Case Study. Answers to Few Questions Required. Detailed. perfect Answer Required. A+. 15 hours
jhayes
5-8-9.docxRunning Head: INDIVIAUAL CASE STUDY 1
1
IROBOT
SWOT Analysis
Strengths
A major strength for iRobot is that they were the first company to product and sell robots in order to consumers to execute domestic chores in a new innovative and efficient manner. iRobot was able to minimize price for consumers when launching their products and make their products more attainable, giving the organization brand recognition and a healthy financial position. iRobot features core competencies of design, development, manufacturing, and marketing of robots. iRobot has a strong ability to from alliances with large companies and improve their products through these alliances. iRobot has an interest in entering new market segments and has a history of being successful doing so. Reference Appendix 1.
Weaknesses
iRobot is highly dependent on third-part suppliers to manufacture their products. The company also depends on sales from a limited market outreach, that concentrates only on a number of consumers. iRobot has also not focused on product innovation and reaching new customers. Reference Appendix 2.
Opportunities
iRobot has several opportunities. One of these is the continues economic upturn that has allowed consumers to change their spending habits and have more disposable income. Also, iRobot has growth potential in new markets through existing relationships with the United States armed forces. iRobot has the opportunity to use new advancements in technology to expand their market reach, introduce new products, and to improve the current product line to meet new customer demands. Reference Appendix 3.
Threats
A major threat to iRobot is increased competition within the robotics industry. New competition from larger companies could threaten their position as a market leader. Also changes in supply chain policies would be a threat to the company’s success as they are dependent upon their suppliers. Reference Appendix 4.
Financial Statements
Income Statement 2016, 2017, 2018 (retrieved from https://www.sec.gov/)
Balance Sheets
2018 (retrieved from https://www.sec.gov/)
2017 (retrieved from https://www.sec.gov/)
2016 (retrieved from https://www.sec.gov/)
Statement of Cash Flows 2016, 2017, 2018 (retrieved from https://www.sec.gov/)
Financial Ratios
|
Ratio |
2018 |
2017 |
2016 |
|
Gross Profit Margin |
50.836% |
49.004% |
48.336% |
|
Operating Profit Margin |
9.685% |
8.223% |
8.712% |
|
Net Profit Margin |
8.053% |
5.765% |
6.348% |
|
Return on Assets |
11.472% |
7.369% |
8.257% |
|
Return on Invested Capital |
16.437% |
10.835% |
10.782% |
|
ROE |
16.437% |
10.835% |
10.782% |
|
Current |
2.406 |
2.198 |
3.406 |
|
Debt to Assets |
0 |
0 |
0 |
|
Long-term Debt to Capital |
0 |
0 |
0 |
|
Debt to Equity |
0 |
0 |
0 |
Financial Ratios Analysis
Appendix 1
Appendix 2
Appendix 3
|
TOWS |
Strengths (Internal) 1. High product quality 2. Healthy financial position 3. Strong brand portfolio 4. Ownership of intellectual property rights |
Weaknesses (Internal) 1. Poor financial planning 2. Insufficient marketing and promotional activities 3. Poor inventory management 4. Lack of research and development
|
|
Opportunities (External) 1. Economic upturns 2. New customer trends 3. Development of new technologies 4. Rise in disposable income among consumers |
High product quality and a healthy financial position allows iRobot to take advantage of new developments in technology and continue to gain profit during periods of economic upturns. |
Better financial planning during economic upturns will allow the company to maintain a healthy financial position. Improving inventory management can better reflect how the company provides products to the consumer. |
|
Threats (External) 1. Supplier bargaining power 2. Seasonal demand of products 3. Imitation/counterfeit products 4. Intense competition |
Imitation and counterfeit products can be controlled through the organizations’ ownership intellectual property rights of its products, this also allows their high-quality products to be different from the competitors.
|
Better financial planning will supplement for greater supplier bargaining power and the seasonal demand of products. |
1
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 30, 2017 Dec. 31, 2016 Current assets: Cash and cash equivalents $ 128,635 $ 214,523 Short term investments 37,225 39,930 Accounts receivable, net 142,829 73,048 Inventory 106,932 50,578 Other current assets 19,105 5,591 Total current assets 434,726 383,670 Property and equipment, net 44,579 27,532 Deferred tax assets 31,531 30,585 Goodwill 121,440 41,041 Intangible assets, net 44,712 12,207 Other assets 14,534 12,877 Total assets 691,522 507,912 Current liabilities: Accounts payable 116,316 67,281 Accrued expenses 73,647 40,869 Deferred revenue and customer advances 7,761 4,486 Total current liabilities 197,724 112,636 Deferred tax liabilities 9,539 0 Other long term liabilities 13,932 6,320 Total long term liabilities 23,471 6,320 Total liabilities 221,195 118,956 Commitments and contingencies (Note 14): Preferred stock, 5,000,000 shares authorized and none outstanding 0 0 Common stock, $0.01 par value, 100,000,000 shares authorized; 27,945,144 and 27,237,870 shares issued and outstanding at December 30, 2017 and December 31, 2016, respectively
279 272
Additional paid-in capital 190,067 161,885 Retained earnings 277,989 226,950 Accumulated other comprehensive income (loss) 1,992 (151) Total stockholders’ equity 470,327 388,956 Total liabilities and stockholders’ equity $ 691,522 $ 507,912
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 30, 2017Dec. 31, 2016
Current assets:
Cash and cash equivalents $ 128,635$ 214,523
Short term investments 37,22539,930
Accounts receivable, net 142,82973,048
Inventory 106,93250,578
Other current assets 19,1055,591
Total current assets 434,726383,670
Property and equipment, net 44,57927,532
Deferred tax assets 31,53130,585
Goodwill 121,44041,041
Intangible assets, net 44,71212,207
Other assets 14,53412,877
Total assets 691,522507,912
Current liabilities:
Accounts payable 116,31667,281
Accrued expenses 73,64740,869
Deferred revenue and customer advances 7,7614,486
Total current liabilities 197,724112,636
Deferred tax liabilities 9,539 0
Other long term liabilities 13,9326,320
Total long term liabilities 23,4716,320
Total liabilities 221,195118,956
Commitments and contingencies (Note 14):
Preferred stock, 5,000,000 shares authorized and none outstanding 0 0
Common stock, $0.01 par value, 100,000,000 shares authorized; 27,945,144 and 27,237,870 shares
issued and outstanding at December 30, 2017 and December 31, 2016, respectively
279272
Additional paid-in capital 190,067161,885
Retained earnings 277,989226,950
Accumulated other comprehensive income (loss) 1,992(151)
Total stockholders’ equity 470,327388,956
Total liabilities and stockholders’ equity $ 691,522$ 507,912
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 31, 2016 Jan. 02, 2016 Current assets: Cash and cash equivalents $ 214,523 $ 179,915 Short term investments 39,930 33,124 Accounts receivable, net of allowance of $29 at December 31, 2016 and $33 at January 2, 2016 72,909 104,679 Unbilled revenue 139 452 Inventory 50,578 61,678 Other current assets 5,591 9,501 Total current assets 383,670 389,349 Property and equipment, net 27,532 26,850 Deferred tax assets 30,585 31,721 Goodwill 41,041 48,751 Intangible assets, net 12,207 15,664 Other assets 12,877 9,408 Total assets 507,912 521,743 Current liabilities: Accounts payable 67,281 61,655 Accrued expenses 19,854 15,954 Accrued compensation 21,015 15,752 Deferred Revenue, Current 4,486 3,265 Total current liabilities 112,636 96,626 Long term liabilities 6,320 7,706 Commitments and contingencies (Note 11): Redeemable convertible preferred stock, 5,000,000 shares authorized and no shares issued or outstanding 0 0
Common stock, $0.01 par value, 100,000,000 shares authorized; and 27,237,870 and 29,091,806 shares issued and outstanding at December 31, 2016 and January 2, 2016, respectively
272 291
Additional paid-in capital 161,885 232,345 Retained earnings 226,950 185,011 Accumulated other comprehensive loss (151) (236) Total stockholders’ equity 388,956 417,411 Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 507,912 $ 521,743
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 31, 2016Jan. 02, 2016
Current assets:
Cash and cash equivalents $ 214,523$ 179,915
Short term investments 39,93033,124
Accounts receivable, net of allowance of $29 at December 31, 2016 and $33 at January 2, 2016 72,909104,679
Unbilled revenue 139452
Inventory 50,57861,678
Other current assets 5,5919,501
Total current assets 383,670389,349
Property and equipment, net 27,53226,850
Deferred tax assets 30,58531,721
Goodwill 41,04148,751
Intangible assets, net 12,20715,664
Other assets 12,8779,408
Total assets 507,912521,743
Current liabilities:
Accounts payable 67,28161,655
Accrued expenses 19,85415,954
Accrued compensation 21,01515,752
Deferred Revenue, Current 4,4863,265
Total current liabilities 112,63696,626
Long term liabilities 6,3207,706
Commitments and contingencies (Note 11):
Redeemable convertible preferred stock, 5,000,000 shares authorized and no shares issued or outstanding 0 0
Common stock, $0.01 par value, 100,000,000 shares authorized; and 27,237,870 and 29,091,806 shares
issued and outstanding at December 31, 2016 and January 2, 2016, respectively
272291
Additional paid-in capital 161,885232,345
Retained earnings 226,950185,011
Accumulated other comprehensive loss (151)(236)
Total stockholders’ equity 388,956417,411
Total liabilities, redeemable convertible preferred stock and stockholders’ equity $ 507,912$ 521,743
Dec. 29, 2018 Dec. 30, 2017 Dec. 31, 2016 Cash flows from operating activities: Net income $ 87,992 $ 50,964 $ 41,939 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,574 25,499 13,606 Gain on business acquisition 0 (2,243) 0 Stock-based compensation 25,804 19,751 15,995 Deferred income taxes, net (10,848) (999) 3,557 Tax benefit of excess stock-based compensation deductions 0 0 (2,971) Deferred rent 1,374 0 0 Other 463 864 (2,361) Changes in operating assets and liabilities — (use) source Accounts receivable (23,920) (53,251) 25,682 Inventory (58,546) (1,470) (981) Other assets (8,533) (10,562) 3,187 Accounts payable 22,470 17,457 6,502 Accrued expenses (3,618) 23,447 10,181 Deferred revenue and customer advances 2,392 2,149 2,996 Long-term liabilities 81 4,709 (908) Net cash provided by operating activities 71,685 76,315 116,424 Cash flows from investing activities: Additions of property and equipment (32,422) (23,371) (10,817) Change in other assets (2,363) (1,542) (2,093) Proceeds from sale of equity investments 856 1,267 634 Proceeds from sale of business unit 0 0 23,520 Cash paid for business acquisitions, net of cash acquired 0 (148,765) 0 Purchases of investments (6,438) (10,578) (16,554) Sales and maturities of investments 14,000 13,066 9,500 Net cash (used in) provided by investing activities (26,367) (169,923) 4,190 Cash flows from financing activities: Proceeds from employee stock plans 10,366 10,573 9,344 Income tax withholding payment associated with restricted stock vesting (3,532) (2,983) (1,300) Stock repurchases (50,000) 0 (97,021) Tax benefit of excess stock-based compensation deductions 0 0 2,971 Net cash (used in) provided by financing activities (43,166) 7,590 (86,006) Effect of exchange rate changes on cash and cash equivalents (414) 130 0 Net increase (decrease) in cash and cash equivalents 1,738 (85,888) 34,608 Cash and cash equivalents, at beginning of period 128,635 214,523 179,915 Cash and cash equivalents, at end of period 130,373 128,635 214,523 Supplemental disclosure of cash flow information Cash paid for income taxes 39,517 25,879 14,061 Additions of property and equipment included in accounts payable $ 2,795 $ 5,001 $ 1,550
Consolidated Statements of Cash Flows - USD ($) $ in Thousands 12 Months Ended
Dec. 29, 2018Dec. 30, 2017Dec. 31, 2016
Cash flows from operating activities:
Net income $ 87,992$ 50,964$ 41,939
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 36,57425,49913,606
Gain on business acquisition 0(2,243) 0
Stock-based compensation 25,80419,75115,995
Deferred income taxes, net (10,848)(999)3,557
Tax benefit of excess stock-based compensation deductions 0 0(2,971)
Deferred rent 1,374 0 0
Other 463864(2,361)
Changes in operating assets and liabilities — (use) source
Accounts receivable (23,920)(53,251)25,682
Inventory (58,546)(1,470)(981)
Other assets (8,533)(10,562)3,187
Accounts payable 22,47017,4576,502
Accrued expenses (3,618)23,44710,181
Deferred revenue and customer advances 2,3922,1492,996
Long-term liabilities 814,709(908)
Net cash provided by operating activities 71,68576,315116,424
Cash flows from investing activities:
Additions of property and equipment (32,422)(23,371)(10,817)
Change in other assets (2,363)(1,542)(2,093)
Proceeds from sale of equity investments 8561,267634
Proceeds from sale of business unit 0 023,520
Cash paid for business acquisitions, net of cash acquired 0(148,765) 0
Purchases of investments (6,438)(10,578)(16,554)
Sales and maturities of investments 14,00013,0669,500
Net cash (used in) provided by investing activities (26,367)(169,923)4,190
Cash flows from financing activities:
Proceeds from employee stock plans 10,36610,5739,344
Income tax withholding payment associated with restricted stock vesting (3,532)(2,983)(1,300)
Stock repurchases (50,000) 0(97,021)
Tax benefit of excess stock-based compensation deductions 0 02,971
Net cash (used in) provided by financing activities (43,166)7,590(86,006)
Effect of exchange rate changes on cash and cash equivalents (414)130 0
Net increase (decrease) in cash and cash equivalents 1,738(85,888)34,608
Cash and cash equivalents, at beginning of period 128,635214,523179,915
Cash and cash equivalents, at end of period 130,373128,635214,523
Supplemental disclosure of cash flow information
Cash paid for income taxes 39,51725,87914,061
Additions of property and equipment included in accounts payable $ 2,795$ 5,001$ 1,550
Consolidated Statements of Cash Flows - USD ($) $ in Thousands
12 Months Ended
Strengths Weight Rating Weighted Score 1 Successful product innovation 0.03 3 0.09 2 Strong distrubtion partnerships 0.02 3 0.06 3 Successful record of mergers and acquisitions 0.02 3 0.06 4 Superb performance in new markets 0.02 3 0.06 5 High level of customer satisfaction 0.05 4 0.20 6 Strong brand portfolio 0.07 4 0.28 7 Healthy financial position 0.10 4 0.40 8 Strong supplier relationships 0.05 4 0.20 9 High product quality 0.10 4 0.40
10 Ownership of intellectual property rights 0.06 4 0.24
Weaknesses Weight Rating Weighted Score 1 Poor inventroy management 0.05 1 0.05 2 Insuffecient marketing and promotional activities 0.10 2 0.20 3 Lack of research and development activities 0.05 1 0.05 4 Poor project management 0.05 1 0.05 5 Poor financial planning 0.10 1 0.10 6 Limited success outside of core business practices 0.02 1 0.02 7 Lack of strategic alliances 0.02 2 0.04 8 Not successful at integrating different work cultures 0.02 2 0.04 9 Lack of understanding customers' needs and expectations 0.02 1 0.02
10 Poor customer service 0.05 1 0.05 Total IFE Score 1.00 2.61
Strengths WeightRatingWeighted Score
1Successful product innovation
0.0330.09
2Strong distrubtion partnerships 0.0230.06
3Successful record of mergers and acquisitions
0.023
0.06
4Superb performance in new markets
0.0230.06
5High level of customer satisfaction
0.054
0.20
6Strong brand portfolio
0.074
0.28
7Healthy financial position
0.104
0.40
8Strong supplier relationships
0.054
0.20
9High product quality
0.104
0.40
10Ownership of intellectual property rights
0.0640.24
Weaknesses WeightRatingWeighted Score
1Poor inventroy management
0.051
0.05
2Insuffecient marketing and promotional activities
0.102
0.20
3Lack of research and development activities
0.051
0.05
4Poor project management
0.051
0.05
5Poor financial planning
0.101
0.10
6Limited success outside of core business practices
0.021
0.02
7Lack of strategic alliances
0.022
0.04
8Not successful at integrating different work cultures
0.022
0.04
9Lack of understanding customers' needs and expectations
0.021
0.02
10Poor customer service
0.0510.05
Total IFE Score
1.00 2.61
Opportunities Weight Rating Weighted Score 1 Population growth 0.03 2 0.06 2 Development of new technologies 0.05 2 0.1 3 Rise in disposable income among consumers 0.10 3 0.3 4 Emergence of e-commerce and social media marketing 0.10 3 0.3 5 Emergence of new market segments 0.01 3 0.03 6 Diminishing international boundries 0.03 3 0.09 7 New consumer trends 0.05 2 0.1 8 New environmental policies 0.03 2 0.06 9 New taxation policies 0.04 2 0.08 10 Economic upturns 0.05 2 0.1
Threats Weight Rating Weighted Score 1 Liability laws 0.05 2 0.10 2 Rising employee pay levels 0.05 2 0.10 3 Seasonal demand of products 0.05 3 0.15 4 Rising cost of raw materials 0.05 2 0.10 5 Imitation/counterfeit products 0.05 3 0.15 6 Intense competition 0.05 3 0.15 7 Changing consumer buying behaviors 0.03 3 0.09 8 Changing regulatory framework 0.03 2 0.06 9 Supplier bargaining power 0.10 2 0.20 10 Government cutbacks 0.05 2 0.10
Total EFE Score 1.00 2.42
Opportunities WeightRatingWeighted Score
1Population growth
0.0320.06
2Development of new technologies
0.0520.1
3Rise in disposable income among consumers
0.1030.3
4Emergence of e-commerce and social media marketing
0.1030.3
5Emergence of new market segments
0.0130.03
6Diminishing international boundries
0.0330.09
7New consumer trends
0.0520.1
8New environmental policies
0.0320.06
9New taxation policies
0.0420.08
10Economic upturns
0.0520.1
Threats WeightRatingWeighted Score
1Liability laws
0.0520.10
2Rising employee pay levels
0.0520.10
3Seasonal demand of products
0.0530.15
4Rising cost of raw materials
0.0520.10
5Imitation/counterfeit products
0.0530.15
6Intense competition
0.0530.15
7Changing consumer buying behaviors
0.0330.09
8Changing regulatory framework
0.0320.06
9Supplier bargaining power
0.1020.20
10Government cutbacks
0.0520.10
Total EFE Score
1.00 2.42
Dec. 29, 2018 Dec. 30, 2017 Dec. 31, 2016 Revenue $ 1,092,584 $ 883,911 $ 660,604 Cost of product revenue 518,612 438,114 337,832 Amortization of acquired intangible assets 18,544 12,638 3,457 Total cost of revenue 537,156 450,752 341,289 Gross profit 555,428 433,159 319,315 Operating expenses: Research and development 140,629 113,149 79,805 Selling and marketing 210,411 162,110 115,125 General and administrative 97,501 84,771 66,828 Amortization of acquired intangible assets 1,065 439 0 Total operating expenses 449,606 360,469 261,758 Operating income 105,822 72,690 57,557 Other income, net 2,800 3,676 3,804 Income before income taxes 108,622 76,366 61,361 Income tax expense 20,630 25,402 19,422 Net income $ 87,992 $ 50,964 $ 41,939 Net income per share: Basic $ 3.18 $ 1.85 $ 1.51 Diluted $ 3.07 $ 1.77 $ 1.48 Number of shares used in per share calculations: Basic 27,692 27,611 27,698 Diluted 28,640 28,753 28,292
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands 12 Months Ended
Dec. 29, 2018Dec. 30, 2017Dec. 31, 2016
Revenue $ 1,092,584$ 883,911$ 660,604
Cost of product revenue 518,612438,114337,832
Amortization of acquired intangible assets 18,54412,6383,457
Total cost of revenue 537,156450,752341,289
Gross profit 555,428433,159319,315
Operating expenses:
Research and development 140,629113,14979,805
Selling and marketing 210,411162,110115,125
General and administrative 97,50184,77166,828
Amortization of acquired intangible assets 1,065439 0
Total operating expenses 449,606360,469261,758
Operating income 105,82272,69057,557
Other income, net 2,8003,6763,804
Income before income taxes 108,62276,36661,361
Income tax expense 20,63025,40219,422
Net income $ 87,992$ 50,964$ 41,939
Net income per share:
Basic $ 3.18$ 1.85$ 1.51
Diluted $ 3.07$ 1.77$ 1.48
Number of shares used in per share calculations:
Basic 27,69227,61127,698
Diluted 28,64028,75328,292
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands
12 Months Ended
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 29, 2018 Dec. 30, 2017 Current assets: Cash and cash equivalents $ 130,373 $ 128,635 Short term investments 31,605 37,225 Accounts receivable, net 162,166 142,829 Inventory 164,633 106,932 Other current assets 25,660 19,105 Total current assets 514,437 434,726 Property and equipment, net 57,026 44,579 Deferred tax assets 36,979 31,531 Goodwill 118,896 121,440 Intangible assets, net 24,273 44,712 Other assets 15,350 14,534 Total assets 766,961 691,522 Current liabilities: Accounts payable 136,742 116,316 Accrued expenses 71,259 73,647 Deferred revenue and customer advances 5,756 7,761 Total current liabilities 213,757 197,724 Deferred tax liabilities 4,005 9,539 Other long-term liabilities 13,877 13,932 Total long-term liabilities 17,882 23,471 Total liabilities 231,639 221,195 Commitments and contingencies (Note 14) Preferred stock, 5,000 shares authorized and none outstanding 0 0 Common stock, $0.01 par value, 100,000 shares authorized; 27,788 and 27,945 shares issued and outstanding, respectively
278 279
Additional paid-in capital 172,771 190,067 Retained earnings 367,021 277,989 Accumulated other comprehensive (loss) income (4,748) 1,992 Total stockholders’ equity 535,322 470,327 Total liabilities and stockholders’ equity $ 766,961 $ 691,522
Consolidated Balance Sheets - USD ($) $ in Thousands Dec. 29, 2018Dec. 30, 2017
Current assets:
Cash and cash equivalents $ 130,373$ 128,635
Short term investments 31,60537,225
Accounts receivable, net 162,166142,829
Inventory 164,633106,932
Other current assets 25,66019,105
Total current assets 514,437434,726
Property and equipment, net 57,02644,579
Deferred tax assets 36,97931,531
Goodwill 118,896121,440
Intangible assets, net 24,27344,712
Other assets 15,35014,534
Total assets 766,961691,522
Current liabilities:
Accounts payable 136,742116,316
Accrued expenses 71,25973,647
Deferred revenue and customer advances 5,7567,761
Total current liabilities 213,757197,724
Deferred tax liabilities 4,0059,539
Other long-term liabilities 13,87713,932
Total long-term liabilities 17,88223,471
Total liabilities 231,639221,195
Commitments and contingencies (Note 14)
Preferred stock, 5,000 shares authorized and none outstanding 0 0
Common stock, $0.01 par value, 100,000 shares authorized; 27,788 and 27,945 shares issued and
outstanding, respectively
278279
Additional paid-in capital 172,771190,067
Retained earnings 367,021277,989
Accumulated other comprehensive (loss) income (4,748)1,992
Total stockholders’ equity 535,322470,327
Total liabilities and stockholders’ equity $ 766,961$ 691,522
