in this action, and all claims set forth therein, and the counterclaims filed by TiVo in this action, shall be dismissed with prejudice. Each party shall bear its own attorneys' fees and costs. Dated: January ___, 2012 Hon. Saundra B. Armstrong United...

  • Page 145
    ... 41 OF THE FEDERAL RULES OF CIVIL PROCEDURE Plaintiff TiVo Inc. ("TiVo"), Defendants AT&T Inc., AT&T Operations, Inc., AT&T Services, Inc., AT&T Video Services, Inc., SBC Internet Services, Inc., and Southwestern Bell Telephone Company (the "AT&T Defendants"), and Intervenor Microsoft Corporation...

  • Page 146
    ... each party to bear its own costs and attorneys' fees. The dismissals set forth in this Stipulation are not intended to, and do not, have any impact on any claims TiVo has or may have against any party other than the AT&T Defendants or with respect to products or services of any party other than the...

  • Page 147
    e. The foregoing dismissals are without prejudice to any claims that TiVo is construed to have asserted, or could have asserted, against Microsoft or any other third party.

  • Page 148
    Text of the proposed order has been lodged concurrently herewith. Dated: January __, 2012 Respectfully submitted, By: Richard Birnholz PARKER, BUNT & AINSWORTH, P.C. Robert M. Parker State Bar No. 15498000 [email protected] Robert Christopher Bunt State Bar No. 00787165 rcbunt@...

  • Page 149
    ... 1800 Avenue of the Stars, Suite 900 Los Angeles, California 90067-4276 Telephone:(310) 277-1010 Facsimile:(310) 203-7199 ATTORNEYS FOR PLAINTIFF TIVO INC. By: /s/ Bryant C. Boren, Jr. Bryant C. Boren, Jr. BAKER BOTTS L.L.P. Bryant C. Boren, Jr. Lead Attorney State of Texas Bar No. 02664100 Kevin...

  • Page 150
    Lance Lee State of Texas Bar No. 24004726 5511 Plaza Drive Texarkana, TX 75503 Telephone: 903.223.0276 [email protected] ATTORNEYS FOR DEFENDANT AT&T INC. By: /s/ Chad S. Campbell Chad S. Campbell GILLAM & SMITH, LLP Harry L. Gillam, ...

  • Page 151
    CERTIFICATE OF SERVICE I hereby certify that the foregoing document was filed electronically on January __, 2012, and pursuant to Local Rule CV-5(a) has been served on all counsel who are deemed to have consented to electronic service. Dated: January __, 2012 /s/ Richard Birnholz Richard Birnholz

  • Page 152
    ... Rules of Civil Procedure and agreements of the parties filed by Plaintiff TiVo Inc. ("TiVo"), Defendants AT&T Inc., AT&T Operations, Inc., AT&T Services, Inc., AT&T Video Services, Inc., SBC Internet Services, Inc., and Southwestern Bell Telephone Company (the "AT&T Defendants"), and Intervenor...

  • Page 153
    ... action are dismissed with prejudice; c. d. e. Microsoft's declaratory judgment claims against TiVo are dismissed without prejudice. TiVo, the AT&T Defendants, and Microsoft shall each bear their own costs and attorney's fees in the Action; and The foregoing dismissals are without prejudice to any...

  • Page 154
    ... available digital video recorder (DVR). TiVo offers the TiVo service and TiVo DVRs directly to consumers online at www.tivo.com and through third-party retailers. TiVo also distributes its technology and services through solutions tailored for cable, satellite, and broadcasting companies...

  • Page 155
    ...in development, competitive service offerings and lack of market acceptance, as well as the other potential factors described under "Risk Factors" in the Company's public reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year...

  • Page 156
    Exhibit C [*] [*] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

  • Page 157
    ... 2012 and 2011, and the related consolidated statements of operations, stockholders' equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended January 31, 2012, and the effectiveness of internal control over financial reporting as of January 31, 2012...

  • Page 158
    ... in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred...

  • Page 159
    ... in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred...

  • Page 160
    ... Act of 2002 In connection with the TiVo Inc. (the "Company") Annual Report on Form 10-K for the year endingJanuary 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas S. Rogers, Chief Executive Officer of the Company, certify pursuant to 18...

  • Page 161
    ...-Oxley Act of 2002 In connection with the TiVo Inc. (the "Company") Annual Report on Form 10-K for the year ending January 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Anna Brunelle, Chief Financial Officer of the Company, certify pursuant to 18...