Garmin Reports Second Quarter Revenue and EPS Growth; Raises

Garmin Reports Second Quarter Revenue and EPS Growth; Raises Guidance


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 27,			June 25,			June 27,
		2016			2015			2016			2015
Net sales	$	811,609		$	773,830		$	1,435,648		$	1,359,224

Cost of goods sold		348,651			354,580			632,840			595,852

Gross profit		462,958			419,250			802,808			763,372

Advertising expense		44,252			45,794			76,485			73,466
Selling, general and administrative expense		103,677			97,552			199,287			196,302
Research and development expense		114,355			109,240			222,559			215,242
Total operating expense		262,284			252,586			498,331			485,010

Operating income		200,674			166,664			304,477			278,362

Other income (expense):
Interest income		8,455			7,420			15,883			15,444
Foreign currency (losses)		(5,743	)		(487	)		(10,582	)		(44,751	)
Other income (loss)		415			(39	)		1,570			698
Total other income (expense)		3,127			6,894			6,871			(28,609	)

Income before income taxes		203,801			173,558			311,348			249,753

Income tax provision		42,737			35,805			62,193			45,208

Net income	$	161,064		$	137,753		$	249,155		$	204,545

Net income per share:
Basic	$	0.85		$	0.72		$	1.32		$	1.07
Diluted	$	0.85		$	0.72		$	1.31		$	1.07

Weighted average common
shares outstanding:
Basic		188,892			191,101			189,195			191,432
Diluted		189,356			191,600			189,491			191,939

Garmin Ltd. And Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except per share information)

	(Unaudited)
	June 25,			December 26,
		2016			2015
Assets
Current assets:
Cash and cash equivalents	$	801,464		$	833,070
Marketable securities		252,253			215,161
Accounts receivable, net		510,309			531,481
Inventories, net		508,161			500,554
Deferred costs		46,552			49,176
Prepaid expenses and other current assets		93,848			81,645
Total current assets		2,212,587			2,211,087

Property and equipment, net		450,654			446,089

Marketable securities		1,306,159			1,343,387
Restricted cash		257			259
Noncurrent deferred income tax		118,320			116,518
Noncurrent deferred costs		47,535			38,769
Intangible assets, net		303,348			245,552
Other assets		88,723			97,730
Total assets	$	4,527,583		$	4,499,391

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	151,904		$	178,905
Salaries and benefits payable		68,067			70,601
Accrued warranty costs		34,670			30,449
Accrued sales program costs		49,538			67,613
Deferred revenue		150,587			164,982
Accrued royalty costs		44,213			30,310
Accrued advertising expense		24,534			33,547
Other accrued expenses		77,442			74,926
Income taxes payable		24,714			21,674
Dividend payable		384,760			192,991
Total current liabilities		1,010,429			865,998

Deferred income taxes		54,633			56,210
Non-current income taxes		111,664			101,689
Non-current deferred revenue		130,342			128,731
Other liabilities		1,680			1,637

Stockholders' equity:
Shares, CHF 10 par value, 208,077 shares authorized and issued;
188,877 shares outstanding at June 25, 2016
and 189,722 shares outstanding at December 26, 2015		1,797,435			1,797,435
Additional paid-in capital		73,279			62,239
Treasury stock		(445,268	)		(414,637	)
Retained earnings		1,794,792			1,930,517
Accumulated other comprehensive income		(1,403	)		(30,428	)
Total stockholders' equity		3,218,835			3,345,126
Total liabilities and stockholders' equity	$	4,527,583		$	4,499,391

Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)

		26-Weeks Ended
		June 25,			June 27,
			2016			2015
Operating Activities:
Net income		$	249,155		$	204,545
Adjustments to reconcile net income to net cash
provided by operating activities:
	Depreciation		26,657			24,915
	Amortization		14,852			13,215
	Loss on sale or disposal of property and equipment		64			420
	Provision for doubtful accounts		1,548			(1,499	)
	Deferred income taxes		(6,074	)		(9,325	)
	Unrealized foreign currency loss		3,198			59,046
	Provision for obsolete and slow moving inventories		15,892			6,569
	Stock compensation expense		19,507			14,742
	Realized gain on marketable securities		(188	)		(364	)
Changes in operating assets and liabilities:
	Accounts receivable		24,415			60,016
	Inventories		(16,672	)		(45,635	)
	Other current and non-current assets		(865	)		(74,725	)
	Accounts payable		(32,291	)		(7,084	)
	Other current and non-current liabilities		(10,806	)		(53,808	)
	Deferred revenue		(13,066	)		(38,836	)
	Deferred cost		(6,089	)		6,892
	Income taxes payable		10,135			(174,788	)
Net cash provided by (used in) operating activities			279,372			(15,704	)

Investing activities:
Purchases of property and equipment			(28,614	)		(39,732	)
Proceeds from sale of property and equipment			-			665
Purchase of intangible assets			(2,831	)		(1,939	)
Purchase of marketable securities			(457,433	)		(480,090	)
Redemption of marketable securities			466,526			540,785
Change in restricted cash			2			29
Acquisitions, net of cash acquired			(62,137	)		(12,632	)
Net cash (used in) provided by investing activities			(84,487	)		7,086

Financing activities:
Dividends paid			(193,111	)		(183,925	)
Purchase of treasury stock under share repurchase plan			(45,097	)		(57,295	)
Purchase of treasury stock related to equity awards			(173	)		(240	)
Proceeds from issuance of treasury stock related to equity awards			8,970			8,560
Tax benefit from issuance of equity awards			2			1,239
Net cash used in financing activities			(229,409	)		(231,661	)

Effect of exchange rate changes on cash and cash equivalents			2,918			(17,806	)

Net decrease in cash and cash equivalents			(31,606	)		(258,085	)
Cash and cash equivalents at beginning of period			833,070			1,196,268
Cash and cash equivalents at end of period		$	801,464		$	938,183

Garmin Ltd. And Subsidiaries
Net Sales, Gross Profit, and Operating Income by Segment (Unaudited)
(In thousands)
	Reporting Segments
	Outdoor	Fitness	Marine	Auto	Aviation	Total

13-Weeks Ended June 25, 2016

Net sales	$133,096	$212,855	$111,599	$245,728	$108,331	$811,609
Gross profit	$85,224	$119,805	$64,515	$112,988	$80,426	$462,958
Operating income	$48,565	$53,074	$28,548	$39,623	$30,864	$200,674

13-Weeks Ended June 27, 2015 ⁽⁴⁾

Net sales	$108,621	$158,649	$103,713	$300,581	$102,266	$773,830
Gross profit	$66,019	$88,458	$58,577	$131,933	$74,263	$419,250
Operating income	$37,201	$33,070	$23,901	$45,087	$27,405	$166,664


26-Weeks Ended June 25, 2016

Net sales	$229,923	$355,273	$194,479	$441,326	$214,647	$1,435,648
Gross profit	$144,155	$192,100	$108,664	$199,131	$158,758	$802,808
Operating income	$76,450	$69,647	$38,840	$58,190	$61,350	$304,477

26-Weeks Ended June 27, 2015 ⁽⁴⁾

Net sales	$181,436	$289,644	$168,010	$519,807	$200,327	$1,359,224
Gross profit	$115,084	$171,534	$94,090	$236,891	$145,773	$763,372
Operating income	$60,730	$67,709	$28,468	$67,870	$53,585	$278,362

(4) Action camera related operating results for the 13-weeks and 26-weeks ended June 27, 2015 have been recast from the Outdoor segment to the Auto segment to conform to the current year presentation.

Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
(In thousands)
	13-Weeks Ended						26-Weeks Ended
	June 25,		June 27,		Yr over Yr		June 25,		June 27,		Yr over Yr
		2016		2015	Change			2016		2015	Change
Net sales	$	811,609	$	773,830	5	%	$	1,435,648	$	1,359,224	6	%
Americas		407,017		417,056	-2	%		724,974		722,317	0	%
EMEA		309,721		274,454	13	%		535,448		482,805	11	%
APAC		94,871		82,320	15	%		175,226		154,102	14	%

EMEA - Europe, Middle East and Africa; APAC - Asia Pacific

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