iRobot 2011 Annual Report Download - page 68

Form 10-K
• the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in
connection with contract negotiations;
• the Cost Accounting Standards, which impose accounting requirements that govern our right to
reimbursement under cost-based government contracts;
• the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a
foreign official to help obtain, retain or direct business, or obtain any unfair advantage;
• the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments
made on the basis of false facts provided to the government, and impose penalties on the basis of false
statements, even if they do not result in a payment;
• laws, regulations and executive orders restricting the use and dissemination of information classified for
national security purposes and the exportation of certain products and technical data;
• Certain contracts from the U.S. federal government may require us to maintain certain certifications
including but not limited to AS9100 and CMMI;
• Contractor Purchasing Systems review (CPSR) requirements, which evaluate the efficiency and
effectiveness with which we spend U.S. Government funds; and
• The sale of our products in countries outside the United States is regulated by the governments of those
countries. While compliance with such regulation will generally be undertaken by international
distributors, we may assist with such compliance and in certain cases may be liable if a distributor fails to
comply.
We must comply with U.S. laws regulating the export of our products. In addition, we are required to obtain
a license from the U.S. federal government to export our PackBot, Warrior, FirstLook and SUGV lines of tactical
military robots. We cannot be sure of our ability to obtain any licenses required to export our products or to
receive authorization from the U.S. federal government for international sales or domestic sales to foreign
persons. Moreover, the export regimes and the governing policies applicable to our business are subject to
change. We cannot assure you of the extent that such export authorizations will be available to us, if at all, in the
future. In some cases where we act as a subcontractor, we rely upon the compliance activities of our prime
contractors, and we cannot assure you that they have taken or will take all measures necessary to comply with
applicable export laws. If we or our prime contractor partners cannot obtain required government approvals
under applicable regulations in a timely manner or at all, we would be delayed or prevented from selling our
products in international jurisdictions, which could materially harm our business, operating results and ability to
generate revenue.
Also, we need special clearances to continue working on and advancing certain of our projects with the
U.S. federal government. Obtaining and maintaining security clearances for employees involves a lengthy
process, and it is difficult to identify, recruit and retain employees who already hold security clearances. If our
employees are unable to obtain security clearances in a timely manner, or at all, or if our employees who hold
security clearances are unable to maintain the clearances or terminate employment with us, then a customer
requiring classified work could terminate the contract or decide not to renew it upon its expiration. In addition,
we expect that many of the contracts on which we will bid will require us to demonstrate our ability to obtain
facility security clearances and employ personnel with specified types of security clearances. To the extent we
are not able to obtain facility security clearances or engage employees with the required security clearances for a
particular contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts.
Classified programs generally will require that we comply with various Executive Orders, federal laws and
regulations and customer security requirements that may include restrictions on how we develop, store, protect
and share information, and may require our employees to obtain government clearances.
Our failure to comply with applicable regulations, rules and approvals could result in the imposition of
penalties, the loss of our government contracts or our suspension or debarment from contracting with the federal
government generally, any of which would harm our business, financial condition and results of operations.
21