TiVo 2005 Annual Report Download - page 31

Table of Contents
Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial
reporting or credit card security and protection measures.
The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors,
misstatements or misrepresentations. While management continues to review the effectiveness of our disclosure controls and procedures and internal control
over financial reporting, we can not assure you that our disclosure controls and procedures and internal control over financial reporting will be effective in
accomplishing all control objectives all of the time. Deficiencies, particularly a material weakness in internal control over financial reporting, which may
occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise
materially adversely affect our business, reputation, results of operation, financial condition or liquidity.
We will need to become compliant with the Payment Card Industry requirements for security and protection of customer credit card information and an
inability to do so will adversely affect our business. As a merchant who processes credit card payments from its customers, we are required to comply with the
payment card industry requirements imposed on us for the protection and security of our customers' credit card information. If we are unable to successfully
comply with the payment card industry requirements imposed on us as a credit card merchant, our business could be harmed because we could be prevented
in the future from transacting customer subscription payments by means of a credit card.
The current legislative and regulatory environment affecting accounting principles generally accepted in the United States of America is
uncertain and volatile, and significant changes in current principles could affect our financial statements going forward.
The accounting rules and regulations that we must comply with are complex and continually changing. Recent actions and public comments from the
Securities Exchange Commission have focused on the integrity of financial reporting generally. Similarly, the U.S. Congress has considered a variety of bills
that could affect certain accounting principles. The FASB has recently introduced several new or proposed accounting standards or are developing new
proposed standards, such as SFAS No. 123(R), related to accounting for stock options, which would represent a significant change from current industry
practices. In addition, many companies' accounting policies are being subject to heightened scrutiny by regulators and the public. While we believe that our
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, we cannot predict the
impact of future changes to accounting principles or our accounting policies on our financial statements going forward. In addition, were we to change our
critical accounting estimates, including the timing of recognition of revenue from our product lifetime subscriptions, our results of operations could be
significantly impacted.
We need to safeguard the security and privacy of our subscriptions' confidential data, and any inability to do so may harm our reputation and
brand and expose us to legal action.
The DVR collects and stores viewer preferences and other data that many of our customers consider confidential. Any compromise or breach of the
encryption and other security measures that we use to protect this data could harm our reputation and expose us to potential liability. Advances in computer
capabilities, new discoveries in the field of cryptography, or other events or developments could compromise or breach the systems we use to protect our
subscriptions' confidential information. We may be required to make significant expenditures to protect against security breaches or to remedy problems
caused by any breaches.
Uncertainty in the marketplace regarding the use of data from subscriptions could reduce demand for the TiVo service and result in increased
expenses. Consumers may be concerned about the use of viewing information gathered by the TiVo service and the DVR. Currently, we gather anonymous
information about our customers' viewing choices while using the TiVo service, unless a customer affirmatively consents to the collection of personally
identifiable viewing information. This anonymous viewing 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 as a result of litigation costs or increased service delivery costs, or otherwise harm our reputation and business.
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