Garmin 2009 Annual Report Download - page 63

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Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations

Thefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationsfocusesonandis
intendedtoclarifytheresultsofouroperations,certainchangesinourfinancialposition,liquidity,capitalstructure
andbusinessdevelopmentsfortheperiodscoveredbytheconsolidatedfinancialstatementsincludedinthisForm
10‐K.Thisdiscussionshouldbereadinconjunctionwith,andisqualifiedbyreferenceto,theotherrelated
informationincluding,butnotlimitedto,theauditedconsolidatedfinancialstatements(includingthenotes
thereto),thedescriptionofourbusiness,allassetforthinthisForm10‐K,aswellastheriskfactorsdiscussed
aboveinItem1A.

Aspreviouslynoted,thediscussionsetforthbelow,aswellasotherportionsofthisForm10‐K,contain
statementsconcerningpotentialfutureevents.Readerscanidentifytheseforward‐lookingstatementsbytheir
useofsuchverbsas“expects,”“anticipates,”“believes”orsimilarverbsorconjugationsofsuchverbs.Ifanyof
ourassumptionsonwhichthestatementsarebasedproveincorrectorshouldunanticipatedcircumstancesarise,
ouractualresultscouldmateriallydifferfromthoseanticipatedbysuchforward‐lookingstatements.The
differencescouldbecausedbyanumberoffactorsorcombinationoffactorsincluding,butnotlimitedto,those
discussedaboveinItem1A.Readersarestronglyencouragedtoconsiderthosefactorswhenevaluatinganysuch
forward‐lookingstatement.Wedonotundertaketoupdateanyforward‐lookingstatementsinthisForm10‐K.

Garmin’sfiscalyearisa52‐53weekperiodendingonthelastSaturdayofthecalendaryear.Fiscalyear
2005contained53weekscomparedto52weeksforfiscalyears2009,2008,2007,and2006.Unlessotherwise
stated,allyearsanddatesrefertotheCompany’sfiscalyearandfiscalperiods.Unlessthecontextotherwise
requires,referencesinthisdocumentto"we,""us,""our"andsimilartermsrefertoGarminLtd.andits
subsidiaries.

Unlessotherwiseindicated,dollaramountssetforthinthetablesareinthousands,exceptpersharedata.

Overview
Wearealeadingworldwideproviderofnavigation,communicationsandinformationdevices,mostof
whichareenabledbyGlobalPositioningSystem,orGPS,technology.Weoperateinfourbusinesssegments,which
servethemarine,outdoor/fitness,automotive/mobile,andaviationmarkets.Oursegmentsofferproducts
throughournetworkofsubsidiarydistributorsandindependentdealersanddistributors.However,thenatureof
productsandtypesofcustomersforthefoursegmentscanvarysignificantly.Assuch,thesegmentsaremanaged
separately.OurportableGPSreceiversandaccessoriesformarine,recreation/fitnessandautomotive/mobile
segmentsaresoldprimarilytoretailoutlets.Ouraviationproductsareportableandpanel‐mountavionicsfor
VisualFlightRulesandInstrumentFlightRulesnavigationandaresoldprimarilytoretailoutletsandcertainaircraft
manufacturers.

Sinceourfirstproductsweredeliveredin1991,wehavegeneratedpositiveincomefromoperationseach
yearandhavefundedourgrowthfromtheseprofits.Oursaleshaveincreasedatacompoundedannualgrowth
rateof30%since2005andournetincomehasincreasedatacompoundedannualgrowthrateof23%since2005.
Thevastmajorityofthisgrowthhasbeenorganic;onlyaverysmallamountofnewrevenueoccurredasaresultof
theacquisitionofMotionBasedTechnologiesLLCin2005,DynastreamInnovationsInc.in2006,DigitalCyclone,
Inc.andtheassetsofNautamaticMarineSystems,Inc.in2007,andtenEuropeandistributorsin2007and2008.
Theseacquisitionshadnosignificantimpactonnetincomeforthoseyears.

SinceourprincipallocationsareintheUnitedStates,TaiwanandtheU.K.,weexperiencesomeforeign
currencyfluctuationsinouroperatingresults.WhiletheU.S.DollarremainsthefunctionalcurrencyofGarmin
(Europe)Ltd.,thefunctionalcurrencyofallotherEuropeanoperationsexcludingGarminDanmarkandGarmin
SwedenistheEuro(effectiveJuly2007)andthefunctionalcurrencyofGarminCorporation,headquarteredin
Taiwan,istheTaiwanDollar.Approximately79%ofsalesbyourEuropeansubsidiariesarenowdenominatedin
BritishPoundsSterlingortheEuro.Weexperienced($6.0)million,($35.3)million,and$23.0millioninforeign
currencygains(losses)duringfiscalyears2009,2008,and2007,respectively.The2008foreigncurrencyloss