iRobot 2005 Annual Report Download - page 55

obligations for services. The following table describes our commitments to settle contractual obligations in
cash as of December 31, 2005:
Payments Due by Period
Less Than 1 to 3 3 to 5 More Than
1 Year Years Years 5 Years Total
(In thousands)
Operating leases ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,785 $3,081 $ 192 $ Ì $5,058
Minimum contractual payments ÏÏÏÏÏÏÏÏÏÏ Ì 1,750 1,750 875 4,375
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,785 $4,831 $1,942 $875 $9,433
Off-Balance Sheet Arrangements
As of December 31, 2005, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of
Regulation S-K.
Recently Issued Accounting Pronouncements
In May 2005, the Financial Accounting Standards Board (""FASB'') issued SFAS 154, ""Accounting
Changes and Error Corrections'', which replaces APB 20, ""Accounting Changes'', and SFAS 3, ""Reporting
Accounting Changes in Interim Financial Statements Ì An Amendment of APB Opinion No. 28''.
SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections.
It establishes retrospective application, or the latest practicable date, as the required method for reporting a
change in accounting principle and the reporting of a correction of an error. SFAS 154 is effective for
accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, and is
therefore required to be adopted by us in the first quarter of fiscal 2006. The adoption of SFAS 154 will not
have a material effect on our consolidated results of operations and financial condition.
In December 2004, the FASB issued SFAS No. 123R, which requires the measurement of all share-
based payments to employees, including grants of employee stock options, using a fair-value-based method
and the recording of such expense in our consolidated statement of operations. The accounting provisions of
SFAS No. 123R are effective for fiscal years beginning after June 15, 2005. We have adopted Statement
No. 123R effective January 1, 2006 using the ""modified-prospective method.'' Under this method, awards that
are granted, modified, or settled after the date of adoption are measured and accounted for in accordance with
SFAS No. 123R. Unvested equity-classified awards that were granted prior to the effective date of
SFAS 123R will continue to be accounted for in accordance with SFAS No. 123, except that amounts must
be recognized in the financial statements. We expect to apply the Black-Scholes valuation model in
determining the fair value of share-based payments to employees, which will then be amortized on a straight-
line basis. Based on our preliminary determination we expect that the adoption of SFAS No. 123R will result
in approximately $3.0 million of additional stock compensation expense in fiscal 2006.
In November 2004, the FASB issued SFAS 151, ""Inventory Costs'', an amendment of Accounting
Research Bulletin (""ARB'') 43, Chapter 4, ""Inventory Pricing''. SFAS 151 amends previous guidance
regarding treatment of abnormal amounts of idle facility expense, freight, handling costs, and spoilage. This
statement requires that those items be recognized as current period charges regardless of whether they meet
the criterion of ""so abnormal'' which was the criterion specified in ARB 43. In addition, this Statement
requires that allocation of fixed production overheads to the cost of the production be based on normal
capacity of the production facilities. This pronouncement is effective for us for fiscal periods beginning
January 1, 2006. The adoption of SFAS 151 will not have an effect on our consolidated results of operations
and financial condition.
51