Garmin Annual Report 2014

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FY2014 Annual Report · Garmin

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A N N U A L R E P O R T

Garmin Ltd.

Mühlentalstrasse 2
8200 Schaffhausen
Switzerland

Garmin.com

has been a worldwide leader

F or the last 25 years, Garmin

the bar for personal navigation

in satellite navigation, setting

We leveraged our experience

Customer testimonials and

Based on the accomplishments

developing dedicated watches

professional recommendations

and milestones we achieved in

for fitness, outdoor and aviation

from last year demonstrate the

2014, we’re looking forward to the

enthusiasts to launch an exciting

relationship our customers have

future. We continue to invest in

Innovation
from experience

devices (PND) by creating superior

new line of activity trackers, which

with our products and their

research and development (R&D)

products that are essential to

our customers’ lives. However,

appeal to all levels of fitness. We

correlation to success in their

and continue to pursue business

added connectivity across all our

chosen fields. For instance,

opportunities in our core market

we recognize that innovation and

markets by integrating social and

fishing legend and broadcast

segments, as well as to explore

diversification are the key s to

winning and retaining customers

and maint aining lon g -t erm

sustained growth. To that end, in

2014 we continued to offer and

improve on the strong portfolio

of products in all our markets—

aviation, automotive/mob ile,

fitness, outdoor and marine—

while also venturing into new

smart technology in select products

personality Bill Dance partnered

emerging categories. By celebrating

to provide a profound, data-rich

with Garmin, and is thrilled to use

25 years in the industry last year,

experience to our customers,

and recommend Garmin marine

we have established our legacy as

allowing them to gain a deeper

electronics. Recognized as one

an innovative products company,

understanding of themselves and

of the world’s top professional

and we expect not just to endure

their goals. In addition, we widened

the displays and angles for some

triathletes, Timothy O’Donnell
helped launch the Forerunner®

of our products to provide users

920XT, our highly anticipated

more detailed information at a

multisport device that’s qualified

glance, decreasing distraction and

to guide the training of elite and

but also to succeed for many years

to come.

territory with additional products

enhancing safety.

amateur athletes alike.

and categories.

Dear Shareholders,

2014 was a year of change for Garmin.

Notably, we entered new markets and we

launched new product categories that

produced growth in both revenue and

profits. In 2014, revenue grew 9% for the

full year and our pro-forma EPS grew 18%,

ahead of revenue, due to strong margin

performance and operating expenses that

grew consistent with sales. This successful

outcome was made possible by the dedication

and hard work of Garmin associates around

the globe. I am proud of what our team

has accomplished and I am thankful for the

strong contributions made by our associates.

One of Garmin’s greatest strengths is the

As we look at 2015 and beyond, we will

diversity of our target markets and product

continue to employ a strategy of multi-

portfolio. While we are excited about the

market diversification. We will focus on

new markets we have entered and the new

building share in recently entered markets

product categories that we have launched,

and product categories, while investing for

we also recognize that we could not have

the future by creating more new markets

achieved these results without the strong

and categories where we can play an

contributions from existing markets and

essential role in the lives of our customers.

product categories. In 2014, we further

We will continue to invest in our core

diversified our business, generating 57%

markets creating compelling, innovative,

of our revenue and 69% of our operating

and differentiated products that our

income from Aviation, Fitness, Marine,

customers seek.

and Outdoor. While the PND market size

continues to decline, we have offset some

of the declines with market share gains,

and we have invested in new markets

and product categories that have further

softened the impact. We believe we are

in a stronger position thanks to the

intentional investments we have been

making to diversify our business.

I want to thank our shareholders for your

ongoing support of our business and

strategy. We will continue to focus on the

long term, building a sustainable enduring

company that plays an ever increasing role

in the lives of our customers.

CLIFF PEMBLE | PRESIDENT AND CEO

2014 will be remembered

as the year the target

audience for wearable technology

began the transition from early

The most recent additions to the

lineup combine practical function

with personalized feedback. We
launched Connect IQ™, our first-

adopters to mainstream consumers.

ever open platform for third-party

This shift was led by the advanced

developers to create apps for our

engineering that enabled the

watches. The software development

development of devices able to be

kit (SDK ) allows developers to

worn easily and every day, driving

translate rich sensor data into

the evolution of the technology

new relevant metrics using fully

from pure novelty product to one

customizable data screens. Users

that provides value.

can then tailor these apps to meet

Over the last decade, we began

their individual needs.

developing watches for dedicated

This expansion to our collection

enthusiasts. They have helped

of watches, which now includes

our customers win races, sail the

both those intended for exclusive

seas, break par, summit mountains

pursuits as well as lifestyle bands

and land safely, providing robust

targeted to all levels of fitness,

and accurate metrics for specific

provided strong growth driven by

activities. Nevertheless, we realize

the combination of breakthrough

not all our customers are elite

design and market demand, and

athletes or backcountry explorers.

is perfectly timed to coincide with

Therefore, we leveraged our

consumers’ newfound comfort

expertise and pushed further into

with the use of wearable technology.

the emerging wearable technology

market.

Ahead

of the trend

INSPIRING

a Movement

implementing a pilot program for

To help our customers stay on

our own associates. Designed to

track, Garmin Connect™ and

improve employee wellness and

Garmin Connect™ Mobile received

inspire individuals to keep a

a complete design update, with

healthy balance between work

improved navigation, customizable

and life, the corporate wellness

dashboard, enhanced reports to

program uses Garmin devices and

track performance over time and

technology to provide motivation

easier social network sharing. A

and accountability for participants.

partnership signed in 2014 with

For added inspiration, our devices

made their broadcast debut when

we partnered with the most recent
season of NBC’s “The Biggest Loser®,”

the competition reality show, for

a branded version of our basic

activity tracker.

the popular app MyFitnessPal® now

lets users view calories consumed

and then burned, and also see

their net count for the remainder

of the day based on their set calorie

goal, providing a more complete

view of their health habits.

More than 10 years ago,

then, the company has retained

Garmin launched its

first fitness watch. Since

when it’s time to start moving again.

In addition, our devices are capable

of learning a user’s activity level

and using it to set a personalized,

its position as a pioneer in the

attainable daily goal. We also

market. In 2014, Garmin drew on

were among the first to add smart

this long-standing reputation in the

notifications and offer a version

fitness market to begin offering a

that, with a year-long battery life,

complete array of wellness devices

doesn’t need to be charged.

and programs.

To coincide with the release of

True to our vision to be the global

these activity trackers, Garmin

leader in every market we serve,

also began offering a corporate

we “raised the bar” for features in

wellness program to engage the

activity trackers. Our distinctive red

workplace population of other

Move Bar gently reminds users

companies — but not before

Everything is
Connected

A s the world increasingly

people are seeking ways to simplify

intensifies its demands

on time and attention,

their lives through the use of smart,

integrated technology. More users

are choosing to control their own

data, capturing and translating it

through personal, mobile devices—

especially the ever-present smart-

phone —and customizing the

metrics to better understand and

streamline the way they live, reach

their destinations and achieve their

goals. The same smart devices our

technology enhanced our products’

integrate scanning sonar capabilities,

customers use in their everyday

features and improved both

interactive features that make it

lives can now be used as a wireless

performance and safety.

easier for pilots to navigate and

gateway in numerous ways.

These technology-enabled devices

In 2014 we added connectivity

can now share weather, traffic, GPS

and wireless capabilities to

information and even flight plans,

communicate with or control

receive satellite radio signals,

our avionics, marine networks

gauge tire pressure, allow drivers

and transportation electronics

to keep their eyes on the road

to provide added flexibility and

and capture in-flight footage

information in the cockpit, at

or incidents on the road. We

the helm and behind the wheel.

introduced smartphone-based

Smart and Bluetooth®-enabled

fleet navigators, chartplotters that

read charts throughout their flight

and expanded an entire portfolio

of products to feature wireless

connectivity between select avionics

and a tablet or phone.

Windows

to the Future

major milestones in 2014.

Garmin celebrated several

We observed the 25th

anniversary of the company’s

For 25 years Garmin has been

offered in sonar and non-sonar

committed to providing superior

versions, is a premier line that

products that are known for their

streamlines high performance,

innovation, reliability and intuitive

usability and superior boating

founding. We also recognized the

design. But we’re resolved not

features with a renowned interface

20th anniversary of the industry’s

to rest on our accomplishments.

that makes any time on the water

first FAA approval of an instrument

The same commitment to

more productive and enjoyable.

approach approved GPS receiver,

innovation that drove our

The series includes a vibrant

and the tenth anniversary of

cutting-edge technology when

widescreen display available in a

delivering the revolutionary G1000®

we began still resides in the DNA

variety of sizes. Garmin DownVü™

Integrated Flight Deck (IFD) to

of our latest products.

and Garmin SideVü™ scanning

customers.

In 2014 we released a large

We have a lot to be proud of at

touchscreen glass flight-display

Garmin. The introduction of GPS

system for installation in

navigation revolutionized the

experimental amateur-built

aviation industry, setting in motion

and light sport aircraft (LSA) and

the phase-out of ground-based

an intuitive, safety-enhancing,

navigational aids (NAVAIDs) and

and easy-to-install angle of attack

ushering in the next generation

(AOA) system available for simple

(NextGen) of technology. GPS

installation in general aviation

sonar provide an almost picture-

quality representation of objects,

structure and fish that are found

both underneath the boat and

also to the sides. These true-to-

life images give an angler a better

idea of the most ideal spots and

underwater structure for fishing,

and provide a clear sonar picture.

navigation proved to be more

aircraft. We also announced

The displays on our products are

precise and provided instrument

new capabilities and enhanced

the windows through which many

approach capability, particularly

important for remote airports

operational benefits for the
G1000® King Air C90 aircraft.

of our customers view the world.

They rely on the data they provide

that did not have funding, or

accessibility to NAVAIDs.

In our marine market, we launched

new products, boasting glass-

bonded, monochrome displays

that show more than 50 marine

and vessel parameters, including

depth, speed, wind and navigational

data. The GPSMAP® 7400/7600 series

of multifunction displays (MFD),

to enhance their experiences and

improve performance and safety.

These true -to-life images give

pilots, mariners and drivers clear

pictures and advanced information

to make accurate decisions not just

to get from Point A to Point B, but

to get there efficiently, safely and

enjoyably.

What Our Users

Say
L ast year fishing legend

Bill Dance partnere d

with Garmin to use

and recommend our marine

electronics, including our new line

of sonar and GPS devices designed

specifically for freshwater anglers.

A professional angler for nearly

50 years, Bill has introduced

thousands to the sport of fishing

through his television show “Bill

Dance Outdoors,” which has been

on the air since 1968 — totaling

more than two thousand episodes.

The full stories behind these testimonials can be found on sites.garmin.com/en-US/annualreport/.

“ I’m thrilled to have the opportunity to fish with
Garmin’s completely redesigned fishfinder and
GPS units. Not only do they have the clearest
sonar and the most detailed lake maps on the
market today, but Garmin units are designed
to be easy to use.”
GARMIN-SPONSORED ANGLER, BILL DANCE

“ My Astro®320/DC™ 50 bundle

saved my dog’s life tonight!“

TOM M.

“ I just want to say that your Approach® golf watches

are great products. Keep up the great work, Garmin!

You have a customer for life.”

BRIAN T.

“ While on a fishing trip I had the good

fortune to use a friend’s brand new

echoMAP™DownVü/SideVü, and all

I can say is WOW!”

BEN S.

“ The fēnix® 2 saved my life.”

WENDY R.

“ Twenty-four pounds lost in less than

5 months all because of the vívofit.”

CHRIS T.

“ It eased my mind knowing I would

have my GPS with me.”

MARY M.

“ My Garmin Forerunner ® 10

is my secret weapon and my

constant companion.”

LESLIE M.

Recognized as one of the world’s

elite and amateur athletes alike.

top professional triathletes,

Timothy won the 2013 IRONMAN®

Timothy O’Donnell helped launch

long-distance triathlon in Brazil in a

the Forerunner® 920XT, our highly

record-setting 8:01:32, and in the

anticipated multisport device that’s

same year was the top American in

qualified to guide the training of

the IRONMAN® World Championship.

“ In a sport where records and seconds count, Garmin

is an essential tool for training and racing. They

continually and methodically raise the bar for their

products, just as I strive to do with each race.”

GARMIN-SPONSORED TRIATHLETE, TIMOTHY O’DONNELL

Our Markets

Marine

Revenue
IN MILLIONS

Operating
Income
IN MILLIONS

Outdoor

Revenue
IN MILLIONS

Operating
Income
IN MILLIONS

Fitness

Revenue
IN MILLIONS

Operating
Income
IN MILLIONS

208

21+22+
25

3+2+
3

40+41+
43

16+16+
15

32+36+
57

11+12+
19

322

569

248

428

223

356

402

120

191

112

151

164

411

159

Aviation

Revenue

IN MILLIONS

Automotive/Mobile

Total Company

Operating
Income

IN MILLIONS

Revenue

IN MILLIONS

Operating
Income

IN MILLIONS

Revenue

IN MILLIONS

Operating
Income

IN MILLIONS

292

29+34+
39

7+9+
11

50+43+
41

22+19+
22

43+45+
50

22+20+
25

2,632

2,871

2,716

1,240

1,302

1,492

386

339

691

574

604

221

107

189

216

Financial Review

The selected financial data below and elsewhere in this annual report should be read in conjunction with the consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K, a copy of which is included with this annual report or
is available at Garmin.com/10K.

Revenue by Segment

% OF TOTAL

Operating Income by Segment

% OF TOTAL

2012

55+

55 49+

49 43+

43 36+

3633+

2014

2012

2013

2014

31+

AUTOMOTIVE/MOBILE

OUTDOOR

FITNESS

AVIATION

MARINE

Revenue and
Net Income
$ IN MILLIONS

Diluted
EPS
$ PER SHARE

R&D
Expenditures
$ IN MILLIONS

Book Value
Per Share
$ PER SHARE

585

521

90
19
92
17
91
18
88
20
96
12

612

542

364

2,690

2,759

2,716

2,632

2,871

2.67

2.95

30+27+28+31

55+60+65+73

+19

+79

3.12

2.76

1.88

299

277

395

326

365

Comparison of 5-Year Cumulative Total Return

AMONG GARMIN LTD., THE NASDAQ COMPOSITE INDEX, AND THE NASDAQ 100 INDEX

GARMIN LTD.
NASDAQ COMPOSITE
NASDAQ 100

179.27
196.83
199.67

212.25
223.74
234.29

141.48
118.70
121.87

151.01
139.00
143.60

100.00
100.00
100.00

105.11
117.61
114.80

+35+47+50+60+71
+38+41+48+67+78
+39+40+46+66+75

16.71

15.40

31+33+36+37

+35

18.64

17.53

18.00

The graph below matches
Garmin Ltd.’s cumulative
5-year total shareholder
return on common stock
with the cumulative total
returns of the NASDAQ
Composite index and
the NASDAQ 100 index.
The graph tracks the
performance of a $100
investment in our common
stock and in each index
(with the reinvestment
of all dividends) from
12/31/2009 to 12/31/2014.

*$100 invested on 12/31/08
in stock or index, including
reinvestment of dividends.
Fiscal year ending December 31.

The stock price performance
included in this graph is not
necessarily indicative of future
stock price performance.

Investor Relations
investor.relations@garmin.com
Security analysts, investment professionals
and shareholders can find investor relations
information on the company’s website at
Garmin.com/10K

Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, Massachusetts, 02021
United States of America

Independent Accountants
Ernst & Young LLP

Market Information
The shares of Garmin Ltd. are traded on
the NASDAQ Global Select Market under
the symbol GRMN. Garmin Ltd. is a
component of the S&P 500 Index.

Offices
Garmin Ltd.
Mühlentalstrasse 2
8200 Schaffhausen
Switzerland

Garmin International, Inc.
1200 East 151st Street
Olathe, Kansas, 66062
United States of America

Garmin (Europe) Ltd.
Liberty House
Hounsdown Business Park
Southampton
SO40 9LR
United Kingdom

Garmin Corporation
No. 68, Zhangshu 2nd Road
Xizhi Dist., New Taipei City 221
Taiwan, R.O.C.

Board of Directors
Dr. Donald H. Eller 2 | 3
INDEPENDENT TECHNICAL EXPERT
Joseph J. Hartnett 1 | 2 | 3
FORMER PRESIDENT AND
CHIEF EXECUTIVE OFFICER
INGENIENT TECHNOLOGIES

Dr. Min H. Kao
EXECUTIVE CHAIRMAN
GARMIN LTD.
Charles W. Peffer 1 | 2 | 3
RETIRED PARTNER
KPMG LLP

Clifton A. Pemble
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
GARMIN LTD.
Thomas P. Poberenzy 1 | 2 | 3
CHAIRMAN EMERITUS EXPERIMENTAL
AIRCRAFT ASSOCIATION (EAA)

1 | Audit Committee
2 | Nominating and Corporate
Governance Committee
3 | Compensation Committee

Executive Officers
Dr. Min H. Kao
EXECUTIVE CHAIRMAN

Clifton A. Pemble
PRESIDENT AND CHIEF
EXECUTIVE OFFICER

Douglas G. Boessen
CHIEF FINANCIAL OFFICER AND TREASURER

Andrew R. Etkind
VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY

Danny J. Bartel
VICE PRESIDENT, WORLDWIDE SALES
GARMIN INTERNATIONAL, INC.

Patrick G. Desbois
VICE PRESIDENT, OPERATIONS
GARMIN INTERNATIONAL, INC.

Philip I. Straub
VICE PRESIDENT AND
MANAGING DIRECTOR, AVIATION
GARMIN INTERNATIONAL, INC.

Sean M. Biddlecombe
MANAGING DIRECTOR, EMEA
GARMIN (EUROPE) LTD.

P.C. Huang
GENERAL MANAGER
GARMIN CORPORATION

Garmin, the Garmin logo, Forerunner, G1000, GPSMAP, Approach, fēnix, Astro and vívofit are trademarks of Garmin Ltd. or
its subsidiaries and are registered in one or more countries, including the U.S. Connect IQ, Garmin DownVü, Garmin SideVü ,
Garmin Connect, Garmin Connect Mobile, GNX, echoMAP and DC and are trademarks of Garmin Ltd. or its subsidiaries.

The Biggest Loser® is a registered trademark of Universal City Studios Productions, LLLP.

MyFitnessPal is a registered trademark of MyFitnessPal, Inc.

The Bluetooth® word mark is owned by the Bluetooth SIG, Inc.

IRONMAN® is a registered trademark of World Triathlon Corporation (WTC).

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A N N U A L R E P O R T

Garmin Ltd.

Mühlentalstrasse 2
8200 Schaffhausen
Switzerland

Garmin.com