iRobot 2008 Annual Report Download - page 78

• potential loss of key employees, customers and strategic alliances from either our current business or the
target company’s business;
• assumption of unanticipated problems or latent liabilities, such as problems with the quality of the target
company’s products; and
• inability to generate sufficient revenue to offset acquisition costs.
Acquisitions also frequently result in the recording of goodwill and other intangible assets which are subject to
potential impairments in the future that could harm our financial results. In addition, if we finance acquisitions by
issuing convertible debt or equity securities, our existing stockholders may be diluted, which could lower the market
price of our common stock. As a result, if we fail to properly evaluate acquisitions or investments, we may not
achieve the anticipated benefits of any such acquisitions, and we may incur costs in excess of what we anticipate.
The failure to successfully evaluate and execute acquisitions or investments or otherwise adequately address these
risks could materially harm our business and financial results.
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our
stockholders.
We anticipate that our current cash, cash equivalents, cash provided by operating activities and funds available
through our working capital line of credit, will be sufficient to meet our current and anticipated needs for general
corporate purposes. We operate in an emerging market, however, which makes our prospects difficult to evaluate. It
is possible that we may not generate sufficient cash flow from operations or otherwise have the capital resources to
meet our future capital needs. For example in fiscal 2007 we consumed $27 million of our cash and short term
investments. If similar consumptions of cash were to continue, we may need additional financing to execute on our
current or future business strategies, including to:
• hire additional engineers and other personnel;
• develop new, or enhance existing, robots and robot accessories;
• enhance our operating infrastructure;
• acquire complementary businesses or technologies; or
• otherwise respond to competitive pressures.
If we raise additional funds through the issuance of equity or convertible debt securities, the percentage
ownership of our stockholders could be significantly diluted, and these newly-issued securities may have rights,
preferences or privileges senior to those of existing stockholders. We cannot assure you that additional financing
will be available on terms favorable to us, or at all. If adequate funds are not available or are not available on
acceptable terms, if and when needed, our ability to fund our operations, take advantage of unanticipated
opportunities, develop or enhance our products, or otherwise respond to competitive pressures would be signif-
icantly limited. In addition, our access to credit through our working capital line of credit may be limited by the
restrictive financial covenants contained in that agreement, which require us to maintain profitability.
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 new and upcoming
requirements relating to our products, including the restrictions on lead and certain other substances in electronics
that apply to specified electronics products put on the market in the European Union (Restriction of Hazardous
Substances in Electrical and Electronic Equipment Directive). Similar laws and regulations have been or may be
enacted in other regions, including in the United States, Canada, Mexico, China, the United Kingdom, Germany and
Japan. There is no assurance that such existing laws or future laws will not impair future earnings or results of
operations.
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