We experienced an increase in the effective tax rate to 19 percent for the first quarter and we now expect this rate for fiscal 2008. The primary reason for the increase was a change in tax law related to the repatriation of earnings from our Taiwan subsidiary."
Fiscal 2008 Outlook
We remain optimistic about the long-term success of our business and our ability to serve customers and distributors around the world. While we are pleased with our strong performance in the first quarter, it is important to note that the global economic slowdown has impacted companies across the board. We will continue to monitor the economic climate closely. As in previous years, we intend to provide a formal update to our fiscal 2008 financial expectations during the second quarter 2008 earnings conference call.
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. The majority of the company's consolidated foreign currency translation gain or loss results from translation into New Taiwan dollars at the end of each reporting period of the significant cash and marketable securities, receivables and payables held in U.S. dollars by the company's Taiwan subsidiary. Such translation is required under GAAP because the functional currency of this subsidiary is New Taiwan dollars. However, there is minimal cash impact from such foreign currency translation and management expects that the Taiwan subsidiary will continue to hold the majority of its cash, cash equivalents and marketable securities in U.S. dollars. 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 non-cash impact of the position of the U.S. dollar versus the New Taiwan dollar, which permits a consistent comparison of 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 March 29, March 31, 2008 2007 Net Income (GAAP) $147,779 $139,860 Foreign currency (gain) / loss, net of tax effects $3,239 ($11,478) Net income, excluding FX $151,018 $128,382 Net income per share (GAAP): Basic $0.68 $0.65 Diluted $0.67 $0.64 Net income per share, excluding FX: Basic $0.70 $0.59 Diluted $0.69 $0.59 Weighted average common shares outstanding: Basic 216,505 216,215 Diluted 218,979 218,704
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) 13-Weeks Ended March 29 March 31 2008 2007 Net cash provided by operating activities $192,465 $168,670 Less: purchases of property and equipment ($26,690) ($12,399) Free Cash Flow $165,775 $156,721 Earnings Call Information The information for Garmin Ltd.'s earnings call is as follows: When: Wednesday, April 30, 2008 at 11:00 a.m. Eastern Where: http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html How: Simply log on to the web at the address above or call to listen in at (800) 891-6383 in the U.S. and Canada, or (706) 643-9558 for international participants; conference ID #42452953 Contact: firstname.lastname@example.org