iRobot 2012 Annual Report Download - page 68

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Acquisitions and potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt
our business, dilute stockholder value and impair our financial results.
As part of our business strategy, we have in the past acquired, and we intend to continue to consider additional
acquisitions of companies, technologies and products that we believe could accelerate our ability to compete in our core
markets or allow us to enter new markets. For example, in October 2012, we acquired Evolution Robotics, Inc. Acquisitions
and combinations are accompanied by a number of risks, including the difficulty of integrating the operations and personnel of
the acquired companies, the potential disruption of our ongoing business, the potential distraction of management, expenses
related to the acquisition and potential unknown liabilities associated with acquired businesses. Any inability to integrate
completed acquisitions or combinations in an efficient and timely manner could have an adverse impact on our results of
operations. In addition, we may not be able to recognize any expected synergies or benefits in connection with a future
acquisition or combination. If we are not successful in completing acquisitions or combinations that we may pursue in the
future, we may incur substantial expenses and devote significant management time and resources without a successful result. In
addition, future acquisitions could require use of substantial portions of our available cash or result in dilutive issuances of
securities.
In addition, charges to earnings as a result of acquisitions may adversely affect our operating results in the foreseeable
future, which could have a material and adverse effect on the market value of our common stock. In particular we have
allocated the cost of acquiring businesses to the individual assets acquired and liabilities assumed, including various
identifiable intangible assets such as acquired technology, acquired trade names and acquired customer relationships based on
their respective fair values. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are
inherently uncertain. After we complete an acquisition, the following factors could result in material charges and adversely
affect our operating results and may adversely affect our cash flows:
• costs incurred to combine the operations of businesses we acquire, such as transitional employee expenses and
employee retention, redeployment or relocation expenses;
• impairment of goodwill or intangible assets;
• amortization of intangible assets acquired;
• a reduction in the useful lives of intangible assets acquired;
• identification of or changes to assumed contingent liabilities, both income tax and non-income tax related after our
final determination of the amounts for these contingencies or the conclusion of the measurement period (generally
up to one year from the acquisition date), whichever comes first;
• charges to our operating results to eliminate certain duplicative pre-merger activities, to restructure our operations or
to reduce our cost structure;
• charges to our operating results resulting from expenses incurred to effect the acquisition; and
• charges to our operating results due to the expensing of certain stock awards assumed in an acquisition.
We may fail to realize anticipated benefits from our acquisition of Evolution Robotics.
The success of our acquisition of Evolution Robotics will depend, in part, on our ability to realize the anticipated
synergies, business opportunities and growth prospects from combining our business with that of Evolution Robotics. We may
never realize these anticipated synergies, business opportunities and growth prospects. Assumptions underlying estimated
benefits may be inaccurate and general industry and business conditions might deteriorate. Our management might have its
attention diverted while trying to integrate operations and corporate and administrative infrastructures from the Evolution
Robotics architecture into the correlative iRobot systems. If any of these factors limit our ability to integrate Evolution
Robotics into our operations successfully or on a timely basis, the expectations of future results of operations, including
synergies and other benefits expected to result from the Evolution Robotics acquisition, might not be met.
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders.
We anticipate that our current cash, cash equivalents, cash provided by operating activities and funds available through
our working capital line of credit, will be sufficient to meet our current and anticipated needs for general corporate purposes.
We operate in an emerging market, however, which makes our prospects difficult to evaluate. It is possible that we may not
generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital needs. In such
cases we may need additional financing to execute on our current or future business strategies. If we raise additional funds
through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be
significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing
stockholders. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate
funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations, take
advantage of unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures
would be significantly limited. In addition, our access to credit through our working capital line of credit may be limited by the
restrictive financial covenants contained in that agreement, which require us to maintain profitability.