Garmin 2005 Annual Report Download - page 73

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43
The increase in expense was primarily attributable to increases in employment generally across the
organization (net increase of over 400 non-engineering employees), significantly increased advertising costs (up
33%) associated primarily with consumer products, ORACLE software implementation costs, and additional
staffing in our customer call center. In the past, selling, general and administrative expenses increased at a lower
rate than revenues due to strong demand for newly introduced and existing consumer products.
Research and Development Expenses
The increase in research and development expense was primarily attributable to the addition of 52
associates to our research and development team during fiscal 2004 and the Garmin AT engineering team
contributing for the full fiscal year.
Other Income (Expense)
Other income (expense) principally consists of interest income, interest expense and foreign currency
exchange gains and losses. Other income (expense) was significantly lower in fiscal 2004, relative to fiscal year
2003, with the majority of this difference caused by foreign currency losses in 2004. Interest income for fiscal 2004
increased due to larger cash and marketable securities balances during the year, increasing the returns on the
Company’s cash and cash equivalents. Interest expense decreased in fiscal 2004, due primarily to the retirement of
$20 million of outstanding long-term debt during fiscal 2003.
During fiscal 2004 the Company experienced foreign currency exchange losses of $24.8 million, as the
U.S. Dollar weakened versus the New Taiwan Dollar (32.19 NTD/USD) relative to the end of fiscal 2003 (34.05
NTD/USD). During fiscal 2003 the Company experienced foreign currency exchange losses of $6.7 million, as
the U.S. Dollar weakened versus the New Taiwan Dollar (34.05 NTD/USD) relative to the end of fiscal 2002 (35.10
NTD/USD).
Income Tax Provision
2004 2003 Year over Year
Selling, % of Selling, % of
Gen. & Admin. Net Sales Gen. & Admin. Net Sales $ change % change
Consumer $60,942 10.3% $47,113 10.4% $13,829 29.4%
Aviation 18,049 10.5% 12,722 10.6% 5,327 41.9%
Total $78,991 10.4% $59,835 10.4% $19,156 32.0%
2004 2003 Year over Year
Research % of Research % of
& Development Net Sales & Development Net Sales $ change % change
Consumer $31,684 5.4% $22,195 4.9% $9,489 42.8%
Aviation 29,896 17.4% 21,511 17.8% 8,385 39.0%
Total $61,580 8.0% $43,706 7.6% $17,874 40.9%
2004 2003
Interest Income $9,419 $7,473
Interest Expense (38) (534)
Foreign Currency Exchange (24,819) (6,699)
Other (19) (1,297)
Total ($15,457) ($1,057)