iRobot 2005 Annual Report Download - page 53

$0.2 million, an increase in total liabilities of $7.6 million, a decrease in inventory of $3.8 million, a decrease in
unbilled revenue of approximately $0.4 million and a decrease in other assets of approximately $0.4 million,
which were partially offset by an increase in accounts receivable of $5.1 million. In addition, in fiscal 2004, we
had $1.3 million of depreciation expense and approximately $0.3 million in deferred compensation, both of
which represent non-cash expenses. The cash used by our operating activities in fiscal 2003 was primarily due
to a net loss of $7.4 million, an increase in accounts receivable and unbilled revenue of approximately
$8.0 million, an increase in inventory of $8.8 million and an increase in other assets of approximately
$0.1 million, which were partially offset by an increase in total liabilities of $12.3 million. In addition, in fiscal
2003, we had approximately $0.7 million of depreciation expense, which is a non-cash expense. The increase
in cash flows provided by operating activities in fiscal 2004 as compared to fiscal 2003 was due primarily to the
75.0% growth in revenue from fiscal 2003.
Net cash used in our investing activities was $5.5 million in fiscal 2005, $3.2 million in fiscal 2004, and
$1.3 million in fiscal 2003. Investment activities throughout the period represent the purchase of capital
equipment in support of our growth, including computer equipment, internal use software, furniture and
fixtures, engineering and test equipment, and production tooling. A significant portion of the increase in
investing activities from fiscal 2003 to fiscal 2004 and from fiscal 2004 to fiscal 2005 reflects the purchase of
production tooling in support of the ramp-up of Roomba production and in support of the introduction of the
Scooba floor washing robot, respectively.
Net cash provided by our financing activities was approximately $71.1 million in fiscal 2005, $9.2 million
in fiscal 2004 and $14.3 million in fiscal 2003. Net cash provided by our financing activities in fiscal 2005
consisted primarily of $70.4 million of proceeds from our initial public offering and $0.7 million from the
exercise of common stock options. Net cash provided by our financing activities in fiscal 2004 consisted
primarily of proceeds of $9.9 million from the issuance of a series of convertible preferred stock, approximately
$0.3 million from exercises of common stock options and approximately $0.3 million from the issuance of
restricted stock, offset by $1.3 million for repayment of borrowings under our working capital line of credit.
Net cash provided by our financing activities in fiscal 2003 consisted primarily of proceeds of $12.9 million
from the issuance of a series of convertible preferred stock and $1.3 million of borrowings under our working
capital line of credit.
The majority of our long-lived assets for the years ended December 31, 2005, 2004 and 2003 are located
in the United States. However, we have invested a significant amount in production tooling for the
manufacture of the Roomba and Scooba product lines in China.
Historically, we have incurred significant losses, largely attributable to our investment in internally
funded research and development. Based on our historical product development efforts, we launched our first
commercial products, our Roomba floor vacuuming robot and our PackBot tactical military robot, in fiscal
2002. Since fiscal 2002, our revenue has significantly increased, our investment in internally-funded research
and development has declined as a percentage of revenue, and we achieved profitability in both fiscal 2004 and
fiscal 2005. We have not invested significantly in property, plant and equipment, primarily as a result of our
outsourced approach to manufacturing that provides significant flexibility in both managing inventory levels
and financing our inventory. Our consumer revenue has been highly seasonal. This seasonality tends to result
in the net use of cash during the first half of the year and significant generation of cash in the second half of
the year. Given the recent success of our products and resulting growth in revenue, we believe that existing
cash, cash equivalents, cash provided by operating activities and funds available through our bank line of credit
will be sufficient to meet our working capital and capital expenditure needs for the foreseeable future.
Working Capital Facility
On May 26, 2005, we obtained a working capital line of credit with a bank under which we can borrow up
to $20.0 million, including a $2.0 million sub-limit for equipment financing. Interest accrues at a variable rate
based on prime or published LIBOR rates. The line expires on May 26, 2007 at which time all advances will
be immediately due and payable. As of December 31, 2005, we had no amounts outstanding and $20.0 million
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