Garmin reports second quarter revenue and earnings growth; Raises guidance for 2018

The net release of uncertain tax position reserves, amounting to approximately $10.3 million and $2.9 million in the 26-weeks ended June 30, 2018 and July 1, 2017, respectively, have not been included as pro forma adjustments in the above presentation of pro forma income tax provision as related items tend to be more recurring in nature or such amounts are individually not significant.

Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the impact of foreign currency gains or losses and certain discrete income tax items, as discussed above, is an important measure in order to permit a consistent comparison of the Company’s performance between periods.

 
Garmin Ltd. And Subsidiaries
Pro Forma Net Income (Earnings) Per Share
(in thousands, except per share information)
         
13-Weeks Ended 26-Weeks Ended
June 30, July 1, June 30, July 1,
2018   2017 2018   2017
 
Net income (GAAP) $ 190,342 $ 176,979 $ 319,715 $ 415,382
Foreign currency gains / losses (1) (2,647 ) (15,110 ) (3,463 ) 22,387
Tax effect of foreign currency gains / losses (2) 513 3,229 624 (4,773 )
Pro forma discrete tax items (3)   -       7,275     -       (161,480 )
Net income (Pro Forma) $ 188,208     $ 172,373   $ 316,876     $ 271,516  
 
Net income per share (GAAP):
Basic $ 1.01 $ 0.94 $ 1.70 $ 2.21
Diluted $ 1.00 $ 0.94 $ 1.69 $ 2.20
 
Net income per share (Pro Forma):
Basic $ 1.00 $ 0.92 $ 1.68 $ 1.44
Diluted $ 0.99 $ 0.91 $ 1.67 $ 1.44
 
Weighted average common shares outstanding:
Basic 188,542 187,757 188,432 187,974
Diluted 189,461 188,492 189,377 188,691

(1)

 

The majority of the Company’s consolidated foreign currency gains and losses are driven by movements in the Taiwan Dollar, Euro, and British Pound Sterling in relation to the U.S. Dollar and the related exchange rate impact on the significant cash, receivables, and payables held in a currency other than the functional currency at one of the Company’s subsidiaries. However, there is minimal cash impact from such foreign currency losses.

(2)

The tax effect of foreign currency gains and losses was calculated using the effective tax rate of 19.4% and 18.0% for the quarter and year-to-date ended June 30, 2018, respectively, and a pro forma effective tax rate of 21.4% and 21.3% for the quarter and year-to-date ended July 1, 2017, respectively.

(3)

The discrete tax items are discussed in the pro forma effective tax rate section above.

 

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