Garmin 2009 Annual Report Download - page 73

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Theincreaseinresearchanddevelopmentexpensedollarswasduetoongoingdevelopmentactivitiesfor
newproductsincludingthemobilehandsetinitiative,theadditionof230newengineeringpersonneltoourstaff
duringtheperiod,andanincreaseinengineeringprogramcostsin2009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20%duringfiscal2010onanabsolutedollarbasis
duetotheanticipatedintroductionofastrongportfolioofnewproductsincludingmobilehandsetsslatedforfiscal
2010.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.
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OtherIncome(Expense)
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52‐weeksended 52‐weeksended
December26,2009 December27,2008
InterestIncome $23,519 $35,535
ForeignCurrencyExchange (6,040) (35,286)
Gainonsaleofequitysecurities ‐ 50,884
Other5,162 1,216
Total $22,641 $52,349
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Otherincome(expense)principallyconsistsofinterestincomeandforeigncurrencyexchangegainsand
losses.Otherincome(expense)waslowerinfiscal2009relativetofiscal2008,withthemajorityofthisdifference
causedbyalargegainonsaleofequitysecuritiesin2008.Interestincomeforfiscal2009decreasedduetolower
interestrates,partiallyoffsetbyhighercashandmarketablesecuritiesbalances.
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ForeigncurrencygainsandlossesfortheCompanyareprimarilytiedtomovementsbytheTaiwanDollar,
theEuro,andtheBritishPoundSterling.TheU.S.DollarremainsthefunctionalcurrencyofGarmin(Europe)Ltd.
TheEuroisthefunctionalcurrencyofallotherEuropeansubsidiariesexcludingGarminDanmarkandGarmin
Sweden.Astheseentitieshavegrown,Eurocurrencymovesgeneratedmaterialgainsandlosses.Additionally,
Euro‐basedinter‐companytransactionsinGarminLtd.canalsogeneratecurrencygainsandlosses.TheCanadian
dollar,DanishKrone,SwedishKronaandAustralianDollararethefunctionalcurrencyofDynastreamInnovations,
Inc.,GarminDanmark,GarminSweden,andGarminAustralasiarespectively;duetotheseentities’relativesize,
currencymovesarenotexpectedtohaveamaterialimpactontheCompany’sfinancialstatements.
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The$6.0millioncurrencylossin2009wasduetotheweakeningoftheU.S.DollarcomparedtotheEuro,
theBritishPoundSterlingandtheTaiwanDollar.During2009,theU.S.Dollarweakened2.4%and8.3%compared
totheEuroandtheBritishPoundSterling,respectively,resultinginagainof$5.8million.Alossof$16.1million
resultedduetotheU.S.Dollarweakening2.3%againsttheTaiwanDollar.TherelativeweaknessoftheTaiwan
DollarandEuro/BritishPoundSterlinghaveoffsettingimpactsduetotheuseoftheTaiwanDollarfor
manufacturingcostswhiletheEuroandBritishPoundSterlingtransactionsrelatetorevenue.Theremainingnet
currencygainof$4.3millionrelatedtoothercurrenciesandtimingoftransactions.
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The$35.3millioncurrencylossin2008wasrelatedtothestrengtheningoftheU.S.Dollaroffsetbyagain
associatedwiththesalesandtenderofourTeleAtlasN.V.shares.During2008,theTaiwanDollarweakened1.6%
incomparisontotheU.S.Dollar,resultingina$20.8milliongain.TheEuroweakened4.1%andtheBritishPound
Sterlingweakened26.1%relativetotheU.S.Dollarin2008whichresultedina$77.3millionloss.Offsettingthis
netlosswasarealizedgainof$21.5millionduetothestrengtheningoftheEurobetweenthedateofpurchaseof
theTeleAtlasN.V.sharesinOctober2007tothedatesoftenderinFebruary,March,andJune2008.Othernet
currencylossesandthetimingoftransactionscreatedtheremaininglossof$0.3million.
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