Garmin Reports Record First Quarter, Affirms 2005 Guidance

Apr 27, 2005, 01:00 ET from Garmin Ltd.

    CAYMAN ISLANDS, April 27 /PRNewswire-FirstCall/ -- Garmin Ltd.
 (Nasdaq:   GRMN) today announced a record first quarter ended March 26, 2005.
 The company's consumer segment experienced 11 percent revenue growth during
 the first quarter of 2005.   The aviation segment also achieved 59 percent
 revenue growth for the quarter, which led to overall revenue growth of
 22 percent for the quarter.
     "The first quarter of 2005 was another good quarter for Garmin.  We
 introduced sixteen new products during the quarter, adding to all categories
 of our product portfolio.  These new products, which include aviation,
 recreational, fitness, marine and automotive units have all been very well
 received by the market," said Dr. Min Kao, CEO of Garmin Ltd.  "Consumer
 awareness and interest in the utility of GPS navigation continue to grow, and
 we experienced solid demand across nearly all product lines," continued Dr.
 Kao.  Over 584,000 units were shipped in the first quarter of 2005,
 demonstrating the growing strength of the Garmin brand.  The company also
 began shipping the acclaimed G1000 integrated avionics system for the
 Cessna 172, the seventh aircraft model to be certified to date.
     "I am pleased to report that we have continued to strengthen our inventory
 position to meet the anticipated demand for the coming marine and spring
 seasons, and have begun to ramp up production for delivery of newly released
 products such as the StreetPilot 'c-series'," said Dr. Kao. "These products
 have generated a great deal of interest.  Therefore, we expect a higher
 consumer segment growth rate in the second quarter and beyond."
 
     First Quarter 2005
     Revenue for the quarter increased 22 percent to $192.7 million from
 $158.3 million in the year-ago quarter.  Net income increased to
 $47.4 million, or $0.43 diluted earnings per share, compared to $34.7 million
 or $0.32 diluted earnings per share in the year-ago quarter.  First quarter
 net income included a $11.1 million foreign currency loss 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 $0.51 compared to $0.37 in
 the year-ago quarter.
     Consumer revenue for the first quarter totaled $137.5 million -- an
 11 percent growth compared to the first quarter of 2004.  Aviation revenue
 totaled $55.2 million -- a 59 percent increase compared to the year-ago
 quarter.  Total units sold for the quarter increased to 584,000 from
 478,000 -- representing an increase of 22 percent.
     Revenue increased across North American and European regions during the
 first quarter of fiscal 2004 when compared to the year-ago quarter:
 
     -- North America revenue was $132.7 million compared to $107.3 million,
        up 24 percent.
     -- Europe revenue was $50.3 million compared to $43.9 million, up
        15 percent.
     -- Asia revenue was $9.7 million compared to $7.1 million, up 37 percent.
 
 
     "We are pleased with our financial results for the first quarter 2005, and
 believe we are on track to meet our 2005 full year guidance," said Kevin
 Rauckman, chief financial officer of Garmin Ltd. "Gross margins were in line
 with our expectations at 53.6 percent for the first quarter.  We also
 generated $31.1 million of free cash flow (defined as operating cash flow less
 capital expenditures for property, plant, and equipment) for the quarter,
 resulting in a cash and marketable securities balance of $601.3 million at the
 end of the first quarter of 2005."  The company believes that free cash flow
 is an important measure because management uses it as a measure of the
 company's quality of earnings and its ability to reinvest in the business.
 
     Foreign Currency Translation - Non-GAAP Measures
     Management believes that earnings 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.
 
     Fiscal 2005 Outlook
     Garmin remains committed to expansion of its growing range of products and
 its ability to serve distributors and customers around the world.   In
 addition to the sixteen products introduced during the first quarter, a number
 of additional new products are expected to be released during the second
 quarter, which should position the Company well for the remainder of 2005.
     The Company affirms its current fiscal year guidance.   Diluted EPS for
 fiscal year 2005, excluding effects of foreign currency, is estimated to be in
 the range of $2.30 to $2.38 on estimated revenues of $890 million to
 $915 million.  Management will continue to provide annual guidance updates and
 progress reports on a quarterly basis.
 
     Earnings Call Information
 
     The information for Garmin Ltd.'s earnings call is as follows:
 
     When:    Wednesday, April 27, 2005 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 24 hours following the earnings
 call and can be accessed by dialing 800-642-1687 utilizing the access code
 4988638.  An archive of the live webcast will be available until May 27, 2005
 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 2005, the Company's
 expected consumer segment growth rate 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 25, 2004 filed by Garmin with the Securities
 and Exchange Commission (Commission file number 0-31983).  A copy of Garmin's
 2004 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 http://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)
                                  (Unaudited)
 
                                              13-Weeks Ended
                                            March 26,  March 27,
                                               2005      2004
 
     Net sales                              $192,651  $158,329
 
     Cost of goods sold                       89,453    77,878
 
     Gross profit                            103,198    80,451
 
     Selling, general and
          administrative expenses             20,518    16,642
 
     Research and development expense         16,928    14,220
                                              37,446    30,862
 
     Operating income                         65,752    49,589
 
     Other income(expense)  (A)               (6,942)   (5,721)
 
     Income before income taxes               58,810    43,868
 
     Income tax provision                     11,409     9,212
 
     Net income                              $47,401   $34,656
 
     Net income per share:
          Basic                                $0.44     $0.32
          Diluted                              $0.43     $0.32
 
     Weighted average common
      shares outstanding:
          Basic                              108,408   108,197
          Diluted                            109,421   109,182
 
 
     (A)  Includes $11.1 million of foreign currency losses in Q1 2005 and
          $7.6 million of foreign currency losses in Q1 2004.
 
 
 
                          Garmin Ltd. And Subsidiaries
                     Condensed Consolidated Balance Sheets
                                 (In thousands)
 
                                           (Unaudited)
                                            March 26,     December 25,
                                               2005          2004
           Assets
           Current assets:
                Cash and cash
                 equivalents                $249,193        $249,909
                Marketable securities         52,270          64,367
                Accounts receivable, net     101,720         110,119
                Inventories                  166,429         154,980
                Deferred income taxes         36,962          38,527
                Prepaid expenses and
                 other current assets         16,991          19,069
 
           Total current assets              623,565         636,971
 
           Property and equipment, net       180,342         171,630
 
           Restricted cash                     1,482           1,457
           Marketable securities             299,850         257,848
           Other assets, net                  47,992          49,485
 
           Total assets                   $1,153,231      $1,117,391
 
           Liabilities and Stockholders' Equity
           Current liabilities:
                Accounts payable             $40,321         $53,673
                Other accrued expenses        41,254          51,661
                Income taxes payable          65,975          70,933
 
           Total current liabilities         147,550         176,267
 
           Deferred income taxes               5,334           5,267
 
           Stockholders' equity:
                Common stock                   1,085           1,084
                Additional paid-in
                 capital                     110,853         108,949
                Retained earnings            862,610         815,209
                Accumulated other
                 comprehensive loss           25,799          10,615
 
           Total stockholders' equity      1,000,347         935,857
           Total liabilities and
            stockholders' equity          $1,153,231      $1,117,391
 
 
 

SOURCE Garmin Ltd.