10-KPeriod: FY2012

GARMIN LTD Annual Report, Year Ended Dec 29, 2012

Filed February 27, 2013For Securities:GRMN

Summary

Garmin Ltd. reported net sales of $2.72 billion for the fiscal year ended December 29, 2012, a slight decrease of 2% compared to the prior year. The company experienced a notable decline in its Automotive/Mobile segment, down 6%, reflecting market saturation and competition from mobile devices and factory-installed systems. However, this was partially offset by growth in the Outdoor (up 11%) and Fitness (up 8%) segments, driven by new product introductions and market share gains. The Aviation segment also saw a modest 2% increase. Gross profit increased by 7% to $1.44 billion, and gross profit margin improved by 450 basis points to 53%, largely due to a favorable product mix, reduced component costs, and the amortization of previously deferred revenues. Operating income increased by 9% to $604 million. Despite the overall revenue dip, Garmin demonstrated strong operational management and innovation, particularly in its higher-margin segments, positioning it for continued development in specialized markets.

Financial Highlights

52 data points
Beta

Revenue

$2.72B

53.0% Gross Margin

Net Income

$542.40M

20.0% Net Margin

EPS (Diluted)

$2.76

Total Assets

$4.82B

Cash & Equivalents

$1.23B

Free Cash Flow

$646.30M

Financial Statements
Beta
Revenue$2.72B
Cost of Revenue$1.28B
Gross Profit$1.44B
R&D Expenses$325.77M
SG&A Expenses$369.79M
Operating Expenses$834.32M
Operating Income$604.16M
Net Income$542.40M
EPS (Basic)$2.78
EPS (Diluted)$2.76
Shares Outstanding (Basic)195K
Shares Outstanding (Diluted)196K

Key Highlights

  • 1Net sales for fiscal year 2012 were $2.72 billion, a 2% decrease from 2011.
  • 2The Automotive/Mobile segment, Garmin's largest, saw a 6% decline in revenue, indicating market maturity and competitive pressures.
  • 3Outdoor and Fitness segments showed strong growth at 11% and 8% respectively, driven by new products and market penetration.
  • 4Gross profit increased by 7% to $1.44 billion, with gross profit margin improving significantly by 450 basis points to 53%.
  • 5Operating income grew by 9% to $604 million, reflecting improved profitability across key segments.
  • 6Research and Development expenses increased by 9% to $326 million, highlighting continued investment in product innovation.
  • 7Garmin declared and paid a quarterly cash dividend of $0.45 per share throughout 2012, indicating a commitment to returning capital to shareholders.

Frequently Asked Questions

Garmin reported a slight 2% decrease in net sales to $2.72 billion for fiscal year 2012. However, the company saw an improvement in profitability, with gross profit increasing by 7% to $1.44 billion and gross profit margin expanding by 450 basis points to 53%. Operating income also grew by 9% to $604 million, driven by strong performance in Outdoor and Fitness segments and improved margins.

The Outdoor segment showed the strongest growth at 11%, followed by the Fitness segment at 8%. The Aviation segment experienced modest 2% growth. The Automotive/Mobile segment, Garmin's largest, declined by 6%, reflecting market challenges. The Marine segment also saw a 6% decrease.

Garmin maintained advertising expenses relatively flat as a percentage of revenue. Selling, General, and Administrative (SG&A) expenses increased as a percentage of revenue, primarily due to acquisitions and legal costs. Importantly, Research and Development (R&D) expenses increased by 9% to $326 million, indicating continued investment in innovation and new product development, particularly in aviation and automotive OEM opportunities.

Garmin continued its practice of paying quarterly cash dividends in 2012, with a dividend of $0.45 per share paid each quarter. Additionally, in February 2013, the Board approved a new share repurchase program authorizing up to $300 million of common shares, demonstrating a commitment to enhancing shareholder value.