iRobot 2012 Annual Report Download - page 84

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34
fiscal 2011 as compared to 66.0% in fiscal 2010. The increase in net average selling prices was primarily driven by customer
mix and product mix relating to the introduction of our Roomba 700 series and Scooba 230 robots.
The $15.3 million increase in revenue from our defense and security robots business unit was driven by a $4.5 million
increase in product life cycle revenue (spare parts, accessories) and a $12.5 million increase in defense and security robot
revenue offset by a $1.6 million decrease in recurring contract development revenue generated under research and development
contracts. The $4.5 million increase in product life cycle revenue is the result of a higher installed base of our defense and
security robots. The $1.6 million decrease in recurring contract development revenue generated under research and
development contracts was primarily the result of decreases in funding and timing of work efforts for our Maritime and Warrior
programs. The $12.5 million increase in defense and security robots revenue was primarily due to a 27.7% increase in net
average selling prices partially offset by a 11.3% decrease in units shipped in fiscal 2011 as compared to fiscal 2010. The
increase in net average selling price was due to product mix primarily attributable to PackBot and SUGV units with a higher
selling price shipped in fiscal 2011 as compared to lower priced PackBot FasTac units and lower priced configuration of SUGV
units shipped in fiscal 2010. Total defense and security robots shipped in fiscal 2011 were 773 units compared to 871 units in
fiscal 2010.
Cost of Revenue
Fiscal Year Ended
December 31,
2011
January 1,
2011 Dollar Change Percent Change
(In thousands)
Total cost of revenue $ 273,382
$ 255,520
$ 17,862 7.0 %
As a percentage of total revenue 58.7 % 63.7 %
Total cost of revenue increased to $273.4 million in fiscal 2011, compared to $255.5 million in fiscal 2010. The increase
is primarily due to the 8.0% increase in home robot units shipped in fiscal 2011 as compared to fiscal 2010.
Gross Margin
Fiscal Year Ended
December 31,
2011
January 1,
2011 Dollar Change Percent Change
(In thousands)
Total gross margin $ 192,118
$ 145,432
$ 46,686 32.1 %
As a percentage of total revenue 41.3 % 36.3 %
Gross margin increased $46.7 million, or 32.1%, to $192.1 million (41.3% of revenue) in fiscal 2011 from $145.4 million
(36.3% of revenue) in fiscal 2010. The increase in gross margin as a percentage of revenue was the result of the home robots
business unit gross margin increasing 5.2 percentage points and the defense and security robots business unit gross margin
increasing 4.3 percentage points. The 5.2 percentage point increase in the home robots business unit is attributable to changes
in customer and product mix to higher margin home robots products including the introduction of our Roomba 700 series and
Scooba 230 robots, improved leverage of our overhead expense against higher revenue, and lower return provisions and
warranty expense in fiscal 2011 as compared to fiscal 2010. The 4.3 percentage point increase in the defense and security
robots business unit is primarily due to lower overhead expenses with improved leverage of our overhead expense against
higher revenue, lower sustaining engineering expense and lower warranty expense in fiscal 2011 as compared to fiscal 2010.
Research and Development
Fiscal Year Ended
December 31,
2011
January 1,
2011 Dollar Change Percent Change
(In thousands)
Total research and development $ 36,498
$ 24,809
$ 11,689 47.1 %
As a percentage of total revenue 7.8 % 6.2 %
Research and development expenses increased by $11.7 million, or 47.1%, to $36.5 million (7.8% of revenue) in fiscal
2011. This was driven by increases in our home robots business unit of $8.8 million, defense and security robots business unit
of $1.8 million and other research and development expense of $1.1 million primarily relating to ongoing development of our
common software platform. The increase in other research and development expense is due to increases in compensation and
benefits, consulting and materials associated with internal research and development projects in both our home robots and
defense and security robots business units. The increase in our home robots business unit is primarily the result of our increased