Garmin 2010 Annual Report Download - page 61

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51
Comparison of 52-Weeks Ended December 25, 2010 and December 26, 2009
Net Sales
Net Sales % of Revenues Net Sales % of Revenues $ Change % Change
Outdoor/Fitness $559,592 21% $468,924 16% $90,668 19%
Marine 198,860 7% 177,644 6% 21,216 12%
Automotive/Mobile 1,668,939 62% 2,054,127 70% (385,188) -19%
Aviation 262,520 10% 245,745 8% 16,775 7%
Total $2,689,911 100% $2,946,440 100% ($256,529) -9%
52-weeks ended December 25, 2010
52-weeks ended December 26, 2009
Year over Year
Net sales decreased 9% in 2010 when compared to the year-ago period. The decrease occurred in
automotive/mobile and was partially offset by revenue growth in outdoor/fitness, marine and aviation. The
outdoor/fitness segment experienced the greatest increase at 19%. Automotive/mobile revenue remains the
largest portion of our revenue mix, but declined from 70% in 2009 to 62% in 2010.
Total unit sales decreased 4% to 16.0 million units in 2010 from 16.6 million units in 2009. The declining
unit sales volume in 2010 was attributable to a decline in automotive/mobile units due to increased saturation in
the segment and competing technologies partially offset by increasing volumes in the outdoor/fitness, marine and
aviation segments.
Automotive/mobile segment revenue declined 19% in 2010, as the average selling price and volumes
declined 11% and 9%, respectively. Outdoor/fitness segment revenue increased 19% on the strength of recent
product introductions that expand the addressable market and ongoing global penetration. Marine revenues
increased 12% due to product introductions, slight industry recovery and market share gains. Aviation revenues
increased 7% as the Company delivered into additional cockpits and the retrofit business began to recover.
The Company anticipates ongoing revenue declines in 2011 driven by the automotive/mobile segment
with partially offsetting growth in the outdoor/fitness, aviation and marine segments. In general, management
believes that continuous innovation and the introduction of new products are essential for future revenue growth.
Cost of Goods Sold
Cost of Goods % of Revenues Cost of Goods % of Revenues $ Change % Change
Outdoor/Fitness $195,136 35% $162,082 35% $33,054 20%
Marine $74,212 37% $72,429 41% 1,783 2%
Automotive/Mobile $995,986 60% $1,192,227 58% (196,241) -16%
Aviation $78,203 30% $75,591 31% 2,612 3%
Total $1,343,537 50% $1,502,329 51% ($158,792) -11%
52-weeks ended December 25, 2010
52-weeks ended December 26, 2009
Year over Year
Cost of goods sold decreased 11% in 2010 when compared to the year-ago period which was generally
consistent with the change in revenue. The absolute dollar decrease occurred in automotive/mobile and was
partially offset by cost of goods increases in outdoor/fitness, marine and aviation. Cost of goods sold in 2010 was
positively impacted by 160 basis points due to a $42.8 million warranty adjustment related to refinement in the
estimated warranty reserve. This adjustment impacted all segments with automotive/mobile, outdoor/fitness and
marine having the largest benefits. Cost per unit declined in all segments driving stable to improving margins in
outdoor/fitness, marine and aviation.
Management believes that cost of goods sold as a percentage of sales will be stable in 2011 given current
component pricing.