Garmin 2008 Annual Report Download - page 67

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Selling, General and Administrative Expenses
Selling, General & Selling, General &
Admin. Expenses % of Revenues Admin. Expenses % of Revenues $ Change % Change
Outdoor/Fitness $60,732 14.2% $41,119 12.1% $19,613 47.7%
Marine 32,068 15.7% 25,914 12.7% 6,154 23.7%
Automotive/Mobile 367,880 14.5% 305,065 13.0% 62,815 20.6%
Aviation 24,709 7.6% 24,400 8.3% 309 1.3%
Total $485,389 13.9% $396,498 12.5% $88,891 22.4%
52-weeks ended December 27, 2008 52-weeks ended December 29, 2007
Year over Year
The increase in selling, general and administrative expense was driven primarily by costs associated with
the European distributors acquired in 2007 and 2008, increased staffing to support our growth and bad debt expense.
Selling, general and administrative expenses excluding advertising increased by $87.7 million in 2008 due to the
acquired European distributors, information technology, call center operations, and other administrative areas to
support the growth of our businesses, as well as bad debt expense due to the bankruptcy of Circuit City. We expect
selling, general and administrative expenses excluding advertising to be flat in 2009. Further bankruptcies among
our customer base or inability to pay timely, could result in increased bad debt expense in 2009. Advertising
expenses increased by $1.2 million on a year-over-year basis as we reduced activities during the second half of the
year due to moderating growth associated with the macroeconomic pressures. Management expects to continue to
reduce advertising costs in 2009 to better match anticipated demand and to support operating margins.
Research and Development Expense
Research & Research &
Development % of Revenues Development % of Revenues $ Change % Change
Outdoor/Fitness $25,419 5.9% $23,302 6.9% $2,117 9.1%
Marine 19,374 9.5% 16,879 8.3% 2,495 14.8%
Automotive/Mobile 85,610 3.4% 59,390 2.5% 26,220 44.1%
Aviation 75,706 23.4% 59,835 20.3% 15,871 26.5%
Total $206,109 5.9% $159,406 5.0% $46,703 29.3%
52-weeks ended December 27, 2008 52-weeks ended December 29, 2007
Year over Year
The increase in research and development expense dollars was due to ongoing development activities for
new products, the addition of 350 new engineering personnel to our staff during the period, and an increase in
engineering program costs in 2008 as a result of our continued emphasis on product innovation. Management
believes that one of the key strategic initiatives for future growth and success of Garmin is continuous innovation,
development, and introduction of new products. Management expects that its research and development expenses
will increase approximately 10%-15% during fiscal 2009 on an absolute dollar basis due to the anticipated
introduction of a strong portfolio of new products slated for fiscal 2009. Management expects to continue to invest
in the research and development of new products and technology in order to maintain Garmin’s competitive
advantage in the markets in which it competes.
Other Income (Expense)
52-weeks ended 52-weeks ended
December 27, 2008 December 29, 2007
Interest Income $35,535 $41,995
Foreign Currency Exchange ($35,286) $22,964
Gain on sale of equity securities $50,884 $5,101
Other $1,216 $862
Total $52,349 $70,922
Other income (expense) principally consists of interest income, interest expense and foreign currency
exchange gains and losses. Other income (expense) was lower in fiscal 2008 relative to fiscal 2007, with the
majority of this difference caused by a large foreign currency loss in 2008. Interest income for fiscal 2008
decreased due to lower interest rates and a decline in our cash and marketable securities balances during the year.