Garmin Reports Fourth Quarter Year-Over-Year Growth in Revenues and Margins and Record EPS

We expect revenue growth in 2010 in the range of 0-5% driven primarily by our outdoor/fitness, marine and aviation segments, as well as new revenue generated by the nüvifone and OEM opportunities. We anticipate both gross and operating margins to decline from the excellent margins generated in 2009 but at a much slower rate than had been earlier anticipated. The margin declines will be primarily driven by an ongoing price decline of approximately 10% in the PND industry and increasing research and development investment across our segments. These factors and an anticipated increase in the effective tax rate result in a forecasted 2010 earnings per share decline of 11-22% based on the strong results in 2009.

Non-GAAP Measures

Pro Forma net income (earnings) per share

Management believes that net income per share before the impact of foreign currency translation gain or loss and other one-time items is an important measure. The majority of the Company’s consolidated foreign currency gain or loss results from transactions involving the Euro, the British Pound Sterling and the Taiwan Dollar at the end of each reporting period of the significant cash and marketable securities, receivables and payables held in U.S. dollars by the Company’s various subsidiaries. Such gain or loss is required under GAAP because the functional currency of the subsidiaries differs from the currency in which various assets and liabilities are held. However, there is minimal cash impact from such foreign currency gain or loss. Accordingly, earnings per share before the impact of foreign currency translation gain or loss allow an assessment of the Company’s operating performance before the non-cash impact of the position of the U.S. Dollar versus other currencies, which permits a consistent comparison of results between periods. The 2008 gain on sale of TeleAtlas N.V. shares is also excluded below as a one-time item.

The following table contains a reconciliation of GAAP net income per share to pro forma net income per share.

Garmin Ltd. And Subsidiaries
Net income per share (Pro Forma)
(in thousands, except per share information)
  13-Weeks Ended  

52-Weeks Ended

December 26,   December 27, December 26,   December 27,
2009   2008 2009   2008
Net Income (GAAP) $ 278,408 $ 157,733 $ 703,950 $ 732,848
Foreign currency (gain) / loss, net of tax effects $ 10,022 $ 30,956 $ 5,258 $ 28,281
Gain on sale of equity securities, net of tax effects   -     -   -     ($40,783 )
Net income (Pro Forma) $ 288,430   $ 188,689 $ 709,208   $ 720,346  
Net income per share (GAAP):
Basic $ 1.39 $ 0.78 $ 3.51 $ 3.51
Diluted $ 1.38 $ 0.78 $ 3.50 $ 3.48
Net income per share (Pro Forma):
Basic $ 1.44 $ 0.94 $ 3.54 $ 3.45
Diluted $ 1.43 $ 0.93 $ 3.53 $ 3.42
Weighted average common shares outstanding:
Basic 200,385 201,331 200,395 208,993
Diluted 201,584 201,824 201,161 210,680
Note: Tax effects are based on respective periods' effective tax rate.

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