iRobot 2011 Annual Report Download - page 61

• our ability to introduce new products and enhancements to our existing products on a timely basis;
• warranty costs associated with our consumer products;
• the amount of government funding and the political, budgetary and purchasing constraints of our
government agency customers; and
• cancellations, delays or contract amendments by government agency customers.
We cannot be certain that our revenues will grow at rates that will allow us to maintain profitability during
every fiscal quarter, or even every fiscal year. We base our current and future expense levels on our internal
operating plans and sales forecasts, including forecasts of holiday sales for our consumer products. A significant
portion of our operating expenses, such as research and development expenses, certain marketing and
promotional expenses and employee wages and salaries, do not vary directly with sales and are difficult to adjust
in the short term. As a result, if sales for a quarter, particularly the final quarter of a fiscal year, are below our
expectations, we might not be able to reduce operating expenses for that quarter and, therefore, we would not be
able to reduce our operating expenses for the fiscal year. Accordingly, a sales shortfall during a fiscal quarter,
and in particular the fourth quarter of a fiscal year, could have a disproportionate effect on our operating results
for that quarter or that year. Because of quarterly fluctuations, we believe that quarter-to-quarter comparisons of
our operating results are not necessarily meaningful. Moreover, our operating results may not meet expectations
of equity research analysts or investors. If this occurs, the trading price of our common stock could fall
substantially either suddenly or over time.
Global economic conditions and any associated impact on consumer spending could have a material
adverse effect on our business, results of operations and financial condition.
Continued economic uncertainty and reductions in consumer spending may result in reductions in sales of
our consumer robots. Additionally, disruptions in credit markets may materially limit consumer credit
availability and restrict credit availability of our retail customers, which would also impact purchases of our
consumer robots. Any reduction in sales of our consumer robots, resulting from reductions in consumer spending
or continued disruption in the availability of credit to retailers or consumers, could materially and adversely
affect our business, results of operations and financial condition.
A significant portion of our business currently depends on our consumer robots, and our sales growth and
operating results would be negatively impacted if we are unable to enhance our current consumer robots or
develop new consumer robots at competitive prices or in a timely manner, or if the consumer robot market
does not achieve broad market acceptance.
For the years ended December 31, 2011 and January 1, 2011, we derived 59.8% and 57.2% of our total
revenue from our consumer robots, respectively. For the foreseeable future, we expect that a significant portion
of our revenue will be derived from sales of consumer robots in general and home floor care products in
particular. Accordingly, our future success depends upon our ability to further penetrate the consumer home care
market, to enhance our current consumer products and develop and introduce new consumer products offering
enhanced performance and functionality at competitive prices. The development and application of new
technologies involve time, substantial costs and risks. Our inability to achieve significant sales of our newly
introduced robots, or to enhance, develop and introduce other products in a timely manner, or at all, would
materially harm our sales growth and operating results.
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.
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