iRobot 2014 Annual Report Download - page 108

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35
General and administrative expenses increased by $7.7 million, or 16.8%, to $53.4 million (10.9% of revenue) in fiscal
2013 from $45.7 million (10.5% of revenue) in fiscal 2012. This increase is primarily attributable to a $5.8 million increase in
compensation costs, and a $1.8 million write-down of an intangible asset in 2013, resulting from a decision made in 2013 to
refocus our funded research activities that significantly reduced our utilization of the technology associated with the intangible
asset.
Other Income (Expense), Net
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
Other Income (expense), net $ (203) $ 435 $ (638) (146.7)%
As a percentage of total revenue — % 0.1%
Other income (expense), net, amounted to $(0.2) million and $0.4 million for fiscal 2013 and fiscal 2012, respectively,
and consisted primarily of interest income offset by foreign currency exchange losses resulting from foreign currency exchange
rate fluctuations.
Income Tax Provision
Fiscal Year Ended
December 28,
2013 December 29,
2012 Dollar Change Percent Change
(In thousands)
Income tax provision $ 4,774 $ 8,310 $ (3,536) (42.6)%
As a percentage of pre-tax income 14.7% 32.5%
We recorded an income tax provision of $4.8 million and $8.3 million for fiscal 2013 and fiscal 2012, respectively. The
$4.8 million income tax provision for fiscal 2013 was based upon a 2013 effective income tax rate of 28.5% plus a net income
tax benefit of $4.5 million primarily resulting from the extension of the federal research and development tax credit in 2013 and
the settlement of uncertain tax positions upon completion of an IRS audit. The $8.3 million provision for fiscal 2012 was based
upon a 2012 effective income tax rate of 30.3% plus a net income tax expense of $0.6 million primarily resulting from the true-
up of prior year permanent items.
In January 2013, legislation was enacted that included the extension of the federal research and development tax credits.
The legislation retroactively reinstated the research and development tax credit for 2012 and extended it through December 31,
2013. As a result, we recorded a discrete benefit of approximately $1.7 million related to 2012 in 2013.
The federal research and development tax credit expired at the end of 2013. The federal research and development tax
credit has not yet been enacted for 2014 and, unless retroactively reinstated, will cause our 2014 effective tax rate to increase.
The decrease in the effective tax rate from 30.3% in 2012 to 28.5% in 2013 was primarily due to the extension of the
federal research and development tax credit, offset by an increase in state taxes.
Liquidity and Capital Resources
At December 27, 2014, our principal sources of liquidity were cash and cash equivalents totaling $186.0 million, short-
term investments of $36.2 million and accounts receivable of $71.1 million.
We manufacture and distribute our products through contract manufacturers and third-party logistics providers. We
believe that this approach gives us the advantages of relatively low capital investment and significant flexibility in scheduling
production and managing inventory levels. By leasing our office facilities, we also minimize the cash needed for expansion.
Accordingly, our capital spending is generally limited to leasehold improvements, computers, office furniture, product-specific
production tooling, internal use software and test equipment. In the fiscal years ended December 27, 2014, December 28, 2013
and December 29, 2012, we spent $13.8 million, $6.8 million and $6.8 million respectively, on capital equipment.
Our strategy for delivering home robots products to our distributors and retail customers gives us the flexibility to provide
container shipments directly to the retailer from China and, alternatively, allows our distributors and retail partners to take
possession of product on a domestic basis. Accordingly, our home robots product inventory consists of goods shipped to our
third-party logistics providers for the fulfillment of distributor, retail and direct-to-consumer sales. Our inventory of defense
and security products consists mostly of components, as well as carefully-managed levels of sub-assemblies. Our contract
manufacturers are also responsible for purchasing and stocking components required for the production of our products, and
they typically invoice us when the finished goods are shipped.