iRobot 2010 Annual Report Download - page 85

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2008. The $10.0 million increase in recurring contract development revenue generated under research and
development contracts was the result of revenue from new contract awards and increased funding on existing
contracts for our PackBot, SUGV and research programs and contracts acquired through our September 2008
acquisition of Nekton Research, LLC.
Cost of Revenue
January 2,
2010
December 27,
2008 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total cost of revenue ............... $207,421 $214,150 $(6,729) (3.1)%
As a percentage of total revenue ....... 69.5% 69.6%
Total cost of revenue decreased to $207.4 million in fiscal 2009, compared to $214.2 million in fiscal 2008.
This decrease was due to the decrease in home robot and government and industrial product units shipped and lower
costs associated with product mix in our government and industrial division, partially offset by an increase in cost of
contracts resulting from new contract awards and increased funding on existing contracts for our PackBot, SUGV
and research programs and contracts acquired through our September 2008 acquisition of Nekton Research, LLC.
Gross Margin
January 2,
2010
December 27
2008 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total gross margin.................. $91,196 $93,471 $(2,275) (2.4)%
As a percentage of total revenue ....... 30.5% 30.4%
Gross margin decreased $2.3 million, or 2.4%, to $91.2 million (30.5% of revenue) in fiscal 2009, from
$93.5 million (30.4% of revenue) in fiscal 2008. The increase in gross margin as a percentage of revenue was the
result of the home robots division gross margin increasing 3.5 percentage points offset by a decrease in the
government and industrial division gross margin of 4.2 percentage points. The 3.5 percentage point increase in the
home robots division is attributable to price increases and the introduction of higher-priced products into the
international market. In addition, domestic margins increased due to an increase in volume and margins on
refurbished products in fiscal 2009 as compared to fiscal 2008. Also, during fiscal 2008, we recorded costs but did
not record revenue for shipments to Linens “N’ Things as a result of its bankruptcy filing. The 4.2 percentage point
decrease in the government and industrial division is attributable to higher overhead expense on lower revenue,
partially offset by higher margins due to product mix in fiscal 2009 as compared to fiscal 2008.
Research and Development
January 2,
2010
December 27,
2008 Dollar Change Percent Change
Fiscal Year Ended
(In thousands)
Total research and development........ $14,747 $17,566 $(2,819) (16.0)%
As a percentage of total revenue ....... 4.9% 5.7%
Research and development expenses decreased by $2.8 million, or 16.0%, to $14.7 million (4.9% of revenue)
in fiscal 2009, from $17.6 million (5.7% of revenue) for fiscal 2008. The decrease in research and development
expenses is due to a decrease in compensation and employee-related costs, contractor costs, occupancy expenses
and material associated with internal research and development projects.
In addition to our research and development activities classified as research and development expense, we
incur research and development expenses under funded development arrangements with governments and industrial
third parties. For fiscal 2009, these expenses amounted to $30.8 million compared to $23.9 million for fiscal 2008.
In accordance with generally accepted accounting principles, these expenses have been classified as cost of contract
39
Form 10-K