iRobot 2008 Annual Report Download - page 61

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Manufacturing a new product requires a close relationship between our product designers and the manufac-
turing organizations. Using multiple engineering techniques, our products are introduced to the selected production
facility at an early-development stage and the feedback provided by manufacturing is incorporated into the design
before tooling is finalized and mass production begins. As a result, we believe that we can significantly reduce the
time required to move a product from its design phase to mass production deliveries, with improved quality and
yields.
We outsource the manufacturing of our consumer products to two contract manufacturers, Jetta Company
Limited and Kin Yat Industrial Co. Ltd., each of which manufactures our consumer products at a single plant in
China. Jetta Company Limited has been manufacturing products since 1977 and brings substantial experience to our
production requirements. Jetta Company Limited has several manufacturing locations and recently expanded one of
its facilities to increase capacity for the production of our Roomba 400 series and Scooba robots. Kin Yat Industrial
Co. Ltd. has been in business since 1981, has several manufacturing locations in China, and began manufacturing
our Roomba 500 series in 2007. Combined with our own engineering operations in India and Hong Kong, this
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 PackBot family of government and industrial products is manufactured by Gem City Engineering and
Manufacturing Corporation, or Gem City, at one plant in Dayton, Ohio. Gem City’s location is particularly
important as military products supplied to the U.S. government must have the majority of their content manu-
factured in the United States. Gem City has multiple facilities and relies on subcontractors for certain component
manufacturing capabilities. Gem City has been in the business of manufacturing primarily machined metal products
since 1936, and has produced numerous products for military contractors. We believe that Gem City’s engineers are
skilled in the production of products meeting military specifications, and in preparing final products for military
inspection and conducting quality reviews.
Our Small Unmanned Ground Vehicle (SUGV) family of government and industrial products, and our
Negotiator family of products targeted for municipal markets, and other products will be manufactured by contract
manufacturers who provide high quality, scalable, cost effective manufacturing services.
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 27,
2008, December 29, 2007 and December 30, 2006, our research and development expenses were $17.6 million,
$17.1 million and $17.0 million, respectively. In addition to our internal research and development activities, for the
years ended December 27, 2008, December 29, 2007 and December 30, 2006, we have incurred research and
development expenses under funded development arrangements with governments and industrial third parties of
$23.9 million, $18.8 million and $15.6 million, respectively. Of our total research and development spending in
2008, 2007 and 2006, approximately 51.7%, 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, 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.
13
Form 10-K