Unassociated Document
United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2007

or

o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number 0-31983
________________

GARMIN LTD.
(Exact name of Company as specified in its charter)

Cayman Islands
(State or other jurisdiction
of incorporation or organization)
98-0229227
(I.R.S. Employer identification no.)
5th Floor, Harbour Place, P.O. Box 30464 SMB,
103 South Church Street
George Town, Grand Cayman, Cayman Islands
(Address of principal executive offices)
N/A
(Zip Code)

Company's telephone number, including area code: (345) 946-5203

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer xAccelerated Filer oNon-accelerated Filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o  NO x

Number of shares outstanding of the Company's common shares as of July 31, 2007
Common Shares, $.005 par value: 216,640,909
 

 
Garmin Ltd.
Form 10-Q
Quarter Ended June 30, 2007

Table of Contents


Part I - Financial Information
Page
     
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
3
     
 
Introductory Comments
3
     
 
Condensed Consolidated Balance Sheets at June 30, 2007 and December 30, 2006
4
     
 
Condensed Consolidated Statements of Income for the 13-weeks and 26-weeks ended June 30, 2007 and July 1, 2006
5
     
 
Condensed Consolidated Statements of Cash Flows for the 26-weeks ended June 30, 2007 and July 1, 2006
6
     
 
Notes to Condensed Consolidated Financial Statements
7
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
13
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
23
     
Item 4.
Controls and Procedures
24
     
Part II - Other Information
 
     
Item 1.
Legal Proceedings
25
     
Item 1A.
Risk Factors
27
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
27
     
Item 3.
Defaults Upon Senior Securities
27
     
Item 4.
Submission of Matters to a Vote of Securities Holders
28
     
Item 5.
Other Information
28
     
Item 6.
Exhibits
29
     
30
     
Index to Exhibits
31

2

 
Garmin Ltd.
Form 10-Q
Quarter Ended June 30, 2007

 
Part I - Financial Information
 
Item 1. Condensed Consolidated Financial Statements (Unaudited)
 
Introductory Comments

The Condensed Consolidated Financial Statements of Garmin Ltd. ("Garmin" or the "Company") included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to enable a reasonable understanding of the information presented. These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 30, 2006. Additionally, the Condensed Consolidated Financial Statements should be read in conjunction with Item 2 of Management's Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q.

The results of operations for the 13-week and 26-week periods ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year 2007.

3

 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except share information)
 
 
 
 
 
 
 
 
June 30,
 
December 30,
 
 
 
2007
 
2006
 
Assets
         
Current assets:
         
Cash and cash equivalents
 
$
667,671
 
$
337,321
 
Marketable securities
   
147,435
   
73,033
 
Accounts receivable, net
   
506,483
   
403,524
 
Inventories, net
   
290,682
   
271,008
 
Deferred income taxes
   
56,934
   
55,996
 
Prepaid expenses and other current assets
   
19,104
   
28,202
 
 
         
Total current assets
   
1,688,309
   
1,169,084
 
 
         
Property and equipment, net
   
350,299
   
250,988
 
 
         
Marketable securities
   
258,445
   
407,843
 
Restricted cash
   
1,558
   
1,525
 
Licensing agreements, net
   
14,804
   
3,307
 
Other intangible assets, net
   
131,186
   
64,273
 
 
         
Total assets
 
$
2,444,601
 
$
1,897,020
 
 
         
Liabilities and Stockholders' Equity
         
Current liabilities:
         
Accounts payable
 
$
167,339
 
$
88,375
 
Salaries and benefits payable
   
26,056
   
16,268
 
Accrued sales programs
   
52,849
   
-
 
Accrued warranty costs
   
49,725
   
37,639
 
Other accrued expenses
   
115,208
   
100,732
 
Income taxes payable
   
16,975
   
94,668
 
 
         
Total current liabilities
   
428,152
   
337,682
 
 
         
Long-term debt, less current portion
   
-
   
248
 
Deferred income taxes
   
1,010
   
1,191
 
Other liabilities
   
90,470
   
-
 
 
         
Stockholders' equity:
         
Common stock, $0.005 par value, 1,000,000,000
         
Issued and outstanding shares - 216,588,000 as of
         
June 30, 2007 and 216,098,000 as of
         
December 30, 2006
   
1,085
   
1,082
 
Additional paid-in capital
   
105,525
   
83,438
 
Retained earnings
   
1,832,891
   
1,478,654
 
Accumulated other comprehensive loss
   
(14,532
)
 
(5,275
)
 
         
Total stockholders' equity
   
1,924,969
   
1,557,899
 
Total liabilities and stockholders' equity
 
$
2,444,601
 
$
1,897,020
 

See accompanying notes.

4

 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)

   
13-Weeks Ended
 
26-Weeks Ended
 
   
June 30,
 
July 1,
 
June 30,
 
July 1,
 
   
2007
 
2006
 
2007
 
2006
 
                   
Net sales
 
$
742,466
 
$
432,468
 
$
1,234,625
 
$
754,779
 
                           
Cost of goods sold
   
367,799
   
216,184
   
622,206
   
375,706
 
                           
Gross profit
   
374,667
   
216,284
   
612,419
   
379,073
 
                           
Selling, general and
administrative expenses
   
95,373
   
54,915
   
161,297
   
92,678
 
 
                         
Research and development
expense
   
37,727
   
26,793
   
71,230
   
51,707
 
     
133,100
   
81,708
   
232,527
   
144,385
 
                           
Operating income
   
241,567
   
134,576
   
379,892
   
234,688
 
                           
Other income (expense):
                         
Interest income
   
10,841
   
8,538
   
20,199
   
15,843
 
Interest expense
   
(23
)
 
(5
)
 
(55
)
 
(12
)
Foreign currency
   
(6,086
)
 
2,958
   
7,119
   
(4,488
)
Other
   
338
   
(167
)
 
389
   
3,437
 
     
5,070
   
11,324
   
27,652
   
14,780
 
                           
Income before income taxes
   
246,637
   
145,900
   
407,544
   
249,468
 
                           
Income tax provision
   
32,260
   
22,614
   
53,307
   
38,668
 
                           
Net income
 
$
214,377
 
$
123,286
 
$
354,237
 
$
210,800
 
                           
Net income per share:
                         
Basic
 
$
0.99
 
$
0.57
 
$
1.64
 
$
0.97
 
Diluted
 
$
0.98
 
$
0.56
 
$
1.62
 
$
0.96
 
                           
Weighted average common
shares outstanding:
                         
Basic
   
216,380
   
216,818
   
216,298
   
216,594
 
Diluted
   
219,078
   
219,344
   
218,925
   
218,868
 

See accompanying notes.
 
5


Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

   
26-Weeks Ended
 
   
June 30,
 
July 1,
 
   
2007
 
2006
 
Operating Activities:
             
Net income
 
$
354,237
 
$
210,800
 
Adjustments to reconcile net income to net cash
             
provided by operating activities:
             
Depreciation
   
13,479
   
10,211
 
Amortization
   
15,856
   
17,055
 
Loss on sale of property and equipment
   
18
   
191
 
Provision for doubtful accounts
   
1,808
   
2,038
 
Deferred income taxes
   
(725
)
 
(13,478
)
Foreign currency transaction gains/losses
   
(10,358
)
 
2,392
 
Provision for obsolete and slow moving inventories
   
17,309
   
9,336
 
Stock compensation expense
   
7,196
   
4,759
 
Realized gains on marketable securities
   
-
   
(3,852
)
Changes in operating assets and liabilities:
             
Accounts receivable
   
(88,405
)
 
(126,836
)
Inventories
   
(33,406
)
 
(37,408
)
Other current assets
   
9,059
   
(11,135
)
Accounts payable
   
63,472
   
13,119
 
Other current and non-current liabilities
   
101,826
   
56,503
 
Income taxes
   
(6,937
)
 
143
 
Purchase of licenses
   
(22,290
)
 
(1,462
)
Net cash provided by operating activities
   
422,139
   
132,376
 
               
Investing activities:
             
Purchases of property and equipment
   
(112,020
)
 
(26,612
)
Purchase of intangible assets
   
(1,881
)
 
(1,115
)
Purchase of marketable securities
   
(378,909
)
 
(231,870
)
Redemption of marketable securities
   
455,598
   
150,222
 
Change in restricted cash
   
(33
)
 
(92
)
Net cash paid for acquisition of businesses and other intangibles
   
(68,902
)
 
-
 
Net cash used in investing activities
   
(106,147
)
 
(109,467
)
               
Financing activities:
             
Proceeds from issuance of common stock
   
7,534
   
9,479
 
Payments on long term debt
   
(248
)
 
-
 
Tax benefit related to stock option exercise
   
7,360
   
6,988
 
Net cash provided by financing activities
   
14,646
   
16,467
 
               
Effect of exchange rate changes on cash and cash equivalents
   
(288
)
 
216
 
               
Net increase in cash and cash equivalents
   
330,350
   
39,592
 
Cash and cash equivalents at beginning of period
   
337,321
   
334,352
 
Cash and cash equivalents at end of period
 
$
667,671
 
$
373,944
 

See accompanying notes.
 
6

 
Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2007
(In thousands, except share and per share information)


1.
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the 13-week and 26-week periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 29, 2007.

The condensed consolidated balance sheet at December 30, 2006 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2006.

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13-weeks. The quarters ended June 30, 2007 and July 1, 2006 both contain operating results for 13-weeks for both year-to-date periods.

Stock Split (“Split”) - All July 1, 2006 common stock and applicable share and per share amounts have been retroactively adjusted to reflect a 2-for-1 split of the Company’s Common Stock effective August 15, 2006.

2.
Inventories

The components of inventories consist of the following:
 
 
 
June 30, 2007
 
December 30, 2006
 
Raw materials
 
$
92,239
 
$
85,040
 
Work-in-process
   
50,453
   
42,450
 
Finished goods
   
170,292
   
160,748
 
Inventory reserves
   
(22,302
)
 
(17,230
)
 
         
Inventory, net of reserves
 
$
290,682
 
$
271,008
 
 
3.
Share Repurchase Plan 

The Board of Directors approved a share repurchase program on August 3, 2006, authorizing the Company to purchase up to 3.0 million shares of Garmin Ltd.’s common stock as market and business conditions warrant. The share repurchase authorization expires on December 31, 2007. There were no shares purchased during the 26-week period ending June 30, 2007.
 
7

 
4.
Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share information):
 
 
 
13-Weeks Ended
 
 
 
June 30,
 
July 1,
 
 
 
2007
 
2006
 
Numerator:
         
Numerator for basic and diluted net income
per share - net income
 
$
214,377
 
$
123,286
 
 
         
Denominator:
         
Denominator for basic net income per share -
weighted-average common shares
   
216,380
   
216,818
 
 
         
Effect of dilutive securities -
employee stock options
   
2,698
   
2,526
 
 
         
Denominator for diluted net income per share -
adjusted weighted-average common shares
   
219,078
   
219,344
 
 
         
Basic net income per share
 
$
0.99
 
$
0.57
 
 
         
Diluted net income per share
 
$
0.98
 
$
0.56
 
 
     
26-Weeks Ended
 
 
   
June 30,
   
July 1,
 
 
   
2007
   
2006
 
Numerator:
         
Numerator for basic and diluted net income
per share - net income
 
$
354,237
 
$
210,800
 
 
         
Denominator:
         
Denominator for basic net income per share -
weighted-average common shares
   
216,298
   
216,594
 
 
         
Effect of dilutive securities -
employee stock options
   
2,627
   
2,274
 
 
         
Denominator for diluted net income per share -
adjusted weighted-average common shares
   
218,925
   
218,868
 
 
         
Basic net income per share
 
$
1.64
 
$
0.97
 
 
         
Diluted net income per share
 
$
1.62
 
$
0.96
 
 
There were no anti-dilutive options for the 13-week period ended June 30, 2007. There were 1,130,830 anti-dilutive options for the 13-week period ended July 1, 2006.

There were no anti-dilutive options for the 26-week period ended June 30, 2007. There were 1,140,550 anti-dilutive options for the 26-week period ended July 1, 2006.

8

 
5.
Comprehensive Income

Comprehensive income is comprised of the following (in thousands):
 
   
13-Weeks Ended
 
   
June 30, 2007
 
July 1, 2006
 
Net income
 
$
214,377
 
$
123,286
 
Translation adjustment
   
2,345
   
(7,641
)
Change in fair value of available-for-sale
marketable securities, net of deferred taxes
   
(538
)
 
(2,760
)
Comprehensive income
 
$
216,184
 
$
112,885
 
 
   
26-Weeks Ended
 
   
June 30, 2007
 
July 1, 2006
 
Net income
 
$
354,237
 
$
210,800
 
Translation adjustment
   
(10,537
)
 
1,568
 
Change in fair value of available-for-sale
marketable securities, net of deferred taxes
   
1,280
   
(5,604
)
Comprehensive income
 
$
344,980
 
$
206,764
 
 
6.
Segment Information

Net sales, operating income, and income before taxes for each of the Company’s reportable segments are presented below:
 
 
 
Reportable Segments
 
 
 
Outdoor/
 
 
 
Auto/
 
 
 
 
 
 
 
Fitness
 
Marine
 
Mobile
 
Aviation
 
Total
 
13-Weeks Ended June 30, 2007
                     
 
                     
Net sales to external customers
 
$
77,163
 
$
79,771
 
$
507,895
 
$
77,637
 
$
742,466
 
Operating income
 
$
28,600
 
$
33,115
 
$
149,067
 
$
30,785
 
$
241,567
 
Income before taxes
 
$
28,812
 
$
34,065
 
$
153,109
 
$
30,651
 
$
246,637
 
 
                     
13-Weeks Ended July 1, 2006
                     
 
                     
Net sales to external customers
 
$
71,115
 
$
50,115
 
$
255,387
 
$
55,851
 
$
432,468
 
Operating income
 
$
31,617
 
$
21,146
 
$
59,974
 
$
21,839
 
$
134,576
 
Income before taxes
 
$
32,883
 
$
21,647
 
$
69,251
 
$
22,119
 
$
145,900
 
 
                               
 
                     
26-Weeks Ended June 30, 2007
                     
 
                     
Net sales to external customers
 
$
137,690
 
$
122,775
 
$
824,520
 
$
149,640
 
$
1,234,625
 
Operating income
 
$
49,809
 
$
44,410
 
$
228,591
 
$
57,082
 
$
379,892
 
Income before taxes
 
$
53,595
 
$
47,150
 
$
248,253
 
$
58,546
 
$
407,544
 
 
                     
26-Weeks Ended July 1, 2006
                     
 
                     
Net sales to external customers
 
$
134,761
 
$
100,818
 
$
406,116
 
$
113,084
 
$
754,779
 
Operating income
 
$
56,298
 
$
40,059
 
$
96,264
 
$
42,067
 
$
234,688
 
Income before taxes
 
$
57,040
 
$
42,293
 
$
108,491
 
$
41,644
 
$
249,468
 
 
9

 
Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis.

Net Sales and long-lived assets (property and equipment) by geographic area are as follows as of and for the 26-week periods ended June 30, 2007 and July 1, 2006:

   
North
             
   
America
 
Asia
 
Europe
 
Total
 
June 30, 2007
                         
Net sales to external customers
 
$
777,515
 
$
52,474
 
$
404,636
 
$
1,234,625
 
Long-lived assets
 
$
162,536
 
$
143,819
 
$
43,944
 
$
350,299
 
                           
July 1, 2006
                         
Net sales to external customers
 
$
435,264
 
$
39,839
 
$
279,676
 
$
754,779
 
Long-lived assets
 
$
138,499
 
$
56,363
 
$
521
 
$
195,383
 
 
7.
Income Taxes

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48), on December 31, 2006, the beginning of fiscal year 2007. As a result of the implementation of FIN 48, the Company has not recognized a material increase or decrease in the liability for unrecognized tax benefits. The total amount of unrecognized tax benefits as of the date of adoption is $70.5 million including interest of $3.3 million. The total amount of unrecognized tax benefits as of June 30, 2007 is $90.3 million including interest of $5.4 million. The June 30, 2007 balance of $90.3 million of unrecognized tax benefits, if recognized, would reduce the effective tax rate. None of the unrecognized tax benefits are due to uncertainty in the timing of deductibility.

FIN 48 requires unrecognized tax benefits to be classified as non-current liabilities, except for the portion that is expected to be paid within one year of the balance sheet date. The Company previously classified these amounts as current liabilities, however after the adoption, the entire $90.3 million is required to be classified as non-current at June 30, 2007.

Interest expense and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense. $0.5 million of interest is included in income tax expense for the quarter ending June 30, 2007. At June 30, 2007 and at December 30, 2006, the Company had accrued approximately $4.3 million and $3.3 million respectively for interest. The Company had no amounts accrued for penalties as the nature of the unrecognized tax benefits, if recognized, would not warrant the imposition of penalties.

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to US federal, state, or local tax examinations by tax authorities for years prior to 2003. The Company also considers 2003 and 2004 US federal returns to have been effectively settled due to the completion of audit examination by the Internal Revenue Service. The Company is no longer subject to Taiwan income tax examinations by tax authorities for years prior to 2001. The Company is no longer subject to United Kingdom tax examinations by tax authorities for years prior to 2005.

The Company believes that it is reasonably possible that $5.0 million of its reserves for certain unrecognized tax benefits will decrease within the next 12 months as the result of the statute of limitations expiring related to an uncertain tax benefit associated with transfer pricing. This potential decrease in unrecognized tax benefits would impact the Company’s effective tax rate within the next 12 months.
 
10

 
8.
Warranty Reserves
 
The Company’s products sold are generally covered by a warranty for periods ranging from one to two years. The Company’s estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

   
13-Weeks Ended
 
   
June 30, 2007
 
July 1, 2006
 
Balance - beginning of the period
 
$
39,281
 
$
20,179
 
Accrual for products sold
             
during the period
   
22,565
   
11,464
 
Expenditures
   
(12,121
)
 
(6,737
)
Balance - end of the period
 
$
49,725
 
$
24,906
 
 
   
26-Weeks Ended
 
   
June 30, 2007
 
July 1, 2006
 
Balance - beginning of the period
 
$
37,639
 
$
18,817
 
Accrual for products sold
             
during the period
   
37,600
   
17,597
 
Expenditures
   
(25,514
)
 
(11,508
)
Balance - end of the period
 
$
49,725
 
$
24,906
 
 
9.
Commitments

Pursuant to certain supply agreements, the Company is contractually committed to make purchases of approximately $15.8 million over the next 3 years.
 
10.
Recent Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company will be required to adopt SFAS No. 157 in the first quarter of fiscal year 2008.   We do not expect the adoption of SFAS No. 157 to have a material impact on our financial reporting and disclosure.

In February 2007, the FASB issued Statement of Financial Accounting Standards (“SFAS No. 159”), “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument by instrument basis, is typically irrevocable once elected. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007, and early application is allowed under certain circumstances. Management is currently evaluating the requirements of SFAS No. 159 and has not yet determined the impact, if any, on the Company’s consolidated financial statements.
 
11

 
11.
Acquisitions

In the first quarter of 2007, Garmin Ltd. acquired EME Tec Sat SAS (the exclusive distributor of Garmin’s consumer products in France and now renamed Garmin France SAS), Digital Cyclone, Inc. (a location based services provider), and the assets of Nautamatic Marine Systems, Inc. (a manufacturer of the TR-1 Gold and Gladiator marine autopilots) for $72.1 million less $3.2 million cash acquired. The preliminary purchase price allocation resulted in an increase in goodwill and intangible assets of $68.6 million. These acquisitions are not material, either individually or in aggregate, therefore supplemental pro forma information is not presented.

In the second quarter of 2007, Garmin Ltd. announced its intent to acquire GPS Gesellschaft für Professionelle Satellitennavigation mbH (the exclusive distributor of Garmin’s consumer products in Germany).

12.
Subsequent Events

On July 2, 2007 the acquisition of GPS Gesellschaft für Professionelle Satellitennavigation mbH was completed and the distributor has been renamed Garmin Deutschland GmbH. This acquisition is not material, therefore supplemental pro forma information will not be presented.

On July 17, 2007, Garmin Ltd. announced its intent to acquire Electronica Trepat SA, the distributor of Garmin’s consumer products in Spain. This acquisition is not expected to be material.

On August 3, 2007, Garmin Ltd. announced its intent to acquire Synergy S.p.A, the distributor of Garmin’s consumer products in Italy. This acquisition is not expected to be material.

The Garmin Board of Directors has approved an annual cash dividend of $0.75 per share payable to shareholders of record on August 15, 2007. This dividend will be paid on September 14, 2007.
 
12

 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion set forth below, as well as other portions of this Quarterly Report, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by our management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. 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 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 factors identified in the Company’s Annual Report on Form 10-K for the year ended December 30, 2006. This report has been filed with the Securities and Exchange Commission (the "SEC" or the "Commission") in Washington, D.C. and can be obtained by contacting the SEC's public reference operations or obtaining it through the SEC's web site on the World Wide Web at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 30, 2006.

The Company is 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 four business segments, the outdoor/fitness, marine, automotive/mobile and aviation markets. Our segments offer products through our network of independent dealers and distributors. However, the nature of products and types of customers for the four segments may vary significantly. As such, the segments are managed separately.
 
13

 
Results of Operations

The following table sets forth our results of operations as a percentage of net sales during the periods shown:

   
13-Weeks Ended
 
   
 June 30, 2007
 
July 1, 2006
 
Net sales
    100.0 %  
100.0
%
Cost of goods sold
    49.5 %  
50.0
%
Gross profit
    50.5 %  
50.0
%
Research and development
    5.1 %  
6.2
%
Selling, general and administrative
    12.8 %  
12.7
%
Total operating expenses
    17.9 %  
18.9
%
Operating income
    32.6 %  
31.1
%
Other income (expense), net
    0.6 %  
2.6
%
Income before income taxes
    33.2 %  
33.7
%
Provision for income taxes
    4.3 %  
5.2
%
Net income
    28.9 %  
28.5
%
 
   
26-Weeks Ended
 
   
 June 30, 2007
 
July 1, 2006
 
Net sales
    100.0 %  
100.0
%
Cost of goods sold
    50.4 %  
49.8
%
Gross profit
    49.6 %  
50.2
%
Research and development
    5.8 %  
6.9
%
Selling, general and administrative
    13.0 %  
12.2
%
Total operating expenses
    18.8 %  
19.1
%
Operating income
    30.8 %  
31.1
%
Other income (expense), net
    2.2 %  
2.0
%
Income before income taxes
    33.0 %  
33.1
%
Provision for income taxes
    4.3 %  
5.1
%
Net income
    28.7 %  
28.0
%


The Company manages its operations in four segments: outdoor/fitness, marine, automotive/mobile, and aviation, and each of its segments employs the same accounting policies. Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis. The following table sets forth our results of operations (in thousands) including revenue, gross profit, and operating profit for each of our four segments during the periods shown. For each line item in the table, the total of the outdoor/fitness, marine, automotive/mobile, and aviation segments' amounts equals the amount in the condensed consolidated statements of income included in Item 1.

14

 
 
 
Reportable Segments
 
 
 
Outdoor/
 
 
 
Auto/
 
 
 
 
 
 
 
Fitness
 
Marine
 
Mobile
 
Aviation
 
Total
 
13-Weeks Ended June 30, 2007
                     
 
                     
Net sales
 
$
77,163
 
$
79,771
 
$
507,895
 
$
77,637
 
$
742,466
 
Gross profit
 
$
43,648
 
$
46,381
 
$
233,520
 
$
51,118
 
$
374,667
 
Operating income
 
$
28,600
 
$
33,115
 
$
149,067
 
$
30,785
 
$
241,567
 
 
                     
13-Weeks Ended July 1, 2006
                     
 
                     
Net sales
 
$
71,115
 
$
50,115
 
$
255,387
 
$
55,851
 
$
432,468
 
Gross profit
 
$
42,469
 
$
29,823
 
$
107,061
 
$
36,931
 
$
216,284
 
Operating income
 
$
31,617
 
$
21,146
 
$
59,974
 
$
21,839
 
$
134,576
 
 
                     
 
                               
 
                     
26-Weeks Ended June 30, 2007
                     
 
                     
Net sales
 
$
137,690
 
$
122,775
 
$
824,520
 
$
149,640
 
$
1,234,625
 
Gross profit
 
$
77,063
 
$
67,534
 
$
370,251
 
$
97,571
 
$
612,419
 
Operating income
 
$
49,809
 
$
44,410
 
$
228,591
 
$
57,082
 
$
379,892
 
 
                     
26-Weeks Ended July 1, 2006
                     
 
                     
Net sales
 
$
134,761
 
$
100,818
 
$
406,116
 
$
113,084
 
$
754,779
 
Gross profit
 
$
78,812
 
$
57,839
 
$
170,147
 
$
72,275
 
$
379,073
 
Operating income
 
$
56,298
 
$
40,059
 
$
96,264
 
$
42,067
 
$
234,688
 
 
15

 
Comparison of 13-Weeks Ended June 30, 2007 and July 1, 2006

Net Sales
 
 
 
13-weeks ended June 30, 2007
 
13-weeks ended July 1, 2006
 
Quarter over Quarter
 
 
 
Net Sales
 
% of Revenues
 
Net Sales
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
77,163
   
10.4
%
$
71,115
   
16.4
%
$
6,048
   
8.5
%
Marine
   
79,771
   
10.7
%
 
50,115
   
11.6
%
 
29,656
   
59.2
%
Automotive/Mobile
   
507,895
   
68.4
%
 
255,387
   
59.1
%
 
252,508
   
98.9
%
Aviation
   
77,637
   
10.5
%
 
55,851
   
12.9
%
 
21,786
   
39.0
%
Total
 
$
742,466
   
100.0
%
$
432,468
   
100.0
%
$
309,998
   
71.7
%
 
Increases in sales for the 13-week period ended June 30, 2007 were primarily due to a strong response to automotive and aviation product offerings. Automotive/mobile revenue became a significantly larger portion of our revenue mix, rising from 59.1% in the second quarter of 2006 to 68.4% in the second quarter of 2007. Approximately 19% of sales in the second quarter of 2007 were generated from products introduced in the last twelve months.

Total unit sales increased 99% to 2,544,000 in the second quarter of 2007 from 1,281,000 in the same period of 2006. The higher unit sales volume in the second quarter of fiscal 2007 was primarily attributable to strong sales of automotive products during the seasonally higher second quarter, although unit growth occurred across all segments of the business during the quarter.

Automotive/mobile segment revenue grew the fastest during the quarter, nearly doubling from the year-ago quarter, on the strength of nüvi, c-series, and other personal navigation devices (PNDs). Our aviation segment also performed well, as demand for our GMX 200, WAAS-enabled retrofit products, and WAAS upgrades to previously installed products continued to be strong. The marine segment showed strong growth during the quarter when compared with the second quarter of 2006, driven by new products released in late first quarter and during the second quarter. Revenues in our outdoor/fitness segment grew relative to the second quarter of 2006 due to seasonal demand for the products, dampened by the overall maturity of products in the segment’s portfolio.

Gross Profit

 
 
13-weeks ended June 30, 2007
 
13-weeks ended July 1, 2006
 
Quarter over Quarter
 
 
 
Gross Profit
 
% of Revenues
 
Gross Profit
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
43,648
   
56.6
%
$
42,469
   
59.7
%
$
1,179
   
2.8
%
Marine
   
46,381
   
58.1
%
 
29,823
   
59.5
%
 
16,558
   
55.5
%
Automotive/Mobile
   
233,520
   
46.0
%
 
107,061
   
41.9
%
 
126,459
   
118.1
%
Aviation
   
51,118
   
65.8
%
 
36,931
   
66.1
%
 
14,187
   
38.4
%
Total
 
$
374,667
   
50.5
%
$
216,284
   
50.0
%
$
158,383
   
73.2
%
 
Gross profit dollars in the second quarter of 2007 grew 73.2% and gross profit margin percentage increased 50 basis points over the second quarter of 2006. Second quarter gross profit margins decreased to 56.6%, 58.1%, and 65.8% in the outdoor/fitness, marine and aviation segments respectively, when compared to the same quarter in 2006. Second quarter 2007 gross profit margins increased to 46.0% in the automotive/mobile segment, when compared with the second quarter of 2006.

Gross profit margin percentage for the Company overall increased primarily as a result of the automotive/mobile segment becoming a significantly larger percentage of the Company’s product mix during a quarter when this segment’s margin improved over 400 basis points. While the automotive/mobile segment is by nature a lower-margin business, strong sales of our higher priced and more fully featured products, declining component pricing, and a less aggressive than anticipated pricing environment for the segment supported both gross margin improvement and gross margin dollar growth within the segment. Release of new products into the marine retail channel drove strong sequential improvement in marine margins, returning them to historic ranges. Declines in gross margin in the outdoor/fitness segment as a result of a more mature product mix pressured gross margins for the Company during the quarter. While product mix in the aviation segment resulted in a small margin decline for the segment relative to the year-ago quarter, the aviation segment’s strong gross margin profile continued to provide gross margin support for the Company.
 
16

 
Selling, General and Administrative Expenses

 
 
13-weeks ended June 30, 2007
 
13-weeks ended July 1, 2006
 
 
 
 
 
Selling, General
 
 
 
Selling, General
 
 
 
Quarter over Quarter
 
 
 
& Admin. Expenses
 
% of Revenues
 
& Admin. Expenses
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
9,310
   
12.1
%
$
6,900
   
9.7
%
$
2,410
   
34.9
%
Marine
   
8,748
   
11.0
%
 
5,611
   
11.2
%
 
3,137
   
55.9
%
Automotive/Mobile
   
71,445
   
14.1
%
 
38,018
   
14.9
%
 
33,427
   
87.9
%
Aviation
   
5,870
   
7.6
%
 
4,386
   
7.9
%
 
1,484
   
33.8
%
Total
 
$
95,373
   
12.8
%
$
54,915
   
12.7
%
$
40,458
   
73.7
%
 
The increase in expense was driven primarily by increased advertising spending and increased staffing throughout the organization to support our growth. Advertising spending, which included increases in both cooperative advertising costs and television and print advertising placements, increased 70% or $23.3 million when compared to the second quarter of 2006. As a percent of sales, advertising held steady at 7.7% of sales in both the second quarter of 2007 and the second quarter of 2006. Other selling, general and administrative expenses increased slightly as a percent of sales from 5.0% of sales in the second quarter of 2006 to 5.2% of sales in the second quarter of 2007, as staffing in marketing and administration were increased to support our rapid growth. In absolute dollars, other selling, general and administrative expenses increased $17.1 million when compared to the previous year quarter, with increases distributed across call center, operations, finance, administration, and marketing administration areas to support the growth of our businesses.

Research and Development Expense
 
 
 
13-weeks ended June 30, 2007
 
13-weeks ended July 1, 2006
 
Quarter over Quarter
 
 
 
Research &
Development
 
% of Revenues
 
Research &
Development
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
5,738
   
7.4
%
$
3,952
   
5.6
%
$
1,786
   
45.2
%
Marine
   
4,518
   
5.7
%
 
3,066
   
6.1
%
 
1,452
   
47.4
%
Automotive/Mobile
   
13,008
   
2.6
%
 
9,069
   
3.6
%
 
3,939
   
43.4
%
Aviation
   
14,463
   
18.6
%
 
10,706
   
19.2
%
 
3,757
   
35.1
%
Total
 
$
37,727
   
5.1
%
$
26,793
   
6.2
%
$
10,934
   
40.8
%
 
The 40.8% increase in research and development expense was due to ongoing development activities for new products, the addition of 200 new engineering personnel to our staff during the quarter, and an increase in engineering program costs during the second quarter of 2007 as a result of our continued emphasis on product innovation. Research and development costs increased $10.9 million when compared with the year-ago quarter, but declined 110 basis points as a percent of revenue primarily due to the fact that the growth rate of research and development expenditures for the period (40.8%) was slower than the growth rate of revenues (71.7%).
 
Operating Income
 
 
 
13-weeks ended June 30, 2007
 
13-weeks ended July 1, 2006
 
Quarter over Quarter
 
 
 
Operating Income
 
% of Revenues
 
Operating Income
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
28,600
   
37.1
%
$
31,617
   
44.5
%
 
($3,017
)
 
-9.5
%
Marine
   
33,115
   
41.5
%
 
21,146
   
42.2
%
 
11,969
   
56.6
%
Automotive/Mobile
   
149,067
   
29.3
%
 
59,974
   
23.5
%
 
89,093
   
148.6
%
Aviation
   
30,785
   
39.7
%
 
21,839
   
39.1
%
 
8,946
   
41.0
%
Total
 
$
241,567
   
32.5
%
$
134,576
   
31.1
%
$
106,991
   
79.5
%
 
Operating income was up 140 basis points as a percent of revenue when compared to the second quarter of 2006 due to the increase in gross margins, which in part offset additions to finance, technology, and administrative expenditures, and personnel additions in the call center to support the growth of our businesses. Operating margins decreased to 37.1% and 41.5% within our outdoor/fitness and marine segments, respectively, when compared with the second quarter in 2006. Operating margins increased to 29.3% and 39.7% within our automotive/mobile and aviation segments, respectively. Our operating margin percentage increased in part as a function of the gross profit margin percentage increase described above, as well as improvements in the operating margins of both the aviation and automotive/mobile segments, offset somewhat by operating margin declines in the marine and outdoor/fitness segments.
 
17

 
Other Income (Expense)

 
 
13-weeks ended
 
13-weeks ended
 
 
 
June 30, 2007
 
July 1, 2006
 
Interest Income
 
$
10,841
 
$
8,538
 
Interest Expense
   
(23
)
 
(5
)
Foreign Currency Exchange
   
(6,086
)
 
2,958
 
Other
   
338
   
(167
)
Total
 
$
5,070
 
$
11,324
 

The average taxable equivalent interest rate return on invested cash during the second quarter of 2007 was 4.4% compared to 4.3% during the same quarter of 2006. The increase in interest income is attributable to our growing cash balances, increasing interest rates, and more active management of our cash balances.

Foreign currency gains and losses for the Company are primarily tied to movements by the Taiwan Dollar, and secondarily to the British Pound Sterling. While the Canadian dollar and the Euro are the respective functional currencies of Dynastream Innovations, Inc. and Garmin France, due to these entities relative sizes, their respective currency moves do not have a material impact on the Company’s financial statements.

The majority of the $6.1 million currency loss in the second quarter of 2007 was due to the weakening of the U.S. Dollar compared to the Taiwan Dollar. During the second quarter of fiscal 2007 the exchange rate decreased 0.7% to $32.86 TD/USD at June 30, 2007 from $33.09 TD/USD at March 31, 2007, resulting in $5.8 million of the quarter’s loss. While the British Pound Sterling strengthened relative to the U.S. Dollar during the quarter, the timing of transactions during the period resulted in Garmin Europe recording a $0.6 million gain.

The U.S. Dollar weakened when compared to the Taiwan Dollar during the second quarter of 2006, when the exchange rate increased to $32.37 TD/USD at July 1, 2006 from $32.46 TD/USD at April 1, 2006. While the U.S. dollar weakened relative to the Taiwan Dollar by the close of the quarter, the $3.0 million currency gain reflected in the second quarter 2006 financials was the result of the timing of transactions during the period. During the second quarter of 2006, British Pound Sterling currency moves had no material impact, and Dynastream and Garmin France had not yet been acquired.

Income Tax Provision
 
Our earnings before taxes increased 69.0% when compared to the same quarter in 2006, and our income tax expense increased by $9.7 million, to $32.3 million, for the 13-week period ended June 30, 2007, from $22.6 million for the 13-week period ended July 1, 2006, due to our strong revenue growth, enhanced by a lower effective tax rate. The effective tax rate was 13.1% in the second quarter of 2007 and 15.5% in the second quarter of 2006. The lower tax rate in the second quarter of 2007 when compared to the same quarter in 2006 was related to tax holidays/credits and the favorable mix of taxable income among Company entities.

Net Income

As a result of the above, net income increased 73.9% for the 13-week period ended June 30, 2007 to $214.4 million compared to $123.3 million for the 13-week period ended July 1, 2006.
 
18

 
Comparison of 26-Weeks Ended June 30, 2007 and July 1, 2006

Net Sales

   
26-weeks ended June 30, 2007
 
26-weeks ended July 1, 2006
 
Period over Period
 
   
Net Sales
 
% of Revenues
 
Net Sales
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
137,690
   
11.2
%
$
134,761
   
17.9
%
$
2,929
   
2.2
%
Marine
   
122,775
   
9.9
%
 
100,818
   
13.4
%
 
21,957
   
21.8
%
Automotive/Mobile
   
824,520
   
66.8
%
 
406,116
   
53.8
%
 
418,404
   
103.0
%
Aviation
   
149,640
   
12.1
%
 
113,084
   
15.0
%
 
36,556
   
32.3
%
Total
 
$
1,234,625
   
100.0
%
$
754,779
   
100.0
%
$
479,846
   
63.6
%
 
Increases in sales for the 26-week period ended June 30, 2007 were due to a strong response to automotive, aviation, and marine product offerings. Automotive/mobile revenue became a significantly larger portion of our revenue mix, rising from 53.8% in the first half of 2006 to 66.8% in the first half of 2007.

Total unit sales increased 85% to 4,095,000 in the first half of 2007 from 2,210,000 in the same period of 2006. The higher unit sales volume in the first half of fiscal 2007 was primarily attributable to strong sales of automotive products, particularly in North America.

Automotive/mobile segment revenue grew the fastest during the period, doubling from the year-ago period, on the strength of nüvi, c-series, and other personal navigation devices (PNDs). Our aviation segment also performed well, as demand for our GMX 200, WAAS-enabled retrofit products, and WAAS upgrades to previously installed products all continued strong. The release of new marine products to the marine retail channel during the period drove strong revenue growth for the segment when compared with the same period of 2006. Revenues in our outdoor/fitness segment were slightly higher than the first half of 2006, but growth for the segment was dampened by the fact that older products are becoming a larger part of the segment’s product portfolio.

Gross Profit

   
26-weeks ended June 30, 2007
 
26-weeks ended July 1, 2006
 
Period over Period
 
   
Gross Profit
 
% of Revenues
 
Gross Profit
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
77,063
   
56.0
%
$
78,812
   
58.5
%
 
($1,749
)
 
-2.2
%
Marine
   
67,534
   
55.0
%
 
57,839
   
57.4
%
 
9,695
   
16.8
%
Automotive/Mobile
   
370,251
   
44.9
%
 
170,147
   
41.9
%
 
200,104
   
117.6
%
Aviation
   
97,571
   
65.2
%
 
72,275
   
63.9
%
 
25,296
   
35.0
%
Total
 
$
612,419
   
49.6
%
$
379,073
   
50.2
%
$
233,346
   
61.6
%
 
Gross profit dollars in the first half of 2007 grew 61.6% and gross profit margin percentage declined 60 basis points over the same period of the previous year. First half gross profit margins decreased to 56.0% and 55.0% in the outdoor/fitness and marine segments respectively, when compared to the same period in 2006. First half 2007 gross profit margins increased to 44.9% and 65.2% within the automotive/mobile and aviation segments, when compared with the first half of 2006.

Gross profit margin percentage for the Company overall decreased primarily as a result of the automotive/mobile segment becoming a significantly larger percentage of the Company’s product mix. While the automotive/mobile segment is by nature a lower-margin business, strong sales of our higher priced and more fully featured products, favorable component pricing, and a less aggressive than anticipated pricing environment for the segment supported gross margin improvement and gross margin dollar growth within the segment. Strong demand for popular retrofit products in the aviation segment resulted in favorable product mix and margins for the aviation segment particularly in the first half of the quarter. Declines in gross margin in both the outdoor/fitness and marine segments pressured gross margins for the Company during the period, although the marine segment showed significant margin improvement in the second half of the period as a result of new product releases.
 
19

 
Selling, General and Administrative Expenses
 
   
26-weeks ended June 30, 2007
 
26-weeks ended July 1, 2006
 
 
 
   
Selling, General
 
 
 
Selling, General
 
 
 
Period over Period
 
   
& Admin. Expenses
 
% of Revenues
 
& Admin. Expenses
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
16,599
   
12.1
%
$
13,845
   
10.3
%
$
2,754
   
19.9
%
Marine
   
14,785
   
12.0
%
 
11,564
   
11.5
%
 
3,221
   
27.9
%
Automotive/Mobile
   
117,259
   
14.2
%
 
57,548
   
14.2
%
 
59,711
   
103.8
%
Aviation
   
12,654
   
8.5
%
 
9,721
   
8.6
%
 
2,933
   
30.2
%
Total
 
$
161,297
   
13.1
%
$
92,678
   
12.3
%
$
68,619
   
74.0
%
 
The increase in expense was driven primarily by increased advertising spending and increased staffing to support our growth. Advertising spending, which included increases in both cooperative advertising costs and television and print advertising placements, increased 66% or $34.3 million when compared to the first half of 2006. As a percent of sales, advertising remained nearly flat, increasing from 6.9% of sales in first half of 2006 to 7.0% of sales in first half of 2007. Other selling, general and administrative expenses increased as a percent of sales from 5.4% of sales in the first half of 2006 to 6.1% of sales in the first half of 2007. In absolute dollars, other expenses increased $34.4 million when compared to the previous year period, with increases distributed across call center, operations, finance, administration, and marketing administration areas to support the growth of our businesses.

Research and Development Expense

   
26-weeks ended June 30, 2007
 
26-weeks ended July 1, 2006
 
Period over Period
 
   
Research &
Development
 
% of
Revenues
 
Research &
Development
 
% of
Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
10,655
   
7.7
%
$
8,669
   
6.4
%
$
1,986
   
22.9
%
Marine
   
8,339
   
6.8
%
 
6,216
   
6.2
%
 
2,123
   
34.2
%
Automotive/Mobile
   
24,401
   
3.0
%
 
16,335
   
4.0
%
 
8,066
   
49.4
%
Aviation
   
27,835
   
18.6
%
 
20,487
   
18.1
%
 
7,348
   
35.9
%
Total
 
$
71,230
   
5.8
%
$
51,707
   
6.9
%
$
19,523
   
37.8
%
 
The 37.8% increase in research and development expense dollars was due to ongoing development activities for new products, the addition of 280 new engineering personnel to our staff during the period, and an increase in engineering program costs during the first half of 2007 as a result of our continued emphasis on product innovation. Research and development costs increased $19.5 million when compared with the year-ago period, but declined 110 basis points as a percent of revenue primarily due to the fact that the growth rate of research and development expenditures for the period (37.8%) was slower than the growth rate of revenues (63.6%).
 
Operating Income

   
26-weeks ended June 30, 2007
 
26-weeks ended July 1, 2006
 
Period over Period
 
   
Operating Income
 
% of Revenues
 
Operating Income
 
% of Revenues
 
$ Change
 
% Change
 
Outdoor/Fitness
 
$
49,809
   
36.2
%
$
56,298
   
41.8
%
 
($6,489
)
 
-11.5
%
Marine
   
44,410
   
36.2
%
 
40,059
   
39.7
%
 
4,351
   
10.9
%
Automotive/Mobile
   
228,591
   
27.7
%
 
96,264
   
23.7
%
 
132,327
   
137.5
%
Aviation
   
57,082
   
38.1
%
 
42,067
   
37.2
%
 
15,015
   
35.7
%
Total
 
$
379,892
   
30.8