01—Abstract
Summary
Summary of the 10-K filed February 27, 2013. Cited figures are marked; the original filing is the authoritative source.
Garmin Ltd. reported net sales of $2.72 billiona 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%b, 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 billionc, 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.
02—Key points
Key Highlights
- Net sales for fiscal year 2012 were $2.72 billion, a 2% decrease from 2011.
- The Automotive/Mobile segment, Garmin's largest, saw a 6% decline in revenue, indicating market maturity and competitive pressures.
- Outdoor and Fitness segments showed strong growth at 11% and 8% respectively, driven by new products and market penetration.
- Gross profit increased by 7% to $1.44 billion, with gross profit margin improving significantly by 450 basis points to 53%.
- Operating income grew by 9% to $604 million, reflecting improved profitability across key segments.
- Research and Development expenses increased by 9% to $326 million, highlighting continued investment in product innovation.
- Garmin declared and paid a quarterly cash dividend of $0.45 per share throughout 2012, indicating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Garmin Ltd kept $0.20.
- Revenue$2.72B100.0%
- Cost of revenue−$1.28B47.0%
- Gross profit$1.44B53.0%
- Operating costs−$834.3M30.7%
- Operating income$604.2M22.2%
- Interest, other & tax−$61.8M2.3%
- Net income$542.4M20.0%
Where FY2012 revenue went
$2.72B- Cost of revenue: $1.28B, 47% of revenue
- Net income: $542.4M, 20% of revenue
- SG&A: $369.8M, 14% of revenue
- R&D: $325.8M, 12% of revenue
- Other operating costs: $138.8M, 5.1% of revenue
- Interest, other & tax: $61.8M, 2.3% of revenue
Kept 20% as net incomeInterest, other & tax $61.8M · 2.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 27, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $2.72B$2.76B | −1.6% |
| Cost of Revenue | $1.28B$1.42B | −10.1% |
| Gross Profit | $1.44B$1.34B | +7.5% |
| R&D Expenses | $325.77M$298.58M | +9.1% |
| SG&A Expenses | $369.79M$341.22M | +8.4% |
| Operating Expenses | $834.32M$784.83M | +6.3% |
| Operating Income | $604.16M$553.77M | +9.1% |
| Net Income | $542.40M$520.90M | +4.1% |
| EPS (Basic) | $2.78$2.68 | +3.7% |
| EPS (Diluted) | $2.76$2.67 | +3.4% |
| Shares Outstanding (Basic) | 195K194K | +0.4% |
| Shares Outstanding (Diluted) | 196K195K | +0.7% |
05—Questions
Frequently Asked Questions
What was Garmin's overall financial performance in fiscal year 2012?
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.
Which business segments performed best and worst in 2012?
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.
How did Garmin manage its expenses and investments in 2012?
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.
What is Garmin's strategy for returning capital to shareholders?
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.
06—Continue