iRobot 2011 Annual Report Download - page 87

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margins relating to contract revenue increased in fiscal 2010 as compared to fiscal 2009 due to higher-margin
firm-fixed-priced contracts awarded in 2010.
Research and Development
Fiscal Year Ended
January 1,
2011
January 2,
2010 Dollar Change Percent Change
(In thousands)
Total research and development .......... $24,809 $14,747 $10,062 68.2%
As a percentage of total revenue ......... 6.2% 4.9%
Research and development expenses increased by $10.1 million, or 68.2%, to $24.8 million (6.2% of
revenue) in fiscal 2010, from $14.7 million (4.9% of revenue) for fiscal 2009. The increase in research and
development expenses is primarily due to increases in compensation, recruiting, employee benefits, materials and
consulting costs associated with internal research and development projects in our home robots division and
expenses related to our healthcare research. The increase in our home robots division is primarily the result of
our increased efforts in the areas of product development and advanced development relating to our consumer
products.
In addition to our research and development activities classified as research and development expense, we
incur research and development expenses under funded development arrangements with governments and
industrial third parties. For fiscal 2010, these expenses amounted to $27.1 million, compared to $30.8 million for
fiscal 2009. In accordance with generally accepted accounting principles, these expenses have been classified as
cost of contract revenue rather than research and development expense. The combined investment in future
technologies, classified as cost of revenue and research and development expense, was $51.9 million for fiscal
2010, compared to $45.5 million for fiscal 2009.
Selling and Marketing
Fiscal Year Ended
January 1,
2011
January 2,
2010 Dollar Change Percent Change
(In thousands)
Total selling and marketing ............. $50,535 $40,902 $9,633 23.6%
As a percentage of total revenue ......... 12.6% 13.7%
Selling and marketing expenses increased by $9.6 million, or 23.6%, to $50.5 million (12.6% of revenue) in
fiscal 2010 from $40.9 million (13.7% of revenue) in fiscal 2009. This was driven by an increase in our home
robots division of $7.9 million attributable to increases in advertising, promotions, on-line media, sales
commission expenses as a result of higher sales, and an increase in compensation and employee-related expense
supporting our international home robot sales for fiscal 2010 as compared to fiscal 2009. Selling and marketing
expenses in our government and industrial division increased by $1.7 million attributable to an increase in
compensation expenses and other expenses relating to bid and proposal activities, and sales commissions as a
result of higher sales in fiscal 2010 as compared to fiscal 2009.
In fiscal 2011, we expect to continue to invest in sales and marketing to increase brand awareness.
Accordingly, we anticipate selling and marketing expenses will increase in absolute dollars but remain at the
same level or slightly above fiscal 2010 as a percentage of revenue.
General and Administrative
Fiscal Year Ended
January 1,
2011
January 2,
2010 Dollar Change Percent Change
(In thousands)
General and administrative .............. $36,618 $30,110 $6,508 21.6%
As a percentage of total revenue ......... 9.1% 10.1%
40