TiVo 2009 Annual Report Download - page 35

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.
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. For instance, recognizing the significant increase in our investments of cash as a result of our on-going
patent litigation, we have instituted controls to monitor compliance with the Investment Company Act of 1940 ("the 1940 Act"). If we fail to maintain
compliance with the 1940 Act in the future, such noncompliance could have significant adverse impact on our business. 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.
The nature of our business requires the application of complex revenue and expense recognition rules and the current legislative and
regulatory environment affecting U.S. Generally Accepted Accounting Principles (GAAP) 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. 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.
Negative conditions in the global credit markets may impair the liquidity of a portion of our investment portfolio.
As of January 31, 2010, our long-term investments included approximately $5.0 million of investment-grade auction rate securities issued by education
finance companies, on which we have recorded unrealized losses of approximately $888,000 as of January 31, 2010. Our auction rate securities are debt
instruments with a long-term maturity and an interest rate that is reset in short intervals through auctions. The recent conditions in the global credit markets
have prevented us from liquidating our holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of
purchase orders for such securities. If there is insufficient demand for the securities at the time of an auction, the auction may not be completed and the
interest rates may be reset to predetermined higher rates. Although to date, we have not recorded any realized gains or losses on our investment portfolio,
when auctions for these securities fail, the investments may not be readily convertible to cash until a future auction of these investments is successful or they
are redeemed or mature. If the financial health of the security issuers deteriorate and any decline in market value is determined to be other-than-temporary, we
would be required to adjust the carrying value of the investment through an impairment charge.
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