On February 15, our Board of Directors authorized the Company to repurchase up to $300 million of the Company’s shares as market and business conditions warrant through December 31, 2014. The repurchases may be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. The Company views the stock repurchase as an appropriate use of cash given the long-term growth prospects of the Company and ongoing free cash flow generation.
2013 Guidance
| 2013 Guidance | ||
| Revenue | $2.5 – 2.6 B | |
| Gross Margin | 53 - 54% | |
| Operating Income | $480 - $500 M | |
| Operating Margin | 19 - 20% | |
| EPS (Pro Forma) | $2.30 - $2.40 | |
We expect 2013 revenue of $2.5 - $2.6 billion as growth in the outdoor, fitness, marine and aviation segments partially offset ongoing declines in the PND market. We anticipate gross margins to be stable to slightly improved at 53-54% while operating margins decline slightly to 19-20% due to ongoing research and development investment. This results in a currently forecasted 2013 EPS range of $2.30 - $2.40. This EPS range assumes an effective tax rate of 14% and a full-year EUR/USD currency exchange rate of 1.30.
Non-GAAP Measures
Pro Forma net income (earnings) per share
Management believes that net income per share before the impact of foreign currency translation gain or loss is an important measure. The majority of the Company’s consolidated foreign currency gain or loss results 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. Accordingly, earnings per share before the impact of foreign currency translation gain or loss allow an assessment of the Company’s operating performance before the non-cash impact of the position of the U.S. Dollar versus other currencies, which permits a consistent comparison of results between periods.
The following table contains a reconciliation of GAAP net income per share to pro forma net income per share.
| Garmin Ltd. And Subsidiaries | ||||||||||||
| Net income per share (Pro Forma) | ||||||||||||
| (in thousands, except per share information) | ||||||||||||
| 13-Weeks Ended | 14-Weeks Ended | 52-Weeks Ended | 53-Weeks Ended | |||||||||
| December 29, | December 31, | December 29, | December 31, | |||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||
| Net Income (GAAP) | $ | 129,294 | $ | 165,556 | $ | 542,403 | $ | 520,896 | ||||
| Foreign currency (gain) / loss, net of normalized tax effects | $ | 3,254 | $ | 21,930 | $ | 17,389 | $ | 10,790 | ||||
| Net income (Pro Forma) | $ | 132,548 | $ | 187,486 | $ | 559,792 | $ | 531,686 | ||||
| Net income per share (GAAP): | ||||||||||||
| Basic | $ | 0.66 | $ | 0.85 | $ | 2.78 | $ | 2.68 | ||||
| Diluted | $ | 0.66 | $ | 0.85 | $ | 2.76 | $ | 2.67 | ||||
| Net income per share (Pro Forma): | ||||||||||||
| Basic | $ | 0.68 | $ | 0.96 | $ | 2.87 | $ | 2.74 | ||||
| Diluted | $ | 0.68 | $ | 0.96 | $ | 2.85 | $ | 2.73 | ||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 195,101 | 194,319 | 194,909 | 194,105 | ||||||||
| Diluted | 196,275 | 195,100 | 196,213 | 194,894 | ||||||||
