iRobot 2010 Annual Report Download - page 70

Our income tax provision and other tax liabilities may be insufficient if taxing authorities are successful
in asserting tax positions that are contrary to our position. Additionally, there is no guarantee that we will
realize our deferred tax assets.
From time to time, we are audited by various federal, state and local authorities regarding income tax matters.
Significant judgment is required to determine our provision for income taxes and our liabilities for federal, state,
local and other taxes. Although we believe our approach to determining the appropriate tax treatment is supportable
and in accordance with relevant authoritative guidance it is possible that the final tax authority will take a tax
position that is materially different than that which is reflected in our income tax provision. Such differences could
have a material adverse effect on our income tax provision or benefit, in the reporting period in which such
determination is made and, consequently, on our results of operations, financial position and/or cash flows for such
period.
The realization of our deferred tax assets ultimately depends on the existence of sufficient taxable income in
either the carryback or carryforward periods under the tax law. Due to significant estimates utilized in establishing
the valuation allowance and the potential for changes in facts and circumstances, it is possible that we will be
required to record adjustments to our valuation allowance in future reporting periods. Our results of operations
would be impacted negatively if we determine that increases to our deferred tax asset valuation allowance are
required in a future reporting period.
Our directors and management will exercise significant control over our company, which will limit your
ability to influence corporate matters.
As of January 1, 2011, our directors and executive officers and their affiliates collectively beneficially owned
approximately 16.0% of our outstanding common stock. As a result, these stockholders, if they act together, will be
able to influence our management and affairs and all matters requiring stockholder approval, including the election
of directors and approval of significant corporate transactions. This concentration of ownership may have the effect
of delaying or preventing a change in control of our company and might negatively affect the market price of our
common stock.
Provisions in our certificate of incorporation and by-laws, our shareholder rights agreement or Delaware
law might discourage, delay or prevent a change of control of our company or changes in our
management and, therefore, depress the trading price of our common stock.
Provisions of our certificate of incorporation and by-laws and Delaware law may discourage, delay or prevent a
merger, acquisition or other change in control that stockholders may consider favorable, including transactions in
which you might otherwise receive a premium for your shares of our common stock. These provisions may also
prevent or frustrate attempts by our stockholders to replace or remove our management. These provisions include:
• limitations on the removal of directors;
• a classified board of directors so that not all members of our board are elected at one time;
• advance notice requirements for stockholder proposals and nominations;
• the inability of stockholders to act by written consent or to call special meetings;
• the ability of our board of directors to make, alter or repeal our by-laws; and
• the ability of our board of directors to designate the terms of and issue new series of preferred stock without
stockholder approval.
The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote is necessary to
amend or repeal the above provisions of our certificate of incorporation. In addition, absent approval of our board of
directors, our by-laws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our
shares of capital stock entitled to vote.
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