Garmin 2008 Annual Report Download - page 66

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44
Comparison of 52-Weeks Ended December 27, 2008 and December 29, 2007
Net Sales
Net Sales % of Revenues Net Sales % of Revenues $ Change % Change
Outdoor/Fitness $427,783 12.2% $339,741 10.7% $88,042 25.9%
Marine 204,477 5.9% 203,399 6.4% 1,078 0.5%
Automotive/Mobile 2,538,411 72.6% 2,342,184 73.6% 196,227 8.4%
Aviation 323,406 9.3% 294,995 9.3% 28,411 9.6%
Total $3,494,077 100.0% $3,180,319 100.0% $313,758 9.9%
52-weeks ended December 27, 2008 52-weeks ended December 29, 2007 Year over Year
The increase in total net sales for 2008 was primarily driven by outdoor/fitness, automotive/mobile and
aviation product offerings. Automotive/mobile revenue remains a significantly larger portion of our revenue mix,
decreasing slightly from 73.6% in 2007 to 72.6% in 2008. Total unit sales increased 38% to 16.9 million in 2008
from 12.3 million in 2007. The higher unit sales volume in 2008 was primarily attributable to strong sales of
automotive products, particularly in North America, and outdoor/fitness products. In general, management believes
that continuous innovation and the introduction of new products are essential for future revenue growth.
Automotive/mobile segment revenue grew 8.4% in 2008, on the strength of the nuvi® series of personal
navigation devices (PNDs), as well as increased consumer awareness of the capabilities and applications of GPS.
On a percentage basis, revenues in our outdoor/fitness segment grew faster than any other segment from the year
ago period due to the introduction of the Colorado™ series, the Oregon ™ series, the Forerunner® 405 and Edge®
705 which offer enhanced form factors and cartography. Our aviation segment continued to grow on the strength of
our G1000 cockpit as an OEM (original equipment manufacturer) solution. This growth slowed significantly in the
second half of 2008 as the macroeconomic conditions influenced purchasing decisions and slowed OEM production
schedules. Marine revenues were slightly higher than the prior year due to strong growth in the first quarter of 2008
offset by flat to declining revenue in the remainder of the year due to macroeconomic conditions and fuel prices.
The Company anticipates that the macroeconomic conditions will dampen or eliminate revenue growth in
2009 across all segments.
Gross Profit
Gross Profit % of Revenues Gross Profit % of Revenues $ Change % Change
Outdoor/Fitness $246,746 57.7% $184,655 54.4% $62,091 33.6%
Marine 111,425 54.5% 110,169 54.2% 1,256 1.1%
Automotive/Mobile 977,595 38.5% 973,205 41.6% 4,390 0.5%
Aviation 217,749 67.3% 195,226 66.2% 22,523 11.5%
Total $1,553,515 44.5% $1,463,255 46.0% $90,260 6.2%
52-weeks ended December 27, 2008 52-weeks ended December 29, 2007 Year over Year
The increase in gross profit dollars was primarily attributable to the outdoor/fitness and aviation segments
where revenue growth and consistent margins contributed. Gross profit margin percentage for the Company overall
decreased 150 basis points as a result of the automotive/mobile segment decline of 310 basis points offset to some
extent by strong gross margins in our other three segments. The automotive/mobile segment is by nature a lower-
margin business and the Company has begun to see the impacts expected on gross margin due to falling prices and a
product mix shift toward lower end PNDs. Management believes that the trend to lower gross margins for this
segment will continue due to ongoing price declines and further product mix shift toward lower margin products.
Outdoor/fitness gross margin has increased due to a newer suite of products. A product mix favoring the high
margin G1000 in the aviation segment resulted in favorable gross margins for the aviation segment in 2008. Marine
gross margin remained relatively stable and within historic ranges.