iRobot 2014 Annual Report Download - page 104

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31
Cost of Revenue
Fiscal Year Ended
December 27,
2014 December 28,
2013 Dollar Change Percent Change
(In thousands)
Total cost of revenue $ 298,791 $ 266,247 $ 32,544 12.2%
As a percentage of total revenue 53.7% 54.6%
Total cost of revenue increased $32.5 million, or 12.2% to $298.8 million in fiscal 2014, compared to $266.2 million in
fiscal 2013. The increase is primarily due to the 12.5% increase in home robot units shipped, as well as the increase in per unit
costs of defense and security robots driven by a lower mix of the lower-cost FirstLook robot in fiscal 2014 compared to fiscal
2013. These increases are partially offset by the 50.4% decrease in defense and security units shipped in fiscal 2014 as
compared to fiscal 2013.
Gross Margin
Fiscal Year Ended
December 27,
2014 December 28,
2013 Dollar Change Percent Change
(In thousands)
Total gross margin $ 258,055 $ 221,154 $ 36,901 16.7%
As a percentage of total revenue 46.3% 45.4%
Gross margin increased $36.9 million, or 16.7%, to $258.1 million (46.3% of revenue) in fiscal 2014 from $221.2 million
(45.4% of revenue) in fiscal 2013. The increase in gross margin as a percentage of revenue was the result of the home robots
business unit gross margin increasing 1.2 percentage points, partially offset by the defense and security business unit gross
margin decreasing 3.7 percentage points. The 1.2 percentage point increase in the home robots business unit was primarily
driven by favorable product and customer mix, with increased volume of higher margin Roomba 800 and 600 series robots in
fiscal 2014 compared to fiscal 2013. During 2014, we recorded a net benefit to revenue and gross margin of $4.3 million and
$5.7 million, respectively, related to adjustments to our product returns reserves, compared to a net benefit to both revenue and
gross margin of $7.9 million related to adjustments to our product returns reserves during fiscal 2013. The net adjustments
recorded in each period resulted from lower product returns experience as compared to estimates used to establish reserves in
prior periods. The favorable product and customer mix was partially offset by the decrease in favorable adjustments to our
product returns reserve in fiscal 2014 compared to fiscal 2013. The 3.7 percentage point decrease in the defense and security
robots business unit is attributable to unfavorable overhead leverage associated with the 9.0% decrease in the defense and
security robots business unit revenue.
Research and Development
Fiscal Year Ended
December 27,
2014 December 28,
2013 Dollar Change Percent Change
(In thousands)
Total research and development $ 69,408 $ 63,649 $ 5,759 9.0%
As a percentage of total revenue 12.5% 13.1%
Research and development expenses increased $5.8 million, or 9.0%, to $69.4 million (12.5% of revenue) in fiscal 2014
from $63.6 million (13.1% of revenue) in fiscal 2013. This increase is attributable to increased efforts in product development
and continued product enhancements, including increases in consultant and other people-related costs of $3.5 million in 2014
compared to 2013.
Selling and Marketing
Fiscal Year Ended
December 27,
2014 December 28,
2013 Dollar Change Percent Change
(In thousands)
Total selling and marketing $ 86,091 $ 71,529 $ 14,562 20.4%
As a percentage of total revenue 15.5% 14.7%