United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of Company as specified in its charter)
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(State or other jurisdiction |
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(I.R.S. Employer |
of incorporation or organization) |
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identification no.) |
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N/A |
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(Address of principal executive offices) |
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(Zip Code) |
Company’s telephone number, including area code: +
Securities registered pursuant to Section 12(b) of the Act:
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(Title of each class) |
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(Trading Symbol) |
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(Name of each exchange on which registered) |
Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated Filer |
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Non-accelerated Filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. YES ☐ NO ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ☐ NO
Number of shares outstanding of the registrant’s common shares as of April 22, 2022
Registered Shares, CHF 0.10 par value:
Garmin Ltd.
Form 10-Q
Quarter Ended March 26, 2022
Table of Contents
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Item 1. |
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1 |
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Condensed Consolidated Balance Sheets at March 26, 2022 and December 25, 2021 (Unaudited) |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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6 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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13 |
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Item 3. |
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18 |
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Item 4. |
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Item 1. |
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Item 1A. |
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19 |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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20 |
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21 |
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i
Part I - Financial Information
Item I - Condensed Consolidated Financial Statements
Garmin Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands, except per share information)
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March 26, |
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December 25, |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable, net |
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Inventories |
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Deferred costs |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Noncurrent marketable securities |
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Deferred income tax assets |
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Noncurrent deferred costs |
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Goodwill |
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Other intangible assets, net |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Salaries and benefits payable |
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Accrued warranty costs |
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Accrued sales program costs |
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Other accrued expenses |
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Deferred revenue |
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Income taxes payable |
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Dividend payable |
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Total current liabilities |
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Deferred income tax liabilities |
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Noncurrent income taxes payable |
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Noncurrent deferred revenue |
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Noncurrent operating lease liabilities |
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Other noncurrent liabilities |
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Stockholders’ equity: |
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Shares, CHF |
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Additional paid-in capital |
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Treasury stock |
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( |
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Retained earnings |
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Accumulated other comprehensive income |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes.
1
Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
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13-Weeks Ended |
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March 26, |
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March 27, |
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Net sales |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Advertising expense |
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Selling, general and administrative expenses |
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Research and development expense |
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Total operating expense |
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Operating income |
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Other income (expense): |
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Interest income |
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Foreign currency losses |
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Other income |
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Total other income (expense) |
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Income before income taxes |
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Income tax provision |
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Net income |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes.
2
Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
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13-Weeks Ended |
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March 26, |
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March 27, |
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Net income |
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$ |
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$ |
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Foreign currency translation adjustment |
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( |
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( |
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Change in fair value of available-for-sale marketable securities, net of deferred taxes |
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( |
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Comprehensive income |
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$ |
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$ |
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See accompanying notes.
3
Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
For the 13-Weeks Ended March 26, 2022 and March 27, 2021
(In thousands, except per share information)
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Total |
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Balance at December 26, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Translation adjustment |
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— |
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— |
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— |
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— |
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( |
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( |
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Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ |
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— |
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— |
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— |
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— |
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( |
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Comprehensive income |
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Dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury stock related to equity awards |
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— |
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( |
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— |
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— |
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Stock compensation |
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— |
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— |
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— |
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— |
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Purchase of treasury stock related to equity awards |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 27, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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Common |
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Additional |
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Treasury |
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Retained |
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Accumulated |
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Total |
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Balance at December 25, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Translation adjustment |
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— |
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— |
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— |
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— |
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( |
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( |
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Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ |
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— |
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— |
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— |
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— |
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( |
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Comprehensive income |
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Dividends declared |
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— |
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— |
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— |
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( |
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— |
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( |
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Issuance of treasury stock related to equity awards |
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— |
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( |
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— |
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— |
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Stock compensation |
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— |
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— |
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— |
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— |
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Purchase of treasury stock related to equity awards |
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— |
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— |
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( |
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— |
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— |
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( |
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Balance at March 26, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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See accompanying notes.
4
Garmin Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
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13-Weeks Ended |
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March 26, |
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March 27, |
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Operating Activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by |
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Depreciation |
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Amortization |
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(Gain) loss on sale or disposal of property and equipment |
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( |
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Unrealized foreign currency (gains) losses |
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( |
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Deferred income taxes |
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( |
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Stock compensation expense |
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Realized (gain) loss on marketable securities |
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Changes in operating assets and liabilities, net of acquisitions: |
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Accounts receivable, net of allowance for doubtful accounts |
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Inventories |
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( |
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( |
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Other current and noncurrent assets |
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( |
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( |
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Accounts payable |
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( |
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( |
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Other current and noncurrent liabilities |
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( |
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( |
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Deferred revenue |
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( |
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( |
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Deferred costs |
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Income taxes |
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Net cash provided by operating activities |
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Investing activities: |
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Purchases of property and equipment |
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( |
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Proceeds from sale of property and equipment |
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Purchase of intangible assets |
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( |
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( |
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Purchase of marketable securities |
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( |
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( |
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Redemption of marketable securities |
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Acquisitions, net of cash acquired |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Financing activities: |
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Dividends |
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( |
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( |
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Proceeds from issuance of treasury stock related to equity awards |
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Purchase of treasury stock related to equity awards |
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( |
) |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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( |
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Net (decrease) increase in cash, cash equivalents, and restricted cash |
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( |
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Cash, cash equivalents, and restricted cash at beginning of period |
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Cash, cash equivalents, and restricted cash at end of period |
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$ |
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$ |
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See accompanying notes.
5
Garmin Ltd. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 26, 2022
(In thousands, except per share information)
1. Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Garmin Ltd. and wholly-owned subsidiaries (collectively, the “Company” or “Garmin”). Intercompany balances and transactions have been eliminated.
The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The condensed consolidated balance sheet at December 25, 2021 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Additionally, the condensed consolidated financial statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q, and the Company’s Annual Report on Form 10-K for the year ended December 25, 2021. Operating results for the 13-week period ended March 26, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended March 26, 2022 and March 27, 2021 both contain operating results for 13 weeks.
Changes in Classification and Allocation
Certain prior period amounts have been reclassified or presented to conform to the current period presentation.
In the first quarter of fiscal 2022, the Company refined the methodology used in classifying certain indirect costs in accordance with the way the Company's management is now using the information in decision making, which management believes provides a more meaningful representation of costs incurred to support research and development activities. As a result, the Company’s condensed consolidated statements of income have been recast for the three months ended March 27, 2021 to reflect a reclassification of $
Additionally, in the first quarter of fiscal 2022, the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined to allocate these expenses in a more direct manner to provide the Company's Chief Operating Decision Maker (CODM) with a more meaningful representation of segment profit or loss. The Company’s composition of operating segments and reportable segments did not change.
These changes in classification and allocation had no effect on the Company’s consolidated operating or net income.
Significant Accounting Policies
For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021. There were no material changes to the Company’s significant accounting policies during the 13-week period ended March 26, 2022.
6
Recently Issued Accounting Standards and Pronouncements
Recently adopted accounting standards and recently issued accounting pronouncements not yet adopted are not expected to have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.
2. Inventories
The components of inventories consist of the following:
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March 26, |
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December 25, 2021 |
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Raw materials |
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$ |
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$ |
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Work-in-process |
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Finished goods |
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Inventories |
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$ |
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$ |
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3. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share. Stock options, stock appreciation rights, and restricted stock units are collectively referred to as “equity awards”.
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13-Weeks Ended |
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March 26, 2022 |
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March 27, 2021 |
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Numerator: |
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Numerator for basic and diluted net income per share – net income |
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$ |
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$ |
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Denominator: |
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Denominator for basic net income per share – weighted-average common shares |
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Effect of dilutive equity awards |
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Denominator for diluted net income per share – adjusted weighted-average common shares |
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Basic net income per share |
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$ |
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$ |
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Diluted net income per share |
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$ |
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$ |
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Shares excluded from diluted net income per share calculation: |
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