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TiVo 8-K 2010

Documents found in this filing:

  1. 8-K
  2. 8-K
Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 8, 2010

 

 

TIVO INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   000-27141   77-0463167

(State or other jurisdiction

of incorporation)

  (Commission File Number)  

(IRS Employer

Identification No.)

 

2160 Gold Street,

Alviso, California

  95002
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (408)519-9100

 

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


ITEM 8.01 OTHER EVENTS.

On March 8, 2010, we announced financial results for our fourth quarter and fiscal year ended January 31, 2010. Net service revenues were $38.4 million in the fourth quarter of fiscal year 2010, a decrease from the $44.1 million in the same prior year period. Net technology revenues increased to $6.8 million in the fourth quarter ended January 31, 2010 from $4.4 million in the fourth quarter ended January 31, 2009. Included in the fourth quarter ended January 31, 2010, was recognition of Comcast development revenues of $2.9 million. The net loss for the quarter was ($10.2) million or ($0.09) per basic and diluted share, compared to a net loss of ($3.6) million or ($0.04) per basic share and diluted share, for the quarter ended January 31, 2009. We ended this quarter with approximately $245 million in cash and short term investments, compared to approximately $207 million in cash and short term investments in the same prior year period. Additionally, we continue to have no debt.

As of January 31, 2010 our total subscriptions were approximately 2.6 million. TiVo-Owned subscription gross additions were 46,000 for the quarter, compared to 59,000 in the fourth quarter fiscal year 2009. TiVo-Owned net subscription losses were 72,000 in the quarter ended January 31, 2010 as compared to 4,000 in the quarter ended January 31, 2009. Our monthly churn rate was 2.6% for the quarter ended January 31, 2010 and TiVo-Owned subscriptions were approximately 1.5 million compared to 1.7 million a year ago. The installed base of MSO/Broadcasters’ TiVo subscriptions was approximately 1.1 million compared to approximately 1.7 million a year ago.

TIVO INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share and share amounts)

(unaudited)

 

     Three Months Ended January 31,     Twelve Months Ended January 31,  
     2010     2009     2010     2009  

Revenues

        

Service revenues

   $ 38,442      $ 44,115      $ 159,772      $ 188,408   

Technology revenues

     6,821        4,353        29,907        20,126   

Hardware revenues

     23,190        10,712        47,907        41,133   
                                

Net revenues

     68,453        59,180        237,586        249,667   

Cost of revenues

        

Cost of service revenues (1)

     10,876        11,180        40,878        44,603   

Cost of technology revenues (1)

     4,434        2,740        20,703        12,300   

Cost of hardware revenues

     27,962        15,764        65,909        57,742   
                                

Total cost of revenues

     43,272        29,684        127,490        114,645   
                                

Gross margin

     25,181        29,496        110,096        135,022   
                                

Research and development (1)

     18,245        15,459        63,039        62,083   

Sales and marketing (1)

     6,385        6,517        23,270        24,944   

Sales and marketing, subscription acquisition costs

     2,022        1,690        5,048        6,038   

General and administrative (1)

     10,167        11,382        44,801        42,931   

Litigation proceeds

     —          —          —          (87,811
                                

Total operating expenses

     36,819        35,048        136,158        48,185   
                                

Income (loss) from operations

     (11,638     (5,552     (26,062     86,837   

Interest income, includes $16,789 related to litigation proceeds in the twelve months ended January 31, 2009

     426        423        1,039        18,636   

Interest expense and other

     (4     (278     83        (553
                                

Income (loss) before income taxes

     (11,216     (5,407     (24,940     104,920   

Benefit (provision) for income taxes

     1,035        1,840        1,024        (1,328
                                

Net income (loss)

   $ (10,181   $ (3,567   $ (23,916   $ 103,592   
                                

Net income (loss) per common share - basic

   $ (0.09   $ (0.04   $ (0.23   $ 1.03   
                                

Net income (loss) per common share - diluted

   $ (0.09   $ (0.04   $ (0.23   $ 1.01   
                                

Weighted average common shares used to calculate basic net income (loss) per share

     108,712,620        101,303,123        106,182,488        100,389,980   
                                

Weighted average common shares used to calculate diluted net income (loss) per share

     108,712,620        101,303,123        106,182,488        102,595,607   
                                

 

        

(1)    Includes stock-based compensation expense as follows :

       

Cost of service revenues

   $ 266      $ 229      $ 1,098      $ 903   

Cost of technology revenues

     512        477        2,319        2,071   

Research and development

     2,152        2,235        8,604        8,805   

Sales and marketing

     668        557        2,567        2,089   

General and administrative

     2,553        2,501        10,766        9,552   

 

2


TIVO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share and share amounts)

(unaudited)

 

     January 31,
2010
    January 31,
2009
 

ASSETS

    

CURRENT ASSETS

    

Cash and cash equivalents

   $ 70,891      $ 162,337   

Short-term investments

     173,691        44,991   

Accounts receivable, net of allowance for doubtful accounts of $409 and $770

     16,996        14,283   

Inventories

     12,110        13,027   

Prepaid expenses and other, current

     7,287        4,896   
                

Total current assets

     280,975        239,534   

LONG-TERM ASSETS

    

Property and equipment, net

     10,098        10,285   

Purchased technology, capitalized software, and intangible assets, net

     9,565        10,597   

Prepaid expenses and other, long-term

     1,263        1,268   

Long-term investments

     7,512        3,944   
                

Total long-term assets

     28,438        26,094   
                

Total assets

   $ 309,413      $ 265,628   
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

LIABILITIES

    

CURRENT LIABILITIES

    

Accounts payable

   $ 20,712      $ 9,844   

Accrued liabilities

     24,786        25,054   

Deferred revenue, current

     38,952        47,560   
                

Total current liabilities

     84,450        82,458   

LONG-TERM LIABILITIES

    

Deferred revenue, long-term

     28,990        28,557   

Other long-term liabilities

     231        126   
                

Total long-term liabilities

     29,221        28,683   
                

Total liabilities

     113,671        111,141   

COMMITMENTS AND CONTINGENCIES

    

STOCKHOLDERS’ EQUITY

    

Preferred stock, par value $0.001:

    

Authorized shares are 10,000,000;

    

Issued and outstanding shares - none

     —          —     

Common stock, par value $0.001:

    

Authorized shares are 275,000,000;

    

Issued shares are 110,434,022 and 103,604,015, respectively and outstanding shares are 109,869,062 and 103,370,523, respectively

     110        104   

Additional paid-in capital

     896,695        829,273   

Accumulated deficit

     (696,112     (672,196

Treasury stock, at cost - 564,960 shares and 233,492 shares, respectively

     (4,325     (1,659

Accumulated other comprehensive loss

     (626     (1,035
                

Total stockholders’ equity

     195,742        154,487   
                

Total liabilities and stockholders’ equity

   $ 309,413      $ 265,628   
                

 

3


TIVO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

     Twelve Months Ended January 31,  
     2010     2009  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net income(loss)

   $ (23,916   $ 103,592   

Adjustments to reconcile net income(loss) to net cash provided by(used in) operating activities:

    

Depreciation and amortization of property and equipment and intangibles

     9,160        9,783   

Stock-based compensation expense

     25,354        23,420   

Inventory write-down

     —          —     

Utilization of trade credits

     90        638   

Allowance for doubtful accounts

     (7     471   

Changes in assets and liabilities:

    

Accounts receivable

     (2,706     5,265   

Inventories

     917        4,721   

Prepaid expenses and other

     (2,476     (1,497

Accounts payable

     10,282        (14,623

Accrued liabilities

     (220     (4,530

Deferred revenue

     (8,175     (21,352

Deferred rent and other long-term liabilities

     105        (183
                

Net cash provided by operating activities

   $ 8,408      $ 105,705   
                

CASH FLOWS FROM INVESTING ACTIVITIES

    

Purchases of short-term investments

     (309,370     (49,976

Sales or maturities of short-term investments

     180,911        20,300   

Purchase of long-term investment

     (3,400     —     

Acquisition of property and equipment

     (5,324     (4,549

Acquisition of capitalized software and intangibles

     (2,031     (319
                

Net cash used in investing activities

   $ (139,214   $ (34,544
                

CASH FLOWS FROM FINANCING ACTIVITIES

    

Proceeds from issuance of common stock related to exercise of common stock options

     37,958        9,240   

Proceeds from issuance of common stock related to employee stock purchase plan

     4,116        3,963   

Treasury Stock - repurchase of stock for tax withholding

     (2,666     (813

Payment under capital lease obligation

     (48     (26
                

Net cash provided by financing activities

   $ 39,360      $ 12,364   
                

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

   $ (91,446   $ 83,525   
                

CASH AND CASH EQUIVALENTS:

    

Balance at beginning of period

     162,337        78,812   
                

Balance at end of period

   $ 70,891      $ 162,337   
                

 

4


TIVO INC.

OTHER DATA

Subscriptions

 

     Three Months Ended January 31,     Twelve Months Ended January 31,  

(Subscriptions in thousands)

   2010     2009     2010     2009  

TiVo-Owned Subscription Gross Additions

   46      59      148      187   

Subscription Net Additions/(Losses):

        

TiVo-Owned

   (72   (4   (189   (91

MSOs/Broadcasters

   (59   (121   (541   (520
                        

Total Subscription Net Additions/(Losses)

   (131   (125   (730   (611

Cumulative Subscriptions:

        

TiVo-Owned

   1,465      1,654      1,465      1,654   

MSOs/Broadcasters

   1,140      1,681      1,140      1,681   
                        

Total Cumulative Subscriptions

   2,605      3,335      2,605      3,335   

% of TiVo-Owned Cumulative Subscriptions paying recurring fees

   58   59   58   59

Included in the 1,465,000 TiVo-Owned subscriptions are approximately 279,000 lifetime subscriptions that have reached the end of the period TiVo uses to recognize lifetime subscription revenue. These lifetime subscriptions no longer generate subscription revenue.

Subscriptions. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our relative position in the marketplace and to forecast future potential service revenues. The TiVo-Owned lines refer to subscriptions sold directly or indirectly by TiVo to consumers who have TiVo-enabled DVRs and for which TiVo incurs acquisition costs. The MSOs/Broadcasters lines refer to subscriptions sold to consumers by MSOs/Broadcasters such as DIRECTV, Cablevision Mexico, Seven (Australia), and Comcast for which TiVo expects to incur little or no acquisition costs. Additionally, we provide a breakdown of the percent of TiVo-Owned subscriptions for which consumers pay recurring fees, including on a monthly and a prepaid one, two, or three year basis, as opposed to a one-time prepaid product lifetime fee.

We define a “subscription” as a contract referencing a TiVo-enabled DVR for which (i) a consumer has committed to pay for the TiVo service and (ii) service is 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 period. Product lifetime subscriptions past this period which have not called into the TiVo service for six months are not counted in this total. Effective November 1, 2008, we extended the period we use to recognize product lifetime subscription revenues from 54 months to 60 months for all product lifetime subscriptions acquired on or before October 31, 2007. We now amortize all product lifetime subscriptions over a 60 month period. We are not aware of any uniform standards for defining subscriptions and caution that our presentation may not be consistent with that of other companies. Additionally, the subscription fees that some of our MSOs/Broadcasters 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 purposes.

TIVO INC.

OTHER DATA - KEY BUSINESS METRICS

 

     Three Months Ended January 31,     Twelve Months Ended January 31,  

TiVo-Owned Churn Rate

   2010     2009     2010     2009  
     (In thousands, except churn rate per month)  

Average TiVo-Owned subscriptions

   1,506      1,656      1,577      1,695   

TiVo-Owned subscription cancellations

   (118   (63   (337   (278
                        

TiVo-Owned Churn Rate per month

   -2.6   -1.3   -1.8   -1.4
                        

 

5


TiVo-Owned Churn Rate per Month. Management reviews this metric, and believes it may be useful to investors, in order to evaluate our ability to retain existing TiVo-Owned subscriptions (including both monthly and product lifetime subscriptions) by providing services that are competitive in the market. Management believes factors such as service enhancements, service commitments, higher customer satisfaction, and improved customer support may improve this metric. Conversely, management believes factors such as increased competition, lack of competitive service features such as high definition television recording capabilities in our lowest cost product offerings, current economic conditions, and increased price sensitivity may cause our TiVo-Owned Churn Rate per month to increase.

We define the TiVo-Owned Churn Rate per month as the total TiVo-Owned subscription cancellations in the period divided by the Average TiVo-Owned subscriptions for the period (including both monthly and product lifetime subscriptions), which then is divided by the number of months in the period. We calculate Average TiVo-Owned subscriptions for the period by adding the average TiVo-Owned subscriptions for each month and dividing by the number of months in the period. We calculate the average TiVo-Owned subscriptions for each month by adding the beginning and ending subscriptions for the month and dividing by two. We are not aware of any uniform standards for calculating churn and caution that our presentation may not be consistent with that of other companies.

 

     Three Months Ended January 31,     Twelve Months Ended January 31,  
     2010     2009     2010     2009  

Subscription Acquisition Costs

   (In thousands, except SAC)  

Sales and marketing, subscription acquisition costs

   $ 2,022      $ 1,690      $ 5,048        6,038   

Hardware revenues

     (23,190     (10,712     (47,907     (41,133

Less: MSOs/Broadcasters-related hardware revenues

     12,818        362        14,497        9,333   

Cost of hardware revenues

     27,962        15,764        65,909        57,742   

Less: MSOs/Broadcasters-related cost of hardware revenues

     (12,064     (385     (13,706     (8,590
                                

Total Acquisition Costs

     7,548        6,719        23,841        23,390   
                                

TiVo-Owned Subscription Gross Additions

     46        59        148        187   

Subscription Acquisition Costs (SAC)

   $ 164      $ 114      $ 161      $ 125   
                                

Subscription Acquisition Cost or SAC. Management reviews this metric, and believes it may be useful to investors, in order to evaluate trends in the efficiency of our marketing programs and subscription acquisition strategies. We define SAC as our total TiVo-Owned acquisition costs for a given period divided by TiVo-Owned subscription gross additions for the same period. We define total acquisition costs as sales and marketing, subscription acquisition costs less net TiVo-Owned related hardware revenues (defined as TiVo-Owned related gross hardware revenues less rebates, revenue share and market development funds paid to retailers) plus TiVo-Owned related cost of hardware revenues. The sales and marketing, subscription acquisition costs line item includes advertising expenses and promotion-related expenses directly related to subscription acquisition activities, but does not include expenses related to advertising sales. We do not include third parties subscription gross additions, such as MSOs/Broadcasters’ gross additions with TiVo subscriptions, in our calculation of SAC because we typically incur limited or no acquisition costs for these new subscriptions, and so we also do not include MSOs/Broadcasters’ sales and marketing, subscription acquisition costs, hardware revenues, or cost of hardware revenues in our calculation of TiVo-Owned SAC. We are not aware of any uniform standards for calculating total acquisition costs or SAC and caution that our presentation may not be consistent with that of other companies.

 

6


     Three Months Ended January 31,     Twelve Months Ended January 31,  

TiVo-Owned Average Revenue per Subscription

   2010     2009     2010     2009  
     (In thousands, except ARPU)  

Total Service revenues

   $ 38,442      $ 44,115      $ 159,772      $ 188,408   

Less: MSOs/Broadcasters-related service revenues

     (4,190     (5,137     (14,932     (22,412
                                

TiVo-Owned-related service revenues

     34,252        38,978        144,840        165,996   

Average TiVo-Owned revenues per month

     11,417        12,993        12,070        13,833   

Average TiVo-Owned per month subscriptions

     1,506        1,656        1,577        1,695   
                                

TiVo-Owned ARPU per month

   $ 7.58      $ 7.85      $ 7.65      $ 8.16   
                                
     Three Months Ended January 31,     Twelve Months Ended January 31,  

MSOs/Broadcasters Average Revenue per Subscription

   2010     2009     2010     2009  
     (In thousands, except ARPU)  

Total Service revenues

   $ 38,442      $ 44,115      $ 159,772      $ 188,408   

Less: TiVo-Owned-related service revenues

     (34,252     (38,978     (144,840     (165,996
                                

MSOs/Broadcasters-related service revenues

     4,190        5,137        14,932        22,412   

Average MSOs/Broadcasters revenues per month

     1,397        1,712        1,244        1,868   

Average MSOs/Broadcasters per month subscriptions

     1,165        1,743        1,422        1,939   
                                

MSOs/Broadcasters ARPU per month

   $ 1.20      $ 0.98      $ 0.88      $ 0.96   
                                

Average Revenue Per Subscription or ARPU. Management reviews this metric, and believes it may be useful to investors, in order to evaluate the potential of our subscription base to generate revenues from a variety of sources, including subscription fees, advertising, and audience research measurement. ARPU does not include rebates, revenue share, and other payments to channel that reduce our GAAP revenues. As a result, you should not use ARPU as a substitute for measures of financial performance calculated in accordance with GAAP. Management believes it is useful to consider this metric excluding the costs associated with rebates, revenue share, and other payments to channel because of the discretionary and varying nature of these expenses and because management believes these expenses, which are included in hardware revenues, net, are more appropriately monitored as part of SAC. We are not aware of any uniform standards for calculating ARPU and caution that our presentation may not be consistent with that of other companies.

We calculate ARPU per month for TiVo-Owned subscriptions by subtracting MSOs/Broadcaster-related service revenues (which includes MSOs/Broadcasters’ subscription service revenues and MSOs/Broadcasters’-related advertising revenues) from our total reported net service revenues and dividing the result by the number of months in the period. We then divide by Average TiVo-Owned subscriptions for the period, calculated as described above for churn rate. The above table shows this calculation.

We calculate ARPU per month for MSOs/Broadcasters’ 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 reported service revenues. Then we divide average revenues per month for MSOs/Broadcasters’-related service revenues by the average MSOs/Broadcasters’ subscriptions for the period.

 

7


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      TIVO INC.
Date: March 8, 2010     By:  

/s/    ANNA BRUNELLE        

        Anna Brunelle
        Chief Financial Officer
        (Principal Financial and Accounting Officer)

 

8

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