iRobot 2012 Annual Report Download - page 97

iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business
iRobot Corporation (“iRobot” or the “Company”) develops robotics and artificial intelligence technologies and applies
these technologies in producing and marketing robots. The majority of the Company’s revenue is generated from product sales
and defense and security research and development contracts.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include those of iRobot and its subsidiaries, after elimination of all
intercompany accounts and transactions. In addition, certain prior year amounts have been reclassified to conform with the
current year presentation. iRobot has prepared the accompanying consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of these financial statements in conformity with accounting principles generally accepted in the United
States requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates
and judgments, including those related to revenue recognition, sales returns, bad debts, warranty claims, inventory reserves,
valuation of investments, assumptions used in valuing stock-based compensation instruments and income taxes. The Company
bases these estimates on historical and anticipated results, and trends and on various other assumptions that the Company
believes are reasonable under the circumstances, including assumptions as to future events. These estimates form the basis for
making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. By their
nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from the Company’s estimates.
Fiscal Year-End
The Company operates and reports using a 52-53 week fiscal year ending on the Saturday closest to December 31.
Accordingly, the Company’s fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each
quarter.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the
time of purchase to be cash equivalents. The Company invests its excess cash primarily in money market funds or savings
accounts of major financial institutions. Accordingly, its cash equivalents are subject to minimal credit and market risk. At
December 29, 2012 and December 31, 2011, cash equivalents were comprised of money market funds totaling $88.1 million
and $117.2 million, respectively. These cash equivalents are carried at cost, which approximates fair value.
Short Term Investments
The Company’s investments are classified as available-for-sale and are recorded at fair value with any unrealized gain or
loss recorded as an element of stockholders’ equity. The fair value of investments is determined based on quoted market prices
at the reporting date for those instruments. As of December 29, 2012 and December 31, 2011, investments consisted of:
December 29,
2012 December 31,
2011
Cost
Fair
Market Value Cost
Fair
Market Value
(In thousands)
Corporate bonds $ 12,980 $ 12,430 $ 15,654 $ 15,309
U.S. Government bond — —
2,500 2,502
Total short term investments $ 12,980 $ 12,430 $ 18,154 $ 17,811
As of December 29, 2012, the Company’s investments had maturity dates ranging from January 2013 to November 2014.
Form 10-K
47