IROBOT CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - IROBOT CORP	b83161e8vk.htm

Exhibit 99.1


Contacts:
Elise Caffrey		Charlie Vaida
Investor Relations		Media Relations
iRobot Corp.		iRobot Corp.
(781) 430-3003		(781) 430-3182
ecaffrey@irobot.com		cvaida@irobot.com

iRobot Reports Third-Quarter Financial Results

Increases full-year expectations

BEDFORD, Mass., Oct. 27, 2010 — iRobot Corp. (NASDAQ: IRBT), a leader in delivering robotic technology-based solutions, today announced its financial results for the third quarter ended October 2, 2010.

Revenue for the third quarter of 2010 increased 20 percent to $94.2 million, compared with $78.6 million for the same quarter one year ago. Net income in the third quarter of 2010 was $7.0 million, compared with $2.6 million in the third quarter of 2009. Quarterly earnings per share were $0.27, compared with $0.10 in the third quarter last year. The third-quarter results include a $2.3 million one-time tax benefit associated with the release of state deferred tax allowances. Excluding the impact of this one-time benefit, net income in the third quarter of 2010 would have been $4.8 million and earnings per share for the quarter would have been $0.18.

“Our financial performance in the third quarter was exceptionally strong following record first-half results. Adjusted EBITDA of $11 million for the quarter increased by 37 percent to more than 12 percent of revenue, far exceeding our expectations,” said Colin Angle, chairman and chief executive officer of iRobot. “Quarterly earnings per share increased by 80 percent year-over-year, excluding the one-time tax benefit. As a result of outstanding performance by both divisions in the third quarter and good visibility for the rest of 2010, we are once again increasing our full-year financial expectations.”

Business Highlights

•		Strong demand in overseas markets drove a 58 percent increase in Q3 2010 international home robot revenue year-over-year. In the third quarter, international home robot revenue of $35 million comprised 64 percent of total home robot revenue.

•		Driven by shipments of Small Unmanned Ground Vehicles and spare parts, government & industrial robot revenue grew 15 percent in the third quarter over the third quarter of 2009.

•		Gross margin for the third quarter increased to 35 percent of revenue, compared with 31 percent of revenue in the third quarter of 2009.

•		Year-to-date operating cash flow was $35 million, compared with $25 million in the first nine months of 2009, driving quarter-end cash position to $107 million.

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

Financial Expectations

Management provides the following expectations with respect to the fourth quarter and year ending January 1, 2011.


Fiscal Year 2010:
Revenue		$395 – $400 million
Earnings Per Share		$0.80 – $0.82
Adjusted EBITDA		$46 – $48 million

Q4 2010:
Revenue		$108 – $113 million
Earnings Per Share		$0.10 – $0.12
Adjusted EBITDA		$8 – $10 million

Third-Quarter Conference Call
iRobot will host a conference call tomorrow at 8:30 a.m. ET to discuss its financial results for the third fiscal quarter 2010, business outlook, and outlook for future financial performance. Pertinent details include:


		Date:		Thursday, October 28, 2010
		Time:		8:30 a.m. ET
		Call-In Number:		617-597-5307
		Passcode:		16836933

A live, audio broadcast of the conference call will also be available at http://investor.irobot.com/phoenix.zhtml?c=193096&p=irol-irhome. An archived version of the broadcast will be available on the same website shortly after the conclusion of the live event. A replay of the telephone conference call will be available through November 4 and can be accessed by dialing 617-801-6888, passcode 35724357.

About iRobot Corp.
iRobot designs and builds robots that make a difference. The company’s home robots help people find smarter ways to clean, and its government and industrial robots protect those in harm’s way. iRobot’s consumer and military robots feature iRobot Aware^® robot intelligence systems, proprietary technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence. For more information about iRobot, please visit www.irobot.com.

For iRobot Investors
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This press release contains express or implied forward-looking statements relating to, among other things, iRobot Corp.’s expectations regarding future financial performance and growth, anticipated revenue, Adjusted EBITDA and earnings per share for fiscal year 2010 and the fourth quarter of 2010. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

forward-looking statements. In particular, the risks and uncertainties include, among other things: our ability to operate in an emerging market, the financial strength of our customers and retailers, general economic conditions, our dependence on the U.S. federal government and government contracts, market acceptance of our products, changes in government policies or spending priorities, and competition. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. iRobot Corp. undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise. For additional disclosure regarding these and other risks faced by iRobot Corp., see the disclosure contained in our public filings with the Securities and Exchange Commission.

This release includes net income excluding the impact of one-time tax benefit, earnings per share excluding the impact of one-time tax benefit and Adjusted EBITDA, each a non-GAAP financial measure as defined by SEC Regulation G. We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, merger and acquisition expenses, and non-cash stock compensation. Reconciliations between net income excluding the impact of one-time tax benefit and net income, earnings per share excluding the impact of one-time tax benefit and earnings per share, and net income and Adjusted EBITDA are provided in the financial tables at the end of this press release.

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)


	For the three months ended				For the nine months ended
	October 2,		September 26,		October 2,		September 26,
	2010		2009		2010		2009

Revenue
Product revenue	$	85,051	$	69,080	$	257,107	$	171,380
Contract revenue		9,172		9,539		29,850		25,515

Total		94,223		78,619		286,957		196,895

Cost of Revenue
Product revenue		54,472		46,415		165,897		116,952
Contract revenue		6,494		8,009		21,116		23,133

Total		60,966		54,424		187,013		140,085

Gross Margin		33,257		24,195		99,944		56,810
Operating Expense
Research & development		6,185		3,159		16,375		10,633
Selling & marketing		10,734		9,514		30,959		27,420
General & administrative		8,904		7,420		26,693		21,915

Total		25,823		20,093		74,027		59,968

Operating income (loss)		7,434		4,102		25,917		(3,158	)
Other income (expense), net		299		112		368		(96	)

Pre-tax income (loss)		7,733		4,214		26,285		(3,254	)
Income tax expense (benefit)		701		1,620		7,771		(1,452	)

Net income (loss)	$	7,032	$	2,594	$	18,514	$	(1,802	)


Net income (loss) per common share:
Basic	$	0.28	$	0.10	$	0.73	$	(0.07	)
Diluted	$	0.27	$	0.10	$	0.70	$	(0.07	)

Shares used in Per Common Share Calculations:
Basic		25,428		25,025		25,293		24,974
Diluted		26,480		25,670		26,319		24,974

Stock-based compensation included in above figures:
Cost of product revenue	$	310	$	267	$	997	$	758
Cost of contract revenue		101		139		337		464
Research & development		211		89		488		187
Selling & marketing		240		351		885		1,006
General & administrative		1,079		1,016		3,325		2,944

Total	$	1,941	$	1,862	$	6,032	$	5,359

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Condensed Consolidated Balance Sheet
(unaudited, in thousands)


	October 2,		January 2,
	2010		2010
Assets

Cash and equivalents	$	90,603	$	71,856
Short term investments		16,576		4,959
Accounts receivable, net		27,794		35,171
Unbilled revenues		2,534		1,831
Inventory		33,969		32,406
Deferred tax assets		9,922		8,669
Other current assets		3,062		4,119

Total current assets		184,460		159,011
Property, plant and equipment, net		22,389		20,230
Deferred tax assets		8,183		6,089
Other assets		13,889		14,254

Total assets	$	228,921	$	199,584


Liabilities and stockholders’ equity

Accounts payable	$	35,677	$	30,559
Accrued expenses		14,061		14,384
Accrued compensation		13,117		13,525
Deferred revenue and customer advances		2,023		3,908

Total current liabilities		64,878		62,376

Long term liabilities		3,692		4,014

Stockholders’ equity		160,351		133,194

Total liabilities and stockholders’ equity	$	228,921	$	199,584

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Consolidated Statement of Cash Flows
(unaudited, in thousands)


	For the three months ended						For the nine months ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009

Cash flows from operating activities:
Net income (loss)	$	7,032		$	2,594		$	18,514		$	(1,802	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		1,918			2,289			5,673			6,153
Loss on disposal of property and equipment		70			74			117			176
Stock-based compensation		1,941			1,862			6,032			5,359
Benefit from deferred tax assets		(3,867	)		164			(3,867	)		(347	)
Non-cash director deferred compensation		33			33			99			99
Changes in operating assets and liabilities — (use) source
Accounts receivable		(661	)		(12,643	)		7,377			(8,004	)
Unbilled revenue		(221	)		922			(703	)		(523	)
Inventory		(3,285	)		3,985			(1,563	)		9,907
Other assets		213			1,052			1,010			(1,111	)
Accounts payable		3,909			6,679			5,118			8,243
Accrued expenses		716			706			(315	)		673
Accrued compensation		1,964			3,819			(408	)		4,453
Deferred revenue		54			1,270			(1,885	)		1,612
Change in long term liabilities		(107	)		(107	)		(322	)		(322	)

Net cash provided by operating activities		9,709			12,699			34,877			24,566


Cash flows from investing activities:
Purchase of property and equipment		(1,869	)		(953	)		(7,537	)		(3,401	)
Purchases of investments		(5,050	)		—			(30,461	)		—
Sales of investments		11,500			—			19,000			—

Net cash provided by (used in) investing activities		4,581			(953	)		(18,998	)		(3,401	)


Cash flows from financing activities:
Proceeds from stock option exercises		370			36			2,297			495
Income tax withholding payment associated with restricted stock vesting		(5	)		(67	)		(284	)		(76	)
Tax benefit of excess stock based compensation deductions		138			43			855			311

Net cash provided by financing activities		503			12			2,868			730


Net increase in cash and cash equivalents		14,793			11,758			18,747			21,895
Cash and cash equivalents, at beginning of period		75,810			50,989		$	71,856			40,852

Cash and cash equivalents, at end of period	$	90,603		$	62,747		$	90,603		$	62,747

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Supplemental Information
(unaudited)


	For the three months ended						For the nine months ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009


Revenue: *

Home Robots	$	54,650		$	44,331		$	160,101		$	111,253


Domestic	$	19,814		$	22,314		$	53,061		$	51,958
International	$	34,836		$	22,017		$	107,040		$	59,295

Retail	$	48,633		$	38,151		$	142,426		$	92,230
Direct	$	6,017		$	6,180		$	17,675		$	19,023

Government & Industrial	$	39,573		$	34,288		$	126,856		$	85,642


Domestic	$	36,013		$	29,854		$	116,486		$	76,549
International	$	3,560		$	4,434		$	10,370		$	9,093

Product	$	30,401		$	24,749		$	97,006		$	60,127
Contract	$	9,172		$	9,539		$	29,850		$	25,515

Product Life Cycle	$	9,060		$	5,368		$	26,621		$	14,299

Gross Margin Percent:
Home Robots		39.7	%		30.3	%		39.0	%		30.3	%
Government & Industrial		29.2	%		31.3	%		29.6	%		27.0	%
Total Company		35.3	%		30.8	%		34.8	%		28.9	%

Units shipped:
Home Robots *		308			289			889			664
Government & Industrial		186			159			702			460

Average gross selling prices for robot units:
Home Robots	$	185		$	167		$	187		$	177
Government & Industrial *	$	115		$	122		$	100		$	100

Government & Industrial Funded Product Backlog *	$	34,003		$	71,038		$	34,003		$	71,038

Days sales outstanding		29			54			29			54

Days in inventory		57			48			57			48

Headcount		643			514			643			514


*		in thousands

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Adjusted EBITDA Reconciliation to GAAP
(unaudited, in thousands)


	For the three months ended						For the nine months ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009


Net income (loss)	$	7,032		$	2,594		$	18,514		$	(1,802	)

Interest income, net		(206	)		(5	)		(572	)		(41	)
Income tax expense (benefit)		701			1,620			7,771			(1,452	)
Depreciation		1,784			2,150			5,261			5,763
Amortization		134			139			412			390


EBITDA		9,445			6,498			31,386			2,858

Stock-based compensation expense		1,941			1,862			6,032			5,359
Merger and acquisition expense		61			—			132			—


Adjusted EBITDA	$	11,447		$	8,360		$	37,550		$	8,217

Use of Non-GAAP Financial Measures

In evaluating its business, iRobot considers and uses Adjusted EBITDA as a supplemental measure of its operating performance. The Company defines Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, merger and acquisition expenses, and non-cash stock compensation. The Company also presents Adjusted EBITDA because it believes it is frequently used by securities analysts, investors and other interested parties as a measure of financial performance.

The term Adjusted EBITDA is not defined under U.S. generally accepted accounting principles, or U.S. GAAP, and is not a measure of operating income, operating performance or liquidity presented in accordance with U.S. GAAP. Adjusted EBITDA has limitations as an analytical tool, and when assessing the Company’s operating performance, investors should not consider Adjusted EBITDA in isolation, or as a substitute for net income (loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Among other things, Adjusted EBITDA does not reflect the Company’s actual cash expenditures. Other companies may calculate similar measures differently than iRobot, limiting their usefulness as comparative tools. iRobot compensates for these limitations by relying primarily on its GAAP results and using Adjusted EBITDA only supplementally.

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

iRobot Corporation
Non-GAAP Net Income and Earnings Per Share Reconciliations to GAAP
(in thousands, except per share amounts)
(unaudited)


	For the three months ended					For the nine months ended
	October 2,			September 26,		October 2,			September 26,
	2010			2009		2010			2009


GAAP net income (loss)	$	7,032		$	2,594	$	18,514		$	(1,802	)

Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance		(2,259	)		—		(2,259	)		—


Non-GAAP net income (loss)	$	4,773		$	2,594	$	16,255		$	(1,802	)


GAAP net income (loss) per common share:
Basic	$	0.28		$	0.10	$	0.73		$	(0.07	)
Diluted	$	0.27		$	0.10	$	0.70		$	(0.07	)

Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance:
Basic	$	(0.09	)	$	—	$	(0.09	)	$	—
Diluted	$	(0.09	)	$	—	$	(0.08	)	$	—

Non-GAAP net income (loss) per common share:
Basic	$	0.19		$	0.10	$	0.64		$	(0.07	)
Diluted	$	0.18		$	0.10	$	0.62		$	(0.07	)

Shares used in Per Common Share Calculations:
Basic		25,428			25,025		25,293			24,974
Diluted		26,480			25,670		26,319			24,974

iRobot Corporation
8 Crosby Drive, Bedford, MA 01730-1402 • 781.430.3000 • Fax 781.430.3001 • www.irobot.com

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