iRobot 2012 Annual Report Download - page 53

3
PART I
ITEM 1. BUSINESS
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of
historical facts contained in this Annual Report on Form 10-K, including statements regarding our future results of operations
and financial position, business strategy, plans and objectives of management for future operations, and plans for product
development and manufacturing are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss certain of
these risks in greater detail in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Also, these
forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we have no plans to update our
forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. We caution
readers not to place undue reliance upon any such forward-looking statements.
iRobot, Roomba, Scooba, PackBot, Warrior, FirstLook, Looj, Verro, Virtual Wall, Home Base, Aware, Mint and AeroVac
are trademarks of iRobot Corporation.
Overview
iRobot Corporation (“iRobot” or the “Company” or “we”) designs and builds robots that make a difference. For over
20 years, we have developed proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and
artificial intelligence to build industry-leading robots. Our home care robots perform time-consuming domestic chores while
our defense and security robots perform tasks such as battlefield reconnaissance and bomb disposal, and multi-purpose tasks
for local police and first responders. We sell our robots to consumers through a variety of distribution channels, including chain
stores and other national retailers, and through our on-line store, and to the U.S. military and other government agencies
worldwide. We maintain certifications for AS9100 for certain programs within our defense and security business unit.
Since our founding, we have accumulated expertise in all the disciplines necessary to design and build durable, high-
performance and cost-effective robots through the close integration of software, electronics and hardware. Our core
technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products, reducing
the time, cost and risk of product development. Our significant expertise in robot design and engineering, combined with our
management team's experience in military and consumer markets, positions us to capitalize on the growth we expect in the
market for robot-based products. We believe that the sophisticated technologies in our existing consumer and military
applications are adaptable to a broad array of markets such as law enforcement, homeland security, commercial cleaning, elder
care, energy services, home automation, healthcare, landscaping, agriculture, construction and other vertical markets.
Over the past ten years, we have sold more than eight million of our home care robots. During that time, we also sold
more than 4,500 of our tactical military robots, most of which have been sold to the U.S. military and deployed on missions in
Afghanistan and Iraq, and more recently to state, local and international government entities.
Our business evolved significantly in fiscal 2012. We are a different company than we were one year ago. Total revenue
for 2012 was $436.2 million, which represented a 6% decline from 2011 revenue of $465.5 million. This decrease in revenue
was directly attributable to a $107.5 million decrease in revenue in our defense and security business related to troop
withdrawals in Afghanistan, program cancellations and ongoing budget reductions within the U.S. government. Revenue in
our home robots business increased by $78.2 million in 2012 compared to 2011 as a direct result of growth in both domestic
and international markets. This increase in home robots business revenue was driven by demand for our new Roomba 700
series robot, the introduction of the Roomba 600 series robot and an increase in marketing programs by us and our international
distributors. Our home robots revenue represented 82% of our total 2012 revenue compared to 60% in 2011. We anticipate
that our revenue for the next few years will be primarily driven by our rapidly growing home technology business and that our
home robots revenue will comprise approximately 90% of our total revenue in the near term.
In response to the changing nature of our business, we took a number of actions in fiscal 2012 which we believe will
assist us in returning to growth in 2013 and beyond. In particular:
• We undertook a company-wide restructuring designed to provide us greater overall flexibility, improved efficiency
and scalability as a more unified organization. In conjunction with this restructuring, we created centralized, shared
services such as engineering, operations and finance to promote further the use of common platforms and ensure
repeatable successes through improved collaboration and standardization while focusing engineering efforts on
markets with the greatest visibility and revenue potential. We expect this new structure to be fully operational in
2013.
• We initiated significant cost reductions in our defense and security business to realign our cost structure with our
reduced revenue expectations for this business.
Form 10-K