iRobot 2015 Annual Report Download - page 128

45
2015. Early adoption is permitted. We do not believe that the impact of this standard 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 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 do not believe that the impact of this standard will be material to 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
exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15,
2016, including interim periods within those annual reporting periods. In July 2015, the FASB voted to defer the effective date
of the new accounting guidance related to revenue recognition by one year to December 17, 2017 for annual reporting periods
beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15,
2016. We are in the process of evaluating the impact that the adoption of the new revenue recognition standard issued in May
2014 will have on our consolidated financial statements and footnote disclosures.
From time to time, new accounting pronouncements are issued by FASB that we adopt as of the specified effective date.
Unless otherwise discussed, we believe that recently issued standards that 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 or swaps, 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 January 2, 2016, we had unrestricted cash and cash equivalents of $179.9 million and short term investments of
$33.1 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 January 2, 2016, 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 January 2, 2016, we
had letters of credit outstanding of $1.5 million under our revolving letter of credit facility.