iRobot 2012 Annual Report Download - page 60

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We are subject to various government regulations, including various U.S. federal government regulations as a contractor
and subcontractor to the U.S. federal government. Among the most significant U.S. federal government regulations affecting
our business are:
• the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the
formation and administration of, and performance under government contracts;
• 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 advantages;
• 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; and
• 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.
We also need special security clearances to continue working on and advancing certain of our projects with the
U.S. federal government. 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.
The nature of the work we do for the federal government may also limit the parties who may invest in or acquire us.
Export laws may keep us from providing potential foreign acquirers with a review of the technical data they would be
acquiring. In addition, there are special requirements for foreign parties who wish to buy or acquire control or influence over
companies that control technology or produce goods in the security interests of the United States. There may need to be a
review under the Exon-Florio provisions of the Defense Production Act. Finally, the government may require a prospective
foreign owner to establish intermediaries to actually run that part of the company that does classified work, and establishing a
subsidiary and its separate operation may make such an acquisition less appealing to such potential acquirers.
In addition, the export from the United States of many of our products may require the issuance of a license by the
U.S. Department of Commerce under the Export Administration Act, as amended, and its implementing Regulations as kept in
force by the International Emergency Economic Powers Act of 1977, as amended. Some of our products may require the
issuance of a license by the U.S. Department of State under the Arms Export Control Act and its implementing Regulations,
which licenses are generally harder to obtain and take longer to obtain than do Export Administration Act licenses.
Our business may require the compliance with state or local laws designed to limit the uses of personal user information
gathered online or require online services to establish privacy policies.
Defense and Security Product Backlog
Our defense and security product backlog consists of written orders or contracts to purchase our products received from
our defense and security customers. Total backlog of product sales to defense and security customers, which includes federal,
state, local and foreign governments, and non-government customers, as of December 29, 2012 and December 31, 2011
amounted to approximately $11.4 million and $7.6 million, respectively. Our funded research and development contracts may
be cancelled or delayed at any time without significant, if any, penalty. As a result, we believe that backlog with respect to our
funded research and development is not meaningful. There can be no assurance that any of our backlog will result in revenue.
Employees
As of December 29, 2012, we had 534 full-time employees located in the United States and abroad, of whom 234 are in
research and development, 94 are in operations, 82 are in sales and marketing and 124 are in general and administration. We
believe that we have a good relationship with our employees.
Available Information
We were incorporated in California in August 1990 under the name IS Robotics, Inc. and reincorporated as IS Robotics
Corporation in Massachusetts in June 1994. We reincorporated in Delaware as iRobot Corporation in December 2000. We
conduct operations and maintain a number of subsidiaries in the United States and abroad, including operations in Hong Kong,
the United Kingdom and China. We also maintain iRobot Securities Corporation, a Massachusetts securities corporation, to
invest our cash balances on a short-term basis. Our website address is www.irobot.com. Our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of