iRobot 2008 Annual Report Download - page 94

Research and development expenses increased by $0.5 million, or 2.8%, to $17.6 million (5.7% of revenue) in
fiscal 2008, from $17.1 million (6.9% of revenue) for fiscal 2007. The increase in research and development
expenses is primarily due to an increase in compensation and employee related costs, increased occupancy costs
associated with our move to our new facility and the write off of in-process research and development costs relating
to the Nekton acquisition, offset by a decrease in consultant expense.
Overall internal research and development headcount decreased to 94 at December 27, 2008 compared to 105
as of December 29, 2007, a decrease of 11 employees or 10%. Headcount grew during 2008 until December, when a
small reduction in force took place.
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 2008, these expenses amounted to $23.9 million compared to $18.8 million for the comparable period in
2007. 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 27,
2008 December 29, 2007 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total selling and marketing ......... $46,866 $44,894 $1,972 4.4%
As a percentage of total revenue ..... 15.2% 18.0%
Selling and marketing expenses increased by $2.0 million, or 4.4%, to $46.9 million (15.2% of revenue) in
fiscal 2008 from $44.9 million (18.0% of revenue) in fiscal 2007.
The increase was primarily driven by increases in our government and industrial division of $1.7 million in
costs associated with bid and proposal activities, increased labor costs and other marketing related costs. Corporate
marketing expenses increased by $0.7 million in fiscal 2008 as compared to fiscal 2007 primarily driven by public
relations spending to continue building brand awareness. These increases were partially offset by an overall
decrease in selling and marketing expenses of the home robots division of $0.4 million attributed to a decrease of
$4.0 million related to our direct response infomercial program, which ran during fiscal 2007 and was not repeated
in fiscal 2008, $0.2 decrease in other marketing related costs, offset by increases of $1.4 million in television, on-
line and print media, $1.8 million in freight and fulfillment related expenses, $0.7 million in labor and sales
commissions.
In fiscal 2009, we expect to continue to invest in sales and marketing to increase brand awareness.
Accordingly, we anticipate selling and marketing expenses will remain at the same level or slightly above fiscal
2008 in absolute dollars.
Overall selling and marketing headcount increased to 41 at December 27, 2008 compared to 36 as of
December 29, 2007, an increase of five employees or 14%.
General and Administrative
December 27,
2008 December 29, 2007 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
General and administrative ......... $28,840 $20,919 $7,921 37.9%
As a percentage of total revenue ..... 9.4% 8.4%
General and administrative expenses increased by $7.9 million, or 37.9%, to $28.8 million (9.4% of revenue)
in fiscal 2008 from $20.9 million (8.4% of revenue) in fiscal 2007. The increase in general and administrative
expenses was primarily driven by increases of $2.1 million in compensation expense due to increased headcount,
$1.2 million in stock-based compensation, $1.0 million in incentive compensation, $1.0 million in bad debt expense
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