Garmin Reports Q4 and Fiscal 2015 Results

This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business that are commonly identified by words such as “would”, “may”, “expects”, “estimates”, “plans”, “intends”, “projects”, and other words or phrases with similar meanings. Any statements regarding the Company’s GAAP and pro forma estimated earnings, EPS and revenue for fiscal 2016, the Company’s expected segment revenue growth rates, margins, currency movements, expenses, pricing, new products to be introduced in 2016 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 and uncertainties 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, 2015 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2015 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

Garmin, the Garmin logo, the Garmin delta, Approach, fēnix and quatix are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S. Varia Vision, Garmin Drive, Garmin Nautix, Striker, GNX, PulsedLight, Garmin Elevate, TruSwing and Beat Yesterday are trademarks of, or exclusively licensed to, 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 52-Weeks Ended
Dec 26, Dec 27, Dec 26, Dec 27,
2015     2014   2015     2014  
Net sales $781,358 $803,306 $2,820,270 $2,870,658
 
Cost of goods sold 368,215   372,458   1,281,566   1,266,246  
 
Gross profit 413,143 430,848 1,538,704 1,604,412
 
Advertising expense 56,814 54,175 167,166 146,633
Selling, general and administrative expense 104,556 99,119 394,914 372,032
Research and development expense 106,011   101,554   427,043   395,121  
Total operating expense 267,381   254,848   989,123   913,786  
 
Operating income 145,762 176,000 549,581 690,626
 
Other income:
Interest income 7,358 6,803 29,653 35,584
Foreign currency gains (losses) (9,288 ) 15,967 (23,465 ) (4,299 )
Other income 8,711   1,126   11,418   1,834  
Total other income 6,781   23,896   17,606   33,119  
 
Income before income taxes 152,543 199,896 567,187 723,745
 
Income tax provision (benefit) 20,160   (10,349 ) 110,960   359,534  
 
Net income $132,383   $210,245   $456,227   $364,211  
 
Net income per share:
Basic $0.70 $1.10 $2.39 $1.89
Diluted $0.70 $1.09 $2.39 $1.88
 
Weighted average common
shares outstanding:
Basic 189,317 191,322 190,631 193,106
Diluted 189,847 192,356 191,107 194,165
 
 
Dividends declared per share $2.04 $1.92
 
     
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
     
(Unaudited)
Dec 26, Dec 27,
2015     2014  
Assets
Current assets:
Cash and cash equivalents $833,070 $1,196,268
Marketable securities 215,161 167,989
Accounts receivable, net 531,481 570,191
Inventories, net 500,554 420,475
Deferred income taxes - 56,102
Deferred costs 49,176 51,336
Prepaid expenses and other current assets 81,645   48,615  
Total current assets 2,211,087 2,510,976
 
Property and equipment, net 446,089 430,887
 
Marketable securities 1,343,387 1,407,344
Restricted cash 259 308
Noncurrent deferred income tax 116,518 67,712
Noncurrent deferred costs 38,769 36,140
Intangible assets, net 245,552 218,083
Other assets 97,730   21,853  
Total assets $4,499,391   $4,693,303  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $178,905 $149,094
Salaries and benefits payable 70,601 62,764
Accrued warranty costs 30,449 27,609
Accrued sales program costs 67,613 58,934
Deferred revenue 164,982 203,598
Accrued royalty costs 30,310 51,889
Accrued advertising expense 33,547 26,334
Other accrued expenses 74,926 67,780
Deferred income taxes - 17,673
Income taxes payable 21,674 182,260
Dividend payable 192,991   185,326  
Total current liabilities 865,998 1,033,261
 
Deferred income taxes 56,210 39,497
Non-current income taxes 101,689 80,611
Non-current deferred revenue 128,731 135,130
Other liabilities 1,637 1,437
 
Stockholders' equity:
Shares, CHF 10 par value, 208,077 shares authorized and issued;
189,722 shares outstanding at December 26, 2015
and 191,815 shares outstanding at December 27, 2014 1,797,435 1,797,435
Additional paid-in capital 62,239 73,521
Treasury stock (414,637 ) (330,132 )
Retained earnings 1,930,517 1,859,972
Accumulated other comprehensive income (30,428 ) 2,571  
Total stockholders' equity 3,345,126   3,403,367  
Total liabilities and stockholders' equity 4,499,391   $4,693,303  
 
     
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
  52-Weeks Ended
Dec 26, Dec 27,
2015   2014  
Operating Activities:
Net income $456,227 $364,211
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 51,311 48,433
Amortization 27,049 28,582
Gain on sale of property and equipment (198 ) (306 )
Provision for doubtful accounts (2,521 ) 66
Deferred income taxes 5,897 89,828
Unrealized foreign currency loss 37,931 573
Provision for obsolete and slow moving inventories 23,257 25,903
Stock compensation expense 26,290 24,293
Realized gain on marketable securities (55 ) (505 )
Changes in operating assets and liabilities:
Accounts receivable 22,473 (27,398 )
Inventories (121,718 ) (76,491 )
Other current and non-current assets (107,360 ) 627
Accounts payable 36,079 8,981
Other current and non-current liabilities 20,742 16,467
Deferred revenue (43,338 ) (87,543 )
Deferred cost (585 ) 11,029
Income taxes payable (151,014 ) 95,961  
Net cash provided by operating activities 280,467 522,711
 
Investing activities:
Purchases of property and equipment (80,592 ) (73,339 )
Proceeds from sale of property and equipment 7,921 748
Purchase of intangible assets (3,889 ) (4,720 )
Purchase of marketable securities (915,921 ) (1,006,482 )
Redemption of marketable securities 919,141 1,096,676
Proceeds from repayment on loan receivable - 137,379
Change in restricted cash 48 (59 )
Acquisitions, net of cash acquired (38,687 ) (18,871 )
Net cash provided by/(used in) investing activities (111,979 ) 131,332
 
Financing activities:
Dividends paid (378,117 ) (360,075 )
Purchase of treasury stock under share repurchase plan (131,413 ) (241,578 )
Purchase of treasury stock related to equity awards (5,586 ) (18,638 )
Proceeds from issuance of treasury stock related to equity awards 17,073 20,753
Tax benefit from issuance of equity awards (2,049 ) (84 )
Net cash used in financing activities (500,092 ) (599,622 )
 
Effect of exchange rate changes on cash and cash equivalents (31,594 ) (37,302 )
   
Net increase/(decrease) in cash and cash equivalents (363,198 ) 17,119
Cash and cash equivalents at beginning of period 1,196,268   1,179,149  
Cash and cash equivalents at end of period $833,070   $1,196,268  
 
                       
Garmin Ltd. And Subsidiaries
Net Sales, Gross Profit, and Operating Income/(Loss) by Segment (Unaudited)
 
Reporting Segments
Outdoor Fitness Marine Auto Aviation Total
 
13-Weeks Ended December 26, 2015
 
Net sales $123,627 $228,740 $56,454 $268,478 $104,059 $781,358
Gross profit $74,549 $117,344 $30,289 $112,061 $78,900 $413,143
Operating income/(loss) $41,189 $40,288 ($5,593 ) $35,928 $33,950 $145,762
 
13-Weeks Ended December 27, 2014
 
Net sales $116,432 $201,303 $52,460 $339,832 $93,279 $803,306
Gross profit $71,745 $122,083 $24,612 $147,073 $65,335 $430,848
Operating income/(loss) $40,709 $57,629 ($687 ) $57,431 $20,918 $176,000
 
 
52-Weeks Ended December 26, 2015
 
Net sales $425,150 $661,599 $286,778 $1,048,125 $398,618 $2,820,270
Gross profit $259,889 $366,139 $158,493 $459,469 $294,714 $1,538,704
Operating income $140,200 $134,574 $28,611 $134,939 $111,257 $549,581
 
52-Weeks Ended December 27, 2014
 
Net sales $427,555 $568,440 $248,371 $1,240,377 $385,915 $2,870,658
Gross profit $266,550 $358,287 $129,710 $569,452 $280,413 $1,604,412
Operating income $151,055 $190,682 $26,232 $215,679 $106,978 $690,626
 
                 
Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
 
13-Weeks Ended 52-Weeks Ended
Dec 26, Dec 27, Yr over Yr Dec 26, Dec 27, Yr over Yr
2015 2014   Change 2015 2014     Change
Net sales $781,358 $803,306 -3% $2,820,270 $2,870,658 -2%
Americas 412,581 448,055 -8% 1,469,243 1,538,322 -4%
EMEA 268,787 272,384 -1% 1,013,139 1,054,244 -4%
APAC 99,990 82,867 21% 337,888 278,092 22%
 
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific
 

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