iRobot 2009 Annual Report Download - page 57

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Form 10-K
If the consumer robot market does not experience significant growth or if our products do not achieve
broad acceptance, we will not be able to achieve our anticipated level of growth.
We derive a substantial portion of our revenue from sales of our consumer robots, including our home care
robots. For the years ended January 2, 2010 and December 27, 2008, consumer robots accounted for 55.5% and
56.4%, respectively, of our total revenue. We face challenges in predicting the future growth rate or the size of the
consumer robot market in general or the home care robot market in particular. Demand for home care robots may
not increase, or may decrease, either generally or in specific geographic markets, for particular types of robots or
during particular time periods. The expansion of the home robot market and the market for our products depends on
a number of factors, such as:
• the cost, performance and reliability of our products and products offered by our competitors;
• public perceptions regarding the effectiveness and value of robots;
• customer satisfaction with robots; and
• marketing efforts and publicity regarding robots.
Even if consumer robots gain wide market acceptance, our robots may not adequately address market
requirements and may not continue to gain market acceptance. If robots generally, or our robots specifically, do not
gain wide market acceptance, we may not be able to achieve our anticipated level of growth, and our revenue and
results of operations would suffer.
Our business and results of operations could be adversely affected by significant changes in the policies
and spending priorities of governments and government agencies.
We derive a substantial portion of our revenue from sales to and contracts with U.S. federal, state and local
governments and government agencies, and subcontracts under federal government prime contracts. For the years
ended January 2, 2010 and December 27, 2008, U.S. federal government orders, contracts and subcontracts
accounted for 36.9% and 40.3%, respectively, of our total revenue. We believe that the success and growth of our
business will continue to depend on our successful procurement of government contracts either directly or through
prime contractors. Many of our government customers are subject to stringent budgetary constraints and our
continued performance under these contracts, or award of additional contracts from these agencies, could be
jeopardized by spending reductions or budget cutbacks at these agencies. We cannot assure you that future levels of
expenditures and authorizations will continue for governmental programs in which we provide products and
services. A significant decline in government expenditures generally, or with respect to programs for which we
provide products, could adversely affect our government product and funded research and development revenues
and prospects, which would harm our business, financial condition and operating results. Our operating results may
also be negatively impacted by other developments that affect these governments and government agencies
generally, including:
• changes in government programs that are related to our products and services;
• adoption of new laws or regulations relating to government contracting or changes to existing laws or
regulations;
• changes in political or public support for security and defense programs;
• delays or changes in the government appropriations process;
• uncertainties associated with the war on terror and other geo-political matters; and
• delays in the payment of our invoices by government payment offices.
These developments and other factors could cause governments and governmental agencies, or prime
contractors that use us as a subcontractor, to reduce their purchases under existing contracts, to exercise their
rights to terminate contracts at-will or to abstain from renewing contracts, any of which would cause our revenue to
decline and could otherwise harm our business, financial condition and results of operations.
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