iRobot 2010 Annual Report Download - page 68

intellectual property rights may be challenged by others or invalidated through administrative processes or
litigation. If we resort to legal proceedings to enforce our intellectual property rights or to determine the validity
and scope of the intellectual property or other proprietary rights of others, the proceedings could result in significant
expense to us and divert the attention and efforts of our management and technical employees, even if we were to
prevail.
Acquisitions and potential future acquisitions could be difficult to integrate, divert the attention of key
personnel, disrupt our business, dilute stockholder value and impair our financial results.
As part of our business strategy, we intend to consider additional acquisitions of companies, technologies and
products that we believe could accelerate our ability to compete in our core markets or allow us to enter new
markets. Acquisitions and combinations are accompanied by a number of risks, including the difficulty of
integrating the operations and personnel of the acquired companies, the potential disruption of our ongoing
business, the potential distraction of management, expenses related to the acquisition and potential unknown
liabilities associated with acquired businesses. Any inability to integrate completed acquisitions or combinations in
an efficient and timely manner could have an adverse impact on our results of operations. In addition, we may not be
able to recognize any expected synergies or benefits in connection with a future acquisition or combination. If we
are not successful in completing acquisitions or combinations that we may pursue in the future, we may incur
substantial expenses and devote significant management time and resources without a successful result. In addition,
future acquisitions could require use of substantial portions of our available cash or result in dilutive issuances of
securities.
We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our
stockholders.
We anticipate that our current cash, cash equivalents, cash provided by operating activities and funds available
through our working capital line of credit, will be sufficient to meet our current and anticipated needs for general
corporate purposes. We operate in an emerging market, however, which makes our prospects difficult to evaluate. It
is possible that we may not generate sufficient cash flow from operations or otherwise have the capital resources to
meet our future capital needs. In such cases we may need additional financing to execute on our current or future
business strategies. If we raise additional funds through the issuance of equity or convertible debt securities, the
percentage ownership of our stockholders could be significantly diluted, and these newly-issued securities may
have rights, preferences or privileges senior to those of existing stockholders. We cannot assure you that additional
financing will be available on terms favorable to us, or at all. If adequate funds are not available or are not available
on acceptable terms, if and when needed, our ability to fund our operations, take advantage of unanticipated
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 legal and regulatory
requirements relating to our products. 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 significant portion of our revenue from international sales in
various European and Far East markets, and Canada. For the fiscal years ended January 1, 2011 and January 2, 2010,
sales to non-U.S. customers accounted for 41.1% and 33.3% 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;
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