iRobot 2015 Annual Report Download - page 120

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37
Gross Margin
Fiscal Year Ended
January 2,
2016
December 27,
2014 Dollar Change Percent Change
(In thousands)
Total gross margin $288,926 $258,055 $ 30,871 12.0%
As a percentage of total revenue 46.8% 46.3%
Gross margin increased $30.9 million, or 12.0%, to $288.9 million (46.8% of revenue) in fiscal 2015 from $258.1 million
(46.3% of revenue) in fiscal 2014. The increase in gross margin as a percentage of revenue was the result of the home robots
business unit gross margin increasing 0.4 percentage points, partially offset by the defense and security business unit gross
margin decreasing 0.5 percentage points. The 0.4 percentage point increase in the home robots business unit was primarily
driven by favorable product and customer mix, the introduction of the higher margin Roomba 980, a decrease in warranty costs,
as well as the favorable impact of the $1.6 million adjustment to revenue related to the release of marketing allowances. During
2015, we recorded a net benefit to revenue and gross margin of $6.9 million related to adjustments to our product returns
reserves compared to a net benefit to revenue and gross margin of $4.3 million and $5.7 million during fiscal 2014. The
0.5 percentage point decrease in the defense and security business unit is attributable to the increase in sales of our lower
margin robots.
Research and Development
Fiscal Year Ended
January 2,
2016
December 27,
2014 Dollar Change Percent Change
(In thousands)
Total research and development $76,071 $69,408 $ 6,663 9.6%
As a percentage of total revenue 12.3% 12.5%
Research and development expenses increased $6.7 million, or 9.6%, to $76.1 million (12.3% of revenue) in fiscal 2015
from $69.4 million (12.5% of revenue) in fiscal 2014. This increase is attributable to increased efforts in product development
and continued product enhancements. People-related costs increased $7.0 million associated with an approximate 10% increase
in headcount, especially related to software engineers, as well as a $0.7 million increase in materials. These increases were
partially offset by decreased consulting expenses of $1.0 million in 2015 compared to 2014.
Selling and Marketing
Fiscal Year Ended
January 2,
2016
December 27,
2014 Dollar Change Percent Change
(
In thousands
)
Total selling and marketing $97,772 $86,091 $ 11,681 13.6%
As a percentage of total revenue 15.9% 15.5%
Selling and marketing expenses increased by $11.7 million, or 13.6%, to $97.8 million (15.9% of revenue) in fiscal 2015
from $86.1 million (15.5% of revenue) in fiscal 2014. This increase is primarily attributable to an increase of $8.9 million in
investments in advertising media, national promotions and other selling and marketing costs incurred to support the retail
launch of the Roomba 980 series and our continued global marketing and branding efforts, as well as increases in people-
related costs of $2.2 million driven by increased headcount in fiscal 2015 compared to fiscal 2014.