10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 25, 2022


☐	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 001-41118

GARMIN LTD.

(Exact name of Company as specified in its charter)


Switzerland		98-0229227
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		identification no.)

Mühlentalstrasse 2
8200 Schaffhausen
Switzerland		N/A
(Address of principal executive offices)		(Zip Code)

Company’s telephone number, including area code: +41 52 630 1600

Securities registered pursuant to Section 12(b) of the Act:


Registered Shares, CHF 0.10 Per Share Par Value	GRMN	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(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.

Yes ☑ NO ☐

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).

Yes ☑ NO ☐

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.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☐
		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 July 22, 2022

Registered Shares, CHF 0.10 par value: 192,855,133 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended June 25, 2022

Table of Contents


		Page

Part I - Financial Information		1

Item 1.	Condensed Consolidated Financial Statements	1

	Condensed Consolidated Balance Sheets at June 25, 2022 and December 25, 2021 (Unaudited)	1

	Condensed Consolidated Statements of Income for the 13-Weeks and 26-Weeks ended June 25, 2022 and June 26, 2021 (Unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 26-Weeks ended June 25, 2022 and June 26, 2021 (Unaudited)	3

	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 26-Weeks ended June 25, 2022 and June 26, 2021 (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the 26-Weeks ended June 25, 2022 and June 26, 2021 (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

Item 4.	Controls and Procedures	23

Part II - Other Information		24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Mine Safety Disclosures	24

Item 5.	Other Information	24

Item 6.	Exhibits	25

Signature Page		26

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)


	June 25, 2022			December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,087,381		$	1,498,058
Marketable securities		526,639			347,980
Accounts receivable, net		698,859			843,445
Inventories		1,454,868			1,227,609
Deferred costs		14,541			15,961
Prepaid expenses and other current assets		340,329			328,719
Total current assets		4,122,617			4,261,772

Property and equipment, net		1,113,562			1,067,478
Operating lease right-of-use assets		128,615			89,457
Noncurrent marketable securities		1,247,490			1,268,698
Deferred income tax assets		347,998			260,205
Noncurrent deferred costs		10,818			12,361
Goodwill		561,395			575,080
Other intangible assets, net		194,070			215,993
Other noncurrent assets		87,131			103,383
Total assets	$	7,813,696		$	7,854,427

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	319,732		$	370,048
Salaries and benefits payable		178,670			211,371
Accrued warranty costs		39,949			45,467
Accrued sales program costs		89,981			121,514
Other accrued expenses		216,862			225,988
Deferred revenue		86,553			87,654
Income taxes payable		127,685			128,083
Dividend payable		564,454			258,023
Total current liabilities		1,623,886			1,448,148

Deferred income tax liabilities		118,062			117,595
Noncurrent income taxes payable		60,233			62,539
Noncurrent deferred revenue		38,297			41,618
Noncurrent operating lease liabilities		106,952			70,044
Other noncurrent liabilities		333			324

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 193,058 shares outstanding at June 25, 2022 and 192,608 shares outstanding at December 25, 2021		17,979			17,979
Additional paid-in capital		2,008,931			1,960,722
Treasury stock (5,019 and 5,469 shares, respectively)		(315,886	)		(303,114	)
Retained earnings		4,225,521			4,320,737
Accumulated other comprehensive (loss) income		(70,612	)		117,835
Total stockholders’ equity		5,865,933			6,114,159
Total liabilities and stockholders’ equity	$	7,813,696		$	7,854,427

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)


	13-Weeks Ended						26-Weeks Ended
	June 25, 2022			June 26, 2021			June 25, 2022			June 26, 2021
Net sales	$	1,240,833		$	1,326,905		$	2,413,496		$	2,399,232
Cost of goods sold		512,007			546,054			1,022,190			976,825
Gross profit		728,826			780,851			1,391,306			1,422,407

Advertising expense		43,357			42,939			77,490			74,000
Selling, general and administrative expenses		191,211			180,717			381,995			352,705
Research and development expense		201,518			186,023			410,524			374,871
Total operating expense		436,086			409,679			870,009			801,576

Operating income		292,740			371,172			521,297			620,831
Other income (expense):
Interest income		8,495			7,018			16,048			14,670
Foreign currency losses		(22,439	)		(7,326	)		(25,946	)		(15,607	)
Other income		170			1,195			3,431			2,679
Total other income (expense)		(13,774	)		887			(6,467	)		1,742

Income before income taxes		278,966			372,059			514,830			622,573
Income tax provision		21,093			55,062			45,366			85,548
Net income	$	257,873		$	316,997		$	469,464		$	537,025

Net income per share:
Basic	$	1.34		$	1.65		$	2.43		$	2.80
Diluted	$	1.33		$	1.64		$	2.43		$	2.78

Weighted average common shares outstanding:
Basic		193,074			192,150			192,980			192,023
Diluted		193,450			192,871			193,515			192,840

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	13-Weeks Ended						26-Weeks Ended
	June 25, 2022			June 26, 2021			June 25, 2022			June 26, 2021
Net income	$	257,873		$	316,997		$	469,464		$	537,025
Foreign currency translation adjustment		(64,895	)		27,680			(121,807	)		(7,611	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		(16,628	)		(1,305	)		(66,640	)		(9,189	)
Comprehensive income	$	176,350		$	343,372		$	281,017		$	520,225

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended June 25, 2022 and June 26, 2021

(In thousands, except per share information)


	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 27, 2021	$	17,979	$	1,892,934	$	(309,522	)	$	3,974,184		$	140,252		$	5,715,827
Net income		—		—		—			316,997			—			316,997
Translation adjustment		—		—		—			—			27,680			27,680
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $78		—		—		—			—			(1,305	)		(1,305	)
Comprehensive income															343,372
Dividends declared ($2.68 per share)		—		—		—			(515,307	)		—			(515,307	)
Issuance of treasury stock related to equity awards		—		11,600		6,476			—			—			18,076
Stock compensation		—		22,603		—			—			—			22,603
Purchase of treasury stock related to equity awards		—		—		(323	)		—			—			(323	)
Balance at June 26, 2021	$	17,979	$	1,927,137	$	(303,369	)	$	3,775,874		$	166,627		$	5,584,248

	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 26, 2022	$	17,979	$	1,982,561	$	(294,711	)	$	4,532,102		$	10,911		$	6,248,842
Net income		—		—		—			257,873			—			257,873
Translation adjustment		—		—		—			—			(64,895	)		(64,895	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $4,757		—		—		—			—			(16,628	)		(16,628	)
Comprehensive income															176,350
Dividends declared ($2.92 per share)		—		—		—			(564,454	)		—			(564,454	)
Issuance of treasury stock related to equity awards		—		11,322		9,582			—			—			20,904
Stock compensation		—		15,048		—			—			—			15,048
Purchase of treasury stock related to equity awards		—		—		(111	)		—			—			(111	)
Purchase of treasury stock under share repurchase plan		—		—		(30,646	)		—			—			(30,646	)
Balance at June 25, 2022	$	17,979	$	2,008,931	$	(315,886	)	$	4,225,521		$	(70,612	)	$	5,865,933

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 26-Weeks Ended June 25, 2022 and June 26, 2021

(In thousands, except per share information)


	Common Stock		Additional Paid-In Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 26, 2020	$	17,979	$	1,880,354	$	(320,016	)	$	3,754,372		$	183,427		$	5,516,116
Net income		—		—		—			537,025			—			537,025
Translation adjustment		—		—		—			—			(7,611	)		(7,611	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,308		—		—		—			—			(9,189	)		(9,189	)
Comprehensive income															520,225
Dividends declared ($2.68 per share)		—		—		—			(515,523	)		—			(515,523	)
Issuance of treasury stock related to equity awards		—		1,482		34,251			—			—			35,733
Stock compensation		—		45,301		—			—			—			45,301
Purchase of treasury stock related to equity awards		—		—		(17,604	)		—			—			(17,604	)
Balance at June 26, 2021	$	17,979	$	1,927,137	$	(303,369	)