Garmin 2003 Annual Report Download - page 36

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35
Income Tax Provision
Income tax expense increased by $7.4 million, to $47.3 million, for fiscal year 2003 from $39.9 million for fiscal year 2002
due to our higher taxable income. The effective tax rate was 20.9% for fiscal 2003 versus 21.9% for fiscal 2002. The decrease in tax
rate is due primarily to additional tax benefits received from Taiwan as a result of our continued capital investment in our
manufacturing facilities there. Management believes that the effective tax rate for fiscal 2004 will be comparable to fiscal 2003. The
actual effective tax rate will be dependent upon the production volume and additional capital investments made during fiscal 2004.
Net Income
As a result of the various factors noted above, net income increased 25.1% to $178.6 million for fiscal year 2003 compared to
$142.8 million for fiscal year 2002.
Comparison of Fiscal Years Ended December 28, 2002 and December 29, 2001
Net Sales
The increase in net sales during fiscal 2002 was primarily due to the introduction of 22 new products and overall demand for
our consumer products. Total consumer and aviation units sold increased 17.0% to 1,557,000 in 2002 from 1,331,000 in 2001. In
general, management believes that continuous innovation and the introduction of new products are essential for future revenue growth.
The increase in consumer net sales was primarily due to the introduction of 18 new consumer products and overall demand
for our consumer products as total units sold were up 17.1%. 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 net sales for fiscal 2002 was primarily due to the introduction of four new products, increased
penetration into the OEM market, and significant reductions of the restrictions placed on general aviation following the events of
September 11, 2001. 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.
2002 2001 Year over Year
% of % of
Net Sales Net Sales Net Sales Net Sales $ change % change
Consumer $350,674 75.4% $263,358 71.3% $87,316 33.2%
Aviation 114,470 24.6% 105,761 28.7% 8,709 8.2%
Total $465,144 100.0% $369,119 100.0% $96,025 26.0%