Garmin 2005 Annual Report Download - page 64

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations focuses on and is
intended to clarify the results of our operations, certain changes in our financial position, liquidity, capital structure
and business developments for the periods covered by the consolidated financial statements included in this Form
10-K. This discussion should be read in conjunction with, and is qualified by reference to, the other related
information including, but not limited to, the audited consolidated financial statements (including the notes thereto
and the report of independent auditors thereon), the description of our business, all as set forth in this Form 10-K, as
well as the risk factors discussed above in Item 1A.
As previously noted, the discussion set forth below, as well as other portions of this Form 10-K, contain
statements concerning potential future events. Readers can identify these forward-looking statements by their use of
such verbs as “expects”, “anticipates”, “believes” or similar verbs or conjugations of such verbs. If any of our
assumptions on which the statements are based prove incorrect or should unanticipated circumstances arise, our
actual results could materially differ from those anticipated by such forward-looking statements. The differences
could be caused by a number of factors or combination of factors including, but not limited to, those discussed
above in Item 1A. Readers are strongly encouraged to consider those factors when evaluating any such forward-
looking statement. We do not undertake to update any forward-looking statements in this Form 10-K.
The Company’s fiscal year is a 52-53 week period ending on the last Saturday of the calendar year. Fiscal
year 2005 contained 53 weeks compared to 52 weeks for fiscal years 2004, 2003, 2002 and 2001. Unless otherwise
stated, all years and dates refer to the Company’s fiscal year and fiscal periods. Unless the context otherwise
requires, references in this document to "we," "us," "our" and similar terms refer to Garmin Ltd. and its subsidiaries.
Unless otherwise indicated, dollar amounts set forth in the tables are in thousands, except per share data.
Overview
We are a leading worldwide provider of navigation, communications and information devices, most of
which are enabled by Global Positioning System, or GPS, technology. We operate in two business segments, the
consumer and aviation markets. Both of our segments offer products through our network of independent dealers
and distributors. However, the nature of products and types of customers for the two segments vary significantly.
As such, the segments are managed separately. Our consumer segment includes portable GPS receivers and
accessories for marine, recreation, land and automotive applications sold primarily to retail outlets. Our aviation
products are portable and panel-mount avionics for Visual Flight Rules and Instrument Flight Rules navigation and
are sold primarily to retail outlets and certain aircraft manufacturers.
Since our first products were delivered in 1991, we have generated positive income from operations each
year and have funded our growth from these profits. Our sales have increased at a compounded annual growth rate
of 29% since 2001 and our net income has increased at a compounded annual growth rate of 29% since 2001. The
vast majority of this growth has been organic; only a very small amount of new revenue occurred as a result of the
acquisition of UPS Aviation Technologies in 2003, and this acquisition had no significant impact on net income for
that year.
Since our principal locations are in the United States, Taiwan and the U.K., we experience some foreign
currency fluctuations in our operating results. The functional currency of our European operations is the U.S. dollar
(effective in 2001) and the functional currency of our Asian operations is the New Taiwan Dollar. Less than 25
percent of transactions of our European operations are now denominated in British Pounds Sterling or the Euro. We
experienced $15.3 million, $(24.8) million, $(6.7) million, $0.0 million, and $11.6 million in foreign currency gains
(losses) during fiscal years 2005, 2004, 2003, 2002, and 2001, respectively. To date, we have not entered into
hedging transactions with the European Dollar, the British Pound Sterling or the New Taiwan Dollar, although we
may utilize hedging transactions in the future.