Garmin 2002 Annual Report Download - page 29

Download and view the complete annual report

Please find page 29 of the 2002 Garmin annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 76

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76

Customers
No customer accounted for greater than 10% of our sales in the year ended December 28, 2002. Our top ten customers
accounted for approximately 25% of net sales. We have experienced average sales days in our customer accounts receivable
between 35 and 45 days since 1998.
Income Taxes
We have experienced a relatively low effective tax rate in Taiwan due to lower marginal tax rates and substantial tax incentives
offered by the Taiwanese government on certain high-technology capital investments. Therefore, profits earned in Taiwan have
been taxed at a lower rate than those in the United States and Europe. As a result, our consolidated effective tax rate was
approximately 22% during 2002. We have taken advantage of this tax benefit in Taiwan since our inception and we expect to
continue to benefit from lower effective tax rates at least through 2007. The current Taiwan tax incentives that Garmin has
received approval for will end in 2007. We have applied for additional incentives for years beyond 2007. However, there can be
no assurance that such tax incentives will be granted after 2007.
Results of Operations
The following table sets forth our results of operations as a percentage of net sales during the periods shown:
Fiscal Years Ended
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 45.2% 46.3% 46.9%
Gross profit 54.8% 53.7% 53.1%
Operating expenses:
Selling, general and administrative 9.8% 10.5% 9.4%
Research and development 6.9% 7.6% 6.3%
Total operating expenses 16.7% 18.1% 15.7%
Operating income 38.1% 35.6% 37.4%
Other income, net 1.2% 5.6% 3.4%
Income before income taxes 39.3% 41.2% 40.8%
Provision for income taxes 8.6% 10.5% 10.2%
Net income 30.7% 30.7% 30.6%
The following table sets forth our results of operations for each of our two segments through income before taxes during the
periods shown. For each line item in the table, the total of the consumer and aviation segments’ amounts equals the amount in
the consolidated statements of income.
Fiscal Years Ended
Dec. 28, 2002 Dec. 29, 2001 Dec. 30, 2000
Consumer Aviation Consumer Aviation Consumer Aviation
(in thousands)
Net sales $ 350,674 $114,470 $ 263,358 $ 105,761 $230,183 $115,558
Cost of goods sold 166,130 43,958 130,836 40,124 114,656 47,359
Gross profit 184,544 70,512 132,522 65,637 115,527 68,199
Operating expenses:
Selling, general and administrative 35,114 10,339 29,018 9,691 23,756 8,913
Research and development 18,863 13,300 18,197 9,967 14,210 7,554
Total operating expenses 53,977 23,639 47,215 19,658 37,966 16,467
Operating income 130,567 46,873 85,307 45,979 77,561 51,732
Other income, net 4,292 1,002 17,204 3,545 10,542 1,087
Income before income taxes $134,859 $47,875 $102,511 $49,524 $88,103 $52,819
28