Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 28, 2013 |
Accounting Policies [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation |
The accompanying consolidated financial statements include those of iRobot and its subsidiaries, after elimination of all intercompany accounts and transactions. In addition, certain prior year amounts have been reclassified to conform with the current year presentation. iRobot has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. |
Reorganization [Policy Text Block] | ' |
Reorganization |
In fiscal year 2012, the Company initiated a reorganization that resulted in, among other things, the centralization of all of the Company's engineering and operations activities. This reorganization was completed at the beginning of fiscal year 2013. In conjunction with this reorganization, the Company reviewed the financial statement classification of its costs and expenses. As a result of this review, the Company decided to classify certain expenses differently than had been classified and presented in prior periods to provide a more clear understanding of the Company's financial performance. As part of this review, the Company also evaluated the impact of the reorganization on its segment reporting and determined that certain modifications were necessary to present the segment information as now viewed by the Company's chief operating decision maker. Although the classification of certain expenses on the income statement has changed in fiscal year 2013 as compared to prior periods, the Company recast the financial results of prior periods in a manner consistent with the fiscal year 2013 presentation for comparability purposes. The reclassified amounts reflected in the consolidated statements of income for the years ended December 29, 2012 and December 31, 2011 included herein conform to the fiscal year 2013 presentation. This reclassification of costs and expenses did not impact previously reported net income or earnings per share as the changes only impacted the categorization of costs within the consolidated statements of income for the periods in question. Consequently, the classification changes did not impact previously presented consolidated balance sheets, statements of cash flow or statements of stockholders' equity. |
Accounting Changes and Error Corrections [Text Block] | ' |
Revision of Consolidated Balance Sheet as of December 29, 2012 |
During the three month period ended March 30, 2013, the Company identified a classification error related to its reserves for uncertain tax positions on its December 29, 2012 consolidated balance sheet. The Company had recorded a gross income tax receivable in current assets and a gross uncertain tax positions liability against that receivable in current liabilities as of December 29, 2012. In addition, the Company misclassified certain liabilities for uncertain tax positions in current and long-term liabilities. The impact of the errors on the December 29, 2012 consolidated balance sheet was a decrease in Other Current Assets of $2.7 million, an increase in Other Assets of $0.2 million, a decrease in Accrued Expenses of $2.9 million, and an increase in Long-term Liabilities of $0.4 million. These adjustments were not considered to be material, individually or in the aggregate, to previously issued financial statements. The Company has revised its December 29, 2012 consolidated balance sheet to correct these errors as reflected herein. This revision had no impact on the consolidated statement of income, the consolidated statement of comprehensive income, or total cash flows from operating activities, investing activities, or financing activities. |
Use of Estimates | ' |
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, valuation of goodwill and intangible assets, 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 Company’s estimates. |
Fiscal Year-End | ' |
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 Company’s fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each quarter. |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents |
The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents. The Company invests its excess cash primarily in money market funds or savings accounts of major financial institutions. Accordingly, its cash equivalents are subject to minimal credit and market risk. At December 28, 2013 and December 29, 2012, cash equivalents were comprised of money market funds totaling $101.4 million and $88.1 million, respectively. These cash equivalents are carried at cost, which approximates fair value. |
Short Term Investments | ' |
Short Term Investments |
The Company’s investments are classified as available-for-sale and are recorded at fair value with any unrealized gain or loss recorded as an element of stockholders’ equity. The fair value of investments is determined based on quoted market prices at the reporting date for those instruments. As of December 28, 2013 and December 29, 2012, investments consisted of: |
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| December 28, | | December 29, |
2013 | 2012 |
| Cost | | Fair | | Cost | | Fair |
Market Value | Market Value |
| (In thousands) |
Corporate and government bonds | $ | 22,134 | | | $ | 21,954 | | | $ | 12,980 | | | $ | 12,430 | |
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Total short term investments | $ | 22,134 | | | $ | 21,954 | | | $ | 12,980 | | | $ | 12,430 | |
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As of December 28, 2013, the Company’s investments had maturity dates ranging from November 2014 to March 2017. The Company invests primarily in investment grade securities and limits the amount of investment in any single issuer. |
Revenue Recognition | ' |
Revenue Recognition |
The Company derives its revenue from product sales and, to a lesser extent, government 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 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 domestic resellers of home robots are typically subject to agreements allowing for limited rights of return, rebates and price protection. Accordingly, the Company reduces revenue for its estimates of liabilities for these rights of return at the time the related sale is recorded. The Company makes an estimate of sales returns for products sold by domestic resellers directly based on historical returns experience and other relevant data. The Company’s 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 domestic 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 Company’s 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. In the situation where the Company’s final actual billing rates are greater than the provisional rates currently in effect, the Company records a cumulative revenue adjustment in the period in which the rate differential is collected from the customer. 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 December 28, 2013, fiscal year 2007 is under audit by DCAA, and fiscal years 2008 through 2013 are open for audit by DCAA. In the situation where the Company’s 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 audits, 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. |
Allowance for Doubtful Accounts | ' |
Allowance for Doubtful Accounts |
The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables. |
Activity related to the allowance for doubtful accounts was as follows: |
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| Fiscal Year Ended | | | | |
| December 28, | | December 29, | | December 31, | | | | |
2013 | 2012 | 2011 | | | | |
| (In thousands) | | | | |
Balance at beginning of period | $ | 111 | | | $ | 87 | | | $ | 88 | | | | | |
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Provision | — | | | 37 | | | — | | | | | |
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Deduction(*) | (44 | ) | | (13 | ) | | (1 | ) | | | | |
Balance at end of period | $ | 67 | | | $ | 111 | | | $ | 87 | | | | | |
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_____________________ |
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(*) | Deductions related to allowance for doubtful accounts represent amounts written off against the allowance, less recoveries. | | | | | | | | | | | | | | |
Inventory | ' |
Inventory |
Inventory is stated at the lower of cost or net realizable value with cost being determined using the first-in, first-out (FIFO) method. The Company maintains a reserve for inventory items to provide for an estimated amount of excess or obsolete inventory. |
Activity related to the inventory reserve was as follows: |
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| Fiscal Year Ended | | | | |
| December 28, | | December 29, | | December 31, | | | | |
2013 | 2012 | 2011 | | | | |
| (In thousands) | | | | |
Balance at beginning of period | $ | 6,608 | | | $ | 2,568 | | | $ | 2,836 | | | | | |
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Provision | 1,571 | | | 5,101 | | | 411 | | | | | |
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Deduction(*) | (2,899 | ) | | (1,061 | ) | | (679 | ) | | | | |
Balance at end of period | $ | 5,280 | | | $ | 6,608 | | | $ | 2,568 | | | | | |
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___________________________ |
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(*) | Deductions related to inventory reserve accounts represent amounts written off against the reserve. | | | | | | | | | | | | | | |
Property and Equipment | ' |
Property and Equipment |
Property and equipment are recorded at cost and consist primarily of computer equipment, leasehold improvements, business applications software and machinery. Depreciation is computed using the straight-line method over the estimated useful lives as follows: |
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| Estimated | | | | | | | | | | | | | |
Useful Life | | | | | | | | | | | | | |
Computer and research equipment | 3 years | | | | | | | | | | | | | | |
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Furniture | 5 | | | | | | | | | | | | | | |
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Machinery | 5-Feb | | | | | | | | | | | | | | |
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Tooling | 5-Feb | | | | | | | | | | | | | | |
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Business applications software | 7-May | | | | | | | | | | | | | | |
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Capital leases and leasehold improvements | Term of lease | | | | | | | | | | | | | | |
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Expenditures for additions, renewals and betterments of plant and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. As assets are retired or sold, the related cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to operations. |
Long-Lived Assets, including Purchased Intangible Assets | ' |
Long-Lived Assets, including Purchased Intangible Assets |
The Company periodically evaluates the recoverability of long-lived assets, including other purchased intangible assets whenever events and changes in circumstances, such as reductions in demand or significant economic slowdowns in the industry, indicate that the carrying amount of an asset may not be fully recoverable. When indicators of impairment are present, the carrying values of the asset group are evaluated in relation to the future undiscounted cash flows of the underlying business. The net book value of the underlying asset is adjusted to fair value if the sum of the expected discounted cash flows is less than book value. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. |
Goodwill | ' |
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 evaluates 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. In accordance with the guidance, the Company is permitted to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a two-step goodwill impairment test is performed. |
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 unit's 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 unit's goodwill with the carrying value of that goodwill. The Company completes the annual impairment evaluation during the fourth quarter each year. |
Research and Development | ' |
Research and Development |
Costs incurred in the research and development of the Company’s products, classified as cost of contract and research and development, are expensed as incurred. |
Internal Use Software | ' |
Internal Use Software |
The Company capitalizes costs associated with the development and implementation of software for internal use. At December 28, 2013 and December 29, 2012, the Company had $8.2 million and $8.3 million, respectively, of costs related to enterprise-wide software included in fixed assets. Capitalized costs are being amortized over the assets’ estimated useful lives. The Company has recorded $0.9 million, $1.0 million and $0.9 million of amortization expense for the years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively. |
Concentration of Credit Risk and Significant Customers | ' |
Concentration of Credit Risk and Significant Customers |
Financial instruments which potentially expose the Company to concentrations of credit risk consist of accounts receivable. Management believes its credit policies are prudent and reflect normal industry terms and business risk. At December 28, 2013, two customers accounted for a total of 37% of the Company's accounts receivable balance, each of which was greater than 10% of the balance and each of whom secured their balance with guaranteed letters of credit. At December 29, 2012, three customers accounted for a total of 55% of the Company’s accounts receivable balance, each of which was greater than 10% of the balance. Two of the customers accounting for 36% of the Company’s accounts receivable balance secured their balance with guaranteed letters of credit. For the years ended December 28, 2013, December 29, 2012 and December 31, 2011, revenue from U.S. federal government orders, contracts and subcontracts, represented 6.2%, 15.1% and 36.1% of total revenue, respectively. For the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011, the Company generated an aggregate of 33.2%, 30.6% and 23.6%, respectively, of total revenue from its home robots distributor in Japan and a network of affiliated European distributors of its home robots. |
The Company maintains its cash in bank deposit accounts at high quality financial institutions. The individual balances, at times, may exceed federally insured limits. |
Geographic Information |
For the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011, sales to non-U.S. customers accounted for 59.5%, 57.3% and 45.5% of total revenue, respectively. |
Significant Customers |
For the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011, U.S. federal government orders, contracts and subcontracts accounted for 6.2%, 15.1% and 36.1% of total revenue, respectively. For the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011 approximately 75.3%, 75.4% and 74.0%, respectively, of our home robot product revenue resulted from sales to 15 customers. For the fiscal years ended December 28, 2013 and December 29, 2012, the Company generated an aggregate of 33.2% and 30.6%, respectively, of its total revenue from its home robots distributor in Japan (Sales on Demand Corporation) and a network of affiliated European distributors of the Company's home robots. |
Stock-Based Compensation | ' |
Stock-Based Compensation |
The Company accounts for stock-based compensation through recognition of the fair value of the stock-based compensation as a charge against earnings. Stock-based compensation cost for stock options is estimated at the grant date based on each option’s fair-value as calculated by the Black-Scholes option-pricing model. Stock-based compensation cost for restricted stock awards and restricted stock units is measured based on the closing fair market value of the Company’s common stock on the date of grant. The Company recognizes stock-based compensation cost as expense ratably on a straight-line basis over the requisite service period, net of estimated forfeitures. |
Advertising Expense | ' |
Advertising Expense |
The Company expenses advertising costs as they are incurred. During the years ended December 28, 2013, December 29, 2012 and December 31, 2011 advertising expense totaled $38.2 million, $34.9 million and $20.4 million, respectively. |
Net Income Per Share | ' |
Net Income Per Share |
The following table presents the calculation of both basic and diluted net income per share: |
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| Fiscal Year Ended | | | | |
| December 28, | | December 29, | | December 31, | | | | |
2013 | 2012 | 2011 | | | | |
Net income | $ | 27,641 | | | $ | 17,297 | | | $ | 40,191 | | | | | |
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Weighted-average shares outstanding | 28,495 | | | 27,577 | | | 26,712 | | | | | |
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Dilutive effect of employee stock options and restricted shares | 859 | | | 724 | | | 1,212 | | | | | |
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Diluted weighted average shares outstanding | 29,354 | | | 28,301 | | | 27,924 | | | | | |
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Basic income per share | $ | 0.97 | | | $ | 0.63 | | | $ | 1.5 | | | | | |
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Diluted income per share | $ | 0.94 | | | $ | 0.61 | | | $ | 1.44 | | | | | |
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Potentially dilutive securities representing approximately 0.7 million, 0.8 million and 0.4 million shares of common stock for the fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively, were excluded from the computation of diluted earnings per share for these periods because their effect would have been antidilutive. |
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Income Taxes | ' |
Income Taxes |
The Company is subject to taxation in the United States and various states and foreign jurisdictions. Though the statute of limitations is closed for years prior to 2010, the IRS has completed and closed its examination for all fiscal periods prior to 2011. The statute of limitations for examinations by state tax authorities is closed for fiscal years prior to 2009. The Company's tax returns are currently under examination by certain states for the years 2009, 2010 and 2011. Federal carryforward attributes that were generated prior to fiscal year 2011, and state carryforward attributes that were generated prior to fiscal year 2009 may still be adjusted upon examination by the IRS or state tax authorities if they either have been or will be used in a period for which the statute of limitations is still open. |
Deferred taxes are determined based on the difference between the financial statement 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 monitors the realization of its deferred tax assets based on changes in circumstances, for example recurring periods of income for tax purposes following historical periods of cumulative losses or changes in tax laws or regulations. The Company's income tax provisions and its assessment of the ability to realize its deferred tax assets involve significant judgments and estimates. |
In fiscal 2012, as part of the Company's acquisition accounting for the acquisition of Evolution Robotics, Inc., the Company recorded a valuation allowance of $2.7 million related to certain state tax attributes of Evolution Robotics, Inc. In fiscal 2013, the deferred tax asset and related valuation allowance were reduced by $0.6 million based on the final computation of certain pre-acquisition state tax attributes of Evolution Robotics, Inc. At December 28, 2013, the Company maintains a net valuation allowance of $2.1 million. |
Comprehensive Income | ' |
Comprehensive Income |
Accumulated other comprehensive income includes unrealized gains and losses on certain investments. The differences between net income and comprehensive income were related to unrealized gains (losses) on investments, net of tax. |
Fair Value Measurements | ' |
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. |
Financial Assets |
The Company’s financial assets measured at fair value on a recurring basis at December 28, 2013, were as follows: |
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| Fair Value Measurements as of | | | | |
| December 28, 2013 | | | | |
Description | Level 1 | | Level 2 | | Level 3 | | | | |
| (In thousands) | | | | |
Assets: | | | | | | | | | |
Money market funds | $ | 101,441 | | | $ | — | | | $ | — | | | | | |
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Corporate and government bonds | — | | | 21,954 | | | — | | | | | |
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Total assets measured at fair value | $ | 101,441 | | | $ | 21,954 | | | $ | — | | | | | |
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The Company’s financial assets measured at fair value on a recurring basis at December 29, 2012, were as follows: |
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| Fair Value Measurements as of | | | | |
| December 29, 2012 | | | | |
Description | Level 1 | | Level 2 | | Level 3 | | | | |
| (In thousands) | | | | |
Assets: | | | | | | | | | |
Money market funds | $ | 88,144 | | | $ | — | | | $ | — | | | | | |
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Corporate bonds | — | | | 12,430 | | | — | | | | | |
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Total assets measured at fair value | $ | 88,144 | | | $ | 12,430 | | | $ | — | | | | | |
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In each table above, the bond investments are valued based on observable market values as of the Company’s reporting date and are included in Level 2. 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 for that period. The fair value of the Company’s bond investments are included in short term investments in its consolidated balance sheets. |
Non-financial Assets |
The Company's non-financial assets, which include goodwill, intangible assets, and property, plant and equipment are not required to be measured at fair value on a recurring basis. However, the Company evaluates the non-financial assets for impairment if a trigger event occurs, or when an annual impairment test is performed. If the asset is determined to be impaired, the asset is required to be recorded at fair value. |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements |
In July 2013, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update related to the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. This new guidance clarifies guidance and eliminates diversity in practice on the presentation of unrecognized tax benefits when certain situations exist at the reporting date. This new guidance is effective for annual reporting periods beginning on or after December 15, 2013 and subsequent interim periods. We are currently assessing the impact, if any, on our consolidated financial statements. |
In February 2013, the FASB issued guidance requiring disclosure of amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present either on the face of the statement of operations or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required to be reclassified to net income in its entirety in the same reporting period. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional detail about those amounts. This guidance was effective prospectively for the Company for annual and interim periods beginning January 1, 2013. The impact of these amendments on the Company’s consolidated financial statements was not material. |
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 its consolidated financial statements upon adoption. |