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Corporate earnings
Wednesday, 1 November 2017, 12:00 am CDT

Garmin Reports Third Quarter Revenue and Profit Growth; Raises Guidance

Garmin Ltd. (Nasdaq: GRMN) today announced results for the third quarter
ended September 30, 2017.

Highlights for the third quarter 2017 include:

  • Total revenue of $743 million, growing 3% over the prior year, with
    outdoor, aviation, marine and fitness collectively growing 9% over the
    prior year quarter and contributing 75% of total revenue
  • Gross margin improved to 58.4% compared to 56.2% in the prior year
    quarter
  • Operating margin improved to 22.8% compared to 22.1% in the prior year
    quarter
  • Operating income was $170 million, growing 6% over the prior year
    quarter
  • GAAP EPS was $0.78, an 18% improvement over the prior year quarter,
    and pro forma EPS(1) was $0.75, consistent with the prior
    year quarter
  • Completed the acquisition of Navionics® S.p.A., a privately-held
    worldwide provider of electronic navigational charts and mobile
    applications for the marine industry
  • Launched several new wearables within the fitness segment, including
    the vívoactive® 3, vívomove® HR, vívosport® and vívofit® jr. 2
    featuring Disney, Star Wars and Marvel branded bands and mobile
    app adventures
(in thousands, 13-Weeks Ended 39-weeks Ended
except per share data) September 30, September 24, Yr over Yr September 30, September 24, Yr over Yr
2017 2016 Change 2017 2016 Change
Net sales $ 743,077 $ 722,250 3 % $ 2,198,508 $ 2,157,898 2 %
Outdoor 184,937 141,006 31 % 495,589 370,929 34 %
Aviation 124,628 107,436 16 % 371,559 322,083 15 %
Marine 77,312 70,010 10 % 290,302 264,489 10 %
Fitness 167,147 189,161 -12 % 485,999 544,434 -11 %
Auto 189,053 214,637 -12 % 555,059 655,963 -15 %
Gross margin % 58.4 % 56.2 % 58.4 % 56.0 %
Operating income % 22.8 % 22.1 % 22.3 % 21.5 %
GAAP diluted EPS $0.78 $0.66 18 % $2.95 $1.98 49 %
Pro forma diluted EPS (1) $0.75 $0.75 0 % $2.15 $2.10 2 %
(1) See attached table for reconciliation of non-GAAP measures including
pro forma diluted EPS


Executive Overview from Cliff Pemble, President
and Chief Executive Officer:

“We continued our strong performance through the third quarter with
double digit revenue and operating profit growth in outdoor, aviation,
and marine,” said Cliff Pemble, president and chief executive officer of
Garmin Ltd. “We are well positioned for the remainder of 2017 with a
strong lineup of new products and opportunities in each business
segment.”


Outdoor:

During the third quarter of 2017, the outdoor segment grew 31% driven by
strong demand for our wearables. Gross margin improved to 64% while
operating margin improved to 37%, resulting in operating income growth
of 38%. We recently entered new product categories with the introduction
of the Descent™ dive watch, bringing a sleek design to underwater
adventurers, and the Impact™ bat swing sensor helping coaches and
players make every swing count. Looking forward, we are focused on
growth opportunities in wearables and inReach product introductions.


Aviation:

The aviation segment posted revenue growth of 16%, driven by growth in
both aftermarket and OEM sales. Gross and operating margins were 73% and
27%, respectively, resulting in 12% operating income growth. We recently
announced the TXi™ series of touchscreen flight displays with engine
monitoring solutions. During the fourth quarter, we began shipping the
previously announced GFC™ 600, providing pilots with advanced autopilot
capabilities in an aftermarket solution. Looking forward, we are focused
on maximizing ADS-B mandate opportunities and gaining share in the OEM
market.


Marine:

The marine segment posted solid third quarter revenue growth of 10%
driven by our strong lineup of chartplotters and fishfinders. Gross
margin increased year-over-year to 58%, while operating margin improved
to 24%. For the third consecutive year Garmin was recognized as the
Manufacturer of the Year by the NMEA (National Marine Electronics
Association), winning a total of nine awards across a broad range of
product categories. We recently completed the acquisition of Navionics
S.p.A., a privately-held provider of electronic navigational charts and
mobile applications. In addition, we announced our 2018 lineup of marine
electronics with updated echoMAP™ and STRIKER™ products. Looking
forward, we are focused on product innovations and gaining share in the
inland fishing category.


Fitness:

Revenue in the fitness segment declined 12% during the quarter, with
gross and operating margins of 58% and 20%, respectively. The decrease
in revenue was primarily driven by the decline of the basic activity
tracker market and the timing of our recent product introductions
partially offset by growth in the running category. During the third
quarter, we launched several new wearables including the vívoactive® 3,
bringing Garmin Pay contactless payment solutions to the wrist,
vívomove™ HR, an analog watch with wrist heart rate and smart
notifications, and vívosport™, a slim activity tracker with built-in GPS
and smart notifications. In addition, we launched our vívofit® jr. 2,
featuring Disney, Star Wars and Marvel bands and mobile app
adventures, encouraging children to be active. Looking forward, we are
focused on growth opportunities in advanced wearables devices.


Auto:

Auto segment revenue declined 12% in the third quarter of 2017,
primarily due to the ongoing PND market contraction partially offset by
solid growth in OEM and niche categories such as camera, truck, fleet,
and RV. Gross and operating margins were 44% and 8%, respectively. We
recently introduced Garmin Speak™ with Amazon Alexa, bringing digital
assistant functionality to the vehicle. Looking forward, we are focused
on disciplined execution to bring desired innovation to the market and
to optimize profitability in this segment.


Additional Financial Information:

Total operating expenses in the quarter were $264 million, an increase
of 7% over the prior year. Research and development increased 11%
primarily due to engineering personnel costs related to our wearable
product offerings and aviation. Selling, general and administrative
expenses increased 5%, primarily due to legal related costs. Advertising
decreased 2%, primarily due to lower cooperative advertising somewhat
offset by increases in outdoor media.

The effective tax rate in the third quarter was 20.8% up from 16.5% in
the prior year quarter. The year-over-year increase in the effective tax
rate is primarily due to the Company’s election to align certain
Switzerland corporate tax positions with evolving international tax
initiatives and income mix by jurisdiction, partially offset by the
benefit associated with the release of income tax reserves.

In the third quarter of 2017, we generated $153 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 $96 million and our share repurchases activity, which
totaled approximately $11 million in the third quarter. We have about $1
million remaining in the share repurchase program authorized through
December 31, 2017. We ended the quarter with cash and marketable
securities of approximately $2.4 billion.


2017 Guidance:

Based on our performance through the first three quarters of 2017, we
are updating our full year guidance. We now anticipate revenue of
approximately $3.07 billion driven primarily by higher expectations for
our outdoor, aviation and auto segments partially offset by lower
expectations for the fitness segment. Our outlook for marine is
unchanged. We anticipate our full year pro forma EPS will be
approximately $2.90 based on gross margin of approximately 57.5%,
operating margin of approximately 21.5% and a full year pro forma
effective tax rate of approximately 21.5%.

2017 Guidance
Updated Prior
Revenue ~$3.07 B ~$3.04 B
Gross Margin ~57.5% ~57.5%
Operating Margin ~21.5% ~21%
Tax Rate (Pro Forma)(1) ~21.5% ~22%
EPS (Pro Forma)(1) ~$2.90 ~$2.80

(1) See attached table for reconciliation of non-GAAP measures
including
forward-looking pro forma tax rate and EPS

2017 Revenue Guidance

Updated Prior
Outdoor ~27% 25%
Aviation ~13% 10%
Marine ~10% 10%
Fitness ~(7%) (5%)
Auto ~(15%) (17%)


Webcast Information/Forward-Looking Statements:

The information for Garmin Ltd.’s earnings call is as follows:

When: Wednesday, November 1, 2017 at 10:30 a.m. Eastern
Where:

http://www.garmin.com/en-US/company/investors/events/

How: Simply log on to the web at the address above or call to listen in
at 855-757-3897

An archive of the live webcast will be available until November 2, 2018
on the Garmin website at www.garmin.com.
To access the replay, click on the Investor Relations link and select
the Quarterly and Annual Earnings page.

This release includes projections and other forward-looking
statements regarding Garmin Ltd. and its business that are commonly
identified by words such as “would,” “may,” “expects,” “estimates,”
“plans,” “intends,” “projects,” and other words or phrases with similar
meanings. Any statements regarding the Company’s GAAP and pro
forma estimated earnings, EPS, and effective tax rate, and the Company’s
expected segment revenue growth rates, consolidated revenue, gross
margins, operating margins, currency movements, expenses, pricing, new
products to be introduced in 2017, statements relating to possible
future dividends 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 and uncertainties
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 31, 2016 filed by Garmin with the Securities and Exchange
Commission (Commission file number 0-31983). A copy of Garmin’s 2016
Form 10-K can be downloaded from

http://www.garmin.com/aboutGarmin/invRelations/finReports.html

.

Garmin, the Garmin logo, the Garmin delta, vívoactive, vívofit, and
inReach are trademarks of Garmin Ltd. or its subsidiaries and are
registered in one or more countries, including the U.S.; Descent,
Impact, TXi, echoMAP, STRIKER, vívomove, vívosport, and Garmin Speak are
trademarks of Garmin Ltd. or its subsidiaries. STAR WARS, and
related properties and character names are trademarks and/or copyrights,
in the United States and other countries, of Lucasfilm Ltd. and/or its
affiliates. © & TM Lucasfilm Ltd. Amazon, Alexa, and all related logos
are trademarks of Amazon.com, Inc. or its affiliates. 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 39-Weeks Ended
September 30, September 24, September 30, September 24,
2017 2016 2017 2016
Net sales $ 743,077 $ 722,250 $ 2,198,508 $ 2,157,898
Cost of goods sold 309,412 316,270 914,862 949,110
Gross profit 433,665 405,980 1,283,646 1,208,788
Advertising expense 32,449 32,956 105,983 109,441
Selling, general and administrative expense 101,794 96,959 309,095 296,246
Research and development expense 129,632 116,449 379,083 339,008
Total operating expense 263,875 246,364 794,161 744,695
Operating income 169,790 159,616 489,485 464,093
Other income (expense):
Interest income 9,207 8,226 26,931 24,109
Foreign currency gains (losses) 8,579 (19,421 ) (13,808 ) (30,003 )
Other (expense) income (1,520 ) 1,344 (805 ) 2,914
Total other income (expense) 16,266 (9,851 ) 12,318 (2,980 )
Income before income taxes 186,056 149,765 501,803 461,113
Income tax provision (benefit) 38,643 24,711 (54,372 ) 86,904
Net income $ 147,413 $ 125,054 $ 556,175 $ 374,209
Net income per share:
Basic $0.79 $0.66 $2.96 $1.98
Diluted $0.78 $0.66 $2.95 $1.98

Weighted average common shares outstanding:

Basic 187,616 188,692 187,902 189,027
Diluted 188,490 189,238 188,671 189,376
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
(Unaudited)
September 30, December 31,
2017 2016
Assets
Current assets:
Cash and cash equivalents $ 891,279 $ 846,883
Marketable securities 253,699 266,952
Accounts receivable, net 457,391 527,062
Inventories, net 575,335 484,821
Deferred costs 47,483 47,395
Prepaid expenses and other current assets 107,287 89,903
Total current assets 2,332,474 2,263,016
Property and equipment, net 554,441 482,878
Marketable securities 1,210,323 1,213,285
Restricted cash 117 113
Deferred income taxes 262,473 110,293
Noncurrent deferred costs 69,286 56,151
Intangible assets, net 313,269 305,002
Other assets 93,008 94,395
Total assets $ 4,835,391 $ 4,525,133
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 158,591 $ 172,404
Salaries and benefits payable 89,124 88,818
Accrued warranty costs 35,669 37,233
Accrued sales program costs 53,826 80,953
Deferred revenue 138,570 146,564
Accrued royalty costs 37,895 36,523
Accrued advertising expense 20,099 37,440
Other accrued expenses 105,783 70,469
Income taxes payable 15,250 16,163
Dividend payable 191,238 96,168
Total current liabilities 846,045 782,735
Deferred income taxes 68,204 61,220
Noncurrent income taxes 123,905 121,174
Noncurrent deferred revenue 155,814 140,407
Other liabilities 1,738 1,594
Stockholders’ equity:

Shares, CHF 0.10 par value, 198,077 shares authorized and issued;
187,500 shares outstanding at September 30, 2017 and
188,565 shares outstanding at December 31, 2016

17,979 17,979
Additional paid-in capital 1,851,529 1,836,047
Treasury stock (506,799 ) (455,964 )
Retained earnings 2,230,489 2,056,702
Accumulated other comprehensive income (loss) 46,487 (36,761 )
Total stockholders’ equity 3,639,685 3,418,003
Total liabilities and stockholders’ equity $ 4,835,391 $ 4,525,133
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
39-Weeks Ended
September 30, September 24,
2017 2016
Operating activities:
Net income $ 556,175 $ 374,209

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation 44,011 40,327
Amortization 19,688 22,215
(Gain) loss on sale or disposal of property and equipment (184 ) 155
Provision for doubtful accounts 551 2,559
Deferred income taxes (143,846 ) (6,821 )
Unrealized foreign currency loss 17,504 19,536
Provision for obsolete and slow moving inventories 16,504 20,943
Stock compensation expense 32,441 29,211
Realized loss (gain) on marketable securities 594 (1,068 )
Changes in operating assets and liabilities:
Accounts receivable 84,982 76,372
Inventories (86,631 ) (41,002 )
Other current and non-current assets (9,635 ) 3,400
Accounts payable (24,526 ) (40,694 )
Other current and non-current liabilities (37,403 ) 1,942
Deferred revenue 5,726 (13,660 )
Deferred costs (12,650 ) (9,906 )
Income taxes payable (724 ) 14,648
Net cash provided by operating activities 462,577 492,366
Investing activities:
Purchases of property and equipment (85,211 ) (42,157 )
Proceeds from sale of property and equipment 264 15
Purchase of intangible assets (9,069 ) (4,706 )
Purchase of marketable securities (438,046 ) (739,676 )
Redemption of marketable securities 455,376 772,733
Change in restricted cash – (6 )
Acquisitions, net of cash acquired (12,400 ) (62,137 )
Net cash used in investing activities (89,086 ) (75,934 )
Financing activities:
Dividends paid (287,318 ) (289,331 )
Purchase of treasury stock under share repurchase plan (74,523 ) (65,221 )
Purchase of treasury stock related to equity awards (3,587 ) (184 )
Proceeds from issuance of treasury stock related to equity awards 10,316 10,210
Tax benefit from issuance of equity awards – 365
Net cash used in financing activities (355,112 ) (344,161 )
Effect of exchange rate changes on cash and cash equivalents 26,017 7,218
Net increase in cash and cash equivalents 44,396 79,489
Cash and cash equivalents at beginning of period 846,883 833,070
Cash and cash equivalents at end of period $ 891,279 $ 912,559
Garmin Ltd. And Subsidiaries
Net Sales, Gross Profit, and Operating Income by Segment
(Unaudited)
Reportable Segments

Outdoor
Fitness
Marine
Auto
Aviation
Total
13-Weeks Ended September 30, 2017
Net sales $184,937 $167,147 $77,312 $189,053 $124,628 $743,077
Gross profit $118,175 $96,135 $44,574 $83,961 $90,820 $433,665
Operating income $67,810 $33,492 $18,420 $15,971 $34,097 $169,790
13-Weeks Ended September 24, 2016
Net sales $141,006 $189,161 $70,010 $214,637 $107,436 $722,250
Gross profit $88,497 $103,363 $39,891 $93,638 $80,591 $405,980
Operating income $49,271 $44,774 $10,332 $24,795 $30,444 $159,616
39-Weeks Ended September 30, 2017
Net sales $495,589 $485,999 $290,302 $555,059 $371,559 $2,198,508
Gross profit $319,457 $276,014 $166,690 $246,931 $274,554 $1,283,646
Operating income $176,544 $89,452 $60,860 $50,566 $112,063 $489,485
39-Weeks Ended September 24, 2016
Net sales $370,929 $544,434 $264,489 $655,963 $322,083 $2,157,898
Gross profit $232,652 $295,463 $148,554 $292,770 $239,349 $1,208,788
Operating income $125,721 $114,422 $49,172 $82,984 $91,794 $464,093
Garmin Ltd. And Subsidiaries
Net Sales by Geography (Unaudited)
(In thousands)
13-Weeks Ended 39-weeks Ended
September 30, September 24, Yr over Yr September 30, September 24, Yr over Yr
2017 2016 Change 2017 2016 Change
Net sales $ 743,077 $ 722,250 3 % $ 2,198,508 $ 2,157,898 2 %
Americas 341,005 348,637 -2 % 1,049,287 1,073,610 -2 %
EMEA 292,291 274,756 6 % 834,125 810,205 3 %
APAC 109,781 98,857 11 % 315,096 274,083 15 %
EMEA – Europe, Middle East and Africa; APAC – Asia Pacific and
Australian Continent

Non-GAAP Financial Information

To supplement our financial results presented in accordance with GAAP,
this release includes the following measures defined by the Securities
and Exchange Commission as non-GAAP financial measures: pro forma net
income (earnings) per share, forward-looking pro forma earnings per
share, pro forma effective tax rate, forward-looking pro forma effective
tax rate and free cash flow. These non-GAAP measures are not based on
any comprehensive set of accounting rules or principles and should not
be considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and may be different from non-GAAP
measures used by other companies. Management believes providing
investors with an operating view consistent with how it manages the
Company provides enhanced transparency into the operating results of the
Company.


Pro forma effective tax rate

The Company’s income tax expense is periodically impacted by discrete
tax items that are not reflective of income tax expense incurred as a
result of current period earnings. Therefore, the effective tax rate and
income tax provision before the effect of such discrete tax items are
important measures to permit consistent comparison between periods. In
fiscal 2016, there were no such discrete tax items identified.

Garmin Ltd. And Subsidiaries
Pro Forma Effective Tax Rate
(in thousands, except effective tax rate (ETR) information)
13-Weeks Ended 39-weeks Ended
September 30, September 30,
2017 2017
$ ETR
(1)
 $ ETR
(1)
U.S. GAAP income tax provision (benefit) $ 38,643 20.8 % ($54,372 ) (10.8 %)
Pro forma discrete tax items:
Revaluation of deferred tax asset(2) – 168,755
Tax expense from share-based award expirations(3) – (7,275 )
Total pro forma discrete tax items – 161,480
Income tax provision (Pro Forma) $ 38,643 20.8 % $ 107,108 21.3 %

(1)

Effective tax rate is calculated by taking the Income tax
provision (benefit) divided by Income before taxes, as presented
on the face of the Condensed Consolidated Statements of Income.

(2)

In first quarter 2017, a $169 million tax benefit was recognized
resulting from the revaluation of certain Switzerland deferred tax
assets. The revaluation is due to the Company’s election in
February 2017 to align certain Switzerland corporate tax positions
with international tax initiatives. As this revaluation is not
reflective of income tax expense incurred related to the current
period earnings, and therefore affects period-to-period
comparability, it has been identified as a pro forma adjustment.

(3)

Following adoption in fiscal 2017 of Accounting Standards Update
No. 2016-09, Compensation – Stock Compensation (Topic 718):
Improvements to Employee Share-Based Payment Accounting (“ASU
2016-09”), the Company may periodically incur tax expense
resulting from stock options and stock appreciation rights (SARs)
expiring unexercised. New grants of stock options and SARs no
longer comprise a significant component of the Company’s
compensation arrangements. As the tax expense from expired awards
is not related to current period earnings or compensation
activities, and affects period-to-period comparability, it has
been identified as a pro forma adjustment.

The net release of uncertain tax position reserves, amounting to
approximately $17.2 million and $5.8 million for the 39-weeks ended
September 30, 2017 and September 24, 2016, respectively, have not been
included as pro forma adjustments in the above presentation of pro forma
income tax provision as such amounts tend to be more recurring in nature.


Pro forma net income (earnings) per share

Management believes that net income (earnings) per share before the
impact of foreign currency gains or losses and certain discrete income
tax items, as discussed above, is an important measure in order to
permit a consistent comparison of the Company’s performance between
periods.

Garmin Ltd. And Subsidiaries
Pro Forma Net Income (Earnings) Per Share
(in thousands, except per share information)
13-Weeks Ended 39-weeks Ended
September 30, September 24, September 30, September 24,
2017 2016 2017 2016
Net income (GAAP) $ 147,413 $ 125,054 $ 556,175 $ 374,209
Foreign currency gains / losses(1) (8,579 ) 19,421 13,808 30,003
Tax effect of foreign currency gains / losses(2) 1,782 (3,204 ) (2,948 ) (5,654 )
Discrete tax items(3) – – (161,480 ) –
Net income (Pro Forma) $ 140,616 $ 141,271 $ 405,555 $ 398,558
Net income per share (GAAP):
Basic $0.79 $0.66 $2.96 $1.98
Diluted $0.78 $0.66 $2.95 $1.98
Net income per share (Pro Forma):
Basic $0.75 $0.75 $2.16 $2.11
Diluted $0.75 $0.75 $2.15 $2.10
Weighted average common shares outstanding:
Basic 187,616 188,692 187,902 189,027
Diluted 188,490 189,238 188,671 189,376

(1)

The majority of the Company’s consolidated foreign currency gains
and losses are typically driven by movements in the Taiwan Dollar,
Euro, and British Pound Sterling in relation to the U.S. Dollar
and the related exchange rate impact on the significant cash,
receivables, and payables held in a currency other than the
functional currency at one of the Company’s subsidiaries. However,
there is minimal cash impact from such foreign currency gains and
losses.

(2)

The tax effect of foreign currency gains and losses was calculated
using the effective tax rate of 20.8% and the pro forma effective
tax rate of 21.3% for the quarter and year-to-date ended September
30, 2017, respectively, and an effective tax rate of 16.5% and
18.8% for the quarter and year-to-date ended September 24, 2016,
respectively.

(3)

The discrete tax items are discussed in the pro forma effective
tax rate section.


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.

Garmin Ltd. And Subsidiaries
Free Cash Flow
(in thousands)
13-Weeks Ended 39-weeks Ended
September 30, September 24, September 30, September 24,
2017 2016 2017 2016
Net cash provided by operating activities $ 198,750 $ 212,994 $ 462,577 $ 492,366
Less: purchases of property and equipment (45,399 ) (13,543 ) (85,211 ) (42,157 )
Free Cash Flow $ 153,351 $ 199,451 $ 377,366 $ 450,209


Forward-looking pro forma effective tax rate

Forward-looking pro forma effective tax rate and forward-looking pro
forma net income (earnings) per share are calculated before the effect
of certain discrete tax items. Management believes certain discrete tax
items may not be reflective of income tax expense incurred as a result
of current period earnings. Therefore, in order to permit consistent
comparison between periods, the effective tax rate and earnings per
share before the effect of such discrete tax items are important
measures. In fiscal 2017, management believes certain discrete tax items
recognized on a GAAP-basis have an effect on comparability between
periods:

  • The fiscal 2017 pro forma effective tax rate excludes certain tax
    effects from share-based compensation as a result of ASU 2016-09. The
    Company is unable to reasonably estimate these amounts on a
    forward-looking basis due to the dependency of this item on the
    underlying share price of the Company. The fiscal 2017 pro forma
    effective tax rate excludes the $7.3 million tax expense resulting
    from the expiration of share-based awards as discussed in the pro
    forma effective tax rate section above. The impact of this discrete
    tax item was $0.04 per share for the 39-weeks ended September 30, 2017.
  • The fiscal 2017 pro forma effective tax rate excludes the $168.8
    million income tax benefit resulting from the revaluation of certain
    Switzerland deferred tax assets as discussed in the pro forma
    effective tax rate section above. The impact of this discrete tax item
    was ($0.90) per share for the 39-weeks ended September 30, 2017.

While management expects the above to have a significant impact on
comparability, management is unable to determine whether or not
additional significant discrete tax items will be identified in the
fourth quarter of 2017.


Forward-looking pro forma earnings per share (EPS)

In addition to the discrete tax items discussed in the forward-looking
pro forma effective tax rate section above, our 2017 pro forma EPS
excludes foreign currency exchange gains and losses. The estimated
impact of such foreign currency gains and losses cannot be reasonably
estimated on a forward-looking basis due to the high variability and low
visibility with respect to non-operating foreign currency exchange gains
and losses and the related tax effects of such gains and losses. The
impact of such foreign currency gains and losses, net of tax effects,
was $10.9 million, or $0.06 per share for the 39-weeks ended September
30, 2017.

 

Contacts

Garmin Ltd. Investor Relations Contact: Teri Seck, 913-397-8200 [email protected] or Media Relations Contact: Ted Gartner, 913-397-8200 [email protected]