{ "docId": "019dd923-622c-750b-8b98-5300aefcfd91", "docSlug": "ed69677379db", "documentTitle": "iRobot Corp (IRBT)", "authorId": "54_Spruce_Point_Capital", "authorName": "Spruce Point Management", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2014-05-20 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 54, "pageCount": 64, "prevPage": 53, "nextPage": 55, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 3, "notes": "Uses a red flag icon and a red arrow to visually connect the CFO's history to the 3Com litigation.", "elementsJson": [ "headline_text", "paragraph", "callout_box", "bullet_list", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-5300aefcfd91/54", "deckHref": "/decks/019dd923-622c-750b-8b98-5300aefcfd91", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-5300aefcfd91.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-5300aefcfd91#slide-54", "components": [ { "bbox": { "h": 0.15, "w": 0.9, "x": 0.05, "y": 0.25 }, "kind": "callout", "text": "With many questionable financial issues (warranty reversals, exploding DSO/DSI, reclassifications, errors, and more), we believe a closer look into IRBT’s CFO is justified. We find its CFO worked at 3Com in various financial capacities at a time when shareholder litigation claimed both 3Com and US Robotics (a company it merged with) perpetuated a scheme to mislead investors about its financial condition (charges included Channel Stuffing). The case was settled for $259 million in 2000 (a near record amount for that time period), and its executives avoided acknowledging any wrong doing.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "98fad8ef-2fe4-4f72-9365-e02c9a870082", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "callout", "text": "With many questionable financial issues (warranty reversals, exploding DSO/DSI, reclassifications, errors, and more), we believe a closer look into IRBT’s CFO is justified.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-5377-73e2-a967-82448eb8f27a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.4, "w": 0.4, "x": 0.55, "y": 0.48 }, "kind": "list", "text": "Key Allegations Made in the Complaint: Deferred the date of the 3Com / USR merger to hide disastrous results of USR; USR customers had substantial inventories of older models that would become obsolete that they covered under a price protection to make its customers whole with a rebate when prices on the old products were discounted; To inflate its revenue, USR induced customers to take quantities of new modems substantially in excess of their needs with unlimited return privileges (rebates), and failed to accrue any reserves, other expenses and take inventory write-downs; Defendants issued false and misleading statements about the company's financial health and levels of inventory in the distribution channels; Defendants sold more than 4m shares of 3Com stock at prices as high as $58 3/8 per share, realizing gross proceeds from these sales of >$200m", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "867a7466-ca5d-4aa8-8926-12e89af42984", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.4, "x": 0.55, "y": 0.42 }, "kind": "paragraph", "text": "Shareholder Litigation Against 3Com and US Robotics (USR) Alleged Channel Stuffing + Other Issues", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "05c02120-d2be-434c-ac20-b44b63f5aa10", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.35, "w": 0.4, "x": 0.05, "y": 0.48 }, "kind": "paragraph", "text": "Ms. Alison Dean has been the Chief Financial Officer, Executive Vice President and Treasurer of iRobot Corporation since April 5, 2013 and serves as its Principal Accounting Officer. Ms. Dean served as the Senior Vice President of Corporate Finance at iRobot Corporation from February 2010 to April 5, 2013 and also served as Principal Accounting Officer from March 19, 2007 to February 2012. Ms. Dean served as Vice President of Financial Controls & Analysis at iRobot Corporation from March 19, 2007 to February 2010. From 1995 to August 2005, she served at 3Com Corporation as Vice President and Corporate Controller from 2004 to 2005 and Vice President of Finance Worldwide Sales from 2003 to 2004.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "646438d9-1898-42c9-863f-c5dc8d4ec910", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.4, "x": 0.05, "y": 0.42 }, "kind": "paragraph", "text": "IRBT’s Current CFO Worked at 3Com During a Tumultuous Period", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "98df02d6-87c3-4976-b6b9-7ac35f624ec3", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "The case was settled for $259 million in 2000 (a near record amount for that time period), and its executives avoided acknowledging any wrong doing. — Source: http://abcnews.go.com/Business/story?id=89101", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-5377-73e2-a967-8776c9aefc7b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.9, "x": 0.05, "y": 0.92 }, "kind": "source-note", "text": "1. http://securities.stanford.edu/filings-documents/1009/COMS97/2000331_r06c_97CV21083.pdf 2. http://abcnews.go.com/Business/story?id=89101 3. Note: ITBT’s CFO was not named directly in the shareholder litigation complaint, nor should it be implied or assumed she facilitated any wrong-doing", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3655a0d2-16bc-469c-a423-03fa7110f5b5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.1, "w": 0.6, "x": 0.15, "y": 0.05 }, "kind": "title", "text": "Who Is Controlling IRBT’s Financials and Supply Chain?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ce30c694-37f1-40f6-bcdf-e3964ed98182", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "a1f7ed21-6702-498b-aeca-7ccc911464be", "evidence": "Linking current executive to past corporate litigation to imply risk.", "confidence": 0.9 } ], "arcBeats": [ { "to": 64, "from": 4, "beatId": "9276d3d0-eba4-4814-902b-c80843925dd7", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The document presents a series of contradictions and concerns about iRobot Corp's financials, market position, and growth prospects.", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }