Garmin Reports Solid First Quarter 2015 Margins and Operating Results

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Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
 
13-Weeks Ended
March 28, March 29,
2015 2014
Net sales $ 585,394 $ 583,221
 
Cost of goods sold   241,272     252,387  
 
Gross profit 344,122 330,834
 
Advertising expense 27,672 24,428
Selling, general and administrative expense 98,750 89,873
Research and development expense   106,002     96,164  
Total operating expense   232,424     210,465  
 
Operating income 111,698 120,369
 
Other income (expense):
Interest income 8,024 9,768
Foreign currency gains (losses) (44,264 ) 12,814
Other   738     (484 )
Total other income (expense)   (35,502 )   22,098  
 
Income before income taxes 76,196 142,467
 
Income tax provision   9,403     23,649  
 
Net income $ 66,793   $ 118,818  
 
Net income per share:
Basic $ 0.35 $ 0.61
Diluted $ 0.35 $ 0.61
 
Weighted average common
shares outstanding:
Basic 191,762 195,090
Diluted 192,341 195,860
 
       
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
       
(Unaudited)
March 28, December 27,
  2015       2014  
Assets
Current assets:
Cash and cash equivalents $ 1,171,388 $ 1,196,268
Marketable securities 270,212 167,989
Accounts receivable, net 425,650 570,191
Inventories, net 470,444 420,475
Deferred income taxes 56,165 56,102
Deferred costs 48,824 51,336
Prepaid expenses and other current assets   57,624     48,615  
Total current assets 2,500,307 2,510,976
 
Property and equipment, net 436,104 430,887
 
Marketable securities 1,259,102 1,407,344
Restricted cash 313 308
Noncurrent deferred income tax 66,664 67,712
Noncurrent deferred costs 32,142 36,140
Intangible assets, net 224,381 218,083
Other assets   24,266     21,853  
Total assets $ 4,543,279   $ 4,693,303  
 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 125,745 $ 149,094
Salaries and benefits payable 63,775 62,764
Accrued warranty costs 23,866 27,609
Accrued sales program costs 37,049 58,934
Deferred revenue 185,899 203,598
Accrued royalty costs 5,811 51,889
Accrued advertising expense 17,190 26,334
Other accrued expenses 68,998 67,780
Deferred income taxes 13,370 17,673
Income taxes payable 190,594 182,260
Dividend payable   91,964     185,326  
Total current liabilities 824,261 1,033,261
 
Deferred income taxes 39,448 39,497
Non-current income taxes 78,663 80,611
Non-current deferred revenue 121,906 135,130
Other liabilities 1,371 1,437
 
Stockholders' equity:
Shares, CHF 10 par value, 208,077 shares authorized and issued;
191,520 shares outstanding at March 28, 2015
and 191,815 shares outstanding at December 27, 2014 1,797,435 1,797,435
Additional paid-in capital 80,598 73,521
Treasury stock (345,143 ) (330,132 )
Retained earnings 1,928,165 1,859,972
Accumulated other comprehensive income   16,575     2,571  
Total stockholders' equity   3,477,630     3,403,367  
Total liabilities and stockholders' equity $ 4,543,279   $ 4,693,303  
 
     
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
  13-Weeks Ended
March 28, March 29,
2015 2014
Operating Activities:
Net income $ 66,793 $ 118,818
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 12,280 11,672
Amortization 6,584 6,740
Gain (loss) on sale of property and equipment 24 (617 )
Provision for doubtful accounts (1,080 ) (189 )
Deferred income taxes (3,647 ) 5,942
Unrealized foreign currency loss (gain) 47,877 (15,334 )
Provision for obsolete and slow moving inventories 4,344 3,384
Stock compensation expense 7,769 6,325
Realized (gain) loss on marketable securities (340 ) 1,544
Changes in operating assets and liabilities:
Accounts receivable 129,448 137,198
Inventories (56,897 ) (64,083 )
Other current and non-current assets (11,537 ) (1,591 )
Accounts payable (25,957 ) (20,411 )
Other current and non-current liabilities (73,408 ) (80,011 )
Deferred revenue (29,870 ) (45,290 )
Deferred cost 6,470 8,129
Income taxes payable   2,802     (1,053 )
Net cash provided by operating activities 81,655 71,173
 
Investing activities:
Purchases of property and equipment (18,143 ) (15,537 )
Proceeds from sale of property and equipment 664 609
Purchase of intangible assets (717 ) (1,111 )
Purchase of marketable securities (254,741 ) (298,695 )
Redemption of marketable securities 308,751 223,786
Proceeds from repayment on loan receivable 0 94,507
Change in restricted cash (5 ) 3
Acquisitions, net of cash acquired   (12,632 )   0  
Net cash provided by investing activities 23,177 3,562
 
Financing activities:
Dividends paid (91,964 ) (87,853 )
Purchase of treasury stock under share repurchase plan (16,260 ) (32,986 )
Purchase of treasury stock related to equity awards (89 ) (58 )
Proceeds from issuance of treasury stock related to equity awards 246 1,107
Tax benefit from issuance of equity awards   399     2,199  
Net cash used in financing activities (107,668 ) (117,591 )
 
Effect of exchange rate changes on cash and cash equivalents (22,044 ) 398
   
Net decrease in cash and cash equivalents (24,880 ) (42,458 )
Cash and cash equivalents at beginning of period   1,196,268     1,179,149  
Cash and cash equivalents at end of period $ 1,171,388   $ 1,136,691  
 
                       
Garmin Ltd. And Subsidiaries
Net Sales, Gross Profit, and Operating Income by Segment (Unaudited)
 
Reporting Segments
 
Outdoor Fitness Marine Auto Aviation Total
 
13-Weeks Ended March 28, 2015
 
Net sales $75,915 $130,994 $64,297 $216,126 $98,062 $585,394
Gross profit $50,220 $83,075 $35,513 $103,803 $71,511 $344,122
Operating income $23,834 $34,638 $4,566 $22,480 $26,180 $111,698
 
13-Weeks Ended March 29, 2014
 
Net sales $83,985 $100,288 $60,002 $242,952 $95,994 $583,221
Gross profit $50,910 $64,085 $31,053 $113,791 $70,995 $330,834
Operating income $23,683 $33,512 $3,810 $30,564 $28,800 $120,369
 
         
Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
 
13-Weeks Ended
March 28, March 29, Yr over Yr
2015 2014 Change
Net sales $585,394 $583,221 0%
Americas 305,261 304,808 0%
EMEA 208,351 220,603 -6%
APAC 71,782 57,810 24%
 
EMEA - Europe, Middle East and Africa; APAC - Asia Pacific
 

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