Garmin Reports Record Third Quarter, Raises Guidance; Announces Management Outstanding Shares of Tele Atlas N.V.



    CAYMAN ISLANDS, Oct. 31 /CNW/ -- Garmin Ltd. (Nasdaq:   GRMN) today
announced a record quarter ended September 29, 2007.

    
    Third Quarter 2007 Financial highlights:
    -- Total revenue of $729 million, up 79% from $408 million in third
       quarter 2006
    -- Automotive/Mobile segment revenue increased 118% to $519 million in
       third quarter 2007
    -- Aviation segment revenue increased 27% to $74 million in third quarter
       2007
    -- Outdoor/Fitness segment revenue increased 24% to $88 million in third
       quarter 2007
    -- Marine segment revenue increased 17% to $48 million in third quarter
       2007
    -- All geographic areas experienced significant growth:
       - North America revenue was $454 million compared to $265 million, up
         71%
       - Europe revenue was $227 million compared to $120 million, up 89%
       - Asia revenue was $48 million compared to $23 million, up 109%
    -- Revenue from our automotive/mobile segment continued to become a larger
       portion of total company revenues when compared with the same quarter
       in 2006, at 71% of total revenues.
    -- Diluted earnings per share increased 57% to $0.88 from $0.56 in third
       quarter 2006; excluding foreign exchange, EPS increased 78% to $0.89
       from $0.50 in the same quarter in 2006.
    

    
    Year-to-Date 2007 Financial highlights:
    -- Total revenue of $1.96 billion, up 69% from $1.16 billion year-to-date
       2006
    -- Automotive/Mobile segment revenue increased 109% to $1.34 billion in
       year-to-date 2007
    -- Aviation segment revenue increased 30% to $224 million in year-to-date
       2007
    -- Outdoor/Fitness segment revenue increased 10% to $225 million in year-
       to-date 2007
    -- Marine segment revenue increased 21% to $170 million in year-to-date
       2007
    -- All geographic areas experienced significant growth:
       - North America revenue was $1.23 billion compared to $700 million, up
         76%
       - Europe revenue was $631 million compared to $400 million, up 58%
       - Asia revenue was $101 million compared to $63 million, up 60%
    -- Diluted earnings per share increased 64% to $2.50 from $1.52 in year-
       to-date 2006; excluding foreign exchange, EPS increased 68% to $2.48
       from $1.48 in the same period in 2006.
    


    
    Business highlights:
    -- Strong sales in our automotive/mobile segment continue to exceed our
       expectations and drive our increased guidance for the remainder of
       2007.
    -- Aviation and marine segment results put them on track to meet or exceed
       earlier full year guidance for these segments.   Given improving sales
       in our outdoor/fitness segment, we continue to anticipate this segment
       will reach our full year guidance with seasonally strong holiday sales.
    -- 2.69 million units sold in the third quarter of 2007, up 119% from the
       same quarter in 2006; year-to-date units sold increased 97% from the
       same period in 2006.
    -- Completed the initial build-out of our third Taiwan manufacturing
       facility, increasing the number of production lines from 31 to 37, and
       production capacity at the end of the third quarter to an annual run
       rate of approximately 16 million units.   Expansion of our R&D and
       other office space in Taiwan continues.
    -- Expansion of our North American warehouse in Olathe, Kansas continues,
       with expected completion in Q1 2008.
    -- We continued to work to increase our retail penetration and broaden our
       distribution as retailers laid the groundwork for the upcoming holiday
       selling season.   Our initial order book for the holiday season is
       strong, as PNDs are positioned to be a popular item during the holiday
       season.
    -- Due diligence work continues on previously announced acquisitions of
       distributors in Spain, Italy, and Denmark.   These activities are part
       of our ongoing efforts to improve our market share in Europe.
    

    
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20061026/CGTH082LOGO)
    Executive overview from Dr. Min Kao, Chairman and Chief Executive Officer:
    
    "Garmin experienced a solid third quarter.  Our continued strong growth
in the automotive/mobile segment demonstrated that our products are well-
positioned to take advantage of the growing interest in portable navigation
devices.   Independent market research indicates we have maintained a strong
leadership position in North America with approximately fifty percent PND
market share, and our market position in Europe continues to improve as well.
    As we head into the holiday season, we believe we are prepared to meet
the growing demand for our products.   We have increased our manufacturing
capacity and grown total inventories over $200 million since the end of the
second quarter of 2007.   Our order book is strong, and we believe our
strategy of extensive market segmentation using both our popular nuvi(TM) and
c-series product offerings will drive positive results.   Useful content and
competitive features integrated into reliable, easy-to-use products at
attractive price points are what customers want - and what they receive when
they choose Garmin.
    Our aviation segment continued to grow steadily during the quarter.
Positive response to our WAAS and GMX200 product offerings and growth in the
sale of our G1000 cockpit continued.  In the third quarter we announced
additional wins for our G1000 cockpit for future Cessna Caravan, Socata TBM
850 as well as the new PiperJet and a G1000 retrofit for the King Air
200/B200.   Also during the 3rd quarter, Cessna announced that our new G300
cockpit display system was selected for its new Skycatcher light sport
aircraft.  We continue to believe the aviation segment is positioned to meet
our 2007 guidance for this segment.
    Our marine segment also showed steady growth, as customer interest in our
revolutionary new marine products and cartography continued to drive revenues
for the quarter.  While typical marine segment revenues decline sequentially
in third and fourth quarter each year, results remain seasonally strong.  We
continue to believe the marine segment is positioned to meet our 2007
guidance.
    Third quarter revenue for our outdoor/fitness segment was strong compared
to the year ago quarter.   Increased sales generated by the new Astro dog
tracking product, as well as new eTrex and Rino products with high-sensitivity
GPS drove this growth.  We see continued growth opportunities for this segment
and believe the outdoor/fitness segment is positioned to meet our 2007
guidance for the segment."
    
    Financial overview from Kevin Rauckman, Chief Financial Officer:
    
    "Our financial results for the third quarter were strong and in line with
our expectations.   Our retail orders are strong, and we look forward to a
solid 2007 holiday season," said Kevin Rauckman, chief financial officer of
Garmin Ltd.  "Our revenue and earnings per share during the quarter grew 79%
and 57% respectively, exceeding our expectations.   Excluding the impact of
foreign exchange, EPS for the quarter grew 78%, from $0.50 to $0.89.
    Gross margin for the overall business declined modestly in the third
quarter, down 180 basis points from the year-ago quarter.   The
automotive/mobile segment gross margin improved 70 basis points during the
quarter due to a seasonal, favorable product mix shift towards higher-margin
North American product, and PND pricing declined more slowly than we expected.
The aviation segment also improved 180 basis points as a function of favorable
product mix.  Gross margin for the marine segment declined 50 basis points
during the quarter when compared to the year-ago quarter as a function of
product mix, and the outdoor/fitness segments declined 320 basis points,
reflecting a product mix shift and the transition of the eTrex product line.
    Operating margin remained relatively stable, declining just 30 basis
points from the year-ago quarter.   This stability reflected an anticipated
decline in gross margin offset by operating leverage as revenues outpaced
increased spending in advertising and research and development expenses during
the quarter.  While we are pleased with these results, we anticipate more
significant margin compression during the fourth quarter of 2007.
    We also generated $117 million of free cash flow in the third quarter of
2007, resulting in a cash and marketable securities balance of $1.03 billion
at the end of the quarter."
    
    Fiscal 2007 Outlook
    
    We remain optimistic about the future success of our business and our
ability to serve customers and distributors around the world.   With this in
mind, we are updating our guidance as follows:

    
    -- We anticipate overall revenue to exceed $2.9 billion in 2007, and
       earnings per share to exceed $3.40.
    -- We anticipate segment revenue growth rates for our automotive/mobile,
       aviation, marine, and outdoor/fitness segments to be 90%, 30%, 20%, and
       10%, respectively
    -- We anticipate operating margins to be approximately 27% for the full
       year 2007
    -- Our effective tax rate should remain approximately 13%
    Announcement of Management Appointment
    
    Given our anticipated ongoing business growth, Cliff Pemble will be
assuming the new positions of Chief Operating Officer (COO) and President of
Garmin Ltd.   In addition, he will assume direct supervision of all North
American Garmin subsidiaries, including Garmin AT, Dynastream, and Digital
Cyclone.   Dr. Kao will continue in his role as Chairman and CEO of Garmin
Ltd. but will now be able to devote more time to business development,
strategic planning, and the development of our Asia-Pacific business
initiatives.
    Announcement of Intent to Make an Offer to Acquire all the Outstanding
Shares in Tele Atlas N.V.
    Early this morning we announced our intention to make an offer to acquire
all the outstanding shares in Tele Atlas N.V.   Garmin has established itself
as a leader in navigation technology by consistently delivering award-winning,
reliable, easy to use products with rich content and competitive features at
attractive prices.   This acquisition is consistent with our vision as a
leader in our market and our vertical integration strategy.   Advanced mapping
data is an essential ingredient for the continued growth of the navigation
industry and this acquisition provides a means for Garmin to contribute more
broadly to the development and growth of this market.   We will discuss this
important announcement more fully on our earnings call this morning.


    
    Non-GAAP Measures
    Net income (earnings) per share, excluding foreign currency
    
    Management believes that net income per share before the impact of
foreign currency translation gain or loss is an important measure.  The
majority of the company's consolidated foreign currency translation gain or
loss results from translation into New Taiwan dollars at the end of each
reporting period of the significant cash and marketable securities,
receivables and payables held in U.S. dollars by the company's Taiwan
subsidiary.  Such translation is required under GAAP because the functional
currency of this subsidiary is New Taiwan dollars.  However, there is minimal
cash impact from such foreign currency translation and management expects that
the Taiwan subsidiary will continue to hold the majority of its cash, cash
equivalents and marketable securities in U.S. dollars.  Accordingly, earnings
per share before the impact of foreign currency translation gain or loss
allows an assessment of the company's operating performance before the
non-cash impact of the position of the U.S. dollar versus the New Taiwan
dollar, which permits a consistent comparison of results between periods.

    The following table contains a reconciliation of GAAP net income per
share to net income per share excluding the impact of foreign currency
translation gain or loss.

    
                         Garmin Ltd. And Subsidiaries
                      Net income per share, excluding FX
                 (in thousands, except per share information)
    

    
                            13-Weeks Ended              39-weeks Ended
                      September 29, September 30,  September 29, September 30,
                          2007          2006           2007          2006
    

    
    Net Income (GAAP)  $193,507       $122,978       $547,744      $333,778
    Foreign currency
     (gain) / loss,
     net of tax
     effects             $3,151       ($12,569)       ($3,036)      ($8,776)
    Net income,
     excluding FX      $196,658       $110,409       $544,708      $325,002
    

    
    Net income per share (GAAP):
     Basic                $0.89          $0.57          $2.53         $1.54
     Diluted              $0.88          $0.56          $2.50         $1.52
    

    
    Net income per share, excluding FX:
     Basic                $0.91          $0.51          $2.52         $1.50
     Diluted              $0.89          $0.50          $2.48         $1.48
    

    
    Weighted average common shares outstanding:
     Basic              216,773        216,317        216,456       216,502
     Diluted            220,644        218,866        219,482       218,878
    Free cash flow
    
    Management believes that free cash flow is an important financial measure
because it represents the amount of cash provided by operations that is
available for investing and defines it as operating cash flow less capital
expenditures for property and equipment.
    The following table contains a reconciliation of GAAP net cash provided
by operating activities to free cash flow.

    
                         Garmin Ltd. And Subsidiaries
                                Free Cash Flow
                                (in thousands)
    

    
                           13-Weeks Ended               39-Weeks Ended
                    September 29, September 30,  September 29, September 30,
                         2007          2006           2007          2006
    

    
    Net cash provided
     by operating
     activities       $133,766       $116,750       $555,905      $249,125
    Less: purchases
     of property and
     equipment        ($16,873)      ($18,865)     ($128,893)     ($45,476)
    Free Cash Flow    $116,893        $97,885       $427,012      $203,649
    


    
    Earnings Call Information
    The information for Garmin Ltd.'s earnings call is as follows:
    

    
    When:    Wednesday, October 31, 2007 at 11:00 a.m. Eastern
    Where:   http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html
    How:     Simply log on to the web at the address above or call to listen
             in at 800-883-9537.
    Contact: investor.relations@garmin.com
    
    A phone recording will be available for five business days following the
earnings call and can be accessed by dialing 800-642-1687 or (706) 645-9291
and utilizing the access code 19218207.  An archive of the live webcast will
be available until November 30, 2007 on the Garmin website at
http://www.garmin.com.  To access the replay, click on the Investor Relations
link and click over to the Events Calendar page.
    This release includes projections and other forward-looking statements
regarding Garmin Ltd. and its business.  Any statements regarding the
company's estimated earnings and revenue for fiscal 2007, the Company's
expected segment revenue growth rate, margins, the number of new products to
be introduced in 2007 and the company's plans and objectives are forward-
looking statements.  The forward-looking events and circumstances discussed in
this release may not occur and actual results could differ materially as a
result of risk factors affecting Garmin, including, but not limited to, the
risk factors that are described in the Annual Report on Form 10-K for the year
ended December 30, 2006 filed by Garmin with the Securities and Exchange
Commission (Commission file number 0-31983).  A copy of Garmin's 2006 Form
10-K can be downloaded from
http://www.garmin.com/aboutGarmin/invRelations/finReports.html.
    Through its operating subsidiaries, Garmin Ltd. designs, manufactures,
and markets navigation, communications and information devices, most of which
are enabled by GPS technology.  Garmin is a leader in the general aviation and
consumer markets and its products serve aviation, marine, outdoor, fitness,
automotive, mobile and OEM applications.  Garmin Ltd. is incorporated in the
Cayman Islands, and its principal subsidiaries are located in the United
States, Taiwan and United Kingdom.  For more information, visit the investor
relations site of Garmin Ltd. at www.garmin.com or contact the Investor
Relations department at 913-397-8200.  Garmin and Forerunner are registered
trademarks, and Edge is a trademark of Garmin Ltd. or its subsidiaries.


    
                         Garmin Ltd. And Subsidiaries
              Condensed Consolidated Balance Sheets (Unaudited)
                   (In thousands, except share information)
    

    
                                                September 29,   December 30,
                                                         2007          2006
    Assets
    Current assets:
     Cash and cash equivalents                      $703,749       $337,321
     Marketable securities                            58,668         73,033
     Accounts receivable, net                        520,538        403,524
     Inventories, net                                493,739        271,008
     Deferred income taxes                            57,700         55,996
     Prepaid expenses and other current assets        23,538         28,202
    

    Total current assets                           1,857,932      1,169,084

    Property and equipment, net                      358,578        250,988

    
    Marketable securities                            263,735        407,843
    Restricted cash                                    1,580          1,525
    Licensing agreements, net                         14,398          3,307
    Other intangible assets, net                     149,277         64,273
    

    Total assets                                  $2,645,500     $1,897,020

    
    Liabilities and Stockholders' Equity
    Current liabilities:
     Accounts payable                               $236,044        $88,375
     Salaries and benefits payable                    32,524         16,268
     Warranty reserve                                 55,225         37,639
     Other accrued expenses                          209,136        100,732
     Income taxes payable                             35,033         94,668
    

    Total current liabilities                        567,962        337,682

    
    Long-term debt, less current portion                 603            248
    Deferred income taxes                              1,219          1,191
    Other liabilities                                 90,505              -
    


    
    Stockholders' equity:
     Common stock                                      1,086          1,082
     Additional paid-in capital                      123,025         83,438
     Retained earnings                             1,863,867      1,478,654
     Accumulated other comprehensive loss             (2,767)        (5,275)
    

    
    Total stockholders' equity                     1,985,211      1,557,899
    Total liabilities and stockholders' equity    $2,645,500     $1,897,020
    


    
                         Garmin Ltd. And Subsidiaries
           Condensed Consolidated Statements of Income (Unaudited)
                 (In thousands, except per share information)
    


    
                            13-Weeks Ended              39-Weeks Ended
                      September 29, September 30,  September 29, September 30,
                            2007         2006         2007          2006
    

    Net sales             $728,673     $407,997   $1,963,298   $1,162,776

    Cost of goods sold     386,822      209,137    1,009,028      584,843

    Gross profit           341,851      198,860      954,270      577,933

    
    Selling, general and
     administrative
     expenses               87,060       47,489      248,358      140,167
    Research and development
     expense                40,634       30,399      111,863       82,105
                           127,694       77,888      360,221      222,272
    

    Operating income       214,157      120,972      594,049      355,661

    
    Other income (expense):
    Interest income         11,798        9,622       31,997       25,464
    Interest expense          (273)          (2)        (328)         (14)
    Foreign currency        (3,626)      14,874        3,493       10,386
    Other                      570           70          959        3,507
                             8,469       24,564       36,121       39,343
    

    
    Income before income
     taxes                 222,626      145,536      630,170      395,004
    

    Income tax provision    29,119       22,558       82,426       61,226

    Net income            $193,507     $122,978     $547,744     $333,778

    
    Net income per share:
     Basic                   $0.89        $0.57        $2.53        $1.54
     Diluted                 $0.88        $0.56        $2.50        $1.52
    

    
    Weighted average common
     shares outstanding:
     Basic                 216,773      216,317      216,456      216,502
     Diluted               220,644      218,866      219,482      218,878
    


    
                         Garmin Ltd. And Subsidiaries
         Condensed Consolidated Statements of Cash Flows (Unaudited)
                                (In thousands)
    

    
                                                      39-Weeks Ended
                                           September 29,       September 30,
                                                    2007                2006
    Operating Activities:
    Net income                                  $547,744            $333,778
    Adjustments to reconcile net income
     to net cash
     provided by operating activities:
        Depreciation                              22,786              15,447
        Amortization                              18,803              19,844
        Loss (gain) on sale of property
         and equipment                                71                  (8)
        Provision for doubtful accounts            3,467                 796
        Deferred income taxes                     (1,157)            (29,867)
        Foreign currency transaction
         gains/losses                              3,232             (19,724)
        Provision for obsolete and slow
         moving inventories                       21,502              15,260
        Stock compensation expense                 8,830               8,378
        Realized gains on marketable
         securities                                    -              (3,852)
    Changes in operating assets and
     liabilities:
        Accounts receivable                      (90,497)            (79,648)
        Inventories                             (234,920)           (148,891)
        Other current assets                       4,510              (1,192)
        Accounts payable                         117,034              48,720
        Other current and non-current
         liabilities                             147,608              69,704
        Income taxes                               9,486              22,866
        Purchase of licenses                     (22,594)             (2,486)
    Net cash provided by operating
     activities                                  555,905             249,125
    

    
    Investing activities:
    Purchases of property and equipment         (128,893)            (45,476)
    Purchase of intangible assets                 (2,481)             (1,513)
    Purchase of marketable securities           (983,716)           (348,621)
    Redemption of marketable securities        1,141,431             197,008
    Change in restricted cash                        (56)               (104)
    Proceeds from asset sale                           4                  75
    Net cash paid for acquisition of
     businesses and other intangibles            (84,126)                  -
    Net cash used in investing activities        (57,837)           (198,631)
    

    
    Financing activities:
    Proceeds from issuance of common
     stock                                        15,358              10,042
    Dividends                                   (162,531)                  -
    Stock repurchase                                   -             (50,451)
    Payments on long term debt                      (218)                  -
    Tax benefit related to stock option
     exercise                                     15,776               7,453
    Net cash used in financing activities       (131,615)            (32,956)
    

    
    Effect of exchange rate changes on
     cash and cash equivalents                       (25)               (167)
    

    
    Net increase in cash and cash
     equivalents                                 366,428              17,371
    Cash and cash equivalents at
     beginning of period                         337,321             334,352
    Cash and cash equivalents at end of
     period                                     $703,749            $351,723
    


    
                         Garmin Ltd. And Subsidiaries
      Revenue, Gross Profit, and Operating Income by Segment (Unaudited)
    

    
                                       Reporting Segments
                      Outdoor/                 Auto/
                      Fitness      Marine     Mobile     Aviation     Total
    

    
    13-Weeks Ended
     September 29, 2007
    

    
    Net sales         $87,747     $47,659    $518,939     $74,328   $728,673
    Gross profit      $46,553     $25,170    $221,148     $48,980   $341,851
    Operating income  $30,178     $15,623    $141,855     $26,501   $214,157
    

    
    13-Weeks Ended
     September 30, 2006
    

    
    Net sales         $70,651     $40,588    $237,981     $58,777   $407,997
    Gross profit      $39,803     $21,645     $99,708     $37,704   $198,860
    Operating income  $28,817     $13,659     $59,517     $18,979   $120,972
    


    
    39-Weeks Ended
     September 29, 2007
    

    
    Net sales        $225,437    $170,433  $1,343,460    $223,968 $1,963,298
    Gross profit     $123,616     $92,704    $591,400    $146,550   $954,270
    Operating income  $79,986     $60,033    $370,448     $83,582   $594,049
    

    
    39-Weeks Ended
     September 30, 2006
    

    
    Net sales        $205,412    $141,406    $644,097    $171,861 $1,162,776
    Gross profit     $118,615     $79,484    $269,855    $109,979   $577,933
    Operating income  $85,116     $53,718    $155,782     $61,045   $355,661
    




For further information:

For further information: INVESTOR CONTACT: Polly Schwerdt, 
+1-913-397-8200, investor.relations@garmin.com, or MEDIA CONTACT: Ted 
Gartner, +1-913-397-8200, media.relations@garmin.com, both of Garmin Ltd. Web
Site: http://www.garmin.com

Organization Profile

GARMIN LTD.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890