Garmin Reports First Quarter 2010 Results with Strong Margins and Pro Forma Earnings Growth

An archive of the live webcast will be available until June 4, 2010 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 2010, the Company’s expected segment revenue growth rate, margins, new products to be introduced in 2010 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 26, 2009 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2009 Form 10-K can be downloaded from

http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

The global leader in satellite navigation, Garmin Ltd. and its subsidiaries have designed, manufactured, marketed and sold navigation, communication and information devices and applications since 1989 – most of which are enabled by GPS technology. Garmin’s products serve automotive, mobile, wireless, outdoor recreation, marine, aviation, and OEM applications. Garmin Ltd. is incorporated in the Cayman Islands, and its principal subsidiaries are located in the United States, Taiwan and the United Kingdom. For more information, visit Garmin's virtual pressroom at www.garmin.com/pressroom or contact the Media Relations department at 913-397-8200.

Garmin, nüvi and Forerunner are registered trademarks, and G Motion, trafficTrends, myTrends, nüvifone and Garminfone 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 Balance Sheets
(In thousands, except share information)
                 
(Unaudited)          
March 27, December 26,
2010 2009
Assets
Current assets:
Cash and cash equivalents $ 1,291,343 $ 1,091,581
Marketable securities 19,635 19,583
Accounts receivable, net 418,520 874,110
Inventories, net 356,073 309,938
Deferred income taxes 60,361 59,189
Prepaid expenses and other current assets   63,427   39,470  
 
Total current assets 2,209,359 2,393,871
 
Property and equipment, net 432,606 441,338
 
Marketable securities 681,049 746,464
Restricted cash 941 2,047
Licensing agreements, net 6,573 15,400
Noncurrent deferred income tax 20,499 20,498
Other intangible assets, net   200,501   206,256  
 
Total assets $ 3,551,528 $ 3,825,874  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 109,904 $ 203,388
Salaries and benefits payable 34,017 45,236
Accrued warranty costs 58,814 87,424
Accrued sales program costs 41,201 119,150
Deferred revenue 35,835 27,910
Accrued advertising expense 10,135 34,146
Other accrued expenses 63,877 143,568
Income taxes payable 25,816 22,846
Dividend payable   299,957   -  
 
Total current liabilities 679,556 683,668
 
Deferred income taxes 10,558 10,170
Non-current income taxes 259,751 255,748
Non-current deferred revenue 45,470 38,574
Other liabilities 1,258 1,267
 
Stockholders' equity:

Common stock, $0.005 par value, 1,000,000,000 shares authorized: Issued and outstanding shares - 199,128,000 as of March 27, 2010 and 200,274,000 as of December 26, 2009

994 1,001
Additional paid-in capital - 32,221
Retained earnings 2,552,920 2,816,607
Accumulated other comprehensive gain/(loss)   1,021   (13,382 )
 
Total stockholders' equity   2,554,935   2,836,447  
Total liabilities and stockholders' equity $ 3,551,528 $ 3,825,874  
 
 
                         
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
 
13-Weeks Ended
March 27, March 28,
2010 2009
 
Net sales $ 431,067 $ 436,699
 
Cost of goods sold   200,158     240,704  
 
Gross profit 230,909 195,995
 
Advertising expense 17,400 23,225
Selling, general and administrative expense 67,678 59,777
Research and development expense   62,483     55,034  
Total operating expense   147,561     138,036  
 
Operating income 83,348 57,959
 
Interest income 6,879 5,097
Foreign currency (46,537 ) (2,438 )
Other   1,833     (694 )
Total other income (expense)   (37,825 )   1,965  
 
Income before income taxes 45,523 59,924
 
Income tax provision   8,194     11,386  
 
Net income $ 37,329   $ 48,538  
 
Net income per share:
Basic $ 0.19 $ 0.24
Diluted $ 0.19 $ 0.24

 

Weighted average common shares outstanding:

Basic 199,926 200,352
Diluted 201,091 200,725
 
 
                         
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
 
  13-Weeks Ended
March 27, March 28,
2010 2009
Operating Activities:
Net income $ 37,329 $ 48,538

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

Depreciation 13,543 13,574
Amortization 8,334 8,088
Gain on sale of property and equipment (6 ) (3 )
Provision for doubtful accounts (1,260 ) (1,101 )
Deferred income taxes (1,546 ) (3,200 )
Foreign currency transaction gains/losses 47,773 (420 )
Provision for obsolete and slow moving inventories 3,140 7,709
Stock compensation expense 9,700 10,587
Realized losses/(gains) on marketable securities (805 ) 1,274
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 436,446 318,095
Inventories (50,168 ) 58,876
Other current assets (606 ) (1,128 )
Accounts payable (94,717 ) (77,595 )
Other current and non-current liabilities (216,868 ) (88,727 )
Deferred revenue 14,286 -
Income taxes payable (4,048 ) 3,993
Purchase of licenses   (396 )   856  
Net cash provided by operating activities 200,131 299,416
 
Investing activities:
Purchases of property and equipment (3,935 ) (13,136 )
Purchase of intangible assets (5,029 ) (872 )
Purchase of marketable securities (74,303 ) (68,662 )
Redemption of marketable securities 146,073 16,638
Change in restricted cash   1,106     43  
Net cash provided by/(used in) investing activities 63,912 (65,989 )
 
Financing activities:

Proceeds from issuance of common stock from stock purchase plan

2,725 119
Stock repurchase (47,206 ) (1,849 )
Tax benefit related to stock option exercise   1,408     26  
Net cash used in financing activities (43,073 ) (1,704 )
 
Effect of exchange rate changes on cash and cash equivalents (21,208 ) (5,729 )
   
Net increase in cash and cash equivalents 199,762 225,994
Cash and cash equivalents at beginning of period   1,091,581     696,335  
Cash and cash equivalents at end of period $ 1,291,343   $ 922,329  
 
 
                           
Garmin Ltd. And Subsidiaries
Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
       
Reporting Segments
Outdoor/ Auto/

Fitness

Marine

Mobile

Aviation

Total

 
13-Weeks Ended March 27, 2010
 
Net sales $ 102,736 $ 41,314 $ 220,924 $ 66,093 $ 431,067
Gross profit $ 65,561 $ 24,231 $ 94,775 $ 46,342 $ 230,909
Operating income $ 38,568 $ 8,929 $ 16,982 $ 18,869 $ 83,348
 
13-Weeks Ended March 28, 2009
 
Net sales $ 80,004 $ 38,017 $ 259,586 $ 59,092 $ 436,699
Gross profit $ 48,424 $ 22,878 $ 84,183 $ 40,510 $ 195,995
Operating income $ 28,504 $ 10,572 $ 4,605 $ 14,278 $ 57,959

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