iRobot 2015 Annual Report Download - page 107

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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 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 additional valuation allowance
in future reporting periods. Our results of operations would be impacted negatively if we determine that additional deferred tax
asset valuation allowance is required in a future reporting period.
Our business could be negatively affected as a result of activist investors.
In the event that any activist investor makes proposals concerning our operations, governance or other matters, or seeks to
change our board of directors, our review and consideration of such proposals may be a significant distraction for our
management and employees, and could require the expenditure of significant time and resources by us. We have received
significant attention from an activist investor, Red Mountain Capital Partners, or RMCP, since April 2015. On February 18,
2016, RMCP delivered notice to us that it plans to nominate two director candidates for election to our board of directors at our
2016 annual meeting of stockholders. As a result of this potential proxy contest, our business could be adversely affected,
including incurring significant costs, diverting the attention of our management and employees, and making it more difficult to
attract and retain qualified personnel and business partners.
Provisions in our certificate of incorporation and by-laws 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.
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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
Form 10-K