TiVo 2006 Annual Report Download - page 31

Table of Contents
Our corporate headquarters is located in Alviso, California which is where the overwhelming majority of our employees work. Our primary servers are
located nearby in San Jose, California. Alviso and San Jose lay near the San Andreas Fault, a major source of earthquake activity in California. In the event of
an earthquake or similar natural disaster, our ability to continue operations could be adversely affected and our business could be harmed.
Legislation, laws or regulations relating to environmental issues, employment matters, and unclaimed property may adversely impact our
business in the future.
It is possible that future proposed environmental regulations on consumer electronic devices, such as DVRs and set-top boxes, may regulate and
increase the production, manufacture, use, and disposal costs incurred by us and our customers. For example future energy regulations could potentially make
it more costly for us to design, manufacture, and sell our DVRs to our customers thus harming the growth of our business.
Additionally, as our business grows and we expand our employed and contracted work force, employment laws and regulations will have an increasing
impact on our ability to manage and grow our work-force. Regulations and laws relating to the status of contractors, classification and related benefits for
exempt and non-exempt employees all may adversely impact our business if we are unable to properly manage and comply with federal, state, and local laws.
Furthermore, as part of our regular business activities now, and in the past, we engage in the issuance of gift subscriptions and the marketing of rebate
offers related to the sale of our products and services. It is possible that money received by us for the sale of gift subscriptions or related to our past rebates
offers could be subject to state and federal escheat, or unclaimed property, laws in the future. If this were the case, our business could be adversely impacted.
If we fail to comply with the laws and regulations relating to the collection of sales tax and payment of income taxes in the various States in
which we do business, we could be exposed to unexpected costs, expenses, penalties, and fees as a result of our noncompliance in which case our
business could be harmed.
As our business grows and expands, we have 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 generated from activities in those States. The laws and regulations governing the collection of sales tax and payment of
income taxes are numerous, complex, and vary between States. If we fail to comply with these laws and regulations requiring the collection of sales tax and
payment of income taxes in one or more States where we do business, we could be subject to significant costs, expenses, penalties, and fees in which case our
business could be harmed.
Recently enacted and proposed changes in securities laws and regulations has increased and will continue to increase our costs and may affect
our ability to be in compliance with such new corporate governance provisions in the future.
The existing federal securities laws and regulations impose complex and continually changing regulatory requirements on our operations and reporting.
With the enactment of the Sarbanes-Oxley Act of 2002 in July 2002, a significant number of new corporate governance requirements have been adopted.
These requirements impose comprehensive reporting and disclosure requirements, set stricter independence and financial expertise standards for audit
committee members, and impose increased civil and criminal penalties for companies, their chief executive officers, chief financial officers and directors for
securities law violations. These developments have increased and will continue to increase our legal compliance costs, increase the difficulty and expense in
obtaining director and officer liability insurance, and make it harder for us to attract and retain qualified members of our board of directors and/or qualified
executive officers. Such developments could harm our results of operations and divert management's attention from business operations.
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, the delisting
of our common stock from the Nasdaq Global Market, or otherwise materially adversely affect our business, reputation, results of operation, financial
condition or liquidity.
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