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Garmin Reports EPS Growth In Fourth Quarter 2013 With Strong Margin Performance; Proposes Dividend Increase; Announces CFO Transition

Garmin Ltd. (Nasdaq: GRMN – News) today announced results for the fiscal year and quarter ended December 28, 2013.

Highlights in the quarter include:
  • Total revenue of $760 million in fourth quarter 2013 with non-automotive/mobile segments of outdoor, fitness, aviation and marine delivering 50% of total revenues and growing 14% over the year ago quarter
  • Operating margin of 23% with 69% of operating profit from outdoor, fitness, aviation and marine
  • Introduced new watches across a range of categories including the tactix, designed with law enforcement and special operations in mind; the D2™, designed for aviators; and the Approach® S4, a feature-rich golf watch
  • Announced a series of new marine products for 2014 led by DownVü and SideVü scanning sonar, an important feature for the fishing market
  • Generated $135 million of free cash flow in fourth quarter 2013

Highlights for the fiscal year include:
  • Total revenue of $2,632 million in 2013 with outdoor, fitness, aviation and marine growing a combined 9% over 2012
  • Operating margin stable at 22% partially driven by a decline in operating expenses
  • Entered new markets and expanded offering within existing markets allowing for a continued diversification of revenue and profitability sources
  • Generated $574 million of free cash flow in 2013
(in thousands, 13-Weeks Ended 52-Weeks Ended
except per share data) Dec 28,   Dec 29,   Yr over Yr Dec 28,   Dec 29,   Yr over Yr
  2013     2012     Change   2013     2012     Change
Net sales $ 759,694 $ 768,548 -1% $ 2,631,851 $ 2,715,675 -3%
Automotive/Mobile 382,504 436,654 -12% 1,302,314 1,492,440 -13%
Outdoor 126,617 118,517 7% 410,989 401,747 2%
Aviation 87,367 69,888 25% 339,337 291,564 16%
Fitness 118,623 103,973 14% 356,283 321,788 11%
Marine 44,583 39,516 13% 222,928 208,136 7%
Gross profit % 52 % 49 % 53 % 53 %
Operating profit % 23 % 19 % 22 % 22 %
Pro forma diluted EPS (1) $ 0.76 $ 0.68 12% $ 2.62 $ 2.85 -8%
Note: YTD 2012 results include one-time royalty fee benefit of $21 million recorded in second quarter 2012 impacting gross margin.
(1) See attached table for reconciliation of GAAP EPS to pro forma diluted EPS

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

“With strong fourth quarter revenue growth in outdoor, fitness, aviation and marine, we generated record annual sales in those segments,” said Cliff Pemble, president and chief executive officer (CEO) of Garmin Ltd. “In the fourth quarter, we also achieved operating income growth in all five segments. This success serves as a solid starting point for 2014 and highlights the strength of our diversified product portfolio. We are excited about the future and the numerous new categories Garmin will serve.”

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