iRobot 2015 Annual Report Download - page 86

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PART I
ITEM 1. BUSINESS
This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical
facts contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and
financial position, business strategy, plans and objectives of management for future operations, and plans for product
development and manufacturing are forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from
any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss certain of
these risks in greater detail in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Also, these
forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we have no plans to update our
forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. We caution
readers not to place undue reliance upon any such forward-looking statements.
iRobot, Roomba, Ava, Scooba, Mint, ViPR, NorthStar, Create, PackBot, FirstLook, iAdapt, Aware, Home Base, Looj,
Braava, Kobra, AeroForce, uPoint, AeroVac, Mirra, and Virtual Wall are trademarks of iRobot Corporation.
Overview
iRobot Corporation ("iRobot" or the "Company" or "we") designs and builds robots that empower people to do more.
For 25 years, we have developed proprietary technology incorporating advanced concepts in navigation, mobility, manipulation
and artificial intelligence to build industry-leading robots. Our home robots, which represented 91% of our revenue in 2015,
and which we expect will grow to an even larger percentage of our revenue in 2016 and beyond, perform time-consuming
domestic chores. Our defense and security robots perform tasks such as battlefield reconnaissance and bomb disposal, and
multi-purpose tasks for law enforcement agencies and first responders, as well as certain commercial users. Our remote
presence robots expand the reach of medical care by connecting physicians with patients from anywhere in the world and also
provide autonomous telepresence capabilities enabling remote workers to more personally collaborate throughout the
workplace. We sell our robots through a variety of distribution channels, including chain stores and other national retailers,
through our on-line store, through value-added distributors and resellers, and to the U.S. military and other government
agencies worldwide.
Since our founding, we have accumulated expertise in all the disciplines necessary to design and build durable, high-
performance and cost-effective robots through the close integration of software, electronics and hardware. Our core
technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products, reducing
the time, cost and risk of product development. Our significant expertise in robot design and engineering positions us to
capitalize on the growth we expect in the market for robot-based products. We believe that the sophisticated technologies in our
existing applications are adaptable to a broad array of markets such as commercial cleaning, elder care, home automation,
healthcare, video collaboration, landscaping, agriculture, and other vertical markets.
Over the past thirteen years, we have sold more than 15 million of our home robots. During that time, we also sold
approximately 6,000 of our defense and security robots, most of which have been sold to the U.S. military and deployed on
missions in Afghanistan and Iraq, and more recently to state, local and international government entities.
During 2015, we took several steps to become more focused on our well established home robots business to capitalize on
the substantial opportunities available to us within consumer markets. First, we entered into an Asset Purchase Agreement on
February 2, 2016 with iRobot Defense Holdings, Inc., a recently-formed portfolio company of Arlington Capital Partners,
which provides for the sale of our defense and security business unit. The purchase price is up to $45.0 million, of which $30.0
million will be paid at the closing of the transaction, subject to adjustments for working capital and indebtedness as set forth in
the purchase agreement, and up to an additional $15.0 million of which may be paid based on 2016 revenue of the defense and
security business unit. The transaction is expected to close during the first quarter of 2016. Second, we reallocated research
and development resources from a next generation remote presence platform to opportunities in our home robots business.
These actions were taken to solidify our position as the leader in diversified home robots and to focus on key technologies, with