iRobot 2011 Annual Report Download - page 71

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 a valuation allowance and the potential for changes in facts and circumstances, it is possible that we
will be required to record a valuation allowance in future reporting periods. Our results of operations would be
impacted negatively if we determine that a deferred tax asset valuation allowance is required in a future reporting
period.
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.
We have also adopted a shareholder rights agreement that entitles our stockholders to acquire shares of our
common stock at a price equal to 50% of the then-current market value in limited circumstances when a third
party acquires or announces its intention to acquire 15% or more of our outstanding common stock.
In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware
corporation from engaging in a business combination with an interested stockholder, generally a person which
together with its affiliates owns, or within the last three years has owned, 15% of our voting stock, for a period of
three years after the date of the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner.
The existence of the foregoing provisions and anti-takeover measures could limit the price that investors
might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of
our company, thereby reducing the likelihood that you could receive a premium for your common stock in an
acquisition.
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