Garmin Reports Second Quarter 2011 Results with Continued Strong Cash Flow Generation

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Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share information)
         
(Unaudited)
June 25, December 25,
  2011           2010  
Assets
Current assets:
Cash and cash equivalents $ 1,418,871 $ 1,260,936
Marketable securities 62,626 24,418
Accounts receivable, net 493,057 747,249
Inventories, net 385,678 387,577
Deferred income taxes 27,691 33,628
Deferred costs 28,343 20,053
Prepaid expenses and other current assets   46,261         24,894  
Total current assets 2,462,527 2,498,755
 
Property and equipment, net 423,697 427,805
 
Marketable securities 1,016,869 777,401
Restricted cash 1,393 1,277
Licensing agreements, net 8,305 1,800
Noncurrent deferred income tax 73,613 73,613
Noncurrent deferred costs 31,047 24,685
Other intangible assets, net   181,004         183,352  
Total assets $ 4,198,455       $ 3,988,688  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 125,680 $ 132,348
Salaries and benefits payable 37,393 49,288
Accrued warranty costs 41,691 49,885
Accrued sales program costs 48,929 107,261
Deferred revenue 134,341 89,711
Accrued royalty costs 27,509 95,086
Accrued advertising expense 23,544 21,587
Other accrued expenses 70,622 63,043
Deferred income taxes 4,435 4,800
Income taxes payable 13,795 56,028
Dividend payable   388,148         0  
Total current liabilities 916,087 669,037
 
Deferred income taxes 13,180 6,986
Non-current income taxes 157,979 153,621
Non-current deferred revenue 146,973 108,076
Other liabilities 1,542 1,406
 
Stockholders' equity:
Shares, CHF 10 par value, 208,077,418 shares authorized and issued;
194,087,445 shares outstanding at June 25, 2011;
and 194,358,038 shares outstanding at December 25, 2010; 1,797,435 1,797,435
Additional paid-in capital 53,707 38,268
Treasury stock (116,099 ) (106,758 )
Retained earnings 1,097,970 1,264,613
Accumulated other comprehensive income   129,681         56,004  
Total stockholders' equity   2,962,694         3,049,562  
Total liabilities and stockholders' equity $ 4,198,455       $ 3,988,688  
 
         
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
 
13-Weeks Ended 26-Weeks Ended
June 25, June 26, June 25, June 26,
  2011     2010     2011     2010  
Net sales $ 674,099 $ 728,765 $ 1,181,933 $ 1,159,833
 
Cost of goods sold   351,999     337,113     621,459     537,272  
 
Gross profit 322,100 391,652 560,474 622,561
 
Advertising expense 34,098 42,440 54,054 59,841
Selling, general and administrative expense 85,896 73,832 159,082 141,509
Research and development expense   70,515     73,337     140,994     135,820  
Total operating expense   190,509     189,609     354,130     337,170  
 
Operating income 131,591 202,043 206,344 285,391
 
Other income (expense):
Interest income 7,639 5,791 14,854 12,669
Foreign currency gains (losses) (14,611 ) (43,605 ) (2,471 ) (90,141 )
Other   2,453     180     5,271     2,013  
Total other income (expense)   (4,519 )   (37,634 )   17,654     (75,459 )
 
Income before income taxes 127,072 164,409 223,998 209,932
 
Income tax provision   17,595     29,593     19,039     37,788  
 
Net income $ 109,477   $ 134,816   $ 204,959   $ 172,144  
 
Net income per share:
Basic $ 0.56 $ 0.68 $ 1.06 $ 0.86
Diluted $ 0.56 $ 0.67 $ 1.05 $ 0.86
 
Weighted average common
shares outstanding:
Basic 194,051 198,948 193,986 199,437
Diluted 194,875 200,102 194,801 200,626
 
 
Dividends declared per share $ 2.00 $ 1.50 $ 2.00 $ 1.50
 
     
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
  26-Weeks Ended
June 25, June 26,
  2011     2010  
Operating Activities:
Net income $ 204,959 $ 172,144
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 27,393 26,746
Amortization 10,861 24,809
Loss (gain) on sale of property and equipment 308 (6 )
Provision for doubtful accounts 3,563 (552 )
Deferred income taxes 7,149 (30 )
Unrealized foreign currency losses/(gains) 16,363 47,880
Provision for obsolete and slow moving inventories (6,998 ) 10,309
Stock compensation expense 17,315 19,099
Realized losses/(gains) on marketable securities (4,176 ) (470 )
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 265,448 364,401
Inventories 20,659 (64,272 )
Other current assets (31,490 ) 5,142
Accounts payable (13,082 ) (52,248 )
Other current and non-current liabilities (142,918 ) (193,657 )
Deferred revenue 83,628 37,425
Deferred cost (14,652 ) (6,610 )
Income taxes payable (30,033 ) (7,771 )
License fees   (3,344 )   (472 )
Net cash provided by operating activities 410,953 381,867
 
Investing activities:
Purchases of property and equipment (14,315 ) (13,220 )
Purchase of intangible assets (2,587 ) (8,229 )
Purchase of marketable securities (520,759 ) (169,062 )
Redemption of marketable securities 263,428 294,350
Change in restricted cash   (116 )   1,111  
Net cash (used in)/provided by investing activities (274,349 ) 104,950
 
Financing activities:
Proceeds from issuance of common stock through
stock purchase plan 4,337 5,452
Taxes paid related to net share settlement of equity awards (336 ) -
Stock repurchase - (84,328 )
Dividends - (299,103 )
Tax benefit related to stock option exercise   1,197     1,898  
Net cash provided by/(used in) financing activities 5,198 (376,081 )
 
Effect of exchange rate changes on cash and cash equivalents 16,133 (29,148 )
   
Net (decrease)/increase in cash and cash equivalents 157,935 81,588
Cash and cash equivalents at beginning of period   1,260,936     1,091,581  
Cash and cash equivalents at end of period $ 1,418,871   $ 1,173,169  
 
                   
Garmin Ltd. And Subsidiaries
Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
   
Reporting Segments
Auto/
Outdoor Fitness Marine Mobile Aviation Total
 
13-Weeks Ended June 25, 2011
 
Net sales $81,007 $78,014 $79,117 $362,706 $73,255 $674,099
Gross profit $52,948 $45,502 $44,208 $128,788 $50,654 $322,100
Operating income $35,667 $25,384 $23,357 $25,277 $21,906 $131,591
 
13-Weeks Ended June 26, 2010
 
Net sales $79,847 $62,469 $74,310 $447,225 $64,914 $728,765
Gross profit $53,257 $38,506 $49,108 $205,336 $45,445 $391,652
Operating income $38,035 $24,724 $32,146 $88,548 $18,590 $202,043
                                     
 
26-Weeks Ended June 25, 2011
 
Net sales $147,458 $134,382 $130,425 $627,255 $142,413 $1,181,933
Gross profit $94,301 $79,293 $77,406 $211,340 $98,134 $560,474
Operating income $60,474 $40,841 $38,490 $26,872 $39,667 $206,344
 
26-Weeks Ended June 26, 2010
 
Net sales $139,233 $105,819 $115,625 $668,149 $131,007 $1,159,833
Gross profit $91,768 $65,557 $73,338 $300,110 $91,788 $622,561
Operating income $62,404 $38,923 $41,075 $105,530 $37,459 $285,391

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