iRobot 2012 Annual Report Download - page 69

19
Environmental laws and regulations and unforeseen costs could negatively impact our future earnings.
The manufacture and sale of our products in certain states and countries may subject us to environmental and other
regulations. We also face increasing complexity in our product design as we adjust to legal and regulatory requirements relating
to our products. There is no assurance that such existing laws or future laws will not impair future earnings or results of
operations.
Business disruptions resulting from international uncertainties could negatively impact our profitability.
We derive, and expect to continue to derive, a significant portion of our revenue from international sales in various
European and Far East markets, and Canada. For the fiscal years ended December 29, 2012 and December 31, 2011, sales to
non-U.S. customers accounted for 57.3% and 45.5% of total revenue, respectively. Our international revenue and operations
are subject to a number of material risks, including, but not limited to:
• difficulties in staffing, managing and supporting operations in multiple countries;
• difficulties in enforcing agreements and collecting receivables through foreign legal systems and other relevant legal
issues;
• fewer legal protections for intellectual property;
• foreign and U.S. taxation issues, tariffs, and international trade barriers;
• difficulties in obtaining any necessary governmental authorizations for the export of our products to certain foreign
jurisdictions;
• potential fluctuations in foreign economies;
• government currency control and restrictions on repatriation of earnings;
• fluctuations in the value of foreign currencies and interest rates;
• general economic and political conditions in the markets in which we operate;
• domestic and international economic or political changes, hostilities and other disruptions in regions where we
currently operate or may operate in the future;
• changes in foreign currency exchange rates;
• different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may
operate in the future; and
• outside of the United States, we primarily rely on a network of exclusive distributors, some of whom may be
operating without written contracts.
Negative developments in any of these areas in one or more countries could result in a reduction in demand for our
products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in collecting
receivables, and a higher cost of doing business, any of which could negatively impact our business, financial condition or
results of operations. Moreover, our sales, including sales to customers outside the United States, are primarily denominated in
U.S. dollars, and downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products
more expensive than other products, which could harm our business.
If we experience a disaster or other business continuity problem, we may not be able to recover successfully, which could
cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability.
If we experience a local or regional disaster or other business continuity problem, such as an earthquake, terrorist attack,
pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our
personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and
operations. As we grow our operations in new geographic regions, the potential for particular types of natural or man-made
disasters, political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks
increases.
If we suffer any data breaches involving the designs, schematics or source code for our products, our business and
financial results could be adversely affected.
We attempt to securely store our designs, schematics and source code for our products as they are created. A breach,
whether physical, electronic or otherwise, of the systems on which this sensitive data is stored could lead to damage or piracy
of our products. In addition, we work with e-commerce providers who hold significant sensitive customer data. If we or our
partners are subject to data security breaches, we may have a loss in sales or increased costs arising from the restoration or
implementation of additional security measures, either of which could materially and adversely affect our business and
financial results.
Form 10-K