iRobot 2009 Annual Report Download - page 116

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income, at its former corporate headquarters in Burlington, MA. Future minimum rental payments under operating
leases were as follows as of January 2, 2010:
Operating
Leases
2010 ................................................................ $ 2,642
2011 ................................................................ 2,439
2012 ................................................................ 2,254
2013 ................................................................ 2,087
2014 ................................................................ 2,087
Thereafter ............................................................ 11,133
Total minimum lease payments .......................................... $22,642
Guarantees and Indemnification Obligations
The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to
these agreements, the Company indemnifies and agrees to reimburse the indemnified party for losses incurred by
the indemnified party, generally the Company’s customers, in connection with any patent, copyright, trade secret or
other proprietary right infringement claim by any third party with respect to the Company’s software. The term of
these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum
potential amount of future payments the Company could be required to make under these indemnification
agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to
these indemnification agreements. As a result, the Company believes the estimated fair value of these agreements is
minimal. Accordingly, the Company has no liabilities recorded for these agreements as of January 2, 2010 and
December 27, 2008, respectively.
Warranty
The Company provides warranties on most products and has established a reserve for warranty based on
identified warranty costs. The reserve is included as part of accrued expenses (Note 6) in the accompanying balance
sheets.
Activity related to the warranty accrual was as follows:
January 2,
2010
December 27,
2008
December 29,
2007
Fiscal Year Ended
(In thousands)
Balance at beginning of period ..................... $5,380 $ 2,491 $ 2,462
Provision ..................................... 4,870 7,728 6,649
Warranty usage(*) .............................. (4,145) (4,839) (6,620)
Balance at end of period.......................... $6,105 $ 5,380 $ 2,491
(*) Warranty usage includes the pro rata expiration of product warranties not utilized.
Sales Taxes
The Company collects and remits sales tax in jurisdictions in which it has a physical presence or it believes
nexus exists, which therefore obligates the Company to collect and remit sales tax. The Company is not currently
aware of any asserted claims for sales tax liabilities for prior taxable periods.
The Company continually evaluates whether it has established a nexus in new jurisdictions with respect to
sales tax. The Company has recorded a liability for potential exposure in several states where there is uncertainty
about the point in time at which the Company established a sufficient business connection to establish a nexus. The
Company continues to analyze possible sales tax exposure, but does not currently believe that any individual claim
82
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)