Garmin Reports Solid Fiscal 2017 Revenue and Operating Income

Garmin Reports Solid Fiscal 2017 Revenue and Operating Income Growth; Proposes Dividend Increase

The Company’s historical net cash flows provided by or used in operating, investing, and financing activities are not impacted by adoption of the new revenue standard.

Within Appendix A and Appendix B, the references to periods such as “FY 17,” “Q1 17,” or “2017,” refer to the corresponding periods or period-end dates as reported in the applicable Form 10-K or Form 10-Q filings. See additional restated financial information below within Appendix B.

APPENDIX B – Restated financial information under ASC Topic 606

Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands)

	Previously Reported

	FY 16	Q1 17		Q2 17	Q3 17	Q4 17	FY 17

Net sales	$3,018,665	$638,546		$816,885	$743,077	$888,496	$3,087,004

Cost of goods sold	1,339,095	266,423		339,027	309,412	388,978	1,303,840

Gross profit	1,679,570	372,123		477,858	433,665	499,518	1,783,164

Total operating expense	1,055,661	255,778		274,508	263,875	320,142	1,114,304

Operating income	623,909	116,345		203,350	169,790	179,376	668,860

Total other income (expense)	5,761	(28,653	)	24,705	16,266	1,115	13,434

Income before income taxes	629,670	87,692		228,055	186,056	180,491	682,294

Income tax provision (benefit)	118,856	(150,120	)	57,105	38,643	41,711	(12,661	)

Net income	$510,814	$237,812		$170,950	$147,413	$138,780	$694,955


	Restated ⁽¹⁾

	FY 16	Q1 17		Q2 17	Q3 17	Q4 17	FY 17

Net sales	$3,045,796	$641,510		$831,486	$751,245	$897,319	$3,121,560

Cost of goods sold	1,357,271	268,704		347,356	313,722	393,837	1,323,619

Gross profit	1,688,525	372,806		484,130	437,523	503,482	1,797,941
		.
Total operating expense	1,055,661	255,778		274,508	263,875	320,142	1,114,304

Operating income	632,864	117,028		209,622	173,648	183,340	683,637

Total other income (expense)	5,761	(28,653	)	24,705	16,266	1,115	13,434

Income before income taxes	638,625	88,375		234,327	189,914	184,455	697,071

Income tax provision (benefit)	122,890	(149,519	)	58,699	39,935	42,983	(7,902	)

Net income	$515,735	$237,894		$175,628	$149,979	$141,472	$704,973


	Impact

	FY 16	Q1 17		Q2 17	Q3 17	Q4 17	FY 17

Net sales	$27,131	$2,964		$14,601	$8,168	$8,823	$34,556

Cost of goods sold	18,176	2,281		8,329	4,310	4,859	19,779

Gross profit	8,955	683		6,272	3,858	3,964	14,777

Total operating expense	-	-		-	-	-	-

Operating income	8,955	683		6,272	3,858	3,964	14,777

Total other income (expense)	-	-		-	-	-	-

Income before income taxes	8,955	683		6,272	3,858	3,964	14,777

Income tax provision (benefit)	4,034	601		1,594	1,292	1,272	4,759

Net income	$4,921	$82		$4,678	$2,566	$2,692	$10,018

⁽¹⁾		Effective for the fiscal year ending December 29, 2018, we have adopted ASC Topic 606. The results above are restated under ASC Topic 606.

Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except per share information)

	Previously Reported						Restated ⁽¹⁾						Impact
Assets	2016			2017			2016			2017			2016			2017
Current assets:
Cash and cash equivalents	$	846,883		$	891,488		$	846,883		$	891,488		$	-		$	-
Marketable securities		266,952			161,687			266,952			161,687			-			-
Accounts receivable, net		527,062			590,882			527,062			590,882			-			-
Inventories, net		484,821			517,644			484,821			517,644			-			-
Deferred costs		47,395			48,312			34,665			30,525			(12,730	)		(17,787	)
Prepaid expenses and other current assets		89,903			153,912			89,903			153,912			-			-
Total current assets		2,263,016			2,363,925			2,250,286			2,346,138			(12,730	)		(17,787	)

Property and equipment, net		482,878			595,684			482,878			595,684			-			-

Marketable securities		1,213,285			1,260,033			1,213,285			1,260,033			-			-
Restricted cash		113			271			113			271			-			-
Deferred income tax		110,293			199,343			105,668			189,959			(4,625	)		(9,384	)
Noncurrent deferred costs		56,151			73,851			30,934			33,029			(25,217	)		(40,822	)
Intangible assets, net		305,002			409,801			305,002			409,801			-			-
Other assets		94,395			107,352			94,395			107,352			-			-
Total assets	$	4,525,133		$	5,010,260		$	4,482,561		$	4,942,267		$	(42,572	)	$	(67,993	)

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	172,404		$	169,640		$	172,404		$	169,640		$	-		$	-
Salaries and benefits payable		88,818			102,802			88,818			102,802			-			-
Accrued warranty costs		37,233			36,827			37,233			36,827			-			-
Accrued sales program costs		80,953			93,250			80,953			93,250			-			-
Deferred revenue		146,564			139,681			118,496			103,140			(28,068	)		(36,541	)
Accrued royalty costs		36,523			32,204			36,523			32,204			-			-
Accrued advertising expense		37,440			30,987			37,440			30,987			-			-
Other accrued expenses		70,469			93,652			70,469			93,652			-			-
Income taxes payable		16,163			33,638			16,163			33,638			-			-
Dividend payable		96,168			95,975			96,168			95,975			-			-
Total current liabilities		782,735			828,656			754,667			792,115			(28,068	)		(36,541	)

Deferred income taxes		61,220			75,215			62,617			76,612			1,397			1,397
Noncurrent income taxes		121,174			138,295			121,174			138,295			-			-
Noncurrent deferred revenue		140,407			163,840			91,238			87,061			(49,169	)		(76,779	)
Other liabilities		1,594			1,788			1,594			1,788			-			-

Stockholders' equity:
Shares, CHF 0.10 par value		17,979			17,979			17,979			17,979			-			-
Additional paid-in capital		1,836,047			1,828,386			1,836,047			1,828,386			-			-
Treasury stock		(455,964	)		(468,818	)		(455,964	)		(468,818	)		-			-
Retained earnings		2,056,702			2,368,874			2,090,233			2,412,423			33,531			43,549
Accumulated other comprehensive income		(36,761	)		56,045			(37,024	)		56,428			(263	)		383
Total stockholders' equity		3,418,003			3,802,466			3,451,271			3,846,397			33,268			43,931
Total liabilities and stockholders' equity	$	4,525,133		$	5,010,260		$	4,482,561		$	4,942,267		$	(42,572	)	$	(67,993	)

⁽¹⁾		Effective for the fiscal year ending December 29, 2018, we have adopted ASC Topic 606. The balances above are restated under ASC Topic 606.

Garmin Ltd. And Subsidiaries
Pro Forma Effective Tax Rate
(In thousands, except effective tax rate (ETR) information)

	Previously Reported

	FY 16		Q1 17			Q2 17			Q3 17		Q4 17			FY 17
Income before income taxes	$	629,670	$	87,692		$	228,055		$	186,056	$	180,491		$	682,294
U.S. GAAP income tax provision (benefit)		118,856		(150,120	)		57,105			38,643		41,711			(12,661	)
U.S. GAAP ETR ⁽²⁾		18.9%		(171.2%)			25.0%			20.8%		23.1%			(1.9%)
Pro forma discrete tax items ⁽³⁾ :
Switzerland corporate tax election		-		168,755			-			-		11,279			180,034
Impact of share-based award expirations		-		-			(7,275	)		-		(15,345	)		(22,620	)
Total pro forma discrete tax items		-		168,755			(7,275	)		-		(4,066	)		157,414
Pro Forma Income Tax Provision	$	118,856	$	18,635		$	49,830		$	38,643	$	37,644		$	144,753
Pro Forma ETR		18.9%		21.3%			21.9%			20.8%		20.9%			21.2%

	Restated ⁽¹⁾
	FY 16		Q1 17			Q2 17			Q3 17		Q4 17			FY 17
Income before income taxes	$	638,625	$	88,375		$	234,327		$	189,914	$	184,455		$	697,071
U.S. GAAP income tax provision (benefit)		122,890		(149,519	)		58,699			39,935		42,983			(7,902	)
U.S. GAAP ETR ⁽²⁾		19.2%		(169.2%)			25.1%			21.0%		23.3%			(1.1%)
Pro forma discrete tax items ⁽³⁾ :
Switzerland corporate tax election		-		168,755			-			-		11,279			180,034
Impact of share-based award expirations		-		-			(7,275	)		-		(15,345	)		(22,620	)
Total pro forma discrete tax items		-		168,755			(7,275	)		-		(4,066	)		157,414
Pro Forma Income Tax Provision	$	122,890	$	19,236		$	51,424		$	39,935	$	38,917		$	149,512
Pro Forma ETR		19.2%		21.8%			21.9%			21.0%		21.1%			21.4%

⁽¹⁾		Effective for the fiscal year ending December 29, 2018, we have adopted ASC Topic 606. The results above are restated under ASC Topic 606.

⁽²⁾		Effective tax rate is calculated by taking the Income tax provision (benefit) divided by Income before taxes.

⁽³⁾		The discussion of the nature and purpose of discrete tax items identified for pro forma adjustments is located above in the "Non-GAAP Financial Information" section of this earnings release, under the heading " Pro forma effective tax rate. "

Garmin Ltd. And Subsidiaries
Pro Forma Net Income (Earnings) Per Share
(in thousands, except per share information)

	Previously Reported
	FY 16		Q1 17		Q2 17		Q3 17		Q4 17		FY 17

Net income (GAAP)	$510,814		$237,812		$170,950		$147,413		$138,780		$694,955
Foreign currency gains / losses ⁽²⁾	31,651		37,497		(15,110	)	(8,579	)	8,772		22,579
Tax effect of foreign currency gains / losses ⁽³⁾	(5,974	)	(7,969	)	3,302		1,782		(1,829	)	(4,791	)
Discrete tax items ⁽⁴⁾	-		(168,755	)	7,275		-		4,066		(157,414	)
Net income (Pro Forma)	$536,491		$98,585		$166,417		$140,616		$149,789		$555,329

Diluted earnings per share (GAAP)	$2.70		$1.26		$0.91		$0.78		$0.73		$3.68

Diluted earnings per share (Pro Forma)	$2.83		$0.52		$0.88		$0.75		$0.79		$2.94


	Restated ⁽¹⁾
	FY 16		Q1 17		Q2 17		Q3 17		Q4 17		FY 17

Net income (GAAP)	$515,735		$237,894		$175,628		$149,979		$141,472		$704,973
Foreign currency gains / losses ⁽²⁾	31,651		37,497		(15,110	)	(8,579	)	8,772		22,579
Tax effect of foreign currency gains / losses ⁽³⁾	(5,974	)	(7,969	)	3,302		1,782		(1,829	)	(4,791	)
Discrete tax items ⁽⁴⁾	-		(168,755	)	7,275		-		4,066		(157,414	)
Net income (Pro Forma)	$541,412		$98,667		$171,095		$143,182		$152,481		$565,347

Diluted earnings per share (GAAP)	$2.72		$1.26		$0.93		$0.80		$0.75		$3.74

Diluted earnings per share (Pro Forma)	$2.86		$0.52		$0.91		$0.76		$0.81		$3.00

⁽¹⁾		Effective for the fiscal year ending December 29, 2018, we have adopted ASC Topic 606. The results above are restated under ASC Topic 606.

⁽²⁾		The majority of the Company’s consolidated foreign currency gains and losses are typically driven by movements in the Taiwan Dollar, Euro, and British Pound Sterling in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at one of the Company’s subsidiaries. However, there is minimal cash impact from such foreign currency gains and losses.

⁽³⁾		The tax effect of foreign currency gains and losses is calculated using the pro forma ETR for the respective period, as presented above. The quarterly tax effects may not cross-foot to the annual tax effect due to quarterly variances in pro forma ETR.

⁽⁴⁾		The discrete tax items are discussed in the pro forma effective tax rate section.

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