Management defines return on invested capital (ROIC) as net operating profit after taxes divided by operating invested capital. Management believes that ROIC provides greater visibility into how effectively Garmin deploys capital. ROIC is not a measure of financial performance under accounting principles generally accepted in the United States (GAAP), and may not be defined and calculated by other companies in the same manner as Garmin does. ROIC should not be considered in isolation or as an alternative to net income as an indicator of company performance.
The following table contains a GAAP reconciliation of return on invested capital.
| Garmin Ltd. And Subsidiaries | ||||||||
| Return on Invested Capital (ROIC) | ||||||||
| (in thousands) | ||||||||
| 52-Weeks Ended | ||||||||
| December 25, | December 26, | |||||||
| 2010 | 2009 | |||||||
| Net Operating Profit After Taxes (NOPAT): | ||||||||
| Operating Income (EBIT) | $ | 636,676 | $ | 786,010 | ||||
| Less: Taxes on Operating Income | ($100,812 | ) | ($101,769 | ) | ||||
| Net Operating Profit after Taxes (NOPAT) | $ | 535,865 | $ | 684,241 | ||||
| Invested Capital (IC): | ||||||||
| Total Assets | $ | 3,988,688 | $ | 3,828,082 | ||||
| Less: Cash & Marketable Securities | ($2,062,756 | ) | ($1,857,628 | ) | ||||
| Less: Deferred Income Taxes | ($107,241 | ) | ($81,894 | ) | ||||
| Less: Non-Interest Bearing Current Liabilities | ($669,037 | ) | ($685,876 | ) | ||||
| Operating Invested Capital (IC) | $ | 1,149,654 | $ | 1,202,684 | ||||
| Return on Invested Capital | 47 | % | 57 | % | ||||
|
Note: Tax effects are based on respective periods' normalized effective tax rate. |
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