iRobot 2005 Annual Report Download - page 34

‚ acquire complementary businesses or technologies; or
‚ otherwise respond to competitive pressures.
If we raise additional funds through the issuance of equity or convertible debt securities, the percentage
ownership of our stockholders could be significantly diluted, and these newly-issued securities may have
rights, preferences or privileges senior to those of existing stockholders. We cannot assure you that additional
financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, if and when needed, our ability to fund our operations, take advantage of
unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures
would be significantly limited.
Environmental laws and regulations and unforeseen costs could negatively impact our future earnings.
The manufacture and sale of our products in certain states and countries may subject us to environmental
and other regulations. We also face increasing complexity in our product design as we adjust to new and
upcoming requirements relating to our products, including the restrictions on lead and certain other substances
in electronics that will apply to specified electronics products put on the market in the European Union as of
July 1, 2006 (Restriction of Hazardous Substances in Electrical and Electronic Equipment Directive).
Similar laws and regulations have been or may be enacted in other regions, including in the United States,
Canada, Mexico, China and Japan. There is no assurance that such existing laws or future laws will not impair
future earnings or results of operations.
Business disruptions resulting from international uncertainties could negatively impact our profitability.
We derive, and expect to continue to derive, a portion of our revenue from international sales in various
European markets, Canada, Japan, Korea and Singapore. For the fiscal years ended December 31, 2005 and
2004, sales to non-U.S. customers accounted for 9.9% and 7.4% of total revenue, respectively. Our
international revenue and operations are subject to a number of material risks, including, but not limited to:
‚ difficulties in staffing, managing and supporting operations in multiple countries;
‚ difficulties in enforcing agreements and collecting receivables through foreign legal systems and other
relevant legal issues;
‚ fewer legal protections for intellectual property;
‚ foreign and U.S. taxation issues and international trade barriers;
‚ difficulties in obtaining any necessary governmental authorizations for the export of our products to
certain foreign jurisdictions;
‚ potential fluctuations in foreign economies;
‚ Government currency control and restrictions on repatriation of earnings;
‚ Fluctuations in the value of foreign currencies and interest rates;
‚ general economic and political conditions in the markets in which we operate;
‚ domestic and international economic or political changes, hostilities and other disruptions in regions
where we currently operate or may operate in the future; and
‚ different and changing legal and regulatory requirements in the jurisdictions in which we currently
operate or may operate in the future.
Negative developments in any of these areas in one or more countries could result in a reduction in
demand for our products, the cancellation or delay of orders already placed, threats to our intellectual
property, difficulty in collecting receivables, and a higher cost of doing business, any of which could negatively
impact our business, financial condition or results of operations. Moreover, our sales, including sales to
customers outside the United States, are primarily denominated in U.S. dollars, and downward fluctuations in
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