GRMN » Topics » Foreign Currency Exchange Rate Risk

This excerpt taken from the GRMN 10-Q filed Nov 2, 2005.

Foreign Currency Exchange Rate Risk

 

The operation of the Company’s subsidiaries in international markets results in exposure to movements in currency exchange rates. The potential of volatile foreign exchange rate fluctuations in the future could have a significant effect on our results of operations.

 

The principal currency involved is the Taiwan Dollar. Garmin Corporation, located in Shijr, Taiwan, uses the local currency as its functional currency. The Company translates all assets and liabilities at year-end exchange rates and income and expense accounts at average rates during the year. In order to minimize the effect of the currency exchange fluctuations on our operations, we have elected to retain most of our cash at our Taiwan subsidiary in U.S. dollars. As discussed above, the exchange rate increased 5.8% during the first nine months of 2005 and resulted in a foreign currency gain of $23.8 million. If the exchange rate decreased by a similar percentage, a comparable foreign currency loss would be recognized.

 

This excerpt taken from the GRMN 10-Q filed Aug 3, 2005.

      Foreign Currency Exchange Rate Risk

        The operation of the Company’s subsidiaries in international markets results in exposure to movements in currency exchange rates. The potential of volatile foreign exchange rate fluctuations in the future could have a significant effect on our results of operations.

        The principal currency involved is the Taiwan Dollar. Garmin Corporation, located in Shijr, Taiwan, uses the local currency as its functional currency. The Company translates all assets and liabilities at year-end exchange rates and income and expense accounts at average rates during the year. In order to minimize the effect of the currency exchange fluctuations on our operations, we have elected to retain most of our cash at our Taiwan subsidiary in U.S. dollars. As discussed above, the exchange rate decreased 2.6% during the first six months of 2005 and resulted in a foreign currency loss of $12.6 million. If the exchange rate increased by a similar percentage, a comparable foreign currency gain would be recognized.

This excerpt taken from the GRMN 10-K filed Mar 9, 2005.

        Foreign Currency Exchange Rate Risk

        The operation of the Company’s subsidiaries in international markets results in exposure to movements in currency exchange rates. We generally have not been significantly affected by foreign exchange fluctuations because, until recently, the New Taiwan Dollar has proven to be relatively stable. However, periodically we have experienced significant foreign currency gains and losses due to the strengthening and weakening of the U.S. dollar. The potential of volatile foreign exchange rate fluctuations in the future could have a significant effect on our results of operations.

        The principal currency involved is the New Taiwan Dollar. Garmin Corporation, located in Shijr, Taiwan uses the local currency as the functional currency. The Company translates all assets and liabilities at year-end exchange rates and income and expense accounts at average rates during the year. In order to minimize the effect of the currency exchange fluctuations on our net assets, we have elected to retain most of our Taiwan subsidiary’s cash and investments marketable securities in U.S. dollars. As discussed above, the New Taiwan dollar/U.S. dollar exchange rate can be volatile. The exchange rate decreased 5.5% during 2004 and resulted in a foreign currency loss of $24.8 million. The exchange rate decreased 3.0% during 2003 and resulted in a foreign currency loss of $6.7 million. While the net effect of foreign currency moves in fiscal 2002 was neutral, there were significant shifts in the exchange rate throughout 2002 A 10% positive or negative change in the US dollar exchange rate versus the New Taiwan Dollar would have resulted in a foreign currency gain of $47.2 million (positive 10% change) or a foreign currency loss of $47.2 million (negative 10% change) during 2004. The majority of our worldwide sales are transacted in U.S. Dollars. Therefore, the impact on sales related to foreign currency movements is minimal.

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