iRobot 2007 Annual Report Download - page 83

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In addition to our internal research and development activities discussed above, we incur research and
development expenses under funded development arrangements with both governments and industrial third parties.
For fiscal 2007 these expenses amounted to $18.8 million compared to $15.6 million for the comparable period in
2006. The increase in these expenses was primarily due to increased headcount in our contract research and
development function to 64 employees at December 29, 2007 from 58 employees at December 30, 2006. In
accordance with generally accepted accounting principles, these expenses have been classified as cost of revenue
rather than research and development expense as they are executed under funded research contracts.
Selling and Marketing
December 29,
2007
December 30,
2006 Dollar Change Percent Change
Fiscal Year Ended
(Dollars in thousands)
Total selling and marketing ......... $44,894 $33,969 $10,925 32.2%
As a percentage of total revenue ..... 18.0% 18.0%
Selling and marketing expenses increased by $10.9 million or 32.2% to $44.9 million (18.0% of revenue) in
fiscal 2007 from $34.0 million (18.0% of revenue) in fiscal 2006.
The $8.7 million increase in the home robot division selling and marketing expense was primarily driven by a
$12 million increase in costs associated with our increased direct business, including both website sales and
infomercial programs which were run earlier in the year, offset by lower television media expenses. Additionally,
trade shows and other marketing related activities increased by $1.3 million, people related costs increased by
$0.7 million and sales commissions increased by $0.6 million.
Government and industrial division selling and marketing expenses were up $2.4 million for fiscal 2007 as
compared to fiscal 2006 due primarily to $0.9 million of increased compensation and benefit related expense
resulting from the expansion of our sales team, $0.3 million increased travel costs, $0.5 million in increased sales
commission due to a new commissions program and $0.4 million increase in stock compensation expense.
In fiscal 2008, 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.
Overall selling and marketing headcount increased to 36 at December 29, 2007 compared to 31 as of
December 30, 2006, an increase of 5 employees or 16% growth.
General and Administrative
December 29,
2007
December 30,
2006 Dollar Change Percent Change
Fiscal Year Ended
(Dollars in thousands)
General and administrative ......... $20,919 $18,703 $2,216 11.8%
As a percentage of total revenue ..... 8.4% 9.9%
General and administrative expenses increased by $2.2 million or 11.8% to $20.9 million (8.4% of revenue) in
fiscal 2007 from $18.7 million (9.9% of revenue) in fiscal 2006. The increase in general and administrative expense
was primarily driven by an increase of $1.1 million in compensation and benefits expenses due to increased
headcount, and an increase of $1.0 million in stock compensation expense for fiscal 2007 as compared to fiscal
2006. In fiscal 2008, we anticipate general and administrative expenses will increase in absolute dollars in support
of efforts to improve scalability, attend to new business complexity, and expand operations globally.
Overall general and administrative headcount increased to 88 at December 29, 2007 compared to 72 as of
December 30, 2006, an increase of 16 employees or 22% growth.
49
Form 10-K