e10vq
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED October 1, 2011
OR
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 000-51598
iROBOT CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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77-0259 335
(I.R.S. Employer
Identification No.) |
8 Crosby Drive
Bedford, MA 01730
(Address of principal executive offices)
(Zip code)
(781) 430-3000
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
(Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
The number of shares outstanding of the Registrants Common Stock as of October 28, 2011 was
27,037,034.
iROBOT CORPORATION
FORM 10-Q
THREE AND NINE MONTHS ENDED OCTOBER 1, 2011
INDEX
2
Consolidated Balance Sheets
(unaudited)
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October 1, |
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January 1, |
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2011 |
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2011 |
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(in thousands) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
131,662 |
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$ |
108,383 |
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Short term investments |
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13,662 |
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13,928 |
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Accounts receivable, net of allowance of $88 at October 1, 2011 and January 1, 2011 |
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41,400 |
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34,056 |
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Unbilled revenue |
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7,899 |
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4,012 |
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Inventory |
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31,989 |
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27,160 |
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Deferred tax assets |
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14,013 |
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12,917 |
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Other current assets |
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12,655 |
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6,137 |
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Total current assets |
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253,280 |
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206,593 |
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Property and equipment, net |
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28,886 |
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25,620 |
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Deferred tax assets |
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6,307 |
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8,338 |
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Other assets |
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13,453 |
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13,780 |
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Total assets |
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$ |
301,926 |
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$ |
254,331 |
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LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
40,522 |
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$ |
38,689 |
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Accrued expenses |
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15,237 |
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15,790 |
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Accrued compensation |
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15,045 |
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17,827 |
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Deferred revenue and customer advances |
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2,358 |
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3,534 |
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Total current liabilities |
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73,162 |
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75,840 |
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Long term liabilities |
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3,727 |
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3,584 |
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Commitments and contingencies (Note 6) |
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Redeemable convertible preferred stock,
5,000,000 shares authorized and none outstanding |
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Common stock, $0.01 par value, 100,000,000 shares authorized; 26,927,670 and
25,844,840 shares issued and outstanding at October 1, 2011 and January 1, 2011,
respectively |
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269 |
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258 |
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Additional paid-in capital |
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177,188 |
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156,620 |
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Retained earnings |
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47,502 |
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17,949 |
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Accumulated other comprehensive income |
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78 |
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80 |
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Total stockholders equity |
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225,037 |
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174,907 |
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Total liabilities, redeemable convertible preferred stock and stockholders equity |
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$ |
301,926 |
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$ |
254,331 |
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The accompanying notes are an integral part of the consolidated financial statements.
3
Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
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Three Months Ended |
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Nine Months Ended |
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October 1, |
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October 2, |
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October 1, |
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October 2, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenue: |
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Product revenue |
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$ |
109,993 |
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$ |
85,051 |
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$ |
304,100 |
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$ |
257,107 |
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Contract revenue |
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10,380 |
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9,172 |
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30,632 |
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29,850 |
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Total revenue |
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120,373 |
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94,223 |
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334,732 |
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286,957 |
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Cost of revenue: |
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Cost of product revenue (1) |
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63,670 |
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54,472 |
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177,695 |
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165,897 |
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Cost of contract revenue (1) |
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6,660 |
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6,494 |
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21,004 |
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21,116 |
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Total cost of revenue |
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70,330 |
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60,966 |
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198,699 |
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187,013 |
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Gross margin |
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50,043 |
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33,257 |
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136,033 |
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99,944 |
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Operating expenses: |
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Research and development (1) |
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8,948 |
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6,185 |
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25,823 |
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16,375 |
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Selling and marketing (1) |
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14,553 |
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10,734 |
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40,301 |
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30,959 |
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General and administrative (1) |
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10,962 |
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8,904 |
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31,659 |
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26,693 |
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Total operating expenses |
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34,463 |
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25,823 |
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97,783 |
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74,027 |
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Operating income |
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15,580 |
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7,434 |
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38,250 |
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25,917 |
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Other income (expense), net |
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(92 |
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299 |
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258 |
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368 |
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Income before income taxes |
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15,488 |
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7,733 |
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38,508 |
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26,285 |
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Income tax expense |
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1,436 |
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701 |
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8,955 |
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7,771 |
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Net income |
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$ |
14,052 |
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$ |
7,032 |
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$ |
29,553 |
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$ |
18,514 |
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Net income per share |
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Basic |
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$ |
0.52 |
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$ |
0.28 |
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$ |
1.11 |
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$ |
0.73 |
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Diluted |
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$ |
0.50 |
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$ |
0.27 |
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$ |
1.06 |
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$ |
0.70 |
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Number of shares used in calculations per share |
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Basic |
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26,902 |
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25,428 |
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26,568 |
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25,293 |
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Diluted |
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27,940 |
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26,480 |
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27,823 |
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26,319 |
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(1) |
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Total stock-based compensation recorded in the three and nine months ended October 1, 2011
and October 2, 2010 included in the above figures breaks down by expense classification as
follows: |
Consolidated Statements of Income
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Three Months Ended |
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Nine Months Ended |
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October 1, |
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October 2, |
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October 1, |
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October 2, |
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2011 |
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2010 |
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2011 |
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2010 |
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Cost of product revenue |
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$ |
344 |
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$ |
310 |
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$ |
915 |
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$ |
997 |
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Cost of contract revenue |
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115 |
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101 |
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365 |
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337 |
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Research and development |
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162 |
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211 |
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481 |
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488 |
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Selling and marketing |
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174 |
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240 |
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513 |
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885 |
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General and administrative |
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1,401 |
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1,079 |
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4,112 |
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3,325 |
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The accompanying notes are an integral part of the consolidated financial statements.
4
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
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Nine Months Ended |
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October 1, |
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October 2, |
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2011 |
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2010 |
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Cash flows from operating activities: |
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Net income |
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$ |
29,553 |
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$ |
18,514 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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7,237 |
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5,673 |
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Loss on disposal of property and equipment |
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476 |
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117 |
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Stock-based compensation |
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6,386 |
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6,032 |
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Deferred income taxes, net |
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447 |
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(3,867 |
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Non-cash director deferred compensation |
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126 |
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99 |
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Changes in operating assets and liabilities (use) source |
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Accounts receivable |
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(7,344 |
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7,377 |
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Unbilled revenue |
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(3,887 |
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(703 |
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Inventory |
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(4,829 |
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(1,563 |
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Other assets |
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(6,572 |
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1,010 |
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Accounts payable |
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1,833 |
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5,118 |
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Accrued expenses |
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(530 |
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(315 |
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Accrued compensation |
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(2,782 |
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(408 |
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Deferred revenue |
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(1,176 |
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(1,885 |
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Long term liabilities |
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143 |
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(322 |
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Net cash provided by operating activities |
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19,081 |
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34,877 |
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Cash flows from investing activities: |
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Additions of property and equipment |
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(10,357 |
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(7,537 |
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Purchases of investments |
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(5,000 |
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(30,461 |
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Sales of investments |
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5,000 |
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19,000 |
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Net cash used in investing activities |
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(10,357 |
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(18,998 |
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Cash flows from financing activities: |
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Proceeds from stock option exercises |
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9,398 |
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2,297 |
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Income tax withholding payment associated with restricted stock vesting |
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(845 |
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(284 |
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Tax benefit of excess stock-based compensation deductions |
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6,002 |
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855 |
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Net cash provided by financing activities |
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14,555 |
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2,868 |
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Net increase in cash and cash equivalents |
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23,279 |
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18,747 |
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Cash and cash equivalents, at beginning of period |
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108,383 |
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71,856 |
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Cash and cash equivalents, at end of period |
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$ |
131,662 |
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$ |
90,603 |
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes |
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$ |
7,946 |
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$ |
12,198 |
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Supplemental disclosure of noncash investing and financing activities:
During the nine months ended October 1, 2011 and October 2, 2010, the Company transferred $847
and $1,945, respectively, of inventory to fixed assets.
The accompanying notes are an integral part of the consolidated financial statements.
5
Notes To Consolidated Financial Statements
(unaudited)
1. Description of Business
iRobot Corporation (iRobot or the Company) develops robotics and artificial intelligence
technologies and applies these technologies in producing and marketing robots. The majority of the
Companys revenue is generated from product sales and government and industrial research and
development contracts.
The Company is subject to risks common to companies in high-tech industries including, but not
limited to, uncertainty of progress in developing technologies, new technological innovations,
dependence on key personnel, protection of proprietary technology, compliance with government
regulations, uncertainty of market acceptance of products, the need to obtain financing, if
necessary, global economic conditions and associated impact on consumer spending, and changes in
policies and spending priorities of the U.S. federal government and other government agencies.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include those of iRobot and its
subsidiaries, after elimination of all intercompany accounts and transactions. iRobot has prepared
the accompanying consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial data as of October 1, 2011 and for the three and nine months ended
October 1, 2011 and October 2, 2010 has been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC). Certain information
and footnote disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the disclosures are
adequate to make the information presented not misleading. The year-end balance sheet data was
derived from audited financial statements, but does not include all disclosures required by
accounting principles generally accepted in the United States. These consolidated financial
statements should be read in conjunction with the Companys audited consolidated financial
statements and the notes thereto included in its Annual Report on Form 10-K for the fiscal year
ended January 1, 2011, filed with the SEC on February 18, 2011.
In the opinion of management, all adjustments necessary to state fairly its statement of
financial position as of October 1, 2011 and results of operations and cash flows for the periods
ended October 1, 2011 and October 2, 2010 have been made. The results of operations and cash flows
for any interim period are not necessarily indicative of the operating results and cash flows for
the full fiscal year or any future periods.
Use of Estimates
The preparation of these financial statements in conformity with accounting principles
generally accepted in the United States requires the Company to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of
contingent assets and liabilities. On an ongoing basis, management evaluates these estimates and
judgments, including those related to revenue recognition, sales returns, bad debts, warranty
claims, inventory reserves, valuation of investments, assumptions used in valuing stock-based
compensation instruments and income taxes. The Company bases these estimates on historical and
anticipated results, and trends and on various other assumptions that the Company believes are
reasonable under the circumstances, including assumptions as to future events. These estimates form
the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. By their nature, estimates are subject to an inherent degree
of uncertainty. Actual results may differ from the Companys estimates.
Fiscal Year-End
The Company operates and reports using a 52-53 week fiscal year ending on the Saturday closest
to December 31. Accordingly, the Companys fiscal quarters end on the Saturday that falls closest
to the last day of the third month of each quarter.
6
Notes To Consolidated Financial Statements Continued
(unaudited)
Revenue Recognition
The Company derives its revenue from product sales, government research and development
contracts, and commercial research and development contracts. The Company sells products directly
to customers and indirectly through resellers and distributors. The Company recognizes revenue from
sales of home robots under the terms of the customer agreement upon transfer of title and risk of
loss to the customer, net of estimated returns, provided that collection is determined to be
reasonably assured and no significant obligations remain. Sales to resellers are typically subject
to agreements allowing for limited rights of return for defective products only, rebates and price
protection. The Company has typically not taken product returns except for defective products.
Accordingly, the Company reduces revenue for its estimates of liabilities for these rights at the
time the related sale is recorded. The Company makes an estimate of sales returns for products sold
by resellers directly based on historical returns experience and other relevant data. The Companys
international distributor agreements do not currently allow for product returns and, as a result,
no reserve for returns is established for this group of customers. The Company has aggregated and
analyzed historical returns from resellers and end users which form the basis of its estimate of
future sales returns by resellers or end users. When a right of return exists, the provision for
these estimated returns is recorded as a reduction of revenue at the time that the related revenue
is recorded. If actual returns differ significantly from its estimates, such differences could have
a material impact on the Companys results of operations for the period in which the returns become
known. The estimates for returns are adjusted periodically based upon historical rates of returns.
The estimates and reserve for rebates and price protection are based on specific programs, expected
usage and historical experience. Actual results could differ from these estimates.
Under cost-plus-fixed-fee (CPFF) type contracts, the Company recognizes revenue based on
costs incurred plus a pro rata portion of the total fixed fee. Costs incurred include labor and
material that are directly associated with individual CPFF contracts plus indirect overhead and
general and administrative type costs based upon billing rates submitted by the Company to the
Defense Contract Management Agency (DCMA). Annually, the Company submits final indirect billing
rates to DCMA based upon actual costs incurred throughout the year. These final billing rates are
subject to audit by the Defense Contract Audit Agency (DCAA) which can occur several years after
the final billing rates are submitted and may result in material adjustments to revenue recognized
based on estimated final billing rates. As of October 1, 2011, fiscal years 2007, 2008, 2009 and
2010 are open for audit by DCAA. In the situation where the Companys anticipated actual billing
rates will be lower than the provisional rates currently in effect, the Company records a
cumulative revenue adjustment in the period in which the rate differential is identified. Revenue
on firm fixed price (FFP) contracts is recognized using the percentage-of-completion method. For
government product FFP contracts revenue is recognized as the product is shipped or in accordance
with the contract terms. Costs and estimated gross margins on contracts are recorded as revenue as
work is performed based on the percentage that incurred costs compare to estimated total costs
utilizing the most recent estimates of costs and funding. Changes in job performance, job
conditions, and estimated profitability, including those arising from final contract settlements
and government audit, may result in revisions to costs and income and are recognized in the period
in which the revisions are determined. Since many contracts extend over a long period of time,
revisions in cost and funding estimates during the progress of work have the effect of adjusting
earnings applicable to past performance in the current period. When the current contract estimate
indicates a loss, a provision is made for the total anticipated loss in the current period. Revenue
earned in excess of billings, if any, is recorded as unbilled revenue. Billings in excess of
revenue earned, if any, are recorded as deferred revenue.
Accounting for Share-Based Payments
The Company accounts for share-based payments to employees, including grants of employee stock
options and awards in the form of restricted shares and restricted stock units by establishing the
fair value of each option grant using the Black-Scholes option- pricing model and the fair value of
awards based on stock price at the time of grant. The fair value of share-based payments is
recorded by the Company as a charge against earnings. The Company recognizes share-based payment
expense over the requisite service period of the underlying grants and awards. The Companys
share-based payment awards are accounted for as equity instruments.
Net Income Per Share
The following table presents the calculation of both basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, 2011 |
|
|
October 2, 2010 |
|
|
October 1, 2011 |
|
|
October 2, 2010 |
|
Net income |
|
$ |
14,052 |
|
|
$ |
7,032 |
|
|
$ |
29,553 |
|
|
$ |
18,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
|
|
26,902 |
|
|
|
25,428 |
|
|
|
26,568 |
|
|
|
25,293 |
|
Dilutive effect of employee stock options and restricted shares |
|
|
1,038 |
|
|
|
1,052 |
|
|
|
1,255 |
|
|
|
1,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted-average shares outstanding |
|
|
27,940 |
|
|
|
26,480 |
|
|
|
27,823 |
|
|
|
26,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per share |
|
$ |
0.52 |
|
|
$ |
0.28 |
|
|
$ |
1.11 |
|
|
$ |
0.73 |
|
Diluted income per share |
|
$ |
0.50 |
|
|
$ |
0.27 |
|
|
$ |
1.06 |
|
|
$ |
0.70 |
|
7
Notes To Consolidated Financial Statements (Continued)
(unaudited)
Potentially dilutive securities representing approximately 0.5 million and 1.2 million shares
of common stock for the three month periods ended October 1, 2011 and October 2, 2010,
respectively, and approximately 0.3 million and 1.0 million shares of common stock for the nine
month periods ended October 1, 2011 and October 2, 2010, respectively, were excluded from the
computation of diluted earnings per share for these periods because their effect would have been
antidilutive.
Income Taxes
Deferred taxes are determined based on the difference between the book and tax basis of assets
and liabilities using enacted tax rates in effect in the years in which the differences are
expected to reverse. Valuation allowances are provided, if based upon the weight of available
evidence, it is more likely than not that some or all of the deferred tax assets will not be
realized.
The Company recorded a tax provision of $1.4 million and $0.7 million for the three month
periods ended October 1, 2011 and October 2, 2010, respectively. The $1.4 million provision for
the three month period ended October 1, 2011 was based upon a projected 2011 effective income tax
rate of 31% offset by a net tax benefit of $3.5 million resulting from the completion in the period
of a comprehensive evaluation of the Companys research and development credit and domestic
manufacturing deductions. The $0.7 million provision for the three month period ended October 2,
2010 was based upon a projected 2010 effective tax rate of 38% offset by a $2.3 million one-time
benefit associated with the full release of the Companys valuation allowance relating to state
deferred tax assets.
The Company recorded a tax provision of $9.0 million and $7.8 million for the nine month
periods ended October 1, 2011 and October 2, 2010, respectively. The $9.0 million provision for
the nine month period ended October 1, 2011 was based upon a projected 2011 effective income tax
rate of 31% offset by a net tax benefit of $3.5 million resulting from the completion in the period
of a comprehensive evaluation of the Companys research and development credit and domestic
manufacturing deductions. The $7.8 million provision for the nine month period ended October 2,
2010 was based upon a projected 2010 effective tax rate of 38% offset by a $2.3 million one-time
benefit associated with the full release of the Companys valuation allowance relating to state
deferred tax assets.
The decrease in the projected effective tax rates from 38% in 2010 to 31% in 2011 was
primarily due to the benefit of research and development tax credits in 2011 as compared to fiscal
2010 when this credit was retroactively re-enacted into law in the fourth quarter, higher domestic
manufacturing deductions in 2011, and lower anticipated state tax,
net of federal benefit due to state tax credits and state tax law
changes.
During the three month period ended October 1, 2011, the Company recorded a $1.3 million
reserve for uncertain tax positions due to the Companys assessment of certain aspects of its
research and development credits. The Company had not previously recorded any reserves for
uncertain tax positions. Consequently, the balance of the reserve for uncertain tax positions at
October 1, 2011 was $1.3 million. The Company includes interest and penalties related to
unrecognized tax benefits within its provision for income taxes.
Comprehensive Income
Comprehensive income includes unrealized gains (losses) on certain investments. The
differences between net income and comprehensive income were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, 2011 |
|
|
October 2, 2010 |
|
|
October 1, 2011 |
|
|
October 2, 2010 |
|
Net income, as reported |
|
$ |
14,052 |
|
|
$ |
7,032 |
|
|
$ |
29,553 |
|
|
$ |
18,514 |
|
Unrealized gains (losses) on investments, net of tax |
|
|
(97 |
) |
|
|
87 |
|
|
|
(2 |
) |
|
|
164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
$ |
13,955 |
|
|
$ |
7,119 |
|
|
$ |
29,551 |
|
|
$ |
18,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements
The authoritative guidance for fair value establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as
observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than
quoted prices in active markets that are either directly or indirectly observable; and Level 3,
defined as unobservable inputs in which little or no market data exists, therefore requiring an
entity to develop its own assumptions.
8
Notes To Consolidated Financial Statements (Continued)
(unaudited)
The Companys assets measured at fair value on a recurring basis at October 1, 2011, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of October 1, 2011 |
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
(In thousands) |
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Funds |
|
$ |
70,445 |
|
|
$ |
|
|
|
$ |
|
|
U.S. Government bonds |
|
|
|
|
|
|
2,509 |
|
|
|
|
|
Corporate bonds |
|
|
|
|
|
|
11,153 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value |
|
$ |
70,445 |
|
|
$ |
13,662 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
The Companys assets measured at fair value on a recurring basis at January 1, 2011, were as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements as of January 1, 2011 |
|
Description |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Funds |
|
$ |
5,090 |
|
|
$ |
|
|
|
$ |
|
|
U.S. Government bonds |
|
|
|
|
|
|
2,504 |
|
|
|
|
|
Corporate bonds |
|
|
|
|
|
|
11,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets measured at fair value |
|
$ |
5,090 |
|
|
$ |
13,928 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
In each table above, the bond investments are valued based on observable market inputs as of
the Companys reporting date and are included in Level 2 inputs. In determining the fair value of
our Level 2 bond investments, the Company considers the appropriateness of a model and assumptions
used by a pricing vendor to price the investments. The pricing vendors model relies on a
comprehensive multi-dimensional relational model that uses standard inputs including benchmark
yields, reported trades, broker/dealer quotes, issue spreads, two-sided markets, benchmark
securities, bids, offers and reference data including market research publications. The bond
investments are recorded at fair value and marked-to-market at the end of each reporting period and
realized and unrealized gains and losses are included in comprehensive income (loss) for that
period. The fair value of the Companys bond investments are included in short term investments in
its consolidated balance sheet.
Goodwill
Goodwill is recorded as the difference, if any, between the aggregate consideration paid for
an acquisition and the fair value of the net tangible and intangible assets acquired. The Company
tests goodwill for impairment at the reporting unit level (operating segment or one level below an
operating segment) annually or more frequently if the Company believes indicators of impairment
exist. The performance of the test involves a two-step process. The first step of the impairment
test involves comparing the fair values of the applicable reporting units with their aggregate
carrying values, including goodwill. If the carrying amount of a reporting unit exceeds the
reporting units fair value, the Company performs the second step of the goodwill impairment test
to determine the amount of impairment loss. The second step of the goodwill impairment test
involves comparing the implied fair value of the affected reporting units goodwill with the
carrying value of that goodwill.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued amended guidance on fair
value measurement and related disclosures. The new guidance clarifies the concepts applicable for
fair value measurement of non-financial assets and requires the disclosure of quantitative
information about the unobservable inputs used in a fair value measurement. This guidance will be
effective for reporting periods beginning after December 15, 2011, and will be applied
prospectively. The Company does not anticipate a material impact on its consolidated financial
statements as a result of the adoption of this amended guidance.
In June 2011, the FASB amended its accounting guidance on the presentation of other
comprehensive income (OCI) in an entitys financial statements. The amended guidance eliminates the
option to present the components of OCI as part of the statement of changes in shareholders equity
and provides two options for presenting OCI: in a statement included in the income statement or in
a separate statement immediately following the income statement. The amendments do not change the
guidance for the items that have to be reported in OCI or when an item of OCI has to be moved into
net income. For public entities, the amendments are effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. The Company does not anticipate that its
adoption of this guidance will have a material impact on its consolidated results.
9
Notes To Consolidated Financial Statements (Continued)
(unaudited)
In September 2011, the FASB issued updated guidance on the periodic testing of goodwill for
impairment. The updated guidance gives companies the option to perform a qualitative assessment to
determine whether it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. The amendment is intended to reduce the cost and complexity of the annual
goodwill impairment test by providing entities an option to perform a qualitative assessment to
determine whether further impairment testing is necessary. The updated accounting guidance is
effective for fiscal years beginning after December 15, 2011, with early adoption permitted. The
Company currently believes its adoption of this guidance will not impact its consolidated financial
statements.
From time to time, new accounting pronouncements are issued by FASB that are adopted by the
Company as of the specified effective date. Unless otherwise discussed, the Company believes that
the impact of recently issued standards, which are not yet effective, will not have a material
impact on the Companys consolidated financial statements upon adoption.
3. Inventory
Inventory consists of the following:
|
|
|
|
|
|
|
|
|
|
|
October 1, |
|
|
January 1, |
|
|
|
2011 |
|
|
2011 |
|
|
|
(In thousands) |
|
Raw materials |
|
$ |
6,348 |
|
|
$ |
6,723 |
|
Work in process |
|
|
21 |
|
|
|
27 |
|
Finished goods |
|
|
25,620 |
|
|
|
20,410 |
|
|
|
|
|
|
|
|
|
|
$ |
31,989 |
|
|
$ |
27,160 |
|
|
|
|
|
|
|
|
4. Stock Option Plans
The Company has options outstanding under three stock incentive plans: the 1994 Stock Option
Plan (the 1994 Plan), the 2004 Stock Option and Incentive Plan (the 2004 Plan) and the 2005
Stock Option and Incentive Plan (the 2005 Plan and together with the 1994 Plan and the 2004 Plan,
the Plans). The 2005 Plan is the only one of the three plans under which new awards may currently
be granted. Under the 2005 Plan, which became effective October 10, 2005, 1,583,682 shares were
initially reserved for issuance in the form of incentive stock options, non-qualified stock
options, stock appreciation rights, deferred stock awards and restricted stock awards.
Additionally, the 2005 Plan provides that the number of shares reserved and available for issuance
under the plan will automatically increase each January 1, beginning in 2007, by 4.5% of the
outstanding number of shares of common stock on the immediately preceding December 31. Stock
options returned to the Plans as a result of their expiration, cancellation or termination are
automatically made available for issuance under the 2005 Plan. Eligibility for incentive stock
options is limited to those individuals whose employment status would qualify them for the tax
treatment associated with incentive stock options in accordance with the Internal Revenue Code of
1986, as amended. As of October 1, 2011, there were 2,676,424 shares available for future grant
under the 2005 Plan.
Options granted under the Plans are subject to terms and conditions as determined by the
compensation committee of the board of directors, including vesting periods. Options granted under
the Plans are exercisable in full at any time subsequent to vesting, generally vest over periods
from zero to five years, and expire seven or ten years from the date of grant or, if earlier, 60 or
90 days from employee termination. The exercise price of incentive stock options is equal to the
closing price on the NASDAQ Global Market on the date of grant. The exercise price of nonstatutory
options may be set at a price other than the fair market value of the common stock.
On September 30, 2011, the Company granted to certain employees an annual merit grant totaling
43,400 restricted stock units. These restricted stock units will vest 25% on each anniversary of
the grant date.
10
Notes To Consolidated Financial Statements (Continued)
(unaudited)
5. Accrued Expenses
Accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
October 1, |
|
|
January 1, |
|
|
|
2011 |
|
|
2011 |
|
|
|
(In thousands) |
|
Accrued warranty |
|
$ |
10,259 |
|
|
$ |
9,284 |
|
Accrued direct fulfillment costs |
|
|
1,135 |
|
|
|
2,405 |
|
Accrued rent |
|
|
733 |
|
|
|
592 |
|
Accrued sales commissions |
|
|
285 |
|
|
|
432 |
|
Accrued accounting fees |
|
|
502 |
|
|
|
439 |
|
Accrued other |
|
|
2,323 |
|
|
|
2,638 |
|
|
|
|
|
|
|
|
|
|
$ |
15,237 |
|
|
$ |
15,790 |
|
|
|
|
|
|
|
|
6. Commitments and Contingencies
Lease Obligations
Rental expense under operating leases for the three months ended October 1, 2011 and October
2, 2010 were $1.1 million and $1.0 million, respectively, and for the nine months ended October 1,
2011 and October 2, 2010 were $3.1 million and $2.8 million, respectively. Future minimum rental
payments under operating leases were as follows as of October 1, 2011:
|
|
|
|
|
|
|
Operating |
|
|
|
Leases |
|
|
|
(In thousands) |
|
Remainder of 2011 |
|
$ |
783 |
|
2012 |
|
|
3,028 |
|
2013 |
|
|
2,611 |
|
2014 |
|
|
2,570 |
|
2015 |
|
|
2,564 |
|
Thereafter |
|
|
10,692 |
|
|
|
|
|
Total minimum lease payments |
|
$ |
22,248 |
|
|
|
|
|
Sales Taxes
The Company collects and remits sales tax in jurisdictions in which it has a physical presence
or it believes nexus exists, which therefore obligates the Company to collect and remit sales tax.
The Company continually evaluates whether it has established a nexus in new jurisdictions with
respect to sales tax. The Company has recorded a liability for potential exposure in several states
where there is uncertainty about the point in time at which the Company established a sufficient
business connection to create nexus. The Company continues to analyze possible sales tax exposure,
but does not currently believe that any individual claim or aggregate claims that might arise will
ultimately have a material effect on its consolidated results of operations, financial position or
cash flows.
Guarantees and Indemnification Obligations
The Company enters into standard indemnification agreements in the ordinary course of
business. Pursuant to these agreements, the Company indemnifies and agrees to reimburse the
indemnified party for losses incurred by the indemnified party, generally the Companys customers,
in connection with any patent, copyright, trade secret or other proprietary right infringement
claim by any third party with respect to the Companys products. The term of these indemnification
agreements is generally perpetual any time after execution of the agreement. The maximum potential
amount of future payments the Company could be required to make under these indemnification
agreements is unlimited. The Company has never incurred costs to defend lawsuits or settle claims
related to these indemnification agreements. As a result, the Company believes the estimated fair
value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for
these agreements as of October 1, 2011 and January 1, 2011, respectively.
Warranty
The Company provides warranties on most products and has established a reserve for warranty
based on identified or estimated warranty costs. The reserve is included as part of accrued
expenses (Note 5) in the accompanying balance sheets.
11
Notes To Consolidated Financial Statements (Continued)
(unaudited)
Activity related to the warranty accrual was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
October 1, |
|
|
October 2, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
|
|
(In thousands) |
|
|
(In thousands) |
|
Balance at beginning of period |
|
$ |
9,472 |
|
|
$ |
7,395 |
|
|
$ |
9,284 |
|
|
$ |
6,105 |
|
Provision |
|
|
1,266 |
|
|
|
1,908 |
|
|
|
3,531 |
|
|
|
5,003 |
|
Warranty usage(1) |
|
|
(479 |
) |
|
|
(604 |
) |
|
|
(2,556 |
) |
|
|
(2,409 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
10,259 |
|
|
$ |
8,699 |
|
|
$ |
10,259 |
|
|
$ |
8,699 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Warranty usage includes the expiration of product warranties unutilized. |
7. Industry Segment, Geographic Information and Significant Customers
The Company operates in two reportable segments, the home robots division and government and
industrial robots division. The nature of products and types of customers for the two segments vary
significantly. As such, the segments are managed separately.
Home Robots
The Companys home robots division offers products to consumers through a network of retail
businesses throughout the United States, to various countries through international distributors
and retailers, and through the Companys on-line store. The Companys home robots division includes
mobile robots used in the maintenance of households.
Government and Industrial
The Companys government and industrial robots division offers products through a small U.S.
government-focused sales force, while products are sold to a limited number of countries, other
than the United States, primarily through international distributors but also through a small
internationally focused sales team. The Companys government and industrial robots are used by
various U.S. and foreign governments, primarily for reconnaissance and bomb disposal missions.
The table below presents segment information about revenue, cost of revenue, gross margin and
income before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
October 1, |
|
|
October 2, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Robots |
|
$ |
72,341 |
|
|
$ |
54,650 |
|
|
$ |
204,116 |
|
|
$ |
160,101 |
|
Government & Industrial |
|
|
48,032 |
|
|
|
39,573 |
|
|
|
130,616 |
|
|
|
126,856 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
120,373 |
|
|
|
94,223 |
|
|
|
334,732 |
|
|
|
286,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Robots |
|
|
39,693 |
|
|
|
32,967 |
|
|
|
112,396 |
|
|
|
97,707 |
|
Government & Industrial |
|
|
30,637 |
|
|
|
27,999 |
|
|
|
86,303 |
|
|
|
89,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
|
70,330 |
|
|
|
60,966 |
|
|
|
198,699 |
|
|
|
187,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home Robots |
|
|
32,648 |
|
|
|
21,683 |
|
|
|
91,720 |
|
|
|
62,394 |
|
Government & Industrial |
|
|
17,395 |
|
|
|
11,574 |
|
|
|
44,313 |
|
|
|
37,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin |
|
|
50,043 |
|
|
|
33,257 |
|
|
|
136,033 |
|
|
|
99,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
8,948 |
|
|
|
6,185 |
|
|
|
25,823 |
|
|
|
16,375 |
|
Selling and marketing |
|
|
14,553 |
|
|
|
10,734 |
|
|
|
40,301 |
|
|
|
30,959 |
|
General and administrative |
|
|
10,962 |
|
|
|
8,904 |
|
|
|
31,659 |
|
|
|
26,693 |
|
Other income (expense), net |
|
|
(92 |
) |
|
|
299 |
|
|
|
258 |
|
|
|
368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
$ |
15,488 |
|
|
$ |
7,733 |
|
|
$ |
38,508 |
|
|
$ |
26,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12
Notes To Consolidated Financial Statements (Continued)
(unaudited)
Geographic Information
For the three months ended October 1, 2011 and October 2, 2010, sales to non-U.S. customers
accounted for 46.9% and 40.7% of total revenue, respectively, and for the nine months ended October
1, 2011 and October 2, 2010, sales to non-U.S. customers accounted for 46.8% and 42.3% of total
revenue, respectively.
Significant Customers
For the three months ended October 1, 2011 and October 2, 2010, U.S. federal government
orders, contracts and subcontracts accounted for 36.8% and 37.9% of total revenue, respectively,
and for the nine months ended October 1, 2011 and October 2, 2010, U.S. federal government orders,
contracts and subcontracts accounted for 35.1% and 39.2% of total revenue, respectively. For the
three and nine months ended October 1, 2011, the Company generated 11.3% and 6.6%, respectively, of
total revenue from one customer as a subcontractor under U.S. federal government contracts. For the
three and nine months ended October 1, 2011, the Company generated 25.6% and 22.6%, respectively,
of total revenue from two of its international distributors of home robots products.
8. Goodwill and Other Intangible Assets
The carrying amount of the goodwill at October 1, 2011 of $7.9 million is from the acquisition
of Nekton Research, LLC completed in September 2008.
Other intangible assets include the value assigned to completed technology, research
contracts, and a trade name. The estimated useful lives for all of these intangible assets are two
to ten years. The intangible assets are being amortized on a straight-line basis, which is
consistent with the pattern that the economic benefits of the intangible assets are expected to be
utilized.
Intangible assets at October 1, 2011 and January 1, 2011 consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 1, 2011 |
|
|
January 1, 2011 |
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
Cost |
|
|
Amortization |
|
|
Net |
|
|
Cost |
|
|
Amortization |
|
|
Net |
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
Completed technology |
|
$ |
3,700 |
|
|
$ |
1,141 |
|
|
$ |
2,559 |
|
|
$ |
3,700 |
|
|
$ |
865 |
|
|
$ |
2,835 |
|
Research contracts |
|
|
100 |
|
|
|
100 |
|
|
|
|
|
|
|
100 |
|
|
|
100 |
|
|
|
|
|
Tradename |
|
|
700 |
|
|
|
216 |
|
|
|
484 |
|
|
|
700 |
|
|
|
165 |
|
|
|
535 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
4,500 |
|
|
$ |
1,457 |
|
|
$ |
3,043 |
|
|
$ |
4,500 |
|
|
$ |
1,130 |
|
|
$ |
3,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to acquired intangible assets was $110,000 and $327,000 for the
three and nine months ended October 1, 2011, respectively. The estimated future amortization
expense related to current intangible assets in the current fiscal year and each of the four
succeeding fiscal years is expected to be as follows:
|
|
|
|
|
|
|
(In thousands) |
|
Remainder of 2011 |
|
$ |
110 |
|
2012 |
|
|
440 |
|
2013 |
|
|
440 |
|
2014 |
|
|
440 |
|
2015 |
|
|
440 |
|
|
|
|
|
Total |
|
$ |
1,870 |
|
|
|
|
|
9. Subsequent Event
On October 19, 2011 the Company implemented a
reduction in force in its government and industrial robots division that was driven by expectations of a reduction in government-funded research
in 2012. This action is expected to result in a fourth quarter
restructuring charge of approximately $1 million.
13
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of the financial condition and results of operations of iRobot
Corporation should be read in conjunction with the consolidated financial statements and the
related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited
financial statements and notes thereto and Managements Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended
January 1, 2011, which has been filed with the SEC. This Quarterly Report on Form 10-Q contains
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the
safe harbor created by those sections. In particular, statements contained in this Quarterly
Report on Form 10-Q, and in the documents incorporated by reference into this Quarterly Report on
Form 10-Q, that are not historical facts, including, but not limited to statements concerning new
product sales, product development and offerings, Roomba, Scooba, Looj and Verro products, PackBot
tactical military robots, the Small Unmanned Ground Vehicle, Seaglider, Negotiator, Ava, our home
robots and government and industrial robots divisions, our competition, our strategy, our market
position, market acceptance of our products, seasonal factors, revenue recognition, our profits,
growth of our revenues, product life cycle revenue, composition of our revenues, our cost of
revenues, units shipped, average selling prices, funding of our government and industrial robot
development programs, operating expenses, selling and marketing expenses, general and
administrative expenses, research and development expenses, and compensation costs, our projected
income tax rate, our credit and letter of credit facilities, our valuations of investments,
valuation and composition of our stock-based awards, and liquidity, constitute forward-looking
statements and are made under these safe harbor provisions. Some of the forward-looking statements
can be identified by the use of forward-looking terms such as believes, expects, may, will,
should, could, seek, intends, plans, estimates, anticipates, or other comparable
terms. Forward-looking statements involve inherent risks and uncertainties which could cause actual
results to differ materially from those in the forward-looking statements, including those risks
and uncertainties described in our Annual Report on Form 10-K for the year ended January 1, 2011,
as well as elsewhere in this Quarterly Report on Form 10-Q. We urge you to consider the risks and
uncertainties discussed in our Annual Report on Form 10-K and in Item 1A contained herein in
evaluating our forward-looking statements. We have no plan to update our forward-looking statements
to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q. We caution
readers not to place undue reliance upon any such forward-looking statements, which speak only as
of the date made.
Overview
iRobot designs and builds robots that make a difference. For over 20 years, we have developed
proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and
artificial intelligence to build industry-leading robots. Our Roomba floor vacuuming robot and
Scooba floor washing robot perform time-consuming domestic chores in the home, while our Looj
gutter cleaning robot and Verro pool cleaning robot perform tasks outside the home. Our PackBot and
Small Unmanned Ground Vehicle (SUGV) tactical ground military robots perform battlefield
reconnaissance and bomb disposal. Our Negotiator ground robot performs multi-purpose tasks for
local police and first responders. Our 1KA Seaglider unmanned underwater robot performs long
endurance oceanic missions. We sell our robots to consumers through a variety of distribution
channels, including chain stores and other national retailers, and through our on-line store, and
to the U.S. military and other government agencies worldwide. We maintain certifications for AS9100
and Capability Maturity Model Integration. These certifications enable us to service our military
products and services.
As of October 1, 2011, we had 689 full-time employees. We have developed expertise in the
disciplines necessary to 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, combined with our management teams experience in military and consumer markets,
positions us to capitalize on the expected growth in the market for robots.
Although we have successfully launched consumer and government and industrial products, our
continued success depends upon our ability to respond to a number of future challenges. We believe
the most significant of these challenges include increasing competition in the markets for both our
consumer and government and industrial products, our ability to obtain U.S. federal government
funding for research and development programs, and our ability to successfully develop and
introduce products and product enhancements.
14
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the dates of the financial statements and the reported amounts of revenue and
expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and
judgments, in particular those related to revenue recognition (specifically sales returns and other
allowances); valuation allowances; assumptions used in valuing stock-based compensation
instruments; evaluating loss contingencies; and valuation allowances for deferred tax assets.
Actual amounts could differ significantly from these estimates. Our management bases its estimates
and judgments on historical experience and various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities and the amounts of revenue and expenses that are not
readily apparent from other sources. Additional information about these critical accounting
policies may be found in the Managements Discussion and Analysis of Financial Condition and
Results of Operations section included in our Annual Report on Form 10-K for the fiscal year ended
January 1, 2011.
Overview of Results of Operations
The following table sets forth our results of operations as a percentage of revenue for the
three and nine month periods ended October 1, 2011 and October 2, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
October 1, |
|
|
October 2, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product revenue |
|
|
91.4 |
% |
|
|
90.3 |
% |
|
|
90.8 |
% |
|
|
89.6 |
% |
Contract revenue |
|
|
8.6 |
|
|
|
9.7 |
|
|
|
9.2 |
|
|
|
10.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenue |
|
|
52.9 |
|
|
|
57.8 |
|
|
|
53.1 |
|
|
|
57.8 |
|
Cost of contract revenue |
|
|
5.5 |
|
|
|
6.9 |
|
|
|
6.3 |
|
|
|
7.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
|
58.4 |
|
|
|
64.7 |
|
|
|
59.4 |
|
|
|
65.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
41.6 |
|
|
|
35.3 |
|
|
|
40.6 |
|
|
|
34.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
7.4 |
|
|
|
6.6 |
|
|
|
7.7 |
|
|
|
5.7 |
|
Selling and marketing |
|
|
12.1 |
|
|
|
11.4 |
|
|
|
12.0 |
|
|
|
10.8 |
|
General and administrative |
|
|
9.1 |
|
|
|
9.4 |
|
|
|
9.5 |
|
|
|
9.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
28.6 |
|
|
|
27.4 |
|
|
|
29.2 |
|
|
|
25.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
13.0 |
|
|
|
7.9 |
|
|
|
11.4 |
|
|
|
9.0 |
|
Other income (expense), net |
|
|
(0.1 |
) |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
12.9 |
|
|
|
8.2 |
|
|
|
11.5 |
|
|
|
9.2 |
|
Income tax expense |
|
|
1.2 |
|
|
|
0.7 |
|
|
|
2.7 |
|
|
|
2.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
11.7 |
% |
|
|
7.5 |
% |
|
|
8.8 |
% |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Comparison of Three and Nine Months Ended October 1, 2011 and October 2, 2010
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
Total revenue |
|
$ |
120,373 |
|
|
$ |
94,223 |
|
|
$ |
26,150 |
|
|
|
27.8 |
% |
|
$ |
334,732 |
|
|
$ |
286,957 |
|
|
$ |
47,775 |
|
|
|
16.6 |
% |
Total revenue for the three months ended October 1, 2011 increased to $120.4 million, or
27.8%, compared to $94.2 million for the three months ended October 2, 2010. Revenue increased
approximately $17.7 million, or 32.4%, in our home robots division and increased approximately $8.5
million, or 21.4%, in our government and industrial robots division.
The $17.7 million increase in revenue from our home robots division for the three months ended
October 1, 2011 was driven by a 9.4% increase in units shipped and a 23.9% increase in net average
selling price as compared to the three months ended October 2, 2010. In the three months ended
October 1, 2011, international home robots revenue increased $19.5 million and domestic home robots
revenue decreased $1.9 million as compared to the three months ended October 2, 2010. Total home
robots shipped in the three months ended October 1, 2011 were 337,000 units compared to 308,000
units in the three months ended October 2, 2010. The increase
15
in home robots division revenue and units shipped was primarily attributable to a 56.1% increase in
international sales of our home robots products. The increase in international sales is due
primarily to increased demand in our European and Asian markets, particularly Japan. This increase
in demand was driven by demand for our new Roomba 700 series robot, an increase in marketing programs by us and our international
distributors and continued
efforts to increase international retail outlets for our home robots products across various countries. Home robots division
revenue from international sales was 75.2% of total home robots division revenue in the three month
period ending October 1, 2011 as compared to 63.7% in the three month period ended October 2, 2010.
In addition, net average selling prices in the home robots division increased due to sales of
higher priced products including the introduction through our direct sales website and certain
retail customers of the higher priced Roomba 700 series robot, increased volume of our higher
priced Roomba 500 series robot and fewer sales of our lower priced Roomba 400 series robot in the
current quarter and compared to the prior year.
The $8.5 million increase in revenue from our government and industrial robots division was driven by
a $4.0 million increase in government and industrial robot revenue, a $3.2 million increase in
product life cycle revenue (spare parts, accessories), and a $1.2 million increase in recurring
contract development revenue generated under research and development contracts. The $3.2 million
increase in product life cycle revenue is due to our increasing installed base of government and
industrial robots. The $1.2 million increase in recurring contract development revenue generated
under research and development contracts was primarily the result of the timing of work efforts for
our SUGV programs. The $4.0 million increase in government and industrial robots revenue was
primarily due to a 13.8% increase in net average selling prices and by a 4.3% increase in units
shipped in the three month period ended October 1, 2011 as compared to the three month period ended
October 2, 2010. The increase in net average selling price was due to product mix primarily
attributable to PackBot and SUGV units which had higher selling prices in the three-month period
ended October 1, 2011 as compared to lower priced PackBot FasTac units and lower priced
configuration of SUGV units shipped in the three-month period ended October 2, 2010. Total
government and industrial robots shipped in the three months ended October 1, 2011 were 194 units
compared to 186 units in the three months ended October 2, 2010.
Total revenue for the nine months ended October 1, 2011 increased to $334.7 million, or 16.6%,
compared to $287.0 million for the nine months ended October 2, 2010. Revenue increased
approximately $44.0 million, or 27.5%, in our home robots division and increased approximately $3.8
million, or 3.0%, in our government and industrial robots division.
The $44.0 million increase in revenue from our home robots division for the nine months ended
October 1, 2011 was driven by a 14.1% increase in units shipped and a 12.6% increase in net average
selling price as compared to the nine months ended October 2, 2010. In the nine months ended
October 1, 2011, international home robots revenue increased $38.7 million and domestic home robots
revenue increased $5.3 million as compared to the nine months ended October 2, 2010. Total home
robots shipped in the nine months ended October 1, 2011 were 1,014,000 units compared to 889,000
units in the nine months ended October 2, 2010. The increase in home robots division revenue and
units shipped was primarily attributable to international sales increasing 36.1% due to increased
demand in our European and Asian markets, particularly Japan. The increase in demand was
driven by demand for our new Roomba 700 series robot, an increase in marketing programs by us and our international distributors and continued efforts to increase
international retail outlets for our home robots products across various countries. There was a 10.8% increase in domestic retail
sales of our home robot products and an 8.3% increase in domestic direct sales through our website.
The increase in domestic retail demand is due in part to our increased and sustained marketing
activities which began in the fourth quarter of 2010 directed at our domestic market. The increase
in our direct to consumer sales through our website was driven by the introduction of our Roomba
700 series and Scooba 230 robots. Home robots division revenue from international sales was 71.4% of
total home robots division revenue in the nine month period ending October 1, 2011 as compared to
66.8% in the nine month period ended October 2, 2010.
The $3.8 million increase in revenue from our government and industrial robots division was driven by
a $5.0 million increase in product life cycle revenue (spare parts, accessories) and a $0.8
million increase in recurring contract development revenue generated under research and development
contracts offset by a $2.1 million decrease in government and industrial robot revenue. The $5.0
million increase in product life cycle revenue is the result of a higher installed base of our
government and industrial robots. The $0.8 million increase in recurring contract development
revenue generated under research and development contracts was primarily the result of timing of
work efforts in our SUGV program partially offset by decreases in funding and timing of work
efforts for our Maritime, PackBot and Research programs. The $2.1 million decrease in government
and industrial robots revenue was primarily due to a 28.9% decrease in units shipped partially
offset by a 36.2% increase in net average selling prices in the nine month period ended October 1,
2011 as compared to the nine month period ended October 2, 2010. The decrease in units shipped is
primarily the result of the delayed passage of the U.S. federal governments 2011 fiscal budget.
The increase in net average selling price was due to product mix primarily attributable to PackBot
and SUGV units with a higher selling price shipped in the nine-month period ended October 1, 2011
as compared to lower priced PackBot FasTac units and lower priced configuration of SUGV units
shipped in the nine-month period ended October 2, 2010. Total government and industrial robots shipped in the
nine months ended October 1, 2011 were 500 units compared to 702 units in the nine months ended
October 2, 2010.
16
Cost of Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue |
|
$ |
70,330 |
|
|
$ |
60,966 |
|
|
$ |
9,364 |
|
|
|
15.4 |
% |
|
$ |
198,699 |
|
|
$ |
187,013 |
|
|
$ |
11,686 |
|
|
|
6.2 |
% |
As a percentage of total
revenue |
|
|
58.4 |
% |
|
|
64.7 |
% |
|
|
|
|
|
|
|
|
|
|
59.4 |
% |
|
|
65.2 |
% |
|
|
|
|
|
|
|
|
Total cost of revenue increased to $70.3 million in the three months ended October 1, 2011,
compared to $61.0 million in the three months ended October 2, 2010. The increase is primarily due
to the 9.4% increase in home robots units shipped and the 4.3% increase in government and industrial
units shipped.
Total cost of revenue increased to $198.7 million in the nine months ended October 1, 2011,
compared to $187.0 million in the nine months ended October 2, 2010. The increase is primarily due
to the 14.1% increase in home robots units shipped offset by the 28.9% decrease in government and
industrial units shipped.
Gross Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross margin |
|
$ |
50,043 |
|
|
$ |
33,257 |
|
|
$ |
16,786 |
|
|
|
50.5 |
% |
|
$ |
136,033 |
|
|
$ |
99,944 |
|
|
$ |
36,089 |
|
|
|
36.1 |
% |
As a percentage of
total revenue |
|
|
41.6 |
% |
|
|
35.3 |
% |
|
|
|
|
|
|
|
|
|
|
40.6 |
% |
|
|
34.8 |
% |
|
|
|
|
|
|
|
|
Gross margin increased $16.8 million, or 50.5%, to $50.0 million (41.6% of revenue) in the
three months ended October 1, 2011 from $33.3 million (35.3% of revenue) in the three months ended
October 2, 2010. The increase in gross margin as a percentage of revenue was the result of the home
robots division gross margin increasing 5.4 percentage points and the government and industrial robots
division gross margin increasing 7.0 percentage points. The 5.4 percentage point increase in the
home robots division is attributable to changes in customer and product mix to higher margin home
robots products including the introduction of our Roomba 700 series and Scooba 230 robots, lower
return provisions and warranty expense, and improved leverage of our overhead expense against
higher revenue in the three month period ended October 1, 2011 as compared to the three month
period ended October 2, 2010. The 7.0 percentage point increase in the government and industrial robots
division is due to improved leverage of our overhead expense against higher revenue in the three
month period ended October 1, 2011 as compared to the three month period ended October 2, 2010, and
product mix primarily attributable to the higher margin PackBot and SUGV units shipped in the
current fiscal quarter compared to lower margin configurations of PackBot and SUGV units shipped in
the third quarter of fiscal 2010.
Gross margin increased $36.1 million, or 36.1%, to $136.0 million (40.6% of revenue) in the
nine months ended October 1, 2011 from $99.9 million (34.8% of revenue) in the nine months ended
October 2, 2010. The increase in gross margin as a percentage of revenue was the result of the home
robots division gross margin increasing 5.9 percentage points and the government and industrial robots
division gross margin increasing 4.3 percentage points. The 5.9 percentage point increase in the
home robots division is attributable to changes in customer and product mix to higher margin home
robots products including the introduction of our Roomba 700 series and Scooba 230 robots, improved
leverage of our overhead expense against higher revenue, and lower return provisions and warranty
expense in the nine month period ended October 1, 2011 as compared to the nine month period ended
October 2, 2010. The 4.3 percentage point increase in the government and industrial robots division is due
to product mix primarily attributable to the higher margin PackBot and SUGV units shipped in the
current year compared to lower margin PackBot FasTac units and the lower margin configuration of
SUGV units shipped in the first three quarters of fiscal 2010 and lower warranty expense. Partially
offsetting these margin improvements were increased overhead expenses in the nine month period
ended October 1, 2011 as compared to the nine month period ended October 2, 2010.
17
Research and Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total research and development |
|
$ |
8,948 |
|
|
$ |
6,185 |
|
|
$ |
2,763 |
|
|
|
44.7 |
% |
|
$ |
25,823 |
|
|
$ |
16,375 |
|
|
$ |
9,448 |
|
|
|
57.7 |
% |
As a percentage of total revenue |
|
|
7.4 |
% |
|
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
7.7 |
% |
|
|
5.7 |
% |
|
|
|
|
|
|
|
|
Research and development expenses increased by $2.8 million, or 44.7%, to $8.9 million (7.4%
of revenue) in the three months ended October 1, 2011 from $6.2 million (6.6% of revenue) for the
three months ended October 2, 2010. This was driven by increases in our home robots division of
$1.9 million, government and industrial robots division of $0.5 million and other research and development
expense of $0.4 million primarily relating to ongoing development of our common software platform.
These increases are due to increases in compensation and benefits, consulting and materials
associated with internal research and development projects in both our home robots and government
and industrial robots divisions. The increase in our home robots division is primarily the result of our
increased efforts in the areas of new product development. The increase in our government and
industrial robots division is the result of our increased efforts in product development relating to our
FirstLook and Warrior programs.
Research and development expenses increased by $9.4 million, or 57.7%, to $25.8 million (7.7%
of revenue) in the nine months ended October 1, 2011 from $16.4 million (5.7% of revenue) for the
nine months ended October 2, 2010. This was driven by increases in our home robots division of $5.6
million, government and industrial robots division of $3.1 million and other research and development
expense of $0.7 million primarily relating to ongoing development of our common software platform.
These increases are due to increases in compensation and benefits, consulting and materials
associated with internal research and development projects in both our home robots and government
and industrial robots divisions. The increase in our home robots division is primarily the result of our
increased efforts in the areas of new product development. The increase in our government and
industrial robots division is the result of our increased efforts in product development relating to our
FirstLook, PackBot and Warrior programs.
In addition to our research and development activities classified as research and development
expense, we incur research and development expenses under funded development arrangements with
governments and industrial third parties. For the three and nine months ended October 1, 2011,
these expenses amounted to $6.7 million and $21.0 million compared to $6.5 million and $21.1
million for the three and nine months ended October 2, 2010. These expenses have been classified as
cost of revenue rather than research and development expense. The combined investment in future
technologies, classified as cost of revenue and research and development expense, was $15.6 million
and $46.8 million for the three and nine months ended October 1, 2011, compared to $12.7 million
and $37.5 million for the three and nine months ended October 2, 2010, respectively.
Selling and Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total selling and marketing |
|
$ |
14,553 |
|
|
$ |
10,734 |
|
|
$ |
3,819 |
|
|
|
35.6 |
% |
|
$ |
40,301 |
|
|
$ |
30,959 |
|
|
$ |
9,342 |
|
|
|
30.2 |
% |
As a percentage of total revenue |
|
|
12.1 |
% |
|
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
12.0 |
% |
|
|
10.8 |
% |
|
|
|
|
|
|
|
|
Selling and marketing expenses increased by $3.8 million, or 35.6%, to $14.6 million (12.1% of
revenue) in the three months ended October 1, 2011 from $10.7 million (11.4% of revenue) in the
three months ended October 2, 2010. This was driven by an increase in our home robots division of
$3.6 million primarily attributable to increases in advertising
as part of our continued global marketing and branding efforts and an increase of
$0.2 million related to various corporate marketing activities for the three months ended October
1, 2011 as compared to the three months ended October 2, 2010. Selling and marketing expenses in
our government and industrial robots division did not change significantly in the three months ended
October 1, 2011 as compared to the three months ended October 2, 2010.
Selling and marketing expenses increased by $9.3 million, or 30.2%, to $40.3 million (12.0% of
revenue) in the nine months ended October 1, 2011 from $31.0 million (10.8% of revenue) in the nine
months ended October 2, 2010. This was driven by an increase in our home robots division of $7.7
million primarily attributable to increases in advertising as part of our continued global marketing and branding efforts, on-line media,
other marketing, compensation, and employee-related expense for the nine months ended October 1,
2011 as compared to the nine months ended October 2, 2010. Selling and marketing expenses in our
government and industrial robots division increased by $1.2 million attributable to an increase in
compensation, trade show, depreciation related to demonstration robots and travel expenses in the
nine months ended October 1, 2011.
18
as compared to the nine months ended October 2, 2010. Corporate marketing expense increased
$0.4 million related to various corporate marketing activities in the nine months ended October 1,
2011 as compared to the nine months ended October 2, 2010.
General and Administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total general
and administrative |
|
$ |
10,962 |
|
|
$ |
8,904 |
|
|
$ |
2,058 |
|
|
|
23.1 |
% |
|
$ |
31,659 |
|
|
$ |
26,693 |
|
|
$ |
4,966 |
|
|
|
18.6 |
% |
As a percentage of
total revenue |
|
|
9.1 |
% |
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
9.5 |
% |
|
|
9.3 |
% |
|
|
|
|
|
|
|
|
General and administrative expenses increased by $2.1 million, or 23.1%, to $11.0 million
(9.1% of revenue) in the three months ended October 1, 2011 from $8.9 million (9.4% of revenue) in
the three months ended October 2, 2010. This increase is primarily attributable to increased
compensation and employee benefit expenses, stock based compensation expense, consulting expenses
and depreciation in the three months ended October 1, 2011 as compared to the three months ended
October 2, 2010.
General and administrative expenses increased by $5.0 million, or 18.6%, to $31.7 million
(9.5% of revenue) in the nine months ended October 1, 2011 from $26.7 million (9.3% of revenue) in
the nine months ended October 2, 2010. This increase is primarily attributable to increased
compensation and employee benefit expenses related to increased headcount, stock based compensation
expense, legal expense primarily attributable to our international expansion and intellectual
property prosecution and enforcement, and expenses relating to four robots sent to Japan to explore
reactor buildings at the Fukushima Daiichi nuclear plant in the nine months ended October 1, 2011
as compared to the nine months ended October 2, 2010.
Other Income (Expense), Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income
(expense), net |
|
$ |
(92 |
) |
|
$ |
299 |
|
|
$ |
(391 |
) |
|
Not Meaningful |
|
$ |
258 |
|
|
$ |
368 |
|
|
$ |
(110 |
) |
|
Not Meaningful |
As a percentage of total revenue |
|
|
(0.1 |
)% |
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
0.1 |
% |
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
Other income (expense), net, amounted to $(0.1) million for the three months ended October 1,
2011 compared to $0.3 million for the three months ended October 2, 2010. Other income, net, for
the three month period ended October 1, 2011 was related to foreign currency exchange losses of
$0.3 million resulting from foreign currency exchange rate fluctuations, offset by interest income
of $0.2 million. Other income (expense), net, for the three month period ended October 2, 2010 was
related to interest income of $0.2 million and foreign currency exchange gains of $0.1 million
resulting from foreign currency exchange rate fluctuations.
Other income, net, amounted to $0.3 million for the nine months ended October 1, 2011 compared
to $0.4 million for the nine months ended October 2, 2010. Other income, net, for the nine month
period ended October 1, 2011 was related to interest income of $0.8 million, offset by foreign
currency exchange losses of $0.3 million resulting from foreign currency exchange rate fluctuations
and other expenses of $0.2 million. Other income, net, for the nine month period ended October 2,
2010 was related to interest income of $0.6 million, offset by foreign currency exchange losses of
$0.2 million resulting from foreign currency exchange rate fluctuations.
Income Tax Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
October 1, |
|
|
October 2, |
|
|
Dollar |
|
|
Percent |
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
Change |
|
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax expense |
|
$ |
1,436 |
|
|
$ |
701 |
|
|
$ |
735 |
|
|
|
104.9 |
% |
|
$ |
8,955 |
|
|
$ |
7,771 |
|
|
$ |
1,184 |
|
|
|
15.2 |
% |
As a percentage of total revenue |
|
|
1.2 |
% |
|
|
0.7 |
% |
|
|
|
|
|
|
|
|
|
|
2.7 |
% |
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
We recorded a tax provision of $1.4 million and $0.7 million for the three month periods ended
October 1, 2011 and October 2, 2010, respectively. The $1.4 million provision for the three month
period ended October 1, 2011 was based upon a projected 2011
19
effective income tax rate of 31% offset by a net tax benefit of $3.5 million resulting from
the completion in the period of a comprehensive evaluation our research and development credit and
domestic manufacturing deductions. The $0.7 million provision for the three month period ended
October 2, 2010 was based upon a projected 2010 effective tax rate of 38% offset by a $2.3 million
one-time benefit associated with the full release of our valuation allowance relating to state
deferred tax assets.
We recorded a tax provision of $9.0 million and $7.8 million for the nine month periods ended
October 1, 2011 and October 2, 2010, respectively. The $9.0 million provision for the nine month
period ended October 1, 2011 was based upon a projected 2011 effective income tax rate of 31%
offset by a net tax benefit of $3.5 million resulting from the completion in the period of a
comprehensive evaluation of our research and development credit and domestic manufacturing
deductions. The $7.8 million provision for the nine month period ended October 2, 2010 was based
upon a projected 2010 effective tax rate of 38% offset by a $2.3 million one-time benefit
associated with the full release of our valuation allowance relating to state deferred tax assets.
The decrease in the projected effective tax rates from 38% in 2010 to 31% in 2011 was
primarily due to the benefit of research and development tax credits in 2011 as
compared to fiscal 2010 when this credit was retroactively re-enacted into law in the
fourth quarter, higher domestic manufacturing deductions in 2011, and lower anticipated state
tax, net of federal benefit due to state tax credits and state tax law changes.
Liquidity and Capital Resources
At October 1, 2011, our principal sources of liquidity were cash and cash equivalents totaling
$131.7 million, short-term investments of $13.7 million and accounts receivable of $41.4 million.
We manufacture and distribute our products through contract manufacturers and third-party
logistics providers. We believe that this approach gives us the advantages of relatively low
capital investment and significant flexibility in scheduling production and managing inventory
levels. By leasing our office facilities, we also minimize the cash needed for expansion.
Accordingly, our capital spending is generally limited to leasehold improvements, computers, office
furniture, product-specific production tooling, internal use software and test equipment. In the
nine months ended October 1, 2011 and October 2, 2010, we spent $10.4 million and $7.5 million,
respectively, on capital equipment.
Our strategy for delivering home robots products to our distributors and retail customers gives
us the flexibility to provide container shipments directly to the retailer from China and,
alternatively, allows our distributors and retail partners to take possession of product on a
domestic basis. Accordingly, our home robots product inventory consists of goods shipped to our
third-party logistics providers for the fulfillment of distributor, retail and direct-to-consumer
sales. Our inventory of government and industrial products is relatively low as they are generally
built to order. Our contract manufacturers are responsible for purchasing and stocking the majority
of components required for the production of our products, and they typically invoice us when the
finished goods are shipped.
The balance of cash and short-term investments of $145.3 million at October 1, 2011 is
primarily the result of improving profitability and our significant focus over the past two years
on managing working capital. As of October 1, 2011, we did not have any borrowings outstanding
under our working capital line of credit and had $1.6 million in letters of credit outstanding
under our revolving letter of credit facility.
Discussion of Cash Flows
Net cash provided by operating activities for the nine months ended October 1, 2011 was $19.1
million, a decrease of $15.8 million compared to the $34.9 million of net cash provided by
operating activities for the nine months ended October 2, 2010. The decrease in net cash provided
by operating activities was primarily driven by the following factors:
|
|
|
An increase in cash of $11.0 million resulting from net income of $29.5 million in 2011
versus a net income of $18.5 million in 2010; |
|
|
|
|
An increase in cash of $1.9 million resulting from non-cash depreciation and amortization
of $7.2 million and losses on the disposition of fixed assets of $0.5 million in 2011 versus
non-cash depreciation and amortization of $5.7 million and losses on the disposition of
fixed assets of $0.1 million in 2010. The losses on disposition of fixed assets in 2011
relate to four robots sent to Japan to explore reactor buildings at the Fukushima Daiichi
nuclear plant; |
20
|
|
|
A decrease in cash of $17.9 million resulting from an increase in accounts receivable
(including unbilled revenue) of $11.2 million in 2011 versus a decrease of $6.7 million in
2010, primarily due to growth in revenue and an increase in unbilled revenue related to
revenue recorded on contract research and development projects to be invoiced upon DCAA
approval of our 2011 provisional indirect cost rates; |
|
|
|
|
A decrease in cash of $3.2 million resulting from an increase in inventory of $4.8
million in 2011 versus an increase of $1.6 million in 2010, primarily due to increased
inventory requirements to support growth in our home robots division revenue and expansion of
the home robots product line; |
|
|
|
|
A decrease in cash of $7.6 million resulting from an increase in other current assets of
$6.6 million in 2011 versus a decrease of $1.0 million in 2010 primarily due to an increase
in prepaid income taxes including the tax benefit associated with excess stock based
compensation deductions; |
|
|
|
|
A decrease in cash of $3.3 million resulting from an increase in accounts payable of $1.8
million in 2011 versus an increase of $5.1 million in 2010, primarily due to the timing of
purchases and payments to suppliers; |
|
|
|
|
A decrease in cash of $2.4 million resulting from a decrease in accrued compensation of
$2.8 million in 2011 versus a decrease of $0.4 million in 2010, primarily due to the impact of
improving profitability on the incentive compensation expense in 2010 and related payment in 2011; |
|
|
|
|
An increase in cash of $4.3 million resulting from a decrease in deferred tax assets of
$0.4 million in 2011 compared to an increase of $3.9 million in 2010, primarily due to the
estimated net utilization of deferred tax assets in 2011 and the impact of the release of a
valuation allowance on state deferred tax assets in 2010. |
Net cash used in investing activities for the nine months ended October 1, 2011 was $10.4 million,
representing a decrease of $8.6 million compared to the $19.0 million of net cash used in investing
activities for the nine months ended October 2, 2010. This decrease in net cash used in investing
activities was primarily driven by the following:
|
|
|
Purchase of investments of $5.0 million, offset by the proceeds from the sale of
investments of $5.0 million in 2011, compared to the purchase of investments, net of the
proceeds from the sale of investments, of $11.5 million in 2010; and |
|
|
|
|
The purchase of property and equipment of $10.4 million in 2011, compared to $7.5 million
in 2010, primarily due to an increase in self-constructed and demonstration assets, an
increase in leasehold improvements associated with expansion of the office space at our
headquarters facility, and the upgrade of our ERP system in 2011. |
Net cash provided by financing activities for the nine months ended October 1, 2011 was $14.6
million, an increase of $11.7 million compared to the $2.9 million of net cash provided by
financing activities for the nine months ended October 2, 2010. The increase is due primarily to an
increase in proceeds from stock option exercises of $7.1 million and the tax benefit associated
with excess stock based compensation deductions of $5.1 million.
Working Capital Facilities
Credit Facility
We have an unsecured revolving credit facility with Bank of America, N.A., which is available
to fund working capital and other corporate purposes. As of October 1, 2011, the total amount
available for borrowing under our credit facility was $75.0 million and the full amount was
available for borrowing. The interest on loans under our credit facility accrues at a rate between
LIBOR plus 1% and LIBOR plus 1.5%, based on our ratio of indebtedness to Adjusted EBITDA, and the
credit facility termination date is June 30, 2014.
As of October 1, 2011, we had no outstanding borrowings under our working capital line of
credit. This credit facility contains customary terms and conditions for credit facilities of this
type, including restrictions on our ability to incur or guaranty additional indebtedness, create
liens, enter into transactions with affiliates, make loans or investments, sell assets, pay
dividends or make distributions on, or repurchase, our stock, and consolidate or merge with other
entities.
In addition, we are required to meet certain financial covenants customary with this type of
agreement, including maintaining a minimum specified consolidated net worth, a minimum ratio of
indebtedness to Adjusted EBITDA, and a minimum specified interest
21
coverage ratio.
This credit facility contains customary events of default, including for payment defaults,
breaches of representations, breaches of affirmative or negative covenants, cross defaults to other
material indebtedness, bankruptcy and failure to discharge certain judgments. If a default occurs
and is not cured within any applicable cure period or is not waived, our obligations under the
credit facility may be accelerated.
As of October 1, 2011, we were in compliance with all covenants under the revolving credit
facility.
Letter of Credit Facility
On January 4, 2011, we entered into a revolving letter of credit facility with Bank of
America, N.A. The credit facility is available to fund letters of credit on our behalf up to an
aggregate outstanding amount of $5 million. We may terminate at any time, subject to proper notice,
or from time to time permanently reduce the amount of the credit facility.
We pay a fee on outstanding letters of credit issued under the credit facility at a rate
between LIBOR plus 1% and LIBOR plus 1.5% per annum, based on our ratio of indebtedness to Adjusted
EBITDA. In addition, we pay a fee equal to 0.25% per annum of the actual daily amount by which the
credit facility exceeds the aggregate undrawn amount of all outstanding letters of credit under the
credit facility plus the aggregate of all unreimbursed drawings under all letters of credit under
the credit facility. The maturity date for letters of credit issued under the credit facility must
be no later than seven days prior to June 30, 2014.
As of October 1, 2011, we had letters of credit outstanding of $1.6 million under our
revolving letter of credit facility. The credit facility contains customary terms and conditions
for credit facilities of this type, including restrictions on our ability to incur or guaranty
additional indebtedness, create liens, enter into transactions with affiliates, make loans or
investments, sell assets, pay dividends or make distributions on, or repurchase, its stock, and
consolidate or merge with other entities. In addition, we are required to meet certain financial
covenants customary with this type of agreement, including maintaining a minimum specified
consolidated net worth, a minimum ratio of indebtedness to Adjusted EBITDA and a minimum specified
ratio of EBIT to interest expense.
The credit facility also contains customary events of default, including for payment defaults,
breaches of representations, breaches of affirmative or negative covenants, cross defaults to other
material indebtedness, bankruptcy, and failure to discharge certain judgments. If a default occurs
and is not cured within any applicable cure period or is not waived, the lender may accelerate the
obligations under the credit facility.
As of October 1, 2011, we were in compliance with all covenants under the revolving letter of
credit facility.
Working Capital and Capital Expenditure Needs
We currently have no material cash commitments, except for normal recurring trade payables,
expense accruals and operating leases, all of which we anticipate funding through working capital,
funds provided by operating activities and our existing working capital line of credit. We do not
currently anticipate significant investment in property, plant and equipment, and we believe that
our outsourced approach to manufacturing provides us with flexibility in both managing inventory
levels and financing our inventory. We believe our existing cash and cash equivalents, short-term
investments, cash provided by operating activities, and funds available through our working capital
line of credit will be sufficient to meet our working capital and capital expenditure needs over at
least the next twelve months. In the event that our revenue plan does not meet our expectations, we
may eliminate or curtail expenditures to mitigate the impact on our working capital. Our future
capital requirements will depend on many factors, including our rate of revenue growth, the
expansion of our marketing and sales activities, the timing and extent of spending to support
product development efforts, the timing of introductions of new products and enhancements to
existing products, the acquisition of new capabilities or technologies, and the continuing market
acceptance of our products and services. Moreover, to the extent that existing cash and cash
equivalents, short-term investments, cash from operations, and cash from short-term borrowing are
insufficient to fund our future activities, we may need to raise additional funds through public or
private equity or debt financing. As part of our business strategy, we may consider additional
acquisitions of companies, technologies and products, which could also require us to seek
additional equity or debt financing. Additional funds may not be available on terms favorable to us
or at all.
22
Contractual Obligations
We generally do not enter into binding purchase commitments. Our principal commitments consist
of obligations under our working capital line of credit, leases for office space and minimum
contractual obligations for services and certain components. The following table describes our
commitments to settle contractual obligations in cash as of October 1, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period |
|
|
|
Less Than |
|
|
1 to 3 |
|
|
3 to 5 |
|
|
More Than |
|
|
|
|
|
|
1 Year |
|
|
Years |
|
|
Years |
|
|
5 Years |
|
|
Total |
|
|
|
(In thousands) |
|
Operating leases |
|
$ |
3,086 |
|
|
$ |
5,263 |
|
|
$ |
5,085 |
|
|
$ |
8,814 |
|
|
$ |
22,248 |
|
Minimum contractual payments |
|
|
2,034 |
|
|
|
1,546 |
|
|
|
|
|
|
|
|
|
|
|
3,580 |
|
Other obligations |
|
|
221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
5,341 |
|
|
$ |
6,809 |
|
|
$ |
5,085 |
|
|
$ |
8,814 |
|
|
$ |
26,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our minimum contractual payments consist of payments to our provider of direct fulfillment
services for direct to consumer sales of our home robots and payments to a key component supplier
for our home robots, which payments are incurred in the ordinary course of business. Based on an
analysis of actual and projected fees for 2011, we expect there will be a shortfall between our
actual transaction fees and our contractual minimum fees for services. Expense accruals for the
proportionate share of these expected shortfalls have been recorded to selling and marketing
expense in the three month period ended October 1, 2011. Other obligations consist of software
license and services agreement for our home robots division customer service web support.
Off-Balance Sheet Arrangements
As of October 1, 2011, we had no off-balance sheet arrangements as defined in Item 303(a)(4)
of Regulation S-K.
Recently Issued Accounting Pronouncements
See Footnote 2 to the Consolidated Financial Statements for a discussion of recently issued
accounting pronouncements.
23
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Interest Rate Sensitivity
At October 1, 2011, we had unrestricted cash and cash equivalents of $131.7 million and short
term investments of $13.7 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 October 1, 2011, 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 as a function of the LIBOR rate at the time of the borrowing.
At October 1, 2011, we had letters of credit outstanding of $1.6 million under our revolving letter
of credit facility.
Exchange Rate Sensitivity
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.
Item 4. Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of
the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures as of the end of the period
covered by this report were effective at a reasonable assurance level in ensuring that information
required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is
recorded, processed, summarized and reported within the time periods specified in the Securities
and Exchange Commissions rules and forms; and (ii) accumulated and communicated to management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely
discussions regarding required disclosure. We believe that a control system, no matter how well
designed and operated, cannot provide absolute assurance that the objectives of the control system
are met, and no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within a company have been detected.
There was no change in our internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal control over
financial reporting.
24
Part II. Other Information
Item 1. Legal Proceedings
From time to time and in the ordinary course of business, we are subject to various claims,
charges and litigation. The outcome of litigation cannot be predicted with certainty and some
lawsuits, claims or proceedings may be disposed of unfavorably to us, which could materially affect
our financial condition or results of operations.
Item 1A. Risk Factors
We operate in a rapidly changing environment that involves a number of risks that could
materially affect our business, financial condition or future results, some of which are beyond our
control. In addition to the other information set forth in this report, the risks and uncertainties
that we believe are most important for you to consider are discussed in Part I, Item 1A. Risk
Factors in our Annual Report on Form 10-K for the year ended January 1, 2011, which could
materially affect our business, financial condition or future results. Additional risks and
uncertainties not presently known to us, which we currently deem immaterial or which are similar to
those faced by other companies in our industry or business in general, may also impair our business
operations. There are no material changes to the Risk Factors described in our Annual Report on
Form 10-K for the fiscal year ended January 1, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following table sets forth the repurchases of our equity securities during the three months
ended October 1, 2011 by or on behalf of us or any affiliated purchaser:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) Total |
|
|
(d) Maximum |
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Number (or |
|
|
|
|
|
|
|
(b) |
|
|
Shares (or Units) |
|
|
Approximate Dollar |
|
|
|
(a) Total |
|
|
Average |
|
|
Purchased as |
|
|
Value) of Shares (or |
|
|
|
number |
|
|
Price |
|
|
Part of Publicly |
|
|
Units) that May Yet |
|
|
|
of Shares |
|
|
Paid per |
|
|
Announced |
|
|
Be Purchased Under |
|
|
|
(or Units) |
|
|
Share (or |
|
|
Plans or |
|
|
the Plans or |
|
Period |
|
Purchased |
|
|
Unit) |
|
|
Programs |
|
|
Programs |
|
Fiscal month beginning July 3, 2011 and ended July 30, 2011 |
|
|
468 |
(1) |
|
$ |
35.35 |
(2) |
|
|
|
|
|
|
|
|
Fiscal month beginning July 31, 2011 and ended August 27, 2011 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
Fiscal month beginning August 28, 2011 and ended October 1, 2011 |
|
|
781 |
(1) |
|
$ |
25.16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
1,249 |
(1) |
|
$ |
28.98 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents shares of our common stock withheld by us to satisfy the minimum tax withholding
obligation in connection with the vesting of restricted stock units held by executive
officers. |
|
(2) |
|
The amount represents the last reported sale price of our common stock on the NASDAQ Global
Market on the applicable vesting date. |
|
(3) |
|
The amount represents the weighted average sale price of all shares of our common stock
repurchased during the three months ended October 1, 2011. |
Item 5. Other Information
Our policy governing transactions in our securities by our directors, officers, and employees
permits our officers, directors, funds affiliated with our directors, and certain other persons to
enter into trading plans complying with Rule 10b5-l under the Securities Exchange Act of 1934, as
amended. We have been advised that certain of our officers and directors (including Colin Angle,
Chief Executive Officer, Joseph Dyer, Chief Operating Officer, Glen Weinstein, Senior Vice
President, General Counsel and Secretary, John Leahy, Chief Financial Officer, Jeffrey Beck,
President, Home Robots Division, Robert Moses, President, Government and Industrial Robots Division, and
Alison Dean, Senior Vice President of Corporate Finance and Principal Accounting Officer) of the
Company have entered into trading plans (each a Plan and collectively, the Plans) covering
periods after the date of this quarterly report on Form 10-Q in accordance with Rule 10b5-l and our
policy governing transactions in our securities. Generally, under these trading plans, the
25
individual relinquishes control over the transactions once the trading plan is put into place.
Accordingly, sales under these plans may occur at any time, including possibly before,
simultaneously with, or immediately after significant events involving our company.
We anticipate that, as permitted by Rule 10b5-l and our policy governing transactions in our
securities, some or all of our officers, directors and employees may establish trading plans in the
future. We intend to disclose the names of our executive officers and directors who establish a
trading plan in compliance with Rule 10b5-l and the requirements of our policy governing
transactions in our securities in our future quarterly and annual reports on Form 10-Q and 10-K
filed with the Securities and Exchange Commission. We, however, undertake no obligation to update
or revise the information provided herein.
26
Item 6. Exhibits
|
|
|
Exhibit |
|
|
Number |
|
Description |
10.1
|
|
Fifth Amendment to Credit Agreement by and between Bank of America, N.A. and the Registrant,
dated July 12, 2011 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K filed
on July 15, 2011 and incorporated by reference herein) |
|
|
|
10.2
|
|
Second Amendment to Reimbursement Agreement by and between Bank of America, N.A. and the
Registrant, dated July 12, 2011 (filed as Exhibit 10.2 to the Registrants Current Report on
Form 8-K filed on July 15, 2011 and incorporated by reference herein) |
|
|
|
10.3
|
|
Third Amendment to Note by and between Bank of America, N.A. and the Registrant, dated July 12,
2011 (filed as Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on July 15,
2011 and incorporated by reference herein) |
|
|
|
31.1*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 |
|
|
|
31.2*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 |
|
|
|
32.1*
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
101**
|
|
The following materials from the Registrants Quarterly Report on Form 10-Q for the quarter
ended October 1, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the
Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated
Statements of Cash Flows, and (iv) related notes to these financial statements |
|
|
|
* |
|
Filed herewith |
|
** |
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for
purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities
Exchange Act of 1934 |
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
iROBOT CORPORATION
|
|
Date: November 4, 2011 |
By: |
/s/ JOHN LEAHY
|
|
|
|
John Leahy |
|
|
|
Executive Vice President, Chief Financial Officer
and Treasurer (Duly Authorized Officer and
Principal Financial Officer) |
|
28
EXHIBIT INDEX
|
|
|
Exhibit |
|
|
Number |
|
Description |
10.1
|
|
Fifth Amendment to Credit Agreement by and between Bank of America, N.A. and the Registrant,
dated July 12, 2011 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K filed
on July 15, 2011 and incorporated by reference herein) |
|
|
|
10.2
|
|
Second Amendment to Reimbursement Agreement by and between Bank of America, N.A. and the
Registrant, dated July 12, 2011 (filed as Exhibit 10.2 to the Registrants Current Report on
Form 8-K filed on July 15, 2011 and incorporated by reference herein) |
|
|
|
10.3
|
|
Third Amendment to Note by and between Bank of America, N.A. and the Registrant, dated July 12,
2011 (filed as Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on July 15,
2011 and incorporated by reference herein) |
|
|
|
31.1*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 |
|
|
|
31.2*
|
|
Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 |
|
|
|
32.1*
|
|
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
101**
|
|
The following materials from the Registrants Quarterly Report on Form 10-Q for the quarter
ended October 1, 2011 formatted in XBRL (eXtensible Business Reporting Language): (i) the
Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the
Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements |
|
|
|
* |
|
Filed herewith |
|
** |
|
As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for
purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities
Exchange Act of 1934 |
29