SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): February 12, 2003
GARMIN LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands 0-31983 98-0229227
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
P.O. Box 30464 SMB
5th Floor, Harbour Place
103 South Church Street
George Town, Grand Cayman, Cayman Islands
(Address of principal executive offices)
Registrant's telephone number, including area code: (345) 946-5203*
Not Applicable
(Former name or former address, if changed since last report)
--------
* The executive offices of the Registrant's principal United States subsidiary
are located at 1200 East 151st Street, Olathe, Kansas 66062.
The telephone number there is (913) 397-8200.
Item 9. Regulation FD Disclosure
See attached as Exhibit 99.1 to this Form 8-K a press release dated
February 12, 2003 concerning the announcement of financial results.
The information in this Form 8-K, including the exhibit, is furnished
pursuant to Item 9 and shall not be deemed to be "filed" for the purposes of
Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that Section. The information in this Form 8-K shall not be
deemed to be incorporated by reference into the Registrant's filings under the
Securities Act of 1933.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARMIN LTD.
Date: February 12, 2003 /s/ Andrew R. Etkind
Andrew R. Etkind
General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
99.1 Press release dated February 12,
2003 concerning the announcement
of financial results.
Exhibit 99.1
Garmin Reports Record Fourth Quarter and Fiscal Year,
Provides 2003 Guidance
CAYMAN ISLANDS, February 12, 2003/PRNewswire/ -- Garmin Ltd. (Nasdaq: GRMN -
news) today announced record revenue and earnings for its fourth fiscal quarter
ended December 28, 2002.
"Fiscal 2002 has been a remarkable year for us. We are pleased to report that,
in the face of weak overall consumer spending, demand for our products remains
strong," said Dr. Min Kao, CEO of Garmin Ltd. "Overall revenue grew 26 percent,
primarily spurred by growth in our consumer segment. This segment recorded a 46
percent growth in revenues during this quarter, and 33.2 percent during 2002,
with strength across all of our consumer product lines. Additionally, during the
fourth quarter we experienced a 80.6 percent growth in EPS when excluding the
effects of foreign currency from the prior year quarter. Including effects of
foreign currency, the fourth quarter EPS growth rate was 62.2 percent. Net
income for the fourth quarter increased to $45.5 million, or $0.42 per share,
compared to $28 million or $0.26 per share in the prior year. Net foreign
currency gains and losses were in total insignificant in 2002, and had no impact
on EPS. Given this fact, diluted EPS (including the effects of foreign currency)
for the year was $1.32, which compares to a diluted EPS of $1.05 for fiscal year
2001. New products have been enthusiastically received across the board.
Consumer awareness of the utility of GPS navigation continues to grow, we have
experienced continued growth in our core markets as a result."
Fourth Quarter 2002
Revenue for the quarter increased 43.7 percent to $133.7 million from $93.0
million in the year-ago quarter, in line with guidance given of $132-$135
million. Net income increased to $45.5 million, or $0.42 diluted earnings per
share, compared to $28 million or $0.26 diluted earnings per share in the
year-ago quarter. Fourth quarter net income included a $157,000 foreign currency
gain as a result of a weaker U.S. dollar compared to the Taiwan dollar.
Excluding the effects of foreign currency, diluted EPS for the quarter was $0.42
compared to $0.23 in the year-ago quarter.
Consumer revenue for the fourth quarter totaled $102 million - a 46 percent
growth compared to the fourth quarter of 2001. Aviation revenue totaled $31.7
million - a 36.7 percent increase compared to the year-ago quarter. Total units
sold for the quarter increased to 478,000 from 338,000 - representing an
increase of 41.4 percent.
Revenue increased across all geographic regions during the fourth quarter of
fiscal 2002 when compared to the year-ago quarter:
- North America revenue was $100.1 million compared to $67.8 million, up 47.6
percent.
- Europe revenue was $27.1 million compared to $20.0 million, up 35.5 percent.
- Asia revenue was $6.5 million compared to $5.2 million, up 25.0 percent.
"We are pleased with our financial performance during the fourth quarter," said
Kevin Rauckman, chief financial officer of Garmin Ltd. "Our consumer business
has now logged its fifth consecutive quarter of year-over-year revenue growth in
excess of twenty percent. Gross margins strengthened to 55.2 percent compared to
53.2 percent in the prior year's fourth quarter. We also generated $39.2 million
of free cash flow for the quarter, resulting in a cash and marketable securities
balance of $462.5 million at the end of fiscal 2002."
Fiscal 2002 Results
Revenue for the fiscal year ending December 28, 2002 was $465.1 million - up 26
percent from the $369.1 million generated in the year-ago period, in line with
guidance given of $464-$467 million. Net income increased to $142.8 million, or
$1.32 diluted earnings per share, compared to $104.8 million or $0.97 diluted
earnings per share in the year-ago period, excluding the effects of foreign
currency. On a year-to-date basis, foreign currency fluctuations were an
insignificant dollar amount and did not impact the EPS calculation.
Consumer revenue for the fiscal year totaled $350.6 million - a 33.2 percent
growth compared to the year-ago period. Aviation revenue totaled $114.5 million
- an 8.2 percent increase compared to fiscal 2001. Total units sold for the
period increased to 1,557,000 from 1,331,000 - representing an increase of 17
percent.
Revenue increased across all geographic regions during fiscal 2002 when compared
to 2001:
- North America revenue was $339.4 million compared to $275.6 million, up 23.1
percent.
- Europe revenue was $103.0 million compared to $78.5 million, up 31.2 percent.
- Asia revenue was $22.7 million compared to $15.0 million, up 51.3 percent.
2003 Outlook
The Company estimates that its diluted EPS for the first fiscal quarter of 2003,
excluding effects for foreign currency, will be in the range of $0.29 to $0.32
on revenues of $113 million to $117 million. Diluted EPS estimates for fiscal
year 2003, excluding effects of foreign currency, will be in the range of $1.45
to $1.54 on revenues of $515 million to $540 million.
Two innovative products were introduced in January 2003 at the Consumer
Electronics Show in Las Vegas, Nevada. Both the new iQue (the first PDA with
fully integrated GPS navigation) and the Geko (miniature-sized basic GPS unit
priced under $100) were enthusiastically received, and both were given
innovation awards at the show.
Garmin believes innovations and ongoing growth are in the Company's future, in
2003 and beyond. The Company has previously announced the following activities
to support future growth:
o Complete the installation of two newly purchased surface-mount technology
lines for the production facility in Taiwan to support the Company's
growing consumer product demands.
o Expand the Olathe, Kansas facility, with scheduled completion in 2004.
This $60 million expansion will include additional floor space to support
Garmin's current and future research and development needs, expansion of
the customer call center, additional warehouse facilities, and other
business needs.
o Implement Oracle's E-Business suite, a fully integrated enterprise suite of
business applications and supporting technologies, to upgrade its existing
MRPII system. The new Oracle ERP (Enterprise Resource Planning) system
will provide improved integration among the major Garmin business entities
in Taiwan, Europe, and the United States, and enable the company to achieve
a higher level of efficiency. The system will be implemented in phases over
the next couple of years.
Earnings Call Information
The information for Garmin Ltd.'s earnings call is as follows:
When: Wednesday, February 12, 2003 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 866-783-5359.
Contact: investor.relations@garmin.com
A phone recording will be available for 24 hours following the earnings call and
can be accessed by dialing 800-252-6030 utilizing the access code 15091084. An
archive of the live webcast will be available until March 12, 2003 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 future
financial position, revenues, earnings, product introductions, 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. Information
concerning risk factors that could affect Garmin's actual results is contained
in the Annual Report on Form 10-K for the year ended December 29, 2001 filed by
Garmin with the Securities and Exchange Commission (Commission file number
0-31983). A copy of Garmin's 2001 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, general recreation,
automotive, wireless 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 Ltd. And Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share information)
13-Weeks
Ended
-------------------------------
Dec. 28, Dec. 29,
2002 2001
-------------------------------
Net sales $133,694 $93,021
Cost of goods sold 59,842 43,559
-------------- -------------
Gross profit 73,852 49,462
Selling, general and
Administrative expenses 12,061 9,965
Research and development
Expense 8,760 7,793
-------------- -------------
20,821 17,758
-------------- -------------
Operating income 53,031 31,704
Other income (A) 1,482 5,864
-------------- -------------
Income before income taxes 54,513 37,568
Income tax provision 9,050 9,523
-------------- -------------
Net income $45,463 $28,045
============== =============
Net income per share:
Basic $0.42 $0.26
Diluted $0.42 $0.26
Weighted average common
shares outstanding:
Basic 107,765 107,662
Diluted 108,251 107,906
(A) Includes $157 thousand of foreign currency
gains in Q4 2002 and $3.9 million of gains in Q4 2001
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share information)
Fiscal Year
Ended
-------------------------------
Dec. 28, Dec. 29,
2002 2001
-------------------------------
Net sales $465,144 $369,119
Cost of goods sold 210,088 170,960
-------------- --------------
Gross profit 255,056 198,159
Selling, general and
Administrative expenses 45,453 38,709
Research and development
Expense 32,163 28,164
-------------- --------------
77,616 66,873
-------------- --------------
Operating income 177,440 131,286
Other income (A) 5,295 20,749
-------------- --------------
Income before income taxes 182,735 152,035
Income tax provision 39,937 38,587
-------------- --------------
Net income $142,798 $113,448
============== ==============
Net income per share:
Basic $1.32 $1.05
Diluted $1.32 $1.05
Weighted average common
shares outstanding:
Basic 107,774 108,097
Diluted 108,201 108,447
(A) Includes $11 thousand of foreign currency gains in 2002 and $11.6
million of gains in 2001.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
---------------------------------------
December 28, December 29,
2002 2001
---------------------------------------
Assets
Current assets:
Cash and cash equivalents $216,768 $192,842
Marketable securities 75,538 40,835
Accounts receivable, net 58,278 47,998
Inventories 57,507 61,132
Deferred income taxes 13,266 7,007
Prepaid expenses and other current assets 4,490 2,921
----------------- ----------------
Total current assets 425,847 352,735
Property and equipment, net 74,440 70,086
Restricted cash 1,598 1,600
Marketable securities 170,170 90,749
Other assets, net 24,479 16,985
----------------- ----------------
Total assets $696,534 $532,155
================= ================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $32,446 $18,837
Salaries and benefits payable 4,178 3,308
Warranty reserve 4,376 4,777
Income taxes payable 18,080 12,444
Current portion of long-term debt 1,334 4,177
Other accrued expenses 14,325 5,485
----------------- ----------------
Total current liabilities 74,739 49,028
Long-term debt 18,666 28,011
Deferred income taxes 631 1,147
Stockholders' equity:
Common stock 1,088 1,078
Additional paid-in capital 128,396 127,131
Retained earnings 507,884 365,087
Accumulated other comprehensive loss (34,870) (39,327)
----------------- ----------------
Total stockholders' equity 602,498 453,969
----------------- ----------------
Total liabilities and stockholders' equity $696,534 $532,155
================= ================