iRobot 2007 Annual Report Download - page 63

We depend on the experience and expertise of our senior management team and key technical employees,
and the loss of any key employee may impair our ability to operate effectively.
Our success depends upon the continued services of our senior management team and key technical
employees, such as our project management personnel and senior engineers. Moreover, we often must comply
with provisions in government contracts that require employment of persons with specified levels of education and
work experience. Each of our executive officers, key technical personnel and other employees could terminate his or
her relationship with us at any time. The loss of any member of our senior management team might significantly
delay or prevent the achievement of our business objectives and could materially harm our business and customer
relationships. In addition, because of the highly technical nature of our robots, the loss of any significant number of
our existing engineering and project management personnel could have a material adverse effect on our business
and operating results.
We are subject to extensive U.S. federal government regulation, and our failure to comply with applicable
regulations could subject us to penalties that may restrict our ability to conduct our business.
As a contractor and subcontractor to the U.S. federal government, we are subject to and must comply with
various government regulations that impact our operating costs, profit margins and the internal organization and
operation of our business. Among the most significant regulations affecting our business are:
• the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate
the formation and administration of, and performance under government contracts;
• the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in
connection with contract negotiations;
• the Cost Accounting Standards, which impose accounting requirements that govern our right to reimburse-
ment under cost-based government contracts;
• the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a
foreign official to help obtain, retain or direct business, or obtain any unfair advantage;
• the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made
on the basis of false facts provided to the government, and impose penalties on the basis of false statements,
even if they do not result in a payment; and
• laws, regulations and executive orders restricting the use and dissemination of information classified for
national security purposes and the exportation of certain products and technical data.
Also, we need special clearances to continue working on and advancing certain of our projects with the
U.S. federal government. Obtaining and maintaining security clearances for employees involves a lengthy process,
and it is difficult to identify, recruit and retain employees who already hold security clearances. If our employees are
unable to obtain security clearances in a timely manner, or at all, or if our employees who hold security clearances
are unable to maintain the clearances or terminate employment with us, then a customer requiring classified work
could terminate the contract or decide not to renew it upon its expiration. In addition, we expect that many of the
contracts on which we will bid will require us to demonstrate our ability to obtain facility security clearances and
employ personnel with specified types of security clearances. To the extent we are not able to obtain facility security
clearances or engage employees with the required security clearances for a particular contract, we may not be able
to bid on or win new contracts, or effectively rebid on expiring contracts. For example, if we were to lose our
security clearance, we would be unable to continue to participate in the U.S. Army’s Future Combat Systems
program. Classified programs generally will require that we comply with various Executive Orders, federal laws
and regulations and customer security requirements that may include restrictions on how we develop, store, protect
and share information, and may require our employees to obtain government clearances.
Our failure to comply with applicable regulations, rules and approvals could result in the imposition of
penalties, the loss of our government contracts or our suspension or debarment from contracting with the federal
government generally, any of which would harm our business, financial condition and results of operations.
29
Form 10-K