iRobot 2009 Annual Report Download - page 65

Form 10-K
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.
Business disruptions resulting from international uncertainties could negatively impact our profitability.
We derive, and expect to continue to derive, a portion of our revenue from international sales in various
European markets, Canada, Japan, Korea and Singapore. For the fiscal years ended January 2, 2010 and
December 27, 2008, sales to non-U.S. customers accounted for 33.3% and 23.4% of total revenue, respectively.
Our international revenue and operations are subject to a number of material risks, including, but not limited to:
• difficulties in staffing, managing and supporting operations in multiple countries;
• difficulties in enforcing agreements and collecting receivables through foreign legal systems and other
relevant legal issues;
• fewer legal protections for intellectual property;
• foreign and U.S. taxation issues, tariffs, and international trade barriers;
• difficulties in obtaining any necessary governmental authorizations for the export of our products to certain
foreign jurisdictions;
• potential fluctuations in foreign economies;
• government currency control and restrictions on repatriation of earnings;
• fluctuations in the value of foreign currencies and interest rates;
• general economic and political conditions in the markets in which we operate;
• domestic and international economic or political changes, hostilities and other disruptions in regions where
we currently operate or may operate in the future;
• changes in foreign currency exchange rates;
• different and changing legal and regulatory requirements in the jurisdictions in which we currently operate
or may operate in the future; and
• Outside of the United States, we primarily rely on a network of exclusive distributors, some of whom may be
operating without written contracts.
Negative developments in any of these areas in one or more countries could result in a reduction in demand for
our products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in
collecting receivables, and a higher cost of doing business, any of which could negatively impact our business,
financial condition or results of operations. Moreover, our sales, including sales to customers outside the United
States, are primarily denominated in U.S. dollars, and downward fluctuations in the value of foreign currencies
relative to the U.S. dollar may make our products more expensive than other products, which could harm our
business.
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