"Our gross and operating margins held strong, exceeding our expectations, coming in at 46% and 29% respectively. We also generated $525 million of free cash flow in 2007, resulting in unrestricted cash and marketable securities balance of $1.1 billion at the end of the fiscal year. Our return on invested capital (ROIC) was 63% during fiscal 2007."
Fiscal 2008 Outlook
We remain optimistic about the future success of our business and our ability to serve customers and distributors around the world. General perspective on overall business expectations for 2008, including our four business segments are:
-- We anticipate overall revenue to exceed $4.5 billion in 2008, and earnings per share to exceed $4.40 assuming an effective tax rate of approximately 12 percent. -- We anticipate automotive/mobile revenues to grow 45 percent in 2008, with declining gross and operating margins due to product mix and a continued transition toward mass market levels. -- We anticipate aviation revenues to grow 30 percent in 2008. Growth is expected to occur within both G1000 OEM and aviation aftermarket shipments. -- We anticipate marine revenues to grow 25 percent in 2008. Growth will come from our innovative offshore and inland marine cartography and additional new product releases. -- We anticipate outdoor/fitness segment revenues to grow 25 percent in 2008 led by new outdoor products with enhanced features, high sensitivity GPS receivers, built-in cartography and unique functionality. Exciting new products for our fitness line and better penetration of targeted fitness markets are expected to drive revenue growth as well. -- We expect the recently announced nuvifone(TM) to be released during Q3 2008 and will see initial unit shipments of this new category for Garmin during the second half of the year. -- We look forward to introducing many innovative product lines again this year. 2008 product introductions began with new auto, outdoor, fitness and wireless products introduced during January's Consumer Electronics Show in Las Vegas and our recent media event in New York City. -- We expect continued expansion of our LinKou, Taiwan manufacturing facility to meet growing demand for our products in 2008. -- We will maintain our focus on new opportunities and expansion of distribution throughout Europe; growth will be supported through the distributors we have acquired, continued improvement of our distribution systems within Europe, and continued emphasis on advertising to enhance awareness of the Garmin brand. Non-GAAP Measures
Net income (earnings) per share, excluding foreign currency
Management believes that net income per share before the impact of foreign currency translation gain or loss is an important measure because it removes the fluctuations attributable to the functional currency versus the transactional currencies of the non-U.S. subsidiaries. Accordingly, earnings per share before the impact of foreign currency translation gain or loss allows an assessment of the company's operating performance before the impact of the position of the U.S. dollar versus other currencies, which permits a consistent comparison of operating results between periods.
The following table contains a reconciliation of GAAP net income per share to net income per share excluding the impact of foreign currency translation gain or loss. Garmin Ltd. And Subsidiaries Net income per share, excluding FX (In thousands, except per share information) 13-Weeks Ended 52-weeks Ended December December December December 29, 2007 30, 2006 29, 2007 30, 2006 Net Income (GAAP) $307,267 $180,345 $855,011 $514,123 Foreign currency (gain) / loss, net of tax effects ($17,017) $8,850 ($20,070) ($516) Net income, excluding FX $290,250 $189,195 $834,941 $513,607 Net income per share (GAAP): Basic $1.42 $0.84 $3.95 $2.38 Diluted $1.39 $0.82 $3.89 $2.35 Net income per share, excluding FX: Basic $1.34 $0.88 $3.86 $2.37 Diluted $1.31 $0.87 $3.80 $2.35 Weighted average common shares outstanding: Basic 216,859 215,857 216,524 216,340 Diluted 220,918 218,630 219,875 218,845
Free cash flow
Management believes that free cash flow is an important financial measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flow less capital expenditures for property and equipment.
The following table contains a reconciliation of GAAP net cash provided by operating activities to free cash flow.
Garmin Ltd. And Subsidiaries Free Cash Flow (In thousands) 52-Weeks Ended December 29, December 30, 2007 2006 Net cash provided by operating activities $682,088 $361,855 Less: purchases of property and equipment ($156,778) ($92,906) Free Cash Flow $525,310 $268,949