Garmin 2003 Annual Report Download - page 34

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Comparison of Fiscal Years Ended December 27, 2003 and December 28, 2002
Net Sales
The increase in total net sales during fiscal 2003 was primarily due to the introduction of 16 new products and overall
demand for our consumer products. Total consumer and aviation units sold increased 33.0% to 2,066,000 in 2003 from 1,557,000 in
2002. In general, management believes that continuous innovation and the introduction of new products are essential for future
revenue growth.
The Company’s revenues are seasonal, with the fiscal second and fourth quarter revenues meaningfully higher than the first
and third fiscal quarters. The revenue increase in second quarter is primarily attributable to the onset of the marine selling season and
secondarily Father’s Day purchases, and the revenue increase in the fourth quarter is primarily attributable to the traditional holiday
selling season. Revenues can also be impacted in any given quarter by the timing of new product introductions.
The increase in net sales to consumers was primarily due to the introduction of 16 new consumer products and overall
demand for our consumer products as total units sold were up 33%. It is management’s belief that the continued demand for the
Company’s consumer products is due to the emergence of the GPS market in general, and overall increased consumer awareness of
the capabilities and applications of GPS.
The increase in aviation sales for fiscal 2003 was primarily due to increased sales from panel mount products sold into the
retrofit market and sales from UPS Aviation Technologies (now Garmin AT, Inc.), which was acquired during the third quarter of
2003. While Temporary Flight Restrictions (TFR's) continue to impact general aviation, the flying community is adapting to these
changes and returning to the skies in greater numbers. Should the Federal Aviation Administration (FAA) impose more restrictions,
or elect to shutdown U.S. airspace in the future, these factors could have a material adverse effect on our business.
Gross Profit
The increase in gross profit is primarily attributed to the introduction of 16 new products and overall demand for our
consumer products. The improvement in gross margin was primarily due to the introduction of new higher margin products, improved
manufacturing efficiencies on many of the new products introduced throughout the year, and reductions of certain material costs early
in the fiscal year. The Company experienced upward pricing pressure on certain raw materials components in the latter part of 2003.
It is unclear at this point if this pricing pressure will abate or continue in 2004.
The increase in consumer gross margin is primarily attributed to the introduction of 16 new consumer products and overall
demand for our consumer products.
The increase in aviation gross profit is primarily due to improved product mix within our OEM and retrofit products partially
offset by certain lower gross profit margin products as a result of the acquisition of UPS Aviation Technologies.
2003 2002 Year over Year
% of % of
Net Sales Net Sales Net Sales Net Sales $ change % change
Consumer $452,437 79.0% $350,674 75.4% $101,763 29.0%
Aviation 120,552 21.0% 114,470 24.6% 6,082 5.3%
Total $572,989 100.0% $465,144 100.0% $107,845 23.2%
2003 2002 Year over Year
Gross % of Gross % of
Profit Net Sales Profit Net Sales $ change % change
Consumer $253,153 56.0% $184,544 52.6% $68,609 37.2%
Aviation 77,388 64.2% 70,512 61.6% 6,876 9.8%
Total $330,541 57.7% $255,056 54.8% $75,485 29.6%