iRobot 2014 Annual Report Download - page 111

38
existing working capital line of credit. We do not currently anticipate significant investment in property, plant and equipment,
and we believe that our outsourced approach to manufacturing provides us with flexibility in both managing inventory levels
and financing our inventory. We believe our existing cash and cash equivalents, short-term investments, cash provided by
operating activities, and funds available through our working capital line of credit will be sufficient to meet our working capital
and capital expenditure needs over at least the next twelve months. In the event that our revenue plan does not meet our
expectations, we may eliminate or curtail expenditures to mitigate the impact on our working capital. Our future capital
requirements will depend on many factors, including our rate of revenue growth, the expansion of our marketing and sales
activities, the timing and extent of spending to support product development efforts, the timing of introductions of new products
and enhancements to existing products, the acquisition of new capabilities or technologies, and the continuing market
acceptance of our products and services. Moreover, to the extent that existing cash and cash equivalents, short-term
investments, cash from operations, and cash from short-term borrowing are insufficient to fund our future activities, we may
need to raise additional funds through public or private equity or debt financing. As part of our business strategy, we may
consider additional acquisitions of companies, technologies and products, which could also require us to seek additional equity
or debt financing. Additional funds may not be available on terms favorable to us or at all.
Contractual Obligations
We generally do not enter into binding purchase commitments. Our principal commitments consist of obligations under
our working capital line of credit, leases for office space and minimum contractual obligations for services. Other obligations
consist of software licensing arrangements and advertising agreements for corporate branding. The following table describes
our commitments to settle contractual obligations in cash as of December 27, 2014:
Payments Due by Period
Less Than
1 Year 1 to 3 Years 3 to 5 Years More Than 5 Years Total
(In thousands)
Operating leases $ 3,460 $ 5,053 $ 4,766 $ 794 $ 14,073
Other obligations 523 125 — — 648
Total $ 3,983 $ 5,178 $ 4,766 $ 794 $ 14,721
At December 27, 2014, we had outstanding purchase orders aggregating approximately $78.1 million. The purchase
orders, the majority of which are with our contract manufacturers for the purchase of inventory in the normal course of
business, are for manufacturing and non-manufacturing related goods and services, and are generally cancelable without
penalty. In circumstances where we determine that we have financial exposure associated with any of these commitments, we
record a liability in the period in which that exposure is identified.
Off-Balance Sheet Arrangements
As of December 27, 2014, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
Recently Issued Accounting Pronouncements
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.
2014-15, “Presentation of Financial Statements - Going Concern.” ASU No. 2014-15 requires management of public and
private companies to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and, if
so, disclose that fact. Management will also be required to evaluate and disclose whether its plans alleviate that doubt. The new
standard is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning
after December 15, 2016. We do not believe that the impact of this amendment will be material to our consolidated financial
statements.
In June 2014, the FASB issued ASU No. 2014-12, “Accounting for Share-Based Payments When the Terms of an Award
Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” ASU No. 2014-12 requires a
reporting entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as
a performance condition. It is effective for annual periods, and interim periods within those annual periods, beginning after
December 15, 2015. Early adoption is permitted. We are currently assessing the potential impact of ASU No. 2014-12 on our
consolidated financial statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which provides guidance
for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised
goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in
Form 10-K