iRobot 2009 Annual Report Download - page 85

Form 10-K
Litigation and related expenses in fiscal 2007 consisted of costs for trade secret misappropriation, breach of
contract and patent infringement litigation relating to lawsuits filed against Robotic FX, Inc. and Jameel Ahed as
well as settlement costs related to ending the litigation.
Other Income, Net
December 27,
2008
December 29,
2007 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Other Income, net ................ $926 $3,151 $(2,225) (70.6)%
As a percentage of total revenue ..... 0.3% 1.3%
For fiscal 2008, other income, net amounted to $0.9 million compared to $3.2 million in fiscal 2007. The
decrease in other income, net in fiscal 2008 was primarily related to a $2.1 million decrease in interest income as a
result of lower investment account balances and reduced interest rates earned on the portfolio, and a $0.1 million
increase in other expense, relating to foreign currency losses, as compared to fiscal 2007. Other income, net for
fiscal 2008 consisted of $1.1 million in interest income resulting from our cash and investments, offset by
$0.1 million in interest expense and $0.1 million in foreign currency losses.
Income Tax Provision
December 27,
2008
December 29,
2007 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Income tax provision (benefit) ....... $369 $(8,558) $8,927 N/A
As a percentage of total revenue ..... 0.1% (3.4)%
In fiscal 2008, we recorded a $0.4 million tax provision based on an effective income tax rate of 32.8%. The
provision for income taxes for fiscal 2008 consists of $0.1 million of federal alternative minimum taxes and
$0.3 million of state taxes.
In fiscal 2007, we recorded an $8.6 million tax benefit, which was primarily attributable to the full release of
the valuation allowance relating to federal deferred tax assets.
Liquidity and Capital Resources
At January 2, 2010, our principal sources of liquidity were cash and cash equivalents totaling $71.9 million,
short-term investments of $5.0 million and accounts receivable of $35.2 million. Prior to our initial public offering
in November 2005, we funded our growth primarily with proceeds from the issuance of convertible preferred stock
for aggregate net cash proceeds of $37.5 million, occasional borrowings under a working capital line of credit and
cash generated from operations. In our initial public offering, we raised $70.4 million net of underwriting and
professional fees associated with the offering.
We manufacture and distribute our products through contract manufacturers and third-party logistics pro-
viders. We believe that this approach gives us the advantages of relatively low capital investment and significant
flexibility in scheduling production and managing inventory levels. By leasing our office facilities, we also
minimize the cash needed for expansion. Accordingly, our capital spending is generally limited to leasehold
improvements, computers, office furniture and product-specific production tooling, internal use software and test
equipment. In the fiscal years ended January 2, 2010 and December 27, 2008, we spent $5.0 million and
$14.8 million, respectively, on capital equipment.
Our strategy for delivering products to our retail customers gives us the flexibility to provide container
shipments directly to the retailer from China and, alternatively allows our retail partners to take possession of
product on a domestic basis. Accordingly, our home robots product inventory consists of goods shipped to our third-
party logistic providers for the fulfillment of retail orders and direct-to-consumer sales. Our inventory of
government and industrial products is relatively low as they are generally built to order. Our contract manufacturers
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