iRobot 2014 Annual Report Download - page 56

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A
Exhibit A
iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)
For the twelve months ended
December 27,
2014 December 28,
2013
Net income $ 37,803 $ 27,641
Interest income, net (673) (660)
Income tax expense 14,606 4,774
Depreciation 9,192 8,077
Amortization 3,857 4,092
EBITDA 64,785 43,924
Stock-based compensation expense 13,778 13,409
Merger and acquisition expense — 400
Net intellectual property litigation expense 1,214 1202
Restructuring expense — 3,296
Adjusted EBITDA $ 79,777 $ 62,231
Use of Non-GAAP Financial Measures
In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The
Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, merger and acquisition
expenses, net intellectual property litigation expenses, restructuring expenses and non-cash stock compensation. The Company also
presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a
measure of financial performance.
The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure
of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations
as an analytical tool, and when assessing the Company’s operating performance, investors should not consider Adjusted EBITDA in
isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP.
Among other things, Adjusted EBITDA does not reflect the Company’s actual cash expenditures. Other companies may calculate
similar measures differently than iRobot, limiting their usefulness as comparative tools. iRobot compensates for these limitations by
relying primarily on its U.S. GAAP results and using Adjusted EBITDA only supplementally.