iRobot 2008 Annual Report Download - page 103

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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. In late 2007, we began to accept orders for home robot products in currencies other than the U.S. dollar
and we expect this practice to continue in the future. 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.
Interest Rate Sensitivity
At December 27, 2008, we had unrestricted cash and cash equivalents of $40.9 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 principal amount 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 27, 2008, all of our cash equivalents were held in
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 our outstanding debt instruments, primarily certain borrowings under our working capital line of credit and
our equipment financing facility. The advances under the working capital line of credit bear a variable rate of
interest determined as a function of the prime rate or the Eurodollar rate at the time of the borrowing. The advances
under the equipment financing facility bear either a variable or fixed rate of interest, at our election, determined as a
function of the LIBOR rate at the time of borrowing. At December 27, 2008, we had letters of credit outstanding of
$2.1 million under our working capital line of credit and no amounts outstanding under our equipment financing
facility.
55
Form 10-K