Garmin 2003 Annual Report Download - page 37

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36
Gross Profit
The increase in gross profit is primarily attributed to the introduction of 22 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 a reduction of material costs.
The increase in the consumer segment gross profit is primarily attributed to the introduction of 18 new consumer products
and overall demand for our consumer products.
The increase in the aviation segment gross profit is primarily due to the increase in revenues associated with the introduction
of four new aviation products, increased penetration into the OEM market, and a return to less restricted airspace for general aviation
aircraft. The decrease in gross margin as a percentage of net revenues for the aviation segment is primarily attributed to product mix
as we experienced a 19.4% increase in lower margin panel mount unit sales during 2002 when compared to 2001.
Selling, General and Administrative Expenses
The increase in selling, general, and administrative expense was primarily attributable to increases in employment generally
across the organization (net increase of 146 employees), increased advertising costs (up 13.3%) associated primarily with new product
releases, additional staffing in the customer call center, and increases in insurance premiums. Overall, selling, general and
administrative expenses increased at a lower rate than revenues due to strong demand for newly introduced and existing consumer
products.
Research and Development Expenses
The increase in research and development expense during fiscal 2002 was primarily attributable to the development and
introduction of 22 new products, and the addition of 67 new engineers to our staff. Management believes that one of the key strategic
initiatives for future growth and success of the Company is continuous innovation, development, and introduction of new products.
2002 2001 Year over Year
Gross % of Gross % of
Profit Net Sales Profit Net Sales $ change % change
Consumer $184,544 52.6% $132,522 50.3% $52,022 39.3%
Aviation 70,512 61.6% 65,637 62.1% 4,875 7.4%
Total $255,056 54.8% $198,159 53.7% $56,897 28.7%
2002 2001 Year over Year
Selling, % of Selling, % of
Gen. & Admin. Net Sales Gen. & Admin. Net Sales $ change % change
Consumer $35,114 10.0% $29,018 11.0% $6,096 21.0%
Aviation 10,339 9.0% 9,691 9.2% 648 6.7%
Total $45,453 9.8% $38,709 10.5% $6,744 17.4%
2002 2001 Year over Year
Research % of Research % of
& Development Net Sales & Development Net Sales $ change % change
Consumer $18,863 5.4% $18,197 6.9% $666 3.7%
Aviation 13,300 11.6% 9,967 9.4% 3,333 33.4%
Total $32,163 6.9% $28,164 7.6% $3,999 14.2%