iRobot 2014 Annual Report Download - page 112

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exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15,
2016, including interim periods within that reporting period. Early application is not permitted. We are currently assessing the
potential impact of ASU No. 2014-09 on our consolidated financial statements.
On April 10, 2014, the FASB issued ASU No. 2014-08 “Reporting Discontinued Operations and Disclosures of Disposals
of Components of an Entity.” ASU No. 2014-08 changes the criteria for reporting discontinued operations and modifies related
disclosure requirements. The new guidance is effective on a prospective basis for fiscal years beginning after December 15,
2014, and interim periods within annual periods beginning on or after December 15, 2015. Early adoption is permitted for new
disposals (or new classifications as held for sale) that have not been reported in financial statements previously issued or
available for issuance. We are currently assessing the future impact of ASU No. 2014-08 on our consolidated financial
statements.
In July 2013, the FASB issued ASU 2013-11 “Presentation of an Unrecognized Tax Benefit when a Net Operating Loss
Carryforward, a Similar Tax Loss, or a Tax Credit Exists”, related to the presentation of an unrecognized tax benefit when a net
operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This guidance clarifies prior guidance and
eliminates diversity in practice on the presentation of unrecognized tax benefits when certain situations exist at the reporting
date. This guidance is effective for annual reporting periods beginning on or after December 15, 2013 and subsequent interim
periods. The impact of this amendment on our consolidated financial statements was not material.
From time to time, new accounting pronouncements are issued by FASB that are adopted by us as of the specified
effective date. Unless otherwise discussed, we believe that the impact of recently issued standards, which are not yet effective,
will not have a material impact on our consolidated financial statements upon adoption.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Currency Exchange Risk
We maintain sales and business operations in foreign countries. As such, we have exposure to adverse changes in
exchange rates associated with operating expenses of our foreign operations, but we believe this exposure to be immaterial.
Additionally, we accept orders for home robots products in currencies other than the U.S. dollar. We regularly monitor the level
of non-U.S. dollar accounts receivable balances to determine if any actions, including possibly entering into foreign currency
forward contracts, should be taken to minimize the impact of fluctuating exchange rates on our results of operations. Our
international revenue is primarily denominated in U.S. dollars and therefore any fluctuations in the Euro or any other non-U.S.
dollar currencies will have minimal direct impact on our international revenue. However, as the U.S. dollar strengthens or
weakens against other currencies, our international distributors may be impacted, which could affect their profitability and our
ability to maintain current pricing levels on our international consumer products.
Interest Rate Sensitivity
At December 27, 2014, we had unrestricted cash and cash equivalents of $186.0 million and short term investments of
$36.2 million. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into
investments for trading or speculative purposes. Some of the securities in which we invest, however, may be subject to market
risk. This means that a change in prevailing interest rates may cause the fair market value of the investment to fluctuate. To
minimize this risk in the future, we intend to maintain our portfolio of cash equivalents in a variety of securities, commercial
paper, money market funds, debt securities and certificates of deposit. Due to the short-term nature of these investments, we
believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes
in interest rates. As of December 27, 2014, all of our cash and cash equivalents were held in demand deposits and money
market accounts.
Our exposure to market risk also relates to the increase or decrease in the amount of interest expense we must pay on any
outstanding debt instruments, primarily certain borrowings under our working capital line of credit. The advances under the
working capital line of credit bear a variable rate of interest determined at the time of the borrowing. At December 27, 2014, we
had letters of credit outstanding of $3.2 million under our revolving letter of credit facility.