iRobot 2012 Annual Report Download - page 89

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operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective
line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same
reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other
disclosures that provide additional detail about those amounts. This guidance is effective prospectively for the Company for
annual and interim periods beginning January 1, 2013. The Company will comply with the disclosure requirements of this
guidance for the quarter ending March 30, 2013.
From time to time, new accounting pronouncements are issued by FASB that are adopted by us as of the specified
effective date. Unless otherwise discussed, we believe that the impact of recently issued standards, which are not yet effective,
will not have a material impact on our consolidated financial statements upon adoption.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We maintain sales and business operations in foreign countries. As such, we have exposure to adverse changes in
exchange rates associated with operating expenses of our foreign operations, but we believe this exposure to be immaterial.
Additionally, we accept orders for home robots products in currencies other than the U.S. dollar. We regularly monitor the level
of non-U.S. dollar accounts receivable balances to determine if any actions, including possibly entering into foreign currency
forward contracts, should be taken to minimize the impact of fluctuating exchange rates on our results of operations. Our
international revenue is primarily denominated in U.S. dollars and therefore any fluctuations in the Euro or any other non-U.S.
dollar currencies will have minimal direct impact on our international revenue. However, as the U.S. dollar strengthens or
weakens against other currencies, our international distributors may be impacted, which could affect their profitability and our
ability to maintain current pricing levels on our international consumer products.
Interest Rate Sensitivity
At December 29, 2012, we had unrestricted cash and cash equivalents of $126.8 million and short term investments of
$12.4 million. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into
investments for trading or speculative purposes. Some of the securities in which we invest, however, may be subject to market
risk. This means that a change in prevailing interest rates may cause the fair market value of the investment to fluctuate. To
minimize this risk in the future, we intend to maintain our portfolio of cash equivalents in a variety of securities, commercial
paper, money market funds, debt securities and certificates of deposit. Due to the short-term nature of these investments, we
believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes
in interest rates. As of December 29, 2012, all of our cash and cash equivalents were held in demand deposits and money
market accounts.
Our exposure to market risk also relates to the increase or decrease in the amount of interest expense we must pay on any
outstanding debt instruments, primarily certain borrowings under our working capital line of credit. The advances under the
working capital line of credit bear a variable rate of interest determined as a function of the LIBOR rate at the time of the
borrowing. At December 29, 2012, we had letters of credit outstanding of $1.5 million under our revolving letter of credit
facility.
Form 10-K