TiVo 2013 Annual Report Download - page 32

Table of Contents
requirements on our operations and reporting. These requirements impose comprehensive reporting and disclosure requirements, set
stricter independence and financial expertise standards for audit committee members, and impose civil and criminal penalties for companies,
their chief executive officers, chief financial officers, and directors for securities law violations. These requirements 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.
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
Our investments include various money market funds and marketable debt securities, such as corporate debt securities, U.S. Treasury
securities, bank certificates of deposit and commercial paper. Weakened financial markets have at times adversely impacted the general
credit, liquidity, market prices and interest rates for these and other types of debt securities. Additionally, changes in monetary policy by the
Federal Open Market Committee and concerns about the rising U.S. government debt level may cause a decrease in the purchasing power
of the U.S. dollar and adversely affect our investment portfolio. Furthermore, if there is a default or downgrade of U.S. government or agency
debt securities, our investment portfolio may be adversely impacted, requiring impairment charges that could adversely affect our liquidity,
financial position, results of operations, or cash flows. The financial market and monetary risks associated with our investment portfolio may
have a material adverse effect on our financial condition, liquidity, results of operations, or cash flows.

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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 cannot 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 recent patent litigation settlements, 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 as by failing to
continue to qualify for the research and development exemption under the 1940 Act, such noncompliance could have a 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.
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
We engage in various advertising, marketing, and other promotional activities, such as offering gift subscriptions to consumers, which are
subject to state and federal laws and regulations. A constantly evolving network of state and federal laws is increasingly regulating these
promotional activities. Additionally, we enter into subscription service contracts directly with consumers which govern both our provision of
and the consumers' payment for the TiVo service. For example, consumers who activate new monthly subscriptions to the TiVo service may
be required to commit to pay for the TiVo service for a minimum of one year or be subject to an early termination fee if they terminate prior to
the expiration of their commitment period. If the terms of our subscription service contracts with consumers, such as our imposition of an
early termination fee, or our previously offered rebate or gift subscription programs were to violate state or federal laws or regulations, we
could be subject to suit, penalties, and/or negative publicity in which case our business would be harmed.
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
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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 remain
compliant with the payment card industry requirements
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