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 March 27, 2010
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 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 May 1, 2010
Common
Shares, $.005 par value: 199,171,926
Garmin
Ltd.
Form
10-Q
Quarter
Ended March 27, 2010
Table
of Contents
|
Page
|
Part
I - Financial Information
|
|
|
|
|
Item
1.
|
Condensed
Consolidated Financial Statements
|
3
|
|
|
|
|
Introductory
Comments
|
3
|
|
|
|
|
Condensed
Consolidated Balance Sheets at March 27, 2010 (Unaudited) and December 26,
2009
|
4
|
|
|
|
|
Condensed
Consolidated Statements of Income for the 13-weeks ended March
27, 2010 and March 28, 2009 (Unaudited)
|
5
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the 13-weeks ended
March 27, 2010 and March 28, 2009 (Unaudited)
|
6
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements (Unaudited)
|
7
|
|
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
13
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
|
|
|
Item
4.
|
Controls
and Procedures
|
20
|
|
|
|
Part
II - Other Information
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
21
|
|
|
|
Item
1A.
|
Risk
Factors
|
23
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
23
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
24
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Securities Holders
|
24
|
|
|
|
Item
5.
|
Other
Information
|
24
|
|
|
|
Item
6.
|
Exhibits
|
25
|
|
|
|
|
26
|
|
|
|
Index
to Exhibits
|
27
|
Garmin
Ltd.
Form
10-Q
Quarter
Ended March 27, 2010
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 26,
2009. 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 period ended March 27, 2010 are not necessarily indicative of the
results to be expected for the full year 2010.
Condensed
Consolidated Balance Sheets
(In
thousands, except share information)
|
|
(Unaudited)
|
|
|
|
|
|
|
March
27,
|
|
|
December
26,
|
|
|
|
2010
|
|
|
2009
|
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
1,291,343 |
|
|
$ |
1,091,581 |
|
Marketable
securities
|
|
|
19,635 |
|
|
|
19,583 |
|
Accounts
receivable, net
|
|
|
418,520 |
|
|
|
874,110 |
|
Inventories,
net
|
|
|
356,073 |
|
|
|
309,938 |
|
Deferred
income taxes
|
|
|
60,361 |
|
|
|
59,189 |
|
Prepaid
expenses and other current assets
|
|
|
63,427 |
|
|
|
39,470 |
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
2,209,359 |
|
|
|
2,393,871 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
432,606 |
|
|
|
441,338 |
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
|
681,049 |
|
|
|
746,464 |
|
Restricted
cash
|
|
|
941 |
|
|
|
2,047 |
|
Licensing
agreements, net
|
|
|
6,573 |
|
|
|
15,400 |
|
Noncurrent
deferred income tax
|
|
|
20,499 |
|
|
|
20,498 |
|
Other
intangible assets, net
|
|
|
200,501 |
|
|
|
206,256 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
3,551,528 |
|
|
$ |
3,825,874 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders' Equity
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
109,904 |
|
|
$ |
203,388 |
|
Salaries
and benefits payable
|
|
|
34,017 |
|
|
|
45,236 |
|
Accrued
warranty costs
|
|
|
58,814 |
|
|
|
87,424 |
|
Accrued
sales program costs
|
|
|
41,201 |
|
|
|
119,150 |
|
Deferred
revenue
|
|
|
35,835 |
|
|
|
27,910 |
|
Accrued
advertising expense
|
|
|
10,135 |
|
|
|
34,146 |
|
Other
accrued expenses
|
|
|
63,877 |
|
|
|
143,568 |
|
Income
taxes payable
|
|
|
25,816 |
|
|
|
22,846 |
|
Dividend
payable
|
|
|
299,957 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
679,556 |
|
|
|
683,668 |
|
|
|
|
|
|
|
|
|
|
Deferred
income taxes
|
|
|
10,558 |
|
|
|
10,170 |
|
Non-current
income taxes
|
|
|
259,751 |
|
|
|
255,748 |
|
Non-current
deferred revenue
|
|
|
45,470 |
|
|
|
38,574 |
|
Other
liabilities
|
|
|
1,258 |
|
|
|
1,267 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common
stock, $0.005 par value, 1,000,000,000 shares authorized:
|
|
|
|
|
|
|
|
|
Issued
and outstanding shares - 199,128,000 as of March 27, 2010 and 200,274,000
as of December 26, 2009
|
|
|
994 |
|
|
|
1,001 |
|
Additional
paid-in capital
|
|
|
- |
|
|
|
32,221 |
|
Retained
earnings
|
|
|
2,552,920 |
|
|
|
2,816,607 |
|
Accumulated
other comprehensive gain/(loss)
|
|
|
1,021 |
|
|
|
(13,382 |
) |
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
2,554,935 |
|
|
|
2,836,447 |
|
Total
liabilities and stockholders' equity
|
|
$ |
3,551,528 |
|
|
$ |
3,825,874 |
|
See
accompanying notes.
Garmin
Ltd. And Subsidiaries
Condensed
Consolidated Statements of Income (Unaudited)
(In
thousands, except per share information)
|
|
13-Weeks Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$ |
431,067 |
|
|
$ |
436,699 |
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold
|
|
|
200,158 |
|
|
|
240,704 |
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
230,909 |
|
|
|
195,995 |
|
|
|
|
|
|
|
|
|
|
Advertising
expense
|
|
|
17,400 |
|
|
|
23,225 |
|
Selling,
general and administrative expense
|
|
|
67,678 |
|
|
|
59,777 |
|
Research
and development expense
|
|
|
62,483 |
|
|
|
55,034 |
|
Total
operating expense
|
|
|
147,561 |
|
|
|
138,036 |
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
83,348 |
|
|
|
57,959 |
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
6,879 |
|
|
|
5,097 |
|
Foreign
currency
|
|
|
(46,537 |
) |
|
|
(2,438 |
) |
Other
|
|
|
1,833 |
|
|
|
(694 |
) |
Total
other income (expense)
|
|
|
(37,825 |
) |
|
|
1,965 |
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
45,523 |
|
|
|
59,924 |
|
|
|
|
|
|
|
|
|
|
Income
tax provision
|
|
|
8,194 |
|
|
|
11,386 |
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
37,329 |
|
|
$ |
48,538 |
|
|
|
|
|
|
|
|
|
|
Net
income per share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.19 |
|
|
$ |
0.24 |
|
Diluted
|
|
$ |
0.19 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
199,926 |
|
|
|
200,352 |
|
Diluted
|
|
|
201,091 |
|
|
|
200,725 |
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common share
|
|
$ |
1.50 |
|
|
|
- |
|
See
accompanying notes.
Condensed
Consolidated Statements of Cash Flows (Unaudited)
(In
thousands)
|
|
13-Weeks Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
|
2010
|
|
|
2009
|
|
Operating
Activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
37,329 |
|
|
$ |
48,538 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
13,543 |
|
|
|
13,574 |
|
Amortization
|
|
|
8,334 |
|
|
|
8,088 |
|
Gain
on sale of property and equipment
|
|
|
(6 |
) |
|
|
(3 |
) |
Provision
for doubtful accounts
|
|
|
(1,260 |
) |
|
|
(1,101 |
) |
Deferred
income taxes
|
|
|
(1,546 |
) |
|
|
(3,200 |
) |
Foreign
currency transaction gains/losses
|
|
|
47,773 |
|
|
|
(420 |
) |
Provision
for obsolete and slow moving inventories
|
|
|
3,140 |
|
|
|
7,709 |
|
Stock
compensation expense
|
|
|
9,700 |
|
|
|
10,587 |
|
Realized
losses/(gains) on marketable securities
|
|
|
(805 |
) |
|
|
1,274 |
|
Changes
in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
|
|
436,446 |
|
|
|
318,095 |
|
Inventories
|
|
|
(50,168 |
) |
|
|
58,876 |
|
Other
current assets
|
|
|
(606 |
) |
|
|
(1,128 |
) |
Accounts
payable
|
|
|
(94,717 |
) |
|
|
(77,595 |
) |
Other
current and non-current liabilities
|
|
|
(216,868 |
) |
|
|
(88,727 |
) |
Deferred
revenue
|
|
|
14,286 |
|
|
|
- |
|
Income
taxes payable
|
|
|
(4,048 |
) |
|
|
3,993 |
|
Purchase
of licenses
|
|
|
(396 |
) |
|
|
856 |
|
Net
cash provided by operating activities
|
|
|
200,131 |
|
|
|
299,416 |
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(3,935 |
) |
|
|
(13,136 |
) |
Purchase
of intangible assets
|
|
|
(5,029 |
) |
|
|
(872 |
) |
Purchase
of marketable securities
|
|
|
(74,303 |
) |
|
|
(68,662 |
) |
Redemption
of marketable securities
|
|
|
146,073 |
|
|
|
16,638 |
|
Change
in restricted cash
|
|
|
1,106 |
|
|
|
43 |
|
Net
cash provided by/(used in) investing activities
|
|
|
63,912 |
|
|
|
(65,989 |
) |
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common stock from stock purchase plan
|
|
|
2,725 |
|
|
|
119 |
|
Stock
repurchase
|
|
|
(47,206 |
) |
|
|
(1,849 |
) |
Tax
benefit related to stock option exercise
|
|
|
1,408 |
|
|
|
26 |
|
Net
cash used in financing activities
|
|
|
(43,073 |
) |
|
|
(1,704 |
) |
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash and cash equivalents
|
|
|
(21,208 |
) |
|
|
(5,729 |
) |
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
199,762 |
|
|
|
225,994 |
|
Cash
and cash equivalents at beginning of period
|
|
|
1,091,581 |
|
|
|
696,335 |
|
Cash
and cash equivalents at end of period
|
|
$ |
1,291,343 |
|
|
$ |
922,329 |
|
See
accompanying notes.
Garmin
Ltd. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements (Unaudited)
March
27, 2010
(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 period ended March 27, 2010 are not necessarily indicative of the
results that may be expected for the year ending December 25, 2010.
The
condensed consolidated balance sheet at December 26, 2009 has been derived from
the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 26,
2009.
The
Company’s fiscal year is based on a 52-53 week period ending on the last
Saturday of the calendar year. Therefore the financial results of
certain fiscal years, and the associated 14-week quarters, will not be exactly
comparable to the prior and subsequent 52-week fiscal years and the associated
quarters having only 13-weeks. The quarters ended March 27, 2010 and
March 28, 2009 both contain operating results for 13-weeks for both year-to-date
periods.
The
components of inventories consist of the following:
|
|
March 27, 2010
|
|
|
December 26, 2009
|
|
|
|
|
|
|
|
|
Raw
Materials
|
|
$ |
89,124 |
|
|
$ |
80,963 |
|
Work-in-process
|
|
|
38,671 |
|
|
|
32,587 |
|
Finished
goods
|
|
|
265,582 |
|
|
|
235,286 |
|
Inventory
Reserves
|
|
|
(37,304 |
) |
|
|
(38,898 |
) |
Inventory,
net of reserves
|
|
$ |
356,073 |
|
|
$ |
309,938 |
|
The Board
of Directors approved a share repurchase program on February 12, 2010,
authorizing the Company to purchase up to $300,000 of its common shares as
market and business conditions warrant on the open market or in negotiated
transactions in compliance with the SEC’s Rule 10b-18. The
share repurchase authorization expires on December 31, 2010. In
the quarter ended March 27, 2010, the Company repurchased 1,437,801 shares using
cash of $47,092. There remains approximately $252,908 available for
repurchase under this authorization.
The
following table sets forth the computation of basic and diluted net income per
share:
|
|
13-Weeks Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
|
2010
|
|
|
2009
|
|
Numerator:
|
|
|
|
|
|
|
Numerator
for basic and diluted net income per share - net income
|
|
$ |
37,329 |
|
|
$ |
48,538 |
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Denominator
for basic net income per share –weighted-average common
shares
|
|
|
199,926 |
|
|
|
200,352 |
|
|
|
|
|
|
|
|
|
|
Effect
of dilutive securities –employee stock options
|
|
|
1,165 |
|
|
|
373 |
|
|
|
|
|
|
|
|
|
|
Denominator
for diluted net income per share –adjusted weighted-average common
shares
|
|
|
201,091 |
|
|
|
200,725 |
|
|
|
|
|
|
|
|
|
|
Basic
net income per share
|
|
$ |
0.19 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
|
Diluted
net income per share
|
|
$ |
0.19 |
|
|
$ |
0.24 |
|
There
were 1,165,620 anti-dilutive options for the 13-week period ended March 27,
2010. There were 9,488,615 anti-dilutive options for the
13-week period ended March 28, 2009.
There were 291,714 shares issued as a
result of exercises of stock appreciation rights and stock options for the
13-week period ended March 27, 2010. There were 12,098 shares issued
as a result of exercises of stock appreciation rights and stock options for the
13-week period ended March 28, 2009.
Comprehensive
income is comprised of the following:
|
|
13-Weeks Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
|
2010
|
|
|
2009
|
|
Net
income
|
|
$ |
37,329 |
|
|
$ |
48,538 |
|
Translation
adjustment
|
|
|
8,039 |
|
|
|
(18,763 |
) |
Change
in fair value of available-for-sale marketable securities, net of deferred
taxes
|
|
|
6,364 |
|
|
|
(6,042 |
) |
Comprehensive
income
|
|
$ |
51,732 |
|
|
$ |
23,733 |
|
Net
sales, operating income, and income before taxes for each of the Company’s
reportable segments are presented below:
|
|
|
Reportable Segments
|
|
|
|
|
Outdoor/
|
|
|
|
|
|
Auto/
|
|
|
|
|
|
|
|
|
|
|
Fitness
|
|
|
Marine
|
|
|
Mobile
|
|
|
Aviation
|
|
|
Total
|
|
13-Weeks
Ended
|
March
27, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ |
102,736 |
|
|
$ |
41,314 |
|
|
$ |
220,924 |
|
|
$ |
66,093 |
|
|
$ |
431,067 |
|
Operating
income
|
|
|
$ |
38,568 |
|
|
$ |
8,929 |
|
|
$ |
16,982 |
|
|
$ |
18,869 |
|
|
$ |
83,348 |
|
Income
before taxes
|
|
$ |
31,165 |
|
|
$ |
6,628 |
|
|
$ |
(10,256 |
) |
|
$ |
17,986 |
|
|
$ |
45,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
March
28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ |
80,004 |
|
|
$ |
38,017 |
|
|
$ |
259,586 |
|
|
$ |
59,092 |
|
|
$ |
436,699 |
|
Operating
income
|
|
|
$ |
28,504 |
|
|
$ |
10,572 |
|
|
$ |
4,605 |
|
|
$ |
14,278 |
|
|
$ |
57,959 |
|
Income
before taxes
|
|
$ |
27,660 |
|
|
$ |
9,723 |
|
|
$ |
9,158 |
|
|
$ |
13,383 |
|
|
$ |
59,924 |
|
Allocation
of certain research and development expenses, and selling, general, and
administrative expenses are made to each segment on a percent of revenue
basis.
Net sales
and long-lived assets (property and equipment) by geographic area are as follows
as of and for the 13-week periods ended March 27, 2010 and March 28,
2009:
|
|
North
|
|
|
|
|
|
|
|
|
|
|
|
|
America
|
|
|
Asia
|
|
|
Europe
|
|
|
Total
|
|
March
27, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales to external customers
|
|
$ |
243,407 |
|
|
$ |
42,683 |
|
|
$ |
144,977 |
|
|
$ |
431,067 |
|
Long
lived assets
|
|
$ |
230,072 |
|
|
$ |
150,682 |
|
|
$ |
51,852 |
|
|
$ |
432,606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales to external customers
|
|
$ |
264,777 |
|
|
$ |
28,140 |
|
|
$ |
143,782 |
|
|
$ |
436,699 |
|
Long
lived assets
|
|
$ |
226,384 |
|
|
$ |
160,087 |
|
|
$ |
54,140 |
|
|
$ |
440,611 |
|
The
Company’s products sold are generally covered by a warranty for periods ranging
from one to two years. The Company’s estimate of costs to
service its warranty obligations are based on historical experience and
expectation of future conditions and are recorded as a liability on the balance
sheet. The following reconciliation provides an illustration of
changes in the aggregate warranty reserve.
|
|
13-Weeks Ended
|
|
|
|
March
27,
|
|
|
March
28,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
Balance
- beginning of the period
|
|
$ |
87,424 |
|
|
$ |
87,408 |
|
Change
in accrual for products sold in prior periods
|
|
|
(21,776 |
) |
|
|
- |
|
Accrual
for products sold during the period
|
|
|
14,914 |
|
|
|
23,993 |
|
Expenditures
|
|
|
(21,748 |
) |
|
|
(42,554 |
) |
Balance
- end of the period
|
|
$ |
58,814 |
|
|
$ |
68,847 |
|
The 13-weeks ended March 27, 2010
include the effect of a change in estimate in the warranty reserves which
decreased the accrual for the period by $21,776.
Pursuant
to certain supply agreements, the Company is contractually committed to make
purchases of approximately $68,415 over the next 5 years.
Our
earnings before taxes decreased 24% when compared to the same quarter in 2009,
and our income tax expense decreased by $3,192, to $8,194 for the 13-week period
ended March 27, 2010, from $11,386 for the 13-week period ended March 28,
2009. The effective tax rate was 18.0% in the first quarter of 2010
and 19.0% in the first quarter of 2009. The slight
decrease is due to the mix of income by tax jurisdiction.
10.
|
Fair
Value Measurements
|
The
Accounting Standards Code (ASC) defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (exit
price). The ASC classifies the inputs used to measure fair value into
the following hierarchy:
Level
1
|
Unadjusted
quoted prices in active markets for identical assets or
liability
|
Level
2
|
Unadjusted
quoted prices in active markets for similar assets or
liabilities
|
Level
3
|
Unobservable
inputs for the asset or liability
|
The Company endeavors to utilize the
best available information in measuring fair value. Financial assets
and liabilities are classified in their entirety based on the lowest level of
input that is significant to the fair value measurement.
For fair value measurements using
significant unobservable inputs, an independent third party provided the
valuation. The collateral composition was used to estimate Weighted
Average Life based on historical and projected payment
information. Cash flows were projected for the issuing trusts, taking
into account underlying loan principal, bonds outstanding, and payout
formulas. Taking this information into account, assumptions were made
as to the yields likely to be required, based upon then current market
conditions for comparable or similar term Asset Based Securities as well as
other fixed income securities.
Assets and liabilities measured at
estimated fair value on a recurring basis are summarized below:
|
|
Fair
Value Measurements as
|
|
|
|
of March 27,
2010
|
|
Description
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for-sale securities
|
|
$ |
630,126 |
|
|
$ |
630,126 |
|
|
$ |
- |
|
|
$ |
- |
|
Failed
Auction rate securities
|
|
|
70,558 |
|
|
|
- |
|
|
|
- |
|
|
|
70,558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
700,684 |
|
|
$ |
630,126 |
|
|
$ |
- |
|
|
$ |
70,558 |
|
|
|
Fair
Value Measurements as
|
|
|
|
of December 26, 2009
|
|
Description
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for-sale securities
|
|
$ |
695,795 |
|
|
$ |
695,795 |
|
|
$ |
- |
|
|
$ |
- |
|
Failed
Auction rate securities
|
|
|
70,252 |
|
|
|
- |
|
|
|
- |
|
|
|
70,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
766,047 |
|
|
$ |
695,795 |
|
|
$ |
- |
|
|
$ |
70,252 |
|
All Level
3 investments have been in a continuous unrealized loss position for 12 months
or longer. For assets and liabilities measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) during the
period, the ASC requires a reconciliation of the beginning and ending balances,
separately for each major category of assets. The reconciliation is
as follows:
|
|
Fair
Value Measurements Using
|
|
|
|
Significant Unobservable Inputs (Level
3)
|
|
|
|
13-Weeks
Ended
|
|
|
|
March 27, 2010
|
|
|
|
|
|
Beginning
balance of auction rate securities
|
|
$ |
70,252 |
|
Total
unrealized gains included in other comprehensive income
|
|
|
856 |
|
Sales
out of Level 3
|
|
|
(550 |
) |
Transfers
in and/or out of Level 3
|
|
|
- |
|
Ending
balance of auction rate securities
|
|
$ |
70,558 |
|
The following is a summary of the
company’s marketable securities classified as available-for-sale securities at
March 27, 2010:
|
|
|
|
|
|
|
|
Gross
|
|
|
Other
Than
|
|
|
Estimated
Fair
|
|
|
|
|
|
|
Gross
|
|
|
Unrealized
|
|
|
Temporary
|
|
|
Value
(Net Carrying
|
|
|
|
Amortized Cost
|
|
|
Unrealized Gains
|
|
|
Losses
|
|
|
Impairment
|
|
|
Amount)
|
|
Mortgage-backed
securities
|
|
$ |
454,639 |
|
|
$ |
4,072 |
|
|
$ |
(1,602 |
) $ |
|
|
- |
|
|
$ |
457,109 |
|
Auction
Rate Securities
|
|
|
91,150 |
|
|
|
- |
|
|
|
(20,592 |
) |
|
|
- |
|
|
$ |
70,558 |
|
Obligations
of states and political subdivisions
|
|
|
110,785 |
|
|
|
1,144 |
|
|
|
(43 |
) |
|
|
- |
|
|
$ |
111,886 |
|
U.S.
corporate bonds
|
|
|
36,623 |
|
|
|
948 |
|
|
|
(349 |
) |
|
|
(1,274 |
) |
|
$ |
35,948 |
|
Other
|
|
|
24,053 |
|
|
|
1,282 |
|
|
|
(152 |
) |
|
|
- |
|
|
$ |
25,183 |
|
Total
|
|
$ |
717,250 |
|
|
$ |
7,446 |
|
|
$ |
(22,738 |
) |
|
$ |
(1,274 |
) |
|
$ |
700,684 |
|
The following is a summary of the
company’s marketable securities classified as available-for-sale securities at
December 26, 2009:
|
|
|
|
|
|
|
|
Gross
|
|
|
Other
Than
|
|
|
Estimated
Fair
|
|
|
|
|
|
|
Gross
|
|
|
Unrealized
|
|
|
Temporary
|
|
|
Value
(Net Carrying
|
|
|
|
Amortized Cost
|
|
|
Unrealized Gains
|
|
|
Losses
|
|
|
Impairment
|
|
|
Amount)
|
|
Mortgage-backed
securities
|
|
$ |
515,200 |
|
|
$ |
2,682 |
|
|
$ |
(4,674 |
) |
|
$ |
- |
|
|
$ |
513,208 |
|
Auction
Rate Securities
|
|
|
91,700 |
|
|
|
- |
|
|
|
(21,448 |
) |
|
|
- |
|
|
$ |
70,252 |
|
Obligations
of states and political subdivisions
|
|
|
112,419 |
|
|
|
908 |
|
|
|
(181 |
) |
|
|
- |
|
|
$ |
113,146 |
|
U.S.
corporate bonds
|
|
|
35,883 |
|
|
|
768 |
|
|
|
(701 |
) |
|
|
(1,274 |
) |
|
$ |
34,676 |
|
Other
|
|
|
33,903 |
|
|
|
1,070
|
|
|
|
(208 |
) |
|
|
- |
|
|
$ |
34,765 |
|
Total
|
|
$ |
789,105 |
|
|
$ |
5,428 |
|
|
$ |
(27,212 |
) |
|
$ |
(1,274 |
) |
|
$ |
766,047 |
|
The cost of securities sold is based on
the specific identification method.
The
amortized cost and estimated fair value of marketable securities at March 27,
2010, 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 (2010)
|
|
$ |
19,526 |
|
|
$ |
19,635 |
|
Due
after one year through five years (2011-2015)
|
|
|
228,883 |
|
|
|
229,448 |
|
Due
after five years through ten years (2016-2020)
|
|
|
200,174 |
|
|
|
200,513 |
|
Due
after ten years (2021 and thereafter)
|
|
|
252,885 |
|
|
|
234,031 |
|
Other
(No contractual maturity dates)
|
|
|
15,782 |
|
|
|
17,057 |
|
|
|
$ |
717,250 |
|
|
$ |
700,684 |
|
11. Recently
Issued Accounting Pronouncements
In January 2010, the FASB issued ASU
No. 2010-06, "Improving Disclosures about Fair Value Measurements" ("ASU
2010-06"), which is included in the ASC Topic 820 (Fair Value Measurements and
Disclosures). ASU 2010-06 requires new disclosures on the amount and reason for
transfers in and out of Level 1 and 2 fair value measurements. ASU
2010-06 also requires disclosure of activities, including purchases, sales,
issuances, and settlements within the Level 3 fair value measurements and
clarifies existing disclosure requirements on levels of disaggregation and
disclosures about inputs and valuation techniques. ASU 2010-06 is
effective for interim and annual reporting periods beginning after December 15,
2009. The adoption of this standard did not have a material effect on our
financial statements.
In February 2010, the FASB issued ASU
No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements"
("ASU 2010-09"), which is included in the FASB Accounting Standards Codification
(the "ASC") Topic 855 (Subsequent Events). ASU 2010-09 clarifies that
an SEC filer is required to evaluate subsequent events through the date that the
financial statements are issued. ASU 2010-09 is effective upon the
issuance of the final update and did not have a significant impact on the
Company's financial statements.
12. Subsequent
Events
On April 28, 2010, Garmin announced a
cash offer of 15 pence per share to acquire all the shares of Raymarine
plc. This offer provides total consideration to Raymarine shareholders of
approximately £12.5 million and implies an enterprise value of approximately
£107.4 million when considering Raymarine’s most recently reported net debt of
£94.9 million. This offer remains subject to shareholder acceptance and
regulatory approvals, but Garmin expects to obtain the necessary merger control
approvals.
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 26, 2009. 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 26, 2009.
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
|
|
|
|
March 27, 2010
|
|
|
March 28, 2009
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost
of goods sold
|
|
|
46.4 |
% |
|
|
55.1 |
% |
Gross
profit
|
|
|
53.6 |
% |
|
|
44.9 |
% |
Advertising
|
|
|
4.1 |
% |
|
|
5.3 |
% |
Selling,
general and administrative
|
|
|
15.7 |
% |
|
|
13.7 |
% |
Research
and development
|
|
|
14.5 |
% |
|
|
12.6 |
% |
Total
operating expenses
|
|
|
34.3 |
% |
|
|
31.6 |
% |
Operating
income
|
|
|
19.3 |
% |
|
|
13.3 |
% |
Other
income (expense), net
|
|
|
(8.7 |
)% |
|
|
0.4 |
% |
Income
before income taxes
|
|
|
10.6 |
% |
|
|
13.7 |
% |
Provision
for income taxes
|
|
|
1.9 |
% |
|
|
2.6 |
% |
Net
income
|
|
|
8.7 |
% |
|
|
11.1 |
% |
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
|
March
27, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ |
102,736 |
|
|
$ |
41,314 |
|
|
$ |
220,924 |
|
|
$ |
66,093 |
|
|
$ |
431,067 |
|
Operating
income
|
|
|
$ |
38,568 |
|
|
$ |
8,929 |
|
|
$ |
16,982 |
|
|
$ |
18,869 |
|
|
$ |
83,348 |
|
Income
before taxes
|
|
$ |
31,165 |
|
|
$ |
6,628 |
|
|
$ |
(10,256 |
) |
|
$ |
17,986 |
|
|
$ |
45,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Weeks
Ended
|
March
28, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
|
$ |
80,004 |
|
|
$ |
38,017 |
|
|
$ |
259,586 |
|
|
$ |
59,092 |
|
|
$ |
436,699 |
|
Operating
income
|
|
|
$ |
28,504 |
|
|
$ |
10,572 |
|
|
$ |
4,605 |
|
|
$ |
14,278 |
|
|
$ |
57,959 |
|
Income
before taxes
|
|
$ |
27,660 |
|
|
$ |
9,723 |
|
|
$ |
9,158 |
|
|
$ |
13,383 |
|
|
$ |
59,924 |
|
Comparison
of 13-Weeks Ended March 27, 2010 and March 28, 2009
(Amounts
included in the following discussion are stated in thousands unless otherwise
indicated)
Net
Sales
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
Quarter over Quarter
|
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
Net Sales
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
102,736 |
|
|
|
23.8 |
% |
|
$ |
80,004 |
|
|
|
18.3 |
% |
|
$ |
22,732 |
|
|
|
28.4 |
% |
Marine
|
|
|
41,314 |
|
|
|
9.6 |
% |
|
|
38,017 |
|
|
|
8.7 |
% |
|
|
3,297 |
|
|
|
8.7 |
% |
Automotive/Mobile
|
|
|
220,924 |
|
|
|
51.3 |
% |
|
|
259,586 |
|
|
|
59.5 |
% |
|
|
(38,662 |
) |
|
|
-14.9 |
% |
Aviation
|
|
|
66,093 |
|
|
|
15.3 |
% |
|
|
59,092 |
|
|
|
13.5 |
% |
|
|
7,001 |
|
|
|
11.8 |
% |
Total
|
|
$ |
431,067 |
|
|
|
100.0 |
% |
|
$ |
436,699 |
|
|
|
100.0 |
% |
|
$ |
(5,632 |
) |
|
|
-1.3 |
% |
Net sales decreased 1.3% for the
13-week period ended March 27, 2010 when compared to the year-ago
quarter. The decline was driven by a 14.9% year-over-year decline in
the automotive/mobile segment. This decline was largely offset by
increased revenues in outdoor/fitness, aviation and
marine. Automotive/mobile revenue remains the largest portion of our
revenue mix, but declined from 59.5% in the first quarter of 2009 to 51.3% in
the first quarter of 2010.
Total
unit sales decreased 12% to 2,137,000 in the first quarter of 2010 from
2,416,000 in the same period of 2009. The lower unit sales
volume in the first quarter of fiscal 2010 was attributable to declining volumes
in automotive as excess retailer inventory cleared the channel in first quarter
offset by unit growth in the outdoor/fitness, aviation and marine
segments.
Automotive/mobile
segment revenue declined 14.9% from the year-ago quarter, as the average selling
price improvement was more than offset by volume declines associated with excess
channel inventory levels and timing of orders from one of our major retail
partners. The aviation and marine segments grew 11.8% and 8.7%,
respectively, from the year-ago quarter as both industries have begun to recover
from the weak macroeconomic conditions experienced in 2009. Revenues
in our outdoor/fitness segment grew 28.4% relative to the first quarter of 2009
as global penetration of our outdoor and fitness products
continues.
Gross
Profit
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
Quarter over Quarter
|
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
Gross Profit
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
65,561 |
|
|
|
63.8 |
% |
|
$ |
48,424 |
|
|
|
60.5 |
% |
|
$ |
17,137 |
|
|
|
35.4 |
% |
Marine
|
|
|
24,231 |
|
|
|
58.6 |
% |
|
|
22,878 |
|
|
|
60.2 |
% |
|
|
1,353 |
|
|
|
5.9 |
% |
Automotive/Mobile
|
|
|
94,775 |
|
|
|
42.9 |
% |
|
|
84,183 |
|
|
|
32.4 |
% |
|
|
10,592 |
|
|
|
12.6 |
% |
Aviation
|
|
|
46,342 |
|
|
|
70.1 |
% |
|
|
40,510 |
|
|
|
68.6 |
% |
|
|
5,832 |
|
|
|
14.4 |
% |
Total
|
|
$ |
230,909 |
|
|
|
53.6 |
% |
|
$ |
195,995 |
|
|
|
44.9 |
% |
|
$ |
34,914 |
|
|
|
17.8 |
% |
Gross
profit dollars in the first quarter of 2010 increased 17.8% and gross profit
margin increased 870 basis points compared to the first quarter of
2009. Gross margins were positively impacted by 510 basis points due
to a $21.8 million warranty adjustment related to a change in the estimated
warranty reserve. This adjustment impacted all segments with
automotive/mobile, outdoor/fitness and marine having the largest
benefits.
The
automotive/mobile segment’s margin increased 1050 basis points as the average
selling price increased and per unit costs decreased including the warranty
benefit. The impact to total company gross margin of the
automotive/mobile segment fell to 41.0% of total gross margin from 43.0% in the
year-ago quarter. The Company benefited from increased margins in the
outdoor/fitness and aviation segments. Outdoor/fitness margins
improved 330 basis points due to slightly increased pricing and decreases in per
unit costs including the warranty benefit. Marine gross margins
decreased 160 basis points from the year-ago quarter due to product
mix.
Advertising
Expense
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
Quarter over Quarter
|
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
Advertising
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
3,807 |
|
|
|
3.7 |
% |
|
$ |
2,698 |
|
|
|
3.4 |
% |
|
$ |
1,109 |
|
|
|
41.1 |
% |
Marine
|
|
|
2,425 |
|
|
|
5.9 |
% |
|
|
1,745 |
|
|
|
4.6 |
% |
|
|
680 |
|
|
|
39.0 |
% |
Automotive/Mobile
|
|
|
9,911 |
|
|
|
4.5 |
% |
|
|
17,662 |
|
|
|
6.8 |
% |
|
|
(7,751 |
) |
|
|
-43.9 |
% |
Aviation
|
|
|
1,257 |
|
|
|
1.9 |
% |
|
|
1,120 |
|
|
|
1.9 |
% |
|
|
137 |
|
|
|
12.2 |
% |
Total
|
|
$ |
17,400 |
|
|
|
4.0 |
% |
|
$ |
23,225 |
|
|
|
5.3 |
% |
|
$ |
(5,825 |
) |
|
|
-25.1 |
% |
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 4.0% in the first quarter of 2010 compared to 5.3% in first
quarter of 2009. The decrease was primarily related to reduced
cooperative advertising paid to our retail partners as volumes declined in the
automotive/mobile segment. We continued to invest in advertising in
the outdoor/fitness, aviation and marine segments which are experiencing revenue
growth.
Selling,
General and Administrative Expense
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Selling, General &
|
|
|
|
|
|
Quarter over Quarter
|
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
Admin. Expenses
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
16,213 |
|
|
|
15.8 |
% |
|
$ |
11,396 |
|
|
|
14.2 |
% |
|
$ |
4,817 |
|
|
|
42.3 |
% |
Marine
|
|
|
6,989 |
|
|
|
16.9 |
% |
|
|
5,382 |
|
|
|
14.2 |
% |
|
|
1,607 |
|
|
|
29.9 |
% |
Automotive/Mobile
|
|
|
39,225 |
|
|
|
17.8 |
% |
|
|
37,036 |
|
|
|
14.3 |
% |
|
|
2,189 |
|
|
|
5.9 |
% |
Aviation
|
|
|
5,251 |
|
|
|
7.9 |
% |
|
|
5,963 |
|
|
|
10.1 |
% |
|
|
(712 |
) |
|
|
-11.9 |
% |
Total
|
|
$ |
67,678 |
|
|
|
15.7 |
% |
|
$ |
59,777 |
|
|
|
13.7 |
% |
|
$ |
7,901 |
|
|
|
13.2 |
% |
Selling, general and administrative
expense increased both as a percentage of sales and in absolute dollars compared
to the year-ago quarter as costs increased in information technology,
administration, legal and finance. This increase is partially related
to expenses associated with the Company’s proposed redomestication to
Switzerland. The increased expense for the outdoor/fitness segment is
driven by the allocation of costs based on revenues. As a percent of
sales, selling, general and administrative expenses increased from 13.7% of
sales in the first quarter of 2009 to 15.7% of sales in the first quarter of
2010, as revenues declined slightly.
Research
and Development Expense
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
|
|
|
|
Research
&
|
|
|
|
|
|
Research
&
|
|
|
|
|
|
Quarter
over Quarter
|
|
|
|
Development
|
|
|
% of Revenues
|
|
|
Development
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
6,973 |
|
|
|
6.8 |
% |
|
$ |
5,826 |
|
|
|
7.3 |
% |
|
$ |
1,147 |
|
|
|
19.7 |
% |
Marine
|
|
|
5,888 |
|
|
|
14.3 |
% |
|
|
5,179 |
|
|
|
13.6 |
% |
|
|
709 |
|
|
|
13.7 |
% |
Automotive/Mobile
|
|
|
28,657 |
|
|
|
13.0 |
% |
|
|
24,880 |
|
|
|
9.6 |
% |
|
|
3,777 |
|
|
|
15.2 |
% |
Aviation
|
|
|
20,965 |
|
|
|
31.7 |
% |
|
|
19,149 |
|
|
|
32.4 |
% |
|
|
1,816 |
|
|
|
9.5 |
% |
Total
|
|
$ |
62,483 |
|
|
|
14.5 |
% |
|
$ |
55,034 |
|
|
|
12.6 |
% |
|
$ |
7,449 |
|
|
|
13.5 |
% |
The 13.5% increase in research and
development expense was due to ongoing development activities for new products
and the addition of over 300 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 $7.4
million when compared with the year-ago quarter representing a 190 basis point
increase as a percent of revenue, as revenues declined slightly.
Operating
Income
|
|
13-weeks ended March 27,
2010
|
|
|
13-weeks ended March 28,
2009
|
|
|
Quarter over Quarter
|
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
Operating Income
|
|
|
% of Revenues
|
|
|
$ Change
|
|
|
% Change
|
|
Outdoor/Fitness
|
|
$ |
38,568 |
|
|
|
37.5 |
% |
|
$ |
28,504 |
|
|
|
35.6 |
% |
|
$ |
10,065 |
|
|
|
35.3 |
% |
Marine
|
|
|
8,929 |
|
|
|
21.6 |
% |
|
|
10,572 |
|
|
|
27.8 |
% |
|
|
(1,643 |
) |
|
|
-15.5 |
% |
Automotive/Mobile
|
|
|
16,982 |
|
|
|
7.7 |
% |
|
|
4,605 |
|
|
|
1.8 |
% |
|
|
12,377 |
|
|
|
268.8 |
% |
Aviation
|
|
|
18,869 |
|
|
|
28.5 |
% |
|
|
14,278 |
|
|
|
24.2 |
% |
|
|
4,590 |
|
|
|
32.1 |
% |
Total
|
|
$ |
83,348 |
|
|
|
19.3 |
% |
|
$ |
57,959 |
|
|
|
13.3 |
% |
|
$ |
25,389 |
|
|
|
43.8 |
% |
Operating
income increased 600 basis points as a percent of revenue when compared to the
first quarter of 2009 due to the significant improvement in gross margins and
reduced advertising expense offset by continued growth in research and
development expense and selling, general and administrative
costs. Operating margins increased in all segments excluding
marine when compared with the first quarter in 2009. Operating
income increased $25.4 million, or 43.8%, when compared to the year ago quarter,
with outdoor/fitness contributing 46% of the operating
income. Management expects operating margins in the automotive/mobile
segment to increase sequentially as volumes increase in the second quarter of
2010.
Other
Income (Expense)
|
|
13-weeks ended
|
|
|
13-weeks ended
|
|
|
|
March 27, 2010
|
|
|
March 28, 2009
|
|
Interest
Income
|
|
$ |
6,879 |
|
|
$ |
5,097 |
|
Foreign
Currency Exchange
|
|
|
(46,537 |
) |
|
|
(2,438 |
) |
Other
|
|
|
1,833 |
|
|
|
(694 |
) |
Total
|
|
$ |
(37,825 |
) |
|
$ |
1,965 |
|
The
average interest rate return on cash and investments during the first quarter of
2010 was 1.4% compared to 1.8% during the same quarter of 2009. The
increase in interest income is attributable to increasing cash balances offset
by 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, Danish Krone, Swedish Krona, and Australian Dollar are the functional
currency of Dynastream Innovations, Inc., Garmin Danmark, Garmin Sweden, and
Garmin Australasia, 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 $46.5 million currency loss in the first quarter of 2010 was due
to the strengthening of the U.S. Dollar compared to the Euro and the British
Pound Sterling. The weakening of the U.S. Dollar compared to the
Taiwan Dollar also contributed to the loss. The currency movement of
the Taiwan Dollar and Euro both generated losses in the current quarter due to
the revaluation of EUR denominated assets (cash and receivables) in Garmin Ltd.
and Garmin Europe, and also the revaluation of the USD denominated
assets/liabilities (cash, receivables and payables) in Garmin Corp.
(Taiwan). During the first quarter of 2010, the U.S. Dollar
strengthened 7.0% and 6.9%, respectively, compared to the Euro and the British
Pound Sterling, resulting in a loss of $39.1 million. In addition,
the U.S. Dollar weakened 1.3% against the Taiwan Dollar, resulting in a $9.1
million loss. The remaining net currency gain of $1.7 million related
to other currencies and timing of transactions.
The
majority of the $2.4 million currency loss in the first quarter of 2009 was due
to the strengthening of the U.S. Dollar compared to the Euro, the British Pound
Sterling, and the Taiwan Dollar. During the first quarter of fiscal
2009, the U.S. Dollar strengthened 4.3% and 2.3%, respectively, compared to the
Euro and the British Pound Sterling, resulting in a loss of $13.6
million. Offsetting this loss was a gain of $11.1 million due to the
U.S. Dollar strengthening 2.1% against the Taiwan Dollar. The
remaining net currency gain of $0.1 million related to other currencies and
timing of transactions.
Income
Tax Provision
Our
earnings before taxes decreased 24% when compared to the same quarter in 2009,
and our income tax expense decreased by $3.2 million, to $8.2 million, for the
13-week period ended March 27, 2010, from $11.4 million for the 13-week period
ended March 28, 2009. The effective tax rate was 18.0% in the first
quarter of 2010 and 19.0% in the first quarter of 2009.
Net
Income
As a
result of the above, net income decreased 23.1% for the 13-week period ended
March 27, 2010 to $37.3 million compared to $48.5 million for the 13-week period
ended March 28, 2009.
Liquidity
and Capital Resources
Net cash
generated by operating activities was $200.1 million for the 13-week period
ended March 27, 2010 compared to $299.4 million for the 13-week period ended
March 28, 2009. Primary drivers of the cash generation included $37.3 million of
net income with non-cash adjustments for depreciation/amortization of $21.9
million and foreign currency losses of $47.8 million, $436.4 million related to
accounts receivable collections following the seasonally strong fourth quarter
and $14.3 million of cash received but deferred due to revenue recognition
policies. This cash generation was offset by uses of cash including
$94.7 million reduction in accounts payable following the seasonally strong
fourth quarter, $216.9 million reduction in other current and noncurrent
liabilities related to the timing of royalty payments and a $50.2 million
increase in inventories as we prepare for the seasonally strong second
quarter.
Cash flow
provided by investing activities during the 13-week period ending March 27, 2010
was $63.9 million. Cash flow provided by investing activities
principally related to the net redemption of $71.8 million of fixed income
securities associated with the investment of our on-hand cash balances offset by
$3.9 million in capital expenditures primarily related to business operation and
maintenance activities, and the purchase of intangible assets for $5.0 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 first quarter of 2010 was 1.4%
Net cash
used in financing activities during the period was $43.1 million resulting from
the use of $47.2 million for stock repurchased under our stock repurchase plan,
offset by $4.1 million from the issuance of common stock related to our Company
stock option plan and stock based compensation tax benefits.
In the
second quarter, we will use cash flow from operations for payment of our
declared dividend, 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 2010.
Contractual
Obligations and Commercial Commitments
Pursuant to certain supply agreements,
the Company is contractually committed to make purchases of approximately $68.4
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.
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 the
Accounting Standards Code, 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
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 March 27, 2010, 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 March 27, 2010, 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 March
27, 2010 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 March 27, 2010 that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
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 December 4, 2009, the Federal
Circuit issued its decision affirming 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 also asserted the ’018 and ’437 patents
against other parties in a separate lawsuit, 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. On August 24, 2009, Encyclopaedia Britannica filed a Notice of Appeal
to the Federal Circuit Court of Appeals. The briefing has been
completed and the Federal Circuit will hold an oral argument on May 4,
2010. Garmin International believes the Federal Circuit will affirm
the district court’s judgment.
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.
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 Patent
Due to Inequitable Conduct. On September 30, 2009, the Court denied TomTom,
Inc.’s Motion for Summary Judgment. On October 9, 2009, the Court issued an
order construing the claims of the ’873 patent. On October 28, 2009, Garmin
filed a Motion for Summary Judgment of Invalidity of the ’873 Patent. On January
6, 2010, SP Technologies, LLC filed its response and on January 20, 2010, Garmin
filed its reply. The parties await the court’s ruling on Garmin’s motion.
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.
Ambato
Media, LLC v. Clarion Co., Ltd., Clarion Corporation of America, Delphi
Corporation, Fujitsu Limited, Fujitsu Ten Corporation of America, Garmin Ltd.,
Garmin International, Inc., Victor Company of Japan Ltd., JVC Americas
Corporation, JVC Kenwood Holdings, Inc., J&K Car Electronics Corporation, LG
Electronics, Inc., LG Electronics USA, Inc., MiTAC International Corporation,
MiTAC Digital Corporation, Mio Technology USA Ltd., Navigon, Inc. Nextar Inc.,
Panasonic Corporation, Panasonic Corporation of North America, Pioneer
Corporation, Pioneer Electronics (USA) Inc., Sanyo Electric Co., Ltd., Sanyo
North America Corporation, Sanyo Electronic Device (U.S.A.)
Corporation,
TomTom
N.V., TomTom International B.V., and TomTom, Inc.
On August 14, 2009, Ambato Media, LLC
filed suit in the United States District Court for the Eastern District of Texas
against Garmin Ltd. and Garmin International, Inc. along with several
codefendants alleging infringement of U.S. Patent No. 5,432,542 (“the ’542
patent”). On September 28, 2009, Garmin filed its Answer and Counterclaims
asserting the ’542 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 believes that the claims are without merit and intends to
vigorously defend this action.
Pioneer
Corporation v. Garmin Deutschland GmbH, Garmin Ltd., Garmin International, Inc.,
Garmin (Europe Ltd. and Garmin Corporation
On October 9, 2009, Pioneer Corporation
filed suit in the District Court in Düsseldorf, Germany against Garmin
Deutschland GmbH, Garmin Ltd., Garmin International, Inc., Garmin Corporation
and Garmin (Europe) Ltd. alleging infringement of European Patent No. 775 892
(“the ‘892 Patent”) and European Patent No. 508 681 (“the‘681 Patent”). Garmin
believes that none of Garmin’s products infringe either of these patents. Garmin
has filed separate lawsuits in the German Federal Patent Court in Munich seeking
declaratory judgments of invalidity of the ‘892 Patent and the ‘681 Patent.
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 action.
In
the Matter of Certain Multimedia Display and Navigation Devices and Systems,
Components Thereof, and Products Containing the Same.
On November 13, 2009, Pioneer
Corporation filed a complaint with the United States International Trade
Commission against Garmin International, Inc., Garmin Corporation, and Honeywell
International Inc. alleging infringement of U.S. Patent No. 5,365,448 (“the ’448
patent”), U.S. Patent No. 6,122,592 (“the ’592 patent”), and U.S. Patent No.
5,424,951 (“the ’951 patent”). On January 12, 2010, Garmin filed its Answer
asserting the ’448 patent, the ’592 patent, and the ’951 patent are 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 believes these claims are
without merit and intends to vigorously defend this action.
Vehicle
IP, LLC v. AT&T Mobility LLC, Cellco Partnership, Garmin International,
Inc., Garmin USA, Inc., Networks in Motion, Inc., Telecommunication Systems,
Inc., Telenav Inc., United Parcel Service, Inc., and UPS Logistics Technologies,
Inc.
On December 31, 2009, Vehicle IP, LLC
filed suit in the United States District Court for the District of Delaware
against Garmin International, Inc. and Garmin USA, Inc. along with several
codefendants alleging infringement of U.S. Patent No. 5,987,377 (“the ’377
patent”). On March 11, 2010, Garmin filed its Answer and Counterclaims asserting
the ’377 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
believes these claims are without merit and intends to vigorously defend this
action.
Nazomi
Communications, Inc. v. Nokia Corporation, Nokia Inc., Microsoft Corporation,
Amazon.com, Inc., Western Digital Corporation, Western Digital Technologies,
Inc., Garmin Ltd., Garmin Corporation, Garmin International, Inc.,
Garmin USA, Inc., Sling Media, Inc., VIZIO, Inc., and Iomega
Corporation.
On February 8, 2010, Nazomi
Communications, Inc. filed suit in the United States District Court for the
Central District of California against Garmin Ltd., Garmin Corporation, Garmin
International, Inc., and Garmin USA, Inc. along with several codefendants
alleging infringement of U.S. Patent No. 7,080,362 (“the ’362 patent”) and U.S.
Patent No. 7,225,436 (“the ’436 patent”). Garmin believes the ’362 patent and
the ’436 patent are not infringed. On April 27, 2010, ARM Ltd., the designer of
the accused hardware, filed a Motion to Intervene and a Motion to Transfer the
case to the Northern District of California. 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 these claims are without merit and intends to
vigorously defend this action.
Visteon
Global Technologies, Inc. and Visteon Technologies LLC v. Garmin International,
Inc.
On February 10, 2010, Visteon Global
Technologies, Inc. and Visteon Technologies LLC filed suit in the United States
District Court for the Eastern District of Michigan, Southern Division, against
Garmin International, Inc. alleging infringement of U.S. Patent No. 5,544,060
(“the ‘060 patent”), U.S. Patent No. 5,654,892 (“the ‘892 patent”), U.S. Patent
No. 5,832, 408 (“the ‘408 patent”), U.S. Patent No 5,987,375 (“the ‘375 patent”)
and U.S. Patent No 6,097,316 (“the ‘316 patent”). Garmin believes that each
claim of the ‘060 patent, the ‘892 patent, the ‘408 patent and the ‘375 patent
is not infringed and/or invalid. 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 these
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
26, 2009. There have been no material changes during the 13-week
period ended March 27, 2010 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.
Items (a) and (b) are not
applicable.
(c) Issuer Purchases of Equity
Securities
The Board
of Directors approved a share repurchase program on February 12, 2010,
authorizing the Company to purchase up to $300 million of its common shares as
market and business conditions warrant. The share repurchase
authorization expires on December 31, 2010. The following
table lists the Company’s share purchases during the first quarter of fiscal
2010:
|
|
|
|
|
|
|
|
Total
Number of Shares
|
|
|
Maximum
Number of Shares
|
|
|
|
|
|
|
|
|
|
Purchased
as Part of
|
|
|
(or
approx. Dollar Value of Shares
|
|
|
|
Total
# of
|
|
|
Average
Price
|
|
|
Publicly
Announced
|
|
|
in
Thousands) That May Yet Be
|
|
Period
|
|
Shares
Purchased
|
|
|
Paid
Per Share
|
|
|
Plans
or Programs
|
|
|
Purchased
Under the Plans or Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-weeks
ended
|
|
|
|
|
|
|
|
|
|
|
|
|
March
27, 2010
|
|
|
1,437,801 |
|
|
$ |
32.75 |
|
|
|
1,437,801 |
|
|
$ |
252,908 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,437,801 |
|
|
$ |
32.75 |
|
|
|
1,437,801 |
|
|
$ |
252,908 |
|
Item
3.
|
Defaults
Upon Senior Securities
|
None
Item
4.
|
Submission
of Matters to a Vote of Security
Holders
|
None
Item
5.
|
Other
Information
|
Not
applicable
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.
|
|
|
Exhibit
101.INS
|
XBRL
Instance Document
|
|
|
Exhibit
101.SCH
|
XBRL
Taxonomy Extension Schema
|
|
|
Exhibit
101.CAL
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
|
Exhibit
101.LAB
|
XBRL
Taxonomy Extension Label Linkbase
|
|
|
Exhibit
101.PRE
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
|
Exhibit
101.DEF
|
XBRL
Taxonomy Extension Definition
Linkbase
|
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.
GARMIN
LTD.
|
|
|
By
|
/s/ Kevin Rauckman
|
|
Kevin
Rauckman
|
|
Chief
Financial Officer
|
|
(Principal
Financial Officer and
|
|
Principal
Accounting Officer)
|
Dated: May
5, 2010
INDEX
TO EXHIBITS
Exhibit No.
|
|
Description
|
|
|
|
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
|
|
|
|
Exhibit
101.INS
|
|
XBRL
Instance Document
|
|
|
|
Exhibit
101.SCH
|
|
XBRL
Taxonomy Extension Schema
|
|
|
|
Exhibit
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase
|
|
|
|
Exhibit
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase
|
|
|
|
Exhibit
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase
|
|
|
|
Exhibit
101.DEF
|
|
XBRL
Taxonomy Extension Definition
Linkbase
|