Garmin Reports Lower Sales, Income

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Cayman Islands - Garmin reported lower sales and net income for the second quarter, ended June 27, compared with the prior-year period, but reported improved margins during the period marked by lower consumer spending due to the recession.

Total revenue of $669 million was down 27 percent, from $912 million in the second quarter last year.  Net income was $162 million, compared with $256 million a year ago.

Garmin, however, said its revenue improved sequentially by 53 percent, compared with the first quarter of the year.

Looking at the automotive/mobile segment specifically, revenues improved sequentially by 68 percent.

In the automotive/mobile segment, gross margins improved 12.3 percent and operating margins improved 22.6 percent, compared with the first quarter

Compared with the year-ago period, automotive/mobile revenues fell 31 percent to $437 million.

Garmin said, however, that on a unit basis, sales of personal navigation devices (PNDs) grew in North America and Asia.  The company expanded its market share in PNDs to 57 percent in North America, up from 53 percent in the first quarter, and it maintained its share of 20 percent in Europe.

Garmin chairman and CEO Dr. Min Kao said, "While the macroeconomic conditions continue to dampen consumer demand, we are encouraged by the 53 percent sequential improvement in revenues in the second quarter. We are also pleased with the solid margins and earnings in the quarter achieved by the various initiatives that we have taken to improve productivity, reduce expenses and utilize the strength of our balance sheet."

Total gross margins improved to 52.6 percent, compared with 45.8 percent last year and 44.9 percent in the first quarter.  Total operating margins rose to 29.8 percent, compared with 26.2 percent last year and 13.3 percent in the first quarter.

All Garmin segments showed revenue declines during the second quarter.  Outdoor/fitness revenues decreased 9 percent to $108 million. Aviation revenues decreased 28 percent to $64 million, and marine revenues fell 15 percent to $60 million.

Viewed by region, overall revenue in North America fell by 24 percent to $346 million while Asia showed an increase of 21 percent in revenue to $35 million.  European revenue was down 36 percent at $198 million.

Garmin's board of directors also approved an annual cash dividend of 75 cents per share that will be paid on Dec. 15.


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