Document and Entity Information
Document and Entity Information | ||
3 Months Ended
Mar. 27, 2010 | May. 01, 2010
| |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | 2010-03-27 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,010 | |
Entity Registrant Name | GARMIN LTD | |
Entity Central Index Key | 0001121788 | |
Current Fiscal Year End Date | --12-25 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 199,171,926 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (USD $) | ||
In Thousands | Mar. 27, 2010
| Dec. 26, 2009
|
Assets | ||
Cash and cash equivalents | $1,291,343 | $1,091,581 |
Marketable securities | 19,635 | 19,583 |
Accounts receivable, net | 418,520 | 874,110 |
Inventories, net | 356,073 | 309,938 |
Deferred income taxes | 60,361 | 59,189 |
Prepaid expenses and other current assets | 63,427 | 39,470 |
Total current assets | 2,209,359 | 2,393,871 |
Property and equipment, net | 432,606 | 441,338 |
Marketable securities | 681,049 | 746,464 |
Restricted cash | 941 | 2,047 |
Licensing agreements, net | 6,573 | 15,400 |
Noncurrent deferred income tax | 20,499 | 20,498 |
Other intangible assets, net | 200,501 | 206,256 |
Total assets | 3,551,528 | 3,825,874 |
Liabilities and Stockholders' Equity | ||
Accounts payable | 109,904 | 203,388 |
Salaries and benefits payable | 34,017 | 45,236 |
Accrued warranty costs | 58,814 | 87,424 |
Accrued sales program costs | 41,201 | 119,150 |
Deferred revenue | 35,835 | 27,910 |
Accrued advertising expense | 10,135 | 34,146 |
Other accrued expenses | 63,877 | 143,568 |
Income taxes payable | 25,816 | 22,846 |
Dividend payable | 299,957 | 0 |
Total current liabilities | 679,556 | 683,668 |
Deferred income taxes | 10,558 | 10,170 |
Non-current income taxes | 259,751 | 255,748 |
Non-current deferred revenue | 45,470 | 38,574 |
Other liabilities | 1,258 | 1,267 |
Stockholders' equity: | ||
Common stock, $0.005 par value, 1,000,000,000 shares authorized: Issued and outstanding shares -199,128,000 as of March 27, 2010 and 200,274,000 as of December 26, 2009 | 994 | 1,001 |
Additional paid-in capital | 0 | 32,221 |
Retained earnings | 2,552,920 | 2,816,607 |
Accumulated other comprehensive gain/ (loss) | 1,021 | (13,382) |
Total stockholders' equity | 2,554,935 | 2,836,447 |
Total liabilities and stockholders' equity | $3,551,528 | $3,825,874 |
1_Condensed Consolidated Balanc
Condensed Consolidated Balance Sheets [Parenthetical] (USD $) | ||
Mar. 27, 2010
| Dec. 26, 2009
| |
Common Stock, Par Value | 0.005 | 0.005 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 199,128,000 | 200,274,000 |
Common Stock, Shares, Outstanding | 199,128,000 | 200,274,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Mar. 27, 2010 | 3 Months Ended
Mar. 28, 2009 |
Net sales | $431,067 | $436,699 |
Cost of goods sold | 200,158 | 240,704 |
Gross profit | 230,909 | 195,995 |
Advertising expense | 17,400 | 23,225 |
Selling, general and administrative expense | 67,678 | 59,777 |
Research and development expense | 62,483 | 55,034 |
Total operating expense | 147,561 | 138,036 |
Operating income | 83,348 | 57,959 |
Interest income | 6,879 | 5,097 |
Foreign currency | (46,537) | (2,438) |
Other | 1,833 | (694) |
Total other income (expense) | (37,825) | 1,965 |
Income before income taxes | 45,523 | 59,924 |
Income tax provision | 8,194 | 11,386 |
Net income | $37,329 | $48,538 |
Net income per share: | ||
Basic | 0.19 | 0.24 |
Diluted | 0.19 | 0.24 |
Weighted average common shares outstanding: | ||
Basic | 199,926 | 200,352 |
Diluted | 201,091 | 200,725 |
Cash dividends declared per common shares | 1.5 | $0 |
2_Condensed Consolidated Statem
Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 3 Months Ended
Mar. 27, 2010 | 3 Months Ended
Mar. 28, 2009 |
Operating Activities: | ||
Net income | $37,329 | $48,538 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 13,543 | 13,574 |
Amortization | 8,334 | 8,088 |
Gain on sale of property and equipment | (6) | (3) |
Provision for doubtful accounts | (1,260) | (1,101) |
Deferred income taxes | (1,546) | (3,200) |
Foreign currency transaction gains/losses | 47,773 | (420) |
Provision for obsolete and slow-moving inventories | 3,140 | 7,709 |
Stock compensation expense | 9,700 | 10,587 |
Realized losses/(gains) on marketable securities | (805) | 1,274 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Accounts receivable | 436,446 | 318,095 |
Inventories | (50,168) | 58,876 |
Other current assets | (606) | (1,128) |
Accounts payable | (94,717) | (77,595) |
Other current and non-current liabilities | (216,868) | (88,727) |
Deferred revenue | 14,286 | 0 |
Income taxes payable | (4,048) | 3,993 |
Purchase of licenses | (396) | 856 |
Net cash provided by operating activities | 200,131 | 299,416 |
Investing activities: | ||
Purchases of property and equipment | (3,935) | (13,136) |
Purchase of intangible assets | (5,029) | (872) |
Purchase of marketable securities | (74,303) | (68,662) |
Redemption of marketable securities | 146,073 | 16,638 |
Change in restricted cash | 1,106 | 43 |
Net cash provided by/(used in) investing activities | 63,912 | (65,989) |
Financing activities: | ||
Proceeds from issuance of common stock from stock purchase plan | 2,725 | 119 |
Stock repurchase | (47,206) | (1,849) |
Tax benefit related to stock option exercise | 1,408 | 26 |
Net cash used in financing activities | (43,073) | (1,704) |
Effect of exchange rate changes on cash and cash equivalents | (21,208) | (5,729) |
Net increase in cash and cash equivalents | 199,762 | 225,994 |
Cash and cash equivalents at beginning of period | 1,091,581 | 696,335 |
Cash and cash equivalents at end of period | $1,291,343 | $922,329 |
Basis of Presentation
Basis of Presentation | |
3 Months Ended
Mar. 27, 2010 | |
Basis of Presentation | 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.Operating results for the 13-week period ended March 27, 2010 are not necessarily indicative of the results that may be expected for the year ending December 25, 2010. The condensed consolidated balance sheet at December 26, 2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 26, 2009. The Company's fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year.Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13-weeks.The quarters ended March 27, 2010 and March 28, 2009 both contain operating results for 13-weeks for both year-to-date periods. |
Inventories
Inventories | |
3 Months Ended
Mar. 27, 2010 | |
Inventories | 2. Inventories The components of inventories consist of the following: March 27, 2010 December 26, 2009 Raw Materials $ 89,124 $ 80,963 Work-in-process 38,671 32,587 Finished goods 265,582 235,286 Inventory Reserves (37,304 ) (38,898 ) Inventory, net of reserves $ 356,073 $ 309,938 |
Share Repurchase Plan
Share Repurchase Plan | |
3 Months Ended
Mar. 27, 2010 | |
Share Repurchase Plan | 3. Share Repurchase Plan The Board of Directors approved a share repurchase program on February 12, 2010, authorizing the Company to purchase up to $300,000 of its common shares as market and business conditions warrant on the open market or in negotiated transactions in compliance with the SEC's Rule 10b-18.The share repurchase authorization expires on December 31, 2010.In the quarter ended March 27, 2010, the Company repurchased 1,437,801 shares using cash of $47,092.There remains approximately $252,908 available for repurchase under this authorization. |
Earnings Per Share
Earnings Per Share | |
3 Months Ended
Mar. 27, 2010 | |
Earnings Per Share | 4. Earnings Per Share The following table sets forth the computation of basic and diluted net income per share: 13-Weeks Ended March 27, March 28, 2010 2009 Numerator: Numerator for basic and diluted net income per share - net income $ 37,329 $ 48,538 Denominator: Denominator for basic net income per share weighted-average common shares 199,926 200,352 Effect of dilutive securities employee stock options 1,165 373 Denominator for diluted net income per share adjusted weighted-average common shares 201,091 200,725 Basic net income per share $ 0.19 $ 0.24 Diluted net income per share $ 0.19 $ 0.24 There were 1,165,620 anti-dilutive options for the 13-week period ended March 27, 2010.There were 9,488,615 anti-dilutive options for the 13-week period ended March 28, 2009. There were 291,714 shares issued as a result of exercises of stock appreciation rights and stock options for the 13-week period ended March 27, 2010.There were 12,098 shares issued as a result of exercises of stock appreciation rights and stock options for the 13-week period ended March 28, 2009. |
Comprehensive Income
Comprehensive Income | |
3 Months Ended
Mar. 27, 2010 | |
Comprehensive Income | 5. Comprehensive Income Comprehensive income is comprised of the following: 13-Weeks Ended March 27, March 28, 2010 2009 Net income $ 37,329 $ 48,538 Translation adjustment 8,039 (18,763 ) Change in fair value of available-for-sale marketable securities, net of deferred taxes 6,364 (6,042 ) Comprehensive income $ 51,732 $ 23,733 |
Segment Information
Segment Information | |
3 Months Ended
Mar. 27, 2010 | |
Segment Information | 6. Segment Information Net sales, operating income, and income before taxes for each of the Company's reportable segments are presented below: Reportable Segments Outdoor/ Auto/ Fitness Marine Mobile Aviation Total 13-Weeks Ended March 27, 2010 Net sales $ 102,736 $ 41,314 $ 220,924 $ 66,093 $ 431,067 Operating income $ 38,569 $ 8,929 $ 16,982 $ 18,868 $ 83,348 Income before taxes $ 31,166 $ 6,628 $ (10,256 ) $ 17,985 $ 45,523 13-Weeks Ended March 28, 2009 Net sales $ 80,004 $ 38,017 $ 259,586 $ 59,092 $ 436,699 Operating income $ 28,504 $ 10,572 $ 4,605 $ 14,278 $ 57,959 Income before taxes $ 27,660 $ 9,723 $ 9,158 $ 13,383 $ 59,924 Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis. Net sales and long-lived assets (property and equipment) by geographic area are as follows as of and for the 13-week periods ended March 27, 2010 and March 28, 2009: North America Asia Europe Total March 27, 2010 Net sales to external customers $ 243,407 $ 42,683 $ 144,977 $ 431,067 Long lived assets $ 230,072 $ 150,682 $ 51,852 $ 432,606 March 28, 2009 Net sales to external customers $ 264,777 $ 28,140 $ 143,782 $ 436,699 Long lived assets $ 226,384 $ 160,087 $ 54,140 $ 440,611 |
Warranty Reserves
Warranty Reserves | |
3 Months Ended
Mar. 27, 2010 | |
Warranty Reserves | 7. Warranty Reserves The Company's products sold are generally covered by a warranty for periods ranging from one to two years.The Company's estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet.The following reconciliation provides an illustration of changes in the aggregate warranty reserve. 13-Weeks Ended March 27, March 28, 2010 2009 Balance - beginning of the period $ 87,424 $ 87,408 Change in accrual for products sold in prior periods (21,776 ) - Accrual for products sold during the period 14,914 23,993 Expenditures (21,748 ) (42,554 ) Balance - end of the period $ 58,814 $ 68,847 The 13-weeks ended March 27, 2010 include the effect of a change in estimate in the warranty reserves which decreased the accrual for the period by $21,776. |
Commitments
Commitments | |
3 Months Ended
Mar. 27, 2010 | |
Commitments | 8. Commitments Pursuant to certain supply agreements, the Company is contractually committed to make purchases of approximately $68,415 over the next 5 years. |
Income Taxes
Income Taxes | |
3 Months Ended
Mar. 27, 2010 | |
Income Taxes | 9.Income Taxes Our earnings before taxes decreased 24% when compared to the same quarter in 2009, and our income tax expense decreased by $3,192, to $8,194 for the 13-week period ended March 27, 2010, from $11,386 for the 13-week period ended March 28, 2009.The effective tax rate was 18.0% in the first quarter of 2010 and 19.0% in the first quarter of 2009.The slight decrease is due to the mix of income by tax jurisdiction. |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Mar. 27, 2010 | |
Fair Value Measurements | 10.Fair Value Measurements The Accounting Standards Code (ASC) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).The ASC classifies the inputs used to measure fair value into the following hierarchy: Level 1 Unadjusted quoted prices in active markets for identical assets or liability Level 2 Unadjusted quoted prices in active markets for similar assets or liabilities Level 3 Unobservable inputs for the asset or liability The Company endeavors to utilize the best available information in measuring fair value.Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. For fair value measurements using significant unobservable inputs, an independent third party provided the valuation.The collateral composition was used to estimate Weighted Average Life based on historical and projected payment information.Cash flows were projected for the issuing trusts, taking into account underlying loan principal, bonds outstanding, and payout formulas.Taking this information into account, assumptions were made as to the yields likely to be required, based upon then current market conditions for comparable or similar term Asset Based Securities as well as other fixed income securities. Assets and liabilities measured at estimated fair value on a recurring basis are summarized below: Fair Value Measurements as of March 27, 2010 Description Total Level 1 Level 2 Level 3 Available for-sale securities $ 630,126 $ 630,126 $ - $ - Failed Auction rate securities $ 70,558 $ 70,558 Total $ 700,684 $ 630,126 $ - $ 70,558 Fair Value Measurements as of December 26, 2009 Description Total Level 1 Level 2 Level 3 Available for-sale securities $ 695,795 $ 695,795 $ - $ - Failed Auction rate securities $ 70,252 $ 70,252 Total $ 766,047 $ 695,795 $ - $ 70,252 All Level 3 investments have been in a continuous unrealized loss position for 12 months or longer.For assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period, the ASC requires a reconciliation of the beginning and ending balances, separately for each major category of assets.The reconciliation is as follows: Fair Value Measurements Using Significant Unobservable Inputs (Level 3) 13-Weeks Ended March 27, 2010 Beginning balance of auction rate securities $ 70,252 Total unrealized gains included in other comprehensive income 856 Purchases in and/or out of Level 3 |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | |
3 Months Ended
Mar. 27, 2010 | |
Recently Issued Accounting Pronouncements | 11.Recently Issued Accounting Pronouncements In January 2010, the FASB issued ASU No. 2010-06, "Improving Disclosures about Fair Value Measurements" ("ASU 2010-06"), which is included in the ASC Topic 820 (Fair Value Measurements and Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for transfers in and out of Level 1 and 2 fair value measurements.ASU 2010-06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosure requirements on levels of disaggregation and disclosures about inputs and valuation techniques.ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material effect on our financial statements. In February 2010, the FASB issued ASU No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements" ("ASU 2010-09"), which is included in the FASB Accounting Standards Codification (the "ASC") Topic 855 (Subsequent Events).ASU 2010-09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued.ASU 2010-09 is effective upon the issuance of the final update and did not have a significant impact on the Company's financial statements. |
Subsequent Events
Subsequent Events | |
3 Months Ended
Mar. 27, 2010 | |
Subsequent Events | 12.Subsequent Events On April 28, 2010, Garmin announced a cash offer of 15 pence per share to acquire all the shares of Raymarine plc. This offer provides total consideration to Raymarine shareholders of approximately 12.5 million and implies an enterprise value of approximately 107.4 million when considering Raymarine's most recently reported net debt of 94.9 million. This offer remains subject to shareholder acceptance and regulatory approvals, but Garmin expects to obtain the necessary merger control approvals. |