TiVo 2015 Annual Report Download - page 23

Table of Contents
Repayment of debt is dependent on cash flow generated by our subsidiaries and their respective subsidiaries.
Rovi Corporation's subsidiaries, including Rovi Solutions Corporation and Rovi Guides, Inc., own a significant portion of our assets and conduct
substantially all of our operations. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our
ability to obtain cash from our subsidiaries. In the event that we do not receive distributions from our subsidiaries, we may be unable to make required
principal and interest payments on the 2020 Convertible Notes. Accordingly, repayment of our indebtedness depends, to a significant extent, on the
generation of cash flow by the subsidiaries, including Rovi Solutions Corporation and Rovi Guides, Inc., the senior secured position of their bank debt, and
their ability to make cash available to us, by dividend, debt repayment or otherwise. Because they are not guarantors or a co
- issuer of the 2020 Convertible
Notes, our subsidiaries do not have any obligation to pay amounts due on those notes or to make funds available for that purpose. Conversely, the ability
of Rovi Solutions Corporation and Rovi Guides, Inc. to repay their indebtedness under our Term Loan Facility B depends, in part, on the generation of cash
flow by their respective subsidiaries. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us, Rovi Solutions
Corporation or Rovi Guides Inc. to make payments in respect of our indebtedness. Distributions from non
- U.S. subsidiaries may be subject to foreign
withholding taxes and would be subject to U.S. income tax which could reduce the net cash available for principal and interest payments.
Despite our current level of indebtedness, we may incur more indebtedness. This could increase the risks associated with our indebtedness.
We and our subsidiaries may incur additional indebtedness in the future. The terms of our debt do not prohibit us or our subsidiaries from
incurring additional indebtedness. If we incur any additional indebtedness that ranks equally with existing indebtedness, the holders of that indebtedness
will be entitled to share ratably with the holders of our existing debt obligations in any proceeds distributed in connection with any insolvency, liquidation,
reorganization, dissolution or other winding
- up of us. If new indebtedness is added to our current debt levels, the related risks that we and our subsidiaries
now face could intensify.
Changes in, or interpretations of, tax rules and regulations, may adversely affect our effective tax rates.
We are subject to U.S. federal, state and foreign income taxes. Our future effective tax rates could be unfavorably affected by changes in tax rates,
tax laws or the interpretation of tax laws, by changes in the amount of pre - tax income derived from countries with high statutory income tax rates, or by
changes in our deferred tax assets and liabilities, including changes in our ability to realize our deferred tax assets. Our effective income tax rate could be
unfavorably affected by changes in the amount of sales to customers in countries with high withholding tax rates.
In addition, U.S. federal, state, and foreign tax jurisdictions may examine our income tax returns, including income tax returns of acquired
companies and acquired tax attributes included therein. We regularly assess the likelihood of outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes. In making such assessments, we exercise judgment in estimating our provision for income taxes. While we
believe our estimates are reasonable, we cannot assure you that the final determination from these examinations will not be materially different from that
reflected in our historical income tax provisions and accruals. Any adverse outcome from these examinations may have a material adverse effect on our
business and operating results.
We may be subject to market risk and legal liability in connection with data collection.
Many components of our services include interactive components that by their very nature require communication between a client and server to
operate. To provide better consumer experiences and to operate effectively, and for our analytics business and other businesses, we collect certain
information from users. Collection and use of such information may be subject to U.S. federal and state privacy and data collection laws and regulations,
standards used by credit card companies applicable to merchants processing credit card details, and foreign laws such as the European Union's Data
Protection Directive (which may be added to or amended by the proposed General Data Protection Regulation or other regulations in the future). We may
also be subject to third party privacy policies and permissions and obligations we owe to third parties, including, for example, those of pay TV operators.
We post our privacy policies concerning the collection, use and disclosure of user data, including that involved in interactions between client and
server. Any failure by us to comply with privacy policies or contractual obligations, any failure to comply with standards set by credit card companies
relating to privacy or data collection, any failure to conform the privacy policy to changing aspects of our business or applicable law, or any existing or new
legislation regarding privacy issues could impact our data collection efforts and subject us to fines, litigation or other liability.
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