iRobot 2009 Annual Report Download - page 74

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December 27, 2008 and December 29, 2007, the combined investment in future technologies, classified as cost of
revenue and research and development expense, was $45.5 million, $41.5 million and $35.9 million, respectively.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist primarily of:
• salaries and related costs for sales and marketing personnel;
• salaries and related costs for executives and administrative personnel;
• advertising, marketing and other brand-building costs;
• fulfillment costs associated with direct-to-consumer sales through our on-line store;
• customer service costs;
• professional services costs;
• information systems and infrastructure costs;
• travel and related costs; and
• occupancy and other overhead costs.
We anticipate that selling, general and administrative expenses will increase in absolute dollars but remain
relatively flat as a percentage of revenue in the foreseeable future as we continue to build the iRobot brand and also
maintain company profitability.
For the fiscal years ended January 2, 2010 and December 27, 2008, selling, general and administrative expense
was $71.0 million and $75.7 million, or 23.8% and 24.6% of total revenue, respectively.
Litigation and Related Expenses
In fiscal 2007, we incurred $2.3 million of litigation and settlement-related costs associated with two related
lawsuits filed by us in August 2007. The first of these lawsuits was filed in Massachusetts Superior Court, and
subsequently transferred to the United States District Court for the District of Massachusetts, against Robotic FX,
Inc. and Jameel Ahed alleging, among other things, misappropriation of trade secrets and breach of contract. The
second lawsuit was filed in the United States District Court for the Northern District of Alabama against Robotic
FX, Inc. alleging willful infringement of two patents owned by us. See Note 11 to the Consolidated Financial
Statements included elsewhere in this Annual Report on Form 10-K for a more detailed discussion of this litigation
and related settlement.
Fiscal Periods
We operate and report using a 52-53 week fiscal year ending on the Saturday closest to December 31.
Accordingly, our fiscal quarters will end on the Saturday that falls closest to the last day of the third month of each
quarter.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these consolidated financial statements requires
us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and
expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our actual
results may differ from these estimates.
We believe that of our significant accounting policies, which are described in the notes to our consolidated
financial statements, the following accounting policies involve a greater degree of judgment and complexity.
Accordingly, we believe that the following accounting policies are the most critical to aid in fully understanding and
evaluating our consolidated financial condition and results of operations.
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