Garmin 2002 Annual Report Download - page 33

Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $6.0 million, or 18.5%, to $38.7 million (10.5% of net revenues) for fiscal
2001 from $32.7 million (9.4% of net revenues) for fiscal 2000. Selling, general and administrative expenses increased $5.3
million, or 22.2%, in the consumer segment and increased $0.8 million, or 8.7% in the aviation segment. The increase in expense
was primarily attributable to increases in employment generally across the organization (net increase of 32 employees), increased
advertising costs (up 27.6%) associated with new product releases, increased costs associated with being a public company, and
increases in insurance premiums. Overall, selling, general and administrative expenses increased at a higher rate than revenues
due to the need to ramp-up for the release of new products.
Research and Development Expenses
Research and development expenses increased $6.4 million, or 29.4%, to $28.2 million (7.6% of net revenues) for fiscal year 2001
from $21.8 million (6.3% of net revenues) for fiscal year 2000. Research and development expenses increased $4.0 million, or
28.1%, in the consumer segment and increased $2.4 million, or 31.9%, in the aviation segment. The increase in expense was
primarily attributable to the development and introduction of 25 new products, and the addition of 50 new engineers to our
staff during fiscal 2001.
Other Income (Expense)
Other income (expense) principally consists of interest income, interest expense and foreign currency exchange gains and losses.
Other income for fiscal year 2001 amounted to $20.7 million compared to other income of $11.6 million for fiscal year 2000.
Interest income for fiscal 2001 amounted to $11.2 million compared to $6.9 million for fiscal 2000, the increase being
attributable to the growth of the Company’s cash and cash equivalents from profitable operations during the period on which
interest income was earned. Interest expense decreased to $2.2 million for fiscal 2001 from $2.3 million for fiscal 2000, due
primarily to the reduction of debt and a lower interest rate environment during fiscal 2001.
We recognized a foreign currency exchange gain of $11.6 million for fiscal 2001 compared to a gain of $7.0 million for fiscal
2000. The $11.6 million gain was due to the significantly increased strength of the U.S. Dollar compared to the New Taiwan
Dollar during 2001, when the exchange rate increased to 35.17 NTD/USD at December 29, 2001 from 33.01 NTD/USD at December
30, 2000. The $7.0 million gain during 2000 was due to the significantly increased strength of the U.S. Dollar compared to the
New Taiwan Dollar during 2000, when the exchange rate increased to 33.01 NTD/USD at December 30, 2000 from 31.30 NTD/USD
at December 25, 1999.
Income Tax Provision
Income tax expense increased by $3.3 million, to $38.6 million, for fiscal year 2001 from $35.3 million for fiscal year 2000 due to
our higher taxable income. The effective tax rate was 25.4% for fiscal 2001 versus 25.0% for fiscal 2000. The increase is
attributable to the source of taxable income between each of our subsidiaries changing slightly during 2001.
Net Income
As a result of the above, net income increased 7.4% to $113.4 million for fiscal year 2001 compared to $105.7 million for fiscal
year 2000.
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