Garmin 2009 Annual Report Download - page 72

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declinesoutpacingproductcostdeclines.Outdoor/fitnessgrossmarginincreasedprincipallyduetoanewersuite
ofhighermarginproducts.Grossprofitmarginpercentageformarineandaviationincreasedcomparedto2008
duetoincreasedaveragesellingpriceanddecreasesinperunitcostsdrivenbyproductmixandmaterialcost
reductions.
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AdvertisingExpenses
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Advertising Advertising
Expense %ofRevenues Expense %ofRevenues $Change %Change
Outdoor/Fitness $23,262 5.0% $27,932 6.5% ($4,670) ‐16.7%
Marine 9,682 5.5% 14,532 7.1% (4,850) ‐33.4%
Automotive/Mobile 118,713 5.8% 160,926 6.3% (42,213) ‐26.2%
Aviation 3,864 1.6% 4,787 1.5% (923) ‐19.3%
Total $155,521 5.3% $208,177 6.0% ($52,656) ‐25.3%
52‐weeksendedDecember26,2009 52‐weeksendedDecember27,2008
YearoverYear

Advertisingexpensedecreasedbothasapercentageofsalesandinabsolutedollarswhencomparedto
2008.Asapercentofsales,advertisingexpensesdeclinedto5.3%in2009comparedto6.0%in2008.The
decreasewasaresultofactionstakenbythecompanytoreducecostsasthemacroeconomicconditionsimpacted
salesacrossoursegmentsandaroundtheworldcombinedwithlowercooperativeadvertisingwhichistiedtonet
saleslevels.Managementexpectstomaintainadvertisingasapercentageofsalesconstantin2010.
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Selling,GeneralandAdministrativeExpenses
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Selling,General& Selling,General&
Admin.Expenses %ofRevenues Admin.Expenses %ofRevenues $Change %Change
Outdoor/Fitness $47,799 10.2% $32,800 7.7% $14,999 45.7%
Marine 18,177 10.2% 17,536 8.6% 641 3.7%
Automotive/Mobile 172,473 8.4% 206,954 8.2% (34,481) ‐16.7%
Aviation 25,753 10.5% 19,922 6.2% 5,831 29.3%
Total $264,202 9.0% $277,212 7.9% ($13,010) ‐4.7%
YearoverYear
52‐weeksendedDecember26,2009 52‐weeksendedDecember27,2008


Selling,generalandadministrativeexpensedecreased4.7%in2009whileitincreasedasapercentageof
salescomparedto2008ascoststhroughouttheCompanywerereducedbutnotasrapidlyastherevenue
declines.Thedeclineincostswasprimarilyrelatedtoareductioninbaddebtexpenseduetospecificreserves
recordedin2008asaresultofvendorbankruptciesoffsetbyincreasedcostsforproductsupportandinformation
technologyasourinstalledbaseofuserscontinuestogrow.Theincreasedexpensefortheoutdoor/fitness
segmentandthedecreasedexpensefortheautomotive/mobilesegmentweredrivenbytheallocationofcosts
basedonrevenues.Asoutdoor/fitnessrevenueshaveincreasedasapercentageofrevenues,additionalselling,
generalandadministrativeexpensesareshiftedtothesegment.Asapercentofsales,selling,generaland
administrativeexpensesincreasedfrom7.9%in2008to9.0%ofsalesin2009,asrevenuesdeclined.Management
expectstomaintainselling,generalandadministrativeexpensesasapercentageofsalesconstantin2010.
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ResearchandDevelopmentExpense
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Research& Research&
Development %ofRevenues Development %ofRevenues $Change %Change
Outdoor/Fitness $23,776 5.1% $25,419 5.9% ($1,643) ‐6.5%
Marine 21,448 12.1% 19,374 9.5% 2,074 10.7%
Automotive/Mobile 110,907 5.4% 85,610 3.4% 25,297 29.5%
Aviation 82,247 33.5% 75,706 23.4% 6,541 8.6%
Total $238,378 8.1% $206,109 5.9% $32,269 15.7%
52‐weeksendedDecember26,2009 52‐weeksendedDecember27,2008
YearoverYear
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