Garmin Reports Strong Revenue & Pro Forma EPS Growth in Second Quarter 2014

An archive of the live webcast will be available until September 24, 2014 on the Garmin website at 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 2014, the Company’s expected segment revenue growth rate, margins, new products to be introduced in 2014 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 28, 2013 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2013 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

Garmin, Fusion, Edge and Forerunner are registered trademarks and VIRB, Approach and vivofit are trademarks 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 28,       June 29, June 28,       June 29,
2014 2013 2014 2013
Net sales $ 777,848 $ 696,563 $ 1,361,069 $ 1,228,520
 
Cost of goods sold   333,363     312,923   585,750     568,747
 
Gross profit 444,485 383,640 775,319 659,773
 
Advertising expense 34,918 29,483 59,346 51,732
Selling, general and administrative expense 92,409 88,039 182,282 174,307
Research and development expense   98,404     96,232   194,568     183,922
Total operating expense   225,731     213,754   436,196     409,961
 
Operating income 218,754 169,886 339,123 249,812
 
Other income (expense):
Interest income 9,670 8,179 19,437 17,077
Foreign currency gains (losses) (20,378 ) 27,451 (7,563 ) 19,102
Other   674     1,069   190     2,228
Total other income (expense)   (10,034 )   36,699   12,064     38,407
 
Income before income taxes 208,720 206,585 351,187 288,219
 
Income tax provision   26,737     34,094   50,387     27,062
 
Net income $ 181,983   $ 172,491 $ 300,800   $ 261,157
 
Net income per share:
Basic $ 0.94 $ 0.88 $ 1.55 $ 1.34
Diluted $ 0.93 $ 0.88 $ 1.54 $ 1.33
 

Weighted average common shares outstanding:

Basic 193,771 195,570 194,431 195,600
Diluted 194,955 196,300 195,464 196,338
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share information)
         
(Unaudited)      
June 28, December 28,
2014       2013
Assets
Current assets:
Cash and cash equivalents $ 1,234,886 $ 1,179,149
Marketable securities 160,901 149,862
Accounts receivable, net 496,979 564,586
Inventories, net 429,673 382,226
Deferred income taxes 67,496 69,823
Deferred costs 47,886 57,368
Loan receivable - 137,379
Prepaid expenses and other current assets   58,748     55,243  
Total current assets 2,496,569 2,595,636
 
Property and equipment, net 428,482 414,848
 
Marketable securities 1,456,103 1,502,106
Restricted cash 250 249
Noncurrent deferred income tax 86,425 88,324
Noncurrent deferred costs 40,853 41,157
Other intangible assets, net 213,242 219,494
Other assets   19,878     17,789  
Total assets $ 4,741,802   $ 4,879,603  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 132,581 $ 146,582
Salaries and benefits payable 52,689 59,794
Accrued warranty costs 27,349 26,767
Accrued sales program costs 33,436 50,903
Deferred revenue 221,079 256,908
Accrued royalty costs 9,451 64,538
Accrued advertising expense 17,927 19,448
Other accrued expenses 70,399 65,657
Deferred income taxes 378 989
Income taxes payable 34,135 38,043
Dividend payable   369,826     175,675  
Total current liabilities 969,250 905,304
 
Deferred income taxes 1,731 1,758
Non-current income taxes 147,589 140,933
Non-current deferred revenue 141,134 171,012
Other liabilities 1,482 890
 
Stockholders' equity:

Shares, CHF 10 par value, 208,077,418 shares authorized and issued; 192,616,300 shares outstanding at June 28, 2014 and 195,150,102 shares outstanding at December 28, 2013

1,797,435 1,797,435
Additional paid-in capital 87,357 79,263
Treasury stock (274,030 ) (120,620 )
Retained earnings 1,796,561 1,865,587
Accumulated other comprehensive income   73,293     38,041  
Total stockholders' equity   3,480,616     3,659,706  
Total liabilities and stockholders' equity $ 4,741,802   $ 4,879,603  
 
 
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
        26-Weeks Ended
June 28,       June 29,
2014 2013
Operating Activities:
Net income $ 300,800 $ 261,157

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 23,736 25,340
Amortization 13,722 14,578
(Gain) loss on sale of property and equipment (662 ) 28
Provision for doubtful accounts 2,383 701
Deferred income taxes 3,071 5,599
Unrealized foreign currency loss (gain) 7,483 (15,996 )
Provision for obsolete and slow moving inventories 16,414 12,017
Stock compensation expense 13,459 10,978
Realized loss (gain) on marketable securities 192 (2,278 )
Changes in operating assets and liabilities:
Accounts receivable 65,317 110,600
Inventories (61,812 ) (12,160 )
Other current and non-current assets (4,291 ) (14,353 )
Accounts payable (14,598 ) (547 )
Other current and non-current liabilities (75,826 ) (95,261 )
Deferred revenue (66,265 ) (25,952 )
Deferred cost 9,783 4,378
Income taxes payable   2,446     (15,168 )
Net cash provided by operating activities 235,352 263,661
 
Investing activities:
Purchases of property and equipment (36,761 ) (29,723 )
Proceeds from sale of property and equipment 669 64
Purchase of intangible assets (1,556 ) (674 )
Purchase of marketable securities (534,952 ) (488,515 )
Redemption of marketable securities 590,887 470,086
Proceeds from repayment (advances) on loan receivable 137,379 (82,020 )
Change in restricted cash (1 ) 587
Acquisitions, net of cash acquired   -     (25 )
Net cash provided by (used in) investing activities 155,665 (130,220 )
 
Financing activities:
Dividends paid (175,574 ) (263,857 )
Purchase of treasury stock under share repurchase plan (162,359 ) (13,353 )
Purchase of treasury stock related to equity awards (11,249 ) (7,367 )
Proceeds from issuance of treasury stock related to equity awards 11,398 8,185
Tax benefit from issuance of equity awards   3,434     300  
Net cash used in financing activities (334,350 ) (276,092 )
 
Effect of exchange rate changes on cash and cash equivalents (930 ) (5,039 )
   
Net increase (decrease) in cash and cash equivalents 55,737 (147,690 )
Cash and cash equivalents at beginning of period   1,179,149     1,231,180  
Cash and cash equivalents at end of period $ 1,234,886   $ 1,083,490  
 

 

Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
 
        Reporting Segments
                  Auto/            
Outdoor Fitness Marine Mobile Aviation Total
 
13-Weeks Ended Jun 28, 2014
 
Net sales $ 106,059 $ 150,678 $ 73,780 $ 350,036 $ 97,295 $ 777,848
Gross profit $ 64,668 $ 98,063 $ 42,536 $ 167,593 $ 71,625 $ 444,485
Operating income $ 35,281 $ 62,872 $ 17,657 $ 74,642 $ 28,302 $ 218,754
 
13-Weeks Ended Jun 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
                                                   
 
26-Weeks Ended Jun 28, 2014
 
Net sales $ 190,044 $ 250,965 $ 133,783 $ 592,988 $ 193,289 $ 1,361,069
Gross profit $ 115,578 $ 162,148 $ 73,588 $ 281,384 142,621 $ 775,319
Operating income $ 58,964 $ 96,384 $ 21,467 $ 105,206 $ 57,102 $ 339,123
 
26-Weeks Ended Jun 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
 
 
Garmin Ltd. And Subsidiaries
Revenue by Geography (Unaudited)
 
        13-Weeks Ended         26-Weeks Ended
Jun 28,       Jun 29,       Yr over Yr Jun 28,       Jun 29,       Yr over Yr
2014 2013 Change 2014 2013 Change
Net sales $ 777,848 $ 696,563 12 % $ 1,361,069 $ 1,228,520 11 %
Americas 411,348 383,537 7 % 716,156 669,349 7 %
EMEA 300,427 256,401 17 % 521,030 447,177 17 %
APAC 66,073 56,625 17 % 123,883 111,994 11 %
 
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific
 

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