Garmin 2005 Annual Report Download - page 69

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The following table sets forth our results of operations for each of our two segments through income before
taxes during the period 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 data included in Item 6.
December 31, 2005 December 25, 2004 December 27, 2003
Consumer Aviation Consumer Aviation Consumer Aviation
Net sales $798,615 $229,158 $591,023 $171,526 $452,437 $120,552
Cost of goods sold 415,235 77,468 286,806 64,504 199,284 43,164
Gross profit 383,380 151,690 304,217 107,022 253,153 77,388
Operating expenses:
Selling, general and administrative 100,182 21,839 60,942 18,049 47,113 12,722
Research and development 40,476 34,403 31,684 29,896 22,195 21,511
Total operating expenses 140,658 56,242 92,626 47,945 69,308 34,233
Operating income 242,722 95,448 211,591 59,077 183,845 43,155
Other income / (expense), net 30,374 4,056 (15,265) (192) (1,144) 87
Income before income taxes $273,096 $99,504 $196,326 $58,885 $182,701 $43,242
Fiscal Years Ended
Comparison of Fiscal Years Ended December 31, 2005 and December 25, 2004
Net Sales
The increase in total net sales during fiscal 2005 was primarily due to the introduction of 55 new products
and overall demand for our consumer and aviation products. Total consumer and aviation units sold increased 31%
to 3,028,000 in 2005 from 2,306,000 in 2004. In general, management believes that continuous innovation and the
introduction of new products are essential for future revenue growth.
The Company’s revenues are normally seasonal, with the fiscal second and fourth quarter revenues
meaningfully higher than the first and third fiscal quarters. In 2005 revenues followed this typical seasonal pattern,
with increases each quarter over the prior year’s quarter due to the impact of new product releases across all product
lines. The revenue increase in second quarter was primarily attributable to initial sell-in of popular new portable
automobile navigation products, the onset of the marine selling season, and Father’s Day purchases. The revenue
increase in the fourth quarter was primarily attributable to new product releases and sales associated with 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 40 new consumer products
and overall demand for our consumer products as total units sold were up 31%. It is management’s belief that the
continued demand for the Company’s consumer products is due to the expansion of the GPS market in general, and
overall increased consumer awareness of the capabilities and applications of GPS, particularly as those capabilities
pertain to automobile navigation.
The increase in aviation sales for fiscal 2005 was primarily due to increased sales from panel mount
products sold into the OEM (original equipment manufacturers) and retrofit markets. Sales of the G1000 integrated
glass cockpit was the primary reason for increased OEM sales in 2005. While Temporary Flight Restrictions
Net Sales % of Revenues Net Sales % of Revenues $ Change % Change
Consumer $798,615 77.7% $591,023 77.5% $207,592 35.1%
Aviation 229,158 22.3% 171,526 22.5% 57,632 33.6%
Total $1,027,773 100.0% $762,549 100.0% $265,224 34.8%
53-weeks ended December 31, 2005 52-weeks ended December 25, 200
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Period over Period