Garmin Reports Strong Second Quarter 2013 Results and Maintains Full Year Outlook

Our 2013 guidance remains largely unchanged with operating income and operating margin trending toward the upper end of prior guidance offset by an anticipated 100 basis point increase in the effective tax rate.

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

When:

 

Wednesday, July 31, 2013 at 10:30 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 888-487-0340

An archive of the live webcast will be available until August 30, 2013 on the Garmin website at http://www.garmin.com. To access the replay, click on the Investor Relations link and click over to the Events Calendar page.

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding the Company’s estimated earnings and revenue for fiscal 2013, the Company’s expected segment revenue growth rate, margins, new products to be introduced in 2013 and the Company’s plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 29, 2012 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2012 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

Garmin, Edge, Forerunner, GPSMAP and nüvi are registered trademarks and Monterra is a trademark of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.

 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
               
13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2013 2012 2013 2012
Net sales $ 696,563 $ 718,154 $ 1,228,520 $ 1,274,751
 
Cost of goods sold   312,923   296,341     568,747   569,180  
 
Gross profit 383,640 421,813 659,773 705,571
 
Advertising expense 29,483 38,258 51,732 61,849
Selling, general and administrative expense 88,039 99,246 174,307 189,362
Research and development expense   96,232   80,303     183,922   160,021  
Total operating expense   213,754   217,807     409,961   411,232  
 
Operating income 169,886 204,006 249,812 294,339
 
Other income (expense):
Interest income 8,179 8,620 17,077 18,291
Foreign currency gains (losses) 27,451 (7,771 ) 19,102 (9,760 )
Other   1,069   2,581     2,228   4,121  
Total other income (expense)   36,699   3,430     38,407   12,652  
 
Income before income taxes 206,585 207,436 288,219 306,991
 
Income tax provision   34,094   21,532     27,062   34,230  
 
Net income $ 172,491 $ 185,904   $ 261,157 $ 272,761  
 
Net income per share:
Basic $ 0.88 $ 0.95 $ 1.34 $ 1.40
Diluted $ 0.88 $ 0.95 $ 1.33 $ 1.39
 
Weighted average common
shares outstanding:
Basic 195,570 194,849 195,600 194,795
Diluted 196,300 196,261 196,338 196,232
 
       
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share information)
       
(Unaudited)
June 29, December 29,
2013     2012
Assets
Current assets:
Cash and cash equivalents $ 1,083,490 $ 1,231,180
Marketable securities 142,582 153,083
Accounts receivable, net 484,246 603,673
Inventories, net 383,492 389,931
Deferred income taxes 63,241 68,785
Deferred costs 54,104 53,948
Prepaid expenses and other current assets   135,104     35,520  
Total current assets 2,346,259 2,536,120
 
Property and equipment, net 410,533 409,751
 
Marketable securities 1,475,761 1,488,312
Restricted cash 249 836
Noncurrent deferred income tax 95,411 93,920
Noncurrent deferred costs 37,830 42,359
Other intangible assets, net 220,531 232,597
Other assets   12,607     15,229  
Total assets $ 4,599,181   $ 4,819,124  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 128,078 $ 131,263
Salaries and benefits payable 50,184 55,969
Accrued warranty costs 34,288 37,301
Accrued sales program costs 39,083 57,080
Deferred revenue 251,074 252,375
Accrued royalty costs 9,444 71,745
Accrued advertising expense 16,696 25,192
Other accrued expenses 72,634 69,806
Deferred income taxes 160 332
Income taxes payable 24,390 32,031
Dividend payable   263,704     175,932  
Total current liabilities 889,735 909,026
 
Deferred income taxes 1,219 2,467
Non-current income taxes 173,651 181,754
Non-current deferred revenue 167,268 193,047
Other liabilities 951 1,034
 
Stockholders' equity:
Shares, CHF 10 par value, 208,077,418 shares authorized and issued;
195,317,390 shares outstanding at June 29, 2013
and 195,591,854 shares outstanding at December 29, 2012 1,797,435 1,797,435
Additional paid-in capital 83,513 72,462
Treasury stock (93,587 ) (81,280 )
Retained earnings 1,514,153 1,604,625
Accumulated other comprehensive income   64,843     138,554  
Total stockholders' equity   3,366,357     3,531,796  
Total liabilities and stockholders' equity $ 4,599,181   $ 4,819,124  
 
       
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
  26-Weeks Ended
June 29, June 30,
2013 2012
Operating Activities:
Net income $ 261,157 $ 272,761
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 25,340 27,351
Amortization 16,579 23,709
Loss on sale of property and equipment 28 11
Provision for doubtful accounts 701 2,256
Deferred income taxes 5,599 (5,268 )
Unrealized foreign currency losses/(gains) (15,996 ) 18,556
Provision for obsolete and slow moving inventories 12,017 3,276
Stock compensation expense 10,978 18,043
Realized gains on marketable securities (2,278 ) (1,463 )
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 110,600 117,422
Inventories (12,160 ) 10,004
Other current and non-current assets (16,354 ) 10,143
Accounts payable (547 ) (26,627 )
Other current and non-current liabilities (95,261 ) (103,327 )
Deferred revenue (25,952 ) 15,493
Deferred cost 4,378 (4,652 )
Income taxes payable   (15,168 )     (32,555 )
Net cash provided by operating activities 263,661 345,133
 
Investing activities:
Purchases of property and equipment (29,723 ) (17,426 )
Proceeds from sale of property and equipment 64 14
Purchase of intangible assets (674 ) (4,682 )
Purchase of marketable securities (488,515 ) (639,612 )
Redemption of marketable securities 470,086 464,329
Advances under loan receivable commitment (82,020 ) -
Change in restricted cash 587 (54 )
Acquisitions, net of cash acquired   (25 )   (2,818 )
Net cash used in investing activities (130,220 ) (200,249 )
 
Financing activities:
Dividends paid (263,857 ) (165,638 )
Purchase of treasury stock under share repurchase plan (13,353 ) -
Purchase of treasury stock related to equity awards (7,367 ) (6,460 )
Proceeds from issuance of treasury stock related to equity awards 8,185 10,133
Tax benefit from issuance of equity awards   300     1,304  
Net cash used in financing activities (276,092 ) (160,661 )
 
Effect of exchange rate changes on cash and cash equivalents (5,039 ) (3,664 )
   
Net decrease in cash and cash equivalents (147,690 ) (19,441 )
Cash and cash equivalents at beginning of period   1,231,180     1,287,160  
Cash and cash equivalents at end of period $ 1,083,490   $ 1,267,719  
 
 
Garmin Ltd. And Subsidiaries
Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
                       
Reporting Segments
Auto/
Outdoor Fitness Marine Mobile Aviation Total
 
13-Weeks Ended June 29, 2013
 
Net sales $106,856 $84,216 $72,748 $344,701 $88,042 $696,563
Gross profit $70,387 $55,071 $40,938 $155,363 $61,881 $383,640
Operating income $44,842 $29,641 $14,411 $60,444 $20,548 $169,886
 
13-Weeks Ended June 30, 2012
 
Net sales $100,496 $81,812 $67,790 $392,124 $75,932 $718,154
Gross profit $66,892 $56,665 $43,139 $200,923 $54,194 $421,813
Operating income $43,739 $34,146 $18,427 $87,108 $20,586 $204,006
                                         
 
26-Weeks Ended June 29, 2013
 
Net sales $183,022 $156,653 $123,044 $597,290 $168,511 $1,228,520
Gross profit $114,862 $100,039 $64,285 $262,483 $118,104 $659,773
Operating income $66,430 $49,533 $11,971 $80,476 $41,402 $249,812
 
26-Weeks Ended June 30, 2012
 
Net sales $177,659 $153,026 $123,854 $671,393 $148,819 $1,274,751
Gross profit $114,154 $100,160 $76,634 $310,753 $103,870 $705,571
Operating income $69,648 $54,797 $27,205 $105,043 $37,646 $294,339
 
                   
Garmin Ltd. And Subsidiaries
Revenue by Geography (Unaudited)
   
13-Weeks Ended 26-Weeks Ended
June 29, June 30, Yr over Yr June 29, June 30, Yr over Yr
2013 2012 Change 2013 2012 Change
Net sales $696,563 $718,154 -3% $1,228,520 $1,274,751 -4%
Americas 383,537 391,671 -2% 669,349 687,841 -3%
EMEA 256,401 269,415 -5% 447,177 468,031 -4%
APAC 56,625 57,068 -1% 111,994 118,879 -6%
 

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