iRobot 2007 Annual Report Download - page 48

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allows us to design our products in both the United States and India, use our own engineers in the United States,
India and Hong Kong as technical interfaces with the facilities in China, and benefit from the experience of Jetta
Company Limited, Kin Yat Industrial Co. Ltd. and their engineers.
Our government and industrial products are manufactured by Gem City Engineering Corporation at one plant
in Dayton, Ohio. Gem City Engineering Corporation’s location is particularly important as military products
supplied to the U.S. government must have the majority of their content manufactured in the United States. Gem
City Engineering Corporation has multiple facilities and relies on other subcontractors for certain component
manufacturing capabilities. Gem City Engineering Corporation has been in the business of manufacturing primarily
metal-tooled products since 1936, and has produced numerous products for military contractors. We believe that its
engineers are skilled in the production of products meeting military specifications, preparing final products for
military inspection and conducting quality reviews.
Research and Development
We believe that our future success depends upon our ability to continue to develop new products and product
accessories, and enhancements to and applications for our existing products. For the years ended December 29,
2007, December 30, 2006 and December 31, 2005, our research and development expenses were $17.1 million,
$17.0 million and $11.6 million, respectively. In addition to our internal research and development activities, for the
years ended December 29, 2007, December 30, 2006 and December 31, 2005, we have incurred research and
development expenses under funded development arrangements with governments and industrial third parties of
$18.8 million, $15.6 million and $12.5 million, respectively. Of our total research and development spending in
2007 and 2006, approximately 37.9% and 36.4%, respectively was funded by government-sponsored research and
development contracts. We intend to continue our investment in research and development to respond to and
anticipate customer needs, and to enable us to introduce new products over the next few years that will continue to
address our existing market sectors.
Team Organization
Our research and development is conducted by small teams dedicated to particular projects, examples of which
include the Roomba team, Scooba team, Warrior team and PackBot team. In connection with our FCS SUGV
program involving more than 50 employees, we have instituted a formal integrated product team structure
consisting of integrated System of Systems, Integrated Logistical Support, Program Operations and Business
Operations teams to work together to deliver a platform that integrates with the FCS system of systems.
Global Engineering
Our domestic research and development efforts are primarily located at our headquarters in Burlington,
Massachusetts, and our special projects engineering office in San Luis Obispo, California. In addition, we have an
engineering design center in India and a product development team working out of Hong Kong. Our global
engineering development process for consumer products allows us to leverage the time differences between our
United States operations and our teams in Asia resulting in a fast, low cost global design and manufacturing cycle.
The first stage of the cycle takes place in both our Burlington, Massachusetts and Mysore, India offices where
we focus on product definition, prototyping, market research and financial analysis. We then create a design that is
manufacturable, including complete modeling and simulation and initial validation of the product/market concept.
After the initial development of the prototypes, we leverage the team in Hong Kong for the production stage of the
cycle.
During this stage, engineers on two continents work on refining the designs, preparing the product for
manufacturing and working through the issues for pilot production, including detailed regression testing. The
product is then turned over to the contract manufacturer for volume production.
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