iRobot 2014 Annual Report Download - page 107

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34
Gross Margin
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
Total gross margin $ 221,154 $ 194,348 $ 26,806 13.8%
As a percentage of total revenue 45.4% 44.6%
Gross margin increased $26.8 million, or 13.8%, to $221.2 million (45.4% of revenue) in fiscal 2013 from $194.3 million
(44.6% of revenue) in fiscal 2012. The increase in gross margin as a percentage of revenue was the result of the defense and
security business unit gross margin increasing 7.1 percentage points offset by the home robots business unit gross margin
decreasing 1.7 percentage points. The 7.1 percentage point increase in the defense and security robots business unit is
attributable to improved leverage of our overhead expense in 2013 as compared to 2012, as well as higher excess and obsolete
inventory costs in 2012, with no material excess and obsolete inventory costs in 2013. During 2013 and 2012, we recorded
favorable adjustments to our return provision due to gradual improvements in returns resulting from sustained investment in
product quality of $7.9 million and $11.0 million, respectively. Additionally, we recorded favorable adjustments of $5.2
million relating to reductions in our international warranty accrual for our home robots business, attributable to declining
warranty cost experience in 2012 with no such adjustments recorded in 2013. The 1.7 percentage point decrease in the home
robots business unit gross margin resulted from the $8.3 million decrease in these favorable adjustments to our return provision
and warranty accrual, partially offset by increased volume of higher margin products including the Roomba 700 and 600 series
robots, and fewer sales of our lower margin Roomba series.
Research and Development
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
Total research and development $ 63,649 $ 57,066 $ 6,583 11.5%
As a percentage of total revenue 13.1% 13.1%
Research and development expenses increased $6.6 million, or 11.5%, to $63.6 million (13.1% of revenue) in fiscal 2013
from $57.1 million (13.1% of revenue) in fiscal 2012. This increase is attributable to increased efforts in product development
and continued product enhancements in 2013 compared to 2012, as well as research and development costs associated with
Evolution, which was acquired on October 1, 2012.
Selling and Marketing
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
Total selling and marketing $ 71,529 $ 66,412 $ 5,117 7.7%
As a percentage of total revenue 14.7% 15.2%
Selling and marketing expenses increased by $5.1 million, or 7.7%, to $71.5 million (14.7% of revenue) in fiscal 2013
from $66.4 million (15.2% of revenue) in fiscal 2012. This increase is primarily attributable to marketing expenses incurred
during 2013 as part of our continued global marketing and branding efforts.
General and Administrative
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
General and administrative $ 53,358 $ 45,698 $ 7,660 16.8%
As a percentage of total revenue 10.9% 10.5%
Form 10-K