CAYMAN ISLANDS, Feb. 20 /PRNewswire-FirstCall/ -- Garmin Ltd. (Nasdaq:
GRMN) today announced a record quarter ended December 29, 2007, reporting
the highest quarterly and annual revenue and earnings in the Company's
history.
(Logo: http://www.newscom.com/cgi-bin/prnh/20061026/CGTH082LOGO)
Fourth Quarter 2007 Financial highlights:
-- Total revenue of $1.217 billion, up 99% from $611 million in fourth
quarter 2006
-- Automotive/Mobile segment revenue increased 124% to $999 million in
fourth quarter 2007
-- Aviation segment revenue increased 16% to $71 million in fourth quarter
2007
-- Outdoor/Fitness segment revenue increased 43% to $114 million in fourth
quarter 2007
-- Marine segment revenue increased 31% to $33 million in fourth quarter
2007
-- All geographic areas experienced significant growth:
* North America revenue was $836 million compared to $393 million, up
113%
* Europe revenue was $338 million compared to $194 million, up 74%
* Asia revenue was $43 million compared to $24 million, up 79%
-- Diluted earnings per share increased 70% to $1.39 from $0.82 in fourth
quarter 2006; excluding foreign exchange, EPS increased 51% to $1.31
from $0.87 in the same quarter in 2006.
Fiscal Year 2007 Financial highlights:
-- Total revenue of $3.18 billion, up 79% from $1.77 billion in 2006
-- Automotive/Mobile segment revenue increased 115% to $2.34 billion in
2007
-- Aviation segment revenue increased 27% to $295 million in 2007
-- Marine segment revenue increased 22% to $203 million in 2007
-- Outdoor/Fitness segment revenue increased 19% to $340 million in 2007
-- Revenue from our automotive/mobile segment continued to become a larger
portion of total company revenues when compared with 2006, at 74% of
total revenues.
-- All geographic areas experienced significant growth:
* North America revenue was $2.067 billion compared to $1.094 billion,
up 89%
* Europe revenue was $969 million compared to $593 million, up 63%
* Asia revenue was $144 million compared to $87 million, up 66%
-- Diluted earnings per share increased 66% to $3.89 from $2.35 in 2006;
excluding foreign exchange, EPS increased 62% to $3.80 from $2.35 in
2006.
-- Over 12 million units sold during fiscal 2007 -- a new and exciting
benchmark -- which brings the total Garmin units sold worldwide to over
31 million units.
Business highlights:
-- Strong sales in our automotive/mobile segment continued to exceed our
expectations and are expected to drive much of our growth during 2008.
-- Aviation, marine, and outdoor/fitness segments all posted double-digit
growth in 2007, and we anticipate stronger performance in 2008.
-- Strong holiday sales drove unit sales in the fourth quarter to over 5.5
million units -- just slightly less than the total number of units sold
in all of 2006. These unit sales reflect an increase of 177% from the
same quarter in 2006.
-- We continue to build out our third Taiwan manufacturing facility,
increasing the number of production lines to 36 and production capacity
at the end of the fourth quarter to an annual run rate of nearly 20
million units. Expansion of our engineering and office space in Taiwan
continues.
-- We continue work on the expansion of our North American warehouse in
Olathe, Kansas, with expected completion in March 2008. We have also
begun planning to expand our headquarters and research and development
facilities in Olathe.
-- Acquisitions of distributors in France, Germany, Spain, and Italy were
completed in 2007. In early 2008 we completed the acquisition of our
distributor in Denmark as well. These activities are part of our
ongoing efforts to increase our market share in Europe.
Executive overview from Dr. Min Kao, Chairman and Chief Executive
Officer:
"Garmin experienced an exciting fourth quarter, which brought a strong
finish to fiscal 2007. The strong holiday season demand we experienced
clearly demonstrated that our products are well-positioned to take
advantage of the growing interest in portable navigation devices.
Independent market research indicates we have maintained a strong
leadership position in North America, and our market position in Europe
continues to improve as well.
"We were prepared to meet the strong demand for our automotive/mobile
products. We effectively managed inventory to meet holiday demand; as
anticipated, we ended 2007 with appropriate inventory levels in our retail
channels. We remain committed to proper inventory planning as we enter
2008. As the automotive/mobile segment continues to become a larger portion
of our business, we expect our business to experience even stronger
seasonality for 2008 and beyond. As such, we intend to more effectively
level our production requirements and our inventory levels throughout the
year. We believe our strategy of extensive market segmentation using our
popular nuvi(R) product offerings will continue to drive positive results.
Useful content and competitive features integrated into reliable,
easy-to-use products at attractive price points are what customers want --
and what they receive when they choose Garmin. Given growth in our existing
markets and opportunities we see in new markets during 2008, we anticipate
automotive/mobile segment revenues will grow 45% in 2008.
"Our aviation segment grew steadily throughout 2007. Positive response
to our WAAS and GMX200 product offerings and growth in the sales of our
G1000(R) cockpit continued. Wins for our G1000 cockpit for future microjets
and business jet as well as retrofit opportunities are expected to continue
to create additional strength in this segment during the second half of
2008. We anticipate aviation segment revenue is positioned to grow 30% in
2008.
"Our marine segment also showed steady growth in 2007, as our
revolutionary new marine products and cartography created opportunities to
draw customers to our products. While marine segment revenues typically
decline sequentially in third and fourth quarter each year, in 2007,
results continued to be seasonally strong during these quarters. We expect
our exciting suite of marine products, as well as additional new products
to be released this year, will allow the marine segment to post revenue
growth of 25% in 2008.
"Holiday season demand for our outdoor/fitness products was strong, as
we posted over 40% revenue growth for this segment when compared with the
same quarter in 2006. Increased sales generated by the new Astro(TM) dog
tracking product, as well as new products with high-sensitivity GPS drove
growth in the latter part of 2007. We see continued growth opportunities
for this segment and anticipate that outdoor/fitness segment revenue is
positioned to grow 25% in 2008."
Financial overview from Kevin Rauckman, Chief Financial Officer:
"We are clearly very pleased with our financial results for the fourth
quarter and fiscal year 2007," said Kevin Rauckman, chief financial officer
of Garmin Ltd. "Our revenue and earnings per share during 2007 grew 79% and
66% respectively, exceeding our expectations. Garmin has now completed
seven years as a public company and has consistently generated top line and
bottom line growth, with a 7-year compounded annual growth rate of revenue
and earnings per share of 37% and 33%, respectively.
"Our gross and operating margins held strong, exceeding our
expectations, coming in at 46% and 29% respectively. We also generated $525
million of free cash flow in 2007, resulting in unrestricted cash and
marketable securities balance of $1.1 billion at the end of the fiscal
year. Our return on invested capital (ROIC) was 63% during fiscal 2007."
Fiscal 2008 Outlook
We remain optimistic about the future success of our business and our
ability to serve customers and distributors around the world. General
perspective on overall business expectations for 2008, including our four
business segments are:
-- We anticipate overall revenue to exceed $4.5 billion in 2008, and
earnings per share to exceed $4.40 assuming an effective tax rate of
approximately 12 percent.
-- We anticipate automotive/mobile revenues to grow 45 percent in 2008,
with declining gross and operating margins due to product mix and a
continued transition toward mass market levels.
-- We anticipate aviation revenues to grow 30 percent in 2008. Growth is
expected to occur within both G1000 OEM and aviation aftermarket
shipments.
-- We anticipate marine revenues to grow 25 percent in 2008. Growth will
come from our innovative offshore and inland marine cartography and
additional new product releases.
-- We anticipate outdoor/fitness segment revenues to grow 25 percent in
2008 led by new outdoor products with enhanced features, high
sensitivity GPS receivers, built-in cartography and unique
functionality. Exciting new products for our fitness line and better
penetration of targeted fitness markets are expected to drive revenue
growth as well.
-- We expect the recently announced nuvifone(TM) to be released during Q3
2008 and will see initial unit shipments of this new category for
Garmin during the second half of the year.
-- We look forward to introducing many innovative product lines again this
year. 2008 product introductions began with new auto, outdoor, fitness
and wireless products introduced during January's Consumer Electronics
Show in Las Vegas and our recent media event in New York City.
-- We expect continued expansion of our LinKou, Taiwan manufacturing
facility to meet growing demand for our products in 2008.
-- We will maintain our focus on new opportunities and expansion of
distribution throughout Europe; growth will be supported through the
distributors we have acquired, continued improvement of our
distribution systems within Europe, and continued emphasis on
advertising to enhance awareness of the Garmin brand.
Non-GAAP Measures
Net income (earnings) per share, excluding foreign currency
Management believes that net income per share before the impact of
foreign currency translation gain or loss is an important measure because
it removes the fluctuations attributable to the functional currency versus
the transactional currencies of the non-U.S. subsidiaries. Accordingly,
earnings per share before the impact of foreign currency translation gain
or loss allows an assessment of the company's operating performance before
the impact of the position of the U.S. dollar versus other currencies,
which permits a consistent comparison of operating results between periods.
The following table contains a reconciliation of GAAP net income per share
to net income per share excluding the impact of foreign currency translation
gain or loss.
Garmin Ltd. And Subsidiaries
Net income per share, excluding FX
(In thousands, except per share information)
13-Weeks Ended 52-weeks Ended
December December December December
29, 2007 30, 2006 29, 2007 30, 2006
Net Income (GAAP) $307,267 $180,345 $855,011 $514,123
Foreign currency (gain) / loss,
net of tax effects ($17,017) $8,850 ($20,070) ($516)
Net income, excluding FX $290,250 $189,195 $834,941 $513,607
Net income per share (GAAP):
Basic $1.42 $0.84 $3.95 $2.38
Diluted $1.39 $0.82 $3.89 $2.35
Net income per share, excluding
FX:
Basic $1.34 $0.88 $3.86 $2.37
Diluted $1.31 $0.87 $3.80 $2.35
Weighted average common shares
outstanding:
Basic 216,859 215,857 216,524 216,340
Diluted 220,918 218,630 219,875 218,845
Free cash flow
Management believes that free cash flow is an important financial
measure because it represents the amount of cash provided by operations
that is available for investing and defines it as operating cash flow less
capital expenditures for property and equipment.
The following table contains a reconciliation of GAAP net cash provided
by operating activities to free cash flow.
Garmin Ltd. And Subsidiaries
Free Cash Flow
(In thousands)
52-Weeks Ended
December 29, December 30,
2007 2006
Net cash provided by operating
activities $682,088 $361,855
Less: purchases of property and
equipment ($156,778) ($92,906)
Free Cash Flow $525,310 $268,949
Return on invested capital (ROIC)
Management defines return on invested capital (ROIC) as net operating
profit after taxes divided by operating invested capital. Management
believes that ROIC provides greater visibility into how effectively Garmin
deploys capital. ROIC is not a measure of financial performance under
accounting principles generally accepted in the United States (GAAP), and
may not be defined and calculated by other companies in the same manner as
Garmin does. ROIC should not be considered in isolation or as an
alternative to net income as an indicator of company performance.
The following table contains a GAAP reconciliation of return on invested
capital.
Garmin Ltd. And Subsidiaries
Return on Invested Capital (ROIC)
(In thousands)
52-Weeks Ended
December 29, December 30,
2007 2006
Net Operating Profit After Taxes (NOPAT):
Operating Income (EBIT) $907,351 $554,559
Less: Taxes on Operating Income ($123,262) ($80,431)
Net Operating Profit after Taxes
(NOPAT) $784,089 $474,128
Invested Capital (IC):
Total Assets $3,291,460 $1,897,020
Less: Cash & Marketable
Securities ($1,132,194) ($818,197)
Less: Deferred Income Taxes ($107,376) ($55,996)
Less: Non-Interest Bearing Current
Liabilities ($801,883) ($337,682)
Operating Invested Capital (IC) $1,250,007 $685,145
Return on Invested Capital 63% 69%
Share Repurchase Program
Garmin Ltd. also announced that its board of directors approved a share
repurchase program authorizing the Company to purchase up to 5 million
common shares of Garmin Ltd. as market and business conditions warrant. The
purchases may be made from time to time on the open market or in negotiated
transactions in compliance with the SEC's Rule 10b-18. The timing and
amounts of any purchases will be determined by the company's management
depending on market conditions and other factors including price,
regulatory requirements and capital availability. The program does not
require the purchase of any minimum number of shares and may be suspended
or discontinued at any time. The share repurchase authorization expires on
December 31, 2009.
2008 Annual Meeting
Garmin Ltd. also announced that its annual shareholders meeting will be
held at 10:00 a.m., Central Time, on June 6, 2008 at the headquarters of
Garmin International, Inc., 1200 E. 151st Street, Olathe, Kansas, 66062.
The record date for shareholders entitled to vote at the annual meeting is
April 10, 2008.
Earnings Call Information
The information for Garmin Ltd.'s earnings call is as follows:
When: Wednesday, February 20, 2008 at 11:00 a.m. Eastern
Where: http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html
How: Simply log on to the web at the address above or call to listen
in at 800-883-9537.
Contact: investor.relations@garmin.com
A phone recording will be available for three business days following
the earnings call and can be accessed by dialing 800-642-1687 or (706)
645-9291 and utilizing the access code 31169439. An archive of the live
webcast will be available until March 21, 2008 on the Garmin website at
http://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. Any statements regarding the
company's estimated earnings and revenue for fiscal 2008, Garmin's expected
segment revenue growth rate, margins, Garmin's plans to repurchase up to
5.0 million of its common shares 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 affecting Garmin, including, but not
limited to, continued competitive pressures in the automotive/mobile
marketplace; the effect competitive and economic factors may have on
consumer buying decisions with respect to Garmin's products; the ability of
Garmin to make timely delivery of new products and successful technological
innovations to the marketplace; the continued availability on acceptable
terms of components essential to Garmin's business Garmin's ability to have
available resources and cash flows to repurchase its shares, changing
market and economic conditions and the risk factors that are described in
the Annual Report on Form 10-K for the year ended December 30, 2006 filed
by Garmin with the Securities and Exchange Commission (Commission file
number 0-31983). A copy of Garmin's 2006 Form 10-K can be downloaded from
http://www.garmin.com/aboutGarmin/invRelations/finReports.html. The Company
assumes no obligation to update any forward-looking statements or
information, which speak as of their respective dates.
Through its operating subsidiaries, Garmin Ltd. designs, manufactures,
and markets navigation, communications and information devices, most of
which are enabled by GPS technology. Garmin is a leader in the general
aviation and consumer markets and its products serve aviation, marine,
outdoor, fitness, automotive, mobile and OEM applications. Garmin Ltd. is
incorporated in the Cayman Islands, and its principal subsidiaries are
located in the United States, Taiwan and United Kingdom. For more
information, visit the investor relations site of Garmin Ltd. at
http://www.garmin.com or contact the Investor Relations department at
913-397-8200. Garmin, G1000 and nuvi are registered trademarks, and Astro
and nuvifone are trademarks of Garmin Ltd. or its subsidiaries.
Garmin Ltd. And Subsidiaries
Consolidated Balance Sheets
(In thousands, except share information)
December 29, December 30,
2007 2006
Assets
Current assets:
Cash and cash equivalents $707,689 $337,321
Marketable securities 37,551 73,033
Accounts receivable 952,513 403,524
Inventories, net 505,467 271,008
Deferred income taxes 107,376 55,996
Prepaid expenses and other
current assets 22,179 28,202
Total current assets 2,332,775 1,169,084
Property and equipment, net 374,147 250,988
Restricted cash 1,554 1,525
Marketable securities 386,954 407,843
License agreements, net 14,672 3,307
Other intangible assets 181,358 64,273
Total assets $3,291,460 $1,897,020
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $341,053 $88,375
Salaries and benefits payable 31,696 16,268
Accrued warranty costs 71,636 37,639
Accrued sales program costs 142,360 32,560
Other accrued expenses 138,244 68,172
Income taxes payable 76,895 94,668
Total current liabilities 801,883 337,682
Long-term debt, less current portion - 248
Deferred income taxes 11,935 1,191
Other liabilities 127,028 -
Stockholders' equity:
Common stock 1,086 1,082
Additional paid-in capital 132,264 83,438
Retained earnings 2,171,134 1,478,654
Accumulated other comprehensive
gain/(loss) 46,130 (5,275)
Total stockholders' equity 2,350,614 1,557,899
Total liabilities and stockholders'
equity $3,291,460 $1,897,020
Garmin Ltd. And Subsidiaries
Consolidated Statements of Income
(In Thousands, Except Per Share Information)
13-Weeks Ended Fiscal Year Ended
December December December December
29, 2007 30, 2006 29, 2007 30, 2006
Net sales $1,217,021 $611,224 $3,180,319 $1,774,000
Cost of goods sold 708,036 306,771 1,717,064 891,614
Gross profit 508,985 304,453 1,463,255 882,386
Selling, general and
administrative expenses 148,140 74,346 396,498 214,513
Research and development
expense 47,543 31,209 159,406 113,314
195,683 105,555 555,904 327,827
Operating income 313,302 198,898 907,351 554,559
Other income (expense):
Interest income 9,999 10,432 41,995 35,897
Interest expense 121 (27) (207) (41)
Foreign currency 19,471 (9,790) 22,964 596
Other 5,210 38 6,170 3,543
34,801 653 70,922 39,995
Income before income taxes 348,103 199,551 978,273 594,554
Income tax provision: 40,836 19,206 123,262 80,431
Net income $307,267 $180,345 $855,011 $514,123
Basic net income per share $1.42 $0.84 $3.95 $2.38
Diluted net income per share $1.39 $0.82 $3.89 $2.35
Garmin Ltd. And Subsidiaries
Consolidated Statements of Cash Flows
(In Thousands)
Fiscal Year Ended
December 29, December 30,
2007 2006
Operating Activities:
Net income $855,011 $514,123
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation 35,524 21,535
Amortization 28,513 22,940
Gain on sale of property and
equipment 560 67
Provision for doubtful accounts 3,617 955
Provision for obsolete and slow-
moving inventories 34,975 23,245
Foreign currency transaction
gains/losses (926) (344)
Deferred income taxes (57,843) (35,060)
Stock appreciation rights 22,164 11,913
Realized gains on marketable
securities (5,101) (3,852)
Changes in operating assets and
liabilities, net of acquisition:
Accounts receivable (477,108) (230,111)
Inventories (224,180) (92,708)
Prepaid expenses and other
current assets 6,213 (4,357)
Purchase of licenses (23,569) (2,950)
Accounts payable 174,781 10,187
Accrued expenses 253,909 97,167
Income taxes payable 55,548 29,105
Net cash provided by operating
activities 682,088 361,855
Investing activities:
Purchases of property and equipment (156,778) (92,906)
Proceeds from sale of property and
equipment 5 76
Purchase of intangible assets (2,918) (3,115)
Purchase of marketable securities (1,672,041) (453,085)
Sales of marketable securities 1,784,816 359,313
Purchase of Dynastream - (36,499)
Net cash paid for acquisition of
businesses and other intangibles (128,751) -
Change in restricted cash (29) (169)
Net cash used in investing activities (175,696) (226,385)
Financing activities:
Dividends (162,530) (107,923)
Payment on long-term debt (248) (11)
Proceeds from issuance of common
stock through
stock purchase plan 5,730 3,569
Proceeds from issuance of common
stock from
exercise of stock options 11,278 12,505
Tax benefit related to stock option
exercise 17,434 9,660
Purchase of common stock (7,780) (50,450)
Net cash used in financing activities (136,116) ($132,650)
Effect of exchange rate changes on
cash and cash equivalents 92 149
Net increase/(decrease) in cash and
cash equivalents 370,368 2,969
Cash and cash equivalents at
beginning of year 337,321 334,352
Cash and cash equivalents at end of year $707,689 $337,321
Garmin Ltd. And Subsidiaries
Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
Reporting Segments
Outdoor/ Auto/
Fitness Marine Mobile Aviation Total
52-Weeks Ended
December 29, 2007
Net sales $339,741 $203,399 $2,342,184 $294,995 $3,180,319
Gross profit $184,654 $110,169 $973,206 $195,226 $1,463,255
Operating income $120,233 $67,376 $608,751 $110,991 $907,351
52-Weeks Ended
December 30, 2006
Net sales $285,362 $166,639 $1,089,093 $232,906 $1,774,000
Gross profit $163,638 $92,952 $475,191 $150,605 $882,386
Operating income $116,766 $60,525 $292,951 $84,317 $554,559
SOURCE Garmin Ltd.
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Related links:
http://www.garmin.com
Photo Notes:http://www.newscom.com/cgi-bin/prnh/20061026/CGTH082LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
investors, Polly Schwerdt, +1-913-397-8200,
investor.relations@garmin.com, or media, Ted Gartner,
+1-913-397-8200, media.relations@garmin.com, both of Garmin Ltd.
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