Garmin Reports Strong Revenue & Pro Forma EPS Growth in Second Quarter 2014
SCHAFFHAUSEN, Switzerland–(BUSINESS WIRE)–Garmin Ltd. (Nasdaq: GRMN) today announced results for the quarter ended June 28, 2014.
Highlights in the quarter include:
- Total revenue of $778 million in second quarter 2014 with fitness and aviation delivering significant growth of 79% and 11%, respectively
- Gross and operating profit margins improved from the prior year quarter to 57% and 28%, respectively
- Pro forma EPS growth of 34%; $1.02 for second quarter 2014 compared to $0.76 in the prior year
- Announced the acquisition of Fusion® Electronics, a leading supplier of integrated marine audio equipment, which was completed in third quarter 2014
- Generated $143 million of free cash flow in second quarter 2014
| (in thousands, | 13-Weeks Ended | 26-Weeks Ended | ||||||||||||||||||||||||||||||||||
| except per share data) | Jun 28, | Jun 29, | Yr over Yr | Jun 28, | Jun 29, | Yr over Yr | ||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||||||||||||
| Net sales | $ | 777,848 | $ | 696,563 | 12 | % | $ | 1,361,069 | $ | 1,228,520 | 11 | % | ||||||||||||||||||||||||
| Automotive/Mobile | 350,036 | 344,701 | 2 | % | 592,988 | 597,290 | -1 | % | ||||||||||||||||||||||||||||
| Fitness | 150,678 | 84,216 | 79 | % | 250,965 | 156,653 | 60 | % | ||||||||||||||||||||||||||||
| Outdoor | 106,059 | 106,856 | -1 | % | 190,044 | 183,022 | 4 | % | ||||||||||||||||||||||||||||
| Aviation | 97,295 | 88,042 | 11 | % | 193,289 | 168,511 | 15 | % | ||||||||||||||||||||||||||||
| Marine | 73,780 | 72,748 | 1 | % | 133,783 | 123,044 | 9 | % | ||||||||||||||||||||||||||||
| Gross profit % | 57 | % | 55 | % | 57 | % | 54 | % | ||||||||||||||||||||||||||||
| Operating profit % | 28 | % | 24 | % | 25 | % | 20 | % | ||||||||||||||||||||||||||||
| Pro forma diluted EPS (1) | $ | 1.02 | $ | 0.76 | 34 | % | $ | 1.57 | $ | 1.16 | 35 | % | ||||||||||||||||||||||||
| (1) See attached table for reconciliation of GAAP EPS to pro forma diluted EPS | ||||||||||||||||||||||||||||||||||||
Executive Overview from Cliff Pemble, President and Chief Executive Officer:
“Our great start to 2014 continued with a second consecutive quarter of revenue, operating income and pro forma EPS growth. We are excited to see the positive consumer reception for many of our recently introduced products and are maintaining our focus on innovation and diversification to drive further growth opportunities,” said Cliff Pemble, president and chief executive officer (CEO) of Garmin Ltd. “Given the strong start to the year, we are raising our revenue and EPS guidance for full year 2014 to $2.75 – $2.85 billion of revenue and $2.95 – $3.05 of pro forma EPS.”
Outdoor:
The outdoor segment posted a slight revenue decline compared to the strong performance we achieved in the second quarter of 2013. Gross and operating margins contracted compared to the prior year due primarily to inventory reserves and advertising expenses associated with our VIRB™ action camera. We further expanded our broad portfolio of outdoor products with the introduction of the Approach™ S6. The Approach S6 for the golf enthusiast delivers one-of-a-kind swing metrics in a wristwatch. Metrics include swing tempo and swing strength paired with a tempo training feature.
Fitness:
The fitness segment posted revenue growth of 79% in the quarter on the strength of vívofit™, our first activity tracker, and recent biking and running product introductions including the Edge® 1000 and the Forerunner® 15, 220 and 620. Gross margins were steady at 65% year-over-year while operating margins improved to 42% as sales growth significantly outpaced operating expense growth. While much has been said about these markets being crowded, we are committed to exploration, development and delivery of innovation that customers desire across our broad range of fitness and wellness products. With this commitment, we believe we can maintain our leadership and deliver ongoing revenue growth in this segment.
Aviation:
The aviation segment posted revenue growth of 11% in the quarter driven by increased OEM sales. The gross and operating margins in aviation were strong at 74% and 29%, respectively. During the quarter, we were pleased to see the final certification and first delivery of the Cessna Citation X+ featuring our touchscreen G5000 integrated flight deck. During the back half of 2014, we will have additional certifications with the G3000 in the updated CJ3+ and Alpine Edition CJ2+. In addition, we continue to focus efforts on numerous certifications that will begin to contribute revenue in 2015 and beyond including the Cessna Latitude, which achieved first flight in February 2014 and is slated for final certification in 2015, as well as the Bell 525 and 505, which are scheduled for first flight this year.
Marine:
The marine segment posted revenue growth of 1% compared to the strong performance we achieved in the second quarter of 2013. While revenue growth was tempered, gross margin improvement and reduced operating expenses drove 23% growth in operating income. Gross margin improvement was driven by product mix shifting toward new products with higher margin profiles. In the quarter, we announced the acquisition of Fusion Electronics, a marine audio equipment supplier. This acquisition will allow us to offer a broader portfolio of marine products as we leverage Fusion’s advanced audio equipment capabilities.
Auto/Mobile:
The automotive/mobile segment posted revenue growth of 2% as PND sales continued to decline but were offset by amortization of previously deferred revenue and growing OEM revenues. Gross and operating margins in the quarter were 48% and 21%, respectively, representing an improvement over the prior year primarily due to the amortization of high margin deferred revenue. The PND market has performed better than expected but we remain cautious regarding the industry and will continue to focus on share gains and profitability.
Additional Financial Information:
Total operating expenses in the quarter were $226 million, a 6% increase from the prior year. Research and development investment increased 2%, while declining as a percentage of sales, driven by fitness and outdoor growth to support new product initiatives. Advertising increased 18% as we launched campaigns to support new products in outdoor and fitness. Selling, general and administrative expense increased by 5% but declined as a percentage of sales in the quarter.
The effective tax rate in the second quarter of 2014 was 12.8% compared to 16.5% in the prior year due to a favorable income mix across tax jurisdictions partially offset by the expiration of certain Taiwan tax holidays and the expiration of the federal research and development credit.
In the second quarter, we generated $143 million of free cash flow (see attached table for reconciliation of this non-GAAP measure). We continued to return cash to shareholders with our quarterly dividend of approximately $88 million and our share repurchase activity which totaled $129 million in the current quarter. We have $79 million remaining in the share repurchase program authorized through December 31, 2014. We ended the quarter with cash and marketable securities of over $2.8 billion.
2014 Guidance:
With strong results in the first half of 2014, we are updating our guidance and now anticipate revenues of $2.75-$2.85 billion, improved gross and operating margins and a lower pro forma effective tax rate. The result of these changes is a pro forma EPS range of $2.95 – $3.05. Our guidance anticipates promotional pricing for the holiday season, as well as higher spending in marketing and advertising to support new product categories resulting in margins that are lower than what we have experienced in the first half of the year.
| 2014 Update | Prior | |||||||||
| Revenue | $2.75 – $2.85 B | $2.6 – $2.7 B | ||||||||
| Gross Margin | ~56% | 54 – 55% | ||||||||
| Operating Income | $650 – $675 M | $530 – $565 M | ||||||||
| Operating Margin | ~24% | ~21% | ||||||||
| Tax Rate (Pro Forma) | ~15% | 17% | ||||||||
| EPS (Pro Forma) | $2.95 – $3.05 | $2.50 – $2.60 | ||||||||
Subsequent Event
On July 24, 2014, Garmin’s Board of Directors approved an intercompany restructuring that will move certain US subsidiaries out from under our Taiwanese subsidiary. This change in corporate structure will provide access to historical earnings that were previously permanently reinvested, and will allow us to efficiently repatriate future earnings to fund dividends, share repurchases, and acquisitions. In order to change our corporate structure and access historical earnings, Garmin will make one-time cash tax payments of approximately $300 million over the next year.
Webcast Information/Forward-Looking Statements:
The information for Garmin Ltd.’s earnings call is as follows:
| When: | Wednesday, July 30, 2014 at 10:30 a.m. Eastern | |||||||||
| Where: |
http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html |
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| How: | Simply log on to the web at the address above or call to listen in at 888-218-8172 | |||||||||
An archive of the live webcast will be available until September 24, 2014 on the Garmin website at 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 2014, the Company’s expected segment revenue growth rate, margins, new products to be introduced in 2014 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 28, 2013 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin’s 2013 Form 10-K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.
Garmin, Fusion, Edge and Forerunner are registered trademarks and VIRB, Approach and vivofit are trademarks of Garmin Ltd. or its subsidiaries. All other brands, product names, company names, trademarks and service marks are the properties of their respective owners. All rights reserved.
| Garmin Ltd. And Subsidiaries | ||||||||||||||||||||||||
| Condensed Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||||
| (In thousands, except per share information) | ||||||||||||||||||||||||
| 13-Weeks Ended | 26-Weeks Ended | |||||||||||||||||||||||
| June 28, | June 29, | June 28, | June 29, | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| Net sales | $ | 777,848 | $ | 696,563 | $ | 1,361,069 | $ | 1,228,520 | ||||||||||||||||
| Cost of goods sold | 333,363 | 312,923 | 585,750 | 568,747 | ||||||||||||||||||||
| Gross profit | 444,485 | 383,640 | 775,319 | 659,773 | ||||||||||||||||||||
| Advertising expense | 34,918 | 29,483 | 59,346 | 51,732 | ||||||||||||||||||||
| Selling, general and administrative expense | 92,409 | 88,039 | 182,282 | 174,307 | ||||||||||||||||||||
| Research and development expense | 98,404 | 96,232 | 194,568 | 183,922 | ||||||||||||||||||||
| Total operating expense | 225,731 | 213,754 | 436,196 | 409,961 | ||||||||||||||||||||
| Operating income | 218,754 | 169,886 | 339,123 | 249,812 | ||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||
| Interest income | 9,670 | 8,179 | 19,437 | 17,077 | ||||||||||||||||||||
| Foreign currency gains (losses) | (20,378 | ) | 27,451 | (7,563 | ) | 19,102 | ||||||||||||||||||
| Other | 674 | 1,069 | 190 | 2,228 | ||||||||||||||||||||
| Total other income (expense) | (10,034 | ) | 36,699 | 12,064 | 38,407 | |||||||||||||||||||
| Income before income taxes | 208,720 | 206,585 | 351,187 | 288,219 | ||||||||||||||||||||
| Income tax provision | 26,737 | 34,094 | 50,387 | 27,062 | ||||||||||||||||||||
| Net income | $ | 181,983 | $ | 172,491 | $ | 300,800 | $ | 261,157 | ||||||||||||||||
| Net income per share: | ||||||||||||||||||||||||
| Basic | $ | 0.94 | $ | 0.88 | $ | 1.55 | $ | 1.34 | ||||||||||||||||
| Diluted | $ | 0.93 | $ | 0.88 | $ | 1.54 | $ | 1.33 | ||||||||||||||||
|
Weighted average common shares outstanding: |
||||||||||||||||||||||||
| Basic | 193,771 | 195,570 | 194,431 | 195,600 | ||||||||||||||||||||
| Diluted | 194,955 | 196,300 | 195,464 | 196,338 | ||||||||||||||||||||
| Garmin Ltd. And Subsidiaries | |||||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||||
| (In thousands, except share information) | |||||||||||||
| (Unaudited) | |||||||||||||
| June 28, | December 28, | ||||||||||||
| 2014 | 2013 | ||||||||||||
| Assets | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 1,234,886 | $ | 1,179,149 | |||||||||
| Marketable securities | 160,901 | 149,862 | |||||||||||
| Accounts receivable, net | 496,979 | 564,586 | |||||||||||
| Inventories, net | 429,673 | 382,226 | |||||||||||
| Deferred income taxes | 67,496 | 69,823 | |||||||||||
| Deferred costs | 47,886 | 57,368 | |||||||||||
| Loan receivable | – | 137,379 | |||||||||||
| Prepaid expenses and other current assets | 58,748 | 55,243 | |||||||||||
| Total current assets | 2,496,569 | 2,595,636 | |||||||||||
| Property and equipment, net | 428,482 | 414,848 | |||||||||||
| Marketable securities | 1,456,103 | 1,502,106 | |||||||||||
| Restricted cash | 250 | 249 | |||||||||||
| Noncurrent deferred income tax | 86,425 | 88,324 | |||||||||||
| Noncurrent deferred costs | 40,853 | 41,157 | |||||||||||
| Other intangible assets, net | 213,242 | 219,494 | |||||||||||
| Other assets | 19,878 | 17,789 | |||||||||||
| Total assets | $ | 4,741,802 | $ | 4,879,603 | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 132,581 | $ | 146,582 | |||||||||
| Salaries and benefits payable | 52,689 | 59,794 | |||||||||||
| Accrued warranty costs | 27,349 | 26,767 | |||||||||||
| Accrued sales program costs | 33,436 | 50,903 | |||||||||||
| Deferred revenue | 221,079 | 256,908 | |||||||||||
| Accrued royalty costs | 9,451 | 64,538 | |||||||||||
| Accrued advertising expense | 17,927 | 19,448 | |||||||||||
| Other accrued expenses | 70,399 | 65,657 | |||||||||||
| Deferred income taxes | 378 | 989 | |||||||||||
| Income taxes payable | 34,135 | 38,043 | |||||||||||
| Dividend payable | 369,826 | 175,675 | |||||||||||
| Total current liabilities | 969,250 | 905,304 | |||||||||||
| Deferred income taxes | 1,731 | 1,758 | |||||||||||
| Non-current income taxes | 147,589 | 140,933 | |||||||||||
| Non-current deferred revenue | 141,134 | 171,012 | |||||||||||
| Other liabilities | 1,482 | 890 | |||||||||||
| Stockholders’ equity: | |||||||||||||
|
Shares, CHF 10 par value, 208,077,418 shares authorized and issued; 192,616,300 shares outstanding at June 28, 2014 and 195,150,102 shares outstanding at December 28, 2013 |
1,797,435 | 1,797,435 | |||||||||||
| Additional paid-in capital | 87,357 | 79,263 | |||||||||||
| Treasury stock | (274,030 | ) | (120,620 | ) | |||||||||
| Retained earnings | 1,796,561 | 1,865,587 | |||||||||||
| Accumulated other comprehensive income | 73,293 | 38,041 | |||||||||||
| Total stockholders’ equity | 3,480,616 | 3,659,706 | |||||||||||
| Total liabilities and stockholders’ equity | $ | 4,741,802 | $ | 4,879,603 | |||||||||
| Garmin Ltd. And Subsidiaries | |||||||||||||
| Condensed Consolidated Statements of Cash Flows (Unaudited) | |||||||||||||
| (In thousands) | |||||||||||||
| 26-Weeks Ended | |||||||||||||
| June 28, | June 29, | ||||||||||||
| 2014 | 2013 | ||||||||||||
| Operating Activities: | |||||||||||||
| Net income | $ | 300,800 | $ | 261,157 | |||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||
| Depreciation | 23,736 | 25,340 | |||||||||||
| Amortization | 13,722 | 14,578 | |||||||||||
| (Gain) loss on sale of property and equipment | (662 | ) | 28 | ||||||||||
| Provision for doubtful accounts | 2,383 | 701 | |||||||||||
| Deferred income taxes | 3,071 | 5,599 | |||||||||||
| Unrealized foreign currency loss (gain) | 7,483 | (15,996 | ) | ||||||||||
| Provision for obsolete and slow moving inventories | 16,414 | 12,017 | |||||||||||
| Stock compensation expense | 13,459 | 10,978 | |||||||||||
| Realized loss (gain) on marketable securities | 192 | (2,278 | ) | ||||||||||
| Changes in operating assets and liabilities: | |||||||||||||
| Accounts receivable | 65,317 | 110,600 | |||||||||||
| Inventories | (61,812 | ) | (12,160 | ) | |||||||||
| Other current and non-current assets | (4,291 | ) | (14,353 | ) | |||||||||
| Accounts payable | (14,598 | ) | (547 | ) | |||||||||
| Other current and non-current liabilities | (75,826 | ) | (95,261 | ) | |||||||||
| Deferred revenue | (66,265 | ) | (25,952 | ) | |||||||||
| Deferred cost | 9,783 | 4,378 | |||||||||||
| Income taxes payable | 2,446 | (15,168 | ) | ||||||||||
| Net cash provided by operating activities | 235,352 | 263,661 | |||||||||||
| Investing activities: | |||||||||||||
| Purchases of property and equipment | (36,761 | ) | (29,723 | ) | |||||||||
| Proceeds from sale of property and equipment | 669 | 64 | |||||||||||
| Purchase of intangible assets | (1,556 | ) | (674 | ) | |||||||||
| Purchase of marketable securities | (534,952 | ) | (488,515 | ) | |||||||||
| Redemption of marketable securities | 590,887 | 470,086 | |||||||||||
| Proceeds from repayment (advances) on loan receivable | 137,379 | (82,020 | ) | ||||||||||
| Change in restricted cash | (1 | ) | 587 | ||||||||||
| Acquisitions, net of cash acquired | – | (25 | ) | ||||||||||
| Net cash provided by (used in) investing activities | 155,665 | (130,220 | ) | ||||||||||
| Financing activities: | |||||||||||||
| Dividends paid | (175,574 | ) | (263,857 | ) | |||||||||
| Purchase of treasury stock under share repurchase plan | (162,359 | ) | (13,353 | ) | |||||||||
| Purchase of treasury stock related to equity awards | (11,249 | ) | (7,367 | ) | |||||||||
| Proceeds from issuance of treasury stock related to equity awards | 11,398 | 8,185 | |||||||||||
| Tax benefit from issuance of equity awards | 3,434 | 300 | |||||||||||
| Net cash used in financing activities | (334,350 | ) | (276,092 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (930 | ) | (5,039 | ) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 55,737 | (147,690 | ) | ||||||||||
| Cash and cash equivalents at beginning of period | 1,179,149 | 1,231,180 | |||||||||||
| Cash and cash equivalents at end of period | $ | 1,234,886 | $ | 1,083,490 | |||||||||
|
|
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| Revenue, Gross Profit, and Operating Income by Segment (Unaudited) | |||||||||||||||||||||||||||||||
| Reporting Segments | |||||||||||||||||||||||||||||||
| Auto/ | |||||||||||||||||||||||||||||||
| Outdoor | Fitness | Marine | Mobile | Aviation | Total | ||||||||||||||||||||||||||
| 13-Weeks Ended Jun 28, 2014 | |||||||||||||||||||||||||||||||
| Net sales | $ | 106,059 | $ | 150,678 | $ | 73,780 | $ | 350,036 | $ | 97,295 | $ | 777,848 | |||||||||||||||||||
| Gross profit | $ | 64,668 | $ | 98,063 | $ | 42,536 | $ | 167,593 | $ | 71,625 | $ | 444,485 | |||||||||||||||||||
| Operating income | $ | 35,281 | $ | 62,872 | $ | 17,657 | $ | 74,642 | $ | 28,302 | $ | 218,754 | |||||||||||||||||||
| 13-Weeks Ended Jun 29, 2013 | |||||||||||||||||||||||||||||||
| Net sales | $ | 106,856 | $ | 84,216 | $ | 72,748 | $ | 344,701 | $ | 88,042 | $ | 696,563 | |||||||||||||||||||
| Gross profit | $ | 70,387 | $ | 55,071 | $ | 40,938 | $ | 155,363 | $ | 61,881 | $ | 383,640 | |||||||||||||||||||
| Operating income | $ | 44,842 | $ | 29,641 | $ | 14,411 | $ | 60,444 | $ | 20,548 | $ | 169,886 | |||||||||||||||||||
| 26-Weeks Ended Jun 28, 2014 | |||||||||||||||||||||||||||||||
| Net sales | $ | 190,044 | $ | 250,965 | $ | 133,783 | $ | 592,988 | $ | 193,289 | $ | 1,361,069 | |||||||||||||||||||
| Gross profit | $ | 115,578 | $ | 162,148 | $ | 73,588 | $ | 281,384 | 142,621 | $ | 775,319 | ||||||||||||||||||||
| Operating income | $ | 58,964 | $ | 96,384 | $ | 21,467 | $ | 105,206 | $ | 57,102 | $ | 339,123 | |||||||||||||||||||
| 26-Weeks Ended Jun 29, 2013 | |||||||||||||||||||||||||||||||
| Net sales | $ | 183,022 | $ | 156,653 | $ | 123,044 | $ | 597,290 | $ | 168,511 | $ | 1,228,520 | |||||||||||||||||||
| Gross profit | $ | 114,862 | $ | 100,039 | $ | 64,285 | $ | 262,483 | $ | 118,104 | $ | 659,773 | |||||||||||||||||||
| Operating income | $ | 66,430 | $ | 49,533 | $ | 11,971 | $ | 80,476 | $ | 41,402 | $ | 249,812 | |||||||||||||||||||
| Garmin Ltd. And Subsidiaries | ||||||||||||||||||||||||||||||||
| Revenue by Geography (Unaudited) | ||||||||||||||||||||||||||||||||
| 13-Weeks Ended | 26-Weeks Ended | |||||||||||||||||||||||||||||||
| Jun 28, | Jun 29, | Yr over Yr | Jun 28, | Jun 29, | Yr over Yr | |||||||||||||||||||||||||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||||||||
| Net sales | $ | 777,848 | $ | 696,563 | 12 | % | $ | 1,361,069 | $ | 1,228,520 | 11 | % | ||||||||||||||||||||
| Americas | 411,348 | 383,537 | 7 | % | 716,156 | 669,349 | 7 | % | ||||||||||||||||||||||||
| EMEA | 300,427 | 256,401 | 17 | % | 521,030 | 447,177 | 17 | % | ||||||||||||||||||||||||
| APAC | 66,073 | 56,625 | 17 | % | 123,883 | 111,994 | 11 | % | ||||||||||||||||||||||||
| EMEA – Europe, Middle East and Africa; APAC – Asia Pacific | ||||||||||||||||||||||||||||||||
Non-GAAP Financial Information
Pro Forma net income (earnings) per share
Management believes that net income per share before the impact of foreign currency translation gain or loss and income tax adjustments that materially impact the effective tax rate due to completion of tax audits and/or expiration of statutes is an important measure. The majority of the Company’s consolidated foreign currency gain or loss result from transactions involving the Euro, the British Pound Sterling and the Taiwan Dollar and from the exchange rate impact of the significant cash and marketable securities, receivables and payables held in U.S. dollars at the end of each reporting period by the Company’s various non-U.S. subsidiaries. Such gain or loss is required under GAAP because the functional currency of the subsidiaries differs from the currency in which various assets and liabilities are held. However, there is minimal cash impact from such foreign currency gain or loss. The Company’s income tax expense is periodically impacted by material reserve releases related to completion of audits and/or the expiration of statutes effecting prior periods. Thus, reported income tax expense is not reflective of the income tax expense that is incurred related to the current period earnings. The release of other uncertain tax position reserves, amounting to approximately $11 million in the first half of 2014 and $10 million in the first half of 2013, have not been included as pro forma adjustments in the following presentation of pro forma net income as such amounts have been considered immaterial, tend to be more recurring in nature and are comparable between periods. Accordingly, earnings per share before the impact of foreign currency translation gain or loss and income tax adjustments that materially impact the effective tax rate due to completion of tax audits and/or expiration of statutes permits a consistent comparison of the Company’s operating performance between periods.
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Net income per share (Pro Forma) |
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(in thousands, except per share information) |
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| 13-Weeks Ended | 26-weeks Ended | |||||||||||||||||||||||
| Jun 28, | Jun 29, | Jun 28, | Jun 29, | |||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
| Net Income (GAAP) | $ | 181,983 | $ | 172,491 | $ | 300,800 | $ | 261,157 | ||||||||||||||||
| Foreign currency (gain) / loss, net of tax effects | $ | 17,768 | ($22,920 | ) | $ | 6,478 | ($16,213 | ) | ||||||||||||||||
|
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|
Income tax benefit due to completion of tax audits and/or expiration of statutes |
– | – | – | ($16,536 | ) | |||||||||||||||||||
| Net income (Pro Forma) | $ | 199,751 | $ | 149,571 | $ | 307,278 | $ | 228,408 | ||||||||||||||||
| Net income per share (GAAP): | ||||||||||||||||||||||||
| Basic | $ | 0.94 | $ | 0.88 | $ | 1.55 | $ | 1.34 | ||||||||||||||||
| Diluted | $ | 0.93 | $ | 0.88 | $ | 1.54 | $ | 1.33 | ||||||||||||||||
| Net income per share (Pro Forma): | ||||||||||||||||||||||||
| Basic | $ | 1.03 | $ | 0.76 | $ | 1.58 | $ | 1.17 | ||||||||||||||||
| Diluted | $ | 1.02 | $ | 0.76 | $ | 1.57 | $ | 1.16 | ||||||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||||||||||
| Basic | 193,771 | 195,570 | 194,431 | 195,600 | ||||||||||||||||||||
| Diluted | 194,955 | 196,300 | 195,464 | 196,338 | ||||||||||||||||||||
Free cash flow
Management believes that free cash flow is an important financial measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flow less capital expenditures for property and equipment.
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| Free Cash Flow | ||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| 13-Weeks Ended | 26-weeks Ended | |||||||||||||||||||||||||
| Jun 28, | Jun 29, | Jun 28, | Jun 29, | |||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||
| Net cash provided by operating activities | $ | 164,179 | $ | 204,298 | $ | 235,352 | $ | 263,661 | ||||||||||||||||||
| Less: purchases of property and equipment | ($21,224 | ) | ($18,107 | ) | ($36,761 | ) | ($29,723 | ) | ||||||||||||||||||
| Free Cash Flow | $ | 142,955 | $ | 186,191 | $ | 198,591 | $ | 233,938 | ||||||||||||||||||
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