IROBOT CORPORATION 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 Quarterly Report on Form 10-Q. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, (the "Exchange Act"), and are subject to the "safe harbor" created by those sections. In particular, statements contained in this Quarterly Report on Form 10-Q that are not historical facts, including, but not limited to statements concerning the impact of COVID-19 on our business, new product sales, product development and offerings, our consumer robots, our competition, our strategy, our market position, market acceptance of our products, seasonal factors, revenue recognition, our profits, growth of our revenues, composition of our revenues, our cost of revenues, units shipped, average selling prices, the impact of promotional activity and tariffs, operating expenses, diversification of our manufacturing supply chain, 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 this Quarterly Report on Form 10-Q and in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year endedJanuary 2, 2021 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 is a leading global consumer robot company that designs and builds robots that empower people to do more. Our consumer robots help people find smarter ways to clean and accomplish more in their daily lives. iRobot's portfolio of floor cleaning robots features proprietary technologies for the connected home and advanced concepts in cleaning, mapping and navigation, human-robot interaction and physical solutions. Leveraging this portfolio, our engineers are building an ecosystem of robots to help realize the smart home's potential. For more than 30 years, we have been a pioneer and leader in consumer robotics, robotic floor care and robotic artificial intelligence. As ofApril 3, 2021 , we had 1,267 full-time employees. Since our founding in 1990, we have developed expertise in the disciplines necessary to design, build, sell and support 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 create next-generation robotic platforms. We believe that this approach accelerates the time to market, while also reducing the costs and risks associated with product development. These capabilities are amplified by the integration of artificial intelligence, home understanding and machine vision technologies that further improve cleaning performance and help personalize the cleaning experience, enabling customers to have greater control over where, when and how our robots clean. We believe that our significant expertise in robot design, engineering, and smart home technologies and targeted focus on understanding and addressing consumer needs, positions us well to capitalize on the anticipated growth in the market for robot-based consumer products. FromSeptember 2018 untilApril 2020 , our Roomba products were subject to Section 301 tariffs. InApril 2020 , we were granted a temporary exclusion from Section 301 List 3 tariffs by the United States Trade Representative ("USTR"). This exclusion, as extended inAugust 2020 , eliminated the 25% tariff on Roomba products imported fromChina untilDecember 31, 2020 and entitled us to a refund of approximately$57.0 million in tariffs paid since the date the Section 301 List 3 tariffs were imposed. EffectiveJanuary 1, 2021 , the 25% Section 301 tariff again applies to our Roomba products imported fromChina . We expect this incremental cost will reduce our gross profit in 2021. To diversify our manufacturing and help offset the adverse financial impact on our business of the 25% Section 301 tariff, we are focused on scaling the manufacture of our products inMalaysia . We commenced production of our products inMalaysia in late 2019 with the current goal of being capable of manufacturing broadly and at scale inMalaysia by the end of 2021. To continue expanding our business globally and increase our profitability in a highly competitive marketplace, we have continued to make progress on each key element of our strategy: 1) differentiating the iRobot experience; 2) building strong relationships with the consumer; and 3) nurturing the lifetime value of our customer relationships. We strive to differentiate the iRobot experience through the ongoing innovation of our existing product offerings and by bringing new products to market. During the first quarter of 2021, we enhanced the iRobot Genius Home Intelligence Platform, a powerful AI-based robot platform that gives users greater personalization and control over their cleaning robots. InJanuary 2021 , we launched Roomba i3 Series in EMEA andJapan following a successful introduction of this product inNorth America 17 -------------------------------------------------------------------------------- inSeptember 2020 . We believe that the Roomba i3 Series will play an important role in strengthening the mid-tier of our product portfolio. To continue building strong relationships with our consumers worldwide, we are focused on enhancing all aspects of the consumer experience, including investing in our digital marketing and e-commerce capabilities. At the end of the first quarter of 2021, we increased our connected customer base to 10.7 million customers who have opted in to our digital communications, up 74% from the same period one year ago. We also continued to make important progress in nurturing the lifetime value of our customer relationships. In earlyApril 2021 , we introduced our new iRobot H1 handheld vacuum, enabling customers to purchase a complementary vacuum to clean in areas that our Roomba or Braava robots are typically unable to reach. In addition, we are now offering extended warranty plans to customers who purchase our products directly from us, and we advanced pilot programs for high-value services that offer customers greater flexibility with how they can purchase our products and accessories. High-value services currently being tested by consumers include iRobot Select, a membership program in which owners pay an initiation fee along with a recurring monthly fee to use their robot along with dedicated customer support and accessories on demand, and a maintenance program in which owners pay a monthly fee for personalized support and accessories. Since the start of the pandemic over a year ago, more consumers are buying our products online. Overall, our direct-to-consumer sales grew 146% in the first quarter and generated 12% of our revenue for the quarter endedApril 3, 2021 . Key Metrics In addition to the measures presented in our consolidated financial statements in accordance with accounting principles generally accepted inthe United States of America ("GAAP"), we use the following key metrics, including non-GAAP financial measures, to evaluate and analyze our core operating performance and trends, and to develop short-term and long-term operational plans. A summary of key metrics for the three months endedApril 3, 2021 , as compared to the three months endedMarch 28, 2020 , is as follows:
Three Months Ended
April 3, 2021 March 28, 2020 (dollars in
thousands, except average gross
selling prices)
(unaudited)
Total Revenue $ 303,261 $ 192,535
Non-GAAP Gross Profit $ 123,531 $ 78,767
Non-GAAP Gross Margin 40.7 % 40.9 %
Non-GAAP Operating Income (Loss) $ 14,954 $ (14,380)
Non-GAAP Operating Margin 4.9 % (7.5) %
Total robot units shipped (in thousands) 1,088 721
Average gross selling prices for robot units $ 319 $ 315
Use of Non-GAAP Financial Measures
Our non-GAAP financial measures reflect adjustments based on the following
items. We exclude these items from our non-GAAP measures to facilitate an
evaluation of our current operating performance and comparisons to our past
operating performance. These items may vary significantly in magnitude or timing
and do not necessarily reflect anticipated future operating activities. In
addition, we believe that providing these non-GAAP measures affords investors a
view of our operating results that may be more easily compared with our peer
companies. These non-GAAP financial measures should not be considered a
substitute for, or superior to, financial measures calculated in accordance with
GAAP, and the financial results calculated in accordance with GAAP and
reconciliations from these results, provided below, should be carefully
evaluated.
Amortization of acquired intangible assets: Amortization of acquired intangible
assets consists of amortization of intangible assets including completed
technology, customer relationships, and reacquired distribution rights acquired
in connection with business combinations. Amortization charges for our
acquisition-related intangible assets are inconsistent in size and are
significantly impacted by the timing and valuation of our acquisitions.
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Tariff Refunds: iRobot was granted a Section 301 List 3 Tariff Exclusion in
April 2020 , which temporarily eliminates tariffs on the Company's products
imported from China until December 31, 2020 and entitles the Company to a refund
of all related tariffs previously paid since September 2018 . We exclude the
refunds for tariff costs expensed during fiscals 2018 and 2019 from our fiscal
2020 non-GAAP measures because those tariff refunds associated with tariff costs
incurred in the past have no impact to our current period earnings.
Net Merger , Acquisition and Divestiture (Income) Expense: Net merger,
acquisition and divestiture (income) expense primarily consists of transaction
fees, professional fees, and transition and integration costs directly
associated with mergers, acquisitions and divestitures. It also includes
business combination adjustments after the measurement period has ended.
Stock-Based Compensation: Stock-based compensation is a non-cash charge relating
to stock-based awards.
IP Litigation Expense, Net: IP litigation expense, net relates to legal costs
incurred to litigate patent, trademark, copyright and false advertising
infringements, or to oppose or defend against interparty actions related to
intellectual property. Any settlement payment or proceeds resulting from these
infringements are included or netted against the costs.
Gain/Loss on Strategic Investments: Gain/loss on strategic investments includes
fair value adjustments, realized gains and losses on the sales of these
investments and losses on the impairment of these investments.
Restructuring and Other: Restructuring charges are related to one-time actions
associated with workforce reductions, including severance costs, certain
professional fees and other costs directly associated with resource realignments
tied to strategic initiatives or changes in business conditions.
Income tax adjustments: Income tax adjustments include the tax effect of the
non-GAAP adjustments, calculated using the appropriate statutory tax rate for
each adjustment. We reassess the need for any valuation allowance recorded based
on the non-GAAP profitability and have eliminated the effect of the valuation
allowance recorded in the U.S. jurisdiction. We also exclude certain tax items
that are not reflective of income tax expense incurred as a result of current
period earnings. These certain tax items include, among other non-recurring tax
items, impacts from the Tax Cuts and Jobs Act of 2017 and stock-based
compensation windfalls/shortfalls.
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The following table reconciles gross profit, operating income (loss), net income
(loss) and net income (loss) per share on a GAAP and non-GAAP basis for the
three months ended April 3, 2021 and March 28, 2020 (dollars in thousands, other
than per share data):
Three Months Ended
April 3, 2021 March 28, 2020
GAAP Gross Profit $ 122,944 $ 77,955
Amortization of acquired intangible assets 225 285
Stock-based compensation 362 527
Non-GAAP Gross Profit $ 123,531 $ 78,767
Non-GAAP Gross Margin 40.7 % 40.9 %
GAAP Operating Income (Loss) $ 6,389 $ (20,225)
Amortization of acquired intangible assets 430 539
Stock-based compensation 6,782
5,191
Net merger, acquisition and divestiture income -
(500)
IP litigation expense, net 1,140
615
Restructuring and other 213
-
Non-GAAP Operating Income (Loss)$ 14,954 $ (14,380) Non-GAAP Operating Margin 4.9 % (7.5) % GAAP Net Income (Loss)$ 7,443 $ (18,135) Amortization of acquired intangible assets 430
539
Stock-based compensation 6,782
5,191
Net merger, acquisition and divestiture income -
(500)
IP litigation expense, net 1,140
615
Restructuring and other 213
-
Gain on strategic investments (38) (87) Income tax effect (4,051) 3,215 Non-GAAP Net Income (Loss)$ 11,919 $ (9,162)
GAAP Net Income (Loss) Per Diluted Share
(0.64)
Dilutive effect of non-GAAP adjustments 0.15
0.32
Non-GAAP Net Income (Loss) Per Diluted Share
(0.32)
Critical Accounting Policies and Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses. These estimates and judgments, include but are not limited to, revenue recognition including performance obligations, variable consideration and other obligations such as product returns and incentives; allowance for credit losses; product warranties; valuation of goodwill and acquired intangible assets; valuation of non-marketable equity investments; evaluating loss contingencies; accounting for stock-based compensation including performance-based assessments; and accounting for income taxes and related valuation allowances. We base these estimates and judgments on historical experience, market participant fair value considerations, projected future cash flows and various other factors that we believe are reasonable under the circumstances. Actual results may differ from our estimates. Additional information about these critical accounting policies may be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section included in our Annual Report on Form 10-K for the fiscal year endedJanuary 2, 2021 . 20 -------------------------------------------------------------------------------- Overview of Results of Operations The following table sets forth our results of operations as a percentage of revenue: Three Months Ended April 3, 2021 March 28, 2020 Revenue 100.0 % 100.0 % Cost of revenue: Cost of product revenue 59.4 59.4 Amortization of acquired intangible assets 0.1 0.1 Total cost of revenue 59.5 59.5 Gross profit 40.5 40.5 Operating expenses: Research and development 13.8 19.1 Selling and marketing 16.8 19.0 General and administrative 7.7 12.8 Amortization of acquired intangible assets 0.1 0.1 Total operating expenses 38.4 51.0 Operating income (loss) 2.1 (10.5) Other expense, net - - Income (loss) before income taxes 2.1 (10.5) Income tax benefit (0.4) (1.1) Net income (loss) 2.5 % (9.4) % Comparison of Three Months EndedApril 3, 2021 andMarch 28, 2020 Revenue Three Months Ended Dollar Percent April 3, 2021 March 28, 2020 Change Change (Dollars in thousands) Revenue$ 303,261 $ 192,535 $ 110,726 57.5 % Revenue for the three months endedApril 3, 2021 increased$110.7 million to$303.3 million , or 57.5%, compared to$192.5 million for the three months endedMarch 28, 2020 . The$110.7 million increase in revenue was primarily attributable to a 50.9% increase in units shipped for the three months endedApril 3, 2021 compared to the three months endedMarch 28, 2020 . During the first quarter of 2020, our ability to fulfill demand for certain products was negatively impacted by supply chain challenges, which was compounded by the impact of the start of the COVID-19 pandemic on our organization, our contractors and our suppliers. In the three months endedApril 3, 2021 , domestic revenue increased$32.8 million , or 40.0%, while international revenue increased$77.9 million , or 70.5% due primarily to 74.4% growth in EMEA and a 53.3% increase inJapan . Cost of Product Revenue Three Months Ended Dollar Percent April 3, 2021 March 28, 2020 Change Change (Dollars in thousands) Cost of product revenue$ 180,092 $ 114,295 $ 65,797 57.6 % As a percentage of revenue 59.4 % 59.4 % Cost of product revenue increased to$180.1 million in the three months endedApril 3, 2021 , compared to$114.3 million in the three months endedMarch 28, 2020 . The$65.8 million increase in cost of product revenue is primarily due to the 57.5% increase in revenue. 21 --------------------------------------------------------------------------------
Gross Profit
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Gross profit $ 122,944 $ 77,955 $ 44,989 57.7 %
Gross margin 40.5 % 40.5 %
Gross margin remained consistent at 40.5% in the three months ended April 3,
2021 , compared to the three months ended March 28, 2020 . Changes in pricing and
promotion, higher air freight fees and higher costs to procure certain
components were offset by leverage from higher sales, lower tariff costs and
favorable channel mix. We expect to see gross margin pressure over the next few
quarters as we anticipate increases in raw materials, freight and transportation
costs as well as higher component costs associated with limited semiconductor
chip availability.
Research and Development
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Research and development
As a percentage of revenue 13.8 % 19.1 %
Research and development expenses increased $5.2 million , or 14.0%, to $41.9
million (13.8% of revenue) in the three months ended April 3, 2021 from $36.8
million (19.1% of revenue) in the three months ended March 28, 2020 . This
increase is primarily due to a $3.3 million increase in people-related costs and
a $1.8 million increase in program-related costs.
Selling and Marketing
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Selling and marketing $ 50,990 $ 36,594 $ 14,396 39.3 %
As a percentage of revenue 16.8 % 19.0 %
Selling and marketing expenses increased $14.4 million , or 39.3%, to $51.0
million (16.8% of revenue) in the three months ended April 3, 2021 from $36.6
million (19.0% of revenue) in the three months ended March 28, 2020 . This
increase was primarily attributable to an $11.1 million increase in marketing
spend associated with working media to drive sales growth and to build and
support our direct-to consumer sales channel, as well as a $3.2 million increase
in people-related costs.
General and Administrative
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
General and administrative
As a percentage of revenue 7.7 % 12.8 %
General and administrative expenses decreased $1.1 million , or 4.6%, to $23.4
million (7.7% of revenue) in the three months ended April 3, 2021 from $24.6
million (12.8% of revenue) in the three months ended March 28, 2020 . This
decrease is primarily due to the change in the allowance for credit loss. During
the three months ended April 3, 2021 , the allowance for credit loss decreased
$2.1 million as a result of improved financial conditions and credit rating for
certain customer accounts. During the three months ended March 28, 2020 , the
allowance for credit loss increased by $4.5 million due to concerns about
certain customers' ability to successfully navigate the pandemic. This decrease
is offset by higher people-related costs of $4.3
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million attributable to higher performance-based stock-based compensation and
short-term incentive compensation as well as an increase in legal fees of $1.2
million driven by higher intellectual property litigation costs.
Amortization of Acquired Intangible Assets
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Cost of revenue $ 225 $ 285 $ (60) (21.1) %
Operating expense 205 254 (49) (19.3) %
Total amortization expense
As a percentage of revenue 0.1 % 0.3 %
The amortization of acquired intangible assets was immaterial in the three
months ended April 3, 2021 and March 28, 2020 .
Other Expense, Net
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Other expense, net $ (160) $ (19) $ (141) 742.1 %
As a percentage of revenue - % - %
Other expense, net, amounted to $0.2 million and $0.0 million for the three
months ended April 3, 2021 and March 28, 2020 , respectively. Other expense, net
includes interest income, interest expense, foreign currency gains (losses) as
well as gains (losses) from strategic investments.
Income Tax Benefit
Three Months Ended
Dollar Percent
April 3, 2021 March 28, 2020 Change Change
(Dollars in thousands)
Income tax benefit $ (1,214) $ (2,109) $ 895 (42.4) %
Effective income tax rate (19.5) % 10.4 %
We recorded an income tax benefit of $1.2 million and $2.1 million for the three
months ended April 3, 2021 and March 28, 2020 , respectively. The $1.2 million
income tax benefit for the three months ended April 3, 2021 resulted in an
effective income tax rate of (19.5)%. The $2.1 million income tax benefit for
the three months ended March 28, 2020 resulted in an effective income tax rate
of 10.4%. The change in the effective income tax rate was primarily due to the
recognition of a discrete tax benefits related to stock-based compensation
during the period compared to a discrete tax expense during prior year.
Our effective income tax rate of (19.5)% for the three months ended April 3,
2021 differed from the federal statutory tax rate of 21% primarily due to the
recognition of a discrete tax benefits related to stock-based compensation.
The effective tax rate for interim periods is determined based upon our
estimated annual effective tax rate, adjusted for the effect of discrete items
arising in that quarter. The impact of such inclusions could result in a higher
or lower effective tax rate during a quarter, based upon the geographic mix and
timing of our actual earnings or losses versus annual projections.
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Liquidity and Capital Resources
At April 3, 2021 , our principal sources of liquidity were cash and cash
equivalents totaling $500.8 million . Our working capital was $579.3 million as
of April 3, 2021 , compared to $573.7 million as of January 2, 2021 .
We manufacture and distribute our products through contract manufacturers and
third-party logistics providers. We believe 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, although we invest
periodically in upgrading these facilities, a portion of which investment will
be reimbursed by the landlords of these facilities. Accordingly, our capital
spending is generally limited to machinery and tooling, leasehold improvements,
business applications software and computer and equipment. In the three months
ended April 3, 2021 and March 28, 2020 , we spent $11.3 million and $7.3 million ,
respectively, on capital expenditures.
Our strategy for delivering consumer products to our distributors and retail
customers gives us the flexibility to provide container shipments directly from
our contract manufacturers in Southern China and Malaysia to our customers and,
alternatively, allows our distributors and certain retail customers to take
possession of product on a domestic basis. Accordingly, our inventory consists
of goods shipped to our third-party logistics providers for the fulfillment of
distributor, retail and direct-to-consumer sales. 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.
Cash provided by operating activities
Net cash provided by operating activities for the three months ended April 3,
2021 was $28.7 million , of which the principal components were our net income of
$7.4 million , non-cash charges of $15.8 million and cash inflow of $5.5 million
from change in working capital. The change in working capital was driven by
decreases in accounts receivable of $101.5 million and accounts payable and
accrued liabilities of $48.0 million . This was partially offset by an increase
in inventory of $51.4 million .
Cash provided by (used in) investing activities
Net cash provided by investing activities for the three months ended April 3,
2021 was $43.7 million . During the three months ended April 3, 2021 , we received
$63.6 million from the sales and maturities of our investments while we paid
$8.7 million for the purchases of investments. We invested $11.3 million in the
purchase of property and equipment, including machinery and tooling for new
products and manufacturing expansion in Malaysia .
Cash used in financing activities
Net cash used in financing activities for the three months ended April 3, 2021
was $2.2 million . During the three months ended April 3, 2021 , we received $2.6
million from employee stock plans and paid $4.8 million upon vesting of
restricted stock where approximately 41,033 shares were retained by us to cover
employee tax withholdings.
Working Capital Facilities
Credit Facility
In June 2018 , we entered into a new agreement with Bank of America, N.A .,
increasing the amount of our unsecured revolving line of credit from $75.0
million to $150.0 million and extending the term of the credit facility to June
2023 . As of April 3, 2021 , we had no outstanding borrowings under our revolving
credit facility. The revolving line of credit is available to fund working
capital and other corporate purposes. 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%. In the event that LIBOR is
discontinued as expected in 2023, we expect the interest rates for our debt
following such event will be based on either alternate base rates or agreed upon
replacement rates. While we do not expect a LIBOR discontinuation would affect
our ability to borrow or maintain already outstanding borrowings, it could
result in higher interest rates.
The credit facility contains customary terms and conditions for credit
facilities of this type, including restrictions on our ability to incur or
guarantee 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 contains customary events of default, including for payment
defaults, breaches of representations, breaches of affirmative or negative
covenants, cross defaults to other material indebtedness, bankruptcy and failure
to discharge certain judgments. If a default occurs and is not cured within any
applicable cure period or is not waived, our obligations under the credit
facility may be accelerated.
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As of April 3, 2021 , we were in compliance with all covenants under the
revolving credit facility.
Lines of Credit
We have an unsecured letter of credit facility with Bank of America, N.A .,
available to fund letters of credit up to an aggregate outstanding amount of
$5.0 million . As of April 3, 2021 , we had letters of credit outstanding of
$0.7 million under our letter of credit facility and other lines of credit with
Bank of America, N.A .
We have an unsecured guarantee line of credit with Mizuho, Bank Ltd. , available
to fund import tax payments up to an aggregate outstanding amount of
250.0 million Japanese Yen . As of April 3, 2021 , we had no outstanding balance
under the guarantee line of credit.
Working Capital and Capital Expenditure Needs
We currently have no material cash commitments, except for normal recurring
trade payables, expense accruals, capital expenditures and operating leases, all
of which we anticipate funding through working capital and funds provided by
operating activities. We believe 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, and funds available through our credit facility will be sufficient
to meet our working capital and capital expenditure needs over at least the next
twelve months. In the event 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 or decline, the expansion or contraction 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, the continuing market acceptance of our products and services, and
the impact of COVID-19 on our business. Moreover, to the extent 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.
Share Repurchases
As of April 3, 2021 , we were authorized to purchase up to $200.0 million of our
common stock under a share repurchase program, of which $25.0 million was
utilized in the first quarter of 2020. On March 11, 2021 , we entered into a Rule
10b5-1 plan to repurchase $50.0 million of common stock in the aggregate
beginning April 12, 2021 and ending September 5, 2021 . We purchased 446,954
shares of our common stock at an average price of $111.85 , totaling $50.0
million during the second quarter of 2021. As of May 6, 2021 , $125.0 million
remained available for future repurchases under the program. Our share
repurchase program does not obligate us to acquire any specific number of
shares.
Contractual Obligations
The disclosure of our contractual obligations and commitments is set forth under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Contractual Obligations" in our Annual Report on Form
10-K for the year ended January 2, 2021 . Our principal commitments generally
consist of obligations under our credit facility, leases for office space and
minimum contractual obligations. Other obligations primarily consist of
subscription services. There have been no material changes in our contractual
obligations and commitments since January 2, 2021 .
At April 3, 2021 , we had outstanding purchase orders aggregating approximately
$545.1 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 cancellable without penalty. In circumstances where we have determined
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 April 3, 2021 , we had no off-balance sheet arrangements as defined in
Item 303(a)(4) of Regulation S-K.
Recently Adopted Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for a discussion of recently
adopted accounting pronouncements.
Recently Issued Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for a discussion of recently
issued accounting pronouncements.
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