Garmin 2008 Annual Report Download - page 64

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42
is an increase from 12.6% during 2007 due to a change in tax law related to the repatriation of earnings from our
Taiwan subsidiary and a more unfavorable mix of taxable income among the tax jurisdictions in which the Company
operates. We have taken advantage of the tax benefit in Taiwan since our inception and we expect to continue to
benefit from lower effective tax rates at least through 2013. We plan on applying for additional incentives for years
beyond 2013 based on capital investments we expect to make in the future. However, there can be no assurance that
such tax incentives will be available indefinitely or that we will receive the incentives for which we apply.
Management believes that due to lower operating margins predicted for fiscal 2009, there may be slightly less
revenue recognized by entities in lower tax rate jurisdictions. Therefore, the effective tax rate for fiscal 2009 is
expected to be slightly higher than fiscal 2008. The actual effective tax rate will be dependent upon the operating
margins, production volume, additional capital investments made during fiscal 2009, and the composition of our
earnings.
Results of Operations
The following table sets forth our results of operations as a percentage of net sales during the periods
shown:
Dec. 27, Dec.29, Dec. 30,
2008 2007 2006
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 55.5% 54.0% 50.3%
Gross profit 44.5% 46.0% 49.7%
Operating expenses:
Selling, general and administrative 13.9% 12.5% 12.1%
Research and development 5.9% 5.0% 6.4%
Total operating expenses 19.8% 17.5% 18.5%
Operating income 24.7% 28.5% 31.2%
Other income / (expense) , net 1.5% 2.2% 2.3%
Income before income taxes 26.2% 30.7% 33.5%
Provision for income taxes 5.2% 3.9% 4.5%
Net income 21.0% 26.8% 29.0%
Fiscal Years Ended
The following table sets forth our results of operations through income before income taxes for each of our
four segments during the period shown. For each line item in the table the total of the segments’ amounts equals
the amount in the consolidated statements of income data included in Item 6.