Garmin reports 2Q marine revenue drop

CAYMAN ISLANDS – Marine segment revenue decreased 3 percent to $50.1 million in the second quarter of 2006 – ended July 1 – for navigation, communication and information products manufacturer Garmin Ltd., the company reported earlier this week.

Those results stood in contrast to what was an otherwise strong quarter as the company’s total revenue rose 64 percent, compared to the same period in 2005 – to $432.5 million from $264.5 million.

“The second quarter was another exciting quarter for Garmin,” said Dr. Min Kao, the company’s chairman and CEO. “Response to our new marine product offerings has been very positive, although success in this segment has been somewhat dampened by poor weather and higher fuel prices experienced by our marine customers during the typically strong marine buying season. We continue to believe the marine segment is well-positioned to meet our 2006 guidance for this segment.

Garmin’s total revenue for fiscal 2006 was up 65 percent, from $457.1 million in the first half of 2005 to $754.8 million. Marine segment revenue increased 7 percent, to $100.8 million in the first half of 2006.

“We are very pleased with our financial results for the second quarter and the first half of 2006,” said Kevin Rauckman, chief financial officer of Garmin Ltd. “Our revenue and earnings per share during the quarter grew 64 percent and 65 percent respectively, and grew 65 percent and 73 percent respectively during the first half of 2006, exceeding our expectations.

“Gross margin and operating margin improved in our outdoor/fitness and marine segments and declined in our automotive/mobile and aviation segments when compared with the year-ago quarter. These results were in line with our expectations.

Rauckman said Garmin remained optimistic about future success as it continued to bring new products to the market and looked forward to the second half of 2006 and the holiday selling season.

“We anticipate revenue growth rates within our outdoor/fitness, marine, and aviation segments to be 20 percent, 10 percent, and 10 percent, respectively, in 2006,” he said. “We expect short-term margins within these segments to be relatively stable despite the possibility of quarter-to-quarter variability due to product mix and the timing of new product introductions.

“We anticipate overall revenue to exceed $1.6 billion in 2006, and earnings per share to exceed $3.90.”

Stock Split
Garmin’s previously announced two-for-one stock split was approved at a Special Shareholders Meeting on July 21. The stock split record date is Aug. 2 and the subdivision of each outstanding Common Share of a par value of $0.01 each into two Common Shares of a par value of $0.005 each will be effective Aug. 15.

The Garmin Board of Directors also previously approved a post-stock split annual cash dividend of $0.50 per share payable to shareholders of record on Dec. 1. This dividend will be paid on Dec. 15.

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