iRobot

IRBT2016

Proxy Statement

Notice of Annual Meeting
of Stockholders to be held on
May 25, 2016

P
r
o
x
y
S
t
a
t
e
m
e
n
t

March 29, 2016

Dear Fellow Stockholder,

I cordially invite you to attend the Annual Meeting of stockholders of iRobot Corporation, a Delaware

corporation (the “Company”), to be held on Wednesday, May 25, 2016, at 8:30 a.m., local time, at the
Company’s headquarters located at 8 Crosby Drive, Bedford, Massachusetts 01730.

Your board of directors is recommending two highly qualified and experienced nominees for election to

the board of directors at the 2016 annual meeting. At this annual meeting, we will ask you to: (1) elect these
Class II directors; (2) ratify the appointment of the accounting firm of PricewaterhouseCoopers LLP as the
Company’s independent registered public accountants for the current fiscal year; (3) approve amendments to our
amended and restated certificate of incorporation to eliminate supermajority voting requirements; (4) approve
amendments to our amended and restated certificate of incorporation to declassify the board of directors; and (5)
approve an advisory vote on the compensation of our named executive officers.

The accompanying materials include the Notice of Annual Meeting of Stockholders and Proxy Statement,
which provide detailed information about the matters to be considered at the 2016 annual meeting. We urge you
to use the enclosed WHITE proxy card TODAY to vote by telephone, by Internet or by signing, dating and
returning the WHITE proxy card in the postage-paid envelope provided.

Because approval of Proposals 3 and 4 requires the affirmative vote of at least 75% of the outstanding
shares, your vote will be especially important at this year’s annual meeting. Additionally, as you may know, Red
Mountain Capital Partners LLC and certain of its affiliates (“Red Mountain”) has notified the Company of its
intention to nominate two individuals for election as directors at the annual meeting in opposition to the
nominees recommended by your board of directors. You may receive proxy solicitation materials from Red
Mountain. The Company is not responsible for the accuracy of any information provided by or relating to Red
Mountain or its nominees contained in solicitation materials filed or disseminated by or on behalf of Red
Mountain or any other statements that Red Mountain may make.

The board of directors does NOT endorse any Red Mountain nominee and strongly recommends that you

NOT sign or return any Green proxy card sent to you by Red Mountain. If you have previously submitted a
Green proxy card sent to you by Red Mountain, you can revoke that proxy card and vote FOR our board of
directors’ nominees and on the other matters to be voted on at the annual meeting by using the enclosed WHITE
proxy card.

If you have any questions about the Annual Meeting or how to vote your shares, please contact Innisfree
M&A Incorporated, our proxy solicitor assisting us in connection with the Annual Meeting. Stockholders may
call toll free at (877) 717-3929. Banks and brokers may call collect at (212) 750-5833.

Thank you for your continued support, interest and investment in iRobot.

Sincerely,

Colin M. Angle
Chairman of the Board and Chief Executive Officer

P
r
o
x
y
S
t
a
t
e
m
e
n
t

iROBOT CORPORATION

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 25, 2016

To the Stockholders of iRobot Corporation:

The annual meeting of stockholders of iRobot Corporation, a Delaware corporation (the “Company”), will

be held on Wednesday, May 25, 2016, at 8:30 a.m., local time, at the Company’s headquarters located at 8
Crosby Drive, Bedford, Massachusetts 01730, for the following purposes:

1. To elect two (2) Class II directors, nominated by the board of directors, each to serve for a three year

term and until his successor has been duly elected and qualified or until his earlier resignation or removal;

2. To ratify the appointment of the accounting firm of PricewaterhouseCoopers LLP as the Company’s

independent registered public accountants for the current fiscal year;

3. To approve amendments to our amended and restated certificate of incorporation to eliminate

supermajority voting requirements;

4. To approve amendments to our amended and restated certificate of incorporation to declassify the

board of directors; and

5. To hold an advisory vote on the approval of the compensation of our named executive officers.

Proposal 1 relates solely to the election of two (2) Class II directors nominated by the board of directors

and does not include any other matters relating to the election of directors, including without limitation, the
election of directors nominated by any stockholder of the Company. Red Mountain Capital Partners LLC and
certain of its affiliates (“Red Mountain”) has notified the Company that Red Mountain intends to nominate two
individuals for election as directors at the annual meeting in opposition to the nominees recommended by your
board of directors. Any candidates nominated by Red Mountain have NOT been endorsed by your board of
directors. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU DO NOT SIGN ANY GREEN
PROXY CARDS SENT TO YOU BY RED MOUNTAIN OR ANY OF ITS AFFILIATES. IF YOU HAVE
PREVIOUSLY SIGNED A GREEN PROXY CARD SENT TO YOU BY RED MOUNTAIN OR ITS
AFFILIATES, YOU CAN REVOKE IT BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE
PROXY CARD IN THE ENVELOPE PROVIDED.

Holders of shares as of the close of business on April 5, 2016, the record date for voting at the annual

meeting, are urged to submit a WHITE proxy card, even if your shares were sold after such date.

If your brokerage firm, bank, broker-dealer or other similar organization is the holder of record of your
shares (i.e., your shares are held in “street-name”), you will receive voting instructions from the holder of record.
You must follow these instructions in order for your shares to be voted. We recommend that you instruct your
broker or other nominee, by following those instructions, to vote your shares for the WHITE proxy card.

All stockholders are cordially invited to attend the annual meeting in person. In accordance with our
security procedures, all persons attending the annual meeting will be required to present a form of government-
issued picture identification. If you hold your shares in “street-name”, you must also provide proof of ownership
(such as recent brokerage statement). If you are a holder of record and attend the annual meeting, you may vote
by ballot in person even if you have previously returned your proxy card. If you hold your shares in “street-
name” and wish to vote in person, you must provide a “legal proxy” from your bank or broker. Directions to the
annual meeting can be found at the Company’s website, http://www.irobot.com.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

Please note that, even if you plan to attend the annual meeting, we recommend that you vote using the

enclosed WHITE proxy card TODAY, to ensure that your shares will be represented.

By Order of the Board of Directors,

GLEN D. WEINSTEIN
Executive Vice President,
Chief Legal Officer and Secretary
Bedford, Massachusetts
March 29, 2016

If you have any questions or require assistance with voting, please call:

Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll Free at (877) 717-3929
Banks and Brokers May Call Collect at (212) 750-5833

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE VOTE

BY TELEPHONE, OVER THE INTERNET OR BY SIGNING, DATING AND RETURNING THE
ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED IN ORDER
TO ASSURE REPRESENTATION OF YOUR SHARES.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

P
r
o
x
y
S
t
a
t
e
m
e
n
t

TABLE OF CONTENTS

PROXY STATEMENT
BACKGROUND OF THE SOLICITATION
PROPOSAL 1 — ELECTION OF DIRECTORS
Nominees
Recommendation of the Board
DIRECTORS AND EXECUTIVE OFFICERS
CORPORATE GOVERNANCE AND BOARD MATTERS
Board Leadership Structure
Independence of Members of the Board of Directors
Executive Sessions of Independent Directors
The Board of Directors’ Role in Risk Oversight
Policies Governing Director Nominations
Policy Governing Security Holder Communications with the Board of Directors
Policy Governing Director Attendance at Annual Meetings of Stockholders
Board of Directors Evaluation Program
Code of Ethics
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
Audit Committee
Compensation and Talent Committee
Nominating and Corporate Governance Committee
Strategy and Finance Committee
Compensation and Talent Committee Interlocks and Insider Participation
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
REPORT OF THE COMPENSATION AND TALENT COMMITTEE OF THE BOARD OF

DIRECTORS

COMPENSATION AND OTHER INFORMATION CONCERNING EXECUTIVE OFFICERS AND

DIRECTORS

Compensation Discussion and Analysis
Compensation Consultant Independence
Executive Compensation Summary
Grants of Plan-Based Awards in 2015
Outstanding Equity Awards at Fiscal Year End
Option Exercises and Stock Vested
Equity Compensation Plan Information
Potential Benefits Upon Termination or Change in Control
Director Compensation
Transactions with Related Persons
PROPOSAL 2 — RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP Fees
Recommendation of the Board
PROPOSAL 3 — APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING
REQUIREMENTS

Recommendation of the Board

1
4
10
10
11
12
19
19
19
19
20
20
22
22
23
23
24
24
24
25
25
26
26
27

29

30
30
41
43
44
45
46
47
47
49
51

52
53
54

55
56

PROPOSAL 4 — APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION TO DECLASSIFY OUR BOARD OF DIRECTORS

Recommendation of the Board
PROPOSAL 5 — ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED

EXECUTIVE OFFICERS
Recommendation of the Board
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OTHER MATTERS
STOCKHOLDER PROPOSALS
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
EXPENSES AND SOLICITATION
Exhibit A
ANNEX A
ANNEX B

57
57

58
58
59
61
61
61
61
A
A-1
B-1

P
r
o
x
y
S
t
a
t
e
m
e
n
t

iROBOT CORPORATION
PROXY STATEMENT
For the Annual Meeting of Stockholders
To Be Held on May 25, 2016

March 29, 2016

This proxy statement and the WHITE proxy card are furnished in connection with the solicitation of
proxies by the board of directors of iRobot Corporation, a Delaware corporation (the “Company” or “iRobot”),
for use at the annual meeting of stockholders to be held on Wednesday, May 25, 2016, at 8:30 a.m., local time, at
the Company’s headquarters located at 8 Crosby Drive, Bedford, Massachusetts 01730, and any adjournments or
postponements thereof. An annual report to stockholders, containing financial statements for the fiscal year
ended January 2, 2016, is being mailed together with this proxy statement to all stockholders entitled to vote at
the annual meeting. This proxy statement and the accompanying WHITE proxy card are expected to be first
mailed to stockholders on or about March 29, 2016.

The purposes of the annual meeting are to elect two (2) Class II directors for three-year terms, to ratify the

appointment of the Company’s independent registered public accountants, to approve amendments to our
amended and restated certificate of incorporation to eliminate supermajority voting requirements, to approve
amendments to our amended and restated certificate of incorporation to declassify the board of directors (such
amendments, together, the “Certificate Amendments”), and to hold an advisory vote on the compensation of our
named executive officers. Only stockholders of record at the close of business on April 5, 2016 will be entitled to
receive notice of and to vote at the annual meeting. As of March 24, 2016, 28,918,311 shares of common stock,
$.01 par value per share, of the Company were issued and outstanding. The holders of common stock are entitled
to one vote per share on any proposal presented at the annual meeting.

Stockholders may vote in person or by proxy. If you attend the annual meeting, you may vote in person

even if you have previously returned your proxy card. Any proxy given pursuant to this solicitation may be
revoked by the person giving it at any time before it is voted. Proxies may be revoked by (i) filing a written
notice of revocation bearing a later date than the proxy with the Secretary of the Company, (ii) duly completing a
later-dated proxy relating to the same shares, or (iii) attending the annual meeting and voting in person (although
attendance at the annual meeting will not in and of itself constitute a revocation of a proxy). Any written notice
of revocation or subsequent proxy should be sent so as to be delivered to iRobot Corporation, 8 Crosby Drive,
Bedford, Massachusetts 01730, Attention: Secretary, before the taking of the vote at the annual meeting.

The representation in person or by proxy of at least a majority of the outstanding shares of common stock

entitled to vote at the annual meeting is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee, abstentions and broker “non-votes” are counted as present or represented for
purposes of determining the presence or absence of a quorum for the annual meeting. A broker “non-vote” occurs
when a nominee holding shares for a beneficial owner votes on one proposal but does not vote on another
proposal because, with respect to such other proposal, the nominee does not have discretionary voting power and
has not received instructions from the beneficial owner. Broker “non-votes” are not considered voted for the
particular matter. If Red Mountain provides proxy materials in opposition to our board of directors to your broker
to forward to you on its behalf, your broker will not have discretionary authority to vote your shares on any of the
matters to be presented at the annual meeting. Therefore, if you hold your shares in “street-name” through a
broker or other nominee, absent voting instructions from you, your shares will not be counted as voting and will
have no effect on those proposals requiring approval by a plurality or majority of the votes cast, and will have the
same effect as if you voted against Proposals 3 and 4. On the other hand, in the absence of Red Mountain
providing proxy materials in opposition to our board to your broker to forward to you on its behalf, Proposal 2 to
ratify the appointment of our independent registered public accountants will be a “routine” matter for which your
broker does not need your voting instruction in order to vote your shares.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

1

For Proposal 1, our by-laws require that, in an uncontested election, each director be elected by the
affirmative vote of holders of a majority of the votes cast by holders of shares present, in person or represented
by proxy, and entitled to vote on the matter is required for approval. Red Mountain has notified us of its intent to
nominate two individuals for election as directors at the annual meeting. If Red Mountain proceeds with its
alternative nominations, the election of directors would be considered a contested election. In a contested
election, directors are elected by a plurality of the votes cast, meaning that the director nominees receiving the
most votes would be elected. As a result, the two director nominees receiving the most votes at the annual
meeting will be elected. You may not vote your shares cumulatively or for a greater number of persons than the
number of director nominees named in this proxy statement. In the event Red Mountain does not proceed with its
nominations or withdraws its nominees on or prior to the day preceding the date the Company first mails the
proxy materials for the annual meeting to the Company’s stockholders, the election of directors will not be
contested, and directors will be elected by the affirmative vote of holders of a majority of the votes cast by
holders of shares present, in person or represented by proxy, and entitled to vote on the matter.

For Proposal 2, the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s
independent registered public accountants for the current fiscal year, and Proposal 5, the advisory vote on the
compensation of our named executive officers, an affirmative vote of holders of a majority of the votes cast by
holders of shares present, in person or represented by proxy, and entitled to vote on each such matter is required
for approval. Abstentions and broker non-votes are not considered votes cast for either proposal and, therefore,
will not have any effect on the outcome of such proposal.

For Proposals 3 and 4, votes on the Certificate Amendments, an affirmative vote of not less than 75% of

the outstanding shares entitled to vote as of the record date is required for approval of each such Proposal.
Abstentions and broker non-votes will have the same effect as if you voted against Proposals 3 and 4.

All properly executed WHITE proxies returned in time to be counted at the annual meeting will be voted

by the named proxies at the annual meeting. Where a choice has been specified on the WHITE proxy with
respect to the foregoing matters, the shares represented by the WHITE proxy will be voted in accordance with
the specifications. If you return a validly executed WHITE proxy card without indicating how your shares
should be voted on a matter and you do not revoke your proxy, such WHITE proxies will be voted FOR election
of the director nominees set forth on the WHITE proxy card, FOR ratification of the appointment of our
independent registered public accountants, FOR each of the Certificate Amendments, and FOR the approval on
an advisory basis, of the compensation of our named executive officers. OUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU DO NOT SIGN OR OTHERWISE VOTE USING ANY GREEN PROXY CARD
SENT TO YOU BY RED MOUNTAIN OR ANY OF ITS AFFILIATES.

If you have any questions or require assistance with voting, please call:

INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll-Free at (877) 717-3929
Banks and Brokers May Call Collect at (212) 750-5833

Aside from the election of directors, the ratification of the appointment of the independent registered
public accountants, the approval of the Certificate, Amendments, and the advisory vote on the compensation of
our named executive officers, the board of directors knows of no other matters to be presented at the annual
meeting. If any other matter should be presented at the annual meeting upon which a vote properly may be taken,
shares represented by all WHITE proxy cards received by the board of directors will be voted with respect
thereto at the discretion of the persons named as proxies.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

2

P
r
o
x
y
S
t
a
t
e
m
e
n
t

You may receive proxy solicitation materials from Red Mountain, including an opposition proxy statement

and Green proxy card. Our board of directors recommends that you do not sign or otherwise vote using any
Green proxy card sent to you by Red Mountain. To vote as our board of directors recommends, stockholders
must use the WHITE proxy card or attend the annual meeting and vote in person. Voting against any Red
Mountain nominees or voting to withhold or abstain on the Green proxy card will not be counted as a vote for our
board’s nominees and will result in the revocation of any previous vote you may have cast on the WHITE proxy
card. If you wish to vote pursuant to the recommendation of our board of directors, you should disregard any
proxy card you receive other than the WHITE proxy card. If you have previously voted using the Green proxy
card sent to you by Red Mountain, you have the right to change your vote by executing a later dated WHITE
proxy card or by attending and voting at the annual meeting. Only the latest dated proxy you submit will be
counted.

OUR BOARD RECOMMENDS THAT YOU DO NOT VOTE FOR ANY INDIVIDUALS WHO MAY

BE NOMINATED BY RED MOUNTAIN OR ANY OF ITS AFFILIATES.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON MAY 25, 2016. THE PROXY STATEMENT AND
ANNUAL REPORT TO STOCKHOLDERS ARE AVAILABLE AT http://investor.irobot.com/
phoenix.zhtml?c=193096&p=irol-sec.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

3

Background of the Solicitation

The following timeline is provided in order to help stockholders understand the discussions that have been

held between the Company and Red Mountain Capital (“Red Mountain”) during 2015 and 2016 regarding our
strategic plan and discussions about potential candidates to join our Board. These discussions were terminated
with no agreement, and Red Mountain has nominated two directors to serve in place of the two directors who are
recommended by our Board for election. During these conversations, the Company’s representatives provided
only publicly available information, as Red Mountain refused several requests to sign confidentiality agreements
that would have enabled us to discuss our strategies and plans in more depth. The Board does not endorse the
Red Mountain nominees and unanimously recommends you use the WHITE proxy card to vote FOR the election
of each of the nominees proposed by the Board.

On February 12, 2014, as part of our Board’s ongoing review of the Company’s business and financial
performance, our Board decided to focus resources and capital on the Company’s home robots business unit, and
began considering strategic alternatives with respect to the Company’s defense and security (“D&S”) business
unit. In connection with this decision, our Board engaged Blackstone Advisory Partners LP, now known as PJT
Partners, to begin exploring a potential sale of the D&S business unit.

On April 1, 2014, in connection with its review of the Company’s capital allocation plan, our Board
authorized the repurchase of up to $50 million of our common stock for the twelve months ended April 30, 2015.

On July 29, 2014, at Red Mountain’s request, a call took place between a representative of the Company

and Ted Moon, a Red Mountain analyst, in which Mr. Moon asked questions regarding the Company’s business
and strategy for the future.

On February 11, 2015 and February 24, 2015, at Red Mountain’s request, follow-up calls took place
between a representative of the Company and Mr. Moon regarding the Company’s financial outlook and strategy.

On March 19, 2015 our Board authorized the repurchase of up to $50 million of our common stock for the

twelve months ending April 30, 2016.

On March 11, 2015, in conjunction with the Piper Jaffray Technology, Media & Telecommunications
Conference in New York City, our Chief Executive Officer, Colin Angle, and our Senior Vice President, Investor
Relations, Elise Caffrey, met with Mr. Moon as part of a meeting with a larger group of investors. During the
meeting, Mr. Angle and Ms. Caffrey discussed our business and various operational matters with the group.

On March 17, 2015, in conjunction with the Sidoti & Company Emerging Growth Research Institutional
Investor Forum in New York City, our Chief Financial Officer, Alison Dean, and Ms. Caffrey met briefly with
Mr. Moon. During the meeting, Ms. Dean responded to questions from Mr. Moon regarding our financial
reporting and business outlook. Mr. Moon requested an in-person meeting with management, which was agreed
would occur following the Company’s April 22, 2015 earnings call.

On April 8, 2015, Red Mountain filed a Schedule 13D with the SEC disclosing it beneficially owned 5.1% of
the outstanding shares of common stock of the Company and sent a letter to the Company stating that Red Mountain
expected to engage in a dialogue with the Company’s management regarding a number of actions that it believed the
Company could take to create value for our stockholders. In particular, Red Mountain’s Schedule 13D and letter
suggested that the Company: (i) focus exclusively on home robots; (ii) optimize its capital structure by increasing
leverage; (iii) allocate capital by focusing on risk-adjusted returns; and (iv) upgrade its corporate governance.

Following Red Mountain’s letter to the Company, members of the Company’s management team had four in-

person meetings with representatives of Red Mountain, which occurred on May 1, 2015, May 15, 2015, June 23, 2015,
and August 3, 2015. These meetings covered a broad range of topics, including the Company’s business and results of

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

4

P
r
o
x
y
S
t
a
t
e
m
e
n
t

operations, our earnings performance, long-term business strategies, including the potential sale and/or discontinuation
of our D&S and remote presence business units, capital allocation strategy and the composition of our Board.

On June 12, 2015, Paul Sagan resigned from the Board. Following Mr. Sagan’s resignation, our Nominating and

Corporate Governance Committee (the “Nominating Committee”) engaged a nationally recognized director search
firm to help the Nominating Committee and the Board fill the vacancy on the Board left by Mr. Sagan’s resignation.
As discussed in “Corporate Governance and Board Matters-Policies Governing Director Nominations,” our
Nominating Committee seeks members from diverse professional backgrounds who combine a broad spectrum of
relevant industry and strategic experience and expertise that, in concert, offer us and our stockholders diversity of
opinion and insight in the areas most important to us and our corporate mission. Through this skills-based approach,
our Nominating Committee focused on reviewing the skill set of our then-existing directors and adding to our Board a
director who would broaden the experience of the then-existing Board and strengthen the ability of our Board to offer
practical business advice and strategic guidance to management and fulfill its fiduciary duties to stockholders.

On June 29, 2015, the Company entered into an exclusivity agreement with a potential buyer of the D&S
business unit. Following termination of negotiations with this party, the Company entered into a letter of intent
with the ultimate buyer of the D&S business unit on November 24, 2015, as further described below.

During the spring and summer of 2015, following consultation and advice from an investment banker and other

advisors, our Board reviewed the Company’s capital allocation plan and considered whether the Company’s existing
share repurchase program should be increased, and the various methods through which an increased program could be
implemented. In connection with these considerations, our Board decided the final size of the revised share repurchase
program and that its implementation would be made in conjunction with the sale of the D&S business unit.

In July 2015, our Board formed an ad hoc strategy and finance committee to, among other things, review

the Company’s strategic objectives and transactional opportunities to support those objectives.

On July 29, 2015, Mr. Willem Mesdag, the Managing Partner of Red Mountain, sent a letter to Mr. Angle
in which Red Mountain expressed dissatisfaction that the Company had seemingly not taken steps to divest the
D&S business unit and return “excess capital to shareholders through a stock repurchase.” Red Mountain
suggested that the Company consider a $100 million Dutch tender offer for the purchase of its own shares.

In an August 6, 2015 letter to the Company, Red Mountain indicated that it “decided to sell our stake in

iRobot.” In the letter, Red Mountain said it “appreciate[d] that [the Company’s] board has considered our views,
and I trust that they are being taken seriously.” Despite this letter, to the best of our knowledge, Red Mountain
did not subsequently sell its stake in the Company.

On August 17, 2015, after a thorough search process by the nationally recognized director search firm, and

considered deliberation by our Nominating Committee and our Board, including the Company’s skills-based
approach to Board composition, the Company announced the appointment of Mohamad Ali, president and chief
executive officer of Carbonite, Inc., to our Board, to fill the vacancy of Paul Sagan.

In an August 21, 2015 letter to the Company, Red Mountain again emphasized that the Company had a
significant opportunity to create stockholder value by focusing on its home robots business unit and by allocating
capital more efficiently through a tender offer for its shares. In this letter, Mr. Mesdag also stated “[o]ur dialogue
has been open and candid, and we have been impressed with your additions to the senior management team and
your board. Your recent appointment of Mohamad Ali to the board is consistent and commendable…I’m
confident that Mr. Ali’s experience at HP…provided him with valuable lessons with regard to the importance of
evaluating each business segment’s contribution to the overall enterprise and efficient capital allocation…HP’s
share price more than doubled during Mr. Ali’s tenure as Chief Strategy Officer. Mr. Ali also has a distinguished
record as a director of City National Bank, the board of which has created enormous value for its shareholders

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

5

over the years, and recently sold the bank to the Royal Bank of Canada at an exceptional valuation. I trust that
Mr. Ali will bring his relevant experience to the board of iRobot, and will help you to drive shareholder value in
addition to maintaining your innovation edge.”

On November 10, 2015, the Company hosted an Analyst Day in New York City, where the Company
publicly announced that it was shifting its focus to home robots and the connected home and would de-emphasize
its D&S and remote presence businesses.

On November 11, 2015, there was an in-person meeting between George McNamee, the Company’s then-

lead independent director, Deborah Ellinger, the chair of our Nominating Committee, Mr. Angle, Ms. Caffrey,
and Mr. Mesdag, of Red Mountain. At the meeting, the parties discussed our business and its strategic direction
(primarily the Company’s decision to focus on home robots and Red Mountain’s belief that the Company should
sell the D&S and remote presence business units). At this meeting, Mr. Mesdag requested that he be appointed to
our Board and issued an ultimatum that if he were not appointed by us, he would initiate a proxy fight for a full
slate of directors at the 2016 annual meeting to gain representation for himself and his nominees on our Board.

Following this meeting with our directors, on November 12, 2015, Mr. Mesdag sent a letter to the Company

requesting that the parties negotiate a settlement agreement that would provide Red Mountain with representation on
our Board. In this letter, Mr. Mesdag delivered an ultimatum that if such a settlement were not reached by December 1,
2015, then Red Mountain would release a public letter disclosing its intent to seek representation on our Board.

On November 24, 2015, the Company entered into a letter of intent with Arlington Capital Partners to sell

them the Company’s D&S business unit.

On November 24, 2015, Mr. Angle sent an email to Mr. Mesdag acknowledging Mr. Mesdag’s interest in

joining the Board and invited him to participate in the Board’s standard process for evaluating director candidates
by requesting information required under the Company’s nomination and corporate governance policies. In
response, Mr. Mesdag provided his resume and references to the Company. Mr. Mesdag also invited the
Company to direct its representatives to contact Red Mountain’s lawyers to commence settlement negotiations.

On December 1, 2015, Mr. Angle spoke by telephone with Mr. Mesdag and informed Mr. Mesdag that the

Company was open to considering director nominee candidates suggested by Red Mountain. Mr. Angle also
informed Mr. Mesdag that our Nominating Committee follows a process for adding directors to our Board that
involves in-person interviews of director candidates, reference checks and other steps to help ensure both a
complementary fit with the Board, as well as finding candidates with skill sets which align well the Company’s
current business needs. Mr. Angle informed Mr. Mesdag that Mr. Mesdag could be an active participant in this
process, but that our Board could not agree to his ultimatum which set this arbitrary December 1st deadline,
especially in light of the fact that the period for stockholders to nominate directors did not even open until January
21, 2016. Mr. Angle also requested that Mr. Mesdag execute a short term confidentiality agreement so that the
Company could discuss with him certain material non-public steps it was undertaking to enhance stockholder
value. Mr. Mesdag declined to execute a confidentiality agreement and asked whether as part of this process there
was a chance he would not be added to our Board. Mr. Angle indicated that there was a possibility that Mr. Mesdag
would not be added to the Board at the conclusion of this process but in these circumstances, Mr. Mesdag would
have sufficient time to nominate candidates to our Board and run a proxy contest. Mr. Mesdag then stated that he
was one of the most qualified public company board director candidates that iRobot could hope to attract and that he
wanted to be added to our Board immediately and would not engage in any type of process. At the conclusion of the
conversation, Mr. Mesdag stated that he would be on our Board “quick or less quick” and would be making a filing
with the SEC later that day indicating his intention to run a proxy contest.

Following this conversation, on December 1, 2015, Red Mountain publicly filed a letter to our Board

outlining its “value enhancement” plan for the Company and announcing its intention to nominate directors for
election at our 2016 annual meeting of stockholders.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

6

P
r
o
x
y
S
t
a
t
e
m
e
n
t

On December 28, 2015, the Company announced that our Board had authorized a new share repurchase

plan whereby the Company would purchase up to one million shares of its common stock during the 2016 fiscal
year, replacing the Company’s existing share repurchase plan.

On January 5, 2016, representatives of the Company and Red Mountain had discussions concerning Red

Mountain’s stated intention to nominate directors for election at the Company’s 2016 annual meeting. The
Company’s representatives indicated that the Company hoped to make a public announcement on material
developments in its business in the near future and requested that Red Mountain not make any public
announcement or officially file nomination papers until after the Company disclosed these developments. The
Company’s representatives indicated that Red Mountain would still have sufficient time after this announcement
to nominate directors under the Company’s by-laws. Red Mountain’s representatives indicated that while these
corporate actions may be beneficial to all stockholders, Red Mountain would still want representation on the
Board. Both parties agreed to update their clients and then continue their discussions.

On January 6, 2016, representatives of the Company and Red Mountain had a follow up call on the
previous day’s discussions. On this call, Red Mountain’s representatives stated that Red Mountain would not
wait to nominate directors until after the Company made its announcement. Red Mountain’s representatives
reiterated that Mr. Mesdag wanted to be added to the Board and to immediately begin settlement discussions to
effect this result. The Company’s representatives indicated that they would inform the Company of this position.

On January 13, 2016, the Company’s representative invited Red Mountain’s lawyers to propose terms for a

potential settlement so that the Board could understand and evaluate the settlement terms that would be
acceptable to Red Mountain.

On January 15, 2016, Red Mountain’s representatives sent the Company’s representatives a draft term
sheet for a proposed settlement agreement, which provided for the immediate resignation of a current director, an
increase in the size of our Board from eight directors to nine, and the appointment of Mr. Mesdag and Lawrence
Peiros to fill the resulting vacancies.

Following receipt of Red Mountain’s term sheet, our Board requested to meet with Mr. Peiros to evaluate

his candidacy as a director nominee. The Company again requested that Red Mountain enter into a short-term
confidentiality agreement so that the parties could discuss certain material, non-public information concerning
the Company in connection with these settlement discussions. Red Mountain’s representatives refused to make
Mr. Peiros available unless it was in the context of a settlement agreement where he and Mr. Mesdag would be
immediately appointed to the Board. Red Mountain again refused to enter into a confidentiality agreement.

On January 25, 2016, Red Mountain sent a letter to our Board expressing its disappointment that the

Company had not entered into settlement discussions to add Messrs. Peiros and Mesdag to the Board.

On January 31, 2016, Mr. Angle again asked Mr. Mesdag to enter into a short-term confidentiality
agreement with a term of one trading day that would allow the Company to discuss with Red Mountain certain
material non-public information that the Company believed would be of interest to Red Mountain and could
facilitate a negotiated settlement.

On February 1, 2016, Red Mountain responded by stating that it would only enter a confidentiality
agreement if the Company agreed to pursue good faith settlement negotiations that would result in Messrs. Peiros
and Mesdag being added to our Board. The Company rejected Red Mountain’s ultimatum because it would have
required the Company to commit to appointing both Messrs. Peiros and Mesdag to our Board before meeting or
having any contact with Mr. Peiros. Red Mountain refused to enter into a confidentiality agreement.

On February 4, 2016, the Company announced that it entered into a definitive agreement to sell the D&S
business unit to a private equity buyer. Additionally, the Company announced that it was expanding its current
share repurchase initiative by $65 million, increasing the total 2016 program to more than $100 million.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

7

After the Company’s February 4, 2016 announcement, Mr. Angle contacted Mr. Mesdag to discuss his

reactions to the D&S business unit sale and the expansion of the share repurchase program and continue to
attempt to amicably settle the parties’ differences. As part of these discussions, Mr. Angle indicated to Mr.
Mesdag the Company’s willingness to discuss with him the composition of the Board. In that regard, Mr. Angle
indicated that as part of the Nominating Committee’s skills-based approach to its director nominations, the Board
was considering adding a sitting chief executive officer from the software industry to the Board and indicated the
Board would welcome any candidates that Mr. Mesdag may know who had these qualifications. Mr. Mesdag
agreed to make Mr. Peiros available to the members of the Nominating Committee.

On February 10, 2016, three members of the Board, Mr. Angle, Ms. Ellinger and Gail Deegan, individually

interviewed Mr. Peiros by telephone as part of the Board’s efforts to evaluate his qualifications to serve as a director.

During January, February and March 2016, the Nominating Committee continued to work with a nationally
recognized director search firm to identify potential new director candidates. In this search, the Nominating Committee
again followed the Company’s longstanding approach and guidelines for reviewing the skill set of existing directors,
identifying future company needs, and identifying the ideal qualifications that a new board member should bring to the
Company. The search firm presented 49 candidates for consideration by the Nominating Committee. The Nominating
Committee conducted interviews with 8 candidates and spoke to references of many of them during this period.

On February 14, 2016, Mr. Angle provided Mr. Mesdag with a draft of a settlement agreement containing
terms upon which the Company would amicably resolve matters with Red Mountain and avoid the expense and
distraction of a proxy contest. The draft settlement agreement provided, among other things, that: (i) the
Company would appoint a new director to our Board, subject to Red Mountain’s approval (provided that Red
Mountain could not reject more than two candidates proposed by the Company); (ii) the Company would
purchase at least $100 million of its stock in 2016; (iii) the Company would submit proposals to be considered at
the Company’s 2016 annual meeting that would declassify the Board and eliminate the supermajority voting
provisions from the Company’s certificate of incorporation; (iv) Red Mountain would vote all of its Company
shares in favor of the Board’s director nominees and governance proposals at the Company’s 2016 annual
meeting; (v) Red Mountain would agree to customary standstill restrictions until 30 days prior to the Company’s
advance notice deadline for director nominations for the Company’s 2017 annual meeting; and (vi) the Company
would reimburse Red Mountain for its expenses incurred in connection with these matters, up to $75,000.

On February 16, 2016, Red Mountain’s representatives responded by providing the Company’s

representatives with a revised draft of the proposed settlement agreement, which included, among other
revisions, the requirement that both Mr. Mesdag and Mr. Peiros be appointed to our Board immediately and
provided Red Mountain with approval rights over an additional new director candidate.

On February 18, 2016, Red Mountain publicly filed a letter notifying the Company that Red Mountain
intended to nominate Messrs. Mesdag and Peiros for election to the Board at the Company’s 2016 annual meeting.

On March 1, 2016, the Company announced it had entered into an accelerated stock repurchase agreement

(“ASR Agreement”) with JPMorgan Chase Bank, N.A. to repurchase an aggregate of $85 million of the
Company’s common stock bringing the total stock repurchases for 2016 to over $100 million.

On March 4, 2016, Ms. Ellinger contacted Mr. Mesdag to see if he was interested in having an in-person

meeting to discuss a potential settlement. The parties agreed to meet in New York on March 9, 2016.

At the March 9, 2016 meeting, Ms. Ellinger proposed a settlement pursuant to which, among other things:

(i) one of Red Mountain’s nominees, Mr. Peiros, would be immediately appointed to the Board; (ii) Mr.
McNamee would not be a nominee for election as a director at the 2016 annual meeting and would retire from
the Board as of the Company’s 2016 annual meeting; (iii) Ms. Ellinger would become the Company’s lead

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

8

P
r
o
x
y
S
t
a
t
e
m
e
n
t

independent director; (iv) the Company would immediately add to the Board a new director who is a chief
executive officer of a software company and this director would also be up for election at the 2016 annual
meeting; and (v) Red Mountain would agree to customary standstill protections which would expire 30 days prior
to the director nomination deadline for the Company’s 2017 annual meeting. After a discussion of these
settlement terms, the potential outcomes of the proxy contest for the 2016 annual meeting and Red Mountain’s
investment philosophy regarding the Company, Mr. Mesdag indicated that he would consider the settlement
proposal and provide Ms. Ellinger with a response on the following day.

On March 10, 2016, Mr. Mesdag contacted Ms. Ellinger and rejected the Company’s settlement proposal.
Instead, Mr. Mesdag indicated that Red Mountain would settle only if he personally, as well as Mr. Peiros, were
added to our Board. Mr. Mesdag indicated that if the Company agreed to this proposal, Red Mountain would also
agree: (i) to a three year limit on Mr. Mesdag’s Board membership, during which three-year term, Mr. Mesdag
would be required to maintain at least 5% ownership of the Company’s common stock, and (ii) Red Mountain’s
standstill would be in effect as long as Mr. Mesdag was on the Board. After a discussion of the terms of this
settlement proposal, Ms. Ellinger agreed to take this settlement proposal to our Board, while also reiterating the
Board’s previous position that the best way to reach a settlement would be for Mr. Mesdag to remove his own
name from consideration and suggest alternative candidates in his place.

On March 13, 2016, after considered deliberation, our Board voted unanimously to reject Red Mountain’s

proposal and not to add Mr. Mesdag to our Board. After careful consideration, the Nominating Committee
concluded that Michael Bell’s experience as a chief executive officer of a public technology company and his
expertise in the Internet of Things, and consumer products and services provided the skill set sought by the
Nominating Committee and the Board. Our Board then: (i) added Mr. Bell to the Board immediately; (ii)
determined that Mr. Bell and Mr. Ali would be the Board’s two nominees for election at the 2016 annual
meeting; and (iii) named Ms. Ellinger as lead independent director.

Following the Board deliberation, on the same day, Ms. Ellinger called Mr. Mesdag to inform him that the

Board had unanimously voted not to accept his settlement offer. She reiterated the Board’s willingness to consider a
settlement that included adding Mr. Peiros to the Board. Ms. Ellinger again emphasized the importance of the
Company’s skills-based approach to board composition pursuant to which the Board sought to add directors who
broaden the skill set of our existing directors and strengthen the ability of our Board to offer practical business advice
and strategic guidance to management and fulfill its fiduciary duties to stockholders. In that regard, Ms. Ellinger
reiterated the importance of software experience for our next Board member. She also indicated to Mr. Mesdag that the
Board believed that he did not possess the skills they were looking for, in particular, that Mr. Mesdag has no known
operating experience in software development, data analytics, Internet of Things or international technology sourcing.

On March 14, 2016, the Company issued a press release announcing (i) the appointment of Mr. Bell to the

board, (ii) the coming retirement of George McNamee, (iii) the election of Ms. Ellinger as lead independent
director, (iv) the Board’s determination to seek stockholder approval at the 2016 annual meeting to (X) amend to
our certificate of incorporation to declassify the Board, and (Y) amend our governing documents to eliminate
supermajority voting requirements relating to the removal of directors and amendments to our certificate of
incorporation and by-laws, and (v) the Board’s approval of an amendment to the Company’s by-laws to provide
proxy access for eligible stockholders of the Company.

On March 18, 2016, Red Mountain filed with the SEC a preliminary proxy statement with respect to its

nominees.

On March 18, 2016, the Company filed with the SEC a preliminary proxy statement with respect to the

Company’s 2016 annual meeting.

On March 23, 2016, the Company filed with the SEC amendment number 1 to its preliminary proxy statement.

On March 24, 2016, Red Mountain filed with the SEC amendment number 1 to its preliminary proxy

statement.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

9

PROPOSAL 1

ELECTION OF DIRECTORS

Nominees

Our board of directors currently consists of nine members. Our amended and restated certificate of
incorporation currently divides the board of directors into three classes. One class is elected each year for a term
of three years. The board of directors, upon the recommendation of the nominating and corporate governance
committee, has nominated Mohamad Ali and Michael Bell and recommended that each be elected to the board of
directors as a Class II director, each to hold office until the annual meeting of stockholders to be held in the year
2019 or until his successor has been duly elected and qualified or until his earlier death, resignation or removal.
Mr. Ali and Mr. Bell are currently Class II directors whose terms are set to expire at this annual meeting. Each of
Mr. Ali and Mr. Bell has consented to being named in this proxy statement and has agreed to serve if elected.
The board of directors is also composed of (i) three Class III directors (Gail Deegan, Andrea Geisser, and
Michelle V. Stacy) whose terms are currently set to expire upon the election and qualification of directors at the
annual meeting of stockholders to be held in 2017, (ii) three Class I directors (Colin M. Angle, Ronald Chwang,
Ph.D., and Deborah G. Ellinger) whose terms are currently set to expire upon the election and qualification of
directors at the annual meeting of stockholders to be held in 2018, and (iii) George C. McNamee, currently a
Class II director, who has informed us that he will retire following the end of his term at the annual meeting.

The board of directors knows of no reason why any of the nominees named in this proxy statement would

be unable or for good cause will not serve, but if any nominee should for any reason be unable to serve or for
good cause will not serve, the board of directors reserves the right to nominate substitute nominees for election
prior to the annual meeting, in which case the Company will file an amendment to this proxy statement
disclosing the identity of such substitute nominees and related information and the proxies will be voted for such
substitute nominees. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the
nominees named below.

We have received a notice from Red Mountain for the nomination of two individuals for election to our
board of directors at the annual meeting in opposition to the director nominees named in this proxy statement.

The board of directors does not endorse any Red Mountain nominees and unanimously recommends that
you vote for the directors who have been named in this proxy statement and on the WHITE proxy card, and do
not sign or otherwise vote using any Green proxy card sent to you by Red Mountain. OUR BOARD OF
DIRECTORS RECOMMENDS THAT YOU DO NOT SIGN ANY PROXY CARDS SENT TO YOU BY RED
MOUNTAIN OR ANY OF ITS AFFILIATES. IF YOU HAVE PREVIOUSLY SIGNED OR OTHERWISE
VOTED USING A GREEN PROXY CARD SENT TO YOU BY RED MOUNTAIN OR ANY OF ITS
AFFILIATES, YOU CAN REVOKE IT BY SIGNING, DATING AND MAILING THE ENCLOSED WHITE
PROXY CARD IN THE ENVELOPE PROVIDED.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

10

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Recommendation of the Board

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” ELECTION OF THE NOMINEES LISTED BELOW.

The following table sets forth our nominees to be elected at the annual meeting and continuing directors,
the positions with us currently held by each nominee and director, the year each nominee’s or director’s current
term is currently set to expire and each nominee’s and director’s current class:

Nominee’s or Director’s Name

Position(s) with the Company

Year Current Term
Will Expire

Current Class
of Director

Nominees for Class II Directors:

Mohamad Ali(1)

Michael Bell(2)

Continuing Directors:

Gail Deegan

Andrea Geisser

Michelle V. Stacy

Colin M. Angle

Ronald Chwang, Ph.D.

Director

Director

Director

Director

Director

Chairman of the Board,
Chief Executive Officer and
Director
Director

Deborah G. Ellinger

Lead Independent Director

2016

2016

2017

2017

2017

2018

2018

2018

II

II

III

III

III

I

I

I

(1) Mr. Ali was appointed by the board of directors as a Class II director in August 2015.
(2) Mr. Bell was appointed by the board of directors as a Class II director in March 2016.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

11

Directors and Executive Officers

The following table sets forth the director nominees to be elected at the annual meeting, the directors and the executive
officers of the Company, their ages immediately prior to the annual meeting, and the positions currently held by each such
person with the Company:

Name

Colin M. Angle(4)
Deborah G. Ellinger(3)(4)
Mohamad Ali(1)(4)
Michael Bell
Ronald Chwang, Ph.D.(1)(4)
Gail Deegan(2)(3)
Andrea Geisser(1)(2)
George C. McNamee(3)(5)
Michelle V. Stacy(1)(2)
Alison Dean

Russell J. Campanello

Christian Cerda

Glen D. Weinstein

Age

48
57
45
49
68
69
73
69
61
51

60

45

45

Position

Chairman of the Board, Chief Executive Officer and Director
Lead Independent Director
Director
Director
Director
Director
Director
Director
Director
Executive Vice President, Chief Financial Officer, Treasurer and
Principal Accounting Officer
Executive Vice President, Human Resources and Corporate
Communications
Executive Vice President and General Manager, Home
Robots Business Unit
Executive Vice President, Chief Legal Officer

(1) Member of compensation and talent committee
(2) Member of audit committee
(3) Member of nominating and corporate governance committee

(4) Member of strategy and finance committee
(5) Mr. McNamee will be retiring from the board of directors and
all committees thereof and is therefore not standing for
re-election at this annual meeting.

Board of Directors

Colin M. Angle

Age: 48

iRobot Committees:
(cid:129) Strategy and Finance

Committee

Public Directorships:
(cid:129) iRobot

Colin M. Angle, a co-founder of iRobot, has served as
chairman of the board since October 2008, as chief executive
officer since June 1997, and prior to that, as our president
since November 1992. He has served as a director since
October 1992. As a co-founder and chief executive officer,
Mr. Angle provides a critical contribution to the board of
directors with his detailed knowledge of the Company, our
employees, our client base, our prospects, the strategic

Skills and Qualifications

Board Experience: Director of two private companies, Striiv, Inc.
and Ixcela, Inc., and director of three nonprofits, Science from
Scientists, Rise and Tech Hub collaborative.

marketplace and our competitors. Mr. Angle previously
worked at the National Aeronautical and Space
Administration’s Jet Propulsion Laboratory where he
participated in the design of the behavior controlled rovers
that led to Sojourner exploring Mars in 1997. He holds a
B.S. in Electrical Engineering and an M.S. in Computer
Science, both from MIT.

Senior Leadership Experience: More than two decades serving
as President and CEO of iRobot.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

12

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Deborah G. Ellinger

Age: 57

Lead Independent Director

iRobot Committees:
(cid:129) Chair of Nominating and
Corporate Governance;
Strategy and Finance

Public Directorships:
(cid:129) iRobot; Interpublic Group

Deborah G. Ellinger has served as a director since November
2011. She has been the chief executive officer or president of
three private-equity backed companies, each of which yielded
three to seven times return on capital to investors. Ms. Ellinger
brings extensive experience in international retail and consumer
products, serving as the former chief executive officer of The
Princeton Review, a company which assists students in test
preparation, from 2012 to 2014, former president of Restoration
Hardware, a luxury home furnishings retailer, from 2008 to 2009
and former chief executive officer of Wellness Pet Food, a
natural pet-food company, from 2004 to 2008. Ms. Ellinger led
each of those companies while they were owned by private
equity firms, and successfully grew each business before
transitioning it to new ownership. Previously, she served as an
executive vice president at CVS Pharmacy,

Skills and Qualifications
Board Experience: Director of Interpublic Group, a public company,
and The Commonwealth Institute, a nonprofit; former director of
Sealy Corporation, National Life Group, and several private
companies, including The Princeton Review, RenewLife, Restoration
Hardware, and Malden Mills Industries.

a senior vice president at Staples and a partner at The
Boston Consulting Group; she began her career with
Mellon Financial Corporation. She also serves on the board
of Interpublic Group and The Commonwealth Institute, a
nonprofit, and is a former director of The Princeton
Review, Sealy Corporation, National Life Group, and
several private companies. Her assignments have taken her
all over the world; she has lived and worked in Europe,
Asia and America. Ms. Ellinger is qualified as a Barrister-
at-Law in London, as a member of the Inner Temple. She
holds an M.A. and B.A. in Law and Mathematics from the
University of Cambridge, England.

Senior Leadership Experience: CEO of The Princeton Review;
president of Restoration Hardware, CEO of Wellness Pet Food,
EVP of CVS Pharmacy, SVP of Staples, and a partner at The
Boston Consulting Group

Mohamad Ali

Age: 45

iRobot Committees:
(cid:129) Chair of Strategy and

Public Directorships:
(cid:129) iRobot, Carbonite, Inc.

Finance; Compensation and
Talent

Mohamad Ali has served as a director since August 2015 and
brings extensive experience with capital allocation in
technology companies, as well as strategic software
development, including cloud infrastructure and data
analytics. He has served as the president, chief executive
officer and director of Carbonite, Inc from 2014 to present.
Mr. Ali has successfully led Carbonite’s continued growth,
serving the ever-evolving technology needs of small and mid-
size businesses and consumers. Boston-based Carbonite
provides cloud and hybrid backup and recovery solutions for
home and business. Previously, Mr. Ali served as chief
strategy officer at Hewlett-Packard, a manufacturer of
computers and enterprise products, from 2012 to 2014 and
president of Avaya Global Services, an enterprise

Skills and Qualifications

communications company. He also served in senior
leadership roles at IBM Corporation, a multinational
technology and consulting company, where he acquired
numerous companies to build IBM’s analytics and big data
business. In addition to serving on the board of directors of
Carbonite, Mr. Ali is also a director of Oxfam America and
Massachusetts Technology Leadership Council and
previously served on the Board of Directors of City National
Corporation and City National Bank. He was named to
Boston Business Journal’s 2008 “40 Under 40” list, and
recognized by Massachusetts High Tech magazine as a 2011
All-Star. Mr. Ali holds a B.S. and an M.S. in Electrical
Engineering, both from Stanford University.

Board Experience: Director of Carbonite and two nonprofits, Oxfam
America and Massachusetts Technology Leadership Council; former
director of City National Corporation and City National Bank.

Senior Leadership Experience: CEO of Carbonite; CSO of
Hewlett-Packard; President of Avaya Global Services; and Senior
executive at IBM.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

13

Michael Bell

Age: 49

Public Directorships:
(cid:129) iRobot, Silver Spring Networks

Michael Bell has served as a director since March 2016 and
brings significant expertise in the Internet of Things from his
work at Silver Spring Networks, Inc., Intel Corporation,
Apple, Inc., and Palm, Inc. He has been the chief executive
officer and president of Silver Spring Networks, a leading
networking platform and solutions provider for smart energy
networks, since September 2015. Previously, from 2010 to
2015 he held various roles at Intel Corporation, a
multinational technology corporation specializing in the
production of semiconductor chips, including Corporate Vice

President New Devices Group, Corporate VP Mobile and
Communications Group and Corporate Vice President Ultra
Mobility Group. He was head of Product Development at
Palm, Inc. from 2007 to 2010. He worked at Apple, Inc.
from 1991 to 2007 and played significant roles in
development of Apple iPhone and Apple TV products,
serving as Vice President, CPU Software from 2002 to
2007. Mr. Bell is a director of Silver Spring Networks, Inc.
He holds a B.S. in Mechanical Engineering from the
University of Pennsylvania.

Skills and Qualifications

Board Experience: Director of Silver Spring Networks and several
private companies.

Senior Leadership Experience: CEO and President of Silver
Spring Networks, Inc.; formerly, CVP and GM of New Devices
Group at Intel; VP of Intel Architecture Group and Director of
smartphone product development; SVP of Palm, Inc., and VP,
CPU Software at Apple Inc.

Dr. Ronald Chwang

iRobot Committees:
(cid:129) Compensation and Talent;

Public Directorships:
(cid:129) iRobot, AU Optronics

Age: 68

Strategy and Finance

Ronald Chwang, Ph.D., has served as a director since
November 1998 and brings extensive experience in
technology, manufacturing, supply chain, business
development and Asian operations. Since January 2005, he
has been the chairman and president of iD Ventures America,
LLC (formerly known as Acer Technology Ventures, LLC)
part of the iD SoftCapital Group, a venture investment and
management consulting service group. He was the chief
executive officer of Acer America from 1992 until 1997,
growing it to over $1 Billion in revenues, and then became

Skills and Qualifications

chairman and president of Acer Technology Ventures until
2004, managing high-tech venture investment activities in
North America. Previously, he was president of two Acer
business groups in Taiwan, from 1986 to 1991. Dr. Chwang
also serves on the board of directors of AU Optronics. He
holds a B.Eng. (with honors) in Electrical Engineering from
McGill University and a Ph.D. in Electrical Engineering
from the University of Southern California.

Board Experience: Director of AU Optronics, Anchor
Semiconductor Inc., CoAdna Photonics Inc., Dragonfly Technology
Inc., mCube Inc., Silicon Frontline Technology Inc., Striiv, Inc., and
QED Labs, LLC; former director of Silicon Storage.

Senior Leadership Experience: Chairman and President of iD
Ventures America, Chairman and President of Acer Technology
Ventures, CEO of Acer America, and President of Acer business
units in Taiwan.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

14

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Gail Deegan

Age: 69

iRobot Committees:
(cid:129) Chair of Audit; Nominating
and Corporate Governance

Public Directorships:
(cid:129) iRobot

Gail Deegan has served as a director since May 2011 and
brings extensive experience as a former chief financial officer
of three public companies and director of five public
companies, in addition to iRobot; she has served as Audit
Committee Chair for three boards of directors. From 1996
until her retirement in 2001, Ms. Deegan served as executive
vice president and chief financial officer of Houghton Mifflin,
a publishing company. She was previously senior vice
president of regulatory and government affairs for NYNEX
New England, and vice president and chief financial officer of
New England Telephone. Earlier in her career she was senior
vice president, chief financial officer and treasurer of Eastern

Skills and Qualifications

Board Experience: Former director of EMC Corporation, TJX
Companies, Inc., EG&G (now called Perkin Elmer), Hartford Life,
and Houghton Mifflin.

Enterprises, as well as chief administrative officer of that
company. Ms. Deegan is a former director of EMC
Corporation, TJX Companies, Inc., and three other public
companies. She brings deep experience with financial
accounting matters for complex organizations, capital
allocation, business transformation, and oversight of
corporate governance requirements and financial reporting
processes. Ms. Deegan holds a B.A. in Elementary
Education from The College of Saint Rose, an M.S. in
History from Ohio State University, and an M.B.A. from
Simmons College School of Management.

Senior Leadership Experience: EVP and CFO of Houghton
Mifflin Company; SVP of regulatory and government affairs for
NYNEX New England; VP and CFO of New England Telephone;
SVP, CFO, CAO, and treasurer of Eastern Enterprises.

Andrea Geisser

Age: 73

iRobot Committees:
(cid:129) Chair of Compensation and

Public Directorships:
(cid:129) iRobot

Talent; Audit

Andrea Geisser has served as a director since March 2004
and brings substantial expertise in financial management and
company oversight as a private equity director. He is currently
a senior advisor to Zephyr Management Inc., a global private
equity firm that specializes in emerging markets, a role in
which he has served since 2006, and a member of the
investment committee of some of the funds managed by
Zephyr Management. From 1995 to 2005, Mr. Geisser was a
founder and managing director of Fenway Partners LLC, a
middle market private equity firm. Prior to founding Fenway
Partners, he was a managing director of

Skills and Qualifications

Board Experience: Former director of Aurora Foods, Bantam Books,
Decorative Concepts, and Harry Winston.

Butler Capital Corporation. Prior to that, Mr. Geisser was a
managing director of Onex Investment Corporation, a
Canadian management buyout company, and was a senior
officer of Exor America from 1974 to 1986. Mr. Geisser
has been a board member and audit committee member of
several private companies, and was the chair of the iRobot
audit committee for several years. He holds a B.A. from
Bocconi University in Milan, Italy and a P.M.D. from
Harvard Business School.

Senior Leadership Experience: Currently a senior advisor to
Zephyr Management Inc. Formerly managing director of Fenway
Partners LLC, and a senior executive with Butler Capital
Corporation, Onex Investment Corporation and Exor America.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

15

George C. McNamee

iRobot Committees:
(cid:129) Nominating and Corporate

Public Directorships:
(cid:129) iRobot, Plug Power, Inc.

Age: 69

Governance

George C. McNamee has served as a director since August
1999; he brings extensive experience with the management of
public and private companies, as well as deep financial
expertise. Currently a private investor, Mr. McNamee served
as a managing partner of FA Technology Ventures
Corporation, an information and energy technology venture
capital firm, from 2000 until 2012. He serves as chairman of
the board of directors of Plug Power Inc., a leading fuel cell
developer, and is a director of several private companies, a
Sterling Fellow of Yale and a Trustee of the Albany

Academies and The American Friends of Eton College.
Mr. McNamee previously served on the board of directors
of Broadpoint (now Gleacher) Securities as well as serving
from 1984 to 2007 as chairman of its predecessor First
Albany Companies and was also a board member of the
New York Stock Exchange Inc., Maplnfo, Home Shopping
Network, Inc. and the Meta Group. He holds a B.A. from
Yale University. Mr. McNamee will be retiring from the
board of directors and is not standing for re-election at this
annual meeting.

Skills and Qualifications

Board Experience: Director of Plug Power and several private
companies; former Director of Broadpoint (now Gleacher) Securities,
First Albany Companies Inc., New York Stock Exchange Inc.,
Maplnfo, Home Shopping Network, and the Meta Group.

Senior Leadership Experience: Managing partner of FA
Technology Ventures

Michelle V. Stacy

iRobot Committees:
(cid:129) Compensation and Talent;

Public Directorships:
(cid:129) iRobot; Flex Pharma, Inc.

Age: 61

Audit

Michelle V. Stacy has served as a director since August 2014.
As the former president of Keurig, Inc. and former vice
president and general manager with Gillette/Procter &
Gamble Co., Ms. Stacy brings to the board of directors a
wealth of experience leading consumer businesses and
building global brands. During her five-year tenure at Keurig
Inc., a division of Keurig Green Mountain, Inc., from 2008 to
2013, the company’s revenue grew from $493 million in 2008

to $4.3 billion for 2013. Ms. Stacy is a director of Coravin,
Inc., Flex Pharma, Inc., Young Innovations Inc. and the
French Cultural Center, a nonprofit. She is a professional
speaker on leadership, innovation and growth. She holds a
B.S. from Dartmouth College and an M.S. in Management
from J.L. Kellogg Graduate School of Management -
Northwestern University, and is bilingual in French and
English.

Skills and Qualifications

Board Experience: Director of Coravin, Inc., Flex Pharma, Inc.,
Young Innovations Inc. and the French Cultural Center, a nonprofit;
former director of Tervis Tumbler Company.

Senior Leadership Experience: President of Keurig, Inc.;
Managing Partner of ArchPoint Consulting from 2007 to 2008, and
VP and GM with Gillette/Procter & Gamble from 1982 to 2007.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

16

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Executive Officers

Alison Dean

Age: 51

Skills and Qualifications

Senior Leadership Experience: In addition to CFO and EVP,
Ms. Dean has served as SVP of corporate finance (February 2010
until April 2013), VP of finance (March 2007 until February 2010),
VP of financial controls and analysis (August 2005 until March
2007). Prior to iRobot, Ms. Dean was VP and Corporate Controller
at 3Com (1995 to August 2005).

Russell J. Campanello

Age: 60

Skills and Qualifications

Senior Leadership Experience: Prior to iRobot, Mr. Campanello
has held senior leadership roles at a variety of companies, including
SVP, HR and admin, Phase Forward (April 2008 until September
2010); SVP of HR and marketing, Keane (September 2003 to
October 2007); Chief people officer, NerveWire (August 2000 to
February 2003); SVP of HR, Genzyme (November 1997 to July
2000) and VP of HR, Lotus (1986 to 1996).

Alison Dean has served as our executive vice president,
chief financial officer, treasurer and principal accounting
officer since April 2013. Ms. Dean previously served as our
senior vice president, corporate finance from February 2010
until March 2013. From March 2007 until February 2010,
Ms. Dean served as our vice president, financial controls &
analysis. From August 2005 until March 2007, Ms. Dean
served as our vice president, financial planning & analysis.
From 1995 to August 2005, Ms. Dean served in a number of
positions at 3Com Corporation, including vice president and
corporate controller from 2004 to 2005 and vice president of
finance - worldwide sales from 2003 to 2004. Ms. Dean
holds a B.A. in Business Economics from Brown University
and an M.B.A. from Boston University.

Russell J. Campanello has served as our executive vice
president, human resources and corporate communications
since February 2014. Mr. Campanello previously served as
our senior vice president, human resources and corporate
communications from July 2013 until February 2014. From
November 2010 until July 2013, Mr. Campanello served as
our senior vice president, human resources. Prior to joining
iRobot, Mr. Campanello served as senior vice president,
human resources and administration at Phase Forward, Inc.
from April 2008 until September 2010. Mr. Campanello
previously served as senior vice president of human
resources and marketing at Keane, Inc., a business process
and information technology consulting firm, from
September 2003 to October 2007. Prior to Keane,
Mr. Campanello served as chief people officer at
NerveWire, Inc. from August 2000 to February 2003. Prior
to NerveWire, he served as senior vice president, human
resources at Genzyme Corp. from November 1997 to July
2000. Earlier in his career, Mr. Campanello spent nine years
as vice president of human resources at Lotus Development
Corporation. He holds a B.S. in Business Administration
from the University of Massachusetts.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

17

Christian Cerda

Age: 45

Skills and Qualifications

Senior Leadership Experience: Prior to iRobot, Mr. Cerda was
General Manager, Sales and Marketing at Whirlpool (June 2005 to
March 2013), a Principal at The Boston Consulting Group (March
1999 to June 2005) and a financial analyst at Procter & Gamble
(September 1993 to June 1996).

Glen D. Weinstein

Age: 45

Skills and Qualifications

Senior Leadership Experience: More than fifteen years of service
as SVP and General Counsel of iRobot. Prior to iRobot,
Mr. Weinstein was an associate at Covington & Burling (September
1997 to July 2000).

Christian Cerda has served as our executive vice president
and general manager of our Home Robot Business Unit
since February 2015, and its senior vice president and
general manager since May 2013. He has direct
responsibility over global sales, marketing and product
management and oversees a multifunctional team managing
all operational execution areas of the unit. Prior to iRobot,
he was general manager and vice president of Sales and
Marketing from April 2010 to March 2013 at Whirlpool
Corporation, a multinational manufacturer of home
appliances, where he was responsible for sales, marketing,
brand communications, product development and
operations. Previously, he served in senior positions at The
Boston Consulting Group and Procter & Gamble Co. Mr.
Cerda holds a B.S. in Computer Engineering from
Universidad Simon Bolivar and an M.S. in Business
Administration with distinction from the Northwestern
University Kellogg Graduate School of Management.

Glen D. Weinstein has served as our executive vice
president and chief legal officer since August 2012.
Mr. Weinstein previously served as our general counsel
from July 2000 to August 2012 and as senior vice president
from January 2005 to August 2012. Since March 2004, he
has also served as our secretary. Prior to joining iRobot,
Mr. Weinstein was with Covington & Burling LLP, a law
firm in Washington, D.C. Mr. Weinstein holds a B.S. in
Mechanical Engineering from MIT and a J.D. from the
University of Virginia School of Law.

Our executive officers are elected by the board of directors on an annual basis and serve until their successors have

been duly elected and qualified or until their earlier death, resignation or removal.

If you have any questions or require assistance with voting, please call:

INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders May Call Toll-Free at (877) 717-3929
Banks and Brokers May Call Collect at (212) 750-5833

Annex A sets forth information relating to our directors, nominees for directors and certain of our officers and
employees who are considered “participants” in our solicitation under the rules of the Securities and Exchange Commission
by reason of their position as directors of the Company, as nominees for directors or because they may be soliciting proxies on
our behalf.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

18

P
r
o
x
y
S
t
a
t
e
m
e
n
t

CORPORATE GOVERNANCE AND BOARD MATTERS

Board Leadership Structure

Mr. Angle serves as our chief executive officer and chairman of the board. The board of directors believes

that having our executive officer as chairman of the board facilitates the board of directors’ decision-making
process because Mr. Angle has first-hand knowledge of our operations and the major issues facing us. This also
enables Mr. Angle to act as the key link between the board of directors and other members of management. To
assure effective independent oversight, our by-laws provide that the independent members of our board of
directors will designate a lead independent director if the chairman of the board is not an independent director, as
discussed further in “Executive Sessions of Independent Directors” below.

Independence of Members of the Board of Directors

The board of directors has determined that Dr. Chwang, Mses. Deegan, Ellinger, and Stacy, and
Messrs. Ali, Bell, Geisser, and McNamee are independent within the meaning of the director independence
standards of The NASDAQ Stock Market, Inc. (“NASDAQ”), and the SEC. Furthermore, the board of directors
has determined that each member of each of the committees of the board of directors is independent within the
meaning of the director independence standards of NASDAQ and the SEC.

Executive Sessions of Independent Directors

Executive sessions of the independent directors are held during each regularly scheduled in-person meeting
of the board of directors. Executive sessions do not include any of our non-independent directors and are chaired
by a lead independent director who is appointed annually by the board of directors from our independent
directors. Ms. Ellinger currently serves as the lead independent director. In this role, Ms. Ellinger serves as
chairperson of the independent director sessions. The independent directors of the board of directors met in
executive session four (4) times in 2015.

In addition to acting as the chairperson of the independent director sessions, the lead independent director

assists the board in assuring effective corporate governance. The lead independent director’s specific duties
include:

(cid:129)
(cid:129)

(cid:129)
(cid:129)

(cid:129)

(cid:129)

(cid:129)

providing the chairman of the board with input as to preparation of agendas for meetings;
advising the chairman of the board as to the quality, quantity and timeliness of the flow of
information from the Company’s management that is necessary for the independent directors to
effectively and responsibly perform their duties;
coordinating and developing the agenda for the executive sessions of the independent directors;
acting as principal liaison between the independent directors and the chairman of the board on
critical issues;
acting as a spokesperson for the independent directors able to talk with major investors and
stockholders on topics of overall governance;
evaluating, along with the members of the compensation and talent committee, the chief executive
officer’s performance and meeting with the chief executive officer to discuss such evaluation; and
acting as chairperson of the board in the absence of the chairman of the board or a vacancy in the
position of chairman of the board.

In addition, the lead independent director works to ensure that “all voices are heard” within the boardroom

and proactively spends considerable time with the chief executive officer, and other executive officers, to
understand the Company’s vision and strategy and works to focus the board of directors on areas aligned with the
Company’s vision and strategy.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

19

The Board of Directors’ Role in Risk Oversight

The board of directors oversees our risk management process. This oversight is primarily accomplished
through the board of directors’ committees and management’s reporting processes, including receiving regular
reports from members of senior management on areas of material risk to the Company, including operational,
financial, legal and regulatory, and strategic and reputational risks. The audit committee focuses on risk related to
accounting, internal controls, and financial and tax reporting. The audit committee also assesses economic and
business risks and monitors compliance with ethical standards. The compensation and talent committee identifies
and oversees risks associated with our executive compensation policies and practices, and the nominating and
corporate governance committee identifies and oversees risks associated with director independence, related
party transactions and the implementation of corporate governance policies. The strategy and finance committee
oversees currency risk management policies and risk related to other treasury and tax policies.

Policies Governing Director Nominations

Director Qualifications

The nominating and corporate governance committee of the board of directors is responsible for reviewing

with the board of directors from time to time the appropriate qualities, skills and characteristics desired of
members of the board of directors in the context of the needs of the business and current make-up of the board of
directors. This assessment includes consideration of the following minimum qualifications that the nominating
and corporate governance committee believes must be met by all directors:

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

nominees must have experience at a strategic or policy making level in a business, government, non-
profit or academic organization of high standing;
nominees must be highly accomplished in their respective fields, with superior credentials and
recognition;
nominees must be well regarded in the community and shall have a long-term reputation for the
highest ethical and moral standards;
nominees must have sufficient time and availability to devote to the affairs of the Company,
particularly in light of the number of boards on which the nominee may serve;
nominees must be free of conflicts of interest and potential conflicts of interest, in particular with
relationships with other boards; and
nominees must, to the extent such nominee serves or has previously served on other boards,
demonstrate a history of actively contributing at board meetings.

We do not have a formal board diversity policy. However, pursuant to the Policy Governing Director
Qualifications and Nominations, as part of its evaluation of potential director candidates and in addition to other
standards the nominating and corporate governance committee may deem appropriate from time to time for the
overall structure and composition of the board of directors, the nominating and corporate governance committee
may consider whether each candidate, if elected, assists in achieving a mix of board members that represent a
diversity of background and experience. Accordingly, the board of directors seeks members from diverse
professional backgrounds who combine a broad spectrum of relevant industry and strategic experience and
expertise that, in concert, offer us and our stockholders diversity of opinion and insight in the areas most
important to us and our corporate mission. In addition, nominees for director are selected to have
complementary, rather than overlapping, skill sets. All candidates for director nominee must have time available
to devote to the activities of the board of directors. The nominating and corporate governance committee also
considers the independence of candidates for director nominee, including the appearance of any conflict in
serving as a director. Candidates for director nominee who do not meet all of these criteria may still be
considered for nomination to the board of directors, if the nominating and corporate governance committee
believes that the candidate will make an exceptional contribution to us and our stockholders.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

20

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Process for Identifying and Evaluating Director Nominees

The board of directors delegates the initial selection and nomination process to the nominating and

corporate governance committee, with the expectation that other members of the board of directors, and of
management, will be requested to take part in the process as appropriate.

Generally, the nominating and corporate governance committee identifies candidates for director nominee

in consultation with management, through the use of search firms or other advisors, through the
recommendations submitted by stockholders or through such other methods as the nominating and corporate
governance committee deems to be helpful to identify candidates. Once candidates have been identified, the
nominating and corporate governance committee confirms that the candidates meet all of the minimum
qualifications for director nominees established by the nominating and corporate governance committee. The
nominating and corporate governance committee may gather information about the candidates through
interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating
and corporate governance committee deems to be helpful in the evaluation process. The nominating and
corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each
candidate, both on an individual basis and taking into account the overall composition and needs of the board of
directors. Based on the results of the evaluation process, the nominating and corporate governance committee
recommends candidates for the board of directors’ approval as director nominees for election to the board of
directors. The nominating and corporate governance committee also recommends candidates to the board of
directors for appointment to the committees of the board of directors. Once appropriate candidates have been
identified, the entire board of directors votes on the candidates, as the selection of board nominees is a
responsibility of the entire board of directors.

Procedures for Recommendation of Director Nominees by Stockholders

The nominating and corporate governance committee will consider director nominee candidates who are

recommended by our stockholders. Stockholders, in submitting recommendations to the nominating and
corporate governance committee for director nominee candidates, shall follow the following procedures:

The nominating and corporate governance committee must receive any such recommendation for
nomination not earlier than the close of business on the 120th day prior to the first anniversary of the date of the
proxy statement delivered to stockholders in connection with the preceding year’s annual meeting.

All recommendations for nomination must be in writing and include the following:

(cid:129)
(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

Name and address of the stockholder making the recommendation;
A representation that the stockholder is a record holder of the Company’s securities, or if the
stockholder is not a record holder, evidence of ownership;
Name, age, business and residential address, educational background, current principal occupation or
employment, and principal occupation or employment for the preceding five full fiscal years of the
individual recommended for consideration as a director nominee;
A description of the qualifications and background of the proposed director nominee which addresses
the minimum qualifications, actual or potential conflicts of interest, and other criteria for board
membership approved by the board of directors from time to time and set forth in the Company’s
Policy Governing Director Qualifications and Nominations;
A description of all arrangements or understandings between the stockholder and the proposed
director nominee;
The consent of the proposed director nominee (i) to be named in the proxy statement for the annual
meeting and (ii) to serve as a director if elected at such annual meeting; and
Any other information regarding the proposed director nominee that is required to be included in the
proxy statement.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

21

Nominations must be sent to the attention of our secretary by U.S. mail (including courier or expedited

delivery service) to:

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730
Attn: Secretary of iRobot Corporation

Our Secretary will promptly forward any such nominations to the nominating and corporate governance

committee.

In addition, we recently amended the Company’s by-laws to permit eligible stockholders, or groups of

stockholders, owning continuously for at least three years shares of the Company’s stock representing an
aggregate of at least 3% of the Company’s outstanding shares, to nominate and include in the Company’s proxy
materials director nominees constituting up to two or 25%, whichever is greater, of the board of directors,
provided that the stockholders and nominees satisfy the requirements in our by-laws. Written notice of
stockholder nominees to the board of directors must be received not later than the close of business on the
90th day nor earlier than the close of business on the 120th day prior to the first anniversary the proceeding year’s
annual meeting. For details on the Company’s proxy access procedures, please refer to our by-laws.

Policy Governing Security Holder Communications with the Board of Directors

The board of directors provides to every security holder the ability to communicate with the board of

directors as a whole and with individual directors on the board of directors through an established process for
security holder communications as follows:

For communications directed to the board of directors as a whole, security holders may send such
communications to the attention of the chairman of the board of directors by U.S. mail (including courier or
expedited delivery service) to:

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730
Attn: Chairman of the Board, c/o Secretary

For security holder communications directed to an individual director in his or her capacity as a member of
the board of directors, security holders may send such communications to the attention of the individual director
by U.S. mail (including courier or expedited delivery service) to:

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730
Attn: [Name of the director], c/o Secretary

We will forward any such security holder communication to the chairman of the board, as a representative

of the board of directors, or to the director to whom the communication is addressed. We will forward such
communications by certified U.S. mail to an address specified by each director and the chairman of the board for
such purposes or by secure electronic transmission.

Policy Governing Director Attendance at Annual Meetings of Stockholders

Our policy is to schedule a regular meeting of the board of directors on the same date as our annual
meeting of stockholders and, accordingly, directors are encouraged to be present at our stockholder meetings.
The eight board members who were directors at the time of the annual meeting of stockholders held in 2015,
attended the meeting.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

22

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Board of Directors Evaluation Program

The board of directors performs annual self-evaluations of its composition and performance, including

evaluations of its standing committees and individual evaluations for each director. In addition, each of the
standing committees of the board of directors conducts its own self-evaluation, which is reported to the board of
directors. The board of directors retains the authority to engage its own advisors and consultants.

For more corporate governance information, you are invited to access the Corporate Governance section of

our website available at http://www.irobot.com.

The following summarizes key information about the board of directors:

Board and Governance Information*
Size of Board
Number of Independent Directors
Average Age of Directors
Board Meetings Held in Fiscal 2015
Average Tenure of Independent Directors (in years)
Independent Directors Added in the Last Three Years
Annual Election of Directors**
Proxy Access
Majority Voting for Directors
No Supermajority Voting Requirements***
Lead Independent Director
Independent Directors Meet Without Management Present
Director Stock Ownership Guidelines
Code of Business Conduct and Ethics for Directors, Officers and Employees
Director Self-Evaluation Program

8
7
59
12
6
43%
✓
✓
✓
✓
✓
✓
✓
✓
✓

*
**

All board of directors data excludes George McNamee, who will retire following the 2016 annual meeting.
The Company is seeking stockholder approval at the 2016 annual meeting to declassify its Board of
Directors.

*** The Company is seeking stockholder approval at the 2016 annual meeting to eliminate supermajority

voting requirements in its governing documents relating to removal of directors and amendments to the
Company’s certificate of incorporation and bylaws.

Code of Ethics

We have adopted a “code of ethics,” as defined by regulations promulgated under the Securities Act of
1933, as amended, and the Exchange Act, that applies to all of our directors and employees worldwide, including
our principal executive officer, principal financial officer, principal accounting officer and controller, or persons
performing similar functions. A current copy of the Code of Business Conduct and Ethics is available at the
Corporate Governance section of our website at http://www.irobot.com. A copy of the Code of Business Conduct
and Ethics may also be obtained, free of charge, from us upon a request directed to: iRobot Corporation,
8 Crosby Drive, Bedford, Massachusetts 01730, Attention: Investor Relations. We intend to disclose any
amendment to or waiver of a provision of the Code of Business Conduct and Ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing
similar functions, by posting such information on its website available at http://www.irobot.com and/or in our
public filings with the SEC.

For more corporate governance information, you are invited to access the Corporate Governance section of

our website available at http://www.irobot.com.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

23

THE BOARD OF DIRECTORS AND ITS COMMITTEES

Board of Directors

The board of directors met twelve (12) times during the fiscal year ended January 2, 2016, and took action

by unanimous written consent six (6) times. Each of the directors attended at least 75% of the aggregate of the
total number of meetings of the board of directors and the total number of meetings of all committees of the
board of directors on which they served during fiscal 2015. The board of directors has the following standing
committees: audit committee; compensation and talent committee; nominating and corporate governance
committee; and strategy and finance committee, each of which operates pursuant to a separate charter that has
been approved by the board of directors. A current copy of each charter is available at the Corporate Governance
section of our website at http://www.irobot.com. Each committee reviews the appropriateness of its charter at
least annually. Each committee retains the authority to engage its own advisors and consultants. The composition
and responsibilities of each committee are summarized below.

Audit Committee

The audit committee of the board of directors currently consists of Mr. Geisser and Mses. Deegan and
Stacy, each of whom is an independent director within the meaning of the director independence standards of
NASDAQ and the SEC, including Rule 10A-3(b)(1) under the Exchange Act, as amended, or the Exchange Act.
In addition, the board of directors has determined that each of Mr. Geisser and Mses. Deegan and Stacy are
financially literate and that Mr. Geisser and Ms. Deegan each qualifies as an “audit committee financial expert”
under the rules of the SEC. Ms. Deegan serves as the chairman of the audit committee. The Company expects
that Mr. Bell will be appointed to serve on the audit committee.

The audit committee met seven (7) times and took action by unanimous written consent one (1) time

during the fiscal year ended January 2, 2016. The audit committee operates under a written charter adopted by
the board of directors, a current copy of which is available at the Corporate Governance section of our website at
http://www.irobot.com.

As described more fully in its charter, the audit committee oversees the integrity of our financial
statements, our accounting and financial reporting processes, our internal controls over financial reporting, our
internal and external audit functions and the safeguarding of our assets. In fulfilling its role, the audit committee
responsibilities include:

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

appointing, approving the compensation of, and assessing the independence of our independent
registered public accounting firm;
pre-approving auditing and permissible non-audit services (including certain tax compliance,
planning and advice services), and the terms of such services, to be provided by our independent
registered public accounting firm;
reviewing and discussing with management and the independent registered public accounting firm
our annual and quarterly financial statements and related disclosures;
coordinating the oversight and reviewing the adequacy of our internal control over financial
reporting;
overseeing the performance of our internal auditors and internal audit functions, including reviewing
the annual internal audit risk assessment as well as the scope of, and overall plans for, the annual
internal audit program;
establishing policies and procedures for the receipt and retention of accounting related complaints
and concerns;
reviewing and discussing with management risk assessments and risk management, including cyber
security;
overseeing the development of business continuity plans;

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

24

P
r
o
x
y
S
t
a
t
e
m
e
n
t

(cid:129)

(cid:129)

(cid:129)
(cid:129)

overseeing our compliance with certain legal and regulatory requirements including, but not limited
to, the Foreign Corrupt Practices Act;
preparing the audit committee report required by SEC rules to be included in our annual proxy
statement:
reviewing certain relationships and related transactions; and
such other matters as the committee deems appropriate.

For additional information concerning the audit committee, see the “Report of the Audit Committee of the Board
of Directors.”

Compensation and Talent Committee

The compensation and talent committee of the board of directors currently consists of Messrs. Geisser and

Ali, Dr. Chwang, and Ms. Stacy each of whom is an independent director within the meaning of the director
independence standards of NASDAQ, a non-employee director as defined in Rule 16b-3 of the Exchange Act,
and an outside director pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the
“Code”). Mr. Geisser serves as the chairman of the compensation and talent committee. The compensation and
talent committee’s responsibilities include:

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

annually reviewing and approving corporate goals and objectives relevant to compensation of our
chief executive officer and other executive officers;
evaluating the performance of our chief executive officer in light of such corporate goals and
objectives and determining the compensation of our chief executive officer and other executive
officers;
overseeing and administering our compensation, welfare, benefit and pension plans and similar
plans;
reviewing and making recommendations to the board of directors with respect to director
compensation; and
reviewing and making recommendations to the board of directors with respect to succession planning
for senior management.

The compensation and talent committee met six (6) times and took action by unanimous written consent
seven (7) times during the fiscal year ended January 2, 2016. The compensation and talent committee operates
under a written charter adopted by the board of directors, a current copy of which is available at the Corporate
Governance section of our website at http://www.irobot.com.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee of the board of directors currently consists of
Mses. Ellinger and Deegan and Mr. McNamee, each of whom is an independent director within the meaning of
the director independence standards of NASDAQ and applicable rules of the SEC. Ms. Ellinger serves as the
chairman of the nominating and corporate governance committee. The nominating and corporate governance
committee’s responsibilities include:

(cid:129)
(cid:129)

(cid:129)
(cid:129)

(cid:129)

(cid:129)

developing and recommending to the board criteria for board and committee membership;
establishing procedures for identifying and evaluating director candidates including nominees
recommended by stockholders;
identifying individuals qualified to become board members;
recommending to the board the persons to be nominated for election as directors and to each of the
board’s committees;
developing and recommending to the board a code of business conduct and ethics and a set of
corporate governance guidelines; and
overseeing the evaluation of the board and management.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

25

The nominating and corporate governance committee met four (4) times and took action by unanimous

written consent one (1) time during the fiscal year ended January 2, 2016. The nominating and corporate
governance committee operates under a written charter adopted by the board of directors, a current copy of which
is available at the Corporate Governance section of our website at http://www.irobot.com.

Strategy and Finance Committee

In July 2015, the board of directors formed an ad hoc strategy and finance committee. The responsibilities

of the strategy and finance committee included:

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

(cid:129)

reviewing periodically with management the Company’s strategic objectives and their translation
into stockholder value creation;
reviewing with management on a regular basis contemplated transactional opportunities that support
the Company’s strategic business objectives;
reviewing with and, when appropriate, making recommendations to the board of directors regarding
the Company’s capital allocation objectives, strategies and plans;
reviewing the Company’s capital allocation process annually and significant capital programs
periodically.
reviewing and making recommendations to the board of directors regarding the Company’s
authorization to repurchase its common stock, approving any actions taken under each such plan, and
monitoring actual repurchases under the repurchase authorization;
reviewing and discussing with management the Company’s annual and long-term business and
financial plans, including the financial impacts of these plans; and as part of its review of the
Company’s annual and long-term business and financial plans, reporting to the board of directors
concerning its review of such plans and the financial and business assumptions underlying the
Company’s financial projections and budgets; and
reviewing the Company’s annual operating plan, and reviewing with management the significant
projects, research and development programs or other investments.

In March 2016, the ad hoc strategy and finance committee was replaced with a formal strategy and finance

committee, which operates under a written charter adopted by the board of directors, a current copy of which is
available at the Corporate Governance section of our website at http://www.irobot.com. Messrs. Ali and Angle,
Dr. Chwang and Ms. Ellinger currently serve as members of the strategy and finance committee. Mr. Ali serves
as the chairman of the strategy and finance committee.

Compensation and Talent Committee Interlocks and Insider Participation

During 2015, Dr. Chwang, Ms. Stacy and Messrs. Geisser and Ali served as members of the compensation

and talent committee. No member of the compensation and talent committee was an employee or former
employee of us or any of our subsidiaries, or had any relationship with us requiring disclosure herein.

During the last year, no executive officer of the Company served as: (i) a member of the compensation and
talent committee (or other committee of the board of directors performing equivalent functions or, in the absence
of any such committee, the entire board of directors) of another entity, one of whose executive officers served on
our compensation and talent committee; (ii) a director of another entity, one of whose executive officers served
on our compensation and talent committee; or (iii) a member of the compensation and talent committee (or other
committee of the board of directors performing equivalent functions or, in the absence of any such committee,
the entire board of directors) of another entity, one of whose executive officers served as a director of the
Company.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

26

P
r
o
x
y
S
t
a
t
e
m
e
n
t

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

No portion of this audit committee report shall be deemed to be incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, through any
general statement incorporating by reference in its entirety the proxy statement in which this report appears,
except to the extent that the Company specifically incorporates this report or a portion of it by reference. In
addition, this report shall not be deemed filed under either the Securities Act or the Exchange Act.

This report is submitted by the audit committee of the board of directors. The audit committee currently

consists of Mses. Deegan (chairman) and Stacy and Mr. Geisser. None of the members of the audit committee is
an officer or employee of the Company, and the board of directors has determined that each member of the audit
committee meets the independence requirements promulgated by NASDAQ and the SEC, including Rule
10A-3(b)(1) under the Exchange Act. Each of Mr. Geisser and Ms. Deegan is an “audit committee financial
expert” as is currently defined under SEC rules. The audit committee operates under a written charter adopted by
the board of directors.

The audit committee oversees the Company’s accounting and financial reporting processes on behalf of the

board of directors. The meetings of the audit committee are designed to facilitate and encourage communication
among the audit committee, Company management, the independent registered public accounting firm and the
Company’s internal audit function. The Company’s management has the primary responsibility for the financial
statements, for maintaining effective internal control over financial reporting, and for assessing the effectiveness
of internal control over financial reporting. In fulfilling its oversight responsibilities, the audit committee has
reviewed and discussed with management the Company’s consolidated financial statements for the fiscal quarters
and full year ended January 2, 2016, including a discussion of, among other things, the quarterly and annual
earnings press releases, the quality of the Company’s accounting principles, the reasonableness of significant
estimates and judgments, and the clarity of disclosures in the Company’s financial statements.

The audit committee ensures that the Company establishes and appropriately resources a professional
internal auditing function and that there are no unjustified restrictions or limitations imposed on that function. In
addition to reviewing and approving the annual internal audit plan and overseeing other internal audit activities,
the audit committee regularly reviews and discusses the results of internal audit reports.

The audit committee also reviewed with PricewaterhouseCoopers LLP, the Company’s independent
registered public accounting firm, the results of their audit and discussed matters required to be discussed by the
Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company
Accounting Oversight Board, other standards of the Public Company Accounting Oversight Board, rules of the
SEC and other applicable regulations. The audit committee has reviewed permitted services under rules of the
SEC as currently in effect and discussed with PricewaterhouseCoopers LLP their independence from
management and the Company, including the matters in the written disclosures and the letter from the
independent registered public accounting firm required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant’s communications with the audit committee
concerning independence, and has considered and discussed the compatibility of non-audit services provided by
PricewaterhouseCoopers LLP with that firm’s independence. For each engagement, Company management
provided the audit committee with information about the services and fees, sufficiently detailed to allow the audit
committee to make an informed judgment about the nature and scope of the services and the potential for the
services to impair the independence of the independent registered public accounting firm. After the end of each
fiscal year, Company management provides the audit committee with a summary of actual fees incurred with the
independent registered public accounting firm.

The audit committee meets with the independent registered public accounting firm, with and without

management present, to discuss the results of their examinations; their evaluations of the Company’s internal

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

27

control, including internal control over financial reporting; and the overall quality of the Company’s financial
reporting. Additionally, the audit committee meets in separate executive sessions with the Company’s chief
financial officer and the head of internal audit.

In accordance with SEC rules and PricewaterhouseCoopers LLP policies, lead and concurring audit
partners are subject to rotation requirements that limit the number of consecutive years an individual partner may
provide services to our Company to a maximum of five years. The selection of the lead audit partner pursuant to
this rotation policy involves a meeting between the candidate for the role and the chair of the audit committee, as
well as with the full audit committee and members of management.

The audit committee has also evaluated the performance of PricewaterhouseCoopers LLP, including,

among other things, the length of time the firm has been engaged; its familiarity with our operations and
businesses, accounting policies and practices, and our internal controls over financial reporting; and the
appropriateness of fees paid to PricewaterhouseCoopers LLP for audit and non-audit services in 2015, on an
absolute basis and as compared to the scope of prior year audits. Information about PricewaterhouseCoopers
LLP’s fees for 2015 is discussed below in this proxy statement under “Proposal 2 - Ratification of Appointment
of Independent Registered Public Accountants.” Based on its evaluation, the audit committee has retained
PricewaterhouseCoopers LLP to serve as the Company’s independent registered public accounting firm for the
2016 fiscal year.

Based on its review of the financial statements and the aforementioned discussions, the audit committee

concluded that it would be reasonable to recommend, and on that basis did recommend, to the board of directors
that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year
ended January 2, 2016, which was filed with the SEC on February 19, 2016.

Respectfully submitted by the Audit Committee,

Gail Deegan (chairman)
Michelle Stacy
Andrea Geisser

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

28

P
r
o
x
y
S
t
a
t
e
m
e
n
t

REPORT OF THE COMPENSATION AND TALENT COMMITTEE OF THE BOARD OF
DIRECTORS

No portion of this compensation and talent committee report shall be deemed to be incorporated by
reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, through any general statement incorporating by reference in its entirety the proxy statement in which
this report appears, except to the extent that the Company specifically incorporates this report or a portion of it
by reference. In addition, this report shall not be deemed filed under either the Securities Act or the Exchange
Act.

The compensation and talent committee of the board of directors, which is comprised solely of
independent directors within the meaning of applicable rules of The NASDAQ Stock Market, Inc., outside
directors within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, and non-
employee directors within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, is
responsible for developing executive compensation policies and advising the board of directors with respect to
such policies and administering the Company’s cash incentive and equity incentive plans. The compensation and
talent committee sets performance goals and objectives for the chief executive officer and the other executive
officers, evaluates their performance with respect to those goals and sets their compensation based upon the
evaluation of their performance. In evaluating executive officer pay, the compensation and talent committee
retains the services of a compensation consultant and considers recommendations from the chief executive
officer with respect to goals and compensation of the other executive officers. The compensation and talent
committee assesses the information it receives in accordance with its business judgment. The compensation and
talent committee also periodically reviews director compensation. All decisions with respect to executive and
director compensation are approved by the compensation and talent committee. All decisions regarding chief
executive officer and director compensation are reviewed and ratified by the full board. Ronald Chwang,
Michelle Stacy, Andrea Geisser and Mohamad Ali are the current members of the compensation and talent
committee.

The compensation and talent committee has reviewed and discussed the Compensation Discussion and
Analysis (the “CD&A”) for the year ended January 2, 2016 with management. In reliance on the reviews and
discussions referred to above, the compensation and talent committee recommended to the board of directors,
and the board of directors has approved, that the CD&A be included in this proxy statement and incorporated by
reference in our Annual Report on Form 10-K for the year ended January 2, 2016, which was filed with the SEC
on February 19, 2016.

Respectfully submitted by the Compensation and Talent Committee,

Andrea Geisser (chairman)
Mohamad Ali
Ronald Chwang
Michelle Stacy

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

29

COMPENSATION AND OTHER INFORMATION
CONCERNING EXECUTIVE OFFICERS AND DIRECTORS

Compensation Discussion and Analysis

Overview

Our compensation philosophy is based on a desire to balance retention of executive talent with pay for

performance incentive compensation for continued service and our sustained financial and operating
performance, which is designed to reward our named executive officers. We believe the compensation of our
named executive officers should align our executives’ interests with those of our stockholders and focus
executive behavior on the achievement of both near-term corporate targets as well as long-term business
objectives and strategies. It is the responsibility of the compensation and talent committee of our board of
directors to administer our compensation practices to ensure they are competitive and include incentives designed
to appropriately drive our performance, including revenue, Adjusted EBITDA (as described below), and, when
appropriate, individual objectives, including business unit contribution margin. Our compensation and talent
committee annually reviews and approves elements of executive compensation, including executive officer base
salaries, cash incentives and equity awards.

Our performance as a company in 2015 was very strong. Full year revenue of $617 million represented an
increase of 11% from full year revenue in 2014, and earnings per share of $1.47 in 2015 increased from earnings
per share of $1.25 in 2014. Moreover, we launched the latest Roomba robot including new navigation and
connectivity capabilities, while growing domestic home robot sales more than 25% year over year through
successful investments in media and national promotions.

Based on our 2015 performance, our named executive officers achieved and were paid short-term incentive
cash compensation for 2015, while maintaining a significant portion of their compensation in the form of long-term
incentives. The long-term incentives granted in 2015 included performance-based equity. We believe our
compensation philosophies, as described below, have aligned executive compensation with Company performance.

Objectives of Our Compensation Programs

Our compensation programs for our executive officers are designed to achieve the following objectives:

(cid:129)

(cid:129)

(cid:129)
(cid:129)

Provide competitive compensation that attracts, motivates and retains the best talent and the highest
caliber executives to help us to achieve our strategic objectives;
Connect a significant portion of the total potential compensation paid to executives to our annual
financial performance;
Align management’s interest with the interests of stockholders through long-term equity incentives; and
Provide management with performance goals directly linked to our annual longer-term plan for growth
and profit.

We believe the compensation of our named executive officers should reflect their success as a management

team, rather than as individuals, in attaining key operating objectives, such as Adjusted EBITDA, operating income
as a percentage of revenue and revenue in dollars. We define Adjusted EBITDA as earnings before interest, taxes,
depreciation and amortization, merger, acquisition and divestiture expenses, net intellectual property litigation
expense, restructuring expense and non-cash stock compensation as shown in Exhibit A of this proxy.

We also believe that the compensation of our named executive officers should not be based on the short-

term performance of our stock, whether favorable or unfavorable, but rather that the price of our stock will, in the
long-term, reflect our operating performance, and ultimately, the management of the Company by our named
executive officers.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

30

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Methodologies for Establishing Executive Compensation

The compensation and talent committee, which is comprised entirely of independent directors, reviews the
compensation packages for our named executive officers, including an analysis of all elements of compensation
separately and in the aggregate. In determining the appropriate compensation levels for our chief executive
officer, the compensation and talent committee meets with only itself and the executive vice president, human
resources and corporate communications. With respect to the compensation levels of all other named executive
officers, the compensation and talent committee meets with our chief executive officer and, as needed, our
executive vice president, human resources and corporate communications. Our chief executive officer annually
reviews the performance of each of the other named executive officers with the compensation and talent
committee.

The compensation and talent committee has engaged Pearl Meyer & Partners, LLC, (“Pearl Meyer”), as an

independent compensation consultant to work with them in addition to our human resources department and the
chief executive officer to assist them in developing recommendations regarding base salary levels, target
incentive awards and actual payouts, performance goals for incentive compensation and equity awards for named
executive officers. In conjunction with the annual performance review of each named executive officer, in
February of each year, the compensation and talent committee carefully considers the recommendations of the
chief executive officer with respect to the other executive officers when setting base salary, bonus payments
under the prior year’s incentive compensation plan, and target amounts and performance goals for the current
year’s incentive compensation plan. In addition, the compensation and talent committee similarly determines
equity incentive awards, if any, for each named executive officer.

Moreover, the compensation and talent committee considers the results of the advisory vote on named

executive officer compensation, or the “say on pay” vote, that is completed each year at our annual meeting of
stockholders.

At the May 2015 annual meeting of stockholders, the Company held its annual say on pay vote. The results

of the say on pay vote held in May 2015 were as follows:

For
Against
Abstain

15,159,954
2,077,340
76,410

87.56%
12.00%
0.44%

As part of ongoing efforts to be responsive to the concerns of our investors regarding our executive
compensation programs and to reward outstanding operational and financial performance, the compensation and
talent committee will, in consultation with Pearl Meyer, continue to consider changes to our compensation
programs as appropriate in response to input from stockholders and evolving factors such as the business
environment and competition for talent.

The compensation and talent committee will continue to consider the outcome of our say on pay votes,

regulatory changes and emerging best practices when making future compensation decisions for our named
executive officers.

Our compensation plans are developed, in part, by utilizing publicly available compensation data and
subscription compensation survey data for national and regional companies in the technology, defense, household
durables and robotics industries. We believe that the practices of this group of companies provide us with
appropriate compensation benchmarks, because these companies have similar organizational structures and tend
to compete with us to attract executives and other employees. For benchmarking executive compensation, we
typically review the compensation data for companies with revenues, numbers of employees and market
capitalizations similar to our profile.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

31

Compensation Consultant

As the independent compensation consultant, Pearl Meyer provides the compensation and talent committee

with advice on a broad range of executive compensation matters. The scope of its services includes the
following:

(cid:129)

(cid:129)

(cid:129)
(cid:129)

(cid:129)

Apprising the compensation and talent committee of compensation-related trends and developments in
the marketplace;
Informing the compensation and talent committee of regulatory developments relating to executive
compensation practices;
Assessing the composition of the peer companies used for comparative purposes;
Identifying potential changes to the executive compensation program to maintain competitiveness and
ensure consistency with business strategies, good governance practices and alignment with stockholder
interests; and
Reviewing the Compensation Discussion & Analysis section of the Company’s proxy statement.

During fiscal 2015, Pearl Meyer attended all regularly scheduled meetings of the compensation and talent
committee.

The compensation and talent committee has assessed the independence of Pearl Meyer pursuant to SEC

rules and concluded that no conflict of interest exists that would prevent Pearl Meyer from independently
advising the compensation and talent committee. The Company did not engage Pearl Meyer for any other
consulting work in fiscal 2015.

Compensation Comparisons

Developing a peer group for compensation comparison purposes is not an easy task for the Company. We
do not have any “true” robotic comparator companies that are publicly-traded, stand-alone, U.S.-based or size-
appropriate. We believe our mix of technology and technology/consumer products peer group firms is
appropriate for compensation and performance comparison purposes, but our peer group firms differ
substantially from the peer groups used by proxy advisory firms. These firms tend to compare us to organizations
in the Consumer Durables industry such as home builders, retailers and furniture distributors/manufacturers (i.e.,
companies with little to no technology attributes to their respective products). These differences in peer group
firms used to determine alignment of pay and performance result in substantial differences in Company
performance and how compensation is valued and delivered to executives. Technology and technology/consumer
products companies perform and pay differently from home builders, retailers and furniture distributors/
manufacturers. The compensation and talent committee takes all of these unique dynamics into account annually
when reviewing our peer group firms and compensation practices.

The following selection criteria, developed in conjunction with the compensation and talent committee,

which are thoroughly reviewed and adjusted (as needed), were used to develop the comparative peer group used
in assessing the competitiveness of our executive compensation for purposes of fiscal 2015 compensation
actions:

(cid:129)
(cid:129)

(cid:129)

Companies with revenues within a similar range and generally similar market capitalization;
Companies within comparable industries that focus on high-tech products (e.g., information technology,
consumer durables, consumer services, aerospace/defense, capital goods, electronics equipment,
instruments and components, healthcare technology, computers and peripherals, networking equipment
and computer hardware);
Companies with highly-engineered products and complex technologies with multiple industry
applications;

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

32

P
r
o
x
y
S
t
a
t
e
m
e
n
t

(cid:129)
(cid:129)
(cid:129)

Technology companies whose products contain both hardware and software components; and
Companies with moderate to high sales growth and opportunity.
Other secondary criteria also considered include:

(cid:129)
(cid:129)

(cid:129)

Companies classified as “disruptive innovation;”
Companies with products with brand recognition and/or disposable income “luxury” goods;
and
Companies with moderate margins and levels of research and development expense that
indicate similar business models and financial strategy.

Our peer group for 2015 consisted of the following 16 companies:

3D Systems Corporation

Accuray Incorporated

AeroVironment, Inc.

Mercury Systems, Inc.

Netgear, Inc.

Orbital Sciences Corporation

American Science and Engineering, Inc.

Plantronics, Inc.

Bruker Corporation

Cognex Corporation

Logitech International S.A.

Maxwell Technologies Inc.

Synaptics Incorporated

Tivo, Inc.

Trimble Navigation Limited

Universal Electronics, Inc.

These 16 companies, at the time of the analysis, had median annual revenues of $552 million and a median

market capitalization of $1.48 billion.

The compensation and talent committee reviews all components of compensation for named executive
officers. In accordance with its charter, the compensation and talent committee also, among other responsibilities,
administers our incentive compensation plan, and reviews management’s recommendations on company-wide
compensation programs and practices. In setting compensation levels for our executive officers in fiscal 2015,
the compensation and talent committee considered many factors in addition to the benchmarking described
above, including, but not limited to:

(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)

(cid:129)

(cid:129)

the scope and strategic impact of the executive officer’s responsibilities;
our past business and segment performance, and future expectations;
our long-term goals and strategies;
the performance and experience of each individual;
past compensation levels of each individual and of the named executive officers as a group;
relative levels of pay among the executive officers;
the amount of each component of compensation in the context of the executive officer’s total
compensation and other benefits;
for each named executive officer, other than the chief executive officer, the evaluations and
recommendations of the chief executive officer; and
the competitiveness of the compensation packages relative to the selected benchmarks as highlighted by
the independent compensation consultant’s analysis.

The compensation and talent committee determines compensation for our chief executive officer using the

same factors it uses for other executive officers, while placing greater emphasis on performance-based
opportunities through long-term equity and short-term cash incentive compensation, which we believe better
aligns our chief executive officer’s interests with our success and the interests of our stockholders. In assessing
the compensation paid to our chief executive officer, the compensation and talent committee relies on both
information from our selected benchmarks and its judgment with respect to the factors described above.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

33

Elements of Compensation

Our executive compensation program in 2015 consists of three primary elements: base salary, an annual

cash incentive, and long-term equity interests, primarily in the form of time vesting restricted stock units,
performance share units (“PSUs”) and stock options. All of our executive officers also are eligible for certain
benefits offered to employees generally, including life, health, disability and dental insurance, as well as
participation in our 401(k) plan. We have also entered into executive agreements with our executive officers that
provide for certain severance benefits upon termination of employment, including a termination in connection
with a change in control of the Company.

Base Salary

In 2015, the compensation and talent committee believes our executive officers, including our chief
executive officer, were paid salaries in line with their qualifications, experience and responsibilities. Salaries are
structured so they are within the range of salaries paid by the peer companies reviewed by the compensation and
talent committee in the technology and robotics industry. We generally aim to set base salaries for each of our
executives between the 55th and 75th percentiles in the technology and robotics industry and also take into
consideration many additional factors (described below) that we believe enable us to attract, motivate and retain
our leadership team in an extremely competitive environment. Salaries are reviewed on an annual basis.

The compensation and talent committee reviewed the base salaries for each of our executive officers,

taking into account an assessment of the individual’s responsibilities, experience, individual performance and
contribution to our performance, and also generally takes into account the competitive environment for attracting
and retaining executives consistent with our business needs. With respect to each of our executive officers, our
chief executive officer provided a detailed evaluation and recommendation related to base salary adjustments, if
any (excluding for himself).

We believe the base salaries paid to our executive officers during our fiscal year 2015 helped to achieve

our executive compensation objectives. In addition, we believe that the base salaries of our named executive
officers, which range from 18% to 34% as a percentage of total compensation, are set at an appropriate level to
keep a significant portion of executive compensation at risk as part of our compensation philosophy.

In February 2016, and as part of the annual review process while taking into account the considerations
discussed above, the compensation and talent committee also approved base salary adjustments for 2016 as noted
in the table below.

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Cash Incentive Compensation

2014 Base Salary % Increase

2015 Base Salary % Increase

2016 Base Salary

$650,000
$400,000
$325,000
$350,000
$348,500

3.8%
7.5%
4.6%
14.3%
4.7%

$675,000
$430,000
$340,000
$400,000
$365,000

3.7%
7.0%
2.9%
5.0%
4.1%

$700,000
$460,000
$350,000
$420,000
$380,000

The compensation and talent committee believes that short-term cash incentive compensation for executive

officers should be contingent upon successful achievement of significant financial and business objectives and
implementation of our business strategy. For our named executive officers, including our chief executive officer,
the payment of cash incentive awards is based on an evaluation of achievement against predetermined Company
financial and operational metrics in accordance with our Senior Executive Incentive Compensation Plan that was
adopted by the compensation and talent committee. For each named executive officer, 100% of his or her target
cash incentive compensation in 2015 was tied to key Company financial and operating performance measures.
Target cash incentives for named executive officers are generally targeted between the 55th and 75th percentiles
of similar cash incentives provided to officers in peer companies reviewed by the compensation and talent

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

34

P
r
o
x
y
S
t
a
t
e
m
e
n
t

committee in the technology and robotics industries. The actual amount of the cash incentives paid to the named
executive officers, however, is subject to the assessment of the compensation and talent committee of our
performance in general and the achievement of specific goals.

For fiscal 2015, the threshold, target and maximum bonus awards under our Senior Executive Incentive
Compensation Plan for each of our named executive officers, as a percentage of base salary earned during the
fiscal year, are set forth in the table below. These target bonus amounts were set at levels the compensation and
talent committee determined were appropriate in order to achieve our objective of retaining those executives who
perform at or above the levels necessary for us to achieve our business plan, which, among other things, involved
growing the Company in a cost-effective way.

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Incentive Bonus Award Opportunity Payout Scale (% of base salary)

Threshold
(25% of target opportunity)
(1)

25.00%
18.75%
15.00%
15.00%
15.00%

Target (100%)

100.00%
75.00%
60.00%
60.00%
60.00%

Maximum
(200% of target opportunity)
(2)

200.00%
150.00%
120.00%
120.00%
120.00%

(1)

(2)

Cash incentive payments are made only after the Company has achieved specified Adjusted EBITDA
hurdle, excluding cash incentive compensation expense.
This reflects the maximum incentive cash payout levels established under our Senior Executive Incentive
Compensation Plan for 2015 based on the specific targets established for fiscal 2015.

While the Senior Executive Incentive Compensation Plan is designed to provide short-term cash incentive

payments based upon objectively determinable formulas that tie cash incentive payments to specific financial
goals and strategic milestones, the compensation and talent committee retains the discretion to adjust cash
incentive payments under the Senior Executive Incentive Compensation Plan based upon additional factors.

The following tables summarize the 2015 performance measures, associated weightings and goals for each

of the named executive officers under the Senior Executive Incentive Compensation Plan. As discussed
previously, the payout opportunity ranges from 25% of the target incentive opportunity for achieving threshold
level of performance to 200% of the target incentive opportunity for achieving maximum level of performance.

For each of our named executive officers, the Senior Executive Incentive Compensation Plan targets for

2015 were:

Performance Measure

Weighting

Threshold

Target

Maximum

Adjusted EBITDA, excluding cash
incentive compensation expense
Revenue

50% $99.2 million $110.2 million $154.2 million
50% $577.9 million $642.1 million $898.9 million

Performance Goal

The compensation and talent committee chose this mix of financial targets for cash incentive compensation

because it believes that executive officers should be focused on a small set of critical, team-based financial and
operating metrics that reinforce the executive’s role and impact and company business strategy. Also, the
compensation and talent committee established a hurdle where the available total incentive compensation payout
for the entire employee base – including the named executive officers – would be reduced on a dollar-for-dollar
basis if Adjusted EBITDA, excluding cash incentive compensation expense, fell below $99.2 million (the
threshold for Adjusted EBITDA shown in the table above).

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

35

The following table shows our achievement against the various metrics used for calculating the 2015 cash

incentive compensation for our named executive officers:

Metric

Adjusted EBITDA, excluding cash
incentive compensation expense

Company Revenue
Total Payout (as a % of Target)

Performance Goal

Threshold

Target
(100%) Maximum

2015 Actual
Performance

$ in millions

$99.2
$110.2
$577.9 $642.1

$154.2
$898.9

$100.6
$616.8

Actual
Percentage
Earned (as %
of target)

56%
80%
69%

Based on our achievement of the performance metrics set forth above, the following cash awards were

made to the named executive officers for performance in fiscal 2015 pursuant to our Senior Executive Incentive
Compensation Plan:

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Long-Term Incentives

Incentive Bonus Award

Original
Target Incentive
Opportunity

$675,000
$322,500
$204,000
$240,000
$219,000

Achievement

ICP Earned &
Paid

69%
69%
69%
69%
69%

$465,750
$222,525
$140,760
$165,600
$151,110

Executive officers (and other employees) are eligible to receive restricted stock, stock option grants, restricted
stock units and other stock awards that are intended to promote success by aligning employee financial interests with
long-term stockholder value. Long-term incentives are awarded based on various factors primarily relating to the
responsibilities of the individual officer or employee, his or her past performance, anticipated future contributions,
prior grants and Company performance. In general, our compensation and talent committee bases its decisions to grant
long-term incentives on recommendations of our chief executive officer and the compensation and talent committee’s
analysis of peer group and industry compensation information, with the intention of keeping the executives’ overall
compensation at a competitive level with the comparator companies reviewed by the compensation and talent
committee in the technology and robotics industries. Our compensation and talent committee also takes into
consideration the number of shares of common stock outstanding, the number of shares of common stock authorized
for issuance under our equity compensation plans, the number of options and other equity awards held by the executive
officer for whom an award is being considered and other elements of the officer’s compensation, as well as our
compensation objectives and policies described above when reviewing the long-term incentive program.

During fiscal 2015, our compensation and talent committee approved the following stock option and

restricted stock unit awards to each of our named executive officers:

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Grant Date
Fair Value
($)

Nonqualified
Stock Option
Awards (#)

Restricted
Stock Units
(#)

$1,977,388
$727,910
$395,819
$870,445
$395,819

46,588
17,150
9,325
20,500
9,325

38,800
14,283
7,767
17,083
7,767

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

36

In March 2014 we began granting PSUs and in March 2015, we again granted our PSUs to our named

executive officers, using a mix of 50% restricted stock units, 25% PSUs and 25% stock options. The
compensation and talent committee believes a mix in our long-term equity awards between stock options,
restricted stock units and PSUs aligns the incentives of our executives with the interests of our stockholders and
the long-term performance of the Company by directly tying a significant portion of the value that may be
realized from our equity compensation to the performance of the Company and to an increase in our stock price.

Long-Term Equity Components

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Stock Options
25%

Time-
Based
50%

RSUs
50%

Performance-
Based
50%

PSUs
25%

The compensation and talent committee expects the mix of long-term equity vehicles to evolve, as needed,

in coming years to continue to best align and support our longer-term business strategy.

The Company’s and the compensation and talent committee’s goals for selecting metrics for the PSU

component of the long-term incentive program include:

(cid:129)
(cid:129)
(cid:129)
(cid:129)

Alignment with business strategy;
Alignment with stockholder interest in improving long-term business fundamentals;
Correlation with total stockholder return; and
Complementary to our short-term incentive metrics.

After a thoughtful process and consideration of various metrics, the compensation and talent committee

determined that operating income percent (with a threshold requirement for a minimum amount of revenue)
continued to be the optimal initial metric for our PSU component. We believe operating income percent is an
excellent measure of the underlying profitability of the enterprise and it has historical correlation with total
stockholder return. Operating income percent is also a regularly reported financial measure, is understood by our
investor base, and can be reasonably forecasted over the relevant performance period. We believe operating
income percent in our long-term incentives coupled with the revenue component of our short-term incentives
provides strong executive focus on important short- and long-term business drivers.

For the PSUs granted in 2014 and 2015, the number of shares actually earned at the end of the three-year
period will range from 0% to 100% of the target number of PSUs granted based on the Company’s performance

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

37

against three-year operating income and revenue goals. In addition, while all vesting of earned PSUs occurs on
the third anniversary of the date of grant, achievement of cumulative intermediate targets for the three-year
period will allow PSUs to be deemed earned but not yet vested for the intermediate periods. Achievement of the
cumulative target will allow all shares subject to the PSUs to be earned regardless of the achievement of the
intermediate annual targets.

Unvested awards are not eligible to receive any dividends or voting rights until the point at which any

shares are earned and vested. Under this plan, participants can only earn awards at 100% of target or at 0% of
target (for performance below 100% of target) for each year as there is no scaled award opportunity under this
plan at this time.

The following table outlines the threshold, target and maximum three-year performance goals for the PSU

plan for the 2014-2016 cycle.

2014 - 2016
PSU Performance Cycle

2014
2015
2016
Cumulative
Corresponding Payout

Operating Income Percent

Revenue (in millions)

Threshold

Target

Actual
Performance
Achieved

9.5%
8.0% 8.0%
9.0% 9.0%
9.8%
10.0% 10.0% —%
—%
9.1% 9.1%
—% 100.0%

Actual
Performance
Achieved

Actual Payout
Level
Achieved

$557
$617
$—
$—

100%
100%
—%
—%

Threshold

$545
$610
$685
$1,840

For 2014, one-third of the awarded PSUs were deemed earned if the Company achieved a minimum 8.0%

operating income as a percentage of revenue and at least $545 million in total revenue. In 2014, the Company
achieved 9.5% in operating income as a percentage of revenue and $557 million in revenue. Accordingly, one-
third of the total number of PSUs awarded were earned but have not yet vested. For 2015, one-third of the
awarded PSUs were deemed earned if the Company achieved a minimum 9.0% operating income as a percentage
of revenue and at least $610 million in total revenue. In 2015, the Company achieved 9.8% in operating income
as a percentage of revenue and $617 million in revenue. Accordingly, an additional one-third of the total number
of PSUs awarded were also earned but have not yet vested. Specifically, the named-executive officers earned the
following restricted stock units with respect to the 2014-2016 long-term incentive plan cycle:

2014 - 2016
PSU Performance Cycle

Colin M. Angle
Alison Dean
Russell J. Campanello
Glen D. Weinstein

PSUs Granted 2014 Earned PSUs 2015 Earned PSUs 2016 Earned PSUs

Total PSUs Earned
to Date

2014-2016 PSUs Granted & Earned

13,550
4,467
4,308
2,467

4,516
1,489
1,436
822

4,517
1,489
1,436
822

—
—
—
—

9,033
2,978
2,872
1,644

The following table outlines the threshold, target and maximum three-year performance goals for the PSU

plan for the 2015-2017 cycle.

2015 - 2017
PSU Performance Cycle

2015
2016
2017
Cumulative
Corresponding Payout

Operating Income Percent

Revenue (in millions)

Actual
Performance
Achieved

9.8%
—%
—%
—%

Threshold

$624
$705
$804
$2,133

Actual
Performance
Achieved

Actual Payout
Level
Achieved

$617
$—
$—
$—

—%
—%
—%
—%

Threshold

Target

9.0%
9.0%
9.0%
9.0%
9.5%
9.5%
9.2%
9.2%
—% 100.0%

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

38

P
r
o
x
y
S
t
a
t
e
m
e
n
t

For 2015, one-third of the awarded PSUs were deemed earned if the Company achieved a minimum 9.0%

operating income as a percentage of revenue and at least $624 million in total revenue. In 2015, the Company
achieved 9.8% in operating income as a percentage of revenue and $617 million in revenue. Accordingly, no
portion of the PSUs awarded under the 2015 long-term incentive plan for the 2015 - 2017 plan cycle were
earned. Specifically, the named-executive officers earned the following restricted share units with respect to the
2015 long-term incentive plan:

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

PSUs Granted 2015 Earned PSUs 2016 Earned PSUs 2017 Earned PSUs

Total PSUs Earned
to Date

2015-2017 PSUs Granted & Earned

19,400
7,142
3,883
8,542
3,883

0
0
0
0
0

—
—
—
—
—

—
—
—
—
—

—
—
—
—
—

Also, the Company determines the value of its annual equity awards early in the year (usually in March).

Annual awards are sized relative to Company and individual performance for the prior year as is a typical
practice for many companies. By granting our annual awards at the beginning of each year and using the prior
year’s performance to size our awards, there could be a possible disconnect with our awards relative to our
performance in the year of grant.

Other Benefits and Perquisites

We also have various broad-based employee benefit plans. Our executive officers participate in these plans
on the same terms as other eligible employees, subject to any legal limits on the amounts that may be contributed
by or paid to executive officers under these plans. We offer a 401(k) plan, which allows our employees to invest
in a wide array of funds on a pre-tax basis. We do not provide pension arrangements or post-retirement health
coverage for our named executive officers or other employees. We also maintain insurance and other benefit
plans for our employees. We offer no perquisites to our executive officers that are not otherwise available to all
of our employees.

Stock Ownership Guidelines

We introduced equity ownership guidelines in 2011 to further align the interests of our senior management

and directors with those of our stockholders. Under the guidelines, executives are expected to hold common
stock in an amount equal to a multiple of their base salary as determined by their position. The guidelines range
from two times base salary for our senior executives to six times base salary for our chief executive officer. In
addition, under the guidelines, our directors are expected to hold common stock in an amount equal to six times
their current board retainer fee. For purposes of these guidelines, stock ownership includes shares for which the
executive or director has direct or indirect ownership or control, including restricted stock and in-the-money
vested stock options, but does not include unvested restricted stock units or unvested stock options. Executives
and directors are expected to meet their ownership guidelines within five years of becoming subject to the
guidelines. All executives and directors are currently meeting or are working to achieve these guidelines within
the five year time period.

Hedging/Pledging Policy

Since 2005, we have had a written insider trading policy that prohibits holding Company securities as

collateral in a margin account, any hedging transactions and prohibits pledging of Company securities as
collateral for a loan unless the pledge has been approved by the compensation and talent committee of the board
of directors. To date, no such approval has been requested or given.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

39

Executive Agreements

We have entered into executive agreements with each of our named executive officers. The executive
agreements provide for severance payments equal to 50% of such officer’s annual base salary at the highest
annualized rate in effect during the one-year period immediately prior to termination, payable in six equal monthly
installments, as well as monthly premium payments for continued health, dental and vision benefits for up to six
months following termination, in the event that we terminate his or her employment other than for cause, as
defined in the executive agreements. In addition, these executive agreements provide that if we experience a
change in control, as defined in the executive agreements, and the employment of such officer is terminated by the
Company without cause at any time within the period beginning on the date that is 45 days prior to the date of the
public announcement of the execution of a definitive agreement for a change in control and ending on the first
anniversary of the effective date of the change in control, or if such officer terminates his or her employment for
good reason, as defined in the executive agreements, during the one-year period following the change in control,
then all unvested equity held by such officer becomes fully-vested and immediately exercisable and such officer is
entitled to severance payments equal to 200% of his or her annual base salary, at the highest annualized rate in
effect during the period immediately prior to the effective date of the change in control and the date of termination
of employment, and 200% of such officer’s highest target cash incentive with respect to the year prior to the year
in which the change in control occurred and ending in the year in which the officer’s employment is terminated,
each payable in 24 equal monthly installments, as well as monthly premium payments for continued health, dental
and vision benefits for up to 24 months following termination. Receipt of the severance payments and benefits
under the executive agreements is subject to the executive officer’s execution of a separation agreement, including
a general release of claims, in a form and of a scope reasonably acceptable to the Company and compliance with
any noncompetition, inventions and/or nondisclosure obligations owed to the Company. There are no tax gross-up
payable under the executive agreements or otherwise.

It is the belief of the compensation and talent committee that these provisions are consistent with executive

severance arrangements that are customary for public companies at our stage of development and are necessary
in order to hire and/or retain our key talent.

Clawback

In 2015, the Company adopted a clawback policy that provides the board of directors discretion to reduce
the amount of future compensation payable to an executive of the Company for excess proceeds from incentive
compensation received by such executive due to a material restatement of financial statements. The clawback
period is the three-year period following the filing of any such restated financial statements with the SEC.

Tax Deductibility of Executive Compensation

In general, under Section 162(m) of the Code, we cannot deduct, for federal income tax purposes,

compensation in excess of $1,000,000 paid to certain executive officers. This deduction limitation does not
apply, however, to compensation that meets all the requirements to be deemed “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code and the regulations promulgated thereunder.
We have considered the limitations on deductions imposed by Section 162(m) of the Code and it is our present
intention, for so long as it is consistent with our overall compensation objective, to structure executive
compensation to minimize application of the deduction limitations of Section 162(m) of the Code, while also
maintaining the flexibility to pay compensation that is subject to the deduction limitations imposed by
Section 162(m) of the Code.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

40

Risk Oversight of Compensation Programs

The compensation and talent committee annually reviews and believes our compensation program for

executive officers is not structured to be reasonably likely to present a material adverse risk to us based on the
following factors:

P
r
o
x
y
S
t
a
t
e
m
e
n
t

(cid:129)

(cid:129)

(cid:129)

(cid:129)

Our compensation program for executive officers is designed to provide a balanced mix of cash and
equity and annual and longer-term incentives, including compensation based on the achievement of
performance targets.
The base salary portion of compensation is designed to provide a steady income regardless of our
stock price performance so executives do not feel pressured to focus primarily on stock price
performance to the detriment of other important business metrics.
Our stock option grants and restricted stock unit grants generally vest over four years and, in the case
of stock options, are only valuable if our stock price increases over time.
Our PSUs vest only after the achievement of significant long-term metrics designed to drive the long-
term interests of our stockholders.
PSU awards align the interests of our executive officers with the success of our business strategy.

(cid:129)
(cid:129) Maximum payout levels for cash incentive compensation are capped.
(cid:129)

Our stock ownership guidelines align the interests of our executive officers with those of our
stockholders.

Compensation Consultant Independence

Pursuant to its charter, the compensation and talent committee has the sole authority to retain, terminate,

obtain advice from, oversee and compensate its outside advisors, including its compensation consultant.

In 2014 in preparation for the 2015 fiscal year, the compensation and talent committee retained Pearl Meyer

as its independent executive compensation consultant. None of our management team participated in the
compensation and talent committee’s decision to retain Pearl Meyer. Pearl Meyer reports directly to the
compensation and talent committee, and the compensation and talent committee may replace Pearl Meyer or hire
additional consultants at any time. Pearl Meyer attends meetings of the compensation and talent committee, as
requested, and communicates with the chairman of the compensation and talent committee between meetings;
however, the committee makes all decisions regarding the compensation of the Company’s executive officers.

Pearl Meyer provides various executive compensation services to the compensation and talent committee

with respect to our executive officers and other key employees at the compensation and talent committee’s
request. The services Pearl Meyer provides include advising the compensation and talent committee on the
principal aspects of the executive compensation program and evolving best practices, and providing market
information and analysis regarding the competitiveness of our program design and awards in relationship to our
performance.

The compensation and talent committee reviews the services provided by its outside consultants and

believes Pearl Meyer is independent in providing executive compensation consulting services. The compensation
and talent committee conducted a specific review of its relationship with Pearl Meyer in 2015, and determined
Pearl Meyer’s work for the compensation and talent committee did not raise any conflicts of interest, consistent
with the guidance provided under the Dodd-Frank Act and by the SEC and NASDAQ. In making this
determination, the compensation and talent committee noted the following during 2015:

(cid:129)

(cid:129)

Pearl Meyer did not provide any services to us or our management other than service to the
compensation and talent committee (including compensation benchmarking for our senior leadership
team), and it its services were limited to executive compensation consulting;
Fees paid by us to Pearl Meyer represented less than 1.0% of Pearl Meyer’s total revenue for the period
January 2015 through December 2015;

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

41

(cid:129)

(cid:129)

(cid:129)

(cid:129)

Pearl Meyer maintains a Conflicts Policy and an Insider Trading Policy which were provided to the
compensation and talent committee with specific policies and procedures designed to ensure
independence;
None of the Pearl Meyer consultants on our account had any business or personal relationship with our
compensation and talent committee members;
None of the Pearl Meyer consultants on our account, or Pearl Meyer, had any business or personal
relationship with our executive officers; and
None of the Pearl Meyer consultants on our account directly own shares of our stock.

The compensation and talent committee continues to monitor the independence of its compensation

consultant on a periodic basis.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

42

Executive Compensation Summary

The following table sets forth summary compensation information for our chief executive officer, chief

financial officer and the three other most highly compensated executive officers:

SUMMARY COMPENSATION TABLE - 2015

Name and Principal Position

Year

Salary
($)(1)

Stock
Awards
($)(2)

Option
Awards
($)(2)

Non-Equity
Incentive Plan
Compensation
($)(3)

All Other
Compensation
($)(4)

Total
($)

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Colin M. Angle

2015

684,135

1,996,260

646,548

Chairman, Chief Executive
Officer and Director

2014

646,154

1,762,178

589,970

2013

613,462

1,514,475

379,237

Alison Dean
Executive Vice President,
Chief Financial Officer,
Treasurer and Principal
Accounting Officer

2015
2014
2013

433,654
388,462
308,838

734,878
580,890
721,142

238,003
194,546
179,783

Russell J. Campanello
Executive Vice President,
Human Resources and
Corporate Communications

2015 344,231
325,000
2014

399,595 129,411
187,841
560,299

2013

322,115

270,319

67,618

2015 400,000
2014 335,385

878,938 284,498
360,889 120,563

465,750

552,500

981,250

222,525
212,500
306,150

140,760
165,750

306,150

165,600
159,250

7,950

3,800,643

7,800

3,558,602

7,650

3,496,074

7,950
7,800
7,650

1,637,010
1,384,198
1,525,563

7,950 1,021,947
1,246,690
7,800

7,650

973,852

7,950 1,736,986
983,887
7,800

2015 369,481

399,595 129,411

151,110

7,950 1,057,547

Christian Cerda
Executive Vice President and
General Manager, Home
Robots Business Unit

Glen D. Weinstein
Executive Vice President and
Chief Legal Officer

(1)

(2)

(3)

(4)

Represents salary earned in the fiscal years presented, which covered 53 weeks for fiscal year 2015 and 52
weeks for fiscal years 2014 and 2013.
Represents the aggregate grant date fair value for stock and option awards granted in the fiscal years ended
January 2, 2016, December 27, 2014 and December 28, 2013, as applicable, in accordance with Financial
Accounting Standards Board, Accounting Standards Codification Topic 718 (“ASC Topic 718”). See the
information appearing in note 9 to our consolidated financial statements included as part of our Annual
Report on Form 10-K for the fiscal year ended January 2, 2016 for certain assumptions made in the
valuation of stock and option awards.
Represents amounts paid in 2016, 2015 and 2014, respectively under the Company’s Senior Executive
Incentive Compensation Plan for performance in the fiscal years ended January 2, 2016, December 27,
2014 and December 28, 2013, as applicable.
Includes 401(k) matching contributions for each of our named executive officers. Excludes medical, group
life insurance and certain other benefits received by the named executive officers that are available
generally to all of our salaried employees.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

43

Grants of Plan-Based Awards in 2015

The following table sets forth, for each of the named executive officers, information about grants of plan-

based awards during fiscal year 2015:

GRANTS OF PLAN-BASED AWARDS — 2015

Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards(1)

Estimated Future Payouts Under
Equity Incentive Plan
Awards(2)

Grant
Date

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)

Exercise
or Base
Price of
Option
Awards
($/Sh)

Name

Colin M.
Angle

—

168,750

675,000

1,350,000

3/6/2015

3/6/2015

3/6/2015

6/5/2015

—

—

—

—

—

—

—

—

—

—

—

—

Alison Dean

—

80,625

322,500

645,000

Russell J.
Campanello

Christian
Cerda

Glen D.

Weinstein

3/6/2015

3/6/2015

3/6/2015

6/5/2015

—
3/6/2015

3/6/2015

3/6/2015

6/5/2015

—
3/6/2015

3/6/2015

3/6/2015

6/5/2015

—
3/6/2015

3/6/2015

3/6/2015

6/5/2015

—

—

—

—

—

—

—

—

—

—

—

—

51,000
—

204,000
—

408,000
—

—

—

—

—

—

—

—

—

—

60,000
—

240,000
—

480,000
—

—

—

—

—

—

—

—

—

—

54,750
—

219,000
—

438,000
—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—
—

—

—

—

—
—

—

—

—

—
—

—

—

—

—

—

19,400

19,400

—

—

—

—

—

—

—

—

7,142

7,142

—

—

—

—
3,883

—

—

—

—
8,542

—

—

—

—
3,883

—

—

—

—

—

—

—
3,883

—

—

—

—
8,542

—

—

—

—
3,883

—

—

—

—

—

38,800

—

—

—

—

14,283

—

—

—
—

7,767

—

—

—
—

17,083

—

—

—
—

7,767

—

—

—

—

—

23,238

23,350

—

—

—

8,550

8,600

—
—

—

4,650

4,675

—
—

—

10,225

10,275

—
—

—

4,650

4,675

—

—

—

34.30

32.38

—

—

—

34.30

32.38

—
—

—

34.30

32.38

—
—

—

34.30

32.38

—
—

—

34.30

32.38

Grant
Date
Fair
Value of
Stock
and
Option
Awards
($)

—

665,420

1,330,840

334,681

311,867

—

244,971

489,907

123,140

114,863

—
133,187

266,408

66,971

62,440

—
292,991

585,947

147,263

137,235

—
133,187

266,408

66,971

62,440

(1)

(2)

This reflects the threshold, target and maximum incentive cash payout levels established under our Senior
Executive Incentive Compensation Plan. The actual amounts paid for fiscal year 2015 are disclosed in the
“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table.
This reflects the threshold, target and maximum equity incentive payout levels associated with PSUs made
pursuant to our 2005 Stock Option and Incentive Plan, as amended (the “2005 Plan”), which amounts will
be payable in shares of our common stock, if the performance thresholds are met under the terms of the
awards

(3) All stock awards and option awards were made pursuant to the 2005 Plan or our 2015 Stock Option and

Incentive Plan (the “2015 Plan”).

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

44

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Outstanding Equity Awards at Fiscal Year End

The following table sets forth, for each of the named executive officers, information about unexercised

option awards and other unvested equity awards that were held as of January 2, 2016.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END — 2015

Option Awards

Stock Awards

Name

Colin M. Angle

Alison Dean

Russell J.
Campanello

Grant
Date

4/2/2010
4/1/2011
3/9/2012
3/8/2013
3/7/2014
6/6/2014
3/6/2015
6/5/2015

4/2/2010
4/1/2011
3/9/2012
3/8/2013
6/7/2013
3/7/2014
6/6/2014
3/6/2015
6/5/2015

12/30/2010
3/9/2012
3/8/2013
3/7/2014
6/6/2014
3/6/2015
6/5/2015

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)(2)

Option
Exercise
Price
($)

Option
Expiration
Date

113,950
45,200
38,274
24,871
6,771
8,619
—
—

11,000
7,375
4,430
3,421
5,298
2,231
2,844
—
—

40,000
5,156
4,435
2,155
2,746
—
—

—
—
2,551
11,304
8,704
11,081
23,238
23,350

—
—
295
1,554
3,177
2,869
3,656
8,550
8,600

—
344
2,015
2,770
3,529
4,650
4,675

14.52
33.48
26.59
22.86
43.35
35.43
34.30
32.38

14.52
33.48
26.59
22.86
34.67
43.35
35.43
34.30
32.38

24.53
26.59
22.86
43.35
35.43
34.30
32.38

4/2/2017
4/1/2018
3/9/2019
3/8/2020
3/7/2021
6/6/2021
3/6/2022
6/5/2022

4/2/2017
4/1/2018
3/9/2019
3/8/2020
6/7/2020
3/7/2021
6/6/2021
3/6/2022
6/5/2022

12/30/2017
3/9/2019
3/8/2020
3/7/2021
6/6/2021
3/6/2022
6/5/2022

Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
(#)(3)

—
—
20,312
33,124
29,358
—
38,800
—

—
—
2,350
4,550
7,400
9,677
—
14,283
—

—
5,237
5,912
9,334
—
7,767
—

Market Value
of
Shares or
Units of
Stock
That Have
Not
Vested
($)(4)

—
—
719,045
1,172,590
1,039,273
—
1,373,520
—

—
—
83,190
161,070
261,960
342,566
—
505,618
—

—
185,390
209,285
330,424
—
274,952
—

Equity
Incentive
Plan
Awards;
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(5)

—
—
—
—
4,517
—
19,400
—

—
—
—
—
—
1,489
—
7,142
—

—
—
—
1,436
—
3,883
—

Equity
Incentive
Plan
Awards;
Payout or
Market
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(4)

—
—
—
—
159,902
—
686,760
—

—
—
—
—
—
52,711
—
252,827
—

—
—
—
50,834
—
137,458
—

Christian Cerda

3/8/2013

41,250

18,750

22.86

3/8/2020

15,000

531,000

—

—

Glen D.
Weinstein

3/7/2014
6/6/2014
3/6/2015
6/5/2015

4/1/2011
3/9/2012
9/7/2012
3/8/2013
3/7/2014
6/6/2014
3/6/2015
6/5/2015

1384
1,762
—
—

11,375
3,474
4,489
4,435
1,231
1,565
—
—

1,779
2,263
10,225
10,275

—
364
1,036
2,015
1,582
2,010
4,650
4,675

43.35
35.43
34.30
32.38

33.48
26.59
25.99
22.86
43.35
35.43
34.30
32.38

3/7/2021
6/6/2021
3/6/2022
6/5/2022

4/1/2018
3/9/2019
9/7/2019
3/8/2020
3/7/2021
6/6/2021
3/6/2022
6/5/2022

6,243
—
17,083
—

—
2,893
2,743
5,912
5,343
—
7,767
—

221,002
—
604,738
—

—
102,412
97,102
209,285
189,142
—
274,952
—

—
—
8,542
—

—
—
302,387
—

823
—
3,883
—

29,134
—
137,458
—

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

45

(1)

(2)

(3)

Except as otherwise noted stock option grants vest over a four-year period, at a rate of twenty-five percent
(25%) on the first anniversary of the grant date, and the remainder in equal quarterly installments
thereafter.
Stock options granted on June 6, 2014 vest at a rate of twenty-five percent (25%) on March 7, 2015, and
the remainder in equal quarterly installments over a three-year period.
Restricted stock unit awards vest over a four-year period, at a rate of twenty-five percent (25%) on each
anniversary of the grant date.

(4) Amounts disclosed in this column were calculated based on the closing price of our common stock on

(5)

December 31, 2015, the last business date of the fiscal year ended January 2, 2016.
PSU awards are earned over a three-year period and vest at the end of such three-year period, dependent on
achievement of pre-established performance goals and objectives. For additional information on the PSU
awards, see the section above entitled “Compensation Discussion and Analysis - Elements of
Compensation - Long-Term Incentives.”

Option Exercises and Stock Vested

The following table sets forth, for each of the named executive officers, information with respect to the

exercise of stock options and the vesting of restricted stock unit awards during the year ended January 2, 2016.

OPTION EXERCISES AND STOCK VESTED — 2015

Option Awards

Stock Awards

Shares
Acquired on
Exercise(#)

73,829

1,873

—

—

—

Value
Realized on
Exercise($)
(1)

1,706,396

34,126

—

—

—

Number of Shares
Acquired on
Vesting(#)

49,350

11,490

19,098

9,582

11,265

Value
Realized on
Vesting($)
(2)

1,688,706

385,524

658,674

330,387

374,248

Name

Colin M. Angle

Alison Dean

Russell J. Campanello

Christian Cerda

Glen D. Weinstein

(1) Amounts disclosed in this column were calculated based on the difference between the fair market value of

our common stock on the date of exercise and the exercise price of the options in accordance with
regulations promulgated under the Exchange Act.

(2) Amounts disclosed in this column were calculated based on the fair market value of the shares on the date

of settlement upon vesting.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

46

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Equity Compensation Plan Information

The following table provides information as of January 2, 2016 regarding shares of common stock that
may be issued under our equity compensation plans, consisting of the Amended and Restated 2004 Stock Option
and Incentive Plan, the 2005 Stock Option and Incentive Plan, as amended, the Evolution Robotics, Inc. 2007
Stock Plan, and the 2015 Stock Option and Incentive Plan.

Number of
securities to be
issued upon
exercise of
outstanding
options, units and
rights (a)

Weighted average
exercise price of
outstanding
options, units and
rights (b)

Number of
securities
remaining
available for future
issuance under
equity
compensation plan
(excluding
securities
referenced in
column (a))(c)

2,262,840 (1)

$27.61

2,484,296 (2)

49,079 (3)

2,311,919 (4)

$ 4.52

$26.73

—

2,484,296

Plan Category

Equity compensation plans approved by
security holders

Equity compensation plans not
approved by security holders

Total

(1)

Includes 1,238,471 shares of common stock issuable upon the exercise of outstanding options, 956,727
shares of common stock issuable upon the vesting of restricted stock units, and 67,642 shares of common
stock issuable upon the vesting of PSUs if specified performance metrics are achieved.

(2) As of January 2, 2016, there were no shares available for grants under the Amended and Restated 2004
Stock Option and Incentive Plan, our 2005 Stock Option and Incentive Plan, as amended, and the
Evolution Robotics, Inc. 2007 Stock Plan, and 2,484,296 shares available under the 2015 Stock Option and
Incentive Plan. In connection with the adoption of the 2015 Stock Option and Incentive Plan in 2015, the
board of directors determined that no further shares would be granted under any previous Plans.
Represents shares issued pursuant to the Evolution Robotics, Inc. 2007 Stock Plan, acquired by the
company as part of the acquisition of Evolution Robotics, Inc., on October 1, 2012.
Includes 1,287,550 shares of common stock issuable upon the exercise of outstanding options.

(4)

(3)

Potential Benefits Upon Termination or Change in Control

Severance and Change in Control Arrangements in General

The Company has entered into executive agreements with each of the named executive officers, the terms

of which are described in the “Compensation Discussion and Analysis” section above.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

47

Cash Payments and/or Acceleration of Vesting Following Certain Termination Events

Assuming the employment of our named executive officers was terminated without cause (not in

connection with a change in control) on January 2, 2016, our named executive officers would be entitled to cash
payments in the amounts set forth opposite their names in the table below, subject to any deferrals required under
Section 409A of the Code.

Name

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Base
Salary
($)

337,500
215,000
170,000
200,000
182,500

Continuation of
Health Plan
Premium
Payments ($)

12,779
11,408
12,779
12,779
11,408

Total ($)

350,279
226,408
182,779
212,779
193,908

Assuming the employment of our named executive officers was terminated by the Company without cause

during the period beginning on the date that is 45 days prior to the date of the public announcement of the
execution of a definitive agreement for a change in control and ending on the first anniversary of the effective
date of the change in control, or such officers resigned with good reason during the one-year period following a
change in control and that such termination or resignation occurred on January 2, 2016, our named executive
officers would be entitled to cash payments in the amounts set forth opposite their names in the below table,
subject to any delay in payment required under Section 409A of the Code, and acceleration of vesting as set forth
in the table below. The total amount payable to each executive officer may be subject to reduction in certain
circumstances if the amount would cause the executive officer to incur an excise tax under Section 4999 of the
Code. The following table provides the market value (that is, the value based upon our stock price on January 2,
2016, minus the exercise price, if any) of stock options and restricted stock units that would become exercisable
or vested as a result of these acceleration events as of January 2, 2016.

Name

Colin M. Angle
Alison Dean
Russell J. Campanello
Christian Cerda
Glen D. Weinstein

Base
Salary
($)

Bonus
($)

1,350,000

1,350,000

860,000

680,000

800,000

730,000

645,000

408,000

480,000

438,000

Continuation
of Health
Plan
Premium
Payments
($)

Market
Value of
Stock
Options
($)

Market
Value of
Restricted
Stock and
Restricted
Stock Units
($)

Total
($)

51,115

45,631

51,115

51,115

45,631

260,305

4,304,428

7,315,848

59,782

47,532

277,403

57,457

1,354,404

2,964,817

1,000,050

2,186,697

1,356,740

2,965,258

872,893

2,143,981

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

48

Director Compensation

In connection with our efforts to attract and retain highly-qualified individuals to serve on our board of
directors, we maintain a cash and equity compensation policy for our non-employee members of our board of
directors. In fiscal year 2015, each non-employee member of our board of directors was entitled to the following
cash compensation:

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Annual retainer for Board membership
Annual retainer for lead independent director
Audit Committee

Annual retainer for committee membership
Additional retainer for committee chair

Compensation and Talent Committee

Annual retainer for committee membership
Additional retainer for committee chair

Nominating and Corporate Governance Committee
Annual retainer for committee membership
Additional retainer for committee chair

Strategy and Finance Committee

Annual retainer for committee membership
Additional retainer for committee chair

$50,000
$ 10,000

$ 10,000
$ 10,000

$ 7,500
$ 7,500

$ 5,000
$ 5,000

$ 7,500
—

In July 2015, the board of directors formed an ad hoc strategy and finance committee focused on
overseeing strategic objectives and their translation into stockholder value creation, along with reviewing the
Company’s capital allocation process. Based upon this commitment of time, the compensation and talent
committee approved additional compensation for members of the strategy and finance committee, as noted
above, beginning in the third quarter of 2015. In March 2016, the ad hoc strategy and finance committee was
replaced with a strategy and finance committee. The strategy and finance committee will have the same fee
structure as the ad hoc strategy and finance committee.

Pursuant to our Non-employee Directors’ Deferred Compensation Program, each non-employee director

may elect in advance to defer the receipt of these cash fees. During the deferral period, the cash fees will be
deemed invested in stock units. The deferred compensation will be settled in shares of our common stock upon
the termination of service of the director or such other time as may have been previously elected by the director.
The shares will be issued from our 2015 Plan or a subsequent stock option and incentive plan approved by our
stockholders.

In 2015, each of our non-employee members of our board of directors was entitled to the following equity

compensation:

Upon initial election to the board of directors, a non-employee director receives a one-time grant of

restricted stock units having a fair market value of $220,000, measured at the end of the tenth week of the fiscal
quarter in which the director was elected, which vests over a four-year period at a rate of twenty-five percent
(25%) on each of the first four anniversaries of the grant date.

At the end of the tenth week of the fiscal quarter in which our annual meeting of stockholders occurs,

each re-elected non-employee director receives a grant of restricted stock units having a fair market value of
$110,000, which vests on the earlier of the date of the first anniversary of such grant or the date of the first
annual meeting of stockholders following the date of grant date.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

49

All of our directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of

the board of directors.

The following table provides compensation information for the fiscal year ended January 2, 2016 for each

non-employee member of our board of directors. No member of our board of directors receives any additional
compensation for services rendered as a member of our board of directors.

DIRECTOR COMPENSATION TABLE — 2015

Name

Mohamad Ali
Ronald Chwang, Ph.D.
Gail Deegan
Deborah G. Ellinger
Andrea Geisser (1)
Paul J. Kern, Gen. U.S. Army (ret.) (3)
George C. McNamee (1)
Paul L. Sagan
Michelle V. Stacy

Fees Earned or
Paid in Cash
($)

Stock Awards
($)(2)

28,125
61,250
67,500
62,500
72,500
30,000
76,250
30,000
58,750

219,898
109,995
109,995
109,995
109,995
—
109,995
109,995
109,995

Total ($)

248,023
171,245
177,495
172,495
182,495
30,000
186,245
139,995
168,745

(1) Messrs. Geisser and McNamee deferred all of their 2015 cash compensation pursuant to our Non-employee

(2)

Directors’ Deferred Compensation Program under which they received stock units in lieu of cash.
Represents the grant date fair value of restricted stock units awarded in the fiscal year ended January 2,
2016 in accordance with FASB ASC Topic 718. The grant date fair value is the fair market value of our
common stock on the date of grant multiplied by the number of shares of common stock underlying such
restricted stock unit award.

(3) Gen. Kern stepped down from the board of directors at the 2015 annual meeting of stockholders, and as a

result was not eligible to receive a stock award in 2015.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

50

P
r
o
x
y
S
t
a
t
e
m
e
n
t

The non-employee members of our board of directors who held such position on January 2, 2016 held the

following aggregate number of unexercised options and unvested restricted stock units as of such date:

Name

Mohamad Ali
Ronald Chwang, Ph.D.
Gail Deegan
Deborah G. Ellinger
Andrea Geisser
George C. McNamee
Michelle V. Stacy

Number of
Securities
Underlying
Unexercised
Options

Number of
Unvested
Restricted
Stock
Units

—
20,000
—
—
—
20,000
—

7,429
3,397
3,397
3,397
3,397
3,397
8,353

Transactions with Related Persons

Other than compensation agreements and other arrangements which are described in the “Compensation
Discussion and Analysis” section of this proxy statement, in 2015, there was no transaction or series of similar
transactions to which we were or will be a party in which the amount involved exceeded or will exceed $120,000
and in which any director, executive officer, holder of five percent or more of any class of our capital stock or
any member of their immediate family had or will have a direct or indirect material interest.

Our board of directors has adopted a written related party transaction approval policy, which sets forth our

policies and procedures for the review, approval or ratification of any transaction required to be reported in our
filings with the SEC. Our policy with regard to related party transactions is that all related party transactions are
to be reviewed by our general counsel, who will determine whether the contemplated transaction or arrangement
requires the approval of the board of directors, the nominating and corporate governance committee, both or
neither.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

51

PROPOSAL 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTANTS

The audit committee of the board of directors has retained the firm of PricewaterhouseCoopers LLP

(“PwC”), independent registered public accountants, to serve as independent registered public accountants for
our 2016 fiscal year. PwC has served as our independent registered public accounting firm since 1999. The
Company is asking stockholders to ratify the selection by the audit committee of the board of directors of PwC as
our independent auditors for the 2016 fiscal year. Although ratification by the stockholders is not required by
law, the board of directors has determined that it is desirable to request approval of this selection by the
stockholders as a matter of good corporate governance. In the event the stockholders fail to ratify the
appointment of PwC, the audit committee will consider this factor when making any determinations regarding
PwC.

Independence and Quality

As provided in the audit committee charter, the audit committee is directly responsible for the

appointment, compensation, retention and oversight of the work of the independent auditors for the purpose of
preparing or issuing an audit report or performing other audit, review or attest services for the company. Each
year, the audit committee considers whether to retain PwC and whether such service continues to be in the best
interests of the Company and our stockholders. Among other things, the audit committee considers:

(cid:129)
(cid:129)
(cid:129)

(cid:129)

(cid:129)

the quality and scope of the audit;
the independence of PwC;
the performance of the lead engagement partner, the number of people staffed on the engagement
team, and the quality of the engagement team, including the quality of the audit committee’s
ongoing communications with and the capability and expertise of the team;
PwC’s tenure as our independent auditor and its familiarity with our global operations and
business, accounting policies and practices, and internal controls over financial reporting; and
external data relating to audit quality and performance, including recent PCAOB inspection
reports available for PwC.

Based on this evaluation, the members of the audit committee and the board of directors believe that PwC is
independent and that it is in the best interests of the Company and our stockholders to retain PwC to serve as our
independent auditors for the fiscal year 2016.

The audit committee is also responsible for selecting the lead engagement partner. The rules of the
Securities and Exchange Commission (the “SEC”) and PwC’s policies require mandatory rotation of the lead
engagement partner every five years. In 2015, the audit committee selected a new lead engagement partner for
the 2016 fiscal year. During 2015, the audit committee, including the chair of the audit committee, were directly
involved in the selection of the new lead engagement partner. The process for selecting a new lead engagement
partner was fulsome and allowed for thoughtful consideration of multiple candidates, each of whom met a list of
specified criteria. The process included discussions between the chair of the audit committee and PwC as to all of
the final candidates under consideration for the position, meetings with the full audit committee and
management, and robust interviews with the final candidates.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

52

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Pre-Approval of Audit and Non-audit Services

The audit committee of the board of directors has implemented procedures under our audit committee pre-

approval policy for audit and non-audit services (the “Pre-Approval Policy”) to ensure that all audit and
permitted non-audit services to be provided to us have been pre-approved by the audit committee. Specifically,
the audit committee pre-approves the use of PwC for specified audit and non-audit services, within approved
monetary limits. If a proposed service has not been pre-approved pursuant to the Pre-Approval Policy, then it
must be specifically pre-approved by the audit committee before it may be provided by PwC. Any pre-approved
services exceeding the pre-approved monetary limits require specific approval by the audit committee. For
additional information concerning the audit committee and its activities with PwC, see “The Board of Directors
and Its Committees” and “Report of the Audit Committee of the Board of Directors.”

Representatives of PwC attended all of the standard audit committee meetings in 2015. We expect that a
representative of PwC will attend the annual meeting, and the representative will have an opportunity to make a
statement if he or she so desires. The representative will also be available to respond to appropriate questions
from stockholders.

PricewaterhouseCoopers LLP Fees
The following table shows the aggregate fees for professional services rendered by PwC to us during the fiscal
years ended January 2, 2016 and December 27, 2014.

Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees

Total

2015

2014

$

1,056,021 $
278,217
140,187
3,394

963,497
124,569
150,000
3,394

$

1,477,819 $

1,241,460

Audit Fees

Audit Fees for both years consist of fees for professional services associated with the annual consolidated
financial statements audit, statutory filings, consents and assistance with and review of documents filed with the
SEC.

Audit-Related Fees

Consists of fees associated with services related to review of accounting for significant transactions and
other services that were reasonably related to the performance of audits or reviews of our financial statements
and were not reported above under “Audit Fees.”

Tax Fees

Tax Fees consist of fees for professional services rendered for assistance with federal, state, local and

international tax planning and compliance.

All Other Fees

All other fees include licenses to technical accounting research software. The audit committee has
determined that the provision of services described above to us by PwC is compatible with maintaining their
independence.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

53

Recommendation of the Board

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE “FOR” THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP
AS iROBOT’S INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR 2016.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

54

P
r
o
x
y
S
t
a
t
e
m
e
n
t

PROPOSAL 3

APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS

At our 2014 annual meeting of stockholders, our stockholders voted to request that our board of directors

take the steps necessary so that each voting requirement in our existing amended and restated certificate of
incorporation (the “Existing Certificate”) and by-laws that calls for a greater than a simple majority vote be
eliminated and replaced by a majority voting standard.

In 2015, our nominating and corporate governance committee and our board of directors determined it was
appropriate to propose the amendments described below, and included the proposal described below in our proxy
statement for the 2015 annual meeting. Despite receiving the affirmative votes of holders of 58% of the
outstanding shares at the 2015 annual meeting, the proposal failed to receive the affirmative vote of holders of
75% of the outstanding shares, which is the required threshold for approval of the proposal.

Our board of directors continues to believe that the amendments described below are in the best interests of
the Company’s stockholders, and, in light of the strong support received at the 2015 annual meeting, our board of
directors has unanimously adopted a resolution approving and declaring the advisability of the below amendments
to our Existing Certificate, which change the voting provisions in the Existing Certificate as follows:

Removal of Directors; Article VI, Section 5 - Currently, the approval of the holders of 75% or more of the

shares of the Company entitled to vote at an election of directors is required to remove a director from office
prior to the expiration of his or her term with cause. If this proposal is approved, stockholders will have the
ability to remove a director from office prior to the expiration of his or her term with cause and the affirmative
vote of a majority of the shares of the Company entitled to vote at an election of directors, which is the lowest
allowable vote threshold under Delaware law; provided, however, that if Proposal 4 is approved by stockholders,
the ability to remove will be without cause.

By-law Amendments; Article VIII, Section 2 - Currently, the Existing Certificate allows stockholders to
amend or repeal our by-laws if at least 75% of the shares of the Company entitled to vote on such matter vote in
favor of the amendment or repeal. If this proposal is approved, stockholders will have the ability to amend our
by-laws with the affirmative vote of a majority of the shares cast and entitled to vote on such matter (with
“abstentions,” “broker non-votes,” and “withheld” votes not counted as a vote either “for” or “against” such
amendment or repeal).

Amendments to Certain Provisions of the Certificate of Incorporation; Article IX - Currently, the

approval of at least 75% of the shares of the Company entitled to vote on such matter is required to amend or
repeal Articles V, VI, VII, VIII or IX of the Existing Certificate, which address, among other things, actions by
written consent of stockholders, special meetings of stockholders requirements and procedures for electing and
removing board members and filling vacancies, limitation of liability of directors, by-law amendments, and
amendments of the Existing Certificate. If this proposal is approved, the threshold approval for stockholders to
amend or repeal these provisions will be a vote of the majority of the outstanding shares of the Company entitled
to vote on such amendment or repeal, which is the lowest allowable vote threshold under Delaware law.

This description of the proposed amendments to our Existing Certificate is a summary and is qualified by
the full text of the proposed amendments to our Existing Certificate, which is attached to this proxy statement as
Annex B and is marked to show the changes described above.

To be approved, the proposed amendments to our Existing Certificate require an affirmative vote of

holders of 75% of the outstanding shares entitled to vote on the record date. If approved, the proposed
amendments to our Existing Certificate will become effective upon the filing of an amended and restated
certificate of corporation with the Secretary of State of the State of Delaware, which we would do promptly after
the annual meeting.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

55

If this proposal is approved by the stockholders, we will make conforming amendments to our by-laws to

require the vote of a majority of the shares cast for the amendment or repeal of our by-laws.

Recommendation of the Board

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

56

P
r
o
x
y
S
t
a
t
e
m
e
n
t

PROPOSAL 4

APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF

INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS

At our 2015 annual meeting of stockholders, our stockholders voted to request that our board of directors
take the steps necessary to reorganize the board of directors into one class with each director subject to election
each year. As part of the request, our stockholders proposed that the Company would have the option to phase
such declassification in over three years.

On March 18, 2016, our board of directors, after carefully considering the advantages and disadvantage of

reorganizing the board of directors into one class with each director subject to election each year, unanimously
adopted a resolution approving and declaring the advisability of amendments to our Existing Certificate that
would declassify our board of directors and instead provide for the annual election of our directors, subject to
obtaining approval of such amendments by our stockholders at the 2016 annual meeting.

Article VI, Section 3 of our Existing Certificate currently provides that our directors are divided into three
classes, with each class serving a three-year term. Under the proposed amendments to our Existing Certificate in
this Proposal 4, Article VI, Section 3 of the Existing Certificate would be amended to phase out the classified
board structure. If the proposed amendments are approved, commencing with the class of directors standing for
election at the 2017 annual meeting of stockholders, directors will stand for election for one-year terms expiring
at the next succeeding annual meeting of stockholders. The directors who were elected at the 2015 annual
meeting of stockholders, whose terms will expire in 2018, and the directors who are elected at the 2016 annual
meeting of stockholders, whose terms will expire in 2019, will hold office until the end of their current terms and
thereafter would be eligible for reelection for one-year terms. As a result, the board of directors will be fully
declassified upon the 2019 annual meeting of stockholders. In all cases, each director will hold office until his or
her successor is duly elected and qualified or until his or her earlier resignation or removal. Any director
appointed to the board of directors to fill a vacancy following the 2017 annual meeting of stockholders will hold
office for a term expiring at the next annual meeting of stockholders following such appointment. Corresponding
changes related to the declassification of the board would be made to Article VI, Section 4 of the Existing
Certificate pertaining to vacancies on the board of directors. Article VI, Section 5 of the Existing Certificate,
which currently provides that directors may be removed by stockholders only for cause, would also be amended
to allow for removal of directors without cause. If the stockholders do not approve this Proposal 4, our board of
directors will remain classified and our directors will continue to be subject to the classifications set forth in our
Existing Certificate.

This description of the proposed amendments to our Existing Certificate is a summary and is qualified by
the full text of the proposed amendments to our Existing Certificate, which is attached to this proxy statement as
Annex B and is marked to show the changes described above.

To be approved, the proposed amendments to our Existing Certificate require an affirmative vote of

holders of 75% of the outstanding shares entitled to vote on the record date. If approved, the proposed
amendments to our Existing Certificate will become effective upon the filing of an amended and restated
certificate of corporation with the Secretary of State of the State of Delaware, which we would do promptly after
the annual meeting.

Recommendation of the Board

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
APPROVAL OF AMENDMENTS TO OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

57

PROPOSAL 5

ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS

The following proposal, commonly known as a “say on pay” proposal, gives our stockholders the
opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers. This
vote is not intended to address any specific item of compensation or the compensation of any particular officer,
but rather the overall compensation of our named executive officers and our compensation philosophy, policies
and practices, as discussed in this proxy statement. Accordingly, we are asking our stockholders to vote “FOR”
the following resolution at our annual meeting of stockholders:

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the
Company’s named executive officers, as disclosed in this proxy statement, including the Compensation
Discussion and Analysis, compensation tables and narrative discussion.”

Before you vote, we recommend that you read the Compensation Discussion and Analysis and Executive

Compensation Summary sections of this proxy statement for additional details on the Company’s executive
compensation programs and philosophy.

This vote is advisory, and therefore not binding on the Company, the compensation and talent committee
or our board of directors. However, our board of directors and our compensation and talent committee value the
opinions of our stockholders and intend to take into account the outcome of the vote when considering future
compensation decisions for our named executive officers.

At our 2011 annual meeting of stockholders, our stockholders voted, on a non-binding, advisory basis, for
the Company to hold future, non-binding advisory votes on the compensation of our named executive officers on
an annual basis. In accordance with the advisory vote by our stockholders, and pursuant to Section 14A of the
Exchange Act, our board of directors holds non-binding, advisory votes on the compensation of our named
executive officers every year.

Recommendation of the Board

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

58

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of the Company’s
common stock as of March 11, 2016: (i) by each person who is known by the Company to beneficially own more
than 5% of the outstanding shares of common stock; (ii) by each director or nominee of the Company; (iii) by
each named executive officer of the Company; and (iv) by all directors and executive officers of the Company as
a group. Unless otherwise noted below, the address of each person listed on the table is c/o iRobot Corporation,
8 Crosby Drive, Bedford, Massachusetts 01730.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Name of Beneficial Owner
BlackRock, Inc.(3)

40 East 52nd St.
New York, NY 10022
The Vanguard Group, Inc.(4)
100 Vanguard Boulevard
Malvern, PA 19355

Shares Beneficially
Owned(1)
2,737,709

Percentage of Shares
Beneficially
Owned(2)
9.44%

2,105,142

7.26%

6.15%

Red Mountain Capital Partners LLC (5)

1,782,500

10100 Santa Monica Boulevard Suite 925

Los Angeles, CA 90067
T. Rowe Price Associates, Inc.(6)

100 East Pratt Street
Baltimore, MD 21202-1009

Colin M. Angle(7)
Alison Dean(8)
Russell J. Campanello(9)
Glen D. Weinstein(10)
Christian Cerda (11)
Ronald Chwang(12)
Gail Deegan
Deborah G. Ellinger
Andrea Geisser(13)
George C. McNamee(14)
Michelle V. Stacy
Mohamad Ali
All executive officers, directors and nominees

as a group(15) (12 persons)

1,498,580

5.17%

651,718
70,809
104,616
74,985
77,789
260,806
13,125
17,266
74,403
108,656
1,652

1,455,825

2.23%
*
*
*
*
*
*
*
*
*
*
*
4.94%

*
(1)

Represents less than 1% of the outstanding common stock.
Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and
investment power with respect to shares. Unless otherwise indicated below, to the knowledge of the
Company, all persons listed below have sole voting and investment power with respect to their shares of
common stock, except to the extent authority is shared by spouses under applicable law. Pursuant to the
rules of the SEC, the number of shares of common stock deemed outstanding includes (i) shares issuable
pursuant to options held by the respective person or group that are currently exercisable or may be
exercised within 60 days of March 11, 2016 and (ii) shares issuable pursuant to restricted stock units held
by the respective person or group that vest within 60 days of March 11, 2016.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

59

(2)

(3)

(4)

(5)

(6)

(7)
(8)
(9)
(10)
(11)
(12)

(13)
(14)

(15)

Applicable percentage of ownership as of March 11, 2016 is based upon 28,989,617 shares of common
stock outstanding.
BlackRock Inc. has sole voting power with respect to 2,671,655 shares and sole dispositive power with
respect to 2,737,709 shares. The address of BlackRock Inc. is 55 East 52nd Street, New York, NY 10055.
This information has been obtained from a Schedule 13G/A filed by BlackRock Inc. with the SEC on
January 26, 2016.
The Vanguard Group, Inc. has sole voting power with respect to 42,409 shares, shared voting power with
respect to 4,400 shares, sole dispositive power with respect to 2,060,133 shares and shared dispositive
power with respect to 45,009 shares. Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned
subsidiary of The Vanguard Group, Inc., is the beneficial owner of 40,609 shares as a result of its serving
as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd. (“VIA”), a
wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 6,200 shares as a result
of its serving as investment manager of Australian investment offerings. The address of each reporting
entity is 100 Vanguard Boulevard, Malvern, PA 19355. This information has been obtained from a
Schedule 13G/A filed by The Vanguard Group, Inc. with the SEC on February 10, 2016.
Red Mountain Capital Partners LLC has sole voting power with respect to 1,782,500 shares and sole
dispositive power with respect to 1,782,500. This information has been obtained from a Schedule 13D/A
filed by Red Mountain Capital Partners LLC with the SEC on March 18, 2016. The address of Red
Mountain Capital Partners LLC is 10100 Santa Monica Boulevard, Suite 925, Los Angeles, CA 90067.
T. Rowe Price Associates, Inc. has sole voting power with respect to 267,780 shares and sole dispositive
power with respect to 1,498,580 shares. This information has been obtained from a Schedule 13G filed by
T. Rowe Price Associates, Inc. with the SEC on February 11, 2016. The address of T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
Includes 250,505 shares issuable to Mr. Angle upon exercise of stock options.
Includes 40,597 shares issuable to Ms. Dean upon exercise of stock options.
Includes 57,102 shares issuable to Mr. Campanello upon exercise of stock options.
Includes 29,244 shares issuable to Mr. Weinstein upon exercise of stock options.
Includes 51,152 shares issuable to Mr. Cerda upon exercise of stock options.
Includes an aggregate of 140,000 shares held by iD5 Fund, L.P. Dr. Chwang is a general partner of the
management company for iD5 Fund, L.P. and may be deemed to share voting and investment power with
respect to all shares held by iD5 Fund, L.P. Dr. Chwang disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest, if any. Also includes 20,000 shares issuable to Dr. Chwang
upon exercise of stock options and 79,210 shares held in a trust for the benefit of certain of his family
members. As co-trustees of the family trust, Dr. Chwang shares voting and dispositive power over the
shares held by the trust with his spouse.
Includes 14,901 shares issuable to Mr. Geisser upon termination of service.
Includes 20,000 shares issuable to Mr. McNamee upon exercise of stock options and 5,861 shares
issuable to Mr. McNamee upon termination of service.
Includes an aggregate of 468,000 shares issuable upon exercise of stock options held by seven executive
officers and directors and an aggregate of 20,762 shares issuable upon termination of service to two
directors.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

60

P
r
o
x
y
S
t
a
t
e
m
e
n
t

OTHER MATTERS

The board of directors knows of no other matters to be brought before the annual meeting. If any other
matters are properly brought before the annual meeting, the persons appointed in the accompanying proxy intend to
vote the shares represented thereby in accordance with their best judgment on such matters, under applicable laws.

STOCKHOLDER PROPOSALS

Proposals of stockholders intended for inclusion in the proxy statement to be furnished to all stockholders

entitled to vote at our 2017 annual meeting of stockholders, pursuant to Rule 14a-8 promulgated under the
Exchange Act by the Securities and Exchange Commission, must be received at the Company’s principal
executive offices not later than November 29, 2016. Stockholders who meet the applicable eligibility
requirements under the proxy access provision of our by-laws and wish to include nominees for our board of
directors in the Company’s proxy statement for the 2017 annual meeting, or stockholders who wish to make a
proposal at the 2017 annual meeting (other than a proposal made pursuant to Rule 14a-8 or pursuant to the proxy
access provision of our by-laws), must in each case notify us between January 25, 2017 and February 24, 2017. If
a stockholder who wishes to present a proposal fails to notify us by February 24, 2017 and such proposal is
brought before the 2017 annual meeting, then under the Securities and Exchange Commission’s proxy rules, the
proxies solicited by management with respect to the 2017 annual meeting will confer discretionary voting
authority with respect to the stockholder’s proposal on the persons selected by management to vote the proxies. If
a stockholder makes a timely notification, the proxies may still exercise discretionary voting authority under
circumstances consistent with the SEC’s proxy rules. In order to curtail controversy as to the date on which we
received a proposal, it is suggested that proponents submit their proposals by Certified Mail, Return Receipt
Requested, to iRobot Corporation, 8 Crosby Drive, Bedford, Massachusetts 01730, Attention: Secretary.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more

than ten percent of a registered class of our equity securities to file reports of ownership and changes in
ownership with the SEC. Such persons are required by regulations of the SEC to furnish us with copies of all
such filings. Based solely on our review of copies of such filings we believe that all such persons complied on a
timely basis with all Section 16(a) filing requirements during the fiscal year ended January 2, 2016.

EXPENSES AND SOLICITATION

We will bear the cost of solicitation of proxies by the Company from our stockholders. In addition to
soliciting stockholders by mail, we will reimburse banks, brokers and other custodians, nominees and fiduciaries for
their reasonable out-of-pocket costs in forwarding proxy materials to the beneficial owners of shares held of record
by them. We have retained Innisfree M&A Incorporated to aid in soliciting proxies and advise on certain matters
relating to the anticipated contested annual meeting for a fee estimated not to exceed $450,000 plus reasonable out-
of-pocket expenses. We have agreed to indemnify Innisfree M&A Incorporated against certain liabilities arising
under the federal securities laws. Innisfree M&A Incorporated has informed us that it expects that approximately 50
of its employees will assist in the solicitation. Proxies may be solicited on or behalf by telephone or through other
means by our directors, officers, and other employees who will receive no additional compensation therefor. Annex
A sets forth information relating to our directors, nominees, executive officers and employees who are considered
“participants” in our solicitation under SEC rules. As a result of the proxy solicitation by Red Mountain and the
matters being considered at the annual meeting, the Company will incur additional costs related to the mailing and
printing of proxy materials, telephone solicitation, data processing and tabulation costs, and other related expenses
of approximately $1.3 million in the aggregate. The Company also will incur significant additional expenses related
to the solicitation (in excess of those normally spent for an annual meeting) which are expected to be approximately
$2.5 million in the aggregate. These additional expenses include the fee payable to our proxy solicitor and the fees
of outside counsel and financial and other advisors advising the Company in connection with a contested solicitation
of proxies. To date, we have incurred approximately $800,000 of these solicitation costs.

Notice of Annual Meeting of Stockholders and iRobot 2016 Proxy Statement

61

Exhibit A

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

Net income

Interest income, net

Income tax expense

Depreciation

Amortization

EBITDA

Stock-based compensation expense

Merger, acquisition and divestiture expense*

Net intellectual property litigation expense

Restructuring expense

For the twelve months ended

January 2,
2015

December 27,
2014

$

44,130 $

37,803

(678)

18,841

11,375

3,715

77,383

14,183

822

(394)

—

(673)

14,606

9,192

3,857

64,785

13,778

—

1214

—

Adjusted EBITDA

$

91,994 $

79,777

* This definition was modified in the fourth quarter of fiscal 2015 to incorporate divestiture related costs.

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,
amortization, stock-based compensation expense, merger, acquisition and divestiture expense, net intellectual
property litigation expense, and restructuring expense. 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.

A

ANNEX A

INFORMATION CONCERNING PERSONS WHO MAY BE DEEMED PARTICIPANTS IN
IROBOT’S SOLICITATION OF PROXIES

The following sets forth the name, principal business address and the present principal occupation or

employment, and the name, principal business and address of any corporation or other organization in which
their employment is carried on, of the directors, director nominees and executive officers of iRobot Corporation
who, under SEC rules, may be deemed to be “participants” in our solicitation of proxies from our stockholders in
connection with the 2016 annual meeting of stockholders.

Non-employee Directors and Nominees

The following table sets forth the names and business addresses of our current non-employee directors and

nominees. The principal occupation or employment of each non-employee director or nominee who may be
deemed to be a participant is set forth in the section of this proxy statement entitled “Election of Directors.”

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Name

Mohamad Ali

Michael Bell

Ronald Chwang, Ph.D.

Gail Deegan

Deborah G. Ellinger

Andrea Geisser

George C. McNamee

Michelle V. Stacy

Business Address

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

iRobot Corporation
8 Crosby Drive
Bedford, Massachusetts 01730

A-1

Executive Officers and Other Employees

The principal occupations of our executive officers and other employees who may be deemed

“participants” in our solicitation of proxies are set forth below. The principal occupation refers to such person’s
position with our company and the business address is iRobot Corporation, 8 Crosby Drive, Bedford,
Massachusetts 01730.

Name

Position

Colin M. Angle

Chairman of the Board, Chief Executive Officer and Director
Executive Vice President, Chief Financial Officer, Treasurer and Principal Accounting
Officer

Alison Dean
Russell J. Campanello Executive Vice President, Human Resources and Corporate Communications
Glen D. Weinstein
Christian Cerda

Executive Vice President, Chief Legal Officer
Executive Vice President and General Manager, Home Robots Business Unit

Information Regarding Ownership of Company Securities by Participants

Except as described in this Annex A, or as otherwise indicated in the “Security Ownership of Certain
Beneficial Owner and Management” section of this proxy statement, none of the persons listed above under
“Directors and Nominees” and “Executive Officers and Other Employees” owns any of our securities of record
but not beneficially. The number of shares of our common stock held by directors, nominees and the named
executive officers as of March 11, 2016, is set forth in the “Security Ownership of Certain Beneficial Owner and
Management” section of this proxy statement.

Information Regarding Transactions in Our Securities by Participants

The following table sets forth purchases and sales during the past two years of shares of our common stock

by the persons listed above under “Directors and Nominees” and “Executive Officers and Other Employees”.
Unless otherwise indicated, all transactions were in the public market and none of the purchase price or market
value of those shares is represented by funds borrowed or otherwise obtained for the purpose of acquiring or
holding such securities.

Name
Colin M. Angle

Purchase/(Sale) of
Common Stock
(number of shares)
(2,694)
(3,574)
26,000
(26,000)
(6,690)
38,800
(2,183)
(5,383)
(8,740)
(2,685)
73,829
(45,446)
(52,138)
(6,936)
(3,153)
(2,233)
(7,801)
(9,567)

Transaction Type
(5)
(5)
(2)
(4)
(4)
(1)
(5)
(5)
(5)
(5)
(2)
(6)
(4)
(4)
(5)
(5)
(5)
(5)

Date
4/1/2014
4/2/2014
11/3/2014
11/3/2014
12/3/2014
3/6/2015
3/7/2015
3/8/2015
3/9/2015
4/1/2015
11/16/2015
11/16/2015
12/15/2015
12/16/2015
3/7/2016
3/7/2016
3/8/2016
3/9/2016

A-2

Name

Alison Dean

Russell J. Campanello

Glen D. Weinstein

P
r
o
x
y
S
t
a
t
e
m
e
n
t

Purchase/(Sale) of
Common Stock
(number of shares)
49,733
(326)
(254)
(1,209)
14,283
(782)
(728)
(764)
(303)
(1,203)
1,873
(1,873)
(1,161)
(726)
(740)
(764)
19,183
10,000
(10,000)
(2,857)
7,767
(783)
(945)
(1,703)
(632)
(701)
(961)
(1,703)
8,617
1,500
(1,500)
(470)
(515)
1,500
(1,500)
1,500
(1,500)
1,500
(1,500)
1,500
(1,500)

Transaction Type
(1)
(5)
(5)
(5)
(1)
(5)
(5)
(5)
(5)
(5)
(2)
(4)
(5)
(5)
(5)
(5)
(1)
(2)
(4)
(5)
(1)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(1)
(2)
(4)
(5)
(5)
(2)
(4)
(2)
(4)
(2)
(4)
(2)
(4)

Date
3/11/2016
4/1/2014
4/2/2014
6/9/2014
3/6/2015
3/7/2015
3/8/2015
3/9/2015
4/1/2015
6/8/2015
7/15/2015
7/15/2015
3/7/2016
3/7/2016
3/8/2016
3/9/2016
3/11/2016
11/24/2014
11/24/2014
12/30/2014
3/6/2015
3/7/2015
3/8/2015
3/9/2015
3/7/2016
3/7/2016
3/8/2016
3/9/2016
3/11/2016
4/1/2014
4/1/2014
4/1/2014
4/2/2014
5/1/2014
5/1/2014
6/2/2014
6/2/2014
7/1/2014
7/1/2014
8/1/2014
8/1/2014

A-3

Name

Christina Cerda

Mohamad Ali
Ronald Chwang, Ph.D.

Gail Deegan

Deborah G. Ellinger

Andrea Geisser

George C. McNamee

Purchase/(Sale) of
Common Stock
(number of shares)
1,500
(1,500)
(1,105)
1,500
(1,500)
1,500
(1,500)
1,300
(1,300)
7,767
(467)
(955)
(941)
(468)
(892)
(632)
(401)
(961)
(941)
11,750
17,083
(752)
(2,422)
(1,389)
(677)
(2,438)
15,667
7,429
3,243
3,397
10,000
(1,598)
3,243
3,397
3,243
3,397
3,243
3,397
40,000
10,000
(10,000)
3,243

Transaction Type
(2)
(4)
(5)
(2)
(4)
(2)
(4)
(2)
(4)
(1)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(5)
(1)
(1)
(5)
(5)
(5)
(5)
(5)
(1)
(1)
(1)
(1)
(2)
(6)
(1)
(1)
(1)
(1)
(1)
(1)
(2)
(2)
(6)
(1)

Date
9/2/2014
9/2/2014
9/8/2014
10/1/2014
10/1/2014
11/3/2014
11/3/2014
12/1/2014
12/1/2014
3/6/2015
3/7/2015
3/8/2015
3/9/2015
4/1/2015
9/8/2015
3/7/2016
3/7/2016
3/8/2016
3/9/2016
3/11/2016
3/6/2015
3/7/2015
3/8/2015
3/7/2016
3/7/2016
3/8/2016
3/11/2016
9/4/2015
6/6/2014
6/5/2015
6/17/2015
12/1/2014
6/6/2014
6/5/2015
6/6/2014
6/5/2015
6/6/2014
6/5/2015
11/2/2015
5/27/2014
5/27/2014
6/6/2014

A-4

Name

Michelle V. Stacy

Date
3/26/2015
3/26/2015
5/12/2015
5/12/2015
6/5/2015
10/27/2015
10/27/2015
9/5/2014
6/5/2015
3/15/2016
3/15/2016

Purchase/(Sale) of
Common Stock
(number of shares)
10,000
(10,000)
10,000
(10,000)
3,397
30,000
30,000
6,608
3,397
1,500
1,500

Transaction Type
(2)
(4)
(2)
(6)
(1)
(2)
(4)
(1)
(1)
(3)
(3)

P
r
o
x
y
S
t
a
t
e
m
e
n
t

(1)
(2)
(3)
(4)
(5)

(6)

Acquired - Restricted stock unit grant
Acquired - Option exercise
Acquired - Open market acquisition
Disposed - Open market sale pursuant to Rule 10b5-1 plan
Disposed - Shares withheld to satisfy tax withholding obligations in connection with the vesting of
restricted stock unit awards
Disposed - Open market sale

Miscellaneous Information Regarding Participants

Except as described in this Annex A or otherwise disclosed in this proxy statement, no person listed above
under “Directors and Nominees” and “Executive Officers and Other Employees” or any of his or her “associates”
beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act), directly or indirectly, any shares
or other securities of the Company or any of its subsidiaries. Furthermore, except as described in this Annex A or
otherwise disclosed in this proxy statement, no such person or any of his or her associates is either a party to any
transaction or series of similar transactions in the last fiscal year, or any currently proposed transaction or series
of similar transactions (1) to which the Company or any of its subsidiaries was or is to be a party, (2) in which
the amount involved exceeds $120,000 and (3) in which such person or associate had or will have a direct or
indirect material interest.

Except as described in this Annex A or otherwise disclosed in this proxy statement, no person listed above

under “Directors and Nominees” and “Executive Officers and Other Employees” or any of his or her associates
has entered into any arrangement or understanding with any person with respect to (1) any future employment
with the Company or its affiliates, or (2) any future transactions to which the Company or any of its affiliates will
or may be a party. Except as described in this Annex A or otherwise disclosed in this proxy statement, there are
no contracts, arrangements or understandings by any of the persons listed under “Directors and Nominees” and
“Executive Officers and Other Employees” within the past year with any person with respect to any of our
securities, including, but not limited to, joint ventures, loan or option arrangements, puts or calls, guarantees
against loss or guarantees of profit, division of losses or profits, or the giving or withholding of proxies.

Except as described in this Annex A or otherwise disclosed in this proxy statement, no persons listed under

“Directors and Nominees” and “Executive Officers and Other Employees” has any substantial interest, direct or
indirect, by security holdings or otherwise, in any matter to be acted upon at the 2016 annual meeting of
stockholders (and no other person who is a party to an arrangement or understanding pursuant to which a
nominee for election as director is proposed to be elected, has any such interests).

A-5

P
r
o
x
y
S
t
a
t
e
m
e
n
t

ANNEX B

PROPOSED AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION

The following are proposed changes to our amended and restated certificate of incorporation as described in
Proposals 3 and 4. The text indicated by underline will be added, and the text indicated by strike-through will be
deleted.

*************************

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

IROBOT CORPORATION

iRobot Corporation, a corporation organized and existing under the laws of the State of Delaware (the

“Corporation”), hereby certifies as follows:

1.

The name of the Corporation is iRobot Corporation. The date of the filing of its original

Certificate of Incorporation with the Secretary of State of the State of Delaware was December 20, 2000 (the
“Original Certificate”). The name under which the Corporation filed the Original Certificate was iRobot
Corporation.

2.

This Amended and Restated Certificate of Incorporation (the “Certificate”) amends, restates
and integrates the provisions of the Amended and Restated Certificate of Incorporation that was filed with the
Secretary of State of the State of Delaware on October 26November 15, 2005 (the “Amended and Restated
Certificate”), and was duly adopted in accordance with the provisions of Sections 242 and 245 of the Delaware
General Corporation Law (the “DGCL”).

3.

The text of the Amended and Restated Certificate is hereby amended and restated in its

entirety to provide as herein set forth in full.

The name of the Corporation is iRobot Corporation.

ARTICLE I

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is c/o Corporation Service

Company, 2711 Centerville Road, Suite 400, City of Wilmington 19808, County of New Castle. The name of its
registered agent at such address is Corporation Service Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be

organized under the DGCL.

B-1

ARTICLE IV

CAPITAL STOCK

The total number of shares of capital stock which the Corporation shall have authority to issue is One
Hundred Five Million (105,000,000) shares, of which (i) One Hundred Million (100,000,000) shares shall be a
class designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) Five Million
(5,000,000) shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the
“Undesignated Preferred Stock”).

The number of authorized shares of the class of Common Stock and Undesignated Preferred Stock may
from time to time be increased or decreased (but not below the number of shares outstanding) by the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote, without a vote of
the holders of the Undesignated Preferred Stock (except as otherwise provided in any certificate of designations
of any series of Undesignated Preferred Stock).

The powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each

class or series of stock shall be determined in accordance with, or as set forth below in, this Article IV.

A. COMMON STOCK

Subject to all the rights, powers and preferences of the Undesignated Preferred Stock and except as

provided by law or in this Article IV (or in any certificate of designations of any series of Undesignated Preferred
Stock):

(a)

the holders of the Common Stock shall have the exclusive right to vote for

the election of directors of the Corporation (the “Directors”) and on all other matters requiring stockholder
action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the
stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law,
holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (or on any
amendment to a certificate of designations of any series of Undesignated Preferred Stock) that alters or changes
the powers, preferences, rights or other terms of one or more outstanding series of Undesignated Preferred Stock
if the holders of such affected series are entitled to vote, either separately or together with the holders of one or
more other such series, on such amendment pursuant to this Certificate (or pursuant to a certificate of
designations of any series of Undesignated Preferred Stock) or pursuant to the DGCL;

(b)

dividends may be declared and paid or set apart for payment upon the

Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends, but
only when and as declared by the Board or any authorized committee thereof; and

(c)

upon the voluntary or involuntary liquidation, dissolution or winding up of

the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common
Stock.

B. UNDESIGNATED PREFERRED STOCK

The Board of Directors or any authorized committee thereof is expressly authorized, to the fullest extent
permitted by law, to provide for the issuance of the shares of Undesignated Preferred Stock in one or more series
of such stock, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or
change from time to time the number of shares of each such series, and to fix the designations, powers, including
voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other
special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

B-2

ARTICLE V

STOCKHOLDER ACTION

1.

Action without Meeting. Except as otherwise provided herein, any action required or permitted

to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the
Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or
effected by a written consent of stockholders in lieu thereof.

2.

Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of

the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the
Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the
affirmative vote of a majority of the Directors then in office. Only those matters set forth in the notice of the
special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

P
r
o
x
y
S
t
a
t
e
m
e
n
t

ARTICLE VI

DIRECTORS

1.

General. The business and affairs of the Corporation shall be managed by or under the

direction of the Board of Directors except as otherwise provided herein or required by law.

2.

Election of Directors. Election of Directors need not be by written ballot unless the By-laws of

the Corporation (the “By-laws”) shall so provide.

3.

Number of Directors; Term of Office. The number of Directors of the Corporation shall be

fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors.

The Directors, other than those who may be elected by the holders of any series of Undesignated
Preferred Stock, shall be classified, with respect to the term for which they severally hold office, into three
classes, as nearly equal in number as reasonably possible. The initial Class I Directors of the Corporation shall be
Colin M. Angle and Ronald Chwang; the initial Class II Directors of the Corporation shall be Helen Greiner,
George C. McNamee and Peter Meekin; and the initial Class III Directors of the Corporation shall be Rodney A.
Brooks, Andrea Geisser and Jacques S. Gansler. The initial Class I Directors shall serve for a term expiring at the
annual meeting of stockholders to be held in 2006, the initial Class II Directors shall serve for a term expiring at
the annual meeting of stockholders to be held in 2007, and the initial Class III Directors shall serve for a term
expiring at the annual meeting of stockholders to be held in 2008. At each annual meeting of stockholders,
Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at
the third succeeding annual meeting of stockholders after their election. Subject to the rights, if any, of the
holders of any series of Undesignated Preferred Stock: (i) at the annual meeting of stockholders of the
Corporation that is held in calendar year 2017 (the “2017 Annual Meeting”), the Directors whose terms
expire at the 2017 Annual Meeting (or such Directors’ successors) shall be elected to hold office for a one-
year term expiring at the annual meeting of stockholders of the Corporation that is held in calendar year
2018 (the “2018 Annual Meeting”); (ii) at the 2018 Annual Meeting, the Directors whose terms expire at
that meeting (or such Directors’ successors) shall be elected to hold office for a one-year term expiring at
the annual meeting of stockholders of the Corporation that is held in calendar year 2019 (the “2019
Annual Meeting”); and (iii) at the 2019 Annual Meeting and each annual meeting of stockholders of the
Corporation thereafter, all Directors shall be elected to hold office for a one-year term expiring at the next
annual meeting of stockholders of the Corporation. For the avoidance of doubt, each person appointed by
the Directors of the Corporation or elected by the stockholders of the Corporation to the Board of
Directors before the 2017 Annual Meeting shall serve for the full term to which he or she was appointed or

B-3

elected before the 2017 Annual Meeting. Notwithstanding the foregoing, the Directors elected to each class
shall hold office until their successors are duly elected and qualified or until their earlier resignation, death or
removal.

Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Certificate, the

holders of any one or more series of Undesignated Preferred Stock shall have the right, voting separately as a
series or together with holders of other such series, to elect Directors at an annual or special meeting of
stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be
governed by the terms of this Certificate and any certificate of designations applicable thereto.

4.

Vacancies. Subject to the rights, if any, of the holders of any series of Undesignated Preferred

Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in
the Board of Directors, however occurring, including, without limitation, by reason of an increase in size of the
Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and
exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a
quorum of the Board of Directors, and not by the stockholders. Any Director appointed in accordance with the
preceding sentence following the 2017 Annual Meeting shall hold office for a term expiring at the next annual
meeting of stockholders of the Corporation held after such appointment for the remainder of the full term of
the class of Directors in which the new directorship was created or the vacancy occurred and until such
Director’s successor shall have been duly elected and qualified or until his or her earlier resignation, death or
removal. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect
Directors, when the number of Directors is increased or decreased, the Board of Directors shall, subject to
Article VI.3 hereof, determine the class or classes to which the increased or decreased number of Directors shall
be apportioned; provided, however, that no decrease in the number of Directors shall shorten the term of any
incumbent Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as
otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.

5.

Removal. Subject to the rights, if any, of any series of Undesignated Preferred Stock to elect
Directors and to remove any Director whom the holders of any such stock have the right to elect, any Director
(including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office
(i) only with without cause and (ii) only by the affirmative vote of the holders of 75% or more majority of the
shares then entitled to vote at an election of Directors. At least forty-five (45) days prior to any meeting of
stockholders at which it is proposed that any Director be removed from office, written notice of such proposed
removal and the alleged grounds thereof shall be sent to the Director whose removal will be considered at the
meeting.

ARTICLE VII

LIMITATION OF LIABILITY

A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for

monetary damages for breach of fiduciary duty as a Director, except for liability (a) for any breach of the
Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or
(d) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended
after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended.

Any repeal or modification of this Article VII by either of (i) the stockholders of the Corporation or
(ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such
repeal or modification with respect to any acts or omissions occurring before such repeal or modification of a
person serving as a Director at the time of such repeal or modification.

B-4

P
r
o
x
y
S
t
a
t
e
m
e
n
t

ARTICLE VIII

AMENDMENT OF BY-LAWS

1.

Amendment by Directors. Except as otherwise provided by law, the By-laws of the

Corporation may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the
Directors then in office.

2.

Amendment by Stockholders. The By-laws of the Corporation may be amended or repealed at
any annual meeting of stockholders, or special meeting of stockholders called for such purpose as provided in the
By-laws, by the affirmative vote of at least 75%the majority of the outstanding shares votes cast by the
stockholders entitled to vote on such amendment or repeal, voting together as a single class (with
“abstentions”, “broker non-votes” and “withheld” votes not counted as a vote either “for” or “against”
such amendment or repeal); provided, however, that if the Board of Directors recommends that stockholders
approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require
the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal,
voting together as a single class.

ARTICLE IX

AMENDMENT OF CERTIFICATE OF INCORPORATION

The Corporation reserves the right to amend or repeal this Certificate in the manner now or hereafter prescribed
by statute and this Certificate, and all rights conferred upon stockholders herein are granted subject to this
reservation. Whenever any vote of the holders of voting stock is required to amend or repeal any provision of this
Certificate, and in addition to any other vote of holders of voting stock that is required by this Certificate or by
law, such amendment or repeal shall require the affirmative vote of the majority of the outstanding shares entitled
to vote on such amendment or repeal, and the affirmative vote of the majority of the outstanding shares of each
class entitled to vote thereon as a class, at a duly constituted meeting of stockholders called expressly for such
purpose; provided, however, that the affirmative vote of not less than 75% of the outstanding shares entitled to
vote on such amendment or repeal, and the affirmative vote of not less than 75% of the outstanding shares of
each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of Article V,
Article VI, Article VII, Article VIII or Article IX of this Certificate.

B-5

UNITED STATES SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
Form 10-K 

(Mark One) 

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 

EXCHANGE ACT OF 1934 

For the fiscal year ended January 2, 2016  
OR 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 

EXCHANGE ACT OF 1934 

Commission file no. 001-36414 

iROBOT CORPORATION 

(Exact name of registrant as specified in its charter) 

Delaware 

(State or other jurisdiction of 
incorporation or organization) 
8 Crosby Drive, Bedford, MA 
(Address of principal executive offices) 

77-0259 335 

(I.R.S. Employer 
Identification No.) 
01730 
(Zip Code) 

F
o
r
m
1
0
-
K

(781) 430-3000 
(Registrant’s telephone number, including area code) 
_______________________________________________ 
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: 
Common Stock, $0.01 par value per share        The NASDAQ Stock Market LLC 
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: 
None 
Indicate by check-mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes          No   
Indicate by check-mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes          No   
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          No   

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          No   

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained 
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in 
Part III of this Form 10-K or any amendment to this Form 10-K.     

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): 

Large accelerated filer 



Accelerated filer 



Non-accelerated filer 



Smaller reporting company 

(Do not check if a smaller 
reporting company) 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes          No   
The aggregate market value of the Common Stock held by nonaffiliates of the registrant was approximately $963.2 million based on the last 

reported sale of the Common Stock on the NASDAQ Global Market on June 26, 2015, the last business day of the registrant's most recently 
completed second fiscal quarter. 

As of February 16, 2016, there were 28,992,738 shares of the registrant’s Common Stock outstanding. 

DOCUMENTS INCORPORATED BY REFERENCE 

The registrant intends to file a definitive Proxy Statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended 

January 2, 2016. Portions of such Proxy Statement are incorporated by reference into Part III of this Form 10-K. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

ANNUAL REPORT ON FORM 10-K 
Year Ended January 2, 2016  

TABLE OF CONTENTS 

Part I

Page 

Item 1.  Business 
Item 1A.  Risk Factors 
Item 1B.  Unresolved Staff Comments 
Item 2. 
Properties 
Item 3.  Legal Proceedings 
Item 4.  Mine Safety Disclosures 

Item 5. 

Part II 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 
Securities 
Selected Financial Data 

Item 6. 
Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations 
Item 7A.  Quantitative and Qualitative Disclosures about Market Risk 
Item 8. 
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
Item 9A.  Controls and Procedures 
Item 9B.  Other Information 

Financial Statements and Supplementary Data 

Part III 
Item 10.  Directors, Executive Officers and Corporate Governance 
Item 11.  Executive Compensation 
Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
Item 13.  Certain Relationships and Related Transactions, and Directors Independence 
Item 14.  Principal Accounting Fees and Services 

Item 15.  Exhibits, Financial Statement Schedules 

Part IV 

2 

F
o
r
m
1
0
-
K

3
12
24
25
25
25

26

27
28
45
46
76
76
78

78
78
78
78
78

79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART I 

ITEM 1. 

BUSINESS 

This Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical 

facts contained in this Annual Report on Form 10-K, including statements regarding our future results of operations and 
financial position, business strategy, plans and objectives of management for future operations, and plans for product 
development and manufacturing are forward-looking statements. These statements involve known and unknown risks, 
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from 
any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss certain of 
these risks in greater detail in the “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. Also, these 
forward-looking statements speak only as of the date of this Annual Report on Form 10-K, and we have no plans to update our 
forward-looking statements to reflect events or circumstances occurring after the date of this Annual Report. We caution 
readers not to place undue reliance upon any such forward-looking statements. 

iRobot, Roomba, Ava,  Scooba, Mint, ViPR, NorthStar, Create, PackBot, FirstLook, iAdapt, Aware, Home Base, Looj, 

Braava, Kobra, AeroForce, uPoint, AeroVac, Mirra, and Virtual Wall are trademarks of iRobot Corporation. 

Overview 

iRobot Corporation ("iRobot" or the "Company" or "we") designs and builds robots that empower people to do more.  
For 25 years, we have developed proprietary technology incorporating advanced concepts in navigation, mobility, manipulation 
and artificial intelligence to build industry-leading robots. Our home robots, which represented 91% of our revenue in 2015, 
and which we expect will grow to an even larger percentage of our revenue in 2016 and beyond, perform time-consuming 
domestic chores. Our defense and security robots perform tasks such as battlefield reconnaissance and bomb disposal, and 
multi-purpose tasks for law enforcement agencies and first responders, as well as certain commercial users.  Our remote 
presence robots expand the reach of medical care by connecting physicians with patients from anywhere in the world and also 
provide autonomous telepresence capabilities enabling remote workers to more personally collaborate throughout the 
workplace. We sell our robots through a variety of distribution channels, including chain stores and other national retailers, 
through our on-line store, through value-added distributors and resellers, and to the U.S. military and other government 
agencies worldwide. 

Since our founding, we have accumulated expertise in all the disciplines necessary to design and build durable, high-

performance and cost-effective robots through the close integration of software, electronics and hardware. Our core 
technologies serve as reusable building blocks that we adapt and expand to develop next generation and new products, reducing 
the time, cost and risk of product development. Our significant expertise in robot design and engineering positions us to 
capitalize on the growth we expect in the market for robot-based products. We believe that the sophisticated technologies in our 
existing applications are adaptable to a broad array of markets such as commercial cleaning, elder care, home automation, 
healthcare, video collaboration, landscaping, agriculture, and other vertical markets. 

Over the past thirteen years, we have sold more than 15 million of our home robots. During that time, we also sold 

approximately 6,000 of our defense and security robots, most of which have been sold to the U.S. military and deployed on 
missions in Afghanistan and Iraq, and more recently to state, local and international government entities. 

During 2015, we took several steps to become more focused on our well established home robots business to capitalize on 

the substantial opportunities available to us within consumer markets.  First, we entered into an Asset Purchase Agreement on 
February 2, 2016 with iRobot Defense Holdings, Inc., a recently-formed portfolio company of Arlington Capital Partners, 
which provides for the sale of our defense and security business unit. The purchase price is up to $45.0 million, of which $30.0 
million will be paid at the closing of the transaction, subject to adjustments for working capital and indebtedness as set forth in 
the purchase agreement, and up to an additional $15.0 million of which may be paid based on 2016 revenue of the defense and 
security business unit. The transaction is expected to close during the first quarter of 2016.  Second, we reallocated research 
and development resources from a next generation remote presence platform to opportunities in our home robots business.  
These actions were taken to solidify our position as the leader in diversified home robots and to focus on key technologies, with 

3 

 
 
 
F
o
r
m
1
0
-
K

an emphasis on software, that allow our robots to understand the homes in which they operate. It is our intent to continue 
investing in these critical technologies and the economic opportunities they unlock. 

In addition to the above, we achieved a number of significant milestones in 2015 that we believe will assist us in 

continuing to generate profitable growth and enhance value for our shareholders.  In particular, we successfully launched 
Roomba 980, our first connected home robot incorporating Visual Simultaneous Location and Mapping, or vSLAM, which 
provides the robot with the capability to dynamically create and update a map of its surroundings.  This is our first step into the 
Internet of Things, enabling new functionality such as remote app-control and systematic navigation, as well as paving the way 
for new products and capabilities in the future.  Additionally, we implemented new Roomba marketing programs in the United 
States that resulted in a significant return on our investment and which we plan to leverage as part of our strategy to accelerate 
growth in international markets. 

In our continuing effort to return capital to our shareholders, we repurchased 1,260,276 shares of our common stock for 

an aggregate purchase price of $37.4 million during fiscal year 2015.   In conjunction with the announcement to divest our 
defense and security business unit, we also announced a $65 million increase to our current share repurchase initiative, partially 
funded from the expected proceeds from the divestiture, bringing total repurchases authorized under the 2016 program to more 
than $100 million.  We intend to initiate the incremental program in the first quarter of fiscal 2016 in conjunction with the 
completion of the defense and security business unit divestiture.  This initiative, coupled with the previous return of capital, 
balances our interest to return cash to shareholders while maintaining sufficient cash to operate and invest in our business. 

Our total revenue for 2015 was $616.8 million, which represents an 11% increase from 2014 revenue of $556.8 million.   

This increase in revenue was largely attributable to a $52.2 million increase in revenue in our home robots business unit as a 
direct result of growth in our domestic market. Domestic growth was primarily attributable to increased sales as a result of 
significant investments in advertising media and national promotions as well as the launch of Roomba 980. International home 
robots revenue growth slowed compared to fiscal 2014 as a result of negative macroeconomic conditions, specifically in Japan 
and Russia, offset by a significant growth increase in China. Revenue increased $9.5 million in our defense and security 
business, primarily attributable to increased sales of our SUGV robot. Our home robots revenue represented 91% of our total 
revenue for both 2015 and 2014.  With the anticipated divestiture of our defense and security business unit, our revenue for the 
next few years will almost entirely be driven by our rapidly growing home robots business. 

Our financial performance in 2016 will be driven by our home robots business unit.  Our strategy is to maintain 
Roomba’s market leadership while positioning it as a key component in the connected home.  We expect growth to be driven 
by: 

•   Expanded worldwide consumer adoption of Roomba supported by targeted marketing programs similar to the 

successful programs we introduced in the United States in 2015; 

•   Wider geographic distribution of Roomba 980; 

•   Building a second material revenue stream, which we expect to do with our wet floor care products; and  

•   Regional growth in China, with specific emphasis on further accelerating growth in the e-commerce channel. 

Strategy 

We are a technology company with the goal of designing and marketing innovative robots that empower people to do 
more.  Our deep understanding of the consumer, the consumer's needs and how robots meet those needs ensures that every 
robot is created with a person in mind.  We strive to drive innovation, serve as an industry catalyst and change the world by 
fueling the era of robots.  We intend to increase the penetration of our products in existing markets, expand existing products 
into new markets, and develop and launch new products into current and adjacent markets. Our strategy is to maintain a 
leadership position by delivering robotic technology-based automated home maintenance solutions that delight our customers 
and anticipate their needs, while extending our technical leadership in the areas of autonomous navigation, manipulation and 
cloud connectivity and services.  With increasing levels of autonomy, continued mobility improvements, more sophisticated 
sensor suites and advanced human interfaces, our robots will expand in effectiveness and efficiency and reduce the 
requirements for actual physical operator presence and control. In the area of automated home maintenance, we seek to 
improve the quality of life with robotic solutions requiring as little human physical intervention as possible. 

4 

 
As part of our 2016 plan, we have made capital allocation choices that will require significant investments in our business 

during the year in order to drive future revenue diversification for our home robots business unit and further revenue 
acceleration in 2017, 2018 and beyond. In order to execute this plan we need to continue to strategically invest in a number of 
areas to: 

•   Strengthen our marketing capabilities globally and accelerate worldwide consumer adoption of Roomba to maintain 

our market-leading position in robotic vacuum cleaners; 

•   Better position ourselves in China to capture an even larger share of the rapidly growing market for robotic floor 

care; 

•   Develop our wet floor care business to generate a material, secondary revenue stream; 

•   Scale our infrastructure to support future connected products; 

•   Explore, develop and grow adjacent non-floor care home robot products that can generate meaningful diversified 

revenue streams; and 

•   Make continued operational improvements that can reduce product and operating costs. 

Key elements of our strategy include: 

Talent:  Investing in our people and our culture.    To develop and integrate the best technology and to be the most 

innovative robotics company, we must attract the most talented people across our functional areas.  Our success is directly 
related to the talents and abilities of our workforce, and to a culture, work environment and leadership that supports its 
development and growth.  Our strategy focuses on transforming our company into one of the most attractive workplaces for 
those seeking to participate in the robotics field. 

Technology:  Investing in robotic technology and products to build better robots.     A better robot lives in our world by 

moving around its environment more intelligently, by cooperating with the people it serves more compellingly, and by 
physically interacting with its surroundings more effectively.  We strive to achieve and sustain world leadership with best-in-
class technology in the areas of autonomy, navigation, cloud robotics and manipulation.  Our superiority in user experience 
comes from leveraging the powerful capabilities of the connected world combined with thoughtful, intuitive design.  We are 
committed to developing, maturing and integrating these technologies to support our business and make these a reality in our 
products.  We implement these technologies with strict cost requirements to support our high-margin, profitable business 
model. 

Tempo:  Investing to improve our agility, speed and operational efficiency.    We strive to increase our pace of innovation 

and bring compelling products to market more quickly in a cost-effective and highly reliable form.  We are committed to 
refining our innovation and product development culture and processes to deliver results faster by increasing the pace of 
development, gaining efficiencies through designing and leveraging modular architecture and reusable hardware and software 
components across products, and utilizing remote software updates and cloud computing to provide rapid cycles for release of 
new features in the installed base of our products. 

Brand. We invest in building a company with a vision, that strives to solve difficult problems, and empowers people to do 

more.  We strive to achieve this image by designing high-quality robots with a recognizable look and feel and a streamlined 
ease of use, by employing impactful marketing, and by continuing to give back to the community.  We invest in building and 
advertising one unified, global brand. 

Technology 

We are focused on behavior-based, artificially-intelligent systems developed to meet customer requirements in multiple 
market segments. Our systems are designed to move around their environments intelligently, by cooperating with the people 
they serve and by physically interacting with their surroundings. 

Our robots rely on technology related to navigation, cloud robotics and manipulation to accomplish their missions 

autonomously. 

Autonomy.    Our robots employ intelligent autonomy because, without autonomy, robots require continuous human 

attention.  Autonomy requires, among other things, advanced navigation and dynamically updated mapping.  We seek to 
achieve and sustain a leadership position in navigation and mapping to enable a higher level of autonomy. 

5 

 
F
o
r
m
1
0
-
K

Navigation.    Our mobile robots navigate through their environment in a variety of ways.  Some do it simply by reacting 
to encounters with obstacles.  Others use more sophisticated means that make use of maps to plan out paths, track their travel, 
and determine their location in the environment.  Intelligent navigation empowers our robots to operate autonomously with 
purposeful intent.  Autonomous navigation is the key enabler for our latest products. 

Cloud Robotics.    Connectivity and cloud services are important because they can leverage additional computational 
resources and capabilities.  Cloud robotics refers to cloud-based shared services that solve robotic challenges and enhance 
robots’ capabilities.  By using the power of off-board computing and storage, it is possible to develop algorithms that aid with 
object recognition, post-process and store large maps, and share data between multiple robots operating in the same 
environment.  Cloud robotics will allow our robots to plan more intelligently, be more productive and keep getting smarter as 
they are used. 

Manipulation.    Manipulation means physically interacting with the world to move or control objects.  It is ultimately 

what sets robots apart from any other technology. 

Combining these four components, we have created proprietary, reusable building blocks of robotics capabilities, 
including mobility platforms, manipulators, navigation and control algorithms and user interfaces. Our technology building 
blocks typically allow us to take a known platform and modify it for a new mission instead of starting from scratch for each 
application. We believe this allows us to design and develop innovative robots quickly and cost-effectively. 

Products 

Historically, we have designed and marketed robots for the consumer and defense and security markets. Upon completion 

of the divestiture of our defense and security business unit, we will be primarily focusing on the consumer market.  With over 
two decades of leadership in the robot industry, we remain committed to establishing robot and software platforms for 
invention and discovery and creating robots that improve the standards of living worldwide. 

Consumer Products 

We sell various products that are designed for use in and around the home. Our current consumer products are focused on 
both indoor and outdoor cleaning applications. We believe our consumer products provide value to our customers by delivering 
a better way to clean and by freeing people from repetitive home cleaning tasks. In order to ensure the continued acceptance of 
our robots we will continue to invest in technology necessary to further improve their cleaning capabilities. 

We currently offer multiple Roomba floor vacuuming robots with varying price points ranging from $375 to $899 based 

upon features and performance characteristics. Our Roomba robot's compact disc shape allows it to clean under kick boards, 
beds and other furniture, resulting in cleaner floors since the Roomba can access more of the floor than standard upright 
vacuum cleaners. In addition, Roomba eliminates the need to manually vacuum -- it cleans automatically upon the push of a 
button or through scheduling.  In September 2015, we launched our newest robot, Roomba 980, our first connected robot. 
Roomba 980 delivers entire level cleaning through smart navigation, recharging as needed and resumes until finished.  The 
iRobot HOME App allows consumers the ability to conveniently schedule cleanings at anytime from anywhere. The Roomba 
600 series robots offer a three-stage cleaning system which thoroughly vacuums every section of the floor multiple times, as 
well as AeroVac technology and improved brush design enabling the robot to better handle fibers like hair, pet fur, lint and 
carpet fuzz. The Roomba 700 series robots offer improved debris pick up, a larger debris bin that vigorously pulls debris and 
hair off brushes into the bin, and dual air filters that capture dust particles as fine as 0.3 microns. The Roomba 800 series robots 
offer our AEROForce technology which incorporates brushless, counter-rotating extractors that amplify suction for superior 
performance over bristle brushes, while requiring less maintenance than previous Roomba models. 

We currently offer the Braava automatic floor mopping robots designed exclusively for hard surface floors with a price of 

$299.  These robots provide a different cleaning approach than our Roomba products.  The Braava automatically dusts and 
damp mops hard surface floors using popular cleaning cloths or our specially designed reusable microfiber cloths, and includes 
a special reservoir that dispenses liquid throughout the cleaning cycle to keep the cloth damp. 

Our Scooba 450 floor scrubbing robot has a price point of $599. Unlike a conventional mop that spreads dirty water on 

the floor, Scooba will apply only fresh water and cleaning solution to the floor from a clean tank. Scooba will clean dirt and 
grime, is safe for use on all sealed, hard floor surfaces, including wood and tile, and is smart enough to avoid carpet.  Our Mirra 
Pool Cleaning Robot is used to clean residential pools and removes debris as small as two microns from pool floors, walls and 

6 

 
stairs. Mirra is brought to market under the iRobot brand through a relationship with Aquatron, Inc., which developed the pool 
cleaning robots.  Our Looj Gutter Cleaning Robot was designed to simplify the difficult and dangerous job of gutter cleaning. 
The Looj cleans an entire stretch of gutter, reducing the number of times a ladder must be repositioned and climbed during 
gutter cleaning. 

Defense and Security Products 

As noted above, we expect to complete the divestiture of our defense and security business unit during the first quarter of 

2016.  In the defense and security product markets, we currently offer several unmanned ground vehicles. Our tactical ground 
robots include the combat-tested 510 PackBot, the 310 SUGV, the 110 FirstLook small, light, throwable robot, and the 710 
Kobra multi-purpose robot capable of carrying heavy payloads. The PackBot, SUGV, FirstLook, and Kobra robots comprise a 
family of robots using many common platform components and offer our patented flipper technology that enables robots to 
easily climb stairs, navigate rubble, and penetrate inaccessible areas. These robots, which are beginning to utilize the uPoint 
Multi-Robot Control system, a universal control system for our line of defense and security robots, are designed to keep war 
fighters and public safety officials out of harm's way and are designed for high-performance, durability and ease of use while 
performing search, reconnaissance, mapping, bomb disposal and other dangerous missions. As of January 2, 2016, we have 
delivered approximately 6,000 robots to military and civil defense forces and research communities worldwide. The robots are 
currently priced between approximately $20,000 and $600,000 per unit, depending on model, configuration and quantities 
ordered. 

We have continued to refine the PackBot product line, focusing on enhanced modularity and providing new capabilities 
to support a variety of mission scenarios. Our unique Aware 2 software is incorporated into the advanced 510 PackBot chassis 
and operator control unit. As a result, PackBot can support multiple configurations and payloads with the same chassis and 
operator control unit, providing customers with a single robot capable of performing a variety of missions. We also utilize 
Configure-To-Order (CTO) procurement options for our commercial 510 PackBot, allowing customers to tailor the product to 
their specific mission needs. The combined benefits of the Aware 2 software and CTO procurement options establish the 510 
PackBot as a truly modular multi-mission robotic platform. 

The 110 FirstLook is an expandable, lightweight robot that performs persistent observation and investigates dangerous 

and hazardous material while keeping its operator out of harm’s way.  The 310 SUGV is a lightweight, backpackable robot 
well-suited to dismounted operations. It has a modular design that accommodates a wide range of optional payloads and 
sensors, including a dexterous manipulator, and can easily climb stairs, roll over obstacles and enter inaccessible and dangerous 
areas.  The 710 Kobra is a powerful, rugged, fast robot that supports or carries multiple and heavy payloads, and can lift up to 
330 pounds. 

Remote Presence Products 

We currently have two products based upon our Ava mobile robotics platform.  The U.S. Food and Drug Administration 

approved RP-VITA telemedicine robot expands the reach of medical care by connecting physicians with patients from 
anywhere in the world.  The RP-VITA combines the latest in autonomous navigation and mobility technologies developed by 
iRobot with the state-of-the-art telemedicine and electronic health record integration developed by InTouch Health.  The RP-
VITA, which is sold to healthcare customers by InTouch Health, was introduced in 2012 and began shipping in early 2013.  
Our Ava 500 Video Collaboration robot, which we began selling in 2014, delivers autonomous telepresence to the enterprise 
market, enabling remote workers to more personally collaborate throughout the workplace.  The Ava 500 blends together our 
autonomous navigation capabilities with Cisco’s TelePresence to enable people working off-site to participate in meetings, 
presentations and events where movement and location spontaneity are important. 

Strategic Alliances 

In addition to our internal technology development, we leverage relevant robotic technologies through licensing, 
acquisitions and/or other partnerships. These strategic alliances are an important part of our product development and 
distribution strategies. We rely on strategic alliances to provide technology, complementary product offerings and increased and 
quicker access to markets. We seek to form relationships with organizations that can provide best-in-class technology or market 
advantages for establishing iRobot technology in new market segments. 

7 

 
 
 
In 2011, we signed a joint development and licensing agreement with InTouch Health, a leading remote presence 
telemedicine solution provider, which resulted in the introduction in 2012 of the RP-VITA, the first autonomous navigation 
remote presence robot to receive U.S. Food and Drug Administration clearance for use in hospitals. In 2013, we signed a joint 
marketing agreement and have worked in close alliance with Cisco to bring our enterprise-grade Ava 500 Video Collaboration 
robot to market.  The Ava 500 blends together our autonomous navigation capabilities with Cisco’s TelePresence to enable 
people working off-site to participate in meetings, presentations and events where movement and location spontaneity are 
important. We continue to explore strategic partnership opportunities for our remote presence technology. 

Our strategy of working closely with third parties extends to the design of our products. By offering extensible platforms 

designed to carry payloads, we have designed and manufactured our products to leverage the work of those individuals and 
organizations that offer specialized technological expertise. The PackBot, Kobra and FirstLook robots are designed with open 
interfaces that allow third-party developers to add payloads to our robots, improving their functionality. 

Sales and Distribution Channels 

We sell our products through distinct sales channels to the consumer, defense and security, telemedicine, and video 

collaboration markets. For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, sales to non-
U.S. customers accounted for 56.0%, 60.9% and 59.5% of total revenue, respectively.  For the fiscal years ended January 2, 
2016, December 27, 2014 and December 28, 2013, U.S. federal government orders, contracts and subcontracts accounted for 
5.1%, 4.3% and 6.2% of total revenue, respectively.  For the years ended January 2, 2016, December 27, 2014 and December 
28, 2013, we generated an aggregate of 26.0%, 29.8% and 33.2% of our revenue, respectively, from our home robots distributor 
in Japan (Sales on Demand Corporation) and a network of affiliated European distributors of our home robots (Robopolis 
SAS). 

F
o
r
m
1
0
-
K

Home Robots 

In the United States and Canada, we sell our consumer products through a network of national retailers. In 2015, this 

network consisted of more than 60 retailers which often sell either one or some combination of our products. Certain smaller 
domestic retail operations are supported by distributors to whom we sell our products directly. In support of sales in the United 
States and Canada, we maintain an in-house sales and product management team. Outside of the United States and Canada, our 
products have been sold in more than 50 countries, primarily through a network of in-country distributors who resell to retail 
stores in their respective countries. These distributors are supported by our international sales and product marketing team. 

Our retail and distributor networks are our primary distribution channels for our consumer products. We also offer 
products direct-to-consumer through our domestic and international on-line stores, representing 6.1%, 6.1% and 5.9% of total 
home robots business unit revenue for fiscal 2015, 2014 and 2013, respectively. We have established valuable databases and 
customer lists that allow us to target directly those consumers most likely to purchase a new robot or upgrade. We believe we 
maintain a close connection with our customers in each of our markets, which provides an enhanced position from which to 
improve our distribution and product offerings. 

Defense and Security 

As noted above, we expect to complete the divestiture of our defense and security business unit during the first quarter of 

2016.  We currently sell our defense and security products directly to end users and indirectly through prime contractors and 
distributors. While the majority of defense and security products have been sold to date to various operations within the 
U.S. federal government, we also sell to state and local agencies as well as to international government organizations, research 
labs, nuclear and industrial companies and universities. Our military products are sold overseas in compliance with the 
International Traffic in Arms Regulations, or ITAR. We have sold our products to the governments of various countries in the 
past several years, including the United Kingdom, France, Germany, Sweden, Norway, Italy, Brazil, Pakistan, Israel, Australia, 
Republic of Korea, Singapore, Bosnia, Lithuania, Qatar, Taiwan, South Africa and Canada. 

Remote Presence 

The RP-VITA telemedicine robot, which was jointly developed with InTouch Health and incorporates our Ava mobile 

robotics platform, is sold to healthcare customers by InTouch Health.  Our Ava 500 Video Collaboration robot, which 

8 

 
 
incorporates our Ava mobile robotics platform and Cisco’s TelePresence, is available from certified Cisco partners on a limited 
basis. 

Customer Service and Support 

We also provide ongoing customer service and support. Consumer customer service representatives, the majority of 
whom are employees of outsourced service organizations or our distribution partners, are extensively trained on the technical 
intricacies of our consumer products. Defense and security customer representatives are usually former military personnel who 
are experienced in logistical and technical support requirements for military operations. Customer service for the RP-VITA 
product is provided by InTouch Health.  Customer service for the Ava 500 is provided by iRobot. 

Marketing and Brand 

We market our home robots to end-user customers through our sales and marketing teams as well as through our 
extensive network of retailers and in-country distributors. We market our defense and security products directly through our 
team of government sales specialists to end users and indirectly through prime contractors. Our website is also playing an 
increasing role in supporting brand awareness, addressing customer questions and serving as a showcase for our products. 

Our marketing strategy is to increase our brand awareness and associate the iRobot brand with innovation, reliability, 

safety and value. Our sales and marketing expenses represented 15.9%, 15.5% and 14.7% of our total revenue in 2015, 2014 
and 2013, respectively. We expect to continue to invest in national advertising, consumer and industry trade shows, direct 
marketing and public relations to further build brand awareness. 

We believe that we have built a trusted, recognized brand by providing high-quality robots. We believe that customer 
word-of-mouth has been a significant driver of our brand's success to date, which can work very well for products that inspire a 
high level of user loyalty because users are likely to share their positive experiences. Our grass-roots marketing efforts focus on 
feeding this word-of-mouth momentum and we use public relations as well as advertising to promote our products. 

Our innovative robots and public relations campaigns have generated extensive press coverage, and iRobot and our 
consumer robots have won several awards.  Through these efforts, we have been able to build our brand, and we expect that our 
reputation for innovative products and customer support will continue to play a significant role in our growth and success. 

Manufacturing 

Our core competencies are the design, development and marketing of robots. Our manufacturing strategy is to outsource 
non-core competencies, such as the production of our robots, to third-party entities skilled in manufacturing. By relying on the 
outsourced manufacture of our consumer, military and remote presence robots, we can focus our engineering expertise on the 
design of robots. 

Manufacturing a new product requires a close relationship between our product designers and the manufacturing 

organizations. Using multiple engineering techniques, our products are introduced to the selected production facility at an 
early-development stage and the feedback provided by manufacturing is incorporated into the design before tooling is finalized 
and mass production begins. As a result, we believe that we can significantly reduce the time required to move a product from 
its design phase to mass production deliveries, with improved quality and yields. 

We outsource the manufacturing of our consumer products to four contract manufacturers, each of which manufactures at 
a single plant in China.  We outsource the manufacturing of our defense and security robots to two contract manufacturers, both 
of which are located in the United States. 

Research and Development 

We believe that our future success depends upon our ability to continue to develop new products and product accessories, 

and enhancements to and applications for our existing products. For the years ended January 2, 2016, December 27, 2014 and 
December 28, 2013, our research and development expenses were $76.1 million, $69.4 million and $63.6 million, or 12.3%, 
12.5% and 13.1% of revenue, respectively.  We intend to continue our investment in research and development to respond to 
and anticipate customer needs, and to enable us to introduce new products over the next few years that will continue to address 
our existing and adjacent market sectors. 

9 

 
 
Our research and development is conducted by teams dedicated to particular projects. Our research and development 

efforts are primarily located at our headquarters in Bedford, Massachusetts and our office in Pasadena, California. 

Competition 

The market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting customer 

needs and expectations and the likely increased introduction of new products. We believe that a number of established 
companies have developed or are developing robots that will compete directly with our product offerings, and many of our 
competitors have significantly more financial and other resources than we possess. 

Our competitors include developers of robot floor cleaning products and developers of small unmanned ground vehicles. 

While we believe many of our customers purchase our Roomba floor vacuuming robots, Braava floor cleaning and 
Scooba floor washing robots as a supplement to, rather than a replacement for, their traditional vacuum cleaners and wet floor 
cleaning methods, we do compete in some cases with providers of traditional cleaning products. 

We believe that the principal competitive factors in the market for robots include product features, performance for the 
intended mission, cost of purchase, total cost of system operation, including maintenance and support, ease of use, integration 
with existing equipment, quality, reliability, customer support, brand and reputation. 

Our ability to remain competitive will depend to a great extent upon our ongoing performance in the areas of product 

development and customer support. We cannot provide assurance that our products will continue to compete favorably or that 
we will be successful in the face of increasing competition from new products and enhancements introduced by existing 
competitors or new companies entering the markets in which we provide products. 

F
o
r
m
1
0
-
K

Intellectual Property 

We believe that our continued success depends in large part on our proprietary technology, the intellectual skills of our 

employees and the ability of our employees to continue to innovate. We rely on a combination of patent, copyright, trademark 
and trade secret laws, as well as confidentiality agreements, to establish and protect our proprietary rights. As part of the sale of 
our defense and security business, we will transfer to the buyer ownership of certain of our intellectual property related to the 
defense and security business, including patents, patent applications and trademarks. 

As of January 2, 2016, we held 375 U.S. patents, more than 350 foreign patents, additional design registrations, and more 

than 500 patent applications pending worldwide.  Our U.S. patents will begin to expire in 2019.  We will continue to file and 
prosecute patent (or design registration, as applicable) applications when and where appropriate to attempt to protect our rights 
in our proprietary technologies. We also encourage our employees to continue to invent and develop new technologies so as to 
maintain our competitiveness in the marketplace. It is possible that our current patents, or patents which we may later acquire, 
may be successfully challenged or invalidated in whole or in part. It is also possible that we may not obtain issued patents for 
our pending patent applications or other inventions we seek to protect. In that regard, we sometimes permit certain intellectual 
property to lapse or go abandoned under appropriate circumstances, and due to uncertainties inherent in prosecuting patent 
applications, sometimes patent applications are rejected and we subsequently abandon them. It is also possible that we may not 
develop proprietary products or technologies in the future that are patentable, or that any patent issued to us may not provide us 
with any competitive advantages, or that the patents of others will harm or altogether preclude our ability to do business. 

Our registered U.S. trademarks include iRobot, Roomba, Ava, Scooba, Mint, ViPR, NorthStar, Create, PackBot, 

FirstLook, iAdapt, Aware, Home Base, Looj, Braava, Kobra, AeroForce, uPoint, AeroVac, Mirra, and Virtual Wall.  Our marks 
iRobot, Roomba, Virtual Wall, Scooba, and certain other trademarks, have also been registered in selected foreign countries. 

Our means of protecting our proprietary rights may not be adequate, and our competitors may independently develop 

technology that is similar to ours. Legal protections afford only limited protection for our technology. The laws of many 
countries do not protect our proprietary rights to as great an extent as do the laws of the United States. Despite our efforts to 
protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to copy aspects of 
our products or to obtain and use information that we regard as proprietary. Third parties may also design around our 
proprietary rights, which may render our protected products less valuable, if the design around is favorably received in the 
marketplace. In addition, if any of our products or the technology underlying our products is covered by third-party patents or 
other intellectual property rights, we could be subject to various legal actions. We cannot assure you that our products do not 

10 

 
 
infringe patents held by others or that they will not in the future. We have received in the past communications from third 
parties relating to technologies used in our various robot products that have alleged infringement of patents or violation of other 
intellectual property rights. In response to these communications, we have contacted these third parties to convey our good 
faith belief that we do not infringe the patents in question or otherwise violate those parties' rights. Although there have been no 
additional actions or communications with respect to these allegations, we cannot assure you that we will not receive further 
correspondence from these parties, or not be subject to additional allegations of infringement from others. Litigation may be 
necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the 
proprietary rights of others, or to defend against claims of infringement or invalidity, misappropriation, or other claims. Any 
such litigation could result in substantial costs and diversion of our resources. Moreover, any settlement of or adverse judgment 
resulting from such litigation could require us to obtain a license to continue to use the technology that is the subject of the 
claim, or otherwise restrict or prohibit our use of the technology. Any required licenses may not be available to us on acceptable 
terms, if at all. If we attempt to design around the technology at issue or to find another provider of suitable alternative 
technology to permit us to continue offering applicable software or product solutions, our continued supply of software or 
product solutions could be disrupted or our introduction of new or enhanced software or products could be significantly 
delayed. 

Regulations 

We are subject to various government regulations, including various U.S. federal government regulations as a contractor 

and subcontractor to the U.S. federal government. Following closing of the sale of our defense and security business unit, we 
will be subject to certain of these regulations only as they pertain to matters related to our operation of the defense and security 
business unit prior to the sale. Among the most significant U.S. federal government regulations currently affecting our business 
are: 

•  

•  

•  

•  

•  

•  

the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the 
formation and administration of, and performance under government contracts; 
the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection 
with contract negotiations; 
the Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement 
under cost-based government contracts; 
the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign 
official to help obtain, retain or direct business, or obtain any unfair advantages; 
the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made on the 
basis of false facts provided to the government, and impose penalties on the basis of false statements, even if they 
do not result in a payment; and 
laws, regulations and executive orders restricting the use and dissemination of information classified for national 
security purposes and the exportation of certain products and technical data. 

We also need special security clearances to continue working on and advancing certain of our projects with the 
U.S. federal government. Classified programs generally will require that we comply with various Executive Orders, federal 
laws and regulations and customer security requirements that may include restrictions on how we develop, store, protect and 
share information, and may require our employees to obtain government clearances. 

The nature of the work we do for the federal government may also limit the parties who may invest in or acquire us. 

Export laws may keep us from providing potential foreign acquirers with a review of the technical data they would be 
acquiring. In addition, there are special requirements for foreign parties who wish to buy or acquire control or influence over 
companies that control technology or produce goods in the security interests of the United States. Finally, the government may 
require a prospective foreign owner to establish intermediaries to actually run that part of the company that does classified 
work, and establishing a subsidiary and its separate operation may make such an acquisition less appealing to such potential 
acquirers. 

11 

 
In addition, the export from the United States of many of our products may require the issuance of a license by the 
U.S. Department of Commerce under the Export Administration Act, as amended, and its implementing Regulations as kept in 
force by the International Emergency Economic Powers Act of 1977, as amended. Some of our products may require the 
issuance of a license by the U.S. Department of State under the Arms Export Control Act and its implementing Regulations, 
which licenses are generally harder to obtain and take longer to obtain than do Export Administration Act licenses. 

Our business may require the compliance with state or local laws designed to limit the uses of personal user information 

gathered online or require online services to establish privacy policies. 

Defense and Security Product Backlog 

Our defense and security product backlog consists of written purchase orders or contracts received from our defense and 

security customers. Total backlog of product sales to defense and security customers, which includes federal, state, local and 
foreign governments, and non-government customers, as of January 2, 2016, December 27, 2014 and December 28, 2013, 
amounted to approximately $10.5 million, $18.2 million and $8.8 million, respectively. There can be no assurance that any of 
our backlog will result in revenue. At the closing of the sale of our defense and security business unit, all defense and security 
product backlog will transfer to the buyer. 

Employees 

As of January 2, 2016, we had 622 full-time employees located in the United States and abroad. We believe that we have 

F
o
r
m
1
0
-
K

a good relationship with our employees. 

Available Information 

We were incorporated in California in August 1990 under the name IS Robotics, Inc. and reincorporated as IS Robotics 

Corporation in Massachusetts in June 1994. We reincorporated in Delaware as iRobot Corporation in December 2000. We 
conduct operations and maintain a number of subsidiaries in the United States and abroad, including operations in Hong Kong, 
the United Kingdom and China. We also maintain iRobot Securities Corporation, a Massachusetts securities corporation, to 
invest our cash balances on a short-term basis. Our website address is www.irobot.com. Our Annual Report on Form 10-K, 
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to 
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through the investor relations page of 
our internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the 
Securities and Exchange Commission.  Alternatively, these reports may be accessed at the SEC’s website at www.sec.gov. 

ITEM 1A.  

RISK FACTORS 

We operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. 

This discussion highlights some of the risks which may affect future operating results. These are the risks and uncertainties we 
believe are most important for you to consider. 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. If any of the following risks or uncertainties actually occurs, our business, financial condition and 
operating results would likely suffer. 

We operate in an emerging market, which makes it difficult to evaluate our business and future prospects. 

Robots represent a new and emerging market. Accordingly, our business and future prospects are difficult to evaluate. We 

cannot accurately predict the extent to which demand for consumer robots will increase, if at all. You should consider the 
challenges, risks and uncertainties frequently encountered by companies using new and unproven business models in rapidly 
evolving markets. These challenges include our ability to: 

•   generate sufficient revenue and gross margin to maintain profitability; 

•  

•  

•  

•  

acquire and maintain market share in our consumer and defense markets; 

attract and retain customers of our consumer robots; 

attract and retain additional engineers and other highly-qualified personnel; 

expand our product offerings beyond our existing robots; and 

12 

 
 
•  

adapt to new or changing policies and spending priorities of governments and government agencies. 

If we fail to successfully address these and other challenges, risks and uncertainties, our business, results of operations 

and financial condition would be materially harmed. 

Our financial results often vary significantly from quarter-to-quarter due to a number of factors, which may lead to 

volatility in our stock price. 

Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary significantly 

from quarter-to-quarter in the future. These fluctuations may be due to numerous factors including: 

•  

•  

the size, timing and mix of orders from retail stores and international distributors for our home robots; 

the mix of products that we sell in the period; 

•   disruption of supply of our products from our manufacturers; 

•   disruptions to our supply chain due to inclement weather, labor disruptions or other factors beyond our control; 

•  

seasonality in the sales of our products; 

•   unanticipated costs incurred in the introduction of new products; 

•  

•  

•  

costs and availability of labor and raw materials; 

costs of freight; 

changes in our rate of returns for our consumer products; 

•   our ability to introduce new products and enhancements to our existing products on a timely basis; 

•   warranty costs associated with our consumer products; 

•  

•  

the size and timing of orders from military and other government agencies; 

the amount of government funding and the political, budgetary and purchasing constraints of our government 
agency customers; and 

•  

cancellations, delays or contract amendments by government agency customers. 

We cannot be certain that our revenues will grow at rates that will allow us to maintain profitability during every fiscal 

quarter, or even every fiscal year. We base our current and future expense levels on our internal operating plans and sales 
forecasts, including forecasts of holiday sales for our consumer products. A significant portion of our operating expenses, such 
as research and development expenses, certain marketing and promotional expenses and employee wages and salaries, do not 
vary directly with sales and are difficult to adjust in the short term. As a result, if sales for a quarter are below our expectations, 
we might not be able to reduce operating expenses for that quarter and, therefore, we would not be able to reduce our operating 
expenses for the fiscal year. Accordingly, a sales shortfall during a fiscal quarter, and in particular the fourth quarter of a fiscal 
year, could have a disproportionate effect on our operating results for that quarter or that year. Because of quarterly 
fluctuations, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Moreover, 
our operating results may not meet expectations of equity research analysts or investors. If this occurs, the trading price of our 
common stock could fall substantially either suddenly or over time. 

Global economic conditions and any associated impact on consumer spending could have a material adverse effect on 

our business, results of operations and financial condition. 

Continued economic uncertainty and reductions in consumer spending, particularly in certain international markets such 
as the European Union, China and Japan, may result in reductions in sales of our consumer robots. Additionally, disruptions in 
credit markets may materially limit consumer credit availability and restrict credit availability of our retail customers, which 
would also impact purchases of our consumer robots. Any reduction in sales of our consumer robots, resulting from reductions 
in consumer spending or continued disruption in the availability of credit to retailers or consumers, could materially and 
adversely affect our business, results of operations and financial condition. 

Because we are a global business that in 2015 generated approximately 56% of our total revenue from sales to customers 

outside of the United States, we are subject to a number of additional risks including foreign currency fluctuations. These 
fluctuations may make our products more expensive to our distributors, which in turn may impact sales directly or the ability or 
willingness of our distribution partners to invest in growing product demand. 

13 

 
F
o
r
m
1
0
-
K

The majority of our business currently depends on our consumer robots, and our sales growth and operating results 
would be negatively impacted if we are unable to enhance our current consumer robots or develop new consumer robots at 
competitive prices or in a timely manner, or if the consumer robot market does not achieve broad market acceptance. 

For the years ended January 2, 2016, December 27, 2014 and December 28, 2013, we derived 90.7%, 91.1% and 87.8% 
of our total revenue from our consumer robots, respectively. For the foreseeable future, we expect that a significant portion of 
our revenue will be derived from sales of consumer robots in general and home floor care products in particular. Accordingly, 
our future success depends upon our ability to further penetrate the consumer home care market, to enhance our current 
consumer products and develop and introduce new consumer products offering enhanced performance and functionality at 
competitive prices. The development and application of new technologies involve time, substantial costs and risks. Our 
inability to achieve significant sales of our newly introduced robots, or to enhance, develop and introduce other products in a 
timely manner, or at all, would materially harm our sales growth and operating results. 

Even if consumer robots gain wide market acceptance, our robots may not adequately address market requirements and 

may not continue to gain market acceptance. If robots generally, or our robots specifically, do not gain wide market acceptance, 
we may not be able to achieve our anticipated level of growth, and our revenue and results of operations would suffer. 

We have signed a definitive agreement to divest our defense and security business unit.  If we are unable to consummate 

this transaction, we may be subject to significant reputational, financial, and operational consequences. 

On February 2, 2016, we entered into an Asset Purchase Agreement with iRobot Defense Holdings, Inc., a recently-
formed portfolio company of Arlington Capital Partners, which provides for the sale of our defense and security business unit.  
Consummation of this transaction is subject to the satisfaction of customary closing conditions for transactions of this type.  If 
these closing conditions are not satisfied, Buyer may not be obligated to consummate the purchase of our defense and security 
business unit.  We believe that, if this transaction is not completed, our continued operation of our defense and security business 
unit may be adversely affected as a result of the public disclosure of our intention to divest this business unit, including 
harming relationships with key customers and suppliers and our ability to retain key employees within the defense and security 
business unit.  In addition, if the transaction is not consummated, we may be unable to enter into a similar transaction with 
another party or may be unable to enter into a transaction with financial or other terms as favorable as those provided in the 
asset purchase agreement with the buyer. 

Although we have signed a definitive agreement to divest our defense and security business unit, we currently depend on 
the U.S. federal government for a portion of our revenue, and any unexpected reduction in the amount of business that we 
do with the U.S. federal government would negatively impact our operating results and financial condition. 

For the years ended January 2, 2016, December 27, 2014 and December 28, 2013, we derived 5.1%, 4.3% and 6.2% of 

our total revenue, respectively, directly or indirectly, from the U.S. federal government and its agencies. If we are unable to 
complete the divestiture of our defense and security business unit, further reduction in the amount of revenue that we derive 
from a limited number of U.S. federal government agencies without an offsetting increase in new sales to other customers 
would have a material adverse effect on our operating results. 

Specifically, the defense industry in which we operate is dependent upon the level of equipment expenditures by the 
armed forces of countries throughout the world, and especially those of the United States, which represents a significant portion 
of world-wide defense expenditures.  In prior years, the war on terror increased the level of equipment expenditures by the U.S. 
armed forces; however, this level of spending does not appear to be sustainable in light of current government spending 
priorities. 

If we are unable to complete the divestiture of our defense and security business unit, future sales of our military robots 
will depend largely on our ability to secure contracts with the U.S. military under its robot programs. We expect that there will 
continue to be only a limited number of programs under which U.S. federal government agencies will seek to fund the 
development of, or purchase, robots. Moreover, it is difficult to predict the timing of the award of government contracts and our 
revenue could fluctuate significantly based on the timing of any such awards. 

14 

 
 
 
We depend on single source manufacturers, and our reputation and results of operations would be harmed if these 

manufacturers fail to meet our requirements. 

We currently depend largely on several single source contract manufacturers, for the manufacture of our various families 
of home care and defense products. All contract manufacturers for our home robots are located in China. These manufacturers 
supply substantially all of the raw materials and provide all facilities and labor required to manufacture our products. If these 
companies were to terminate their arrangements with us or fail to provide the required capacity and quality on a timely basis, 
we would be unable to manufacture our products until replacement contract manufacturing services could be obtained or 
volume transferred to an alternative manufacturing partner, each of which is a costly and time-consuming process. We cannot 
assure you that we would be able to establish alternative manufacturing arrangements on acceptable terms or in a timely 
manner. 

Our reliance on these contract manufacturers involves certain risks, including the following: 

•  

•  

•  

•  

•  

lack of direct control over production capacity and delivery schedules; 

lack of direct control over quality assurance, manufacturing yields and production costs; 

lack of enforceable contractual provisions over the production and costs of consumer products; 

risk of loss of inventory while in transit; 

risks associated with international commerce, including unexpected changes in legal and regulatory requirements, 
changes in tariffs and trade policies, risks associated with the protection of intellectual property and political and 
economic instability; and 

•   our attempts to add additional manufacturing resources may be significantly delayed and thereby create disruptions 

in production of our products. 

Any interruption in the manufacture of our products would be likely to result in delays in shipment, lost sales and revenue 

and damage to our reputation in the market, all of which would harm our business and results of operations. In addition, while 
our contract obligations with our contract manufacturers in China are typically denominated in U.S. dollars, changes in 
currency exchange rates could impact our suppliers and increase our prices. 

Any efforts to expand our product offerings beyond our current markets may not succeed, which could negatively impact 

our operating results. 

We have focused historically on selling our robots in the home floor care and defense and security markets. Efforts to 
expand our product offerings beyond the markets that we currently serve, however, may divert management resources from 
existing operations and require us to commit significant financial resources to an unproven business, either of which could 
significantly impair our operating results. Moreover, efforts to expand beyond our existing markets may never result in new 
products that achieve market acceptance, create additional revenue or become profitable. 

If we fail to maintain or increase consumer robot sales through our distribution channels, our operating results would be 

negatively impacted. 

We do not have long-term contracts regarding purchase volumes with any of our retail partners. As a result, purchases 
generally occur on an order-by-order basis, and the relationships, as well as particular orders, can generally be terminated or 
otherwise materially changed at any time by our retail partners. A decision by a major retail partner, whether motivated by 
competitive considerations, financial difficulties, economic conditions or otherwise, to decrease its purchases from us, to 
reduce the shelf space for our products or to change its manner of doing business with us could significantly damage our 
consumer product sales and negatively impact our business, financial condition and results of operations. In addition, during 
recent years, various retailers, including some of our partners, have experienced significant changes and difficulties, including 
consolidation of ownership, increased centralization of purchasing decisions, restructurings, bankruptcies and liquidations. 
These and other financial problems of some of our retailers increase the risk of extending credit to these retailers. A significant 
adverse change in a retail partner relationship with us or in a retail partner’s financial position could cause us to limit or 
discontinue business with that partner, require us to assume more credit risk relating to that partner’s receivables or limit our 
ability to collect amounts related to previous purchases by that partner, all of which could harm our business and financial 
condition. Disruption of the iRobot on-line store could also decrease our home robot sales. 

15 

 
We have recently begun to spend significant amounts on advertising and other marketing campaigns, which may not be 

successful or cost effective. 

We have recently begun to spend significant amounts on advertising and other marketing campaigns, such as television, 
print advertising, and social media, as well as increased promotional activities, to acquire new customers, and we expect our 
marketing expenses to increase in the future as we continue to spend significant amounts to increase awareness of our home 
robot products.  For the years ended January 2, 2016, December 27, 2014 and December 28, 2013, sales and marketing 
expenses were $97.8 million, $86.1 million and $71.5 million, respectively, representing approximately 15.9%, 15.5% and 
14.7% of our revenue, respectively. While we seek to structure our advertising campaigns in the manner that we believe is most 
likely to encourage people to purchase our products, we may fail to identify advertising opportunities that satisfy our 
anticipated return on advertising spend as we scale our investments in marketing or to fully understand or estimate the 
conditions and behaviors that drive customer behavior. If any of our advertising campaigns prove less successful than 
anticipated in attracting customers, we may not be able to recover our advertising spend, and our revenue may fail to meet 
market expectations, either of which could have an adverse effect on our business. There can be no assurance that our 
advertising and other marketing efforts will result in increased sales of our products. 

Our contracts with the U.S. federal government contain certain provisions that may be unfavorable to us and subject us 

to government audits, which could materially harm our business and results of operations. 

Our contracts and subcontracts with the U.S. federal government subject us to certain risks and give the U.S. federal 

government rights and remedies not typically found in commercial contracts, including rights that allow the U.S. federal 
government to: 

F
o
r
m
1
0
-
K

•  

•  

•  

•  

•  

•  

terminate contracts for convenience, in whole or in part, at any time and for any reason; 

reduce or modify contracts or subcontracts if its requirements or budgetary constraints change; 

cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become 
unavailable; 

exercise production priorities, which allow it to require that we accept government purchase orders or produce 
products under its contracts before we produce products under other contracts, which may displace or delay 
production of more profitable orders; 

claim certain rights in products provided by us; and 

control or prohibit the export of certain of our products. 

Several of our prime contracts with the U.S. federal government do not contain a limitation of liability provision, creating 

a risk of responsibility for direct and consequential damages. Several subcontracts with prime contractors hold the prime 
contractor harmless against liability that stems from our work and do not contain a limitation of liability. These provisions 
could cause substantial liability for us, especially given the use to which our products may be put. 

In addition, we are subject to audits by the U.S. federal government as part of routine audits of government contracts. As 
part of an audit, these agencies may review our performance on contracts, cost structures and compliance with applicable laws, 
regulations and standards. If any of our costs are found to be allocated improperly to a specific contract, the costs may not be 
reimbursed and any costs already reimbursed for such contract may have to be refunded. Accordingly, an audit could result in a 
material adjustment to our revenue and results of operations. Moreover, if an audit uncovers improper or illegal activities, we 
may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of 
profits, suspension of payments, fines and suspension or debarment from doing business with the government. 

If any of the foregoing were to occur, or if the U.S. federal government otherwise ceased doing business with us or 
decreased the amount of business with us, our business and operating results could be materially harmed and the value of your 
investment in our common stock could be impaired. 

Some of our contracts with the U.S. federal government allow it to use inventions developed under the contracts and to 

disclose technical data to third parties, which could harm our ability to compete. 

Some of our contracts allow the U.S. federal government rights to use, or have others use, patented inventions developed 

under those contracts on behalf of the government. Some of the contracts allow the federal government to disclose technical 

16 

 
data without constraining the recipient in how that data is used. The ability of third parties to use patents and technical data for 
government purposes creates the possibility that the government could attempt to establish additional sources for the products 
we provide that stem from these contracts. It may also allow the government the ability to negotiate with us to reduce our prices 
for products we provide to it. The potential that the government may release some of the technical data without constraint 
creates the possibility that third parties may be able to use this data to compete with us in the commercial sector. 

We face intense competition from other providers of robots, including diversified technology providers, as well as 

competition from providers offering alternative products, which could negatively impact our results of operations and cause 
our market share to decline. 

We believe that a number of companies have developed or are developing robots that will compete directly with our 

product offerings. Additionally, large and small companies, government-sponsored laboratories and universities are 
aggressively pursuing contracts for robot-focused research and development. Many current and potential competitors have 
substantially greater financial, marketing, research and manufacturing resources than we possess, and there can be no assurance 
that our current and future competitors will not be more successful than us. Moreover, while we believe many of our customers 
purchase our floor vacuuming robots as a supplement to, rather than a replacement for, their traditional vacuum cleaners; we 
also compete in some cases with providers of traditional vacuum cleaners. Our competitors include developers of robot floor 
cleaning products, developers of small unmanned ground vehicles, and established government contractors working on 
unmanned systems. 

The market for robots is highly competitive, rapidly evolving and subject to changing technologies, shifting customer 

needs and expectations and the likely increased introduction of new products. Our ability to remain competitive will depend to 
a great extent upon our ongoing performance in the areas of product development and customer support. 

In the event that the robot market expands further, we expect that competition will intensify as additional competitors 
enter the market and current competitors expand their product lines. Companies competing with us may introduce products that 
are competitively priced, have increased performance or functionality, or incorporate technological advances that we have not 
yet developed or implemented. Increased competitive pressure could result in a loss of sales or market share or cause us to 
lower prices for our products, any of which would harm our business and operating results. 

We cannot assure you that our products will continue to compete favorably or that we will be successful in the face of 
increasing competition from new products and enhancements introduced by existing competitors or new companies entering 
the markets in which we provide products. Our failure to compete successfully could cause our revenue and market share to 
decline, which would negatively impact our results of operations and financial condition. 

If critical components of our products that we currently purchase from a small number of suppliers become unavailable, 

we may incur delays in shipment, which could damage our business. 

We and our outsourced manufacturers obtain hardware components, various subsystems, raw materials and batteries from 

a limited group of suppliers, some of which are sole suppliers. We do not have any long-term agreements with these suppliers 
obligating them to continue to sell components or products to us. If we or our outsourced manufacturers are unable to obtain 
components from third-party suppliers in the quantities and of the quality that we require, on a timely basis and at acceptable 
prices, we may not be able to deliver our products on a timely or cost-effective basis to our customers, which could cause 
customers to terminate their contracts with us, reduce our gross margin and seriously harm our business, results of operations 
and financial condition. Moreover, if any of our suppliers become financially unstable, we may have to find new suppliers. It 
may take several months to locate alternative suppliers, if required, or to re-tool our products to accommodate components 
from different suppliers. We may experience significant delays in manufacturing and shipping our products to customers and 
incur additional development, manufacturing and other costs to establish alternative sources of supply if we lose any of these 
sources. We cannot predict if we will be able to obtain replacement components within the time frames that we require at an 
affordable cost, or at all. 

17 

 
 
F
o
r
m
1
0
-
K

Our products are complex and could have unknown defects or errors, which may give rise to claims against us, diminish 

our brand or divert our resources from other purposes. 

Our robots rely on the interplay among behavior-based artificially intelligent systems, real-world dynamic sensors, user-
friendly interfaces and tightly-integrated, electromechanical designs to accomplish their missions. Despite testing, our new or 
existing products have contained defects and errors and may in the future contain defects, errors or performance problems when 
first introduced, when new versions or enhancements are released, or even after these products have been used by our 
customers for a period of time. These problems could result in expensive and time-consuming design modifications or warranty 
charges, delays in the introduction of new products or enhancements, significant increases in our service and maintenance 
costs, exposure to liability for damages, mandatory or voluntary recall or product upgrades, damaged customer relationships 
and harm to our reputation, any of which could materially harm our results of operations and ability to achieve market 
acceptance. Our quality control procedures relating to the raw materials and components that it receives from third-party 
suppliers as well as our quality control procedures relating to its products after those products are designed, manufactured and 
packaged may not be sufficient. In addition, increased development and warranty costs, including the costs of any mandatory or 
voluntary recall, could be substantial and could reduce our operating margins. Moreover, because military robots are used in 
dangerous situations, the failure or malfunction of any of these robots, including our own, could significantly damage our 
reputation and support for robot solutions in general. The existence of any defects, errors, or failures in our products could also 
lead to product liability claims or lawsuits against us. A successful product liability claim could result in substantial cost, 
diminish our brand and divert management’s attention and resources, which could have a negative impact on our business, 
financial condition and results of operations. 

We collect, store, process, and use customer data, including certain personal and robot-specific information, which 

subjects us to governmental regulation and other legal obligations related to privacy, information security, and data 
protection, and any security breaches or our actual or perceived failure to comply with such legal obligations could harm 
our business. 

Our latest Roomba products, as well as additional products in development, collect, store, process, and use certain 
customer data, which subjects us to governmental regulation and other legal obligations related to privacy, information security, 
and data protection, and any security breaches or our actual or perceived failure to comply with such legal obligations could 
harm our business. We collect, store, process, and use personal information and other user data, and we rely on third parties that 
are not directly under our control to do so as well. If our security measures, some of which are managed by third parties, are 
breached or fail, unauthorized persons may be able to obtain access to or acquire sensitive user data, which may expose us to a 
risk of loss, litigation, or regulatory proceedings. Depending on the nature of the information compromised, in the event of a 
data breach or other unauthorized access to or acquisition of our user data, we may also have obligations to notify users about 
the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the 
individuals affected by the incident. A growing number of legislative and regulatory bodies have adopted consumer notification 
requirements in the event of unauthorized access to or acquisition of certain types of personal data. Such breach notification 
laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could 
cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises user data. 

If we are unable to attract and retain additional skilled personnel, we may be unable to grow our business. 

To execute our growth plan, we must attract and retain additional, highly-qualified personnel. Competition for hiring 
these employees is intense, especially with regard to engineers with high levels of experience in designing, developing and 
integrating robots. Many of the companies with which we compete for hiring experienced employees have greater resources 
than we have. If we fail to attract new technical personnel or fail to retain and motivate our current employees, our business and 
future growth prospects could be severely harmed. 

We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-

consuming and limit our ability to use certain technologies in the future. 

If the size of our markets increases, we would be more likely to be subject to claims that our technologies infringe upon 
the intellectual property or other proprietary rights of third parties. In addition, the vendors from which we license technology 
used in our products could become subject to similar infringement claims. Our vendors, or we, may not be able to withstand 

18 

 
 
third-party infringement claims. Any claims, with or without merit, could be time-consuming and expensive, and could divert 
our management’s attention away from the execution of our business plan. Moreover, any settlement or adverse judgment 
resulting from the claim could require us to pay substantial amounts or obtain a license to continue to use the technology that is 
the subject of the claim, or otherwise restrict or prohibit our use of the technology. There can be no assurance that we would be 
able to obtain a license from the third party asserting the claim on commercially reasonable terms, if at all, that we would be 
able to develop alternative technology on a timely basis, if at all, or that we would be able to obtain a license to use a suitable 
alternative technology to permit us to continue offering, and our customers to continue using, our affected product. In addition, 
we may be required to indemnify our retail and distribution partners for third-party intellectual property infringement claims, 
which would increase the cost to us of an adverse ruling in such a claim. An adverse determination could also prevent us from 
offering our products to others. Infringement claims asserted against us or our vendors may have a material adverse effect on 
our business, results of operations or financial condition. 

If we fail to protect, or incur significant costs in defending, our intellectual property and other proprietary rights, our 

business and results of operations could be materially harmed. 

Our success depends on our ability to protect our intellectual property and other proprietary rights. We rely primarily on 
patents, trademarks, copyrights, trade secrets and unfair competition laws, as well as license agreements and other contractual 
provisions, to protect our intellectual property and other proprietary rights. Significant technology used in our products, 
however, is not the subject of any patent protection, and we may be unable to obtain patent protection on such technology in the 
future. Moreover, existing U.S. legal standards relating to the validity, enforceability and scope of protection of intellectual 
property rights offer only limited protection, may not provide us with any competitive advantages, and may be challenged by 
third parties. In addition, the laws of countries other than the United States in which we market our products may afford little or 
no effective protection of our intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties 
from infringing upon or misappropriating our intellectual property or otherwise gaining access to our technology. Unauthorized 
third parties may try to copy or reverse engineer our products or portions of our products or otherwise obtain and use our 
intellectual property. Some of our contracts with the U.S. federal government allow the federal government to disclose 
technical data regarding the products developed on behalf of the government under the contract without constraining the 
recipient on how it is used. This ability of the government creates the potential that third parties may be able to use this data to 
compete with us in the commercial sector. If we fail to protect our intellectual property and other proprietary rights, our 
business, results of operations or financial condition could be materially harmed. 

In addition, defending our intellectual property rights may entail significant expense. We believe that certain products in 

the marketplace may infringe our existing intellectual property rights. We have, from time to time, resorted to legal proceedings 
to protect our intellectual property and may continue to do so in the future. We may be required to expend significant resources 
to monitor and protect our intellectual property rights. Any of our intellectual property rights may be challenged by others or 
invalidated through administrative processes or litigation. If we resort to legal proceedings to enforce our intellectual property 
rights or to determine the validity and scope of the intellectual property or other proprietary rights of others, the proceedings 
could result in significant expense to us and divert the attention and efforts of our management and technical employees, even 
if we were to prevail. 

If we fail to enhance our brand, our ability to expand our customer base will be impaired and our operating results may 

suffer. 

We believe that developing and maintaining awareness of the iRobot brand is critical to achieving widespread acceptance 

of our existing and future products and is an important element in attracting new customers. Furthermore, we expect the 
importance of global brand recognition to increase as competition develops. If customers do not perceive our products to be of 
high quality, our brand and reputation could be harmed, which could adversely impact our financial results. In addition, brand 
promotion efforts may not yield significant revenue or increased revenue sufficient to offset the additional expenses incurred in 
building our brand. Maintaining, protecting, and enhancing our brand may require us to make substantial investments, and 
these investments may not be successful. If we fail to successfully maintain, promote, and position our brand and protect our 
reputation, or if we incur significant expenses in this effort, our business, financial condition and operating results may be 
adversely affected. 

19 

 
We depend on the experience and expertise of our senior management team and key technical employees, and the loss of 

any key employee may impair our ability to operate effectively. 

Our success depends upon the continued services of our senior management team and key technical employees, such as 

our project management personnel and senior engineers. Moreover, we often must comply with provisions in government 
contracts that require employment of persons with specified levels of education and work experience. Each of our executive 
officers, key technical personnel and other employees could terminate his or her relationship with us at any time. The loss of 
any member of our senior management team might significantly delay or prevent the achievement of our business objectives 
and could materially harm our business and customer relationships. In addition, because of the highly technical nature of our 
robots, the loss of any significant number of our existing engineering and project management personnel could have a material 
adverse effect on our business and operating results. 

We are subject to extensive U.S. federal government regulation, and our failure to comply with applicable regulations 

could subject us to penalties that may restrict our ability to conduct our business. 

As a contractor and subcontractor to the U.S. federal government, we are subject to and must comply with various 
government regulations that impact our operating costs, profit margins and the internal organization and operation of our 
business. Following closing of the sale of our defense and security business unit, we will be subject to certain of these 
regulations only as they pertain to matters related to our operation of the defense and security business unit prior to the sale. 
Among the most significant regulations currently affecting our business are: 

F
o
r
m
1
0
-
K

•  

•  

•  

•  

•  

•  

the Federal Acquisition Regulations and supplemental agency regulations, which comprehensively regulate the 
formation and administration of, and performance under government contracts; 

the Truth in Negotiations Act, which requires certification and disclosure of all cost and pricing data in connection 
with contract negotiations; 

the Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement 
under cost-based government contracts; 

the Foreign Corrupt Practices Act, which prohibits U.S. companies from providing anything of value to a foreign 
official to help obtain, retain or direct business, or obtain any unfair advantage; 

the False Claims Act and the False Statements Act, which, respectively, impose penalties for payments made on the 
basis of false facts provided to the government, and impose penalties on the basis of false statements, even if they 
do not result in a payment; 

laws, regulations and executive orders restricting the use and dissemination of information classified for national 
security purposes and the exportation of certain products and technical data; 

•   Certain contracts from the U.S. federal government may require us to maintain certain certifications including but 

not limited to AS9100 and CMMI; 

•   Contractor Purchasing Systems review (CPSR) requirements, which evaluate the efficiency and effectiveness with 

which we spend U.S. Government funds; and 

•   The sale of our products in countries outside the United States is regulated by the governments of those countries. 

While compliance with such regulation will generally be undertaken by our international distributors, we may assist 
with such compliance and in certain cases may be liable if a distributor fails to comply. 

We must comply with U.S. laws regulating the export of our products. In addition, we are required to obtain a license 

from the U.S. federal government to export our PackBot, Kobra and SUGV lines of defense and security robots. We cannot be 
sure of our ability to obtain any licenses required to export our products or to receive authorization from the U.S. federal 
government for international sales or domestic sales to foreign persons. Moreover, the export regimes and the governing 
policies applicable to our business are subject to change. We cannot assure you of the extent that such export authorizations will 
be available to us, if at all, in the future. In some cases where we act as a subcontractor, we rely upon the compliance activities 
of our prime contractors, and we cannot assure you that they have taken or will take all measures necessary to comply with 
applicable export laws. If we or our prime contractor partners cannot obtain required government approvals under applicable 
regulations in a timely manner or at all, we would be delayed or prevented from selling our products in international 
jurisdictions, which could materially harm our business, operating results and ability to generate revenue. 

20 

 
 
Also, we need special clearances to continue working on and advancing certain of our projects with the U.S. federal 
government. Obtaining and maintaining security clearances for employees involves a lengthy process, and it is difficult to 
identify, recruit and retain employees who already hold security clearances. If our employees are unable to obtain security 
clearances in a timely manner, or at all, or if our employees who hold security clearances are unable to maintain the clearances 
or terminate employment with us, then a customer requiring classified work could terminate the contract or decide not to renew 
it upon its expiration. In addition, we expect that many of the contracts on which we will bid will require us to demonstrate our 
ability to obtain facility security clearances and employ personnel with specified types of security clearances. To the extent we 
are not able to obtain facility security clearances or engage employees with the required security clearances for a particular 
contract, we may not be able to bid on or win new contracts, or effectively rebid on expiring contracts. Classified programs 
generally will require that we comply with various Executive Orders, federal laws and regulations and customer security 
requirements that may include restrictions on how we develop, store, protect and share information, and may require our 
employees to obtain government clearances. 

Our failure to comply with applicable regulations, rules and approvals could result in the imposition of penalties, the loss 

of our government contracts or our suspension or debarment from contracting with the federal government generally, any of 
which would harm our business, financial condition and results of operations. 

Acquisitions and potential future acquisitions could be difficult to integrate, divert the attention of key personnel, disrupt 

our business, dilute stockholder value and impair our financial results. 

As part of our business strategy, we have in the past acquired, and we intend to continue to consider additional 
acquisitions of companies, technologies and products that we believe could accelerate our ability to compete in our core 
markets or allow us to enter new markets. Acquisitions and combinations are accompanied by a number of risks, including the 
difficulty of integrating the operations and personnel of the acquired companies, the potential disruption of our ongoing 
business, the potential distraction of management, expenses related to the acquisition and potential unknown liabilities 
associated with acquired businesses. Any inability to integrate completed acquisitions or combinations in an efficient and 
timely manner could have an adverse impact on our results of operations. In addition, we may not be able to recognize any 
expected synergies or benefits in connection with a future acquisition or combination. If we are not successful in completing 
acquisitions or combinations that we may pursue in the future, we may incur substantial expenses and devote significant 
management time and resources without a successful result. In addition, future acquisitions could require use of substantial 
portions of our available cash or result in dilutive issuances of securities. 

In addition, charges to earnings as a result of acquisitions may adversely affect our operating results in the foreseeable 

future, which could have a material and adverse effect on the market value of our common stock.  In particular we have 
allocated the cost of acquiring businesses to the individual assets acquired and liabilities assumed, including various 
identifiable intangible assets such as acquired technology, acquired trade names and acquired customer relationships based on 
their respective fair values. Our estimates of fair value are based upon assumptions believed to be reasonable, but which are 
inherently uncertain. After we complete an acquisition, the following factors could result in material charges and adversely 
affect our operating results and may adversely affect our cash flows: 

•  

•  

•  

•  

•  

•  

•  

•  

costs incurred to combine the operations of businesses we acquire, such as transitional employee expenses and 
employee retention, redeployment or relocation expenses; 

impairment of goodwill or intangible assets; 

amortization of intangible assets acquired; 

a reduction in the useful lives of intangible assets acquired; 

identification of or changes to assumed contingent liabilities, both income tax and non-income tax related after our 
final determination of the amounts for these contingencies or the conclusion of the measurement period (generally 
up to one year from the acquisition date), whichever comes first; 

charges to our operating results to eliminate certain duplicative pre-merger activities, to restructure our operations or 
to reduce our cost structure; 

charges to our operating results resulting from expenses incurred to effect the acquisition; and 

charges to our operating results due to the expensing of certain stock awards assumed in an acquisition. 

21 

 
 
F
o
r
m
1
0
-
K

We may not be able to obtain capital when desired on favorable terms, if at all, or without dilution to our stockholders. 

We anticipate that our current cash, cash equivalents, cash provided by operating activities and funds available through 
our working capital line of credit, will be sufficient to meet our current and anticipated needs for general corporate purposes. 
We operate in an emerging market, however, which makes our prospects difficult to evaluate. It is possible that we may not 
generate sufficient cash flow from operations or otherwise have the capital resources to meet our future capital needs. In such 
cases we may need additional financing to execute on our current or future business strategies. If we raise additional funds 
through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be 
significantly diluted, and these newly-issued securities may have rights, preferences or privileges senior to those of existing 
stockholders. We cannot assure you that additional financing will be available on terms favorable to us, or at all. If adequate 
funds are not available or are not available on acceptable terms, if and when needed, our ability to fund our operations, take 
advantage of unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures 
would be significantly limited. In addition, our access to credit through our working capital line of credit may be limited by the 
restrictive financial covenants contained in that agreement, which require us to maintain profitability. 

Cybersecurity risks could adversely affect our business and disrupt our operations. 

The threats to network and data security are increasingly diverse and sophisticated. Despite our efforts and processes to 

prevent breaches, our devices, as well as our servers, computer systems, and those of third parties that we use in our operations 
are vulnerable to cybersecurity risks, including cyber attacks such as viruses and worms, phishing attacks, denial-of-service 
attacks, and similar disruptions from unauthorized tampering with our servers and computer systems or those of third parties 
that we use in our operations, which could lead to interruptions, delays, loss of critical data, and loss of consumer confidence. 
In addition, we may be the target of email scams that attempt to acquire sensitive information or company assets. Despite our 
efforts to create security barriers to such threats, we may not be able to entirely mitigate these risks. Any cyber attack that 
attempts to obtain our data and assets, disrupt our service, or otherwise access our systems, or those of third parties we use, if 
successful, could adversely affect our business, operating results, and financial condition, be expensive to remedy, and damage 
our reputation. 

If we suffer data breaches involving the designs, schematics or source code for our products, our brand, business and 

financial results could be adversely affected. 

We attempt to securely store our designs, schematics and source code for our products as they are created. A breach, 
whether physical, electronic or otherwise, of the systems on which this sensitive data is stored could lead to damage or piracy 
of our products. If we or our partners are subject to data security breaches, we may have a loss in sales or increased costs 
arising from the restoration or implementation of additional security measures, either of which could materially and adversely 
affect our brand, business and financial results. 

Environmental laws and regulations and unforeseen costs could negatively impact our future earnings. 

The manufacture and sale of our products in certain states and countries may subject us to environmental and other 
regulations. We also face increasing complexity in our product design as we adjust to legal and regulatory requirements relating 
to our products. There is no assurance that such existing laws or future laws will not impair future earnings or results of 
operations. 

Business disruptions resulting from international uncertainties could negatively impact our profitability. 

We derive, and expect to continue to derive, a significant portion of our revenue from international sales in various 
European and Far East markets, and Canada. For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 
2013, sales to non-U.S. customers accounted for 56.0%, 60.9% and 59.5% of total revenue, respectively. Our international 
revenue and operations are subject to a number of material risks, including, but not limited to: 

•   difficulties in staffing, managing and supporting operations in multiple countries; 

•   difficulties in enforcing agreements and collecting receivables through foreign legal systems and other relevant legal 

issues; 

•  

•  

fewer legal protections for intellectual property; 

foreign and U.S. taxation issues, tariffs, and international trade barriers; 

22 

 
 
•   difficulties in obtaining any necessary governmental authorizations for the export of our products to certain foreign 

jurisdictions; 

•   potential fluctuations in foreign economies; 

•   government currency control and restrictions on repatriation of earnings; 

•  

fluctuations in the value of foreign currencies and interest rates; 

•   general economic and political conditions in the markets in which we operate; 

•   domestic and international economic or political changes, hostilities and other disruptions in regions where we 

currently operate or may operate in the future; 

•  

changes in foreign currency exchange rates; 

•   different and changing legal and regulatory requirements in the jurisdictions in which we currently operate or may 

operate in the future; and 

•   outside of the United States, we primarily rely on a network of exclusive distributors, some of whom may be 

operating without written contracts. 

Negative developments in any of these areas in one or more countries could result in a reduction in demand for our 

products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in collecting 
receivables, and a higher cost of doing business, any of which could negatively impact our business, financial condition or 
results of operations. Moreover, our sales, including sales to customers outside the United States, are primarily denominated in 
U.S. dollars, and downward fluctuations in the value of foreign currencies relative to the U.S. dollar may make our products 
more expensive than other products, which could harm our business. 

If we experience a disaster or other business continuity problem, we may not be able to recover successfully, which could 

cause material financial loss, loss of human capital, regulatory actions, reputational harm, or legal liability. 

If we experience a local or regional disaster or other business continuity problem, such as an earthquake, terrorist attack, 

pandemic or other natural or man-made disaster, our continued success will depend, in part, on the availability of our personnel, 
our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations. 
As we grow our operations in new geographic regions, the potential for particular types of natural or man-made disasters, 
political, economic or infrastructure instabilities, or other country- or region-specific business continuity risks increases. 

The effects of new regulations relating to conflict minerals may adversely affect our business. 

On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted 
new requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or 
not these products are manufactured by third parties. These requirements require companies to research, disclose and report 
whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. We have to research 
whether such minerals are used in the manufacture of our products.  However, the implementation of these requirements could 
adversely affect the sourcing, availability and pricing of such minerals if they are found to be used in the manufacture of our 
products. In addition, we continue to incur additional costs to comply with the disclosure requirements, including costs related 
to determining the source of any of the relevant minerals and metals used in our products. Since our supply chain is complex, 
we may not be able to sufficiently verify the origins for these minerals and metals used in our products through the due 
diligence procedures that we implement, which may harm our reputation. In such event, we may also face difficulties in 
satisfying customers who require that all of the components of our products are certified as conflict mineral free. 

 Our income tax provision and other tax liabilities may be insufficient if taxing authorities are successful in asserting 
tax positions that are contrary to our position. Additionally, there is no guarantee that we will realize our deferred tax assets. 

From time to time, we are audited by various federal, state, local and foreign authorities regarding income tax matters. 

Significant judgment is required to determine our provision for income taxes and our liabilities for federal, state, local and 
foreign taxes. Although we believe our approach to determining the appropriate tax treatment is supportable and in accordance 
with relevant authoritative guidance it is possible that the final tax authority will take a tax position that is materially different 
than that which is reflected in our income tax provision. Such differences could have a material adverse effect on our income 

23 

 
tax provision or benefit, in the reporting period in which such determination is made and, consequently, on our results of 
operations, financial position and/or cash flows for such period. 

The realization of our deferred tax assets ultimately depends on the existence of sufficient income in either the carryback 

or carryforward periods under the tax law. Due to significant estimates utilized in establishing a valuation allowance and the 
potential for changes in facts and circumstances, it is possible that we will be required to record additional valuation allowance 
in future reporting periods. Our results of operations would be impacted negatively if we determine that additional deferred tax 
asset valuation allowance is required in a future reporting period. 

Our business could be negatively affected as a result of activist investors. 

In the event that any activist investor makes proposals concerning our operations, governance or other matters, or seeks to 

change our board of directors, our review and consideration of such proposals may be a significant distraction for our 
management and employees, and could require the expenditure of significant time and resources by us. We have received 
significant attention from an activist investor, Red Mountain Capital Partners, or RMCP, since April 2015.  On February 18, 
2016, RMCP delivered notice to us that it plans to nominate two director candidates for election to our board of directors at our 
2016 annual meeting of stockholders.  As a result of this potential proxy contest, our business could be adversely affected, 
including incurring significant costs, diverting the attention of our management and employees, and making it more difficult to 
attract and retain qualified personnel and business partners. 

Provisions in our certificate of incorporation and by-laws or Delaware law might discourage, delay or prevent a change 

of control of our company or changes in our management and, therefore, depress the trading price of our common stock. 

Provisions of our certificate of incorporation and by-laws and Delaware law may discourage, delay or prevent a merger, 

acquisition or other change in control that stockholders may consider favorable, including transactions in which you might 
otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by 
our stockholders to replace or remove our management. These provisions include: 

F
o
r
m
1
0
-
K

•  

•  

•  

•  

•  

•  

limitations on the removal of directors; 

a classified board of directors so that not all members of our board are elected at one time; 

advance notice requirements for stockholder proposals and nominations; 

the inability of stockholders to act by written consent or to call special meetings; 

the ability of our board of directors to make, alter or repeal our by-laws; and 

the ability of our board of directors to designate the terms of and issue new series of preferred stock without 
stockholder approval. 

The affirmative vote of the holders of at least 75% of our shares of capital stock entitled to vote is necessary to amend or 

repeal the above provisions of our certificate of incorporation. In addition, absent approval of our board of directors, our by-
laws may only be amended or repealed by the affirmative vote of the holders of at least 75% of our shares of capital stock 
entitled to vote. 

In addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from 
engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, 
or within the last three years has owned, 15% of our voting stock, for a period of three years after the date of the transaction in 
which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. 

The existence of the foregoing provisions and anti-takeover measures could limit the price that investors might be willing 
to pay in the future for shares of our common stock. They could also deter potential acquirers of our company, thereby reducing 
the likelihood that you could receive a premium for your common stock in an acquisition. 

ITEM 1B. 

UNRESOLVED STAFF COMMENTS 

None. 

24 

 
 
 
ITEM 2. 

PROPERTIES 

Our corporate headquarters are located in Bedford, Massachusetts, where we lease approximately 203,000 square feet. 

This lease expires on May 1, 2020.  We lease smaller facilities in Hong Kong; Guangzhou, China; London, England; and 
Pasadena, California. We do not own any real property. We believe that our leased facilities and additional or alternative space 
available to us will be adequate to meet our needs for the foreseeable future. 

ITEM 3. 

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 4. 

MINE SAFETY DISCLOSURES 

Not Applicable. 

25 

 
 
 
PART II 

ITEM 5. 

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND 
ISSUER PURCHASES OF EQUITY SECURITIES 

Our common stock is listed on the NASDAQ Global Market under the symbol “IRBT”. The following table sets forth, 
for the periods indicated, the high and low sales prices per share for our common stock as reported on the NASDAQ Global 
Market. 

Fiscal 2014: 
First quarter 
Second quarter 
Third quarter 
Fourth quarter 

Fiscal 2015: 
First quarter 
Second quarter 
Third quarter 
Fourth quarter 

High 

Low 

$ 
$ 
$ 
$ 

$ 
$ 
$ 
$ 

48.36  $
44.43  $
42.00  $
38.10  $

35.27  $
34.93  $
33.27  $
37.71  $

32.93
30.11
30.24
29.73

28.05
31.61
27.55
28.27

F
o
r
m
1
0
-
K

As of February 16, 2016, there were approximately 28,992,738 shares of our common stock outstanding held by 

approximately 125 stockholders of record and the last reported sale price of our common stock on the NASDAQ Global Market 
on February 16, 2016 was $30.72 per share. 

Issuer Purchases of Equity Securities 

The following is a summary of our repurchases of our common stock during the three months ended January 2, 2016: 

Period 

Fiscal month beginning September 27, 
2015 and ended October 24, 2015 
Fiscal month beginning October 25, 2015 
and ended November 21, 2015 
Fiscal month beginning November 22, 
2015 and ended January 2, 2016 
Total 

 __________________________ 

(a) Total number 
of Shares 
Purchased (1) 

(b) Average Price 
Paid per Share 

(c) Total Number of 
Shares Purchased as Part 
of Publicly Announced 
Plans or Programs (2)

(d) Approximate Dollar 
Value of Shares that May 
Yet Be Purchased Under 
the Plans or Programs

228,186 $

28.87

228,186

$ 

23,100,000

—

169,344

397,530 $

—

32.94

30.61

—

23,100,000

169,344
397,530  $ 

17,500,000

17,500,000

(1)  Consists of shares of our common stock. All repurchases were made in open market transactions and pursuant to our 

previously-announced stock repurchase program. 

(2)  On March 19, 2015, we announced the adoption of our stock repurchase program, which provided that we may 

purchase up to $50 million of our common stock from May 1, 2015 to April 30, 2016.  

Dividend Policy 

We have never declared or paid any cash dividends on our capital stock. We currently expect to retain future earnings, if 

any, to finance the growth and development of our business and we do not anticipate paying any cash dividends in the 
foreseeable future. 

26 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ITEM 6. 

SELECTED FINANCIAL DATA 

The selected historical financial data set forth below as of January 2, 2016 and December 27, 2014 and for the years 

ended January 2, 2016, December 27, 2014 and December 28, 2013 are derived from financial statements, which have been 
audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm. Consolidated balance sheets as of 
January 2, 2016 and December 27, 2014 and the related consolidated statements of income and of cash flows for each of the 
three years in the period ended January 2, 2016 and notes thereto appear elsewhere in this Annual Report on Form 10-K. The 
selected historical financial data as of December 28, 2013, December 29, 2012 and December 31, 2011 and for the years ended 
December 29, 2012 and December 31, 2011 are derived from our financial statements, which have been audited by 
PricewaterhouseCoopers LLP and which are not included elsewhere in this Annual Report. 

In fiscal year 2012, we initiated a reorganization that resulted in, among other things, the centralization of all of our 

engineering and operations activities. This reorganization was completed at the beginning of fiscal year 2013. In conjunction 
with this reorganization, we reviewed the financial statement classification of our costs and expenses. As a result of this review, 
we decided to classify certain expenses differently than had been classified and presented in prior periods to provide a more 
clear understanding of our financial performance. Because the classification of certain expenses on the income statement 
changed in fiscal year 2013 as compared to prior periods, we recast the financial results of prior periods in a manner consistent 
with the fiscal year 2015, 2014 and 2013 presentation for comparability purposes.  The following selected consolidated 
financial data reflects the reclassified amounts for the years ended December 29, 2012 and December 31, 2011. 

The following selected consolidated financial data should be read in conjunction with our consolidated financial 
statements, the related notes and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" 
included elsewhere in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results to be 
expected for any future period. 

Year Ended 

January 2, 
 2016

December 27, 
2014

December 28, 
2013
(In thousands, except earnings per share amounts) 

December 29, 
 2012 

Consolidated Statements of Income: 
Revenue 
Cost of revenue 

Gross margin 
Operating expenses 

Research and development 
Selling and marketing 
General and administrative 

Total operating expenses 

Operating income 
Net income 

Net income per common share basic 

Diluted 

Shares used in per common share 
calculations 

Basic 
Diluted 

$ 

616,778 $
327,852

556,846 $
298,791

487,401 $ 
266,247

288,926

258,055

221,154

76,071
97,772
54,465

228,308
60,618
44,130 $

1.49 $
1.47 $

69,408
86,091
49,439

204,938
53,117
37,803 $

1.28 $
1.25 $

63,649
71,529
53,358

188,536
32,618
27,641 $ 

0.97 $ 
0.94 $ 

$ 

$ 
$ 

436,244  $
241,896 
194,348 

57,066 
66,412 
45,698 
169,176 
25,172 
17,297  $
0.63  $
0.61  $

29,550
30,107

29,485
30,210

28,495
29,354

27,577 
28,301 

27 

December 31, 
2011

465,500
257,847

207,653

60,100
50,477
43,753

154,330
53,323
40,191

1.50
1.44

26,712
27,924

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated Balance Sheet Data: 
Cash and cash equivalents 
Short term investments 
Total assets 
Total liabilities 
Total stockholders’ equity 

January 2, 
2016

December 27, 
2014

December 28, 
2013
(In thousands) 

December 29, 
 2012 

December 31, 
2011

$ 

179,915 $
33,124
521,743
104,332
417,411

185,957 $
36,166
493,213
102,777
390,436

165,404 $ 
21,954
416,337
85,648
330,689

126,770  $
12,430 
354,313 
78,496 
275,817 

166,308
17,811
332,213
89,255
242,958

ITEM  7. 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF 
OPERATIONS 

F
o
r
m
1
0
-
K

The information contained in this section has been derived from our consolidated financial statements and should be read 
together with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. 
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act 
of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, or the Exchange Act, and are 
subject to the “safe harbor” created by those sections. In particular, statements contained in this Annual Report on Form 10-K 
that are not historical facts, including, but not limited to statements concerning new product sales, product development and 
offerings, Roomba, Scooba, Looj, Braava and Mirra products, PackBot tactical military robots, the Small Unmanned Ground 
Vehicle, FirstLook, Kobra, Ava, our home robots, defense and security robots and remote presence robots business units, 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 defense and security 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. We urge you to consider the risks and uncertainties discussed in greater detail under 
the heading “Risk Factors” in evaluating our forward-looking statements. We have no plans to update our forward-looking 
statements to reflect events or circumstances after the date of this report. 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 empower people to do more. For 25 years, we have developed proprietary 
technology incorporating advanced concepts in navigation, mobility, manipulation and artificial intelligence to build industry-
leading robots. Our home robots perform time-consuming domestic chores while our defense and security robots perform tasks 
such as battlefield reconnaissance and bomb disposal, and multi-purpose tasks for law enforcement agencies and first 
responders, as well as certain commercial users. We sell our robots through a variety of distribution channels, including chain 
stores and other national retailers, through our on-line store, through value-added distributors and resellers, and to the 
U.S. military and other government agencies worldwide. 

During 2015, we took several steps to become more focused on our well-established home robots business unit to 
capitalize on the substantial opportunities available to us within consumer markets.  First, we entered into an Asset Purchase 
Agreement on February 2, 2016 with iRobot Defense Holdings, Inc., a recently-formed portfolio company of Arlington Capital 
Partners, which provides for the sale of our defense and security business unit. The purchase price is up to $45.0 million, of 
which $30.0 million will be paid at the closing of the transaction, subject to adjustments for working capital and indebtedness 
as set forth in the purchase agreement, and up to an additional $15.0 million of which may be paid based on 2016 revenue of 
the defense and security business unit. The transaction is expected to close during the first quarter of 2016.  Second, we 

28 

 
 
 
 
 
 
 
 
 
 
reallocated research and development resources from a next generation remote presence platform to opportunities in our home 
robots business unit.  These actions were taken to solidify our position as the leader in diversified home robots and to focus on 
key technologies, with an emphasis on software, that allow our robots to understand the homes in which they operate. It is our 
intent to continue investing in these critical technologies and the economic opportunities they unlock. 

As of January 2, 2016, we had 622 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 positions us 
to capitalize on the expected growth in the market for robot-based products. 

Although we have successfully launched consumer and defense and security 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 market competition, and our ability to successfully develop and introduce products and product enhancements into 
both new and existing markets. 

During 2015, we launched our first connected robot, Roomba 980. Roomba 980 has navigating and mapping capabilities 
using vSLAM technology that we acquired as part of our acquisition of Evolution Robotics. Roomba 980 was available on our 
website, in select retail locations in the U.S. and in Japan, as well as several European markets during fiscal 2015. Roomba 980 
will be available in additional domestic and international locations in fiscal 2016. 

Our total revenue for 2015 was $616.8 million, which represents an 11% increase from 2014 revenue of $556.8 million.   
This increase in revenue was largely attributable to a $52.2 million increase in revenue in our home robots business as a direct 
result of growth in our domestic market. Domestic growth was primarily attributable to increased sales as a result of significant 
media investments as well as the launch of Roomba 980. International home robots revenue growth slowed compared to fiscal 
2014 as a result of negative macroeconomic conditions, specifically in Japan and Russia, offset by a significant growth increase 
in China. Revenue increased $9.5 million in our defense and security business as compared to 2014, primarily attributable to 
increased sales of our SUGV robot. During 2015, we recorded a net benefit to revenue and income before income taxes of $6.9 
million related to adjustments to our product returns reserves compared to a net benefit to revenue and income before income 
taxes of $4.3 million and $5.7 million during fiscal 2014.  The adjustments recorded in each of these periods resulted from 
lower product returns experience as compared to estimates used to establish reserves in prior periods, resulting from continued 
improvements in product quality, especially in our most recently released products. Our home robots revenue represented 91% 
of our total revenue for both 2015 and 2014.  With the expected divestiture of our defense and security business, our revenue 
for the next few years will be driven by our rapidly growing home robots business. 

Our total revenue for 2014 was $556.8 million, which represents a 14% increase from 2013 revenue of $487.4 million.  
This increase in revenue was largely attributable to a $79.6 million increase in revenue in our home robots business as a direct 
result of growth in both domestic and international markets, which was primarily driven by expanded distribution of our 
Roomba 800 series robot worldwide, growth in China and the replacement of the Roomba 500 series robot with the higher-
priced Roomba 600 series in club stores.  The increase in home robots revenue was partially offset by a decrease in revenue of 
$4.5 million in our defense and security business related to continued budget reductions within the U.S. government in 2014.  
We began selling our remote presence robots into the healthcare market and the enterprise market in 2013 and 2014, 
respectively.  However, these sales did not generate meaningful revenue in 2014 or 2013. Our home robots revenue represented 
91% of our total 2014 revenue compared to 88% in 2013. 

Revenue 

We currently derive revenue from product sales and, to a lesser extent, government and commercial research and 
development contracts. Product revenue is derived from the sale of our various home cleaning robots and defense and security 
robots and related spares and accessories. Research and development revenue is derived from the execution of contracts 
awarded by the U.S. federal government, other governments and a small number of other partners. 

29 

 
F
o
r
m
1
0
-
K

We currently derive a majority of our product revenue from the sale of our home cleaning robots, and to a lesser extent, 
our PackBot, FirstLook, SUGV and Kobra defense and security robots, and product life cycle revenue related to these robots. 
For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, product revenues accounted for 
99.8%, 99.2% and 98.0% of total revenue, respectively.  For the fiscal years ended January 2, 2016, December 27, 2014 and 
December 28, 2013, our funded research and development contracts accounted for approximately 0.2%, 0.8% and 2.0% of our 
total revenue, respectively.  

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, approximately 76.6%, 75.7% 
and 75.3%, respectively, of our home robot product revenue resulted from sales to 15 customers, which were comprised of both 
domestic retailers and international distributors. Direct-to-consumer revenue generated through our domestic and international 
on-line stores accounted for 6.1%, 6.1% and 5.9% of our home robot product revenue for the fiscal years ended January 2, 
2016, December 27, 2014 and December 28, 2013, respectively.  We typically sell our recently launched products direct on-
line, and then subsequently offer these products through other channels of distribution.   

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, sales to non-U.S. customers 

accounted for 56.0%, 60.9% and 59.5% of total revenue, respectively. 

Our revenue from product sales is generated through sales to our retail distribution channels, our distributor network and 
to certain U.S. and foreign governments. We recognize 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.  During 2015, we recorded a net benefit to revenue and income 
before income taxes of $6.9 million related to adjustments to our product returns reserves compared to a net benefit to revenue 
and income before income taxes of $4.3 million and $5.7 million during fiscal 2014. The net adjustments recorded in 2015 and 
2014 resulted from lower product returns experience as compared to estimates used to establish reserves in prior periods. 

Revenue from our defense and security business unit is occasionally influenced by the September 30 fiscal year-end of 

the U.S. federal government. In addition, our revenue can be affected by the timing of the release of new products and the size 
and timing of contract awards from defense and other government agencies. Historically, revenue from consumer product sales 
has been significantly seasonal, with a majority of our consumer product revenue generated in the second half of the year (in 
advance of the holiday season).  A significant portion of our revenue was recorded in the second half of 2014 and 2015 and we 
expect this trend to continue into 2016. 

Cost of Revenue 

Cost of revenue includes the cost of raw materials and labor that go into the development and manufacture of our 
products as well as manufacturing overhead costs such as manufacturing engineering, quality assurance, logistics, warranty, 
third-party consulting, travel and associated direct material costs.  Additionally, we include overhead expenses such as indirect 
engineering labor, occupancy costs associated with the project resources, engineering tools and supplies and program 
management expenses.  For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, total cost of 
revenue was 53.2%, 53.7% and 54.6% of total revenue, respectively.  Raw material costs, which are our most significant cost 
items, can fluctuate materially on a periodic basis, although many components have been historically stable. Additionally, unit 
costs can vary significantly depending on the mix of products sold. There can be no assurance that our costs of raw materials 
will not increase. Labor costs also comprise a significant portion of our cost of revenue. We outsource the manufacture of our 
home robots to contract manufacturers in China.  While labor costs in China traditionally have been favorable compared to 
labor costs elsewhere in the world, including the United States, they have recently been increasing. In addition, fluctuations in 
currency exchange rates could increase the cost of labor. Consequently, the labor costs for our home robots could increase in 
the future. 

Gross Margin 

Our gross margin as a percentage of revenue varies according to the mix of product and contract revenue, the mix of 
products sold, total sales volume, the level of defective product returns, and levels of other product costs such as warranty, 
scrap, re-work and manufacturing overhead. For the years ended January 2, 2016, December 27, 2014 and December 28, 2013, 
gross margin was 46.8%, 46.3% and 45.4% of total revenue, respectively.   

30 

 
 
 
Research and Development Expenses 

Research and development expenses consist primarily of: 

•  

•  

•  

salaries and related costs for our engineers; 

costs for high technology components used in product and prototype development; 

costs of test equipment used during product development; and 

•   occupancy and other overhead costs. 

We have significantly expanded our research and development capabilities and expect to continue to expand these 
capabilities in the future. We are committed to consistently maintaining the level of innovative design and development of new 
products as we strive to enhance our ability to serve our existing consumer markets as well as new markets for robots.  We 
anticipate that research and development expenses will increase in absolute dollars but remain relatively consistent as a 
percentage of revenue in the foreseeable future. 

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, research and development 

expense was $76.1 million, $69.4 million and $63.6 million, or 12.3%, 12.5% and 13.1% of total revenue, respectively. 

Selling, Marketing, General and Administrative Expenses 

Our selling, marketing, general and administrative expenses consist primarily of: 

•  

•  

•  

•  

salaries and related costs for sales and marketing personnel; 

salaries and related costs for executives and administrative personnel; 

advertising, marketing and other brand-building costs; 

customer service costs; 

•   professional services costs; 

•  

•  

information systems and infrastructure costs; 

travel and related costs; and 

•   occupancy and other overhead costs. 

We anticipate that in 2016, selling, marketing, general and administrative expenses will increase in absolute dollars and 

as a percentage of revenue and will, for the foreseeable future thereafter, continue to increase in absolute dollars but remain 
relatively consistent, or decrease slightly, as a percentage of revenue, as we continue to build the iRobot brand. 

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013 selling, marketing, general and 
administrative expense was $152.2 million, $135.5 million and $124.9 million, or 24.7%, 24.3% and 25.6% of total revenue, 
respectively. 

Fiscal Periods 

We operate and report using a 52-53 week fiscal year ending on the Saturday closest to December 31. Accordingly, our 

fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each quarter. 

Critical Accounting Policies and Estimates 

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the 

United States of America. The preparation of these consolidated financial statements requires us to make estimates and 
assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. We 
evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. 

We believe that of our significant accounting policies, which are described in the notes to our consolidated financial 

statements, the following accounting policies involve a greater degree of judgment and complexity. Accordingly, we believe 
that the following accounting policies are the most critical to aid in fully understanding and evaluating our consolidated 
financial condition and results of operations. 

31 

 
 
 
F
o
r
m
1
0
-
K

Revenue Recognition 

We derive our revenue from product sales and, to a lesser extent, government and commercial research and development 

contracts. We sell products directly to customers and indirectly through resellers and distributors. We recognize 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. 

Beginning in the third quarter of 2015, with the introduction of our first connected robot, each sale of a connected robot 

represents a multi-element arrangement containing the robot, an app and potential future unspecified software upgrades. 
Revenue is allocated to the deliverables based on their relative selling prices which have been determined using best estimate of 
selling price (BESP), as we have not been able to establish vendor specific objective evidence (VSOE) or obtain relevant third 
party evidence (TPE). Revenue allocated to the app and unspecified software upgrades is then deferred and recognized on a 
straight-line basis over the period in which we expect to provide the upgrades over the estimated life of the robot. 

Sales to domestic and Canadian resellers of home robots are typically subject to agreements allowing for limited rights of 
return, rebates and price protection. We also provide limited rights of returns for direct-to-consumer sales generated through our 
on-line stores. Accordingly, we reduce revenue for our estimates of liabilities for these rights of return, rebates and price 
protection at the time the related sale is recorded. These estimates for rights of return are directly based on specific terms and 
conditions included in the reseller agreements, historical returns experience and various other assumptions that we believe are 
reasonable under the circumstances. In the case of new product introductions, the estimates for returns applied to the new 
products are based upon the estimates for the most similar predecessor products until such time that we have enough actual 
returns experience for the new products, which is typically two holiday returns cycles. At that time, we incorporate that data 
into the development of returns estimates for the new products.  We update our analysis of returns on a quarterly basis.  If 
actual returns differ significantly from our estimates, or if modifications to individual reseller agreements are entered into that 
impact their rights of returns, such differences could result in an adjustment to previously established reserves and could have a 
material impact, either favorably or unfavorably, on our results of operations for the period in which the actual returns become 
known or the reseller agreement is modified. Our 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 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, we recognize 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 we submit to the Defense Contract 
Management Agency (DCMA). We submit on an annual basis final indirect billing rates to DCMA based upon actual costs 
incurred throughout the year.  In the situation where our final actual billing rates are greater than the estimated rates currently in 
effect, we record 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 January 2, 2016, fiscal years 2012 through 2015 are open for audit by DCAA.  In the situation where our 
anticipated actual billing rates will be lower than the provisional rates currently in effect, we record 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. 

32 

 
Accounting for Stock-Based Awards 

We recognized $3.4 million of stock-based compensation expense during the fiscal year ended January 2, 2016 for stock 

options. The unamortized fair value as of January 2, 2016 associated with these grants was $6.4 million with a weighted-
average remaining recognition period of 2.83 years. 

The risk-free interest rate is derived from the average U.S. Treasury constant maturity rate, which approximates the rate 
in effect at the time of grant, commensurate with the expected life of the instrument. The dividend yield is zero based upon the 
fact that we have never paid and have no present intention to pay cash dividends.  We utilize company-specific historical data 
for purposes of establishing expected volatility and expected term. 

Based upon the above assumptions, the weighted average fair value of each stock option granted for the fiscal year ended 

January 2, 2016 was $13.21. 

During the fiscal year ended January 2, 2016, we recognized $10.7 million of stock-based compensation associated with 

restricted stock units. Unamortized expense associated with restricted stock units at January 2, 2016, was $24.3 million. 

We have assumed a forfeiture rate for all stock options and restricted stock-based units based on our historical data. In the 
future, we will record incremental stock-based compensation expense if the actual forfeiture rates are lower than estimated and 
will record a recovery of prior stock-based compensation expense if the actual forfeitures are higher than estimated. 

Accounting for stock-based awards requires significant judgment and the use of estimates, particularly surrounding 

assumptions such as stock price volatility and expected option lives to value equity-based compensation. 

Accounting for Income Taxes 

We are subject to taxation in the United States and various states and foreign jurisdictions. The statute of limitations for 

examinations by the Internal Revenue Service is closed for fiscal years prior to 2012. The statute of limitations for 
examinations by state tax authorities is closed for fiscal years prior to 2011. Federal carryforward attributes that were generated 
prior to fiscal year 2012 and state carryforward attributes that were generated prior to fiscal year 2011 may still be adjusted 
upon examination by the federal 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. 

We monitor the realization of our deferred tax assets based on changes in circumstances, for example, recurring periods 

of income for tax purposes following historical periods of cumulative losses, generation of tax credits compared to future 
utilization of credits, or changes in tax laws or regulations. Our income tax provision and our assessment of the ability to 
realize our deferred tax assets involve significant judgments and estimates.  We are currently generating state research credits 
that exceed the amount being utilized.  As a result of this trend, a valuation allowance may be needed in the future related to 
these state tax credits. 

As of December 28, 2013, we maintained a valuation allowance of $2.1 million related to certain state tax attributes from 

the Evolution Robotics, Inc. acquisition.  During the year ended December 27, 2014, this valuation allowance was released 
when the realization of these state tax attributes became more likely than not. As of January 2, 2016, we did not record a 
valuation allowance as all deferred tax assets are considered realizable. 

Warranty 

We typically provide a one-year warranty (with the exception of European consumer products which typically have a 
two-year warranty period, and our defense and security spares and remote presence robots, which typically have a warranty 
period of less than one year) against defects in materials and workmanship and will either repair the goods, provide 
replacement products at no charge to the customer or refund amounts to the customer for defective products. We record 
estimated warranty costs, based on historical experience by product, at the time we recognize product revenue.  Actual results 
could differ from these estimates, which could cause increases or decreases to our warranty reserves in future periods. 

33 

 
Inventory Valuation 

We value our inventory at the lower of the actual cost of our inventory or its current estimated market value. We write 

down inventory for obsolescence or unmarketable inventories based upon assumptions about future demand and market 
conditions.  Actual demand and market conditions may be lower than those that we project and this difference could have a 
material adverse effect on our gross margin if inventory write-downs beyond those initially recorded become necessary. 
Alternatively, if actual demand and market conditions are more favorable than those we estimated at the time of such a write-
down, our gross margin could be favorably impacted in future periods. 

Long-Lived Assets, including Purchased Intangible Assets 

We periodically evaluate 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 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. We evaluate goodwill for impairment at the reporting unit level 
(operating segment or one level below an operating segment) annually or more frequently if we believe indicators of 
impairment exist. In accordance with guidance, we are 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 we conclude 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, 
we perform 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.  We complete the annual impairment evaluation during the fourth quarter each year. 

F
o
r
m
1
0
-
K

34 

 
 
Overview of Results of Operations 

The following table sets forth our results of operations for the periods shown: 

Revenue 
Cost of revenue (1) 

Gross margin 
Operating expenses 

Research and development (1) 
Selling and marketing (1) 
General and administrative (1) 

Total operating expenses 

Operating income 
Other income (expense), net 

Income before income taxes 
Income tax expense 

Net income 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

616,778 $ 
327,852

288,926

76,071
97,772
54,465

228,308
60,618
2,353

62,971
18,841

$

44,130 $ 

556,846  $
298,791 
258,055 

69,408 
86,091 
49,439 
204,938 
53,117 
(708)
52,409 
14,606 
37,803  $

487,401
266,247

221,154

63,649
71,529
53,358

188,536
32,618
(203)

32,415
4,774

27,641

 ___________________ 
(1) 

Stock-based compensation recorded in fiscal 2015, 2014 and 2013 breaks down by expense classification as follows. 

Cost of revenue 
Research and development 
Selling and marketing 
General and administrative 

$

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

1,076 $ 
3,256
1,457
8,394

865  $

3,359 
1,296 
8,258 

700
2,700
1,246
8,763

The following table sets forth our results of operations as a percentage of revenue for the periods shown: 

Revenue 
Cost of revenue 

Gross margin 
Operating expenses 

Research and development 
Selling and marketing 
General and administrative 

Total operating expenses 

Operating income 
Other income (expense), net 

Income before income taxes 
Income tax expense 

Net income 

Fiscal Year Ended 

January 2, 
2016

December 27, 
 2014 

December 28, 
2013

100.0%
53.2 
46.8 

12.3 
15.9 
8.8 
37.0 
9.8 
0.5 
10.3 
3.1 
7.2%

100.0%
53.7 
46.3 

12.5 
15.5 
8.9 
36.9 
9.4 
(0.1) 
9.3 
2.6 
6.7%

100.0%
54.6 
45.4 

13.1 
14.7 
10.9 
38.7 
6.7 
— 
6.7 
1.0 
5.7%

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comparison of Years Ended January 2, 2016 and December 27, 2014  

Revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

(In thousands) 

Total Revenue 

$

616,778 $

556,846 $ 

59,932 

10.8%

Our revenue increased 10.8% to $616.8 million in fiscal 2015 from $556.8 million in fiscal 2014.  Revenue increased 
$52.2 million, or 10.3%, in our home robots business unit, and $9.5 million, or 20.9%, in our defense and security business 
unit. 

The $52.2 million increase in revenue from our home robots business unit was driven by a 12.1% increase in units 

shipped, partially offset by a 1.5% decrease in net average selling price.  In fiscal 2015, domestic home robots revenue 
increased $47.3 million, or 25.2%, and international home robots revenue increased $4.9 million, or 1.5%, compared to fiscal 
2014.  Total home robots shipped in fiscal 2015 were 2,436,000 units compared to 2,174,000 units in fiscal 2014.  The increase 
in domestic home robots revenue was primarily attributable to increased sales as a result of significant investments in 
advertising media and national promotions as well as the launch of Roomba 980.  International home robots revenue growth 
slowed compared to fiscal 2014 as a result of negative macroeconomic conditions, specifically in Japan and Russia, offset by a 
significant growth increase in China. The increase in revenue also includes a $1.6 million favorable adjustment associated with 
the release of marketing allowances to a former customer that went unused and for which the statute of limitations has lapsed. 
During 2015, we recorded a net benefit to revenue and income before income taxes of $6.9 million related to adjustments to our 
product returns reserves compared to a net benefit to revenue and income before income taxes of $4.3 million and $5.7 million 
during fiscal 2014. The net adjustments recorded in each period resulted from lower product returns experience as compared to 
estimates used to establish reserves in prior periods. 

F
o
r
m
1
0
-
K

The $9.5 million increase in revenue from our defense and security business unit was driven by a $7.7 million increase in 
defense and security robot revenue and a $4.1 million increase in product life cycle revenue (spare parts, accessories), partially 
offset by a $2.3 million decrease in recurring contract revenue generated under research and development contracts. Total 
defense and security robots shipped in fiscal 2015 were 294 units compared to 265 units in fiscal 2014, while the net average 
selling price of our defense and security robots increased from approximately $56 thousand in fiscal 2014 to approximately $77 
thousand in fiscal 2015.  The increase in the number of units shipped and the increase in average selling price resulted from 
increased sales of our higher-priced SUGV robot in fiscal 2015 as compared to fiscal 2014. The $2.3 million decrease in 
contract revenue was primarily due to our change in strategy to not pursue funded research. The $4.1 million increase in 
product life cycle revenue was driven primarily by the delivery of robots and spare parts under a contract with the Canadian 
Department of National Defence. 

Cost of Revenue 

Total cost of revenue 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

327,852 

$

53.2%

298,791 

(In thousands) 
$ 
53.7%  

29,061 

9.7%

Total cost of revenue increased $29.1 million, or 9.7% to $327.9 million in fiscal 2015, compared to $298.8 million in 
fiscal 2014.  The increase is primarily due to the 12.1% and 10.9% increase of units shipped in our home robots business unit 
and defense and security business unit, respectively. These increases are partially offset by a higher mix of lower margin 
products sold in the defense and security business unit.  

36 

 
 
 
 
 
 
 
 
 
 
Gross Margin 

Total gross margin 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

288,926 

$

46.8%

258,055 

(In thousands) 
$ 
46.3%  

30,871 

12.0%

Gross margin increased $30.9 million, or 12.0%, to $288.9 million (46.8% of revenue) in fiscal 2015 from $258.1 million 

(46.3% of revenue) in fiscal 2014.  The increase in gross margin as a percentage of revenue was the result of the home robots 
business unit gross margin increasing 0.4 percentage points, partially offset by the defense and security business unit gross 
margin decreasing 0.5 percentage points. The 0.4 percentage point increase in the home robots business unit was primarily 
driven by favorable product and customer mix, the introduction of the higher margin Roomba 980, a decrease in warranty costs, 
as well as the favorable impact of the $1.6 million adjustment to revenue related to the release of marketing allowances. During 
2015, we recorded a net benefit to revenue and gross margin of $6.9 million related to adjustments to our product returns 
reserves compared to a net benefit to revenue and gross margin of $4.3 million and $5.7 million during fiscal 2014. The 
0.5 percentage point decrease in the defense and security business unit is attributable to the increase in sales of our lower 
margin robots.    

Research and Development 

Total research and development 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

76,071 

$

12.3%

69,408 

(In thousands) 
$ 
12.5%  

6,663 

9.6%

Research and development expenses increased $6.7 million, or 9.6%, to $76.1 million (12.3% of revenue) in fiscal 2015 
from $69.4 million (12.5% of revenue) in fiscal 2014.  This increase is attributable to increased efforts in product development 
and continued product enhancements. People-related costs increased $7.0 million associated with an approximate 10% increase 
in headcount, especially related to software engineers, as well as a $0.7 million increase in materials.  These increases were 
partially offset by decreased consulting expenses of $1.0 million in 2015 compared to 2014.  

Selling and Marketing 

Total selling and marketing 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

97,772 

$

15.9%

86,091 

(In thousands) 
$ 
15.5%  

11,681 

13.6%

Selling and marketing expenses increased by $11.7 million, or 13.6%, to $97.8 million (15.9% of revenue) in fiscal 2015 

from $86.1 million (15.5% of revenue) in fiscal 2014.  This increase is primarily attributable to an increase of $8.9 million in 
investments in advertising media, national promotions and other selling and marketing costs incurred to support the retail 
launch of the Roomba 980 series and our continued global marketing and branding efforts, as well as increases in people-
related costs of $2.2 million driven by increased headcount in fiscal 2015 compared to fiscal 2014.  

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General and Administrative 

General and administrative 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

54,465 

$

8.8%

49,439 

(In thousands) 
$ 
8.9%  

5,026 

10.2%

General and administrative expenses increased by $5.0 million, or 10.2%, to $54.5 million (8.8% of revenue) in fiscal 
2015 from $49.4 million (8.9% of revenue) in fiscal 2014.  This increase is primarily attributable to increases of $2.6 million in 
consulting costs, $1.8 million in people-related costs and $0.7 million related to investments in enterprise hardware and 
software maintenance, support, and services. 

Other Income (Expense), Net 

Other income (expense), net 
As a percentage of total revenue 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

2,353 

$

0.5%

(In thousands) 
$ 
(708) 
(0.1)%  

3,061 

(432.3)%

F
o
r
m
1
0
-
K

Other income (expense), net, amounted to $2.4 million and $(0.7) million for fiscal 2015 and fiscal 2014, respectively. 
During fiscal 2015, we recorded a gain of approximately $3.3 million related to the sale of a cost method investment, which 
was offset primarily by foreign currency exchange losses resulting from foreign currency exchange rate fluctuations. 

Income Tax Provision 

Income tax provision 
As a percentage of pre-tax income 

Fiscal Year Ended 

January 2, 
2016

December 27, 
2014

Dollar Change 

Percent Change 

$

18,841 

$

29.9%

14,606 

(In thousands) 
$ 
27.9%  

4,235 

29.0%

We recorded an income tax provision of $18.8 million and $14.6 million for fiscal 2015 and fiscal 2014, respectively. The 

$18.8 million income tax provision for fiscal 2015 was based upon a 2015 effective income tax rate of 31.3% reduced by a net 
income tax benefit of $0.9 million primarily resulting from an increase in federal and state tax credits upon filing the 2014 tax 
returns during 2015. The $14.6 million provision for fiscal 2014 was based upon a 2014 effective income tax rate of 31.5% plus 
a net income tax benefit of $1.9 million primarily resulting from the release of $2.1 million of valuation allowance related to 
certain state tax attributes of Evolution Robotics, Inc. 

The federal research and development tax credit expired at the end of 2014.  In December 2015, legislation was enacted 

that included the permanent extension of the federal research and development tax credit. The legislation also retroactively 
reinstated the research and development tax credit for 2015. 

Comparison of Years Ended December 27, 2014 and December 28, 2013  

Revenue 

Total Revenue 

$

556,846 $

487,401 $ 

69,445 

14.2%

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

(In thousands) 

38 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Our revenue increased 14.2% to $556.8 million in fiscal 2014 from $487.4 million in fiscal 2013. Revenue increased 
$79.6 million, or 18.6%, in our home robots business unit, and decreased $4.5 million, or 9.0%, in our defense and security 
business unit. 

The $79.6 million increase in revenue from our home robots business unit was driven by a 12.5% increase in units 

shipped and a 6.1% increase in net average selling price. In fiscal 2014, international home robots revenue increased $46.0 
million, or 16.8%, and domestic home robots revenue increased $33.5 million, or 21.8%, compared to fiscal 2013. Total home 
robots shipped in fiscal 2014 were 2,174,000 units compared to 1,933,000 units in fiscal 2013. The increase in both domestic 
and international home robots revenue was primarily driven by expanded distribution of our Roomba 800 series robot 
worldwide, and the replacement of the Roomba 500 series robot with the higher-priced Roomba 600 series in club stores. 
International home robots revenue growth was further supported by strong demand in China, where revenue increased over 
200% in fiscal 2014 compared to fiscal 2013. 

The $4.5 million decrease in revenue from our defense and security business unit was driven by a $4.7 million decrease 
in defense and security robot revenue and a $1.2 million decrease in recurring contract development revenue generated under 
research and development contracts, partially offset by a $1.4 million increase in product life cycle revenue (spare parts, 
accessories). Total defense and security robots shipped in fiscal 2014 were 265 units compared to 534 units in fiscal 2013, 
while the net average selling price of our defense and security robots increased from approximately $36 thousand in fiscal 2013 
to approximately $56 thousand in fiscal 2014. The decrease in the number of units shipped and the increase in average selling 
price resulted from decreased sales of our lower-priced FirstLook robot in fiscal 2014 as compared to fiscal 2013. The $1.2 
million decrease in contract revenue was primarily due to a decrease in revenue related to the U.S. Army's Brigade Combat 
Team Modernization program, for which efforts were completed during the first half of fiscal 2013. The $1.4 million increase 
in product life cycle revenue was due to an increase in Packbot upgrades, partially offset by decreases in FirstLook and SUGV 
spares. Continued funding delays for government contracts have reduced our near-term visibility in our defense and security 
business unit and contributed to the decrease in period-over-period revenue in this business unit. As previously described, we 
have entered into an agreement to sell our defense and security business unit. We anticipate this transaction will close during 
the first quarter of 2016. 

Cost of Revenue 

Total cost of revenue 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

298,791 

$

53.7%

266,247 

(In thousands) 
$ 
54.6%  

32,544 

12.2%

Total cost of revenue increased to $298.8 million in fiscal 2014, compared to $266.2 million in fiscal 2013. The increase 

is primarily due to the 12.5% increase in home robot units shipped, as well as the increase in per unit costs of defense and 
security robots driven by a lower mix of the lower-cost FirstLook robot in fiscal 2014 compared to fiscal 2013. These increases 
are partially offset by the 50.4% decrease in defense and security units shipped in fiscal 2014 as compared to fiscal 2013.  

 Gross Margin 

Total gross margin 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

258,055 

$

46.3%

221,154 

(In thousands) 
$ 
45.4%  

36,901 

16.7%

Gross margin increased $36.9 million, or 16.7%, to $258.1 million (46.3% of revenue) in fiscal 2014 from $221.2 million 

(45.4% of revenue) in fiscal 2013. The increase in gross margin as a percentage of revenue was the result of the home robots 
business unit gross margin increasing 1.2 percentage points, partially offset by the defense and security business unit gross 

39 

 
 
 
 
 
 
 
 
 
 
 
F
o
r
m
1
0
-
K

margin decreasing 3.7 percentage points. The 1.2 percentage point increase in the home robots business unit was primarily 
driven by favorable product and customer mix, with increased volume of higher margin Roomba 800 and 600 series robots in 
fiscal 2014 compared to fiscal 2013. During 2014, we recorded a net benefit to revenue and gross margin of $4.3 million and 
$5.7 million, respectively, related to adjustments to our product returns reserves, compared to a net benefit to both revenue and 
gross margin of $7.9 million related to adjustments to our product returns reserves during fiscal 2013. The net adjustments 
recorded in each period resulted from lower product returns experience as compared to estimates used to establish reserves in 
prior periods. The favorable product and customer mix was partially offset by the decrease in favorable adjustments to our 
product returns reserve in fiscal 2014 compared to fiscal 2013. The 3.7 percentage point decrease in the defense and security 
business unit is attributable to unfavorable overhead leverage associated with the 9.0% decrease in the defense and security 
business unit revenue.  

Research and Development 

Total research and development 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

69,408 

$

12.5%

63,649 

(In thousands) 
$ 
13.1%  

5,759 

9.0%

Research and development expenses increased $5.8 million, or 9.0%, to $69.4 million (12.5% of revenue) in fiscal 2014 
from $63.6 million (13.1% of revenue) in fiscal 2013. This increase is attributable to increased efforts in product development 
and continued product enhancements, including increases in consultant and other people-related costs of $3.5 million in 2014 
compared to 2013. 

Selling and Marketing 

Total selling and marketing 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

86,091 

$

15.5%

71,529 

(In thousands) 
$ 
14.7%  

14,562 

20.4%

Selling and marketing expenses increased by $14.6 million, or 20.4%, to $86.1 million (15.5% of revenue) in fiscal 2014 

from $71.5 million (14.7% of revenue) in fiscal 2013. This increase is primarily attributable to $11.6 million in promotions, 
marketing displays, on-line media and other selling and marketing costs incurred to support the retail launch of the Roomba 
800 series and Scooba 450 robots and our continued global marketing and branding efforts, as well as increases in people-
related costs of $2.6 million driven by increased headcount in fiscal 2014 compared to fiscal 2013. 

General and Administrative 

General and administrative 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

49,439 

$

8.9%

53,358 

(In thousands) 
$ 
10.9%  

(3,919)

(7.3)%

General and administrative expenses decreased by $3.9 million, or 7.3%, to $49.4 million (8.9% of revenue) in fiscal 
2014 from $53.4 million (10.9% of revenue) in fiscal 2013. This decrease is primarily attributable to a $3.9 million decrease in 
people-related costs. Additionally, we recorded a $1.8 million write-down of an intangible asset in fiscal 2013, resulting from a 
decision made in 2013 to refocus our funded research activities that significantly reduced our utilization of the technology 
associated with the intangible asset, with no such write-down in fiscal 2014. These decreases are partially offset by increases in 
consulting and other miscellaneous general and administrative costs. 

40 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Expense, Net 

Other expense, net 
As a percentage of total revenue 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

$

(708) 
(0.1)%

(203) 

(In thousands) 
$
— %  

(505)  

248.8%

Other income (expense), net, amounted to $(0.7) million and $(0.2) million for fiscal 2014 and fiscal 2013, respectively, 
and consisted primarily foreign currency exchange losses resulting from foreign currency exchange rate fluctuations, offset by 
interest income.  

Income Tax Provision 

Income tax provision 
As a percentage of pre-tax income 

Fiscal Year Ended 

December 27, 
2014

December 28, 
2013

Dollar Change 

Percent Change 

$

14,606 

$

27.9%

(In thousands) 
4,774 
$
14.7%  

9,832   

205.9%

We recorded an income tax provision of $14.6 million and $4.8 million for fiscal 2014 and fiscal 2013, respectively. The 
$14.6 million income tax provision for fiscal 2014 was based upon a 2014 effective income tax rate of 31.5% reduced by a net 
income tax benefit of $1.9 million primarily resulting from the release of $2.1 million of valuation allowance related to certain 
state tax attributes of Evolution Robotics, Inc. The $4.8 million provision for fiscal 2013 was based upon a 2013 effective 
income tax rate of 28.5% plus a net income tax benefit of $4.5 million primarily resulting from the extension of the federal 
research and development tax credit in 2013 and the settlement of uncertain tax positions upon completion of an IRS audit. 

 In January 2013, legislation was enacted that included the extension of the federal research and development tax credits. 
The legislation retroactively reinstated the research and development tax credit for 2012 and extended it through December 31, 
2013. As a result, we recorded a discrete benefit of approximately $1.7 million related to 2012 in 2013. 

The increase in the effective tax rate from 28.5% in 2013 to 31.5% in 2014 was primarily due to a smaller research and 

development credit in 2014 as compared to 2013 and an increase in state tax expense in 2014 as compared to 2013. 

Liquidity and Capital Resources 

At January 2, 2016, our principal sources of liquidity were cash and cash equivalents totaling $179.9 million, short-term 

investments of $33.1 million and accounts receivable of $104.7 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 fiscal years ended January 2, 2016, December 27, 2014 and 
December 28, 2013, we spent $9.4 million, $13.8 million and $6.8 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 defense 
and security products consists mostly of components, as well as carefully-managed levels of sub-assemblies. Our contract 
manufacturers are also responsible for purchasing and stocking components required for the production of our products, and 
they typically invoice us when the finished goods are shipped. 

As of January 2, 2016, we held cash, cash equivalents and short-term investments of $213.0 million, primarily the result 
of our increased profitability, as well as our on-going focus on managing working capital.  Net cash provided by our operations 
for the fiscal year ended January 2, 2016 was $26.7 million, of which the principal components were our net income of 

41 

 
 
 
 
 
 
   
 
 
 
 
 
 
   
$44.1 million and non-cash charges of $23.9 million, partially offset by a net increase in operating assets and liabilities of 
$41.3 million. The increase in net operating assets and liabilities includes an increase in accounts receivable (including unbilled 
revenue) of $31.5 million primarily due to an increase in revenue and timing of billing in respective periods and a $14.0 million 
increase in inventory primarily to support increased domestic sales and the roll-out of Roomba 980.   As of January 2, 2016, we 
did not have any borrowings outstanding under our working capital line of credit and had $1.5 million in letters of credit 
outstanding under our revolving letter of credit facility. 

We invested $9.4 million in the purchase of property and equipment in 2015, including tooling for new products.  We 
purchased $17.8 million of marketable securities in 2015, while sales and maturities of marketable securities amounted to $20.5 
million.  We received $5.6 million from sales of other assets.  We made strategic investments of $1.0 million in the form of 
preferred shares and notes receivable. 

During 2015, we received $6.5 million from the exercise of stock options and $1.5 million from the excess tax benefit 

related to our stock-based compensation plans.  In addition, we repurchased 1,260,276 shares of our common stock for an 
aggregate purchase price of $37.4 million.  Shares issued upon vesting of restricted stock were net of 37,969 shares retained by 
us to cover employee tax withholdings of $1.3 million. 

Net cash provided by our operations for the fiscal year ended December 27, 2014 was $40.6 million, of which the 

principal components were our net income of $37.8 million and non-cash charges of $27.2 million, partially offset by a net 
increase in operating assets and liabilities of $24.4 million. The increase in net operating assets and liabilities includes an 
increase in accounts receivable (including unbilled revenue) of $33.5 million primarily due to an increase in revenue, normal 
billing and collection activities and timing of the billing in respective periods, a $3.4 million decrease in accrued compensation 
reflecting higher accrual for incentive compensation in 2013 compared to 2014, a $2.9 million increase on other assets relating 
to an increase in prepaid income tax expenses, a $2.4 million increase in inventory, partially offset by a $19.9 million increase 
in accounts payable and accrued expenses as a result of normal purchasing and vendor payment activities. 

We invested $13.8 million in the purchase of property and equipment in 2014, including $3.5 million for leasehold 
improvements in our Bedford, Massachusetts office.  We purchased $31.2 million of marketable securities in 2014, while 
maturities of marketable securities amounted to $16.5 million.  We also made a strategic investment of $250 thousand in a cost-
method investment. 

During 2014, we received $8.9 million from the exercise of stock options and $3.1 million from the excess tax benefit 

related to our stock-based compensation plans. In addition, we repurchased 55,973 shares of our common stock for an 
aggregate purchase price of $1.7 million.  Shares issued upon vesting of restricted stock were net of 39,297 shares retained by 
us to cover employee tax withholdings of $1.6 million. 

F
o
r
m
1
0
-
K

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 January 2, 2016, the total amount of 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 our election, at either (1) LIBOR 
plus a margin, currently equal to 1.0%, based on our ratio of indebtedness to Adjusted EBITDA (the "Eurodollar Rate"), or (2) 
the lender’s base rate. The lender’s base rate is equal to the highest of (1) the federal funds rate plus 0.5%, (2) the lender’s 
prime rate and (3) the Eurodollar Rate plus 1.0%. The credit facility will terminate and all amounts outstanding thereunder will 
be due and payable in full on December 20, 2018.  

As of January 2, 2016, we had no outstanding borrowings under our revolving credit facility. 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 maximum ratio of indebtedness to Adjusted EBITDA and a minimum specified interest 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 

42 

 
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 January 2, 2016, we were in compliance with all covenants under the revolving credit facility.  

Letter of Credit Facility 

  We have an unsecured 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 of up to 1.5% per annum of the outstanding 
letters of credit.  The maturity date for letters of credit issued under the credit facility must be no later than 365 days following 
the maturity date of the credit facility. 

  As of January 2, 2016, we had letters of credit outstanding of $1.5 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, 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 
maximum ratio of indebtedness to Adjusted EBITDA and a minimum specified interest coverage ratio.  

  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 January 2, 2016, 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. 

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 material. Other obligations 
consist of software licensing arrangements. The following table describes our commitments to settle contractual obligations in 
cash as of January 2, 2016: 

43 

 
Less Than 
1  Year

1 to 3 
Years

Payments Due by Period 

3 to 5 
Years
(In thousands) 

More Than 
5  Years 

Total 

Operating leases 
Minimum contractual payments 
Other obligations 

Total 

$ 

$ 

3,856 $
675
641

5,172 $

6,368 $
—
2,307

8,675 $

3,903 $ 
—
493

4,396 $ 

—  $
— 
— 
—  $

14,127
675
3,441

18,243

At January 2, 2016, we had outstanding purchase orders aggregating approximately $74.7 million. The purchase orders, 
the majority of which are with our contract manufacturers for the purchase of inventory in the normal course of business, are 
for manufacturing and non-manufacturing related goods and services, and are generally cancelable without penalty.  In 
circumstances where we determine that we have financial exposure associated with any of these commitments, we record a 
liability in the period in which that exposure is identified. 

Off-Balance Sheet Arrangements 

As of January 2, 2016, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K. 

Recently Issued Accounting Pronouncements 

F
o
r
m
1
0
-
K

In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 

2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires that the presentation of 
deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into 
current and noncurrent amounts. This standard will become effective for fiscal years, and the interim periods within those 
years, beginning after December 15, 2016, with early adoption allowed. We elected to prospectively adopt ASU 2015-17. The 
prior reporting period was not retrospectively adjusted. The adoption of this guidance had no impact on our Consolidated 
Statements of Income and Comprehensive Income. 

In July 2015, the FASB issued ASU No. 2015-11, "Inventory: Simplifying the Measurement of Inventory." ASU 2015-11 
applies only to inventory for which cost is determined by methods other than last-in, first-out and the retail inventory method, 
which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of this standard is 
required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the 
ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new standard will 
be effective for us on January 1, 2017. We are currently assessing the potential impact of ASU 2015-11 on our consolidated 
financial statements. 

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software: Customer's 
Accounting  for  Fees  Paid  in  a  Cloud  Computing  Arrangement."  Under  ASU  2015-05,  if  a  cloud  computing  arrangement 
includes  a  software  license,  the  software  license  element  of  the  arrangement  should  be  accounted  for  consistent  with  the 
acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement 
should be accounted for as a service contract. The new standard will be effective for us on January 3, 2016. We do not believe 
that the impact of this standard will be material to our consolidated financial statements. 

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest: Simplifying the Presentation of Debt 
Issuance Costs." ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability as a direct 
deduction from the carrying amount of that debt liability consistent with debt discounts and is effective for financial statements 
issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. We do not believe that 
the impact of this standard will be material to our consolidated financial statements. 

In  February  2015,  the  FASB  issued ASU  No.  2015-02,  "Consolidation  - Amendments  to  the  Consolidation Analysis."  
ASU  2015-02 reduces the number of consolidation models and changes the way reporting entities evaluate a variable interest 
entity.    It  is  effective  for  annual  periods,  and  interim  periods  within  those  annual  periods,  beginning  after  December  15, 

44 

 
 
 
 
 
 
2015.  Early  adoption  is  permitted.  We  do  not  believe  that  the  impact  of  this  standard  will  be  material  to  our  consolidated 
financial statements. 

In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award 
Provide That a Performance Target Could Be Achieved after the Requisite Service Period."  ASU 2014-12 requires a reporting 
entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a 
performance condition. It is effective for annual periods, and interim periods within those annual periods, beginning after 
December 15, 2015. Early adoption is permitted. We do not believe that the impact of this standard will be material to our 
consolidated financial statements. 

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which provides guidance 

for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised 
goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in 
exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15, 
2016, including interim periods within those annual reporting periods. In July 2015, the FASB voted to defer the effective date 
of the new accounting guidance related to revenue recognition by one year to December 17, 2017 for annual reporting periods 
beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 
2016.  We are in the process of evaluating the impact that the adoption of the new revenue recognition standard issued in May 
2014 will have on our consolidated financial statements and footnote disclosures. 

From time to time, new accounting pronouncements are issued by FASB that we adopt as of the specified effective date. 
Unless otherwise discussed, we believe that recently issued standards that are not yet effective will not have a material impact 
on our consolidated financial statements upon adoption. 

ITEM 7A.  

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Foreign Currency Exchange Risk 

We maintain sales and business operations in foreign countries. As such, we have exposure to adverse changes in 
exchange rates associated with operating expenses of our foreign operations, but we believe this exposure to be immaterial. 
Additionally, we accept orders for home robots products in currencies other than the U.S. dollar. We regularly monitor the level 
of non-U.S. dollar accounts receivable balances to determine if any actions, including possibly entering into foreign currency 
forward contracts or swaps, should be taken to minimize the impact of fluctuating exchange rates on our results of operations. 
Our international revenue is primarily denominated in U.S. dollars and therefore any fluctuations in the Euro or any other non-
U.S. dollar currencies will have minimal direct impact on our international revenue. However, as the U.S. dollar strengthens or 
weakens against other currencies, our international distributors may be impacted, which could affect their profitability and our 
ability to maintain current pricing levels on our international consumer products. 

Interest Rate Sensitivity 

At January 2, 2016, we had unrestricted cash and cash equivalents of $179.9 million and short term investments of 

$33.1 million. The unrestricted cash and cash equivalents are held for working capital purposes. We do not enter into 
investments for trading or speculative purposes. Some of the securities in which we invest, however, may be subject to market 
risk. This means that a change in prevailing interest rates may cause the fair market value of the investment to fluctuate. To 
minimize this risk in the future, we intend to maintain our portfolio of cash equivalents in a variety of securities, commercial 
paper, money market funds, debt securities and certificates of deposit. Due to the short-term nature of these investments, we 
believe that we do not have any material exposure to changes in the fair value of our investment portfolio as a result of changes 
in interest rates. As of January 2, 2016, all of our cash and cash equivalents were held in demand deposits and money market 
accounts.  

Our exposure to market risk also relates to the increase or decrease in the amount of interest expense we must pay on any 

outstanding debt instruments, primarily certain borrowings under our working capital line of credit. The advances under the 
working capital line of credit bear a variable rate of interest determined at the time of the borrowing. At January 2, 2016, we 
had letters of credit outstanding of $1.5 million under our revolving letter of credit facility. 

45 

 
 
 
 
ITEM 8. 

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 

iROBOT CORPORATION 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

Report of Independent Registered Public Accounting Firm 
Consolidated Balance Sheets at January 2, 2016 and December 27, 2014 
Consolidated Statements of Income for the Years ended January 2, 2016, December 27, 2014 and December 28, 
2013 
Consolidated Statements of Comprehensive Income for the Years ended January 2, 2016, December 27, 2014 
and December 28, 2013 
Consolidated Statements of Stockholders’ Equity for the Years ended January 2, 2016, December 27, 2014 and 
December 28, 2013 
Consolidated Statements of Cash Flows for the Years ended January 2, 2016, December 27, 2014 and December 
28, 2013 
Notes to Consolidated Financial Statements 

Page 

47
48

49

50

51

52

53

F
o
r
m
1
0
-
K

46 

 
 
 
 
Report of Independent Registered Public Accounting Firm 

To the Board of Directors and Stockholders of 
iRobot Corporation: 

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, 
comprehensive income, stockholders’ equity and cash flows present fairly, in all material respects, the financial position of 
iRobot Corporation and its subsidiaries at January 2, 2016 and December 27, 2014, and the results of their operations and their 
cash flows for each of the three years in the period ended January 2, 2016 in conformity with accounting principles generally 
accepted in the United States of America.  Also in our opinion, the Company maintained, in all material respects, effective 
internal control over financial reporting as of January 2, 2016, based on criteria established in Internal Control - Integrated 
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The 
Company's management is responsible for these financial statements, for maintaining effective internal control over financial 
reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s 
Report on Internal Control over Financial Reporting.  Our responsibility is to express opinions on these financial statements 
and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in 
accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require 
that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material 
misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits 
of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial 
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall 
financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of 
internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design 
and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other 
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our 
opinions. 

As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it accounts for the 
classification of deferred taxes in the consolidated balance sheets due to the adoption of ASU 2015-17, Balance Sheet 
Classification of Deferred Taxes. 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 
accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures 
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to 
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 
expenditures of the company are being made only in accordance with authorizations of management and directors of the 
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 
disposition of the company’s assets that could have a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, 
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate 
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

/s/ PricewaterhouseCoopers LLP 

Boston, Massachusetts 
February 19, 2016 

47 

 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

CONSOLIDATED BALANCE SHEETS 

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 

F
o
r
m
1
0
-
K

185,957
36,166

71,056

2,614
47,857
21,505
9,704

374,859
31,297
8,409
48,751
19,146
10,751

493,213

60,256
18,701
16,235
3,849

99,041
3,736

Current assets: 

ASSETS

Cash and cash equivalents 
Short term investments 
Accounts receivable, net of allowance of $33 at January 2, 2016 and $67 at December 27, 
2014 
Unbilled revenue 
Inventory 
Deferred tax assets 
Other current assets 

Total current assets 

Property and equipment, net 
Deferred tax assets 
Goodwill 
Intangible assets, net 
Other assets 

Total assets 

$ 

$ 

179,915  $
33,124 

104,679
452 
61,678 
— 
9,501 
389,349 
26,850 
31,721 
48,751 
15,664 
9,408 
521,743  $

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND 
STOCKHOLDERS’ EQUITY 

Current liabilities: 
Accounts payable 
Accrued expenses 
Accrued compensation 
Deferred revenue and customer advances 

Total current liabilities 

Long term liabilities 
Commitments and contingencies (Note 11): 
Redeemable convertible preferred stock, 5,000,000 shares authorized and no shares issued 
or outstanding 
Common stock, $0.01 par value, 100,000,000 shares authorized; and 29,091,806 and 
29,644,602 shares issued and outstanding at January 2, 2016 and December 27, 2014, 
respectively 
Additional paid-in capital 
Retained earnings 
Accumulated other comprehensive loss 

Total stockholders’ equity 
Total liabilities, redeemable convertible preferred stock and stockholders’ equity 

$ 

See accompanying Notes to Consolidated Financial Statements 

48 

$ 

61,655  $
15,954 
15,752 
3,265 
96,626 
7,706 

—

—

291
232,345 
185,011 
(236)
417,411 
521,743  $

297

249,409
140,881
(151)

390,436
493,213

 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

CONSOLIDATED STATEMENTS OF INCOME 

Fiscal Year Ended 

January 2, 
2016

December 27, 
 2014 
(In thousands, except per share amounts) 

December 28, 
2013

Revenue 
Cost of revenue(1) 

Gross margin 
Operating expenses: 
Research and development(1) 
Selling and marketing(1) 
General and administrative(1) 

Total operating expenses 

Operating income 
Other income (expense), net 

Income before income taxes 
Income tax expense 

Net income 

Net income per share 

$

616,778 $ 
327,852

288,926

76,071
97,772
54,465

228,308
60,618
2,353

62,971
18,841

$

44,130 $ 

556,846  $
298,791 
258,055 

69,408 
86,091 
49,439 
204,938 
53,117 
(708)
52,409 
14,606 
37,803  $

Basic 
Diluted 

$
$
Number of weighted average common shares used in calculations per share  

Basic 
Diluted 

 __________________________ 

1.49 $ 
1.47 $ 

1.28  $
1.25  $

29,550
30,107

29,485 
30,210 

487,401
266,247

221,154

63,649
71,529
53,358

188,536
32,618
(203)

32,415
4,774

27,641

0.97
0.94

28,495
29,354

(1) 

Stock-based compensation recorded in fiscal 2015, 2014 and 2013 breaks down by expense classification as follows: 

Cost of revenue 
Research and development 
Selling and marketing 
General and administrative 

$

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

1,076 $ 
3,256
1,457
8,394

865  $

3,359 
1,296 
8,258 

700
2,700
1,246
8,763

See accompanying Notes to Consolidated Financial Statements 

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 

Net income 

Other comprehensive loss, net of tax: 

Unrealized losses on investments, net of tax 

Total comprehensive income 

$

$

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

44,130 $ 

37,803  $

27,641

(85)

44,045 $ 

(298)
37,505  $

(52)

27,589

See accompanying Notes to Consolidated Financial Statements 

F
o
r
m
1
0
-
K

50 

 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 

Balance at December 29, 2012 
Issuance of common stock for exercise of stock 
options 
Conversion of deferred compensation 

Vesting of restricted stock units 

Tax benefit of excess stock based compensation 
deduction 
Amortization of deferred compensation relating 
to stock options and restricted stock units 
Stock withheld to cover tax withholdings 
requirements upon vesting of restricted stock 
units 
Unrealized loss on short term investment 

Directors' deferred compensation 

Net income 

Balance at December 28, 2013 
Issuance of common stock for exercise of stock 
options 
Vesting of restricted stock units 

Tax benefit of excess stock based compensation 
deduction 
Amortization of deferred compensation relating 
to stock options and restricted stock units 
Stock withheld to cover tax withholdings 
requirements upon vesting of restricted stock 
units 
Unrealized loss on short term investment 

Directors' deferred compensation 

Stock repurchases 

Net income 

Balance at December 27, 2014 
Issuance of common stock for exercise of stock 
options 
Conversion of deferred compensation 

Vesting of restricted stock units 

Tax benefit of excess stock based compensation 
deduction 
Amortization of deferred compensation relating 
to stock options and restricted stock units 
Stock withheld to cover tax withholdings 
requirements upon vesting of restricted stock 
units 
Unrealized loss on short term investment 

Directors' deferred compensation 

Common Stock 

Shares 

Value 

Additional
Paid-In 
Capital 

Retained 
Earnings 

Accumulated 
Other 
Comprehensive 
Income (Loss) 

Stockholders’ 
Equity 

27,781,659 $

278 $

199,903 $

75,437 $ 

199    $

(In thousands, except share data) 

840,951

9,780

348,141

8

—

3

(45,278)

13,621

—

(3)

1,413

13,409

(1,212)

44

28,935,253 $

289 $

227,175 $

103,078 $ 

27,641

486,252

318,367

5

3

(39,297)

(55,973)

8,938

(3)

2,776

13,778

(1,626)

49

(1,678)

37,803

(52)  

147    $

(298)  

275,817

13,629

—

—

1,413

13,409

(1,212)

(52)

44

27,641

330,689

8,943

—

2,776

13,778

(1,626)

(298)

49

(1,678)

37,803

29,644,602 $

297 $

249,409 $

140,881 $ 

(151)   $

390,436

390,085

14,610

340,754

4

—

3

(37,969)

6,460

—

(3)

822

14,183

(1,295)

149

(85)  

6,464

—

—

822

14,183

(1,295)

(85)

149

(37,393)

44,130

417,411

Stock repurchases 

Net income 

(1,260,276)

(13)

(37,380)

44,130

Balance at January 2, 2016 

29,091,806 $

291 $

232,345 $

185,011 $ 

(236)   $

See accompanying Notes to Consolidated Financial Statements 

51 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

44,130 $ 

37,803  $

27,641

Cash flows from operating activities: 

Net income 

Adjustments to reconcile net income to net cash provided by operating activities: 

Depreciation and amortization 

Loss on disposal of property and equipment 

Gain on sale of cost method investment 

Goodwill and intangible assets impairment 

Stock-based compensation 

Deferred income taxes, net 

Tax benefit of excess stock-based compensation deductions 

Non-cash director deferred compensation 

Changes in operating assets and liabilities — (use) source 

Accounts receivable 

Unbilled revenue 

Inventory 

Other assets 

Accounts payable 

Accrued expenses 

Accrued compensation 

Deferred revenue and customer advances 

Long term liabilities 

Net cash provided by operating activities 

Cash flows from investing activities: 
Additions of property and equipment 

Change in other assets 

Proceeds from sale of cost method investment 

Purchases of investments 

Sales and maturities of investments 

Proceeds from sale of assets 

Net cash used in investing activities 

Cash flows from financing activities: 
Income tax withholding payment associated with restricted stock vesting 

Proceeds from stock option exercises 

Stock repurchases 

Tax benefit of excess stock-based compensation deductions 

Net cash provided by (used in) financing activities 

Net increase (decrease) in cash and cash equivalents 

Cash and cash equivalents, at beginning of period 

Cash and cash equivalents, at end of period 

Supplemental disclosure of cash flow information 
Cash paid for income taxes 

   Non-cash investing and financing activities: 

     Transfer of inventory to property and equipment 

     Additions of property and equipment included in accounts payable 

$

$

$

F
o
r
m
1
0
-
K

15,090

214

(3,287)

—

14,183

(985)

(1,467)

149

(33,623)

2,162

(13,978)

203

3,786

(2,768)

(483)

(584)

3,970

26,712

(9,372)

(1,015)

5,645

(17,755)

20,500

—

(1,997)

(1,295)

6,464

(37,393)

1,467

(30,757)

(6,042)

185,957

179,915 $ 

13,049 
246 
— 
— 
13,778 
3,101 
(3,051)
49 

(31,708)

(1,758)

(2,387)

(2,856)
16,249 
3,695 
(3,371)

(1,236)

(997)
40,606 

(13,774)

(250)
— 
(31,219)
16,500 
— 

(28,743)

(1,626)
8,943 
(1,678)
3,051 
8,690 
20,553 
165,404 
185,957  $

12,169

189

—

1,988

13,409

(768)

(2,406)

44

(9,935)

340

(9,365)

1,980

(1,743)

1,255

7,751

(1,172)

515

41,892

(6,829)

(2,000)

—

(17,946)

8,044

650

(18,081)

(1,212)

13,629

—

2,406

14,823

38,634

126,770

165,404

14,341 $ 

15,508  $

7,235

157

848 $ 

637 
3,235  $

223

572

See accompanying Notes to Consolidated Financial Statements 

52 

 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

1. 

Nature of the Business 

iRobot Corporation ("iRobot" or the "Company") develops robotics and artificial intelligence technologies and applies 

these technologies in producing and marketing robots. The Company’s revenue is primarily generated from product sales. 

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. 

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 

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 end on the Saturday that falls closest to the last day of the third month of each 
quarter. 

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 
January 2, 2016 and December 27, 2014, cash equivalents were comprised of money market funds totaling $110.8 million and 
$109.8 million, respectively. These cash equivalents are carried at cost, which approximates fair value. 

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 January 2, 2016 and December 27, 2014, investments consisted of: 

Corporate and government bonds 

Total short term investments 

January 2, 
2016

December 27, 
 2014

Cost 

Fair 
Market Value

Cost 

Fair 
Market Value

(In thousands) 

$

$

33,622 $

33,622 $

33,124 $ 

33,124 $ 

36,659  $
36,659  $

36,166

36,166

53 

 
 
 
 
 
 
 
F
o
r
m
1
0
-
K

iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

As of January 2, 2016, the Company’s investments had maturity dates ranging from January 2016 to August 2018. The 

Company invests primarily in investment grade securities and limits the amount of investment in any single issuer. 

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. 

Beginning in the third quarter of 2015, with the introduction of the Company's first connected robot, each sale of a 
connected robot represents a multi-element arrangement containing the robot, an app and potential future unspecified software 
upgrades. Revenue is allocated to the deliverables based on their relative selling prices which have been determined using best 
estimate of selling price (BESP), as the Company has not been able to establish vendor specific objective evidence (VSOE) or 
obtain relevant third party evidence (TPE). Revenue allocated to the app and unspecified software upgrades is then deferred 
and recognized on a straight-line basis over the period in which the Company expects to provide the upgrades over the 
estimated life of the robot. 

Sales to domestic and Canadian resellers of home robots are typically subject to agreements allowing for limited rights of 
return, rebates and price protection. The Company also provides limited rights of returns for direct-to-consumer sales generated 
through its on-line stores. Accordingly, the Company reduces revenue for its estimates of liabilities for these rights of return, 
rebates and price protection at the time the related sale is recorded. These estimates for rights of return are directly based on 
specific terms and conditions included in the reseller agreements, historical returns experience and various other assumptions 
that the Company believes are reasonable under the circumstances. In the case of new product introductions, the estimates for 
returns applied to the new products are based upon the estimates for the most similar predecessor products until such time that 
the Company has enough actual returns experience for the new products, which is typically two holiday return cycles. At that 
time, the Company incorporates that data into the development of returns estimates for the new products.  The Company 
updates its analysis of returns on a quarterly basis. If actual returns differ significantly from the Company's estimates, or if 
modifications to individual reseller agreements are entered into that impact their rights of returns, such differences could result 
in an adjustment to previously established reserves and could have a material impact, either favorably or unfavorably, on the 
Company's results of operations for the period in which the actual returns become known or the reseller agreement is modified. 
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 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 estimated 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 January 2, 2016, fiscal years 2012 through 2015 
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 

54 

 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

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 

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: 

Balance at beginning of period 
Provision 
Deduction(*) 

Balance at end of period 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

$

67 $ 
—
(34)

33 $ 

67  $
— 
— 
67  $

111
—
(44)

67

___________________________ 
(*)  

Deductions related to allowance for doubtful accounts represent amounts written off against the allowance, less 
recoveries. 

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: 

Balance at beginning of period 
Provision 
Deduction(*) 

Balance at end of period 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

$

$

5,251 $ 
424
(1,753)

3,922 $ 

5,280  $
1,045 
(1,074)
5,251  $

December 28, 
2013

6,608
1,571
(2,899)

5,280

 ___________________________ 
(*)  

Deductions related to inventory reserve accounts represent amounts written off against the reserve. 

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: 

55 

 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

Computer and research equipment 
Furniture 
Machinery 
Tooling 
Business applications software 

Capital leases and leasehold improvements 

Estimated 
Useful Life 

3 years
5
2-5
2-5
5-7
Lesser of economic 
benefit period or 
term of lease

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 

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. 

F
o
r
m
1
0
-
K

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 

Costs incurred in the research and development of the Company’s products are expensed as incurred. 

Internal Use Software 

The Company capitalizes costs associated with the development and implementation of software for internal use. At 

January 2, 2016, December 27, 2014 and December 28, 2013, the Company had $8.6 million, $8.2 million and $8.2 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 $0.7 million, $0.8 million and $0.9 million of amortization expense 
for the years ended January 2, 2016, December 27, 2014 and December 28, 2013, respectively. 

56 

 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

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 
January 2, 2016, three customers accounted for a total of 45.8% of the Company's accounts receivable balance, each of which 
was greater than 10% of the balance and two of whom secured their balance with guaranteed letters of credit which together 
represents 34.1% of the balance.  At December 27, 2014, two customers accounted for a total of 32.2% 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. For the years ended January 2, 2016, December 27, 2014 and December 28, 2013, revenue from 
U.S. federal government orders, contracts and subcontracts, represented 5.1%, 4.3% and 6.2% of total revenue, respectively. 
For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, the Company generated an aggregate 
of 26.0%, 29.8% and 33.2%, respectively, of total revenue from its home robots distributor in Japan (Sales on Demand 
Corporation) and a network of affiliated European distributors of its home robots (Robopolis SAS). 

The Company maintains its cash in bank deposit accounts at high quality financial institutions. The individual balances, 

at times, may exceed federally insured limits. 

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, time-based restricted stock units and performance-based restricted stock units is measured based on the 
closing fair market value of the Company's common stock on the date of grant. For performance-based restricted stock units, 
the compensation costs will be subsequently adjusted for assumptions of achievement during the period in which the 
assumption of achievement changes, as applicable. 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 

The Company expenses advertising costs as they are incurred. During the years ended January 2, 2016, December 27, 

2014 and December 28, 2013 advertising expense totaled $54.7 million, $46.1 million and $38.2 million, respectively, and are 
recorded with the selling and marketing expenses line item.  

Net Income Per Share 

The following table presents the calculation of both basic and diluted net income per share: 

Net income 

Weighted-average shares outstanding 
Dilutive effect of employee stock options and restricted shares 

Diluted weighted-average shares outstanding 

Basic income per share 
Diluted income per share 

Fiscal Year Ended 

January 2, 
2016

December 27, 
 2014 

December 28, 
2013

$

$
$

44,130 $ 

29,550
557

30,107

1.49 $ 
1.47 $ 

37,803  $
29,485 
725 
30,210 

1.28  $
1.25  $

27,641

28,495
859

29,354

0.97
0.94

Restricted stock units and stock options representing approximately 0.5 million, 0.2 million and 0.7 million shares of 

common stock for the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, respectively, were 
excluded from the computation of diluted earnings per share for these periods because their effect would have been antidilutive. 

57 

 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

Income Taxes 

The Company is subject to taxation in the United States and various states and foreign jurisdictions.  The statute of 
limitations for examinations by the Internal Revenue Service is closed for fiscal years prior to 2012. The statute of limitations 
for examinations by state tax authorities is closed for fiscal years prior to 2011. Federal carryforward attributes that were 
generated prior to fiscal year 2012 and state carryforward attributes that were generated prior to fiscal year 2011 may still be 
adjusted upon examination by the federal 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, generation of tax credits 
compared to future utilization of credits, or changes in tax laws or regulations. The Company's income tax provision and its 
assessment of the ability to realize its deferred tax assets involve significant judgments and estimates.  The Company is 
currently generating state research credits that exceed the amount being utilized.  As a result of this trend, a valuation allowance 
may be needed in the future related to these state tax credits. 

F
o
r
m
1
0
-
K

As of December 28, 2013, the Company maintained a valuation allowance of $2.1 million related to certain state tax 

attributes from the Evolution Robotics, Inc. acquisition.  During the year ended December 27, 2014, this valuation allowance 
was released when the realization of these state tax attributes became more likely than not. As of January 2, 2016, the Company 
did not record a valuation allowance as all deferred tax assets are considered realizable.   

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 

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. 

58 

 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

Financial Assets and Liabilities 

The Company’s financial assets and liabilities measured at fair value on a recurring basis at January 2, 2016, were as 

follows: 

Description 

Assets: 

Cash and cash equivalents 

Money market funds 
Short term investments 

Corporate and government bonds (1) 

Total assets measured at fair value 

Liabilities: 

Accrued expenses 

Derivative instruments (Note 13) (2) 

Total liabilities measured at fair value 

Fair Value Measurements as of 

January 2, 2016 

Level 1 

Level 2 

Level 3 

(In thousands) 

$

$

$

$

110,817 $ 

—  $

—

110,817 $ 

33,124 
33,124  $

— $ 

— $ 

28  $
28  $

The Company’s financial assets measured at fair value on a recurring basis at December 27, 2014, were as follows: 

Description 

Assets: 

Cash and cash equivalents 

Money market funds 
Short term investments 

Corporate and government bonds (1) 

Total assets measured at fair value 

Fair Value Measurements as of 

December 27, 2014 

Level 1 

Level 2 

Level 3 

(In thousands) 

$

$

109,843 $ 

—  $

—

109,843 $ 

36,166 
36,166  $

—

—

—

—

—

—

—

—

(1) The bond investments are valued based on observable market values as of the Company's reporting date. The bond 
investments are recorded at fair value and marked-to-market at the end of each reporting period. The realized and unrealized 
gains and losses are included in comprehensive income for that period. 

(2) Derivative instruments are valued using an income approach based on the present value of the forward rate less the 

contract rate multiplied by the notional amount. 

Recent Accounting Pronouncements 

In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 

2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires that the presentation of 
deferred tax assets and liabilities be classified as noncurrent on the balance sheet instead of separating deferred taxes into 
current and noncurrent amounts. This standard will become effective for fiscal years, and the interim periods within those 
years, beginning after December 15, 2016, with early adoption allowed. The Company elected to prospectively adopt ASU 
2015-17. The prior reporting period was not retrospectively adjusted. The adoption of this guidance had no impact on the 
Company's Consolidated Statements of Income and Comprehensive Income. 

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

In July 2015, the FASB issued ASU No. 2015-11,  "Inventory: Simplifying the Measurement of Inventory." ASU 2015-11 

applies only to inventory for which cost is determined by methods other than last-in, first-out and the retail inventory method, 
which includes inventory that is measured using first-in, first-out or average cost. Inventory within the scope of this standard is 
required to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the 
ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new standard 
will be effective for the Company on January 1, 2017. The Company is currently assessing the potential impact of ASU 2015-
11 on its consolidated financial statements. 

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software: Customer's 

Accounting for Fees Paid in a Cloud Computing Arrangement." Under ASU 2015-05, if a cloud computing arrangement 
includes a software license, the software license element of the arrangement should be accounted for consistent with the 
acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the arrangement 
should be accounted for as a service contract. The new standard will be effective for the Company on January 3, 2016. The 
Company does not believe that the impact of this standard will be material to the Company’s consolidated financial statements. 

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest: Simplifying the Presentation of Debt 
Issuance Costs." ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability as a direct 
deduction from the carrying amount of that debt liability consistent with debt discounts and is effective for financial statements 
issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company does not 
believe that the impact of this standard will be material to the Company’s consolidated financial statements. 

F
o
r
m
1
0
-
K

In February 2015, the FASB issued ASU No. 2015-02, "Consolidation - Amendments to the Consolidation Analysis."  

ASU 2015-02 reduces the number of consolidation models and changes the way reporting entities evaluate a variable interest 
entity.  It is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 
2015.  Early adoption is permitted.  The Company does not believe that the impact of this standard will be material to the 
Company’s consolidated financial statements. 

In June 2014, the FASB issued ASU No. 2014-12, "Accounting for Share-Based Payments When the Terms of an Award 
Provide That a Performance Target Could Be Achieved after the Requisite Service Period."  ASU 2014-12 requires a reporting 
entity to treat a performance target that affects vesting and that could be achieved after the requisite service period as a 
performance condition. It is effective for annual periods, and interim periods within those annual periods, beginning after 
December 15, 2015. Early adoption is permitted. The Company does not believe that the impact of this standard will be 
material to the Company's consolidated financial statements. 

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers," which provides guidance 

for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised 
goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in 
exchange for those goods or services. The new guidance is effective for annual reporting periods beginning after December 15, 
2016, including interim periods within those annual reporting periods. In July 2015, the FASB voted to defer the effective date 
of the new accounting guidance related to revenue recognition by one year to December 17, 2017 for annual reporting periods 
beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 
15, 2016.  The Company is in the process of evaluating the impact that the adoption of the new revenue recognition standard 
issued in May 2014 will have on its consolidated financial statements and footnote disclosures. 

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 recently issued standards, which are not yet 
effective, will not have a material impact on the Company’s consolidated financial statements upon adoption. 

60 

 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

3. 

Inventory 

Inventory consists of the following at: 

Raw materials 
Finished goods 

4. 

Property and Equipment 

Property and equipment consists of the following at: 

Computer and equipment 
Furniture 
Machinery 
Tooling 
Leasehold improvements 
Business applications software 

Less: accumulated depreciation 

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 
9,082  $
52,596 
61,678  $

9,455
38,402

47,857

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 

13,825  $
2,441 
7,134 
16,599 
21,022 
8,559 
69,580 
42,730 
26,850  $

15,173
2,297
5,307
18,614
20,833
8,214

70,438
39,141

31,297

$ 

$ 

$ 

$ 

Depreciation expense for the years ended January 2, 2016, December 27, 2014 and December 28, 2013 was $11.4 

million, $9.2 million, and $8.1 million, respectively. 

5.  Other Assets 

At January 2, 2016, other assets consisted of six investments totaling $9.4 million.  At December 27, 2014, other assets 

consisted of three investments totaling $10.8 million. At January 2, 2016, these investments consisted primarily of cost method 
investments and notes receivable. The Company regularly monitors these investments to determine if facts and circumstances 
have changed in a manner that would require a change in accounting methodology. Additionally, the Company regularly 
evaluates whether or not these investments have been impaired by considering such factors as economic environment, market 
conditions, operational performance and other specific factors relating to the businesses underlying the investments. If any such 
impairment is identified, a reduction in the carrying value of the investments would be recorded at that time. Since the 
Company believes the fair value of its investments is greater than the carrying value of its investments, it has not impaired 
these investments. 

61 

 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

6. 

Accrued Expenses 

Accrued expenses consist of the following at: 

Accrued warranty 
Accrued direct fulfillment costs 
Accrued sales tax 
Accrued customer deposits 
Accrued rent 
Accrued sales commissions 
Accrued accounting fees 
Accrued other 

Accrued compensation consists of the following at: 

Accrued bonus 
Accrued other compensation 

7.  Working Capital Facilities 

Credit Facility 

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 
6,907  $
2,030 
625 
788 
547 
465 
395 
4,197 
15,954  $

7,769
1,346
867
702
701
531
167
6,618

18,701

$ 

$ 

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 
8,640    $
7,112   
15,752    $

8,455
7,780

16,235

$

$

F
o
r
m
1
0
-
K

The Company has an unsecured revolving credit facility with Bank of America, N.A., which is available to fund working 
capital and other corporate purposes. As of January 2, 2016, the total amount of the credit facility was $75.0 million and the full 
amount was available for borrowing. The interest on loans under the credit facility will accrue, at the Company's election, at 
either (1) LIBOR plus a margin, currently equal to 1.0%, based on the Company's ratio of indebtedness to Adjusted EBITDA 
(the "Eurodollar Rate"), or (2) the lender's base rate. The lender's base rate is equal to the highest of (1) the federal funds rate 
plus 0.5%, (2) the lender's prime rate and (3) the Eurodollar Rate plus 1.0%. The credit facility will terminate and all amounts 
outstanding thereunder will be due and payable in full on December 20, 2018. 

As of January 2, 2016, the Company had no outstanding borrowings under its revolving credit facility. This credit facility 

contains customary terms and conditions for credit facilities of this type, including restrictions on the Company's 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, the Company's stock, and consolidate or merge with other 
entities.  

In addition, the Company is required to meet certain financial covenants customary with this type of agreement, including 

maintaining a maximum ratio of indebtedness to Adjusted EBITDA and a minimum specified interest 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, the Company's 
obligations under the credit facility may be accelerated. 

As of January 2, 2016, the Company was in compliance with all covenants under its credit facility.  

62 

 
 
 
 
 
 
 
 
 
 
 
Letter of Credit Facility 

  The Company has an unsecured revolving letter of credit facility with Bank of America, N.A. The credit facility is 
available to fund letters of credit on the Company's behalf up to an aggregate outstanding amount of $5 million. The Company 
may terminate at any time, subject to proper notice, or from time to time permanently reduce the amount of the credit facility.  

  The Company pays a fee on outstanding letters of credit issued under the credit facility of up to 1.5% per annum of the 

outstanding letters of credit.  The maturity date for letters of credit issued under the credit facility must be no later than 365 
days following the maturity date of the credit facility. 

  As of January 2, 2016, there were letters of credit outstanding of $1.5 million under the revolving letter of credit 
facility. The credit facility contains customary terms and conditions for credit facilities of this type, including restrictions on the 
Company's 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 stock, and consolidate or merge with other 
entities. In addition, the Company is required to meet certain financial covenants customary with this type of agreement, 
including maintaining a maximum ratio of indebtedness to Adjusted EBITDA and a minimum specified interest coverage ratio.  

  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 January 2, 2016, the Company was in compliance with all covenants under the revolving letter of credit facility. 

8. 

Common Stock 

Common stockholders are entitled to one vote for each share held and to receive dividends if and when declared by the 
Board of Directors and subject to and qualified by the rights of holders of the preferred stock. Upon dissolution or liquidation 
of the Company, holders of common stock will be entitled to receive all available assets subject to any preferential rights of any 
then outstanding preferred stock. 

On April 2, 2014, the Company announced a stock repurchase program.  Under the program, the Company may purchase 

up to $50 million of its common stock from May 1, 2014 to April 30, 2015. On March 19, 2015, the Company announced an 
additional stock repurchase program, which authorized the repurchase of $50 million of its common stock from May 1, 2015 to 
April 30, 2016. During 2015 and 2014, the Company repurchased 1,260,276 shares totaling $37.4 million and 55,973 shares 
totaling $1.7 million, respectively, in the open market under these stock repurchase plans. During the fourth quarter of 2015, the 
Company replaced the then-current stock repurchase program with a new stock repurchase program, effective January 4, 2016 
and ending on December 31, 2016, pursuant to which the Company is authorized to purchase up to one million shares or $40 
million of its common stock, whichever occurs earlier. 

9. 

Stock Option Plans and Stock-Based Compensation 

The Company has options outstanding under three stock incentive plans: the 2005 Stock Option and Incentive Plan (the 

"2005 Plan"), the Evolution Robotics, Inc. 2007 Stock Plan (the "2007 Plan") and the 2015 Stock Option and Incentive Plan 
(the "2015 Plan" and together with the 2005 Plan and the 2007 Plan, the “Plans”). All options that remained outstanding under 
the 2004  Stock Option and Incentive Plan as of December 27, 2014 were exercised during fiscal 2015. The 2015 Plan is the 
only one of the three plans under which new awards may currently be granted. Under the 2015 Plan, which became effective 
May 20, 2015, 3,100,000 shares were initially reserved for issuance in the form of incentive stock options, non-qualified stock 
options, stock appreciation rights, deferred stock awards, restricted stock units, unrestricted stock awards, cash-based awards, 
performance share awards and dividend equivalent rights.  Stock awards returned to the Plans, with the exception of those 
issued under the 2007 Plan, as a result of their expiration, cancellation or termination are automatically made available for 
issuance under the 2015 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 January 2, 2016, there were 2,484,296 shares available for future grant under the 2015 Plan. 

63 

 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

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 four years, and expire five or ten years from the date of grant or, if earlier, 90 days from employee 
termination. The exercise price of stock options is typically equal to the closing price on the NASDAQ Global Market on the 
date of grant. Other awards granted under the Plans generally vest over periods from three to four years.   

In conjunction with the acquisition of Evolution Robotics, Inc. on October 1, 2012, each outstanding and unvested 
incentive stock option held by Evolution employees as of the acquisition date was automatically converted into stock options of 
the Company under the same terms and conditions as were applicable to the original Evolution grants.  The number of 
replacement options granted and the associated exercise prices were determined utilizing a conversion ratio as defined in the 
merger agreement.  There were 114,248 incentive stock options issued by the Company as a result of this automatic conversion 
with exercise prices ranging from $2.55 to $4.81.  All of these options were granted from the 2007 Plan, which was assumed by 
the Company as a result of the acquisition. 

The Company recognized $3.4 million of stock-based compensation expense during the fiscal year ended January 2, 2016 

for stock options.  The unamortized fair value as of January 2, 2016 associated with these grants was $6.4 million with a 
weighted-average remaining recognition period of 2.83 years.  The Company expects to recognize associated stock-based 
compensation expense of $2.6 million, $1.9 million, $1.3 million and $0.6 million in 2016, 2017, 2018 and 2019, respectively.   

F
o
r
m
1
0
-
K

The fair value of each option grant for the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 

2013 was computed on the grant date using the Black-Scholes option-pricing model with the following assumptions: 

Risk-free interest rate 
Expected dividend yield 
Expected life 
Expected volatility 

January 2, 
2016
1.47% — 1.75%
— 
3.98 — 4.02 years
46.5% — 52.4% 

Fiscal Year Ended 

December 27, 
2014 
1.65% — 1.69% 
— 

December 28, 
2013
  0.90% — 1.77%

— 

3.91 — 4.00 years    4.03 — 4.21 years
  54.0% — 58.0% 
52.8% — 56.0% 

The risk-free interest rate is derived from the average U.S. Treasury constant maturity rate, which approximates the rate in 

effect at the time of grant, commensurate with the expected life of the instrument. The dividend yield is zero based upon the 
fact the Company has never paid and has no present intention to pay cash dividends.  The Company utilizes company specific 
historical data for purposes of establishing expected volatility and expected term. 

Based upon the above assumptions, the weighted average fair value of each stock option granted for the fiscal years 

ended January 2, 2016, December 27, 2014 and December 28, 2013 was $13.21, $15.87 and $11.17, respectively. 

64 

 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

The table below summarizes stock option plan activity: 

Number of 
Shares 

Weighted Average 
Exercise Price 

Weighted  Average 
Remaining 
Contractual Term 

Aggregate 
Intrinsic 
Value(1)

Outstanding at December 29, 2012 
Granted 
Exercised 
Canceled 

Outstanding at December 28, 2013 
Granted 
Exercised 
Canceled 

Outstanding at December 27, 2014 
Granted 
Exercised 
Canceled 

Outstanding at January 2, 2016 

Vested and expected to vest at January 2, 2016 

Exercisable as of January 2, 2016 
Weighted average fair value of options granted 
during the fiscal year ended January 2, 2016 

2,503,667 $
293,325
(840,951)
(185,666)

1,770,375 $
233,181
(486,252)
(43,984)

1,473,320 $
323,104
(390,085)
(118,789)

1,287,550 $

1,230,537 $

768,184 $

$

18.27
24.60
16.21
22.16

19.89
37.10
18.39
27.17

22.89
32.58
16.57
28.41

26.73

26.45

23.18

13.21

4.00 years 

$11.6 million 

3.90 years 

$11.4 million 

2.74 years 

$9.6 million 

Options available for future grant at January 2, 2016 

2,484,296

 _________________________ 
(1) 

The aggregate intrinsic value on the table was calculated based upon the positive difference between the closing 
market value of the Company’s stock on January 2, 2016 of $35.40 and the exercise price of the underlying option. 

During fiscal years 2015, 2014, and 2013, the total intrinsic value of stock options exercised was $5.9 million, $10.5 

million and $12.1 million, respectively.  No amounts relating to stock-based compensation have been capitalized. 

The following table summarizes information about stock options outstanding at January 2, 2016: 

Options Outstanding 

Options Exercisable 

Range of Exercise Prices 

Number 
Outstanding 

Weighted  Average
Exercise Price 

Number 
Exercisable 

Weighted Average 
Exercise Price 

     $  3.54 - $ 13.46 
      14.52 - 14.52 
      17.70 - 21.23 
      22.86 - 22.86 
      24.53 - 26.59 
      29.60 - 32.38 
      33.29 - 33.48 
      33.72 - 34.30 
      34.67 - 37.08 
      43.35 -  43.35 

     $ 3.54 -  $43.35 

$

Weighted Average 
Remaining 
Contractual Life
2.88 years 
1.25 
1.61 
4.10 
2.85 
6.51 
3.27 
6.24 
5.34 
4.95 

81,723
144,017
82,171
166,757
167,468
162,225
159,940
168,599
107,648
47,002

1,287,550

4.00 years 

$

65 

7.97
14.52
18.44
22.86
25.75
31.04
33.42
34.13
35.83
43.35

26.73

78,713    $
144,017   
73,194   
112,252   
153,635   
1,500   
125,453   
12,671   
44,991   
21,758   
768,184    $

8.09
14.52
18.41
22.86
25.71
31.22
33.46
33.72
35.66
43.35

23.18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

During the fiscal year ended January 2, 2016, the Company recognized $10.7 million of stock-based compensation 

expense associated with restricted stock units.  As of January 2, 2016, December 27, 2014 and December 28, 2013, the 
unamortized fair value of all restricted stock units was $24.3 million, $20.1 million and $17.5 million, respectively. The 
Company expects to recognize associated stock-based compensation expense of $9.7 million, $7.3 million, $5.2 million and 
$2.1 million in 2016, 2017, 2018 and 2019, respectively. 

The table below summarizes activity relating to restricted stock units: 

Outstanding at December 29, 2012 
Granted 
Vested 
Forfeited 

Outstanding at December 28, 2013 
Granted 
Vested 
Forfeited 

Outstanding at December 27, 2014 
Granted 
Vested 
Forfeited 

Outstanding at January 2, 2016 

Number of 
Shares Underlying 
Restricted Stock 

Weighted Average 
Grant Date Fair 
Value

941,030     $ 
521,056    
(348,141 )  
(186,291 )  
927,654     $ 
372,159    
(318,367 )  
(71,591 )  
909,855     $ 
576,410    
(340,754 )  
(121,142 )  
1,024,369     $ 

F
o
r
m
1
0
-
K

24.09
25.87
22.57
24.91

25.50
38.25
25.38
28.42

30.53
32.33
29.13
31.49

31.90

In 2014 and 2015, the Company granted performance-based restricted stock units (PSUs) to certain of its employees.  
The performance metric for these awards is operating income percent, with a threshold requirement for a minimum amount of 
revenue growth.  These awards vest over a three year period.  The number of shares actually earned at the end of the three year 
period will range from 0% to 100% of the target number of PSUs granted based on the Company’s performance against three 
year operating income and revenue goals. In addition, while all vesting of earned PSUs occurs on the third anniversary of the 
date of grant, achievement of cumulative intermediate targets for each individual year will allow PSUs to be deemed earned but 
not yet vested for the intermediate periods. Achievement of the cumulative target will allow all shares subject to the PSUs to be 
earned regardless of the achievement of the intermediate individual year targets. 

66 

 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

10. 

Income Taxes 

The components of income tax expense were as follows: 

Current 

Federal 
State 
Foreign 

Total current tax provision 

Deferred 
Federal 
State 

Total deferred tax provision 
Total income tax provision 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

$

20,033    $ 
972   
121   
21,126   

(1,657)  
(628)  

(2,285)  
18,841    $ 

15,128 $
129
91

15,348

1,268
(2,010)

(742)
14,606 $

6,363
1,124
41

7,528

(2,026)
(728)

(2,754)
4,774

In certain jurisdictions, an immaterial provision has been made for deferred taxes on undistributed earnings of non-

U.S. subsidiaries. In other jurisdictions, for the remaining undistributed earnings of non-U.S. subsidiaries, no provision 
has been made for deferred taxes as these earnings have been indefinitely reinvested. As of January 2, 2016, a deferred tax 
liability has not been established for approximately $1.0 million of cumulative undistributed earnings of non-U.S. 
subsidiaries, as the Company plans to keep these amounts permanently reinvested overseas. The amount of any 
unrecognized deferred tax liability on these undistributed earnings would be immaterial. 

67 

 
 
 
 
 
 
 
 
   
 
 
   
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

The components of net deferred tax assets were as follows: 

Net deferred tax assets 
Current deferred tax assets 
Reserves and accruals 
Stock-based compensation 
Net operating loss carryforwards 
Foreign tax credits 

Total current deferred tax assets 

Non-current deferred tax assets 

Reserves and accruals 
Tax credits 
Property and equipment 
Stock-based compensation 
Net operating loss carryforwards 

Total non-current deferred tax assets 

Current deferred tax liabilities 

Prepaids 

Total current deferred tax liabilities 

Non-current deferred tax liabilities 

Prepaids 
Intangible assets 

Total non-current deferred tax liabilities 
Total net deferred tax assets 

January 2, 
 2016 

December 27, 
 2014 

(In thousands) 

$ 

—   $
— 
— 
— 
— 

21,544 
6,114 
1,308 
5,962 
3,606 
38,534 

— 
— 

623 
6,190 
6,813 
31,721   $

$ 

18,568
767
2,470
148

21,953

586
5,927
178
5,011
3,879

15,581

448

448

—
7,172

7,172
29,914

F
o
r
m
1
0
-
K

In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes: Balance Sheet Classification of Deferred 

Taxes." ASU 2015-17 requires that the presentation of deferred tax assets and liabilities be classified as noncurrent on the 
balance sheet instead of separating deferred taxes into current and noncurrent amounts. This standard will become 
effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016, with early 
adoption allowed. The Company elected to prospectively adopt ASU 2015-17. The prior reporting period was not 
retrospectively adjusted. The adoption of this guidance had no impact on the Company's Consolidated Statements of 
Income and Comprehensive Income. 

As of December 28, 2013, the Company maintained a valuation allowance of $2.1 million related to certain state tax 

attributes from the Evolution Robotics, Inc. acquisition. During the year ended December 27, 2014, this valuation 
allowance was released when realization of these state tax attributes became more likely than not. As of January 2, 2016, 
the Company did not record a valuation allowance as all deferred tax assets are considered realizable.   

The table below summarizes activity relating to the valuation allowance: 

Fiscal Year Ended 

December 28, 2013 
December 27, 2014 
January 2, 2016 

Balance at 
beginning  of
period 

Additions 
Charged to 
Costs and 
Expenses

$
$
$

2,691
2,090
—

—
—
—

Additions 
Charged to 
Goodwill 

(In thousands) 

Deductions   

Balance 
at End 
of Period 

—
—
—

601     $ 
2,090     $ 
—     $ 

2,090
—
—

68 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

The Company has federal net operating loss carryforwards of $8.0 million and $15.1 million as of January 2, 2016 
and December 27, 2014, respectively, which expire in 2031. The Company has state net operating loss carryforwards of 
$15.0 million and $19.4 million as of January 2, 2016 and December 27, 2014, respectively, which expire from 2029 to 
2031. The Company has federal research and development credit carryforwards of $1.0 million and $1.0 million as of 
January 2, 2016 and December 27, 2014, respectively, which expire from 2026 to 2031. The Company has state research 
and development credit carryforwards of $9.3 million and $8.1 million as of January 2, 2016 and December 27, 2014, 
respectively, which expire from 2023 to 2030. The Company has state investment tax credit carryforwards of $0.3 million 
and $0.7 million as of January 2, 2016 and December 27, 2014, respectively, which expire from 2024 to 2025. Under the 
Internal Revenue Code, certain substantial changes in the Company’s ownership could result in an annual limitation on 
the amount of these tax carryforwards which can be utilized in future years.  As of January 2, 2016, the Company has 
$23.0 million of federal and state net operating loss carryforwards and $2.2 million of federal and state research and 
development credits related to the acquisition of Evolution Robotics that are limited by Section 382 and Section 383, 
respectively, of the Internal Revenue Code.  However, these limitations are not expected to cause any of these federal and 
state net operating loss carryforwards or federal and state research and development credits to expire prior to being 
utilized. 

The reconciliation of the expected tax (benefit) expense (computed by applying the federal statutory rate to income 

before income taxes) to actual tax expense was as follows: 

Expected federal income tax 
Miscellaneous permanent items 
State taxes (net of federal benefit) 
Federal and state credits 
Change in valuation allowance 
Domestic production activities deduction 
Settlement of uncertain tax positions 
Other 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

22,040   $ 
608  
982  
(2,767) 
—  
(2,145) 
(194) 
317  

$

18,841   $ 

18,344   $
691 
1,058 
(1,487)
(2,090)
(1,562)
(176)
(172)
14,606   $

11,345
405
867
(3,909)
—
(1,168)
(2,696)
(70)

4,774

A summary of the Company’s adjustments to its gross unrecognized tax benefits in the current year is as follows: 

Balance at beginning of period 

Increase for tax positions related to the current year 
Increase (decrease) for tax positions related to prior years 
Decreases for settlements with applicable taxing authorities 
Decreases for lapses of statute of limitations 

Balance at end of period 

January 2, 2016  

Fiscal Year Ended 

December 27, 
2014 
(in thousands) 

December 28, 
2013

$

$

2,491   $ 
786  
3,533  
—  
(194)  

6,616   $ 

2,618 $
252
(108)
(271)
—

2,491 $

4,469
355
490
(2,696)
—

2,618

The Company accrues interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are 

classified as a component of income tax expense.  As of January 2, 2016, December 27, 2014 and December 28, 2013 

69 

 
 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

there were no material accrued interest or penalties. Over the next twelve months, it is reasonably possible that the 
Company may recognize approximately $0.2 million of previously net unrecognized tax benefits related to U.S. federal, 
state and foreign tax audits and expiration of the statute of limitations. If all of our unrecognized tax benefits as of 
January 2, 2016 were to become recognizable in the future, we would record a $2.1 million benefit, inclusive of interest, 
to the income tax provision, reflective of federal benefit on state items. 

Included in the Company’s state tax credit carryforwards are unrecognized tax benefits related to stock-based 
compensation beginning from January 1, 2006 of $0.6 million and $0.5 million as of January 2, 2016 and December 27, 
2014, respectively. Included in the Company's state net operating loss carryforwards are unrecognized tax benefits related 
to stock-based compensation beginning from January 1, 2006 of $1.0 million and $0.7 million as of January 2, 2016 and 
December 27, 2014, respectively. These unrecognized tax benefits will be credited to additional paid-in capital when they 
reduce income taxes payable. Therefore, these amounts were not included in the Company’s gross or net deferred tax 
assets at January 2, 2016 and December 27, 2014.  

The Company follows the with and without approach for direct and indirect effects of windfall tax deductions. 

11. 

Commitments and Contingencies 

Legal 

From time to time and in the ordinary course of business, the Company is 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 the Company's financial condition or results of operations. 

Lease Obligations 

The Company leases its facilities. Rental expense under operating leases for fiscal 2015, 2014 and 2013 amounted to $4.9 

million, $4.8 million, and $5.3 million, respectively. Future minimum rental payments under operating leases were as follows 
as of January 2, 2016: 

F
o
r
m
1
0
-
K

2016 
2017 
2018 
2019 
2020 
Thereafter 

Total minimum lease payments

Outstanding Purchase Orders 

Operating 
Leases 

3,856
3,411
2,957
2,925
978
—
14,127

$

$

At January 2, 2016, we had outstanding purchase orders aggregating approximately $74.7 million. The purchase orders, 
the majority of which are with our contract manufacturers for the purchase of inventory in the normal course of business, are 
for manufacturing and non-manufacturing related goods and services, and are generally cancelable without penalty.  In 
circumstances where we determine that we have financial exposure associated with any of these commitments, we record a 
liability in the period in which that exposure is identified. 

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 Company’s customers, in connection with any patent, copyright, trade secret or other proprietary right 
infringement claim by any third party. The term of these indemnification agreements is generally perpetual any time after 

70 

 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

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 January 2, 2016 and December 27, 
2014, respectively. 

Government Contract Contingencies 

Several of the Company’s prime contracts with the U.S. federal government do not contain a limitation of liability 
provision, creating a risk of responsibility for direct and consequential damages. Several subcontracts with prime contractors 
hold the prime contractor harmless against liability that stems from our work and do not contain a limitation of liability. These 
provisions could cause substantial liability for the Company. In addition, the Company is subject to audits by the U.S. federal 
government as part of routine audits of government contracts. As part of an audit, these agencies may review the Company’s 
performance on contracts, cost structures and compliance with applicable laws, regulations and standards. If any of its costs are 
found to be allocated improperly to a specific contract, the costs may not be reimbursed and any costs already reimbursed for 
such contract may have to be refunded. Accordingly, an audit could result in a material adjustment to our revenue and results of 
operations. 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 DCAA.  As of January 2, 2016, fiscal years 2012 through 2015 are 
open for audit by DCAA.   

Warranty 

The Company provides warranties on most products and has established a reserve for warranty based on estimated 
warranty costs. The reserve is included as part of accrued expenses (Note 6) in the accompanying consolidated balance sheets. 

Activity related to the warranty accrual was as follows: 

Balance at beginning of period 
Provision 
Warranty usage(*) 

Balance at end of period 

 __________________________________ 
(*) 

Warranty usage includes costs incurred for warranty obligations. 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

$

$

7,769 $ 
4,598
(5,460)

6,907 $ 

6,497  $
6,410 
(5,138)
7,769  $

December 28, 
2013

6,057
1,744
(1,304)

6,497

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 nexus in new jurisdictions with respect to sales tax. The Company has recorded a liability for potential exposure in 
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. 

12. 

Employee Benefits 

The Company sponsors a retirement plan under Section 401(k) of the Internal Revenue Code (the "Retirement Plan"). All 

Company employees, with the exception of temporary, contract and international employees are eligible to participate in the 

71 

 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

Retirement Plan after satisfying age and length of service requirements prescribed by the plan. Under the Retirement Plan, 
employees may make tax-deferred contributions, and the Company, at its sole discretion, and subject to the limits prescribed by 
the IRS, may make either a nonelective contribution on behalf of all eligible employees or a matching contribution on behalf of 
all plan participants. 

The Company elected to make a matching contribution of approximately $1.8 million, $1.7 million and $1.5 million for 

the plan years ended January 2, 2016, December 27, 2014 and December 28, 2013 ("Plan-Year 2015," "Plan-Year 2014" and 
"Plan-Year 2013"), respectively. The employer contribution represents a matching contribution at a rate of 50% of each 
employee’s first six percent contribution. Accordingly, each employee participating during Plan-Year 2015, Plan-Year 2014 and 
Plan-Year 2013 is entitled up to a maximum of three percent of his or her eligible annual payroll. The employer matching 
contribution for Plan-Year 2015 is included in accrued compensation in the accompanying consolidated balance sheet. 

13. 

Derivative Instruments 

The Company is exposed to adverse changes in foreign currency exchange rates, primarily related to sales in the Canadian 

Dollar and the Euro.  As a result, the Company periodically enters into foreign currency forward contracts to minimize the 
impact of fluctuating exchange rates on results of operations. These derivative instruments have maturities of two months or 
less and have not qualified for hedge accounting. 

Notional amounts and fair values of derivative instruments are as follows: 

F
o
r
m
1
0
-
K

Classification 

January 2, 2016 

December 27, 2014

January 2, 2016 

  December 27, 2014

Notional amount 

Fair Value 

(In thousands) 

Foreign currency 
forward contracts 

Accrued expenses  $

6,773 $

— $

28

 $ 

—

Gains/(losses) associated with derivative instruments are as follows: 

Classification 

January 2, 2016 

December 27, 2014 

Twelve Months Ended 

(In thousands) 

Derivatives not designated as hedging instruments 

Gain (loss) recognized in income 

Other expense,  net $

368   $ 

—

14.  Goodwill and other intangible assets 

The carrying amount of the goodwill at January 2, 2016 is $48.8 million.  $41.0 million resulted from the acquisition of 

Evolution Robotics, Inc. in October 2012 and was assigned to the home robots reporting unit.  $7.7 million (net of a subsequent 
write-down of $0.2 million) resulted from the acquisition of Nekton Research, LLC completed in September 2008 and was 
assigned to the defense and security reporting unit. In conjunction with the reorganization completed as of the beginning of the 
fiscal year 2013, the defense and security reporting unit was divided into two reporting units: the defense and security reporting 
unit and the research reporting unit. As a result, the goodwill of $7.9 million was reassigned utilizing a relative fair value 
allocation approach. $7.7 million and $0.2 million were reassigned to the defense and security and research reporting units, 
respectively.  

72 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

During the second quarter of 2013, the Company decided to refocus its funded research activities.  The Company 
considered this decision to be an impairment indicator, requiring an interim impairment test within the research reporting unit.  
The Company performed an impairment assessment using the income approach, and determined that goodwill was impaired.  
The Company recorded an impairment loss of $0.2 million within general and administrative expenses during the fiscal year 
ended December 28, 2013. 

In the fourth quarter of 2015, the Company completed its annual goodwill impairment tests on the goodwill associated 

with the acquisitions of Evolution Robotics, Inc. and Nekton Research, LLC and did not identify any goodwill impairment. The 
Company further considered the subsequent event of the signed definitive agreement associated with the sale of the defense and 
security business unit, and reevaluated its position which incorporated the associated purchase price and reconfirmed that no 
impairment of the Nekton goodwill exists. 

Other intangible assets include the value assigned to completed technology, research contracts, and trade names. 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 estimated economic benefits of the intangible assets are expected 
to be utilized. 

Intangible assets at January 2, 2016 and December 27, 2014 consisted of the following: 

January 2, 2016 

Cost 

Accumulated
Amortization

December 27, 2014 

Net 

Cost 

Accumulated 
Amortization   

Impairment 
Loss

Net 

Completed technology 
Research contracts 
Tradename 

$  26,900 $

—
100

(In thousands) 
11,236 $ 15,664 $ 30,600 $
—
—

100
800

—
100

Total 

$  27,000 $

11,336 $ 15,664 $ 31,500 $

9,691    $ 
100   
775   
10,566    $ 

1,788 $ 19,121
—
25

—
—

1,788 $ 19,146

As part of the Company's decision during 2013 to refocus its funded research activities, the Company decided to no 
longer pursue certain research contracts in which completed technology acquired as part of the acquisition of Nekton Research, 
LLC was utilized.  As a result, the Company performed an impairment assessment of the associated intangible asset using the 
income approach, and recorded an impairment loss of $1.8 million within general and administrative expenses during the fiscal 
year ended December 28, 2013.  

Amortization expense related to acquired intangible assets was $3.5 million, $3.5 million, and $3.8 million for the fiscal 

years ended January 2, 2016, December 27, 2014 and December 28, 2013, respectively. The estimated future amortization 
expense related to current intangible assets in each of the five succeeding fiscal years is expected to be as follows: 

2016 
2017 
2018 
2019 
2020 

Total 

$

(In thousands) 

3,457
3,457
3,457
2,818
900

$

14,089

15. 

Restructuring charges 

In 2013, the Company incurred restructuring charges of $3.3 million primarily related to a $1.8 million write-down of an 

intangible asset, costs associated with the closing of its San Luis Obispo, California office and severance-related costs.  

73 

 
 
 
 
 
 
 
 
 
The activity for the restructuring program is presented below: 

Balance at beginning of period 
Charges 
Utilization 

Balance at end of period 

Fiscal Year Ended 

January 2, 2016 

December 27, 2014    December 28, 2013 

(In thousands) 

$

$

— $
—
—

— $

675    $ 
—   
(675)  

—   $ 

197
3,296
(2,818)

675

16. 

Industry Segment, Geographic Information and Significant Customers 

The Company operates in two reportable segments, the home robots business unit and the defense and security business 

unit. The nature of products and types of customers for the two segments vary significantly. As such, the segments are managed 
separately. 

F
o
r
m
1
0
-
K

Home Robots 

The Company’s home robots business unit 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 Company’s 
on-line store. The Company’s home robots business unit includes mobile robots used in the maintenance of households. 

Defense and Security Robots 

The Company’s defense and security business unit offers products to the U.S. Department of Defense through a small 

U.S. government-focused sales force, and to other North American and international entities through small domestic and 
international sales teams, as well as through North American and international distributors. The Company’s defense and 
security robots are used to increase warfighters', law enforcement, security forces and first responders' safety and productivity. 

Other 

The Company’s other revenue and cost of revenue result from other smaller business units that do not meet the criteria of 

a reportable segment, as well as certain operational costs included in cost of revenue. 

74 

 
 
   
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

The table below presents segment information about revenue, cost of revenue, gross margin and income before income 

taxes: 

Revenue: 

Home Robots 
Defense & Security Robots 
Other 

Total revenue 

Cost of revenue: 
Home Robots 
Defense & Security Robots 
Other 

Total cost of revenue 

Gross margin: 
Home Robots 
Defense & Security Robots 
Other 

Total gross margin 

Research and development 
Selling and marketing 
General and administrative 
Other expense, net 

Income before income taxes 

January 2, 
2016

Fiscal Year Ended 

December 27, 
 2014 
(In thousands) 

December 28, 
2013

$

559,619 $ 

55,004
2,155

616,778

274,613
29,737
23,502

327,852

285,006
25,267
(21,347)

288,926

76,071
97,772
54,465
2,353

$

62,971 $ 

507,414  $
45,502 
3,930 
556,846 

251,095 
24,409 
23,287 
298,791 

256,319 
21,093 
(19,357)
258,055 
69,408 
86,091 
49,439 
(708)
52,409  $

427,853
50,003
9,545

487,401

217,011
24,975
24,261

266,247

210,842
25,028
(14,716)

221,154

63,649
71,529
53,358
(203)

32,415

As of January 2, 2016, goodwill of $41.0 million and purchased intangible assets, net of $15.7 million recorded in 

conjunction with the acquisition of Evolution Robotics, Inc. in October 2012 are directly associated with the home robots 
business unit.  Goodwill of $7.7 million recorded in conjunction with the acquisition of Nekton in September 2008 is directly 
associated with the defense and security business unit. Other long lived assets are not directly attributable to individual business 
segments. 

Geographic Information 

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, sales to non-U.S. customers 
accounted for 56.0%, 60.9% and 59.5% of total revenue, respectively. For the fiscal years ended January 2, 2016, December 27, 
2014 and December 28, 2013, sales to our home robots distributor in Japan accounted for 13.3%, 17.0%, and 19.8% of total 
revenue, respectively. 

Significant Customers 

For the fiscal years ended January 2, 2016, December 27, 2014 and December 28, 2013, U.S. federal government orders, 

contracts and subcontracts accounted for 5.1%, 4.3% and 6.2% of total revenue, respectively.  For the fiscal years ended 
January 2, 2016, December 27, 2014 and December 28, 2013 approximately 76.6%, 75.7% and 75.3%, respectively, of our 
home robot product revenue resulted from sales to 15 customers.  For the fiscal years ended January 2, 2016, December 27, 
2014 and December 28, 2013, the Company generated an aggregate of 26.0%, 29.8% and 33.2%, 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 (Robopolis SAS). 

75 

 
 
 
 
 
 
 
 
 
 
 
 
iROBOT CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 

17.  Quarterly Information (Unaudited) 

Fiscal Quarter Ended 

January 2, 
 2016 

September 26, 
 2015 

June 27,
2015

March 28, 
2015

December 27,
2014

September 27, 
2014 

June 28, 
 2014 

March 29, 
2014

(In thousands, except per share amounts) 

$  206,420    $
95,327   
19,331   

143,609    $ 148,788 $
69,858   
12,793   

70,033
7,252

117,961 $
53,708
4,754

159,342 $
76,335
9,386

143,497    $  139,803 $
67,889   
14,607   

62,121
8,530

114,204
51,710
5,280

$ 

0.65

  $

0.42

  $ 

0.24 $

0.16 $

0.31 $

0.48

  $ 

0.28 $

0.18

Revenue 
Gross margin 
Net income 
Diluted earnings 
per share 

During the fourth quarter of 2015, the Company identified immaterial errors to previously reported revenue due to certain 

customer allowances recorded at an incorrect rate and a reserve calculation which was overstated. The recorded out of period 
adjustment to revenue resulted in a $1.5 million increase in fourth quarter 2015 income before taxes.  Of the $1.5 million 
adjustment, $0.7 million relates to prior years and $0.8 million relates to the first three quarters of 2015.  The adjustment did 
not have a material impact on the reported financial position or results of operations for the three and twelve months ended 
January 2, 2016.  Additionally, had the errors been recorded in the prior periods to which they relate, the impact would not have 
been material to the reported financial position or results of operations for those periods. 

F
o
r
m
1
0
-
K

18.  Subsequent Event 

On February 2, 2016, the Company entered into an Asset Purchase Agreement with iRobot Defense Holdings, Inc., a 

recently-formed portfolio company of Arlington Capital Partners, to sell all of the assets and certain liabilities of the defense 
and security business unit. The purchase price is up to $45.0 million, of which $30.0 million will be paid at the closing of the 
transaction, subject to adjustments for working capital and indebtedness as set forth in the purchase agreement, and up to an 
additional $15.0 million of which may be earned based on 2016 revenue of the defense and security business unit. The 
transaction is expected to close during the first quarter of 2016. 

ITEM 9. 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE 

Not Applicable. 

ITEM 9A. 

CONTROLS AND PROCEDURES 

Evaluation of disclosure controls and procedures. 

As required by Rule 13a-15(b) under the Exchange Act, we have carried out an evaluation, under the supervision and 
with the participation of our management, including our Chief Executive Officer (CEO) and our Chief Financial Officer (CFO), 
of the effectiveness, as of the end of the period covered by this report, of the design and operation of our “disclosure controls 
and procedures” as defined in Rule 13a-15(e) promulgated by the SEC under the Exchange Act. Based upon that evaluation, 
our CEO and our CFO concluded that our disclosure controls and procedures, as of the end of such period, were adequate and 
effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act 
is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such 
information was accumulated and communicated to management, as appropriate, to allow timely decisions regarding required 
disclosure. 

Management’s Report on Internal Control Over Financial Reporting 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial 

reporting.  Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the 

76 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial 
officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance 
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance 
with generally accepted accounting principles and includes those policies and procedures that: 

•   Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and 

dispositions of the assets of the Company; 

•   Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial 

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the 
Company are being made only in accordance with authorizations of management and directors of the Company; and 

•   Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or 

disposition of the Company’s assets that could have a material effect on the financial statements. 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become 
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

Under the supervision and with the participation of management, including our principal executive and financial officers, 

we assessed the Company’s internal control over financial reporting as of January 2, 2016, based on criteria for effective 
internal control over financial reporting established in Internal Control — Integrated Framework (2013), issued by the 
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management 
concluded that the Company maintained effective internal control over financial reporting as of January 2, 2016 based on the 
specified criteria. 

The effectiveness of the Company’s internal control over financial reporting as of January 2, 2016 has been audited by 

PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included 
herein. 

Changes in Internal Control Over Financial Reporting 

During the quarter ended January 2, 2016, there were no changes in our internal control over financial reporting that have 

materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

77 

 
 
F
o
r
m
1
0
-
K

ITEM 9B. 

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 and Glen D. Weinstein, EVP & Chief Legal Officer) of the Company have 
entered into trading plans (each a “Plan” and collectively, the “Plans”) covering periods after the date of this Annual Report on 
Form 10-K in accordance with Rule 10b5-l and our policy governing transactions in our securities. Generally, under these 
trading plans, the 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, including for revision or termination of an established trading plan, other than in such quarterly and annual reports. 

PART  III 

ITEM 10. 

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement 

pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 
120 days after the close of the Company’s fiscal year ended January 2, 2016. 

ITEM 11. 

EXECUTIVE COMPENSATION 

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement 

pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 
120 days after the close of the Company’s fiscal year ended January 2, 2016. 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED 

STOCKHOLDER MATTERS 

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement 

pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 
120 days after the close of the Company’s fiscal year ended January 2, 2016. 

ITEM 13. 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement 

pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 
120 days after the close of the Company’s fiscal year ended January 2, 2016. 

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES 

The information required under this item is incorporated herein by reference to the Company’s definitive proxy statement 

pursuant to Regulation 14A, which proxy statement will be filed with the Securities and Exchange Commission not later than 
120 days after the close of the Company’s fiscal year ended January 2, 2016. 

78 

 
 
 
 
 
 
ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES 

PART IV 

(a) 

The following are filed as part of this Annual Report on Form 10-K: 

1. 

Financial Statements 

The following consolidated financial statements are included in Item 8: 

Report of Independent Registered Public Accounting Firm 

Consolidated Balance Sheets at January 2, 2016 and December 27, 2014  

Consolidated Statements of Income for the Years ended January 2, 2016, December 27, 2014 and December 28, 
2013  

Consolidated Statements of Comprehensive Income for the Years ended January 2, 2016, December 27, 2014 and 
December 28, 2013  

Consolidated Statements of Stockholders’ Equity for the Years ended January 2, 2016, December 27, 2014 and 
December 28, 2013  

Consolidated Statements of Cash Flows for the Years ended January 2, 2016, December 27, 2014 and December 28, 
2013  

Notes to Consolidated Financial Statements 

2. 

Financial Statement Schedules 

All other schedules have been omitted since the required information is not present, or not present in amounts 

sufficient to require submission of the schedule, or because the information required is included in the consolidated financial 
statements or the Notes thereto. 

3. 

Exhibits — See item 15(b) of this report below 

(b)  Exhibits 

The following exhibits are filed as part of and incorporated by reference into this Annual Report: 

79 

 
 
 
 
 
 
 
F
o
r
m
1
0
-
K

Exhibit 
Number 
3.1(1) 
3.2 

4.1(1) 
10.1†(1) 
10.2† 

10.3† 

10.4†(1) 
10.5† 

10.6#(1) 

10.7† 

10.8* 

 10.9† 

10.10† 

10.11† 

10.12# 

10.13 

10.14 

10.15# 

10.16† 
10.17† 

10.18 

21.1* 
23.1* 
24.1 
31.1* 
31.2* 
32.1* 

Description 

  Form of Second Amended and Restated Certificate of Incorporation of the Registrant dated November 15, 2005
Amended and Restated By-laws of the Registrant (filed as Exhibit 3.1 to the Registrant's Quarterly Report on 
Form 10-Q for the quarter ended June 28, 2014 and incorporated by reference herein) 
  Specimen Stock Certificate for shares of the Registrant’s Common Stock 
  Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers 
Amended and Restated 2004 Stock Option and Incentive Plan and forms of agreements thereunder (filed as 
Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and 
incorporated by reference herein) 
Form of Executive Agreement between the Registrant and certain executive officers of the Registrant, as 
amended (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
October 2, 2010 and incorporated by reference herein)
  Employment Agreement between the Registrant and Colin Angle, dated as of January 1, 1997 
2005 Stock Option and Incentive Plan, as amended, and forms of agreements thereunder (filed as Exhibit 10.1 
to the Registrant’s Current Report on Form 8-K filed on June 2, 2009 and incorporated by reference herein) 
Manufacturing and Services Agreement between the Registrant and Gem City Engineering Corporation, dated 
as of July 27, 2004 
Non-Employee Directors’ Deferred Compensation Program, as amended (filed as Exhibit 10.19 to the 
Registrant’s Annual Report on Form 10-K for the year ended December 29, 2007 and incorporated by reference 
herein) 
Lease Agreement between the Registrant and Boston Properties Limited Partnership for premises located at 4-
18 Crosby Drive, Bedford, Massachusetts, dated as of February 22, 2007 (as amended to date) 
Senior Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on 
Form 10-Q for the quarter ended July 2, 2011 and incorporated by reference herein) 
Form of Deferred Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as 
Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and 
incorporated by reference herein) 
Form of Restricted Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as 
Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and 
incorporated by reference herein) 
Manufacturing Services Agreement between the Registrant and Jabil Circuit, Inc., dated as of March 18, 2010 
(filed as Exhibit 10.1 to Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter 
ended April 3, 2010 and incorporated by reference herein)
Amended and Restated Credit Agreement between the Registrant and Bank of America N.A. dated December 
20, 2013 (filed as Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the year ended December 
28, 2013 and incorporated by reference herein)
Amended and Restated Reimbursement Agreement between the Registrant and Bank of America N.A. dated 
December 20, 2013 (filed as Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended 
December 28, 2013 and incorporated by reference herein)
Manufacturing Services Agreement between the Registrant and Kin Yat Industrial Company Limited, dated as 
of January 22, 2014 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter 
ended March 29, 2014 and incorporated by reference herein)
  Evolution Robotics, Inc. 2007 Stock Plan and forms of agreements thereunder 
2015 Stock Option and Incentive Plan and forms of agreements thereunder (filed as Exhibit 10.2 to the 
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 27, 2015 and incorporated by reference 
herein)
Separation Agreement by and between the Registrant and Paolo Pirjanian, dated as of July 2, 2015 (filed as 
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 26, 2015 and 
incorporated by reference herein) 
  Subsidiaries of the Registrant 
  Consent of PricewaterhouseCoopers LLP 
  Power of Attorney (incorporated by reference to the signature page of this report on Form 10-K) 
  Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 
  Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number 

101* 

Description 

The following materials from the Registrant’s Annual Report on Form 10-K for the year ended January 2, 2016 
formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the 
Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the 
Consolidated Statements of Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) 
related notes to these financial statements 

† 

# 

Indicates a management contract or any compensatory plan, contract or arrangement. 

Confidential treatment requested for portions of this document. 

(1) 

Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-
126907) 

* 

Filed herewith 

81 

 
 
 
 
 
 
 
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant 

has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. 

SIGNATURES 

iROBOT CORPORATION 

By:

/s/    Colin M. Angle 

Colin M. Angle 
Chairman of the Board, 
Chief Executive Officer and Director

Date: February 19, 2016  

POWER OF ATTORNEY 

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints 

Colin M. Angle and Alison Dean, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her 
in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits 
thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and 
confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue 
hereof. 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has 

been signed by the following persons in the capacities indicated on February 19, 2016. 

F
o
r
m
1
0
-
K

Signature 

Title(s) 

/s/    COLIN M. ANGLE 

Colin M. Angle 

/s/    ALISON DEAN 

Alison Dean 

/s/    RONALD CHWANG 

Ronald Chwang 

/s/    MICHELLE V. STACY 

Michelle V. Stacy 

/s/    GAIL DEEGAN 

Gail Deegan 

/s/    ANDREA GEISSER 

Andrea Geisser 

Chairman of the Board, Chief Executive Officer and Director 
(Principal Executive Officer) 

Executive Vice President, Chief Financial Officer and 
Treasurer (Principal Financial and Accounting Officer) 

Director 

Director 

Director 

Director 

82 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
/s/    GEORGE C. MCNAMEE 

George C. McNamee 

/s/    DEBORAH G. ELLINGER 

Deborah G. Ellinger 

/s/    MOHAMAD ALI 

Mohamad Ali 

Director 

Director 

Director 

83 

 
 
 
 
 
 
 
 
 
 
 
Exhibit 
Number 
3.1(1) 
3.2 

4.1(1) 
10.1†(1) 
10.2† 

10.3† 

10.4†(1) 
10.5† 

10.6#(1) 

10.7† 

10.8* 

10.9† 

10.10† 

10.11† 

10.12# 

10.13 

10.14 

10.15# 

10.16† 
10.17† 

10.18 

21.1* 
23.1* 
24.1 
31.1* 

EXHIBIT INDEX 

Description 

  Form of Second Amended and Restated Certificate of Incorporation of the Registrant dated November 15, 2005
Amended and Restated By-laws of the Registrant (filed as Exhibit 3.1 to the Registrant's Quarterly Report on 
Form 10-Q for the quarter ended June 28, 2014 and incorporated by reference herein) 
  Specimen Stock Certificate for shares of the Registrant’s Common Stock 
  Form of Indemnification Agreement between the Registrant and its Directors and Executive Officers 
Amended and Restated 2004 Stock Option and Incentive Plan and forms of agreements thereunder (filed as 
Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and 
incorporated by reference herein) 
Form of Executive Agreement between the Registrant and certain executive officers of the Registrant, as 
amended (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended 
October 2, 2010 and incorporated by reference herein)
  Employment Agreement between the Registrant and Colin Angle, dated as of January 1, 1997 
2005 Stock Option and Incentive Plan, as amended, and forms of agreements thereunder (filed as Exhibit 10.1 
to the Registrant’s Current Report on Form 8-K filed on June 2, 2009 and incorporated by reference herein) 
Manufacturing and Services Agreement between the Registrant and Gem City Engineering Corporation, dated 
as of July 27, 2004 
Non-Employee Directors’ Deferred Compensation Program, as amended (filed as Exhibit 10.19 to the 
Registrant’s Annual Report on Form 10-K for the year ended December 29, 2007 and incorporated by reference 
herein) 
Lease Agreement between the Registrant and Boston Properties Limited Partnership for premises located at 4-
18 Crosby Drive, Bedford, Massachusetts, dated as of February 22, 2007 (as amended to date) 
Senior Executive Incentive Compensation Plan (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on 
Form 10-Q for the quarter ended July 2, 2011 and incorporated by reference herein) 
Form of Deferred Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as 
Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and 
incorporated by reference herein) 
Form of Restricted Stock Award Agreement under the 2005 Stock Option and Incentive Plan (filed as 
Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 28, 2008 and 
incorporated by reference herein) 
Manufacturing Services Agreement between the Registrant and Jabil Circuit, Inc., dated as of March 18, 2010 
(filed as Exhibit 10.1 to Amendment No. 1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter 
ended April 3, 2010 and incorporated by reference herein)
Amended and Restated Credit Agreement between the Registrant and Bank of America N.A. dated December 
20, 2013 (filed as Exhibit 10.15 to the Registrant's Annual Report on Form 10-K for the year ended December 
28, 2013 and incorporated by reference herein)
Amended and Restated Reimbursement Agreement between the Registrant and Bank of America N.A. dated 
December 20, 2013 (filed as Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended 
December 28, 2013 and incorporated by reference herein)
Manufacturing Services Agreement between the Registrant and Kin Yat Industrial Company Limited, dated as 
of January 22, 2014 (filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter 
ended March 29, 2014 and incorporated by reference herein)
  Evolution Robotics, Inc. 2007 Stock Plan and forms of agreements thereunder 
2015 Stock Option and Incentive Plan and forms of agreements thereunder (filed as Exhibit 10.2 to the 
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 27, 2015 and incorporated by reference 
herein) 
Separation Agreement by and between the Registrant and Paolo Pirjanian, dated as of July 2, 2015 (filed as 
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 26, 2015 and 
incorporated by reference herein) 
  Subsidiaries of the Registrant 
  Consent of PricewaterhouseCoopers LLP 
  Power of Attorney (incorporated by reference to the signature page of this report on Form 10-K) 
  Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31.2* 
32.1* 

101* 

† 

# 

  Certification Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act 
of 2002 
The following materials from the Registrant’s Annual Report on Form 10-K for the year ended January 2, 2016 
formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the 
Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the 
Consolidated Statements of Stockholders' Equity, (v) the Consolidated Statements of Cash Flows, and (vi) 
related notes to these financial statements 

Indicates a management contract or any compensatory plan, contract or arrangement. 

Confidential treatment requested for portions of this document. 

(1) 

Incorporated by reference herein to the exhibits to the Company’s Registration Statement on Form S-1 (File No. 333-
126907) 

* 

Filed herewith 

85 

 
 
 
 
 
 
 
 
 
   The graph below matches the cumulative 5-Year total return of holders of iRobot Corporation's common stock with the 
cumulative total returns of the NASDAQ Composite index and S&P Technology Hardware & Equipment Industry Group. The 
graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including 
reinvestment of dividends) was $100 on 12/31/2010 and tracks it through 12/31/2015. 

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among iRobot Corporation, the NASDAQ Composite Index,
and S&P Technology Hardware & Equipment Industry Group

$250

$200

$150

$100

$50

$0

12/10 3/11 6/11 9/11 12/11 3/12 6/12 9/12 12/12 3/13 6/13 9/13 12/13 3/14 6/14 9/14 12/14 3/15 6/15 9/15 12/15

iRobot Corporation

NASDAQ Composite

S&P Technology Hardware & Equipment Industry Group

*$100 invested on 12/31/10 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

Copyright© 2016 S&P, a division of McGraw Hill Financial. All rights reserved.

iRobot Corporation 
NASDAQ Composite 
S&P Technology Hardware & Equipment Industry Group 

12/10 

100.00 
100.00 
100.00 

1/11 

108.52 
102.13 
105.48 

2/11 

115.43 
105.16 
107.11 

3/11 

132.19 
104.83 
103.21 

4/11 

142.36 
108.40 
105.00 

5/11 

135.05 
107.04 
103.66 

6/11 

141.84 
104.78 
99.22 

7/11 

140.70 
104.64 
102.77 

9/11 

101.13 
92.10 
92.14 

10/12 
72.15 
115.04 
123.07 

11/13 
133.48 
161.23 
138.77 

12/14 

139.55 
188.78 
185.22 

10/11 

136.09 
102.12 
102.82 

11/12 
75.72 
116.65 
125.19 

12/13 
139.75 
166.19 
142.46 

1/15 

126.81 
184.88 
183.04 

11/11 

127.61 
100.21 
100.28 

12/12 
75.32 
116.92 
120.65 

1/14 
142.04 
162.97 
134.99 

2/15 

132.03 
198.10 
200.71 

12/11 

119.98 
100.53 
101.31 

1/13 
91.96 
121.98 
114.22 

2/14 
168.49 
171.76 
140.47 

3/15 

131.15 
194.95 
191.16 

1/12 

132.80 
107.84 
112.24 

2/13 
86.17 
122.74 
113.51 

3/14 
164.99 
167.53 
144.92 

4/15 

130.31 
197.04 
193.40 

2/12 

102.57 
113.87 
124.72 

3/13 
103.14 
127.54 
115.91 

4/14 
134.65 
164.08 
151.46 

5/15 

128.42 
202.60 
199.22 

3/12 

109.57 
118.78 
134.66 

4/13 
116.92 
130.45 
113.53 

5/14 
142.00 
169.39 
159.96 

6/15 

128.14 
199.00 
188.87 

4/12 

94.90 
117.11 
130.34 

5/13 
135.81 
135.25 
120.50 

6/14 
164.59 
176.10 
162.96 

7/15 

123.75 
204.43 
187.39 

5/12 

85.13 
109.19 
121.21 

6/13 
159.85 
133.47 
113.40 

7/14 
130.10 
174.58 
165.06 

8/15 

117.77 
190.33 
174.20 

6/12 

89.03 
112.95 
122.26 

7/13 
140.51 
142.27 
123.93 

8/14 
130.35 
182.66 
173.86 

9/15 

117.12 
184.09 
170.27 

7/12 

91.48 
113.57 
125.94 

8/13 
131.31 
141.49 
125.69 

9/14 
122.39 
179.04 
170.30 

10/15 

120.62 
201.19 
184.33 

8/12 

101.25 
118.56 
135.78 

9/13 
151.31 
149.35 
125.46 

10/14 
143.57 
184.18 
177.82 

11/15 

133.00 
203.79 
179.85 

8/11 

111.82 
98.64 
96.12 

9/12 
91.48 
120.49 
136.85 

10/13 
136.13 
155.49 
132.67 

11/14 

146.38 
191.05 
191.49 

12/15  
142.28 
199.95 
167.76 

The stock price performance included in this graph is not necessarily indicative of future stock price performance. 

S&P Technology Hardware & Equipment Industry Group 

Amphenol Corporation 
Apple Inc. 
Cisco Systems, Inc. 
Corning Incorporated 
Emc Corporation 
F5 Networks, Inc. 
Flir Systems, Inc. 
Harris Corporation 
Hewlett Packard Enterprise Company 
Hp Inc. 

Juniper Networks, Inc. 
Motorola Solutions, Inc. 
Netapp, Inc. 
Qualcomm Incorporated 
Sandisk Corporation 
Seagate Technology Public Limited 
Company 
Te Connectivity Ltd. 
Western Digital Corporation 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael Bell 
Director 

Dr. Ronald Chwang 
Director 

Gail Deegan 
Director, Audit Committee Chair 

Deborah G. Ellinger 
Lead Independent Director, Nominating and 
Corporate Governance Committee Chair 

Andrea Geisser 
Director, Compensation and Talent 
Committee Chair 

George C. McNamee 
Director 

Michelle Stacy 
Director 

Executive Team 
Colin M. Angle 
Chief Executive Officer 

Alison Dean 
Executive Vice President, Chief Financial 
Officer and Treasurer 

Russell Campanello 
Executive Vice President, Human Resources 
and Corporate Communications 

Glen D. Weinstein 
Executive Vice President, Chief Legal 
Officer 

Christian Cerda 
Executive Vice President and General 
Manager, Home Robots Business Unit 

Corporate Office 
8 Crosby Drive 
Bedford, Massachusetts 01730 
Phone:  781.430.3000 
Fax:  781.430.3001 

Transfer Agent 
Computershare Trust 
Company, Inc. 
350 Indiana Street 
Suite 750 
Golden, Colorado 80401 
Phone: 303.262.0600 

Legal Counsel 
Goodwin Procter LLP 
Exchange Place 
53 State Street 
Boston, Massachusetts 02109 
Phone: 617.570.1000 

Independent Registered 
Public Accounting Firm 
PricewaterhouseCoopers LLP 
101 Seaport Boulevard 
Boston, Massachusetts 02210 
Phone: 617.530.5000 

Common Stock Information 
Our common stock is traded on the Nasdaq 
National Market under the 
symbol IRBT. 

Investor Information 
Elise P. Caffrey 
SVP, Investor Relations 

A copy of our financial reports, stock 
quotes, news releases, SEC filings, as 
well as information on our products is 
available in the Investor Relations section of 
www.irobot.com 

Board Members 
Colin M. Angle 
Co-founder, Chairman of the Board and 
Chief Executive Officer 

Mohamad Ali 
Director, Strategy and Finance Committee 
Chair 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iRobot Mission
Empowering People To Do More

Corporate Headquarters

8 Crosby Drive
Bedford, MA 01730
USA

Phone: 781.430.3000
Fax: 781.430.3001

www.irobot.com
info@irobot.com