SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 27, 2010

iROBOT CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of Incorporation)

000-51598		77-0259335
(Commission File Number)		(IRS Employer Identification No.)

8 Crosby Drive, Bedford, Massachusetts		01730
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (781) 430-3000

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

	o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

	o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

	o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

	o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02		Results of Operations and Financial Condition.

     On October 27, 2010, iRobot Corporation announced its financial results for the fiscal quarter ended October 2, 2010. A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

     The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01		Financial Statements and Exhibits.

           (d)     Exhibits:

99.1		Press Release issued by the registrant on October 27, 2010, furnished herewith.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

Exhibit Number		Description
99.1		Press Release issued by the registrant on October 27, 2010, furnished herewith.

Exhibit 99.1

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

iRobot Reports Third-Quarter Financial Results

Increases full-year expectations

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

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

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

Business Highlights

•		Strong demand in overseas markets drove a 58 percent increase in Q3 2010 international home robot revenue year-over-year. In the third quarter, international home robot revenue of $35 million comprised 64 percent of total home robot revenue.
•		Driven by shipments of Small Unmanned Ground Vehicles and spare parts, government & industrial robot revenue grew 15 percent in the third quarter over the third quarter of 2009.
•		Gross margin for the third quarter increased to 35 percent of revenue, compared with 31 percent of revenue in the third quarter of 2009.
•		Year-to-date operating cash flow was $35 million, compared with $25 million in the first nine months of 2009, driving quarter-end cash position to $107 million.

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

Financial Expectations

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

Fiscal Year 2010:
Revenue		$395 – $400 million
Earnings Per Share		$0.80 – $0.82
Adjusted EBITDA		$46 – $48 million
Q4 2010:
Revenue		$108 – $113 million
Earnings Per Share		$0.10 – $0.12
Adjusted EBITDA		$8 – $10 million

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

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

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

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

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

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

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

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

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

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

		For the three months ended								For the nine months ended
		October 2,				September 26,				October 2,				September 26,
		2010				2009				2010				2009
Revenue
Product revenue		$	85,051			$	69,080			$	257,107			$	171,380
Contract revenue			9,172				9,539				29,850				25,515
Total			94,223				78,619				286,957				196,895
Cost of Revenue
Product revenue			54,472				46,415				165,897				116,952
Contract revenue			6,494				8,009				21,116				23,133
Total			60,966				54,424				187,013				140,085
Gross Margin			33,257				24,195				99,944				56,810
Operating Expense
Research & development			6,185				3,159				16,375				10,633
Selling & marketing			10,734				9,514				30,959				27,420
General & administrative			8,904				7,420				26,693				21,915
Total			25,823				20,093				74,027				59,968
Operating income (loss)			7,434				4,102				25,917				(3,158	)
Other income (expense), net			299				112				368				(96	)
Pre-tax income (loss)			7,733				4,214				26,285				(3,254	)
Income tax expense (benefit)			701				1,620				7,771				(1,452	)
Net income (loss)		$	7,032			$	2,594			$	18,514			$	(1,802	)
Net income (loss) per common share:
Basic		$	0.28			$	0.10			$	0.73			$	(0.07	)
Diluted		$	0.27			$	0.10			$	0.70			$	(0.07	)
Shares used in Per Common Share Calculations:
Basic			25,428				25,025				25,293				24,974
Diluted			26,480				25,670				26,319				24,974
Stock-based compensation included in above figures:
Cost of product revenue		$	310			$	267			$	997			$	758
Cost of contract revenue			101				139				337				464
Research & development			211				89				488				187
Selling & marketing			240				351				885				1,006
General & administrative			1,079				1,016				3,325				2,944
Total		$	1,941			$	1,862			$	6,032			$	5,359

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

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

		October 2,				January 2,
		2010				2010
Assets
Cash and equivalents		$	90,603			$	71,856
Short term investments			16,576				4,959
Accounts receivable, net			27,794				35,171
Unbilled revenues			2,534				1,831
Inventory			33,969				32,406
Deferred tax assets			9,922				8,669
Other current assets			3,062				4,119
Total current assets			184,460				159,011
Property, plant and equipment, net			22,389				20,230
Deferred tax assets			8,183				6,089
Other assets			13,889				14,254
Total assets		$	228,921			$	199,584
Liabilities and stockholders’ equity
Accounts payable		$	35,677			$	30,559
Accrued expenses			14,061				14,384
Accrued compensation			13,117				13,525
Deferred revenue and customer advances			2,023				3,908
Total current liabilities			64,878				62,376
Long term liabilities			3,692				4,014
Stockholders’ equity			160,351				133,194
Total liabilities and stockholders’ equity		$	228,921			$	199,584

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

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

		For the three months ended								For the nine months ended
		October 2,				September 26,				October 2,				September 26,
		2010				2009				2010				2009
Cash flows from operating activities:
Net income (loss)		$	7,032			$	2,594			$	18,514			$	(1,802	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			1,918				2,289				5,673				6,153
Loss on disposal of property and equipment			70				74				117				176
Stock-based compensation			1,941				1,862				6,032				5,359
Benefit from deferred tax assets			(3,867	)			164				(3,867	)			(347	)
Non-cash director deferred compensation			33				33				99				99
Changes in operating assets and liabilities — (use) source
Accounts receivable			(661	)			(12,643	)			7,377				(8,004	)
Unbilled revenue			(221	)			922				(703	)			(523	)
Inventory			(3,285	)			3,985				(1,563	)			9,907
Other assets			213				1,052				1,010				(1,111	)
Accounts payable			3,909				6,679				5,118				8,243
Accrued expenses			716				706				(315	)			673
Accrued compensation			1,964				3,819				(408	)			4,453
Deferred revenue			54				1,270				(1,885	)			1,612
Change in long term liabilities			(107	)			(107	)			(322	)			(322	)
Net cash provided by operating activities			9,709				12,699				34,877				24,566
Cash flows from investing activities:
Purchase of property and equipment			(1,869	)			(953	)			(7,537	)			(3,401	)
Purchases of investments			(5,050	)			—				(30,461	)			—
Sales of investments			11,500				—				19,000				—
Net cash provided by (used in) investing activities			4,581				(953	)			(18,998	)			(3,401	)
Cash flows from financing activities:
Proceeds from stock option exercises			370				36				2,297				495
Income tax withholding payment associated with restricted stock vesting			(5	)			(67	)			(284	)			(76	)
Tax benefit of excess stock based compensation deductions			138				43				855				311
Net cash provided by financing activities			503				12				2,868				730
Net increase in cash and cash equivalents			14,793				11,758				18,747				21,895
Cash and cash equivalents, at beginning of period			75,810				50,989			$	71,856				40,852
Cash and cash equivalents, at end of period		$	90,603			$	62,747			$	90,603			$	62,747

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

iRobot Corporation
Supplemental Information
(unaudited)

		For the three months ended								For the nine months ended
		October 2,				September 26,				October 2,				September 26,
		2010				2009				2010				2009
Revenue: *
Home Robots		$	54,650			$	44,331			$	160,101			$	111,253
Domestic		$	19,814			$	22,314			$	53,061			$	51,958
International		$	34,836			$	22,017			$	107,040			$	59,295
Retail		$	48,633			$	38,151			$	142,426			$	92,230
Direct		$	6,017			$	6,180			$	17,675			$	19,023
Government & Industrial		$	39,573			$	34,288			$	126,856			$	85,642
Domestic		$	36,013			$	29,854			$	116,486			$	76,549
International		$	3,560			$	4,434			$	10,370			$	9,093
Product		$	30,401			$	24,749			$	97,006			$	60,127
Contract		$	9,172			$	9,539			$	29,850			$	25,515
Product Life Cycle		$	9,060			$	5,368			$	26,621			$	14,299
Gross Margin Percent:
Home Robots			39.7	%			30.3	%			39.0	%			30.3	%
Government & Industrial			29.2	%			31.3	%			29.6	%			27.0	%
Total Company			35.3	%			30.8	%			34.8	%			28.9	%
Units shipped:
Home Robots *			308				289				889				664
Government & Industrial			186				159				702				460
Average gross selling prices for robot units:
Home Robots		$	185			$	167			$	187			$	177
Government & Industrial *		$	115			$	122			$	100			$	100
Government & Industrial Funded Product Backlog *		$	34,003			$	71,038			$	34,003			$	71,038
Days sales outstanding			29				54				29				54
Days in inventory			57				48				57				48
Headcount			643				514				643				514

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

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

		For the three months ended								For the nine months ended
		October 2,				September 26,				October 2,				September 26,
		2010				2009				2010				2009
Net income (loss)		$	7,032			$	2,594			$	18,514			$	(1,802	)
Interest income, net			(206	)			(5	)			(572	)			(41	)
Income tax expense (benefit)			701				1,620				7,771				(1,452	)
Depreciation			1,784				2,150				5,261				5,763
Amortization			134				139				412				390
EBITDA			9,445				6,498				31,386				2,858
Stock-based compensation expense			1,941				1,862				6,032				5,359
Merger and acquisition expense			61				—				132				—
Adjusted EBITDA		$	11,447			$	8,360			$	37,550			$	8,217

Use of Non-GAAP Financial Measures

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

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

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

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

		For the three months ended								For the nine months ended
		October 2,				September 26,				October 2,				September 26,
		2010				2009				2010				2009
GAAP net income (loss)		$	7,032			$	2,594			$	18,514			$	(1,802	)
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance			(2,259	)			—				(2,259	)			—
Non-GAAP net income (loss)		$	4,773			$	2,594			$	16,255			$	(1,802	)
GAAP net income (loss) per common share:
Basic		$	0.28			$	0.10			$	0.73			$	(0.07	)
Diluted		$	0.27			$	0.10			$	0.70			$	(0.07	)
Less one-time net income tax benefit associated with release of state deferred tax asset valuation allowance:
Basic		$	(0.09	)		$	—			$	(0.09	)		$	—
Diluted		$	(0.09	)		$	—			$	(0.08	)		$	—
Non-GAAP net income (loss) per common share:
Basic		$	0.19			$	0.10			$	0.64			$	(0.07	)
Diluted		$	0.18			$	0.10			$	0.62			$	(0.07	)
Shares used in Per Common Share Calculations:
Basic			25,428				25,025				25,293				24,974
Diluted			26,480				25,670				26,319				24,974

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