Garmin 2001 Annual Report Download - page 24

Download and view the complete annual report

Please find page 24 of the 2001 Garmin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 60

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60

Since we plan to increase market penetration in the future, we expect selling, general and administrative expenses to continue
to increase for the foreseeable future. We intend to increase advertising and marketing expenses in order to build increased brand
awareness in the consumer marketplace, especially as we enter into new markets, such as wireless and PDA. We do not anticipate
that these increased expenses will significantly impact our financial results in 2002 and subsequent periods.
Research and Development
The majority of our research and development costs represent salaries for our engineers, costs for high technology components
used in product and prototype development, and costs of test equipment needed during product development.
We have continued to grow our research and development capabilities since our inception. Substantially all of the research and
development of our products is performed in the United States.
We are committed to increasing the level of innovative design and development of new products as we strive for expanded
ability to serve our existing consumer and aviation markets as well as new markets for GPS-enabled devices. We continue to
grow our research and development budget on absolute terms. Research and development expenses may also grow at a faster
rate when compared to our projected revenue growth for fiscal year 2002.
Customers
No customer accounted for greater than 10% of our sales in the year ended December 29, 2001. Our top ten customers accounted
for approximately 26% of net sales. We have experienced average sales days in our customer accounts receivable between 35
and 45 days since 1998.
Income Taxes
We have experienced a relatively low effective tax rate in Taiwan due to lower marginal tax rates and substantial tax incentives
offered by the Taiwanese government on certain high-technology capital investments. Therefore, profits earned in Taiwan have
been taxed at a lower rate than those in the United States and Europe. As a result, our consolidated effective tax rate was
approximately 25% during 2001. We have taken advantage of this tax benefit in Taiwan since our inception and we expect to
continue to benefit from lower effective tax rates at least through 2004. The current Taiwan tax incentives that Garmin has
received approval for will end in 2004. We have applied for additional incentives for years beyond 2004. However, there can be
no assurance that such tax incentives will be granted after 2004.
23