Garmin Ltd.’s outdoor/fitness segment was a standout in the fourth quarter ended Dec. 26, generating sales of $149 million, up 24% from the year earlier quarter in a period when Garmins overall revenues rose just 1%. For the year, outdoor/fitness sales rose 10% to $469 million. By comparison automotive/mobile sales fell 19%, aviation fell 24% and the marine segment fell 13%.
Garmin said its total North American sales rose 1% to $768 million, while sales declined 2% in Europe to $246 million and rose 25% in Asia to $45 million.
Gross margins for the company improved 480 basis points to 45.9% in the quarter, while operating margins improved 500 basis points to 27.6% in the fourth quarter.
The outdoor/fitness segment continued to be strong, posting year-over-year revenue growth of 24% with exceptionally strong gross and operating margins, said Chairman and CEO Dr. Min Kao. Because of the strong margin performance, the segment contributed 27% of our operating income in the quarter. We hope to build on the strength of the segment in 2010 by offering innovative new products with improved form factors, utility, and functionality, as well as additional points of distribution. Specifically in the fitness market, the growing international market offers ongoing opportunities for expanded distribution and penetration.
| Garmin Ltd. And Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share information) | |||||||||||||||||||
| 13-Weeks Ended | 52-Weeks Ended | ||||||||||||||||||
| December 26, | December 27, | December 26, | December 27, | ||||||||||||||||
| 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net sales | $ | 1,059,383 | $ | 1,048,246 | $ | 2,946,440 | $ | 3,494,077 | |||||||||||
| Cost of goods sold | 572,623 | 617,613 | 1,502,329 | 1,940,562 | |||||||||||||||
| Gross profit | 486,760 | 430,633 | 1,444,111 | 1,553,515 | |||||||||||||||
| Advertising expense | 52,421 | 60,979 | 155,521 | 208,177 | |||||||||||||||
| Selling, general and administrative expense | 70,740 | 83,031 | 264,202 | 277,212 | |||||||||||||||
| Research and development expense | 71,582 | 50,205 | 238,378 | 206,109 | |||||||||||||||
| Total operating expense | 194,743 | 194,215 | 658,101 | 691,498 | |||||||||||||||
| Operating income | 292,017 | 236,418 | 786,010 | 862,017 | |||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Interest income | 7,044 | 8,705 | 23,519 | 35,535 | |||||||||||||||
| Foreign currency | (10,518 | ) | (40,104 | ) | (6,040 | ) | (35,286 | ) | |||||||||||
| Gain on sale of equity securities | 2,850 | – | 2,741 | 50,884 | |||||||||||||||
| Other | 815 | (673 | ) | 2,421 | 1,216 | ||||||||||||||
| Total other income (expense) | 191 | (32,072 | ) | 22,641 | 52,349 | ||||||||||||||
| Income before income taxes | 292,208 | 204,346 | 808,651 | 914,366 | |||||||||||||||
| Income tax provision | 13,800 | 46,613 | 104,701 | 181,518 | |||||||||||||||
| Net income | $ | 278,408 | $ | 157,733 | $ | 703,950 | $ | 732,848 | |||||||||||
