Unassociated Document
United
States
Securities
and Exchange Commission
Washington, D.C.
20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended June 27,
2009
|
or
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the transition period from
to
|
Commission
file number 0-31983
________________
GARMIN
LTD.
(Exact
name of Company as specified in its charter)
Cayman
Islands
(State
or other jurisdiction
of
incorporation or organization)
|
98-0229227
(I.R.S.
Employer identification no.)
|
P.O.
Box 10670, Grand Cayman KY1-1006
Suite
3206B, 45 Market Street, Gardenia Court
Camana
Bay, Cayman Islands
(Address
of principal executive offices)
|
N/A
(Zip
Code)
|
Company's
telephone number, including area code: (345) 640-9050
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the Company (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES þ NO
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). YES ¨ NO
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.
Large
Accelerated Filer þ Accelerated
Filer ¨ Non-accelerated
Filer ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). YES ¨ NO
þ
Number of
shares outstanding of the Company's common shares as of July 31,
2009
Common
Shares, $.005 par value: 200,512,323
Garmin
Ltd.
Form
10-Q
Quarter
Ended June 27, 2009
Table
of Contents
|
|
Page
|
|
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|
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|
|
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|
Item
1.
|
Condensed
Consolidated Financial Statements
|
|
3 |
|
|
|
|
|
|
|
|
|
Introductory
Comments
|
|
3 |
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets at June 27, 2009 (Unaudited) and December 27,
2008
|
|
4 |
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Income for the 13-weeks and 26-weeks ended June
27, 2009 and June 28, 2008 (Unaudited)
|
|
5 |
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the 13-weeks and 26-weeks ended
June 27, 2009 and June 28, 2008 (Unaudited)
|
|
6 |
|
|
|
|
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
|
7 |
|
|
|
|
|
|
|
|
Item
2.
|
Management's
Discussion and Analysis of
|
|
|
|
|
|
Financial
Condition and Results of Operations
|
|
15 |
|
|
|
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About
|
|
|
|
|
|
Market
Risk
|
|
26 |
|
|
|
|
|
|
|
|
Item
4.
|
Controls
and Procedures
|
|
27 |
|
|
|
|
|
|
|
Part
II - Other Information
|
|
|
|
|
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
|
28 |
|
|
|
|
|
|
|
|
Item 1A.
|
Risk
Factors
|
|
29 |
|
|
|
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
29 |
|
|
|
|
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
|
30 |
|
|
|
|
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Securities Holders
|
|
30 |
|
|
|
|
|
|
|
|
Item
5.
|
Other
Information
|
|
30 |
|
|
|
|
|
|
|
|
Item
6.
|
Exhibits
|
|
31 |
|
|
|
|
|
|
|
Signature
Page
|
|
|
32 |
|
|
|
|
|
|
|
Index
to Exhibits
|
|
|
33 |
|
Garmin
Ltd.
Form
10-Q
Quarter
Ended June 27, 2009
Part
I – Financial Information
Item
1. Condensed Consolidated Financial Statements
Introductory
Comments
The Condensed Consolidated Financial
Statements of Garmin Ltd. ("Garmin" or the "Company") included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the United States Securities and Exchange Commission. Certain
information and note disclosures normally included in financial statements
prepared in accordance with U.S. generally accepted accounting principles have
been condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to enable a reasonable
understanding of the information presented. These Condensed
Consolidated Financial Statements should be read in conjunction with the audited
financial statements and the notes thereto for the year ended December 27,
2008. Additionally, the Condensed Consolidated Financial Statements
should be read in conjunction with Item 2 of Management's Discussion and
Analysis of Financial Condition and Results of Operations, included in this Form
10-Q.
The results of operations for the
13-week and 26-week periods ended June 27, 2009 are not necessarily indicative
of the results to be expected for the full year 2009.
Garmin
Ltd. And Subsidiaries
Condensed
Consolidated Balance Sheets
(In
thousands, except share information)
|
|
(Unaudited)
|
|
|
|
|
|
|
June
27,
|
|
|
December
27,
|
|
|
|
2009
|
|
|
2008
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
958,909 |
|
|
$ |
696,335 |
|
Marketable
securities
|
|
|
18,889 |
|
|
|
12,886 |
|
Accounts
receivable, net
|
|
|
519,433 |
|
|
|
741,321 |
|
Inventories,
net
|
|
|
323,161 |
|
|
|
425,312 |
|
Deferred
income taxes
|
|
|
59,331 |
|
|
|
49,825 |
|
Prepaid
expenses and other current assets
|
|
|
65,081 |
|
|
|
58,746 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
1,944,804 |
|
|
|
1,984,425 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
443,026 |
|
|
|
445,252 |
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
|
524,935 |
|
|
|
262,009 |
|
Restricted
cash
|
|
|
2,066 |
|
|
|
1,941 |
|
Licensing
agreements, net
|
|
|
20,647 |
|
|
|
16,013 |
|
Other
intangible assets, net
|
|
|
208,888 |
|
|
|
214,941 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
3,144,366 |
|
|
$ |
2,924,581 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
137,360 |
|
|
$ |
160,094 |
|
Salaries
and benefits payable
|
|
|
28,396 |
|
|
|
34,241 |
|
Accrued
warranty costs
|
|
|
79,968 |
|
|
|
87,408 |
|
Accrued
sales program costs
|
|
|
69,554 |
|
|
|
90,337 |
|
Other
accrued expenses
|
|
|
94,118 |
|
|
|
87,021 |
|
Income
taxes payable
|
|
|
20,142 |
|
|
|
20,075 |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
429,538 |
|
|
|
479,176 |
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
14,514 |
|
|
|
4,070 |
|
Non-current
taxes
|
|
|
236,927 |
|
|
|
214,366 |
|
Other
liabilities
|
|
|
1,231 |
|
|
|
1,115 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock, $0.005 par value, 1,000,000,000 shares authorized:
|
|
|
|
|
|
|
|
|
Issued
and outstanding shares - 200,505,000 as of
|
|
|
|
|
|
|
|
|
June
27, 2009 and 200,363,000 as of
|
|
|
|
|
|
|
|
|
December
27, 2008
|
|
|
1,000 |
|
|
|
1,002 |
|
Additional
paid-in capital
|
|
|
23,264 |
|
|
|
- |
|
Retained
earnings
|
|
|
2,472,912 |
|
|
|
2,262,503 |
|
Accumulated
other comprehensive gain/(loss)
|
|
|
(35,020 |
) |
|
|
(37,651 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
2,462,156 |
|
|
|
2,225,854 |
|
Total
liabilities and stockholders' equity
|
|
$ |
3,144,366 |
|
|
$ |
2,924,581 |
|
See
accompanying notes.
Condensed
Consolidated Statements of Income (Unaudited)
(In
thousands, except per share information)
|
|
13-Weeks
Ended
|
|
|
26-Weeks
Ended
|
|
|
|
June
27,
|
|
|
June
28,
|
|
|
June
27,
|
|
|
June
28,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
669,104 |
|
|
$ |
911,671 |
|
|
$ |
1,105,803 |
|
|
$ |
1,575,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold
|
|
|
317,490 |
|
|
|
494,543 |
|
|
|
558,194 |
|
|
|
838,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
351,614 |
|
|
|
417,128 |
|
|
|
547,609 |
|
|
|
737,243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
expense
|
|
|
34,023 |
|
|
|
58,327 |
|
|
|
57,248 |
|
|
|
96,456 |
|
Selling,
general and administrative expense
|
|
|
62,186 |
|
|
|
66,701 |
|
|
|
121,963 |
|
|
|
126,397 |
|
Research
and development expense
|
|
|
56,253 |
|
|
|
53,597 |
|
|
|
111,287 |
|
|
|
103,154 |
|
Total
operating expense
|
|
|
152,462 |
|
|
|
178,625 |
|
|
|
290,498 |
|
|
|
326,007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
199,152 |
|
|
|
238,503 |
|
|
|
257,111 |
|
|
|
411,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
5,190 |
|
|
|
9,801 |
|
|
|
10,286 |
|
|
|
18,127 |
|
Foreign
currency
|
|
|
(4,836 |
) |
|
|
21,561 |
|
|
|
(7,274 |
) |
|
|
17,562 |
|
Gain
on sale of equity securities
|
|
|
- |
|
|
|
45,686 |
|
|
|
- |
|
|
|
50,949 |
|
Other
|
|
|
335 |
|
|
|
612 |
|
|
|
(359 |
) |
|
|
732 |
|
Total
other income
|
|
|
689 |
|
|
|
77,660 |
|
|
|
2,653 |
|
|
|
87,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
199,841 |
|
|
|
316,163 |
|
|
|
259,764 |
|
|
|
498,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax provision
|
|
|
37,970 |
|
|
|
60,071 |
|
|
|
49,355 |
|
|
|
94,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
161,871 |
|
|
$ |
256,092 |
|
|
$ |
210,409 |
|
|
$ |
403,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.81 |
|
|
$ |
1.20 |
|
|
$ |
1.05 |
|
|
$ |
1.88 |
|
Diluted
|
|
$ |
0.81 |
|
|
$ |
1.19 |
|
|
$ |
1.05 |
|
|
$ |
1.86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
200,296 |
|
|
|
213,756 |
|
|
|
200,364 |
|
|
|
215,130 |
|
Diluted
|
|
|
200,853 |
|
|
|
215,572 |
|
|
|
200,814 |
|
|
|
217,274 |
|
See
accompanying
notes.
Garmin
Ltd. And Subsidiaries
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
thousands)
|
|
26-Weeks Ended
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
2009
|
|
|
2008
|
|
Operating
Activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
210,409 |
|
|
$ |
403,871 |
|
Adjustments to
reconcile net income to net cash provided
by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
26,335 |
|
|
|
18,690 |
|
Amortization
|
|
|
15,914 |
|
|
|
8,430 |
|
Gain
on sale of property and equipment
|
|
|
(108 |
) |
|
|
(208 |
) |
Provision
for doubtful accounts
|
|
|
(5,223 |
) |
|
|
3,977 |
|
Deferred
income taxes
|
|
|
(718 |
) |
|
|
17,342 |
|
Foreign
currency transaction gains/losses
|
|
|
(4,493 |
) |
|
|
25,428 |
|
Provision
for obsolete and slow moving inventories
|
|
|
14,111 |
|
|
|
28,326 |
|
Stock
compensation expense
|
|
|
21,029 |
|
|
|
18,253 |
|
Realized
gains on marketable securities
|
|
|
(1,274 |
) |
|
|
(72,445 |
) |
Changes
in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
233,166 |
|
|
|
307,580 |
|
Inventories
|
|
|
89,044 |
|
|
|
(141,180 |
) |
Other
current assets
|
|
|
(2,415 |
) |
|
|
8,110 |
|
Accounts
payable
|
|
|
(23,175 |
) |
|
|
(213,507 |
) |
Other
current and non-current liabilities
|
|
|
(4,838 |
) |
|
|
(102,909 |
) |
Income
taxes payable
|
|
|
(5,140 |
) |
|
|
(25,341 |
) |
Purchase
of licenses
|
|
|
(6,936 |
) |
|
|
(4,236 |
) |
Net
cash provided by operating activities
|
|
|
555,688 |
|
|
|
280,181 |
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(23,343 |
) |
|
|
(79,917 |
) |
Proceeds
from sale of property and equipment
|
|
|
(7 |
) |
|
|
8 |
|
Purchase
of intangible assets
|
|
|
(3,496 |
) |
|
|
(997 |
) |
Purchase
of marketable securities
|
|
|
(341,423 |
) |
|
|
(344,119 |
) |
Redemption
of marketable securities
|
|
|
68,173 |
|
|
|
390,179 |
|
Change
in restricted cash
|
|
|
(125 |
) |
|
|
14 |
|
Acquisitions,
net of cash acquired
|
|
|
0 |
|
|
|
(34,768 |
) |
Net
cash used in investing activities
|
|
|
(300,221 |
) |
|
|
(69,600 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock from exercise of stock
options
|
|
|
310 |
|
|
|
2,050 |
|
Proceeds
from issuance of common stock from stock purchase
plan
|
|
|
3,712 |
|
|
|
5,144 |
|
Stock
repurchase
|
|
|
(1,849 |
) |
|
|
(318,471 |
) |
Tax
benefit related to stock option exercise
|
|
|
65 |
|
|
|
1,965 |
|
Net
cash provided by/(used in) financing activities
|
|
|
2,238 |
|
|
|
(309,312 |
) |
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
4,869 |
|
|
|
15,524 |
|
|
|
|
|
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents
|
|
|
262,574 |
|
|
|
(83,207 |
) |
Cash
and cash equivalents at beginning of period
|
|
|
696,335 |
|
|
|
707,689 |
|
Cash
and cash equivalents at end of period
|
|
$ |
958,909 |
|
|
$ |
624,482 |
|
See
accompanying notes.
Garmin
Ltd. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (Unaudited)
June
27, 2009
(In
thousands, except share and per share information)
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 and 26-week periods ended June 27, 2009 are not necessarily indicative
of the results that may be expected for the year ending December 26,
2009.
The
condensed consolidated balance sheet at December 27, 2008 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 27,
2008.
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 June 27, 2009 and
June 28, 2008 both contain operating results for 13-weeks for both year-to-date
periods.
The
components of inventories consist of the following:
|
|
June 27, 2009
|
|
|
December 27, 2008
|
|
|
|
|
|
|
|
|
Raw
Materials
|
|
$ |
97,118 |
|
|
$ |
151,132 |
|
Work-in-process
|
|
|
37,819 |
|
|
|
28,759 |
|
Finished
goods
|
|
|
216,304 |
|
|
|
268,625 |
|
Inventory
Reserves
|
|
|
(28,080 |
) |
|
|
(23,204 |
) |
Inventory,
net of reserves
|
|
$ |
323,161 |
|
|
$ |
425,312 |
|
The Board
of Directors approved a share repurchase program on October 22, 2008,
authorizing the Company to purchase up to $300,000 of its common shares as
market and business conditions warrant. The share repurchase
authorization expires on December 31, 2009. As of June 27,
2009, the Company had repurchased 117,600 shares using cash of $1,849 with all
purchases made in the first quarter. There remains approximately
$256,000 available for repurchase under this authorization given the $42,000 of
purchases in fiscal 2008.
The
following table sets forth the computation of basic and diluted net income per
share:
|
|
13-Weeks Ended
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
Numerator
for basic and diluted net income per share - net
income
|
|
$ |
161,871 |
|
|
$ |
256,092 |
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator
for basic net income per share – weighted-average common
shares
|
|
|
200,296 |
|
|
|
213,756 |
|
|
|
|
|
|
|
|
|
|
Effect
of dilutive securities – employee stock options
|
|
|
557 |
|
|
|
1,816 |
|
|
|
|
|
|
|
|
|
|
Denominator
for diluted net income per share – adjusted weighted-average common
shares
|
|
|
200,853 |
|
|
|
215,572 |
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
$ |
0.81 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share
|
|
$ |
0.81 |
|
|
$ |
1.19 |
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks Ended
|
|
|
|
June
27,
|
|
|
June
28,
|
|
|
|
2009
|
|
|
2008
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Numerator
for basic and diluted net income per share - net
income
|
|
$ |
210,409 |
|
|
$ |
403,871 |
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator
for basic net income per share – weighted-average common
shares
|
|
|
200,364 |
|
|
|
215,130 |
|
|
|
|
|
|
|
|
|
|
Effect
of dilutive securities – employee stock options
|
|
|
450 |
|
|
|
2,144 |
|
|
|
|
|
|
|
|
|
|
Denominator
for diluted net income per share – adjusted weighted-average common
shares
|
|
|
200,814 |
|
|
|
217,274 |
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
$ |
1.05 |
|
|
$ |
1.88 |
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share
|
|
$ |
1.05 |
|
|
$ |
1.86 |
|
There
were 7,948,978 anti-dilutive options for the 13-week period ended June 27,
2009. There were 5,408,834 anti-dilutive options for the
13-week period ended June 28, 2008.
There
were 8,548,181 anti-dilutive options for the 26-week period ended June 27,
2009. There were 5,049,164 anti-dilutive options for the
26-week period ended June 28, 2008.
There
were 12,622 shares issued as a result of exercises of stock appreciation rights
and stock options for the 13-week period ended June 27, 2009.
There
were 24,720 shares issued as a result of exercises of stock appreciation rights
and stock options for the 26-week period ended June 27, 2009.
Comprehensive
income is comprised of the following:
|
|
13-Weeks Ended
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
2009
|
|
|
2008
|
|
Net
income
|
|
$ |
161,871 |
|
|
$ |
256,092 |
|
Translation
adjustment
|
|
|
26,236 |
|
|
|
(18,790 |
) |
Change
in fair value of available-for-sale
|
|
|
|
|
|
|
|
|
marketable
securities, net of deferred taxes
|
|
|
1,199 |
|
|
|
(24,291 |
) |
Comprehensive
income
|
|
$ |
189,306 |
|
|
$ |
213,011 |
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks Ended
|
|
|
|
June
27,
|
|
|
June
28,
|
|
|
|
2009
|
|
|
2008
|
|
Net
income
|
|
$ |
210,409 |
|
|
$ |
403,871 |
|
Translation
adjustment
|
|
|
7,473 |
|
|
|
61,004 |
|
Change
in fair value of available-for-sale
|
|
|
|
|
|
|
|
|
marketable
securities, net of deferred taxes
|
|
|
(4,842 |
) |
|
|
(57,265 |
) |
Comprehensive
income
|
|
$ |
213,040 |
|
|
$ |
407,610 |
|
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 June 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
108,009 |
|
|
$ |
60,198 |
|
|
$ |
436,718 |
|
|
$ |
64,179 |
|
|
$ |
669,104 |
|
Operating
income
|
|
$ |
50,416 |
|
|
$ |
21,342 |
|
|
$ |
106,712 |
|
|
$ |
20,682 |
|
|
$ |
199,152 |
|
Income
before taxes
|
|
$ |
51,255 |
|
|
$ |
21,722 |
|
|
$ |
105,474 |
|
|
$ |
21,390 |
|
|
$ |
199,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
119,147 |
|
|
$ |
71,178 |
|
|
$ |
631,883 |
|
|
$ |
89,463 |
|
|
$ |
911,671 |
|
Operating
income
|
|
$ |
45,445 |
|
|
$ |
24,068 |
|
|
$ |
129,190 |
|
|
$ |
39,800 |
|
|
$ |
238,503 |
|
Income
before taxes
|
|
$ |
55,302 |
|
|
$ |
27,905 |
|
|
$ |
191,855 |
|
|
$ |
41,101 |
|
|
$ |
316,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks
Ended June 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
188,013 |
|
|
$ |
98,215 |
|
|
$ |
696,304 |
|
|
$ |
123,271 |
|
|
$ |
1,105,803 |
|
Operating
income
|
|
$ |
78,920 |
|
|
$ |
31,914 |
|
|
$ |
111,318 |
|
|
$ |
34,959 |
|
|
$ |
257,111 |
|
Income
before taxes
|
|
$ |
78,915 |
|
|
$ |
31,444 |
|
|
$ |
114,632 |
|
|
$ |
34,773 |
|
|
$ |
259,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks
Ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
189,641 |
|
|
$ |
127,185 |
|
|
$ |
1,083,742 |
|
|
$ |
174,908 |
|
|
$ |
1,575,476 |
|
Operating
income
|
|
$ |
64,756 |
|
|
$ |
41,904 |
|
|
$ |
236,831 |
|
|
$ |
67,745 |
|
|
$ |
411,236 |
|
Income
before taxes
|
|
$ |
75,749 |
|
|
$ |
47,238 |
|
|
$ |
304,159 |
|
|
$ |
71,460 |
|
|
$ |
498,606 |
|
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 property and equipment, net by geographic area are as follows as of and for
the 26-week periods ended June 27, 2009 and June 28, 2008:
|
|
Americas
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
June
27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales to external customers
|
|
$ |
701,603 |
|
|
$ |
64,026 |
|
|
$ |
340,174 |
|
|
$ |
1,105,803 |
|
Property
and equipment, net
|
|
$ |
228,976 |
|
|
$ |
159,931 |
|
|
$ |
54,119 |
|
|
$ |
443,026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales to external customers
|
|
$ |
987,440 |
|
|
$ |
70,685 |
|
|
$ |
517,351 |
|
|
$ |
1,575,476 |
|
Property
and equipment, net
|
|
$ |
209,481 |
|
|
$ |
184,041 |
|
|
$ |
56,205 |
|
|
$ |
449,727 |
|
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
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Balance - beginning of the
period
|
|
$ |
68,847 |
|
|
$ |
72,751 |
|
Accrual for products sold during
the period
|
|
|
31,106 |
|
|
|
37,666 |
|
Expenditures
|
|
|
(19,985 |
) |
|
|
(26,498 |
) |
Balance - end of the period
|
|
$ |
79,968 |
|
|
$ |
83,919 |
|
|
|
26-Weeks Ended
|
|
|
|
June 27,
|
|
|
June 28,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
Balance - beginning of the
period
|
|
$ |
87,408 |
|
|
$ |
71,636 |
|
Accrual for products sold during
the period
|
|
|
49,621 |
|
|
|
72,987 |
|
Expenditures
|
|
|
(57,061 |
) |
|
|
(60,704 |
) |
Balance - end of the period
|
|
$ |
79,968 |
|
|
$ |
83,919 |
|
We are a
party to certain commitments, which includes raw materials, advertising and
other indirect purchases in connection with conducting out business. Pursuant to these
agreements, the Company is contractually committed to make purchases of
approximately $37,200 over the next 5 years.
9. Income
Taxes
Our
earnings before taxes decreased 36.8% when compared to the same quarter in 2008,
and our income tax expense decreased by $22,101, to $37,970, for the 13-week
period ended June 27, 2009, from $60,071 for the 13-week period ended June 28,
2008, due to our earnings before taxes decline. The effective tax rate was
19.0% for both the 13-weeks and 26-weeks ended June 27, 2009 and the 13-weeks
and 26-weeks ended June 28, 2008. We have experienced a
relatively low effective corporate tax rate due to the proportion of our revenue
generated by entities in tax jurisdictions with low statutory
rates. In particular, the profit entitlement
afforded our parent company based on its intellectual property rights ownership
of our consumer products along with substantial tax incentives offered by the
Taiwanese government on certain high-technology capital investments have
continued to generate a relatively low tax rate.
10. Fair
Value Measurements
In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 establishes a
framework for measuring fair value in GAAP, and expands disclosures about fair
value measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements. The Company adopted SFAS
No. 157 effective December 30, 2007.
SFAS No.
157 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). SFAS No. 157
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,
or
|
Unadjustedquoted
prices for identical or similar assets
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 inputs used in the valuations used the following
methodology. 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 June 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for-sale securites
|
|
$ |
475,995 |
|
|
$ |
475,995 |
|
|
|
- |
|
|
|
- |
|
Failed
Auction rate securities
|
|
|
67,829 |
|
|
|
- |
|
|
|
- |
|
|
|
67,829 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
543,824 |
|
|
$ |
475,995 |
|
|
$ |
- |
|
|
$ |
67,829 |
|
For
assets and liabilities measured at fair value on a recurring basis using
significant unobservable inputs (Level 3) during the period, SFAS No. 157
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
|
|
|
26-Weeks Ended
|
|
|
|
June 27, 2009
|
|
|
June 27, 2009
|
|
|
|
|
|
|
|
|
Beginning
balance of auction rate securities
|
|
$ |
65,544 |
|
|
$ |
71,303 |
|
Total
unrealized losses included in other comprehensive
income
|
|
|
2,285 |
|
|
|
(3,474 |
) |
Purchases
in and/or out of Level 3
|
|
|
- |
|
|
|
- |
|
Transfers
in and/or out of Level 3
|
|
|
- |
|
|
|
- |
|
Ending
balance of auction rate securities
|
|
$ |
67,829 |
|
|
$ |
67,829 |
|
The following is a summary of the
company’s marketable securities classified as available-for-sale securities at
June 27, 2009:
|
|
Amortized
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Impairment
|
|
|
Carrying
Amount)
|
|
Mortgage-backed
securities
|
|
$ |
337,865 |
|
|
$ |
1,499 |
|
|
$ |
(2,904 |
) |
|
|
- |
|
|
$ |
336,460 |
|
Auction
rate securities
|
|
|
92,750 |
|
|
|
- |
|
|
|
(24,921 |
) |
|
|
- |
|
|
|
67,829 |
|
Obligations
of states and political subdivisions
|
|
|
85,961 |
|
|
|
685 |
|
|
|
(430 |
) |
|
|
- |
|
|
|
86,216 |
|
U.S.
corporate bonds
|
|
|
33,555 |
|
|
|
367 |
|
|
|
(1,372 |
) |
|
|
(1,274 |
) |
|
|
31,276 |
|
Other
|
|
|
22,157 |
|
|
|
273 |
|
|
|
(387 |
) |
|
|
- |
|
|
|
22,043 |
|
Total
|
|
$ |
572,288 |
|
|
$ |
2,824 |
|
|
$ |
(30,014 |
) |
|
$ |
(1,274 |
) |
|
$ |
543,824 |
|
The
following is a summary of the company’s marketable securities classified as
available-for-sale securities at December 27, 2008:
|
|
|
|
|
Gross
|
|
|
Gross
|
|
|
Other Than
|
|
|
Estimated Fair
Value (Net
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Temporary
|
|
|
Carrying
|
|
|
|
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Impairment
|
|
|
Amount)
|
|
Mortgage-backed
securities
|
|
$ |
137,854 |
|
|
$ |
1,184 |
|
|
$ |
(140 |
) |
|
|
- |
|
|
$ |
138,898 |
|
Auction
rate securities
|
|
|
92,850 |
|
|
|
- |
|
|
|
(21,547 |
) |
|
|
- |
|
|
|
71,303 |
|
Obligations
of states and political subdivisions
|
|
|
40,336 |
|
|
|
960 |
|
|
|
(12 |
) |
|
|
- |
|
|
|
41,284 |
|
U.S.
corporate bonds
|
|
|
16,545 |
|
|
|
200 |
|
|
|
(2,707 |
) |
|
|
- |
|
|
|
14,038 |
|
Other
|
|
|
9,502 |
|
|
|
79 |
|
|
|
(209 |
) |
|
|
- |
|
|
|
9,372 |
|
Total
|
|
$ |
297,087 |
|
|
$ |
2,423 |
|
|
$ |
(24,615 |
) |
|
$ |
0 |
|
|
$ |
274,895 |
|
The cost of securities sold is based on
the specific identification method.
The
unrealized losses on the Company’s investment in 2008 and year-to-date 2009 were
caused primarily by changes in interest rates, specifically, widening credit
spreads. The Company’s investment policy requires investments to be
rated A or better with the objective of minimizing the potential risk of
principal loss. Therefore, the Company considers the declines to be
temporary in nature. Fair values were determined for each individual
security in the investment portfolio. When evaluating the investments
for other-than-temporary impairment, the Company review factors such as the
length of time and extent to which fair value has been below cost basis, the
financial condition of the issuer, and the Company’s ability and intent to hold
the investment for a period of time, which may be sufficient for anticipated
recovery in market value. During 2008 and year-to-date 2009, the
Company did not record any material impairment charges on its outstanding
securities.
The amortized cost and estimated fair
value of marketable securities at June 27, 2009, by contractual maturity, are
shown below. Expected maturities will differ from contractual maturities because
the issuers of the securities may have the right to prepay obligations without
prepayment penalties.
|
|
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
Due
in one year or less
|
|
$ |
28,756 |
|
|
$ |
28,909 |
|
Due
after one year through five years
|
|
|
243,194 |
|
|
|
217,733 |
|
Due
after five years through ten years
|
|
|
151,202 |
|
|
|
149,890 |
|
Due
after ten years
|
|
|
149,136 |
|
|
|
147,292 |
|
|
|
$ |
572,288 |
|
|
$ |
543,824 |
|
For certain of the Company’s financial
instruments, including accounts receivable, accounts payable and other accrued
liabilities, the carrying amounts approximate fair value due to their short
maturities.
11. Recently
Issued Accounting Pronouncements
In May
2008, the FASB issued EITF 07-1, Accounting for Collaborative Arrangements. EITF
Issue 07-1 requires entities entering into collaborative arrangements in which
two or more parties actively participate in a joint operating activity and are
exposed to significant risks and rewards that depend on the commercial success
of the joint operating activity to make specific disclosures regarding that
arrangement. Garmin announced a strategic alliance with ASUSTeK Computer Inc. on
February 4, 2009 that will leverage the companies’ navigation and mobile
telephony expertise to design, manufacture and distribute co-branded
location-centric mobile phones. The mobile phone product line will be known as
the Garmin-Asus nüvifone series. The Company has adopted EITF Issue 07-1 and the
strategic alliance did not have a material impact on the Company’s financial
condition or operating results in the second quarter of 2009.
In
January 2009, the FASB released Proposed Staff Position SFAS 107-b and
Accounting Principles Board (APB) Opinion No. 28-a, “Interim Disclosures about
Fair Value of Financial Instruments” (SFAS 107-b and APB 28-a). This
proposal amends FASB Statement No. 107, “Disclosures about Fair Values of
Financial Instruments,” to require disclosures about fair value of financial
instruments in interim financial statements as well as in annual financial
statements. The proposal also amends APB Opinion No. 28, “Interim
Financial Reporting,” to require those disclosures in all interim financial
statements. This proposal is effective for interim periods ending
after June 15, 2009, but early adoption is permitted for interim periods ending
after March 15, 2009. The Company has adopted SFAS 107-b and APB 28-a
and the guidance did not have a material impact on the Company’s financial
condition or operating results in the second quarter of 2009.
In April
2009, the FASB issued FSP No. FAS 157-4 (“FSP FAS 157-4”), “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability has
Significantly Decreased and Identifying Transactions That Are Not Orderly” and
FSP No. FAS 115-2 and FAS 124-2 (“FSP FAS 115-2”), “Recognition and Presentation
of Other-Than-Temporary Impairments”. These two FSPs were issued to
provide additional guidance about (1) measuring the fair value of financial
instruments when the markets become inactive and quoted prices may reflect
distressed transactions, and (2) recording impairment charges on investments in
debt instruments. Additionally, the FASB issued FSP No. FAS 107-1 and
APB 28-1 (“FSP FAS 107-1”), “Interim Disclosures about Fair Value of Financial
Instruments,” to require disclosures of fair value of certain financial
instruments in interim financial statements. The adoption of these
FSPs did not materially impact the Company. These FSPs are effective
for financial statements issued for interim and annual reporting periods ending
after June 15, 2009. The Company has adopted FSP FAS 157-4 and the
guidance did not have a material impact on the Company’s financial condition or
operating results in the second quarter of 2009.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS
165”). SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS
165 is effective for interim or annual financial periods ending after June 15,
2009. The Company adopted the provisions of SFAS 165 for the quarter
ended June 27, 2009. The adoption of this provision did not have a
material effect on our financial statements.
12. Subsequent
Events
On July 30, 2009, the Company’s Board
of Directors approved an annual cash dividend of $0.75 per share. The
dividend is payable to shareholders of record on December 1, 2009 and will be
paid on December 15, 2009. The Company estimates the liability to be
approximately $150,000 based on the current shares outstanding.
The Company evaluated subsequent events
through the time of filing this Quarterly Report on Form 10-Q on August 5,
2009.
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
The discussion set forth below, as well
as other portions of this Quarterly Report, contains statements concerning
potential future events. Such forward-looking statements are based
upon assumptions by our management, as of the date of this Quarterly Report,
including assumptions about risks and uncertainties faced by the
Company. Readers can identify these forward-looking statements by
their use of such verbs as expects, anticipates, believes or similar verbs or
conjugations of such verbs. If any of our assumptions prove incorrect
or should unanticipated circumstances arise, our actual results could materially
differ from those anticipated by such forward-looking statements. The
differences could be caused by a number of factors or combination of factors
including, but not limited to, those factors identified in the Company’s Annual
Report on Form 10-K for the year ended December 27, 2008. This report
has been filed with the Securities and Exchange Commission (the "SEC" or the
"Commission") in Washington, D.C. and can be obtained by contacting the SEC's
public reference operations or obtaining it through the SEC's web site on the
World Wide Web at http://www.sec.gov. Readers are strongly encouraged
to consider those factors when evaluating any forward-looking statement
concerning the Company. The Company will not update any
forward-looking statements in this Quarterly Report to reflect future events or
developments.
The information contained in this
Management’s Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Condensed Consolidated
Financial Statements and Notes thereto included in this Form 10-Q and the
audited financial statements and notes thereto in the Company’s Annual Report on
Form 10-K for the year ended December 27, 2008.
The Company is a leading worldwide
provider of navigation, communications and information devices, most of which
are enabled by Global Positioning System, or GPS, technology. We
operate in four business segments, the outdoor/fitness, marine,
automotive/mobile and aviation markets. Our segments offer products
through our network of independent dealers and distributors. However,
the nature of products and types of customers for the four segments may vary
significantly. As such, the segments are managed
separately.
Results
of Operations
The
following table sets forth our results of operations as a percentage of net
sales during the periods shown:
|
|
13-Weeks Ended
|
|
|
|
June 27, 2009
|
|
|
June 28, 2008
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost
of goods sold
|
|
|
47.4 |
% |
|
|
54.2 |
% |
Gross
profit
|
|
|
52.6 |
% |
|
|
45.8 |
% |
Advertising
|
|
|
5.1 |
% |
|
|
6.4 |
% |
Selling,
general and administrative
|
|
|
9.3 |
% |
|
|
7.3 |
% |
Research
and development
|
|
|
8.4 |
% |
|
|
5.9 |
% |
Total
operating expenses
|
|
|
22.8 |
% |
|
|
19.6 |
% |
Operating
income
|
|
|
29.8 |
% |
|
|
26.2 |
% |
Other
income (expense), net
|
|
|
0.1 |
% |
|
|
8.5 |
% |
Income
before income taxes
|
|
|
29.9 |
% |
|
|
34.7 |
% |
Provision
for income taxes
|
|
|
5.7 |
% |
|
|
6.6 |
% |
Net
income
|
|
|
24.2 |
% |
|
|
28.1 |
% |
|
|
26-Weeks Ended
|
|
|
|
June 27, 2009
|
|
|
June 28, 2008
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost
of goods sold
|
|
|
50.5 |
% |
|
|
53.2 |
% |
Gross
profit
|
|
|
49.5 |
% |
|
|
46.8 |
% |
Advertising
|
|
|
5.2 |
% |
|
|
6.1 |
% |
Selling,
general and administrative
|
|
|
11.0 |
% |
|
|
8.0 |
% |
Research
and development
|
|
|
10.1 |
% |
|
|
6.6 |
% |
Total
operating expenses
|
|
|
26.3 |
% |
|
|
20.7 |
% |
Operating
income
|
|
|
23.2 |
% |
|
|
26.1 |
% |
Other
income (expense), net
|
|
|
0.2 |
% |
|
|
5.5 |
% |
Income
before income taxes
|
|
|
23.4 |
% |
|
|
31.6 |
% |
Provision
for income taxes
|
|
|
4.4 |
% |
|
|
6.0 |
% |
Net
income
|
|
|
19.0 |
% |
|
|
25.6 |
% |
The
Company manages its operations in four segments: outdoor/fitness, marine,
automotive/mobile, and aviation, and each of its segments employs the same
accounting policies. Allocation of certain research and development expenses,
and selling, general, and administrative expenses are made to each segment on a
percent of revenue basis. The following table sets forth our
results of operations (in thousands) including revenue (net sales), operating
income, and income before taxes for each of our four segments during the periods
shown. For each line item in the table, the total of the
outdoor/fitness, marine, automotive/mobile, and aviation segments' amounts
equals the amount in the condensed consolidated statements of income included in
Item 1.
|
|
Reportable Segments
|
|
|
|
Outdoor/
|
|
|
|
|
|
Auto/
|
|
|
|
|
|
|
|
|
|
Fitness
|
|
|
Marine
|
|
|
Mobile
|
|
|
Aviation
|
|
|
Total
|
|
13-Weeks
Ended June 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
108,009 |
|
|
$ |
60,198 |
|
|
$ |
436,718 |
|
|
$ |
64,179 |
|
|
$ |
669,104 |
|
Operating
income
|
|
$ |
50,416 |
|
|
$ |
21,342 |
|
|
$ |
106,712 |
|
|
$ |
20,682 |
|
|
$ |
199,152 |
|
Income
before taxes
|
|
$ |
51,255 |
|
|
$ |
21,722 |
|
|
$ |
105,474 |
|
|
$ |
21,390 |
|
|
$ |
199,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
119,147 |
|
|
$ |
71,178 |
|
|
$ |
631,883 |
|
|
$ |
89,463 |
|
|
$ |
911,671 |
|
Operating
income
|
|
$ |
45,445 |
|
|
$ |
24,068 |
|
|
$ |
129,190 |
|
|
$ |
39,800 |
|
|
$ |
238,503 |
|
Income
before taxes
|
|
$ |
55,302 |
|
|
$ |
27,905 |
|
|
$ |
191,855 |
|
|
$ |
41,101 |
|
|
$ |
316,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks
Ended June 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
188,013 |
|
|
$ |
98,215 |
|
|
$ |
696,304 |
|
|
$ |
123,271 |
|
|
$ |
1,105,803 |
|
Operating
income
|
|
$ |
78,920 |
|
|
$ |
31,914 |
|
|
$ |
111,318 |
|
|
$ |
34,959 |
|
|
$ |
257,111 |
|
Income
before taxes
|
|
$ |
78,915 |
|
|
$ |
31,444 |
|
|
$ |
114,632 |
|
|
$ |
34,773 |
|
|
$ |
259,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26-Weeks
Ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
189,641 |
|
|
$ |
127,185 |
|
|
$ |
1,083,742 |
|
|
$ |
174,908 |
|
|
$ |
1,575,476 |
|
Operating
income
|
|
$ |
64,756 |
|
|
$ |
41,904 |
|
|
$ |
236,831 |
|
|
$ |
67,745 |
|
|
$ |
411,236 |
|
Income
before taxes
|
|
$ |
75,749 |
|
|
$ |
47,238 |
|
|
$ |
304,159 |
|
|
$ |
71,460 |
|
|
$ |
498,606 |
|
Comparison
of 13-Weeks Ended June 27, 2009 and June 28, 2008
(Amounts
included in the following discussion are stated in thousands unless otherwise
indicated)
Net
Sales
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
108,009 |
|
|
|
16.1 |
% |
|
$ |
119,147 |
|
|
|
13.1 |
% |
|
$ |
(11,138 |
) |
|
|
-9.3 |
% |
Marine
|
|
|
60,198 |
|
|
|
9.0 |
% |
|
|
71,178 |
|
|
|
7.8 |
% |
|
|
(10,980 |
) |
|
|
-15.4 |
% |
Automotive/Mobile
|
|
|
436,718 |
|
|
|
65.3 |
% |
|
|
631,883 |
|
|
|
69.3 |
% |
|
|
(195,165 |
) |
|
|
-30.9 |
% |
Aviation
|
|
|
64,179 |
|
|
|
9.6 |
% |
|
|
89,463 |
|
|
|
9.8 |
% |
|
|
(25,284 |
) |
|
|
-28.3 |
% |
Total
|
|
$ |
669,104 |
|
|
|
100.0 |
% |
|
$ |
911,671 |
|
|
|
100.0 |
% |
|
$ |
(242,567 |
) |
|
|
-26.6 |
% |
Net sales decreased 26.6% for the
13-week period ended June 27, 2009 when compared to the year-ago
quarter. The decline occurred across all segments with the greatest
decline in the automotive/mobile segment, as well as
aviation. Automotive/mobile revenue remains the largest portion of
our revenue mix, but declined from 69.3% in the second quarter of 2008 to 65.3%
in the second quarter of 2009.
Total
unit sales decreased 5% to 3,715,000 in the second quarter of 2009 from
3,920,000 in the same period of 2008. The lower unit sales
volume in the second quarter of fiscal 2009 was attributable to declining
volumes across all segments with the greatest percentage declines occurring in
aviation and marine.
Automotive/mobile
segment revenue declined 31% from the year-ago quarter, as the average selling
price declined 28% and volumes fell 4%. This segment has slowed due
to global macroeconomic conditions which have especially impacted growth in
North America and Europe. The aviation and marine segments declined
28% and 15%, respectively, from the year-ago quarter as both industries
experience significant slowdowns associated with the macroeconomic
conditions. Revenues in our outdoor/fitness segment declined 9% from
the year ago quarter when we introduced many new products in the
segment.
Gross
Profit
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
73,215 |
|
|
|
67.8 |
% |
|
$ |
67,908 |
|
|
|
57.0 |
% |
|
$ |
5,307 |
|
|
|
7.8 |
% |
Marine
|
|
|
35,780 |
|
|
|
59.4 |
% |
|
|
40,120 |
|
|
|
56.4 |
% |
|
|
(4,340 |
) |
|
|
-10.8 |
% |
Automotive/Mobile
|
|
|
195,075 |
|
|
|
44.7 |
% |
|
|
243,720 |
|
|
|
38.6 |
% |
|
|
(48,645 |
) |
|
|
-20.0 |
% |
Aviation
|
|
|
47,544 |
|
|
|
74.1 |
% |
|
|
65,380 |
|
|
|
73.1 |
% |
|
|
(17,836 |
) |
|
|
-27.3 |
% |
Total
|
|
$ |
351,614 |
|
|
|
52.6 |
% |
|
$ |
417,128 |
|
|
|
45.8 |
% |
|
$ |
(65,514 |
) |
|
|
-15.7 |
% |
Gross
profit dollars in the second quarter of 2009 fell 15.7% while gross profit
margin increased 680 basis points compared to the second quarter of
2008. Second quarter gross profit margins increased in all segments,
when compared to the same quarter in 2008. Second quarter 2009
gross profit margin improvements were greatest in the outdoor/fitness and
automotive/mobile segments at 1080 basis points and 610 basis points,
respectively.
The
automotive/mobile segment’s margin increase was driven by a decrease in per unit
cost partially offset by average selling price reductions. The per
unit cost benefits were driven by foreign currency fluctuations, material cost
reductions, and other cost savings. The impact to total company gross
margin of the automotive/mobile segment declined as it fell to 55.5% of total
gross margin from 58.4% in the year-ago quarter. The Company also
benefited from increased margins in the outdoor/fitness, aviation and marine
segments due to stable or increased pricing and decreases in per unit
costs. Gross margins were most improved in the outdoor/fitness
segment, as pricing was stable and the product mix shifted toward higher margin
units. Aviation and marine gross margins increased 100 basis points
and 300 basis points, respectively, from the year-ago quarter.
Advertising
Expense
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
6,133 |
|
|
|
5.7 |
% |
|
$ |
7,534 |
|
|
|
6.3 |
% |
|
$ |
(1,401 |
) |
|
|
-18.6 |
% |
Marine
|
|
|
3,253 |
|
|
|
5.4 |
% |
|
|
5,596 |
|
|
|
7.9 |
% |
|
|
(2,343 |
) |
|
|
-41.9 |
% |
Automotive/Mobile
|
|
|
23,520 |
|
|
|
5.4 |
% |
|
|
43,387 |
|
|
|
6.9 |
% |
|
|
(19,867 |
) |
|
|
-45.8 |
% |
Aviation
|
|
|
1,117 |
|
|
|
1.7 |
% |
|
|
1,810 |
|
|
|
2.0 |
% |
|
|
(693 |
) |
|
|
-38.3 |
% |
Total
|
|
$ |
34,023 |
|
|
|
5.1 |
% |
|
$ |
58,327 |
|
|
|
6.4 |
% |
|
$ |
(24,304 |
) |
|
|
-41.7 |
% |
Advertising
expense decreased both as a percentage of sales and in absolute dollars when
compared with the year-ago period. As a percent of sales, advertising
expenses declined to 5.1% in the second quarter of 2009 compared to 6.4% in
second quarter of 2008. The decrease was a result of actions taken by
the Company to reduce costs as the macroeconomic conditions impacted sales
across our segments and around the world.
Selling,
General and Administrative Expense
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Quarter over Quarter
|
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
10,834 |
|
|
|
10.0 |
% |
|
$ |
8,298 |
|
|
|
7.0 |
% |
|
$ |
2,536 |
|
|
|
30.6 |
% |
Marine
|
|
|
5,797 |
|
|
|
9.6 |
% |
|
|
5,620 |
|
|
|
7.9 |
% |
|
|
177 |
|
|
|
3.1 |
% |
Automotive/Mobile
|
|
|
40,016 |
|
|
|
9.2 |
% |
|
|
47,762 |
|
|
|
7.6 |
% |
|
|
(7,746 |
) |
|
|
-16.2 |
% |
Aviation
|
|
|
5,539 |
|
|
|
8.6 |
% |
|
|
5,021 |
|
|
|
5.6 |
% |
|
|
518 |
|
|
|
10.3 |
% |
Total
|
|
$ |
62,186 |
|
|
|
9.3 |
% |
|
$ |
66,701 |
|
|
|
7.3 |
% |
|
$ |
(4,515 |
) |
|
|
-6.8 |
% |
Selling, general and administrative
expense decreased in absolute dollars while increasing as a percentage of sales
compared to the year-ago quarter as costs throughout the Company were reduced
but not as rapidly as the revenue declines. Cost reductions related
to headcount reductions primarily in operations and reduced bad debt expense in
the current year. The increased expense for the outdoor/fitness
segment is driven by the allocation of costs based on revenues. As
outdoor/fitness revenues have increased as a percentage of revenues, additional
selling, general and administrative expenses are shifted to the
segment. As a percent of sales, selling, general and administrative
expenses increased from 7.3% of sales in the second quarter of 2008 to 9.3% of
sales in the second quarter of 2009, as revenues declined.
Research
and Development Expense
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
Research &
|
|
|
|
|
|
Research &
|
|
|
|
|
|
Quarter over Quarter
|
|
|
|
Development
|
|
|
% of Revenues
|
|
|
Development
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
5,832 |
|
|
|
5.4 |
% |
|
$ |
6,631 |
|
|
|
5.6 |
% |
|
$ |
(799 |
) |
|
|
-12.1 |
% |
Marine
|
|
|
5,388 |
|
|
|
9.0 |
% |
|
|
4,836 |
|
|
|
6.8 |
% |
|
|
552 |
|
|
|
11.4 |
% |
Automotive/Mobile
|
|
|
24,827 |
|
|
|
5.7 |
% |
|
|
23,381 |
|
|
|
3.7 |
% |
|
|
1,446 |
|
|
|
6.2 |
% |
Aviation
|
|
|
20,206 |
|
|
|
31.5 |
% |
|
|
18,749 |
|
|
|
21.0 |
% |
|
|
1,457 |
|
|
|
7.8 |
% |
Total
|
|
$ |
56,253 |
|
|
|
8.4 |
% |
|
$ |
53,597 |
|
|
|
5.9 |
% |
|
$ |
2,656 |
|
|
|
5.0 |
% |
The 5.0% increase in research and
development expense was due to ongoing development activities for new products
and the addition of almost 200 new engineering personnel to our staff since the
year-ago quarter as a result of our continued emphasis on product
innovation. Research and development costs increased $2.7
million when compared with the year-ago quarter representing a 250 basis point
increase as a percent of revenue, due to the 27% revenue
decline.
Operating
Income
|
|
13-weeks ended June 27, 2009
|
|
|
13-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
50,416 |
|
|
|
46.7 |
% |
|
$ |
45,445 |
|
|
|
38.1 |
% |
|
$ |
4,971 |
|
|
|
10.9 |
% |
Marine
|
|
|
21,342 |
|
|
|
35.5 |
% |
|
|
24,068 |
|
|
|
33.8 |
% |
|
|
(2,726 |
) |
|
|
-11.3 |
% |
Automotive/Mobile
|
|
|
106,712 |
|
|
|
24.4 |
% |
|
|
129,190 |
|
|
|
20.4 |
% |
|
|
(22,478 |
) |
|
|
-17.4 |
% |
Aviation
|
|
|
20,682 |
|
|
|
32.2 |
% |
|
|
39,800 |
|
|
|
44.5 |
% |
|
|
(19,118 |
) |
|
|
-48.0 |
% |
Total
|
|
$ |
199,152 |
|
|
|
29.8 |
% |
|
$ |
238,503 |
|
|
|
26.2 |
% |
|
$ |
(39,351 |
) |
|
|
-16.5 |
% |
Operating
income increased 360 basis points as a percent of revenue when compared to the
second quarter of 2008 as declining revenues and continued growth in research
and development expense associated with ongoing development activities were
offset by gross margin improvement.
Other
Income (Expense)
|
|
13-weeks ended
|
|
|
13-weeks ended
|
|
|
|
June 27, 2009
|
|
|
June 28, 2008
|
|
Interest
Income
|
|
$ |
5,190 |
|
|
$ |
9,801 |
|
Foreign
Currency Exchange
|
|
|
(4,836 |
) |
|
|
21,561 |
|
Gain
on sale of equity securities
|
|
|
- |
|
|
|
45,686 |
|
Other
|
|
|
335 |
|
|
|
612 |
|
Total
|
|
$ |
689 |
|
|
$ |
77,660 |
|
The
average interest rate return on cash and investments during the second quarter
of 2009 was 1.5% compared to 3.6% during the same quarter of
2008. The decrease in interest income is attributable to decreasing
interest rates.
Foreign
currency gains and losses for the Company are primarily tied to movements by the
Taiwan Dollar, the Euro, and the British Pound Sterling. The
U.S. Dollar remains the functional currency of Garmin (Europe)
Ltd. The Euro is the functional currency of all other European
subsidiaries excluding Garmin Danmark and Garmin Sweden. As these
entities have grown, Euro currency moves generate material gains and
losses. Additionally, Euro-based inter-company transactions in
Garmin Ltd. can also generate currency gains and losses. The Canadian
Dollar and Danish Krone, and Swedish Krona are the functional currency of
Dynastream Innovations, Inc., Garmin Danmark, and Garmin Sweden respectively;
due to these entities’ relative size, currency moves are not expected to have a
material impact on the Company’s financial statements.
The
majority of the $4.8 million currency loss in the second quarter of 2009 was due
to the weakening of the U.S. Dollar compared to the Euro, the British Pound
Sterling, and the Taiwan Dollar. The relative strength of the Taiwan
Dollar and Euro have offsetting impacts due to the use of the Taiwan Dollar for
manufacturing costs while the Euro transactions relate to
revenue. During the second quarter of 2009, the U.S. Dollar weakened
4.4% and 14.3%, respectively, compared to the Euro and the British Pound
Sterling, resulting in a gain of $12.9 million. Offsetting this gain
was a loss of $16.4 million due to the U.S. Dollar weakening 2.6% against the
Taiwan Dollar. The remaining net currency loss of $1.3 million
related to other currencies and timing of transactions.
The
majority of the $21.6 million currency gain in the second quarter of 2008 was
related to the tender of our Tele Atlas N.V. shares. This transaction
generated a realized gain of $20.4 million due to the strengthening of the Euro
between the date of purchase of the shares in October 2007 to the date of tender
in June 2008.
The gain
on sale of equity securities of $45.7 million in the second quarter of 2008 was
generated from the sale of a portion of our equity interest in Tele Atlas
N.V.
Income
Tax Provision
Our
earnings before taxes decreased 37% when compared to the same quarter in 2008,
and our income tax expense decreased similarly by $22.1 million, to $38.0
million, for the 13-week period ended June 27, 2009, from $60.1 million for the
13-week period ended June 28, 2008. The effective tax rate was 19.0%
in the second quarter of 2009 and the second quarter of 2008.
Net
Income
As a
result of the above, net income decreased 37% for the 13-week period ended June
27, 2009 to $161.9 million compared to $256.1 million for the 13-week period
ended June 28, 2008.
Comparison
of 26-Weeks Ended June 27, 2009 and June 28, 2008
(Amounts
included in the following discussion are stated in thousands unless otherwise
indicated)
Net
Sales
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
188,013 |
|
|
|
17.0 |
% |
|
$ |
189,641 |
|
|
|
12.0 |
% |
|
$ |
(1,628 |
) |
|
|
-0.9 |
% |
Marine
|
|
|
98,215 |
|
|
|
8.9 |
% |
|
|
127,185 |
|
|
|
8.1 |
% |
|
|
(28,970 |
) |
|
|
-22.8 |
% |
Automotive/Mobile
|
|
|
696,304 |
|
|
|
62.9 |
% |
|
|
1,083,742 |
|
|
|
68.8 |
% |
|
|
(387,438 |
) |
|
|
-35.8 |
% |
Aviation
|
|
|
123,271 |
|
|
|
11.2 |
% |
|
|
174,908 |
|
|
|
11.1 |
% |
|
|
(51,637 |
) |
|
|
-29.5 |
% |
Total
|
|
$ |
1,105,803 |
|
|
|
100.0 |
% |
|
$ |
1,575,476 |
|
|
|
100.0 |
% |
|
$ |
(469,673 |
) |
|
|
-29.8 |
% |
Net sales decreased 29.8% for the
26-week period ended June 27, 2009 when compared to the year-ago
period. The decline occurred across all segments with the greatest
decline in the automotive/mobile segment, as well as
aviation. Automotive/mobile revenue remains the largest portion of
our revenue mix, but declined from 68.8% in the first half of 2008 to 62.9% in
the first half of 2009.
Total
unit sales decreased 9% to 6,132,000 in the first half of 2009 from 6,707,000 in
the same period of 2008. The lower unit sales volume in the
first half of fiscal 2009 was attributable to declining volumes across all
segments with the greatest percentage declines occurring in aviation and
marine.
Automotive/mobile
segment revenue declined 35.8% from the year-ago period, as the average selling
price declined 30% and volumes declined 9%. The aviation and
marine segments declined 29.5% and 22.8%, respectively, from the year-ago period
as both industries experience significant slowdowns associated with the
macroeconomic conditions. Outdoor/fitness segment revenue declined
0.9% as growth in the first quarter was offset by declines in the second quarter
as previously discussed.
Gross
Profit
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
121,639 |
|
|
|
64.7 |
% |
|
$ |
105,347 |
|
|
|
55.6 |
% |
|
$ |
16,292 |
|
|
|
15.5 |
% |
Marine
|
|
|
58,658 |
|
|
|
59.7 |
% |
|
|
72,583 |
|
|
|
57.1 |
% |
|
|
(13,925 |
) |
|
|
-19.2 |
% |
Automotive/Mobile
|
|
|
279,258 |
|
|
|
40.1 |
% |
|
|
439,614 |
|
|
|
40.6 |
% |
|
|
(160,356 |
) |
|
|
-36.5 |
% |
Aviation
|
|
|
88,054 |
|
|
|
71.4 |
% |
|
|
119,699 |
|
|
|
68.4 |
% |
|
|
(31,645 |
) |
|
|
-26.4 |
% |
Total
|
|
$ |
547,609 |
|
|
|
49.5 |
% |
|
$ |
737,243 |
|
|
|
46.8 |
% |
|
$ |
(189,634 |
) |
|
|
-25.7 |
% |
Gross profit dollars in the first half
of 2009 fell 25.7% while gross profit margin percentage increased 270 basis
points over the same period of the previous year. First half gross
profit margins increased in all segments excluding automotive/mobile, when
compared to the same period in 2007.
The
automotive/mobile segment gross profit margin percentage decline of 50 basis
points was driven by price declines largely offset by material cost reductions
and foreign currency fluctuations as the Company benefited from sales transacted
in foreign currencies. The automotive/mobile segment is by
nature a lower-margin business and the Company continues to see the impacts
expected on gross margin due to falling prices and a product mix shift toward
lower end PNDs. Gross profit margin percentage for outdoor/fitness, marine and
aviation increased compared to the first half of 2008 due to stable or increased
pricing and decreases in per unit costs driven by product mix and material cost
reductions.
Advertising
Expense
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
8,830 |
|
|
|
4.7 |
% |
|
$ |
12,504 |
|
|
|
6.6 |
% |
|
$ |
(3,674 |
) |
|
|
-29.4 |
% |
Marine
|
|
|
4,999 |
|
|
|
5.1 |
% |
|
|
9,704 |
|
|
|
7.6 |
% |
|
|
(4,705 |
) |
|
|
-48.5 |
% |
Automotive/Mobile
|
|
|
41,182 |
|
|
|
5.9 |
% |
|
|
71,364 |
|
|
|
6.6 |
% |
|
|
(30,182 |
) |
|
|
-42.3 |
% |
Aviation
|
|
|
2,237 |
|
|
|
1.8 |
% |
|
|
2,884 |
|
|
|
1.6 |
% |
|
|
(647 |
) |
|
|
-22.4 |
% |
Total
|
|
$ |
57,248 |
|
|
|
5.2 |
% |
|
$ |
96,456 |
|
|
|
6.1 |
% |
|
$ |
(39,208 |
) |
|
|
-40.6 |
% |
Advertising
expense decreased both as a percentage of sales and in absolute dollars when
compared with the year-ago period. As a percent of sales, advertising
expenses declined to 5.2% in the first half of 2009 compared to 6.1% in first
half of 2008. The decrease was a result of actions taken by the
Company to reduce costs as the macroeconomic conditions impacted sales across
our segments and around the world.
Selling,
General and Administrative Expenses
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Quarter over Quarter
|
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
22,232 |
|
|
|
11.8 |
% |
|
$ |
15,258 |
|
|
|
8.0 |
% |
|
$ |
6,974 |
|
|
|
45.7 |
% |
Marine
|
|
|
11,178 |
|
|
|
11.4 |
% |
|
|
10,783 |
|
|
|
8.5 |
% |
|
|
395 |
|
|
|
3.7 |
% |
Automotive/Mobile
|
|
|
77,051 |
|
|
|
11.1 |
% |
|
|
88,815 |
|
|
|
8.2 |
% |
|
|
(11,764 |
) |
|
|
-13.2 |
% |
Aviation
|
|
|
11,502 |
|
|
|
9.3 |
% |
|
|
11,541 |
|
|
|
6.6 |
% |
|
|
(39 |
) |
|
|
-0.3 |
% |
Total
|
|
$ |
121,963 |
|
|
|
11.0 |
% |
|
$ |
126,397 |
|
|
|
8.0 |
% |
|
$ |
(4,434 |
) |
|
|
-3.5 |
% |
Selling,
general and administrative expense decreased in absolute dollars while
increasing as a percentage of sales compared to the year-ago period as costs
throughout the Company were reduced but not as rapidly as the revenue
declines. Cost reductions related to headcount reductions primarily
in operations and reduced bad debt expense in the current year. The
increased expense for the outdoor/fitness segment is driven by the allocation of
costs based on revenues. As outdoor/fitness revenues have increased
as a percentage of revenues, additional selling, general and administrative
expenses are shifted to the segment. As a percent of sales, selling,
general and administrative expenses increased from 8.0% of sales in the first
half of 2008 to 11.0% of sales in the first half of 2009, as revenues
declined.
Research
and Development Expense
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
|
|
|
|
|
|
|
Research &
|
|
|
|
|
|
Research &
|
|
|
|
|
|
Quarter over Quarter
|
|
|
|
Development
|
|
|
% of Revenues
|
|
|
Development
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
11,657 |
|
|
|
6.2 |
% |
|
$ |
12,829 |
|
|
|
6.8 |
% |
|
$ |
(1,172 |
) |
|
|
-9.1 |
% |
Marine
|
|
|
10,567 |
|
|
|
10.8 |
% |
|
|
10,192 |
|
|
|
8.0 |
% |
|
|
375 |
|
|
|
3.7 |
% |
Automotive/Mobile
|
|
|
49,707 |
|
|
|
7.1 |
% |
|
|
42,604 |
|
|
|
3.9 |
% |
|
|
7,103 |
|
|
|
16.7 |
% |
Aviation
|
|
|
39,356 |
|
|
|
31.9 |
% |
|
|
37,529 |
|
|
|
21.5 |
% |
|
|
1,827 |
|
|
|
4.9 |
% |
Total
|
|
$ |
111,287 |
|
|
|
10.1 |
% |
|
$ |
103,154 |
|
|
|
6.5 |
% |
|
$ |
8,133 |
|
|
|
7.9 |
% |
The 7.9% increase in research and
development expense dollars was due to ongoing development activities for new
products, the addition of 200 new engineering personnel to our staff during the
period, and an increase in engineering program costs during the first half of
2009 as a result of our continued emphasis on product
innovation. Research and development costs increased $8.1
million when compared with the year-ago period and increased 360 basis points as
a percent of revenue as research and development grew while revenues
declined.
Operating
Income
|
|
26-weeks ended June 27, 2009
|
|
|
26-weeks ended June 28, 2008
|
|
|
Quarter over Quarter
|
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
78,920 |
|
|
|
42.0 |
% |
|
$ |
64,756 |
|
|
|
34.1 |
% |
|
$ |
14,164 |
|
|
|
21.9 |
% |
Marine
|
|
|
31,914 |
|
|
|
32.5 |
% |
|
|
41,904 |
|
|
|
32.9 |
% |
|
|
(9,990 |
) |
|
|
-23.8 |
% |
Automotive/Mobile
|
|
|
111,318 |
|
|
|
16.0 |
% |
|
|
236,831 |
|
|
|
21.9 |
% |
|
|
(125,513 |
) |
|
|
-53.0 |
% |
Aviation
|
|
|
34,959 |
|
|
|
28.4 |
% |
|
|
67,745 |
|
|
|
38.7 |
% |
|
|
(32,786 |
) |
|
|
-48.4 |
% |
Total
|
|
$ |
257,111 |
|
|
|
23.3 |
% |
|
$ |
411,236 |
|
|
|
26.1 |
% |
|
$ |
(154,125 |
) |
|
|
-37.5 |
% |
Operating
income was down 280 basis points as a percent of revenue when compared to the
year-ago period as the revenue declines and continued growth in research and
development expense associated with ongoing development activities were only
partially offset by gross margin improvements and declining in advertising
expense.
Other
Income (Expense)
|
|
26-weeks ended
|
|
|
26-weeks ended
|
|
|
|
June 27, 2009
|
|
|
June 28, 2008
|
|
Interest
Income
|
|
$ |
10,286 |
|
|
$ |
18,127 |
|
Foreign
Currency Exchange
|
|
$ |
(7,274 |
) |
|
|
17,562 |
|
Gain
on sale of equity securities
|
|
|
- |
|
|
|
50,949 |
|
Other
|
|
$ |
(359 |
) |
|
|
732 |
|
Total
|
|
$ |
2,653 |
|
|
$ |
87,370 |
|
The
average taxable equivalent interest rate return on invested cash during the
first half of 2009 was 1.6% compared to 3.4% during the same period of
2008. The decrease in interest income is attributable to decreasing
interest rates.
Foreign
currency gains and losses for the Company are primarily tied to movements by the
Taiwan Dollar, the Euro, and the British Pound Sterling. The
U.S. Dollar remains the functional currency of Garmin (Europe)
Ltd. The Euro is the functional currency of all other European
subsidiaries excluding Garmin Danmark and Garmin Sweden. As these
entities have grown, Euro currency moves generate material gains and
losses. Additionally, Euro-based inter-company transactions in
Garmin Ltd. can also generate currency gains and losses. The Canadian
Dollar and Danish Krone, and Swedish Krona are the functional currency of
Dynastream Innovations, Inc., Garmin Danmark, and Garmin Sweden respectively;
due to these entities’ relative size, currency moves are not expected to have a
material impact on the Company’s financial statements.
The
majority of the $7.3 million currency loss in the first half of 2009 was due to
the weakening of the U.S. Dollar compared to the British Pound Sterling and the
Taiwan Dollar. During the first half of 2009, the U.S. Dollar
weakened 11.7% compared to the British Pound Sterling, resulting in a loss of
$0.7 million. A loss of $5.3 million resulted due to the U.S. Dollar
weakening 0.5% against the Taiwan Dollar. The remaining net currency
loss of $1.3 million related to other currencies and timing of
transactions.
The
majority of the $17.6 million currency gain in the first half of 2008 was
related to the tender of our Tele Atlas N.V. shares. This transaction
generated a realized gain of $21.5 million due to the strengthening of the Euro
between the date of purchase of the shares in October 2007 to the dates of
tender in February, March, and June 2008. The remainder of the $3.9
million currency loss in the first half of 2008 was primarily due to the
weakening of the U.S. Dollar compared to the Taiwan Dollar. During
the first half of fiscal 2008 the Taiwan Dollar exchange rate increased 6.8% in
comparison to the USD, resulting in a $38.2 million loss. Offsetting this
impact, the Euro has strengthened 7.1% relative to the U.S. Dollar during the
first half which resulted in a $34.0 million gain. The relative strength of
the Taiwan Dollar and Euro have offsetting impacts due to the use of the Taiwan
Dollar for manufacturing costs while the Euro transactions relate to revenue.
Other net currency gains and the timing of transactions created the remaining
gain of $0.3 million.
The gain
on sale of equity securities of $50.9 million in the first half of 2008 was
generated from the sale of our equity interest in Tele Atlas N.V.
Income
Tax Provision
Our
earnings before taxes decreased 47.9% when compared to the same period in 2008,
and our income tax expense decreased similarly by $45.4 million, to $49.4
million, for the 26-week period ended June 27, 2009, from $94.7 million for the
26-week period ended June 28, 2008. The effective tax rate was 19.0%
in the first half of 2009 and the first half of 2008.
Net
Income
As a
result of the above, net income decreased 47.9% for the 26-week period ended
June 27, 2009 to $210.4 million compared to $403.9 million for the 26-week
period ended June 28, 2008.
Liquidity
and Capital Resources
Net cash
generated by operating activities was $555.7 million for the 26-week period
ended June 27, 2009 compared to $280.2 million for the 26-week period ended June
28, 2008. We experienced an $89.0 million year-to-date decrease in net
inventories in this 26-week period of 2009. We were able to
reduce inventory levels while still carrying sufficient inventory levels of
finished goods and key components so that potential supplier shortages have as
minimal an impact as possible on our ability to deliver our finished products.
Accounts receivable decreased $233.2 million, net of bad debts, during the first
half of 2009 due to collections following the seasonally strong fourth quarter
of 2008.
Cash flow
used in investing activities during the 26-week period ending June 27, 2009 was
$300.2 million. Cash flow used in investing activities principally
related to $23.3 million in capital expenditures primarily related to business
operation and maintenance activities, the net purchase of $273.3 million of
fixed income securities associated with the investment of our on-hand cash
balances, and the purchase of intangible assets for $3.5 million. It is
management’s goal to invest the on-hand cash consistent with the Company’s
investment policy, which has been approved by the Board of Directors. The
investment policy’s primary purpose is to preserve capital, maintain an
acceptable degree of liquidity, and maximize yield within the constraint of
maximum safety. The average interest rate return on cash and investments during
the second quarter of 2009 was 1.6%
Net cash
provided by financing activities during the period was $2.2 million resulting
from $4.1 million from the issuance of common stock related to our Company stock
plans and stock based compensation tax benefits offset by the use of $1.9
million for stock repurchased under our stock repurchase plan.
We
currently use cash flow from operations to fund our capital expenditures and to
support our working capital requirements. We expect that future cash
requirements will principally be for capital expenditures, working capital
requirements, repurchase of shares, and payment of dividends
declared.
We
believe that our existing cash balances and cash flow from operations will be
sufficient to meet our projected capital expenditures, working capital,
repurchase of shares, and other cash requirements at least through the end of
fiscal 2009.
Contractual
Obligations and Commercial Commitments
We are a party to certain commitments,
which includes raw materials, advertising and other indirect purchases in
connection with conducting out business. Pursuant to these
agreements, the Company is contractually committed to make purchases of
approximately $37.2 million over the next 5 years.
Off-Balance
Sheet Arrangements
We do not have any off-balance sheet
arrangements.
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
Market Sensitivity
We have
market risk primarily in connection with the pricing of our products and
services and the purchase of raw materials. Product pricing and raw
material costs are both significantly influenced by semiconductor market
conditions. Historically, during cyclical economic downturns, we have
been able to offset pricing declines for our products through a combination of
improved product mix and success in obtaining price reductions in raw material
costs. In the current quarter, we were not able to offset the
steep decline in sales with cost savings resulting in a significant decrease in
gross profit and operating income.
Inflation
We do not believe that inflation has
had a material effect on our business, financial condition or results of
operations. If our costs were to become subject to significant
inflationary pressures, we may not be able to fully offset such higher costs
through price increases. Our inability or failure to do so could
adversely affect our business, financial condition and results of
operations.
Foreign Currency Exchange Rate
Risk
The
operation of the Company’s subsidiaries in international markets results in
exposure to movements in currency exchange rates. The potential of volatile
foreign exchange rate fluctuations in the future could have a significant effect
on our results of operations. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 52, Foreign Currency
Translation, the financial statements of all Company entities with functional
currencies that are not United States dollars (USD) are translated for
consolidation purposes into USD, the functional currency of Garmin Ltd. and
Garmin International, Inc. Sales, costs, and expenses are
translated at rates prevailing during the reporting periods and at end-of-period
rates for all assets and liabilities. The effect of this
translation is recorded in a separate component of stockholders’ equity and have
been included in accumulated other comprehensive gain/(loss) in the accompanying
condensed consolidated balance sheets.
Foreign
currency gains and losses for the Company are primarily tied to movements by the
Taiwan Dollar (TD), the Euro, and the British Pound
Sterling. The U.S. Dollar (USD) remains the functional currency
of Garmin (Europe) Ltd. The Euro is the functional currency of all
European subsidiaries excluding Garmin Danmark and Garmin Sweden. As
these entities have grown, Euro currency moves generated material gains and
losses. Additionally, Euro-based inter-company transactions in
Garmin Ltd. can also generate currency gains and losses. The Canadian
Dollar and Danish Krone, and Swedish Krona are the functional currency of
Dynastream Innovations, Inc., Garmin Danmark, and Garmin Sweden respectively;
due to these entities’ relative size, currency moves are not expected to have a
material impact on the Company’s financial statements.
Interest Rate
Risk
As of June 27, 2009, we are exposed to
interest rate risk in connection with our investments in marketable
securities. As interest rates change, the unrealized gains and
losses associated with those securities will fluctuate
accordingly. As we have no outstanding long term debt we
have no meaningful debt-related interest rate risk.
Item
4. Controls and Procedures
(a) Evaluation of disclosure controls
and procedures. The Company maintains a system of disclosure controls and
procedures that are designed to provide reasonable assurance that information,
which is required to be timely disclosed, is accumulated and communicated to
management in a timely fashion. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. As of June 27, 2009, the
Company carried out an evaluation, under the supervision and with the
participation of the Company’s management, including the Company’s Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company’s disclosure controls and procedures. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded as of June 27,
2009 that our disclosure controls and procedures were effective such that the
information relating to the Company, required to be disclosed in our Securities
and Exchange Commission ("SEC") reports (i) is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms, and (ii)
is accumulated and communicated to the Company's management, including our Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
(b) Changes in internal control over
financial reporting. There has been no change in the Company’s internal
controls over financial reporting that occurred during the Company’s fiscal
quarter ended June 27, 2009 that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
Part
II - Other Information
Item
1. Legal Proceedings
Encyclopaedia
Britannica, Inc. v. Alpine Electronics of America, Inc., Alpine Electronics,
Inc., Denso Corporation, Toyota
Motor Sales, U.S.A., Inc., American Honda Motor Co., Inc., and Garmin
International, Inc.
On May
16, 2005, Encyclopaedia Britannica, Inc. (“Encyclopaedia Britannica”) filed suit
in the United States District Court for the Western District of Texas, Austin
Division, against Garmin International, Inc. and five other unrelated companies,
alleging infringement of U.S. Patent No. 5,241,671 (“the ’671 patent”). On
December 30, 2005, Garmin International filed a Motion for Summary Judgment for
Claim Invalidity Based on Indefiniteness. On September 30, 2008, the court
issued a Memorandum Opinion and Order granting Garmin International’s Motion for
Summary Judgment for Claim Invalidity Based on Indefiniteness with respect to
the ’671 patent. On October 8, 2008, the court issued an Amended Final Judgment
ordering that Encyclopaedia Britannica take nothing from its action against
Garmin International with respect to the ’671 patent and closed that case. On
November 12, 2008, Encyclopaedia Britannica filed a Notice of Appeal to the
Federal Circuit Court of Appeals. On March 3, 2009, Encyclopaedia Britannica
filed a Corrected Brief of Appellant. On June 1, 2009, Garmin
International filed its responsive brief. On July 20, Encyclopaedia
Britannica filed a reply brief. Garmin International believes the
Federal Circuit will affirm the district court’s judgment.
On May
23, 2006, Encyclopaedia Britannica filed an amended complaint claiming that
Garmin International and the other defendants also infringe U.S. Patent No.
7,051,018 (“the ‘018 patent”), a continuation patent of the ‘671 patent, which
issued on May 23, 2006. On July 25, 2006, Encyclopaedia Britannica filed a new
complaint claiming that Garmin International and the other defendants also
infringe U.S. Patent No. 7,082,437 (“the ‘437 patent”), a continuation patent of
the ‘671 patent, which issued on July 25, 2006. Encyclopaedia Britannica has
asserted the ’018 and ’437 patents against other parties in Encyclopaedia
Britannica v. Magellan Navigation, Inc., et al., Case No. 07‐CA‐787 (LY)(W.D.
Tex). On February 6, 2009, the court entered a scheduling order enabling all
defendants in these cases to file a consolidated Joint Motion for Summary
Judgment of Invalidity of the ’018 and ’437 patents and stayed all proceedings
pending the court’s ruling on the joint motion for summary judgment. On February
20, 2009, the defendants filed a consolidated Joint Motion for Summary Judgment
of Invalidity of the ’018 and ’437 patents. On August 3, 2009, the court issued
a Memorandum Opinion and Order granting the defendants’ consolidated
Joint Motion for Summary Judgment of Invalidity of the ’018 and ’437 patents and
holding that these patents are invalid.
SP
Technologies, LLC v. Garmin Ltd., Garmin International, Inc., TomTom, Inc., and
Magellan Navigation,Inc.
On June
5, 2008, SP Technologies, LLC filed suit in the United States District Court for
the Northern District of Illinois against Garmin Ltd. and Garmin International,
Inc. alleging infringement of U.S. Patent No. 6,784,873 (“the ’873 patent”). On
July 7, 2008, SP Technologies, LLC filed an amended complaint removing all
claims against Garmin Ltd. and alleging infringement of the ’873 patent against
additional defendants TomTom, Inc. and Magellan Navigation, Inc. Garmin believes
that it should not be found liable for infringement of the ’873 patent and
additionally that the ’873 patent is invalid. On August 18, 2008, Garmin filed
its answer to the amended complaint along with a motion for dismissal of SP
Technologies, LLC’s claims of willful and inducement infringement of the ’873
patent. On October 16, 2008, the court granted Garmin’s motion for partial
dismissal, striking the willful and inducement infringement allegations from the
amended complaint. Although there can be no assurance that an
unfavorable outcome of this litigation would not have a material adverse effect
on our operating results, liquidity or financial position, Garmin believes that
the claims are without merit and intends to vigorously defend this
lawsuit.
On
January 7, 2009, Garmin filed an Amended Answer and Counterclaims asserting the
’873 patent is not infringed, is invalid, and that the plaintiff committed
inequitable conduct resulting in unenforceability of the ’873 patent. On
February 2, 2009, codefendant TomTom, Inc. filed a Motion for Summary Judgment
of Unenforceability of the ’873 22 Patent Due to Inequitable Conduct. On April
10, 2009, the Court held a claim construction hearing and the parties await the
Court’s ruling on claim construction and summary judgment.
Scott
C. Harris and Memory Control Enterprise, LLC v. Dash Navigation, Inc., Garmin
International, Inc., Lowrance Electronics,
Inc., Magellan Navigation, Inc., Mio Technology USA, Navigon Inc., Netropa
Corporation, and Sony Electronics,
Inc.
On
September 4, 2008, Scott C. Harris and Memory Control Enterprise, LLC filed suit
in the United States District Court for the Northern District of Illinois
against Garmin International, Inc., along with Dash Navigation, Inc., Lowrance
Electronics, Inc., Magellan Navigation, Inc., Mio Technology USA, Navigon Inc.,
Netropa Corporation, and Sony Electronics, Inc. The complaint against Garmin
International, Inc. alleges infringement of U.S. Patent No. 6,892,136 (“the ’136
patent”). On July 16, 2009, the parties entered into a confidential
settlement agreement and on July 22, 2009, Scott C. Harris and Memory Control
Enterprise, LLC moved the court to dismiss its claims against Garmin
International with prejudice. The settlement was not material to
Garmin.
Traffic
Information, LLC v. Sony Electronics Inc., Asus Computer International, Best Buy
Stores, L.P.,
Kenwood
U.S.A. Corporation, Nextar, Inc., American Suzuki Motor Corporation, TGSP, L.P.
d/b/a Empire
Suzuki,
and Garmin International, Inc.
On July
1, 2009, Traffic Information, LLC filed suit in the United States District Court
for the Eastern District of Texas against Garmin International, Inc. along with
Sony Electronics Inc., Asus Computer International, Best Buy Stores, L.P.,
Kenwood U.S.A. Corporation, Nextar, Inc., American Suzuki Motor Corporation, and
TGSP, L.P. d/b/a Empire Suzuki. The complaint against Garmin
International, Inc. alleges infringement of U.S. Patent No. 6,785,606 (“the ’606
patent”). Garmin
International, Inc. believes the ’606 patent is invalid and not
infringed. Although there can be no assurance that an unfavorable
outcome of this litigation would not have a material adverse effect on our
operating results, liquidity or financial position, Garmin International, Inc.
believes that the claims are without merit and intends to vigorously defend this
action.
From time
to time Garmin is involved in other legal actions arising in the ordinary course
of our business. We believe that the ultimate outcome of these actions will not
have a material adverse effect on our business, financial condition and results
of operations.
Item
1A. Risk Factors
There are many risks and uncertainties
that can affect our future business, financial performance or share
price. In addition to the other information set forth in this report,
you should carefully consider the factors discussed in Part I, “Item 1A. Risk
Factors” in our Annual Report on Form 10-K for the fiscal year ended December
27, 2008. There have been no material changes during the 13-week and
26-week period ended June 27, 2009 in the risks described in our Annual Report
on Form 10-K. These risks, however, are not the only risks facing our
Company. Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
Items (a) and (b) are not
applicable.
(c) Issuer Purchases of Equity
Securities
The Board
of Directors approved a share repurchase program on October 22, 2008,
authorizing the Company to purchase up to $300,000 of its common shares as
market and business conditions warrant. The share repurchase
authorization expires on December 31, 2009. The company
did not purchase any shares under this authorization in the second quarter of
fiscal 2009.
Item
3. Defaults Upon Senior Securities
None
Item
4. Submission of Matters to a Vote of Security
Holders
The Company held its Annual General
Meeting of Shareholders on June 5, 2009. Proxies for the meeting were
solicited pursuant to Regulation 14A. There was no solicitation in
opposition to the Board of Directors’ nominees for election as directors as
listed in the Proxy Statement and all such nominees were elected. Listed
below is each matter voted on at the Company’s Annual General Meeting. All
such matters were approved. A total of 185,272,255 common shares or
approximately 93% of the common shares outstanding on the record date, were
present in person or by proxy at the Annual General Meeting. These shares
were voted as follows:
Election
of Two Directors of the Company:
Nominee
|
|
For
|
|
Withheld
|
|
|
|
|
|
|
|
Min
H. Kao
|
|
183,293,617
|
|
1,978,638
|
|
Charles
W. Peffer
|
|
183,325,315
|
|
1,946,940
|
|
The terms of office of Directors Min H. Kao and Charles W. Peffer will
continue until the Annual General Meeting in 2012. The terms of office of
Directors Gene M. Betts and Thomas A. McDonnell will continue until the Annual
General Meeting of Shareholders in 2010. The terms of office of Directors Donald
H. Eller and Clifton A. Pemble will continue until the Annual General Meeting of
Shareholders in 2011.
Ratification
of the Appointment of Ernst & Young LLP as the Company’s independent
registered public accounting firm for the 2009 Fiscal Year:
Approval
of Amendment to the Garmin Ltd. 2005 Equity Incentive Plan
For
|
|
Against
|
|
Abstain
|
|
Not
Voted
|
|
143,887,562
|
|
2,117,854
|
|
179,833
|
|
39,087,006
|
|
Approval
of Amendment to the Garmin Ltd. 2000 Non-Employee Directors’ Option
Plan
For
|
|
Against
|
|
Abstain
|
|
Not
Voted
|
|
143,498,920
|
|
2,480,622
|
|
205,707
|
|
39,087,006
|
|
Item
5. Other Information
Not
applicable
Item
6. Exhibits
Exhibit
10.1
|
|
Best
Buy Vendor Program Agreement and Addendum thereto dated March 30,
2009.
|
|
|
|
Exhibit
31.1
|
|
Certification
of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or
15d-14(a).
|
|
|
|
Exhibit
31.2
|
|
Certification
of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or
15d-14(a).
|
|
|
|
Exhibit
32.1
|
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
|
|
Exhibit
32.2
|
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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GARMIN
LTD.
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By
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/s/ Kevin Rauckman
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Kevin
Rauckman
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Chief
Financial Officer
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(Principal
Financial Officer and
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Principal
Accounting
Officer)
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Dated: August
5, 2009
INDEX
TO EXHIBITS
Exhibit No.
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Description
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Exhibit 10.1*
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Best
Buy Vendor Program Agreement and Addendum thereto dated March 30,
2009.
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Exhibit 31.1
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Certification
of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or
15d-14(a).
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Exhibit 31.2
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Certification
of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or
15d-14(a).
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Exhibit 32.1
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Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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Exhibit 32.2
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Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
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*
Portions of Exhibit 10.1 have been omitted pursuant to a request for
confidential treatment.