iRobot 2010 Annual Report Download - page 82

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generated under research and development contracts. The $20.2 million increase in government and industrial
robots revenue was due to a 10.3% increase in units shipped in fiscal 2010 as compared to fiscal 2009. The
$14.5 million increase in product life cycle revenue was the result of a higher installed base of our government and
industrial robots, which during fiscal 2010 included product life cycle revenue related to our SUGV 310 product.
The $4.1 million increase in recurring contract development revenue generated under research and development
contracts was primarily attributable to an increase in funding of our SUGV program offset by decreases in funding
of our PackBot and Warrior programs. Total government and industrial robots shipped in fiscal 2010 were 871 units
compared to 789 units in fiscal 2009.
Cost of Revenue
January 1,
2011
January 2,
2010 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total cost of revenue ................. $255,520 $207,421 $48,099 23.2%
As a percentage of total revenue ......... 63.7% 69.5%
Total cost of revenue increased to $255.5 million in fiscal 2010, compared to $207.4 million in fiscal 2009. The
increase is primarily due to the 28.4% increase in home robot units shipped and the 10.3% increase in government
and industrial units shipped.
Gross Margin
January 1,
2011
January 2,
2010 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total gross margin ................... $145,432 $91,196 $54,236 59.5%
As a percentage of total revenue ......... 36.3% 30.5%
Gross margin increased $54.2 million, or 59.5%, to $145.4 million (36.3% of revenue) in fiscal 2010 from
$91.2 million (30.5% of revenue) in fiscal 2009. The increase in gross margin as a percentage of revenue was the
result of the home robots division gross margin increasing 7.8 percentage points and the government and industrial
division gross margin increasing 2.9 percentage points. The 7.8 percentage point increase in the home robots
division is attributable to lower return provisions, the increase in units shipped through our higher-margin
international channel, price increases on certain international products, continued product cost reduction efforts,
lower excess and obsolete inventory provisions and improved leverage of our overhead expense against higher
revenue in fiscal 2010 as compared to fiscal 2009. The 2.9 percentage point increase in the government and
industrial division is primarily attributable to leveraging our overhead expense against higher revenue, and an
increase in higher-margin product life cycle revenue, partially offset by a decrease due to product mix primarily
attributable to a significant number of SUGV 310 units shipped in fiscal 2010 as compared to fiscal 2009. Our
margins relating to contract revenue increased in fiscal 2010 as compared to fiscal 2009 due to higher-margin firm-
fixed-priced contracts awarded in 2010.
Research and Development
January 1,
2011
January 2,
2010 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total research and development ......... $24,809 $14,747 $10,062 68.2%
As a percentage of total revenue ......... 6.2% 4.9%
Research and development expenses increased by $10.1 million, or 68.2%, to $24.8 million (6.2% of revenue)
in fiscal 2010, from $14.7 million (4.9% of revenue) for fiscal 2009. The increase in research and development
expenses is primarily due to increases in compensation, recruiting, employee benefits, materials and consulting
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