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 September 24, 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 October 21, 2022

Registered Shares, CHF 0.10 par value: 191,663,933 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended September 24, 2022

Table of Contents


		Page

Part I - Financial Information		1

Item 1.	Condensed Consolidated Financial Statements	1

	Condensed Consolidated Balance Sheets at September 24, 2022 and December 25, 2021 (Unaudited)	1

	Condensed Consolidated Statements of Income for the 13-Weeks and 39-Weeks ended September 24, 2022 and September 25, 2021 (Unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 39-Weeks ended September 24, 2022 and September 25, 2021 (Unaudited)	3

	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 39-Weeks ended September 24, 2022 and September 25, 2021 (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the 39-Weeks ended September 24, 2022 and September 25, 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)


	September 24, 2022			December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,082,338		$	1,498,058
Marketable securities		378,705			347,980
Accounts receivable, net		641,072			843,445
Inventories		1,533,271			1,227,609
Deferred costs		14,398			15,961
Prepaid expenses and other current assets		318,339			328,719
Total current assets		3,968,123			4,261,772

Property and equipment, net		1,100,257			1,067,478
Operating lease right-of-use assets		121,937			89,457
Noncurrent marketable securities		1,236,350			1,268,698
Deferred income tax assets		390,105			260,205
Noncurrent deferred costs		10,393			12,361
Goodwill		540,740			575,080
Other intangible assets, net		179,890			215,993
Other noncurrent assets		79,811			103,383
Total assets	$	7,627,606		$	7,854,427

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	268,674		$	370,048
Salaries and benefits payable		184,802			211,371
Accrued warranty costs		39,925			45,467
Accrued sales program costs		75,182			121,514
Other accrued expenses		195,117			225,988
Deferred revenue		88,563			87,654
Income taxes payable		169,665			128,083
Dividend payable		420,995			258,023
Total current liabilities		1,442,923			1,448,148

Deferred income tax liabilities		117,941			117,595
Noncurrent income taxes payable		50,943			62,539
Noncurrent deferred revenue		37,068			41,618
Noncurrent operating lease liabilities		100,181			70,044
Other noncurrent liabilities		361			324

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 192,180 shares outstanding at September 24, 2022 and 192,608 shares outstanding at December 25, 2021		17,979			17,979
Additional paid-in capital		2,027,019			1,960,722
Treasury stock (5,897 and 5,469 shares, respectively)		(398,974	)		(303,114	)
Retained earnings		4,439,004			4,320,737
Accumulated other comprehensive (loss) income		(206,839	)		117,835
Total stockholders’ equity		5,878,189			6,114,159
Total liabilities and stockholders’ equity	$	7,627,606		$	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						39-Weeks Ended
	September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Net sales	$	1,140,434		$	1,191,973		$	3,553,931		$	3,591,206
Cost of goods sold		469,935			496,026			1,492,126			1,472,852
Gross profit		670,499			695,947			2,061,805			2,118,354

Advertising expense		32,888			36,705			110,378			110,705
Selling, general and administrative expenses		189,546			177,647			571,541			530,351
Research and development expense		208,692			198,925			619,215			573,798
Total operating expense		431,126			413,277			1,301,134			1,214,854

Operating income		239,373			282,670			760,671			903,500
Other income (expense):
Interest income		10,472			6,897			26,520			21,568
Foreign currency losses		(29,863	)		(15,014	)		(55,809	)		(30,621	)
Other income		285			833			3,716			3,511
Total other income (expense)		(19,106	)		(7,284	)		(25,573	)		(5,542	)

Income before income taxes		220,267			275,386			735,098			897,958
Income tax provision		9,419			16,347			54,785			101,894
Net income	$	210,848		$	259,039		$	680,313		$	796,064

Net income per share:
Basic	$	1.09		$	1.35		$	3.53		$	4.14
Diluted	$	1.09		$	1.34		$	3.52		$	4.13

Weighted average common shares outstanding:
Basic		192,672			192,322			192,878			192,123
Diluted		193,105			193,185			193,378			192,955

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	13-Weeks Ended						39-Weeks Ended
	September 24, 2022			September 25, 2021			September 24, 2022			September 25, 2021
Net income	$	210,848		$	259,039		$	680,313		$	796,064
Foreign currency translation adjustment		(117,360	)		(8,702	)		(239,167	)		(16,313	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		(18,867	)		(3,169	)		(85,507	)		(12,358	)
Comprehensive income	$	74,621		$	247,168		$	355,639		$	767,393

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended September 24, 2022 and September 25, 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 June 26, 2021	$	17,979	$	1,927,137		$	(303,369	)	$	3,775,874		$	166,627		$	5,584,248
Net income		—		—			—			259,039			—			259,039
Translation adjustment		—		—			—			—			(8,702	)		(8,702	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $609		—		—			—			—			(3,169	)		(3,169	)
Comprehensive income																247,168
Dividends		—		—			—			(1	)		—			(1	)
Issuance of treasury stock related to equity awards		—		(28	)		28			—			—			—
Stock compensation		—		23,355			—			—			—			23,355
Purchase of treasury stock related to equity awards		—		—			(32	)		—			—			(32	)
Balance at September 25, 2021	$	17,979	$	1,950,464		$	(303,373	)	$	4,034,912		$	154,756		$	5,854,738

	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 25, 2022	$	17,979	$	2,008,931		$	(315,886	)	$	4,225,521		$	(70,612	)	$	5,865,933
Net income		—		—			—			210,848			—			210,848
Translation adjustment		—		—			—			—			(117,360	)		(117,360	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $5,744		—		—			—			—			(18,867	)		(18,867	)
Comprehensive income																74,621
Dividends		—		—			—			2,635			—			2,635
Issuance of treasury stock related to equity awards		—		(28	)		28			—			—			—
Stock compensation		—		18,116			—			—			—			18,116
Purchase of treasury stock related to equity awards		—		—			(27	)		—			—			(27	)
Purchase of treasury stock under share repurchase plan		—		—			(83,089	)		—			—			(83,089	)
Balance at September 24, 2022	$	17,979	$	2,027,019		$	(398,974	)	$	4,439,004		$	(206,839	)	$	5,878,189

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 39-Weeks Ended September 24, 2022 and September 25, 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		—		—		—			796,064		—			796,064
Translation adjustment		—		—		—			—		(16,313	)		(16,313	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,918		—		—		—			—