iRobot 2009 Annual Report Download - page 108

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results of operations, or cash flow, the Company is now required to provide additional disclosures as part of its
financial statements.
The Company has adopted the authoritative guidance for fair value measurement as of December 28, 2008 for
nonfinancial assets and nonfinancial liabilities. This adoption did not impact the Company’s consolidated financial
statements.
The authoritative guidance for fair value establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices
in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own assumptions.
The Company’s assets measured at fair value on a recurring basis at January 2, 2010, were as follows:
Description Level 1 Level 2 Level 3
Fair Value Measurements as of
January 2, 2010
(In thousands)
Assets:
Money Market Accounts ............................ $20,077 $ — $—
Investment in U.S. Government bonds................... — 4,959 —
Total assets measured at fair value ..................... $20,077 $4,959 $—
The bond investment is valued based on observable market values as of the Company’s reporting date and is
included in level 2 inputs. The bond investment is recorded at fair value and marked-to-market at the end of each
reporting period and realized and unrealized gains and losses are included in comprehensive income for that period. The
fair value of the Company’s bond investment is included in short term investments in its consolidated balance sheet.
The Company’s assets measured at fair value on a recurring basis at December 27, 2008, were as follows:
Description Level 1 Level 2 Level 3
Fair Value Measurements as of
December 27, 2008
(In thousands)
Assets:
Money Market Accounts ............................ $39,512 $ — $—
Foreign Currency forward contracts .................... — (55) —
Total assets measured at fair value ..................... $39,512 (55) $—
Foreign currency forward contracts are valued based on observable market spot and forward rates as of our
reporting date and are included in level 2 inputs. The Company uses these derivative instruments to mitigate foreign
currency receivable transactions exposure. All contracts are recorded at fair value and marked to market at the end of
each reporting period and realized and unrealized gains and losses are included in net income for that period. The fair
value of the Company’s foreign currency forward contracts was included in receivables in its consolidated balance sheet.
Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (“FASB”) issued amendments to the accounting
and disclosure requirements for business combinations and noncontrolling interests in consolidated financial
statements. The amendment to the accounting and disclosure requirements for business combinations will change
how business acquisitions are accounted for and will impact financial statements both on the acquisition date and in
74
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)