iRobot 2014 Annual Report Download - page 103

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30
The following table sets forth our results of operations as a percentage of revenue for the periods shown:
Fiscal Year Ended
December 27,
2014 December 28,
2013 December 29,
2012
Revenue 100.0% 100.0% 100.0%
Cost of revenue 53.7 54.6 55.4
Gross margin 46.3 45.4 44.6
Operating expenses
Research and development 12.5 13.1 13.1
Selling and marketing 15.5 14.7 15.2
General and administrative 8.9 10.9 10.5
Total operating expenses 36.9 38.7 38.8
Operating income 9.4 6.7 5.8
Other income (expense), net (0.1) — 0.1
Income before income taxes 9.3 6.7 5.9
Income tax expense 2.6 1.0 1.9
Net income 6.7% 5.7% 4.0%
Comparison of Years Ended December 27, 2014 and December 28, 2013
Revenue
Fiscal Year Ended
December 27,
2014 December 28,
2013 Dollar Change Percent Change
(In thousands)
Total Revenue $ 556,846 $ 487,401 $ 69,445 14.2%
Our revenue increased 14.2% to $556.8 million in fiscal 2014 from $487.4 million in fiscal 2013. Revenue increased
$79.6 million, or 18.6%, in our home robots business unit, and decreased $4.5 million, or 9.0%, in our defense and security
business unit.
The $79.6 million increase in revenue from our home robots business unit was driven by a 12.5% increase in units
shipped and a 6.1% increase in net average selling price. In fiscal 2014, international home robots revenue increased
$46.0 million, or 16.8%, and domestic home robots revenue increased $33.5 million, or 21.8%, compared to fiscal 2013. Total
home robots shipped in fiscal 2014 were 2,174,000 units compared to 1,933,000 units in fiscal 2013. The increase in both
domestic and international home robots revenue was primarily driven by expanded distribution of our Roomba 800 series robot
worldwide, and the replacement of the Roomba 500 series robot with the higher-priced Roomba 600 series in club stores.
International home robots revenue growth was further supported by strong demand in China, where revenue increased over
200% in fiscal 2014 compared to fiscal 2013.
The $4.5 million decrease in revenue from our defense and security robots business unit was driven by a $4.7 million
decrease in defense and security robot revenue and a $1.2 million decrease in recurring contract development revenue
generated under research and development contracts, partially offset by a $1.4 million increase in product life cycle revenue
(spare parts, accessories). Total defense and security robots shipped in fiscal 2014 were 265 units compared to 534 units in
fiscal 2013, while the net average selling price of our defense and security robots increased from approximately $36 thousand
in fiscal 2013 to approximately $56 thousand in fiscal 2014. The decrease in the number of units shipped and the increase in
average selling price resulted from decreased sales of our lower-priced FirstLook robot in fiscal 2014 as compared to fiscal
2013. The $1.2 million decrease in contract revenue was primarily due to a decrease in revenue related to the U.S. Army's
Brigade Combat Team Modernization program, for which efforts were completed during the first half of fiscal 2013. The $1.4
million increase in product life cycle revenue was due to an increase in Packbot upgrades, partially offset by decreases in
FirstLook and SUGV spares. Continued funding delays for government contracts have reduced our near-term visibility in our
defense and security robots business unit and contributed to the decrease in period-over-period revenue in this business unit.
We cannot predict with any certainty the extent to which these funding delays will continue.
Form 10-K