iRobot 2012 Annual Report Download - page 61

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11
our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the
Securities and Exchange Commission.
ITEM 1A. RISK FACTORS
We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control.
This discussion highlights some of the risks which may affect future operating results. These are the risks and uncertainties we
believe are most important for you to consider. Additional risks and uncertainties not presently known to us, which we
currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may
also impair our business operations. If any of the following risks or uncertainties actually occurs, our business, financial
condition and operating results would likely suffer.
Risks Related to Our Business
We operate in an emerging market, which makes it difficult to evaluate our business and future prospects.
Robots represent a new and emerging market. Accordingly, our business and future prospects are difficult to evaluate.
We cannot accurately predict the extent to which demand for consumer robots will increase, if at all. Moreover, there are only a
limited number of programs under which the U.S. federal government is currently funding the development or purchase of
defense robots. You should consider the challenges, risks and uncertainties frequently encountered by companies using new
and unproven business models in rapidly evolving markets. These challenges include our ability to:
• generate sufficient revenue and gross margin to maintain profitability;
• acquire and maintain market share in our consumer and defense markets;
• attract and retain customers of our consumer robots;
• develop and renew government contracts for our defense and security robots;
• attract and retain additional engineers and other highly-qualified personnel;
• expand our product offerings beyond our existing robots; and
• adapt to new or changing policies and spending priorities of governments and government agencies.
If we fail to successfully address these and other challenges, risks and uncertainties, our business, results of operations
and financial condition would be materially harmed.
Our financial results often vary significantly from quarter-to-quarter due to a number of factors, which may lead to
volatility in our stock price.
Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary significantly
from quarter-to-quarter in the future. These fluctuations may be due to numerous factors including:
• the size and timing of orders from military and other government agencies;
• the size, timing and mix of orders from retail stores and international distributors for our home care robots;
• the mix of products that we sell in the period;
• disruption of supply of our products from our manufacturers;
• seasonality in the sales of our military and consumer products;
• the inability to attract and retain qualified, revenue-generating personnel;
• unanticipated costs incurred in the introduction of new products;
• costs and availability of labor and raw materials;
• costs of freight;
• changes in our rate of returns for our consumer products;
• our ability to introduce new products and enhancements to our existing products on a timely basis;
• warranty costs associated with our consumer products;
• the amount of government funding and the political, budgetary and purchasing constraints of our government
agency customers; and
• cancellations, delays or contract amendments by government agency customers.
We cannot be certain that our revenues will grow at rates that will allow us to maintain profitability during every fiscal
quarter, or even every fiscal year. We base our current and future expense levels on our internal operating plans and sales
forecasts, including forecasts of holiday sales for our consumer products. A significant portion of our operating expenses, such
as research and development expenses, certain marketing and promotional expenses and employee wages and salaries, do not
vary directly with sales and are difficult to adjust in the short term. As a result, if sales for a quarter are below our expectations,
we might not be able to reduce operating expenses for that quarter and, therefore, we would not be able to reduce our operating
Form 10-K