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Table of Contents
Implementing Playback Features for Compressed Video”); and 6,356,708 (“Method and Apparatus for Implementing Playback Features for Compressed
Video”). Motorola seeks, among other things, damages and a permanent injunction. On April 18, 2011, the Company served its answer to the complaint and
counterclaimed, seeking a declaration that it does not infringe and the patents are invalid. On April 20, 2011, Motorola filed a reply to the Company's
counterclaims. The magistrate judge has currently indicated that trial would likely be scheduled for April 2013. The Company expects to incur material
expenses in connection with this lawsuit, and in the event it were to lose, it could be forced to pay damages for infringement, to license technology from
Motorola, and it could be subject to an injunction preventing it from infringing Motorola's technology or otherwise affecting its business, and in any such
case, the Company's business would be harmed. The Company has determined a potential loss is reasonably possible as it is defined by the Financial
Accounting Standard Board's ASC 450 Contingencies; however, based on its current knowledge, management does not believe that the amount of such
possible loss or a range of potential loss is reasonably estimable.
On October 6, 2011, Digital CBT filed a complaint against TiVo alleging infringement of U.S. Patent No. 5,805,173 ("System and Method for Capturing
and Transferring Selected Portions of a Video Stream in a Computer System"). Digital CBT seeks an injunction and unspecified damages. The Company may
incur material expenses in connection with this litigation and in the event there is an adverse outcome, the Company's business could be harmed. The
Company has determined a potential loss is reasonably possible as it is defined by the Financial Accounting Standard Board's ASC 450 Contingencies;
however, based on its current knowledge, management does not believe that the amount of such possible loss or a range of potential loss is reasonably
estimable.
Facilities Leases
The Company leases its corporate headquarters, located in Alviso, California, comprising a total of 177,254 square feet of office space. The corporate
headquarters houses its administrative, sales and 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 with built-in base rent escalations periodically throughout the lease term. All the Company's property leases are
deemed operating leases.
Rent expense is recognized using the straight-line method over the lease term and for fiscal years ended January 31, 2012, 2011, and 2010 was $2.6
million, $2.2 million, and $2.3 million, respectively. Operating lease cash payments for the fiscal years ended January 31, 2012, 2011, and 2010 were $3.8
million, $3.4 million, and $3.5 million, respectively. Future minimum operating lease payments as of January 31, 2012, are as follows:
Fiscal Year Ending January 31, Lease Payments
(In thousands)
2013 $ 2,678
2014 2,747
2015 2,858
2016 2,762
2017 2,716
Total $ 13,761
10. CONVERTIBLE SENIOR NOTES
On March 10, 2011, the Company issued $150.0 million aggregate principal amount of 4.00% convertible senior subordinated notes due March 15, 2016
for which it received approximately $144.5 million in net proceeds. On March 30, 2011, the Company issued an additional $22.5 million aggregate principal
amount of the convertible senior subordinated notes and received approximately $21.8 million in net proceeds pursuant to the exercise of the initial
purchaser's overallotment option. The effective interest rate of these notes is not materially different than the stated interest rate of 4.00%. These notes have an
initial conversion price of $11.16 per share of TiVo's common stock. The conversion option has no cash settlement provisions. Total issuance costs for the
convertible notes and
83