Garmin Reports Third Quarter Revenue and EPS Growth; Raises

Garmin Reports Third Quarter Revenue and EPS Growth; Raises Guidance

Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

	When:		Wednesday, October 26, 2016 at 10:30 a.m. Eastern
	Where:		http://www.garmin.com/en-US/company/investors/events/
	How:		Simply log on to the web at the address above or call to listen in at 855-757-3897

An archive of the live webcast will be available until December 29, 2016 on the Garmin website at www.garmin.com. To access the replay, click on the Investor Relations link and click over to the Events Calendar page.

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, fēnix, Forerunner, vívofit, vívosmart and VIRB are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S.; Garmin Elevate, Fantom and G5000, are trademarks of 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					39-Weeks Ended
	Sept 24,			Sept 26,		Sept 24,			Sept 26,
		2016			2015		2016			2015
Net sales	$	722,250		$	679,690	$	2,157,898		$	2,038,913

Cost of goods sold		316,270			317,500		949,110			913,352

Gross profit		405,980			362,190		1,208,788			1,125,561

Advertising expense		32,956			36,887		109,441			110,352
Selling, general and administrative expense		96,959			94,057		296,246			290,359
Research and development expense		116,449			105,789		339,008			321,031
Total operating expense		246,364			236,733		744,695			721,742

Operating income		159,616			125,457		464,093			403,819

Other income (expense):
Interest income		8,226			6,851		24,109			22,295
Foreign currency gains (losses)		(19,421	)		30,573		(30,003	)		(14,177	)
Other income		1,344			2,010		2,914			2,707
Total other income (expense)		(9,851	)		39,434		(2,980	)		10,825

Income before income taxes		149,765			164,891		461,113			414,644

Income tax provision		24,711			45,592		86,904			90,800

Net income	$	125,054		$	119,299	$	374,209		$	323,844

Net income per share:
Basic	$	0.66		$	0.63	$	1.98		$	1.69
Diluted	$	0.66		$	0.63	$	1.98		$	1.69

Weighted average common
shares outstanding:
Basic		188,692			190,342		189,027			191,068
Diluted		189,238			190,822		189,376			191,523

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

	(Unaudited)
	Sept 24,			December 26,
		2016			2015
Assets
Current assets:
Cash and cash equivalents	$	912,559		$	833,070
Marketable securities		201,560			215,161
Accounts receivable, net		461,355			531,481
Inventories, net		534,683			500,554
Deferred costs		46,569			49,176
Prepaid expenses and other current assets		90,733			81,645
Total current assets		2,247,459			2,211,087

Property and equipment, net		454,246			446,089

Marketable securities		1,327,347			1,343,387
Restricted cash		265			259
Noncurrent deferred income tax		121,084			116,518
Noncurrent deferred costs		51,395			38,769
Intangible assets, net		301,983			245,552
Other assets		88,127			97,730
Total assets	$	4,591,906		$	4,499,391

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	148,030		$	178,905
Salaries and benefits payable		86,104			70,601
Accrued warranty costs		38,872			30,449
Accrued sales program costs		49,172			67,613
Deferred revenue		146,384			164,982
Accrued royalty costs		34,801			30,310
Accrued advertising expense		22,775			33,547
Other accrued expenses		81,313			74,926
Income taxes payable		24,004			21,674
Dividend payable		288,540			192,991
Total current liabilities		919,995			865,998

Deferred income taxes		56,463			56,210
Non-current income taxes		117,276			101,689
Non-current deferred revenue		134,236			128,731
Other liabilities		1,707			1,637

Stockholders' equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued;
and 188,446 shares outstanding at September 24, 2016
Shares, CHF 10.00 par value, 208,077 shares authorized and issued;
and 189,722 shares outstanding at December 26, 2015		17,979			1,797,435
Additional paid-in capital		1,862,801			62,239
Treasury stock		(464,163	)		(414,637	)
Retained earnings		1,919,846			1,930,517
Accumulated other comprehensive income		25,766			(30,428	)
Total stockholders' equity		3,362,229			3,345,126
Total liabilities and stockholders' equity	$	4,591,906		$	4,499,391

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

		39-Weeks Ended
		Sept 24,			Sept 26,
			2016			2015
Operating activities:
Net income		$	374,209		$	323,844
Adjustments to reconcile net income to net cash
provided by operating activities:
	Depreciation		40,327			37,936
	Amortization		22,215			20,447
	Loss (gain) on sale or disposal of property and equipment		155			(190	)
	Provision for doubtful accounts		2,559			(1,781	)
	Deferred income taxes		(6,821	)		5,796
	Unrealized foreign currency loss		19,536			30,473
	Provision for obsolete and slow moving inventories		20,943			9,925
	Stock compensation expense		29,211			19,596
	Realized gain on marketable securities		(1,068	)		(76	)
Changes in operating assets and liabilities:
	Accounts receivable		76,372			123,875
	Inventories		(41,002	)		(111,008	)
	Other current and non-current assets		3,400			(110,695	)
	Accounts payable		(40,694	)		16,864
	Other current and non-current liabilities		1,942			(44,636	)
	Deferred revenue		(13,660	)		(49,790	)
	Deferred cost		(9,906	)		7,080
	Income taxes payable		14,648			(155,529	)
Net cash provided by operating activities			492,366			122,131

Investing activities:
Purchases of property and equipment			(42,157	)		(53,297	)
Proceeds from sale of property and equipment			15			670
Purchase of intangible assets			(4,706	)		(2,817	)
Purchase of marketable securities			(739,676	)		(649,881	)
Redemption of marketable securities			772,733			720,717
Change in restricted cash			(6	)		48
Acquisitions, net of cash acquired			(62,137	)		(12,632	)
Net cash (used in) provided by investing activities			(75,934	)		2,808

Financing activities:
Dividends paid			(289,331	)		(281,247	)
Purchase of treasury stock under share repurchase plan			(65,221	)		(108,057	)
Purchase of treasury stock related to equity awards			(184	)		(241	)
Proceeds from issuance of treasury stock related to equity awards			10,210			8,554
Tax benefit from issuance of equity awards			365			1,257
Net cash used in financing activities			(344,161	)		(379,734	)

Effect of exchange rate changes on cash and cash equivalents			7,218			(26,566	)

Net increase (decrease) in cash and cash equivalents			79,489			(281,361	)
Cash and cash equivalents at beginning of period			833,070			1,196,268
Cash and cash equivalents at end of period		$	912,559		$	914,907

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 September 24, 2016

Net sales	$	141,006	$	189,161	$	70,010	$	214,637	$	107,436	$	722,250
Gross profit	$	88,497	$	103,363	$	39,891	$	93,638	$	80,591	$	405,980
Operating income	$	49,271	$	44,774	$	10,332	$	24,795	$	30,444	$	159,616

13-Weeks Ended September 26, 2015 ⁽³⁾

Net sales	$	109,863	$	143,216	$	62,315	$	270,064	$	94,232	$	679,690
Gross profit	$	66,442	$	77,261	$	34,115	$	114,331	$	70,041	$	362,190
Operating income	$	37,409	$	26,577	$	5,737	$	32,012	$	23,722	$	125,457


39-Weeks Ended September 24, 2016

Net sales	$	370,929	$	544,434	$	264,489	$	655,963	$	322,083	$	2,157,898
Gross profit	$	232,652	$	295,463	$	148,554	$	292,770	$	239,349	$	1,208,788
Operating income	$	125,721	$	114,422	$	49,172	$	82,984	$	91,794	$	464,093

39-Weeks Ended September 26, 2015 ⁽³⁾

Net sales	$	291,299	$	432,859	$	230,325	$	789,870	$	294,560	$	2,038,913
Gross profit	$	181,525	$	248,795	$	128,204	$	351,223	$	215,814	$	1,125,561
Operating income	$	98,135	$	94,286	$	34,204	$	99,887	$	77,307	$	403,819

(3) Action camera related operating results for the 13-weeks and 39-weeks ended September 26, 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						39-Weeks Ended
	Sept 24,		Sept 26,		Yr over Yr		Sept 24,		Sept 26,		Yr over Yr
		2016		2015	Change			2016		2015	Change
Net sales	$	722,250	$	679,690	6	%	$	2,157,898	$	2,038,913	6	%
Americas		348,637		335,041	4	%		1,073,610		1,057,359	2	%
EMEA		274,756		261,548	5	%		810,205		744,352	9	%
APAC		98,857		83,101	19	%		274,083		237,202	16	%

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

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