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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
Amendment No. 1
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
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Exchange Act of 1934. For the quarterly period ended September 30, 2000.
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934. For the transition period from ____________________ to ________________
Commission file number 000-27141
TIVO INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 77-0463167
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
2160 Gold Street, PO Box 2160, Alviso, CA 95002
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(Address of principal executive offices) (Zip Code)
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(408) 519-9100
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(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
The number of outstanding shares of the registrant's Common Stock, $0.001 par
value, was 43,408,910 as of November 8, 2000.
EXPLANATORY NOTE
This Amendment No. 1 to the Quarterly Report on Form 10 Q for TiVo Inc. (the
"Company") for the quarter ended September 30, 2000 as filed with the Securities
and Exchange Commission on November 14, 2000 is being filed to provide
additional disclosure by replacing the first two paragraphs of Part I "Financial
Information" in Item 2 "Management's Discussion and Analysis of Financial
Condition and Result of Operations" with the following:
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The discussion in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains trend analysis and other forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements include, without limitation,
statements containing the words "believes," "anticipates," "expects," and words
of similar import. Such forward-looking statements will have known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Actual results could
differ materially from those set forth in such forward-looking statements as a
result of the "Factors That May Affect Future Operating Results" and other risks
detailed in the Company's reports filed with the Securities and Exchange
Commission.
During the three months ended September 30, 2000, the Company made several key
announcements:
. TiVo announced a partnership with ASI Entertainment and Nielsen Media
Research to join forces in a project that will create a national TV
sample through the National In-Home TV Lab, designed to forecast the
future impact of personal television on television programming and
advertising.
. TiVo announced a partnership with Comcast Cable to jointly deliver
personal video recorders with the TiVo Service.
. TiVo announced the launch of TiVo Service in the United Kingdom in
cooperation with British Sky Broadcast. Consumer electronic
manufacturer, Thomson, will manufacture the TiVo Recorder under the
Thomson SCENIUM brand. The TiVo Recorder became available in October
2000 at Dixons, Curry's and selected electrical retailers. In an
effort to support this partnership, TiVo has established a presence in
the United Kingdom by both incorporating TiVo (UK) Ltd. and
establishing an office in Middlesex, UK. Additionally, the BBC signed
an agreement as a network partner to showcase its content on the TiVo
Personal Television Service in the UK.
. TiVo introduced "TiVo Direct", an innovative, new marketing and
merchandising product. This new content product is comprised of 30
minutes of video advertising and marketing programming pre-loaded into
the hard drive before a TiVo enabled unit is shipped from the
factory." This content is produced by an advertiser. It may include
advertisements for purchase of advertiser merchandise or other goods
and services selected by the advertiser. The content resides on the
hard drive until the consumer deletes it. TiVo will receive a
percentage revenue share of specified products sold through this
medium. As of December 31, 2000 TiVo has recognized no revenue for
TiVo Direct.
. On September 13, 2000, TiVo closed the Investment Agreement with AOL,
pursuant to which AOL paid TiVo $200 million. Under the terms of the
Investment Agreement between AOL and TiVo, dated June 6, 2000, as
amended by the First Amendment to the Investment Agreement dated
September 11, 2000, TiVo issued 2,711,861 shares of redeemable
convertible preferred stock at $30.00 per share, 806,889 shares of
redeemable common stock at $23.11 per share, 4,327,833 shares of
common stock at $23.11 per share, two initial warrants to purchase an
aggregate of 2,603,903 shares of TiVo's common stock and two
performance warrants to purchase an aggregate of up to5,207,806 shares
of common stock. The two performance warrants are contingent upon
future performance. The AOL investment is part of a three-year
strategic Production Integration and Marketing Agreement between AOL
and TiVo, in which TiVo became an AOL TV programming partner, offering
AOL TV subscribers access to features of TiVo's Personal TV Service.
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Restricted Cash
Under the terms of the Investment Agreement, TiVo deposited $91.5
million of the proceeds received from the AOL investment and the associated
interest income earned of $258,000 in an escrow account as restricted cash. In
accordance with the Commercial Agreement, $91.5 million of the restricted cash
is intended to be used as subsidy payments to manufacturer(s). However, the
restricted cash would be used in the event AOL exercises its put option to
repurchase Series A redeemable convertible preferred stock and redeemable common
stock. The terms of the put option are described below.
Series A Redeemable Convertible Preferred Stock
In September 2000, TiVo issued 2,711,861 shares of Series A redeemable
convertible preferred stock at $30.00 per share to AOL in exchange for $81.4
million, before issuance costs of $2.2 million. Each share of the Series A
redeemable convertible preferred stock is initially convertible into one share
of common stock, subject to adjustment for stock splits, dividends,
combinations, reclassifications or similar transactions, as provided in TiVo's
Amended and Restated Certificate of Incorporation. The Series A redeemable
convertible preferred stock is convertible upon AOL's option or is mandatorily
convertible if the price of TiVo's common stock exceeds $30.00 per share for any
30 consecutive trading day period. The Series A redeemable convertible preferred
stock was issued with a put option that under certain conditions will require
TiVo to repurchase the number of preferred shares having an initial liquidation
value of $91.5 million. If the set-top box launch of the Integrated Product has
not occurred by December 31, 2001 and AOL has not committed a material breach of
the Commercial Agreement or TiVo breaches its obligations with respect to the
financial covenants, then AOL shall have a put option exercisable for a period
of ninety days. In the event that the set-top box launch occurs after the
planned launch date, but prior to the exercise of the put option, the put option
shall immediately expire.
Series A Redeemable Convertible Preferred Stock Dividend
Under the terms of the Investment Agreement between AOL and TiVo, TiVo
issued Series A redeemable convertible preferred stock, with dividend and voting
rights. Dividends on the Series A redeemable convertible preferred stock are
calculated by multiplying the Non-Government Institutional Funds Simple Average
Rate by $30.00 per shares times the number of shares of Series A redeemable
convertible preferred stock outstanding. Dividends are payable quarterly as
declared by TiVo's Board of Directors.
Redeemable Common Stock
In September 2000, TiVo issued 806,889 shares of redeemable common
stock at $23.11 per share to AOL in exchange for $18.6 million, before issuance
costs of $514,000. The redeemable common stock is common stock that was issued
with a put option. The terms of the put option are the same as described above.
Common Stock
In September 2000, TiVo issued 4,327,833 shares of common stock at
$23.11 per share to AOL in exchange for $100.0 million, before issuance costs of
$3.8 million.
Initial Common Stock Warrants A and B
In conjunction with AOL's investment, TiVo issued two initial warrants
to AOL to purchase common stock. The initial warrants are vested immediately and
exercisable as follows:
. Initial Warrant A - AOL was issued warrants to purchase 2,308,475
shares of common stock at $23.11 per share. TiVo will expense the
estimated fair value of the warrants of $13.5 million over 3 years,
the term of the Commercial Agreement. The estimated fair value of the
warrants was determined using the Black-Scholes option pricing model.
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The principal assumptions used in the computation are: 16-month term;
fair market value at the date of issuance of $20.00 per share; a risk-
free rate of return of 6.05%; dividend yield of zero percent; and a
volatility of 70%.
. Initial Warrant B - AOL was issued warrants to purchase 295,428 shares
of common stock at $30.00 per share. TiVo will expense the estimated
fair value of the warrants of $2.5 million over 3 years, the term of
the Commercial Agreement. The estimated fair value of the warrants was
determined using the Black-Scholes option pricing model. The principal
assumptions used in the computation are: 40-month term; fair market
value at the date of issuance of $20.00 per share; a risk-free rate of
return of 6.05%; dividend yield of zero percent; and a volatility of
70%.
The expiration of Initial Warrant A is December 31, 2001 and Initial
Warrant B expires December 31, 2003. The estimated value of the warrants of
$16.0 million was recorded as prepaid marketing expense (contra-equity) when
issued.
Performance Warrants
Under the terms of the Investment Agreement two performance warrants
were issued. If AOL meets certain performance criteria, they may exercise these
two performance warrants to purchase up to an aggregate of 5,207,806 shares of
common stock at an exercise price per share which is a function of the market
price of the common stock. The first warrant is contingent and exercisable upon
a written binding commitment for the set-top box launch during the term of the
Commercial Agreement. The second performance warrant is contingent and
exercisable upon notification that there are 1.5 million activated users of the
Integrated Service existing at one time, excluding users of the Integrated
Service for whom the Integrated Service is enabled by hardware and equipment
developed to receive the DIRECTV service. These warrants are exercisable for a
six month period following the time they become exercisable. Additionally, these
warrants shall also become exercisable immediately upon the occurrence of either
a material breach of the Commercial Agreement by TiVo or TiVo enters into a
definitive agreement for a change of control. The performance warrants expire on
the earlier of September 11, 2003 or in the event that AOL commits a material
breach of the Commercial Agreement.
AOL Advertising Insertion Order
Under the terms of the Investment Agreement, TiVo has agreed to pay
$12.0 million to AOL for advertising media under the AOL Advertising Insertion
Order. On the closing date of the Investment Agreement, $8.5 million of this
amount was paid to AOL. TiVo has recorded this payment as prepaid marketing
expense (contra equity). As of September 30, 2000 we have incurred $1.0 million
of advertising expense. The balance of $3.5 million has not been incurred and is
not due as of September 30, 2000.
Financial Convenants
Under the terms of the Investment Agreement, TiVo must maintain a
positive net cash position in excess of $25.0 million at the end of each fiscal
quarter. Net cash is defined as consolidated current assets (excluding deferred
tax assets and escrowed funds) minus consolidated current liabilities (excluding
deferred revenue, deferred interest income on escrowed funds, sublessee prepaid
rent and leasing obligations). TiVo will, on an informational basis, advise AOL
monthly of TiVo's net cash position. The financial covenants shall terminate
from the earlier of the date of the set-top box launch, (so long as the such
set-top box launch occurs before the planned launch date), the expiration of the
put option or the day following the first anniversary of the planned launch
date.
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Signatures
Pursuant to 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, thereunto duly authorized.
TIVO INC.
Date: January 12, 2001 By: /s/ Michael Ramsay
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Michael Ramsay
Chief Executive Officer and Chairman of the
Board of Directors
(Principal Executive Officer)
Date: January 12, 2001 By: /s/ David H. Courtney
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David H. Courtney
Chief Financial Officer and Sr. Vice President
of Finance and Administration (Principal
Financial and Accounting Officer)
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