iRobot 2007 Annual Report Download - page 85

we recognized an additional $2.7 million of home robot product revenue related to robots shipped both during the
third quarter of 2005 and during prior periods.
The $28.6 million increase in revenue from our government and industrial business for fiscal 2006 as
compared to fiscal 2005 was due to a 52.8% increase in the number of military robots shipped combined with a 5.5%
increase in associated net average selling prices, a 30.9% increase in recurring contract revenues generated under
funded research and development contracts and the impact of $2.2 million associated with the United Kingdom
Ministry of Defence contract modification. Also included in this $28.6 million growth was an increase of
approximately $7.5 million in product life cycle revenue (robot spares), as compared to $5.4 million of product
life cycle revenue in fiscal 2005, which was primarily driven by the increased demand for our military robots. Total
military robot units shipped in fiscal 2006 was 385 compared to 252 in fiscal 2005. This unit increase was directly
related to 229 units shipped under our contract with the Naval Sea Systems Command for Man Transportable
Robotics Systems.
Cost of Revenue
December 30,
2006
December 31,
2005 Dollar Change Percent Change
Fiscal Year Ended
(Dollars in thousands)
Total cost of revenue.............. $119,220 $94,389 $24,831 26.3%
As a percentage of total revenue ..... 63.1% 66.5%
Total cost of revenue increased to $119.2 million in fiscal 2006, compared to $94.4 million in fiscal 2005. The
increase is primarily attributable to a 9.4% increase in the unit sales of our home floor care robots, a 52.8% increase
in the unit sales of our military robots and higher costs associated with a 30.9% increase in recurring contract
revenues generated under funded research and development contracts in fiscal 2006 as compared to fiscal 2005.
The home robots division cost of revenue decreased as a percent of revenue by 1.2 percentage points in fiscal
2006 as compared to fiscal 2005. This decrease was attributable to the above-mentioned increase in average selling
prices offset by a 6.4% increase in average unit costs as a result of a shift in the product mix of the home floor care
robots that we sold. In particular, the average unit cost increase was largely attributable to a significant number of
Scooba floor washing robots shipped in fiscal 2006. Our Scooba floor washing robot carries a higher per unit cost
than our Roomba floor vacuuming robot which represented nearly 100% of home floor care robots shipped in fiscal
2005.
The government and industrial robots division cost of revenue decreased as a percent of revenue by
8.8 percentage points for fiscal 2006 as compared to fiscal 2005. This decrease was due primarily to the
above-mentioned increase in average selling prices, a 9.1% reduction in the average unit cost of product sold,
higher margins on increased product life cycle revenue and lower cost of warranty partially offset by higher
manufacturing overhead.
Gross Profit
December 30,
2006
December 31,
2005 Dollar Change Percent Change
Fiscal Year Ended
(Dollars in thousands)
Total gross profit ................ $69,735 $47,579 $22,156 46.6%
As a percentage of total revenue ..... 36.9% 33.5%
Gross profit increased 46.6% to $69.7 million in fiscal 2006, from $47.6 million in fiscal 2005. Gross profit as
a percentage of revenue increased to 36.9% in fiscal 2006 from 33.5% of revenue in fiscal 2005. This 3.4 percentage
increase in gross profit was the result of the home robots division gross profit increasing 1.2 percentage points and
the government and industrial gross profit increasing 8.8 percentage points. These increases were partially offset by
the fact that the home robots division, which carries a higher overall gross profit than the government and industrial
division, accounted for 63.6% of total gross profit in fiscal 2006 as compared to 75.5% in fiscal 2005. Included in
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Form 10-K