Corporate Analysis

Capstone Project Presented by:

Team B - Synergy
Scott, Irene, April, Simplicious

Contents
Click section to jump throughout document

Executive Summary Garmin Company Description Technological Innovations Marketing Strategy

Product Price Place Promotion

PEST Analysis
Political Economic Social Technological

SWOT Analysis
Strengths Weaknesses Opportunities Threats

Competitive Analysis
Target Markets Market Segments Porters Five Forces

Financial Ratio Analysis Critical Success Factors Evaluation Appendix

Income Statement Balance Sheet Cash Flow Other Financials

1 2 3 3 3 4 5 5 6 6 7 7 8 9 9 9 9 9 10 10 10 11 13 14 14 A1 A2 A3 A4

Sources
Corporate Overview Sources Technological Innovations & Marketing Strategy Sources PEST Analysis Sources SWOT Analysis Sources Competitive Analysis Sources Critical Success Factors Sources

S1 S1 S1 S2 S3 S3

Executive Summary Garmin was founded in 1990 by two electrical engineers, Gary Burrell and Dr. Min Kao. They are headquartered in Olathe, Kansas.

Produces over 100 products in aviation, marine, outdoor, fitness, automatic, mobile, and OEM markets Continual focus on innovation by extending product lines, to include nvifone Garmin is reliant upon satellite technology which is outside of their control Competition comes from TomTom, iPhone, Blackberry, L-3 Avionics System and Rockwell Collins Risk stems from new entrants in cell-phone GPS unit market and market saturation The use of GPS technology across all age groups is a significant opportunity, as well as possible strategic partnership with Google Garmins financial position is strong, although they have been impacted by the economic situation that has reduced their YoY revenue growth The company's stronger gross margins in the second quarter were helped by currency fluctuations, product mix, stable prices and raw material cost reductions. Garmin is betting on the nvifone smartphone to boost its position in the hypercompetitive mobile market.

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Garmin Company Description

Creating navigation and communication devices that enrich their customers lives is what Garmin is all about. One year after a brainstorming session around a card table with a small group of engineers, Garmin launched its first product in 1990. The GPS 100, a panel-mounted receiver intended for the marine market, debuted at the 1990 International Marine Technology Exposition in Chicago.1 Garmins next product was a handheld GPS receiver used by military personnel serving during the first Gulf War in 1991. The company expanded industry application of these devices for the fitness and sports industries next. One of their most popular product lines is the eTrek series of handheld GPS devices. The eTrek product line continues today.2 Garmins focus on continual innovation, along with a desire to meet their loyal customers expectations, has fueled an ever-growing list of products. Today, application of Garmins products span a wide range of industries to include automotive, aviation, marine, fitness, outdoor recreation, and wireless. 3 The company designs, manufactures, markets, and sells its own products. Garmin employees are also responsible for live-use testing of their products. This gives them a significant competitive advantage because they live and breathe their solutions. Research and development is paramount to Garmins longterm success. This enables Garmin to remain focused on continual improvement of their products.4 Garmin sells over 100 products and most recently announced the launch of a smartphone, the nvifone, which is intended to compete with smartphones on the market. 5
Source: http://gpsdock.com/blogs/2008/01/31/garmin-nuvifone-to-compete-with-iphone/

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Technological Innovations
Garmin pioneered the standalone portable navigation device market. The market for stand-alone GPS devices is fast-growing and increasingly competitive as multi-capability devices, such as smartphones, are gaining market share. GPS technology moved onto cell phones a few years ago and is a fast-growing feature on the devices. Some 77 million GPS-equipped smartphones will ship worldwide in 2009, up 35% from last year. (Garmin, 2008) One of the key strategic initiatives of the company for its future growth is continuous innovation, development, and introduction of new products. Garmin benefits greatly from the consistently expanding aviation, marine and fitness segments. Product development for these segments accounts for nearly 30% of Garmin's sales and approximately 45% of its operational earnings. (Kiley, 2009) Garmin leverages its GPS expertise to deliver navigation devices for anything that moves. Garmin also distinguishes itself from competitors through rapid research-and-development (R&D) cycles that deliver product refreshes quickly.

Marketing Strategy
Garmin's primary marketing strategy is to "provide a quality product at an affordable price." The overarching mission of this strategy is: to enrich the lives of customers, suppliers, distributors, associates and stockholders by designing, manufacturing and selling navigation and communication products that provide superior quality, safety and operational features, lower cost of manufacturing and ownership, and sufficient profits to support desired company growth. (Garmin, 2007) Product Garmin designs, manufactures, markets and sells over 100 products worldwide for consumer, business and military applications. As customer demands have evolved - Garmin has launched new products. Their communication and navigation products serve the aviation, marine, outdoor, fitness, automotive, mobile and OEM markets. As the navigation component of its devices becomes more commoditized, Garmin is branching out into services and new devices such as the nvifone to sustain its market share and competing with mobile phone manufacturers. The navigation is integrated into the nvifone as a prominent feature rather than an after-thought.

Garmin's focus on R&D ensures the latest features are brought to market quickly through product refreshes. Garmin is betting on the nvifone to help it stay relevant as GPS functionality becomes pervasive on cell phones. This stride comes with significant execution risk in a competitive industry. Adoption of GPS service by wireless carriers could cannibalize sales of Garmin's personal navigation devices.

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Price According to Pricegrabber.com, Garmin produces seven of the top ten most popular GPS products. In 2008, Garmins GPS products sold for an average of $467. Overall, the non-Garmin GPS products on the list had an average price of $307, priced 34% lower than Garmin GPS products. (Pricegrabber, 2008) Garmin ranked highest in a list of average price ranges for all GPS products by manufacturer: $500 average price range - Garmin $400 average price range - TomTom, Magellan, and Lowrance $200 average price range - Mio and ViaMichelin Another study performed by PriceGrabber in 2007, reported a continuing downward trend in GPS prices, despite new introductions of high-end products, like the Garmin Nvi 660. The lower-end products and the introduction of value-oriented products introduce stiff competition around the $200 price range.
*Pricing based on average monthly price of all GPS products

Source: Market Reporter Pricegrabber.com, 2007

Despite this downward trend - Garmin continues to employ a niche product pricing strategy because the standalone GPS market is still considered a niche market. Garmins pricing is geared toward the higherincome consumer.

Average sale prices for Garmin's navigation devices continue to fall as competition increases which adversely affects their market share. Garmin recently benefited from lower input costs affecting their ability to remain competitively priced. (Pricegrabber, 2008)

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Place Garmin products are available in a variety of retail channels on three continents: North America, Europe and Asia. As consumer demand for GPS technology increases, especially in the automotive market, Garmin has opportunities to meet the needs of consumers in more key markets. Garmin also has relationships with many original equipment manufacturers. The consumer product distributors of the company include giants such as Chrysler/Mopar, Toyota, Harley-Davidson, BMW Motorrad, and Honda Motorcycle. In 2008, Stan Brajer, director of fitness sales and marketing for Garmin, announced that they wanted to focus more on specialty markets as part of their goal to win back independent bicycle dealers. (Norman, 2009)

Garmins distribution network includes 3,000+ independent dealers and the largest electronics retailers. Garmin's consumer products are marketed through local distributors who resell to dealers. Garmin's distribution reach diminishes as retailers such as Circuit City close stores.

Promotion Garmin utilizes an in-house advertising agency that handles all of the company's promotional and communication needs. In 2008, they also became an exclusive navigation supplier to Kenwoods new 2008 lineup of in-dash automotive electronics. Garmin aligned with Kenwood on print, radio and online advertising in addition to a dedicated internet site and point-of-purchase materials to inform customers. (Garmin, 2007)

The company's focus is on increased consumer awareness of the Garmin name. Efforts include typical media placements (periodical ad space, billboard, radio)

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PEST Analysis
POLITICAL: GPS devices are rendered useless without a satellite system to support them. Global Navigation Satellite System (GNSS) is the standard generic term for satellite navigation systems that provide autonomous geospatial positioning with global coverage.1 Currently, the U.S. has the only operational GNSS in the world referred to as the NAVSTAR Global Positioning System (GPS). The EU is currently working on the Galileo project, expected to launch in 2013. Russias GLONASS and Chinas Beidou are similar projects underway, but neither will deploy until after 2013. The European Union (EU) began to develop GNSS in order to have an independent system they can rely upon in times of war or political disagreement. Presently, the U.S. and/or Russia could disable EUs access to GPS through encryption. The U.S. was successful in its request that the EU leverage a different frequency for Galileo GPS, thereby ensuring any jamming of their GNSS system would not affect the US system.3 Until 2000, the U.S. had at their disposal a capability on the satellites called Selective Availability (SA), which allowed them to render locations incorrectly on the GPS. The EU felt that civil infrastructure using the GPS was vulnerable and, as a result, believed an independent system was needed. In 2000, President Clinton disabled SA and committed that future satellites wouldnt include the SA capability.4 China is currently the third largest export market for U.S. goods. China is part of the World Trade Organization. Prior to their accession in 2001 to the WTO, China severely limited imports by imposing high tariffs and taxes. Chinas post-WTO accession tariff rates are bound, meaning that China cannot raise them above the bound rates without compensating WTO trading partners. Chinas most important revenue source is the Value Added Tax, which ranges between 13 and 17 percent and continues to be uneven. Importers from a wide range of sectors report that, because taxes on imported goods are reliably collected at the border, they are sometimes subject to application of a VAT that their domestic competitors often fail to pay. 5 EU countries, collectively, ranked second in the U.S. goods export market in 2007. Notwithstanding the existence of customs laws that govern all EU Member States, the EU does not administer its laws through a single customs administration. This makes uniform application of decisions impossible, thereby increasing costs for appeals. The U.S has continued to raise serious concerns both bilaterally with the EU and in the WTO ITA Committee in Geneva about a series of EU measures that have the effect of no longer providing or guaranteeing duty free treatment for certain information technology products, to include smartphones with GPS. The EU is applying new duties as high as 14 percent on imports of these products. 6 Canada is currently the largest export market for U.S. goods. If NAFTA (North American Free Trade Agreement) expired, Garmin could face significant costs related to tariffs and taxes. 7

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ECONOMIC: While economic pressures have severely affected consumer discretionary spending, shipments of GPSenabled cell phones will increase 6.4% from 2008. It is expected that nine out of every 10 smartphones will contain GPS capability by 2014, as compared to one in three in 2008.8 Shipment of GPS handsets, though, is expected to drop four to five percent in 2009. With the dollar weakening and Garmin manufacturing overseas - they must endure the negative impact of losing money on the conversion. During the dollars continuing decline, they might benefit greatly from a shift to manufacturing a portion of their products in the U.S. The current economic crisis will likely last through the end of 2010. Recent news, published by Bloomberg, indicates the worlds largest economy (US) shrank at a .7% annual rate from April through June.9 Europes economy contracted more than estimated in the second quarter as consumer spending was weaker than earlier reported. 10 In late 2009, China announced an enormous fiscal stimulus package. Since then the Shanghai Composite Index has rallied some 90 percent. Despite this fact, questions remain over their ability to sustain over the longer-term as the stimulus goes away.11 Given the state of the economy, businesses around the world are concerned about the impact inflationary pressures could have on their businesses. One consequence of selling into international markets is an exposure to movements in currency exchange rates. Tax rates, such as repatriated earnings taxes, can have a significant impact upon the company. In 2008, Taiwan increased these taxes to 19% from 12%, resulting in a loss of .30c per share that year alone. 12 The state of several major economies, as of September 30, 2009:

Country U.S. EU China

Interest Rate .25% 1.00% 5.31%

Growth Rate -3.8% 4.8% 7.9%

Inflation Rate -1.5% -.20% -1.2%

Jobless Rate 9.8% 9.6% 4.3%

Exchange Rate 77.0450 1.4732 6.8255

Source: http://www.tradingeconomics.com

SOCIAL: Telecom Times reports that by 2015, the expected number of GPS subscribers will reach 160 million, which translates to a 33.7% compound annual growth rate. U.S. and Japan subscribers are opting for mobile devices in large numbers, whereas the EU is seeing a more gradual replacement of personal navigation devices.13 More than 40 percent of all smartphone owners use their mobile devices to get turn-by-turn directions, according to Compete, a web analytics firm. For iPhone users, that number is more than double. As these phones enhance their GPS capabilities, it may continue to pressure personal navigation device makers. One person interviewed recently, summed up the general sentiment of desiring one device when he said, The simplicity of having one device and not needing to pull the Garmin out of my glove compartment is enough. I want to get into my car and do as few things as possible. 14
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The EU has implemented several environmental regulations in the past few years, one of which is the RoHS (restriction of hazardous substances) Directive. This directive bans new electrical and electronic equipment containing more than permissible levels of hazardous substances on the EU market after July 1, 2006. Since then, other countries have adopted the RoHS directive. Garmin has expended considerable effort and resources to ensure compliance with the directive, although not all of its products are RoHS compliant. 15 TECHNOLOGICAL: Although China is a large potential market for GPS makers, there were questions as to the state of their infrastructure in 2007. In an article found in the EETimes Asia, there was a lack of an industrial standard and supervision for GPS operations in China. Since that time, China has made significant strides to address the infrastructure shortcomings. China and the EU have joined forces to work toward Information and Communications Technologies (ICT) standards. 16

Source: Cellular News, July 12th, 2009 http://www.cellular-news.com/story/38484.php?s=h

Of additional concern, the US Air Force is seeking comments from receiver manufacturers regarding an SVN49 signal anomaly that is causing signal distortions. This involves the GPS IIR-20(M) spacecraft launched in early 2009, but not yet operational. Due to the number of manufacturers, it is impossible for the Air Force to work through this matter on their own. This highlights a vulnerability of Garmins product, as it is completely dependent upon properly functioning satellites. These anomalies could impact service levels, and brand confidence would be significantly affected. 17

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SWOT ANALYSIS1
STRENGTHS Core competency of Garmin is its ability to leverage GPS technologies and in-house manufacturing to create trendy but useful products for high growth markets. Provides efficient after sales services and superior customer support in areas like repairs, technical support and warranties services. Manufacturing their products in-house reduces mishaps and ensures quality products. The company owns its manufacturing facilities in Taiwan and receives tax incentives from the Taiwanese government slated to end in 2011. Cheap labor allows the company to keep its operating costs low. Garmin produces quality products that are ISO certified and further approved for use in aviation by the FAA. WEAKNESSES GPS devices (inherent product weakness) are accurate to within 15 meters and certain atmospheric and weather factors may affect their accuracy. This has allowed competitors like NavSync Ltd and Ekahau Inc. to differentiate their products. These companies have developed Wi-Fi-based Real Time Location Systems that boost GPS accuracy and have created new products like NavTrac Wi-Fienabled GPS devices that support asset and inventory tracking from inside buildings to around the world. GPS satellites are monitored and controlled by the U.S Department of Defense, potentially limiting sales to certain clients (i.e. foreign governments). Endures a low sales cycle during the first half of the year versus the latter half of the year as consumers plan annual trips and marine activity. Owning manufacturing facilities and their related costs can be considered a weakness when sales volumes decline. OPPORTUNITIES A brand awareness drive to increase visibility in the world, in Europe they sponsored the English Premier League football club at Middlesbrough and Garmin-Slipstream cycling team. The use of GPS technology within varying age groups is rising and there are increased opportunities to provide cutting-edge applications of the technology. The need for all-in-one devices and the shift by most electronic and manufacturing companies toward consolidated products and applications provides continued opportunity. Garmin could capitalize/invest in the technology of applications such as Google-Maps such as streetlevel images and specialty routing options. THREATS Increase of new entrants offering personal navigation devices consolidated into mobile devices like the iPhone and Blackberry. GPS satellites may become inoperable due to decaying gravity; over time, they will be pulled into Earths atmosphere. There is a risk of market saturation of GPS devices because of their long life cycles and usability, hence reducing non-recurring sales/revenues coming to the company.

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COMPETITIVE ANALYSIS2:
TARGET MARKETS Garmins target markets are currently broken down into four main segments: 1. Automotive/mobile 2. Outdoor/fitness 3. Marine 4. Aviation
Source: GARMIN-LTD-10K-Annual-Reports-20090225

MARKET SEGMENTS 1. Mobile cellular device owners, through the companys new Nvifone 2. Car owners without in-built GPS systems in their cars. 3. Nature and trail tracking enthusiasts, including joggers. 4. Auto rental companies, to provide GPS devices as an option to their fleet of cars, for example Enterprise and Budget car rental companies. 5. Resell companies that buy in bulk and resell their products i.e. Best Buy and Wal-Mart. 6. Auto companies like Toyota and Ford that offer the product in their cars. 7. Marine enthusiasts and for navigating Oceans, lakes and rivers. 8. Aviation industry for air planes through aircraft companies like Raytheon and Cessna.

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PORTERS FIVE FORCES: (Measurement scale: Very Weak, Weak, Medium, Strong and Very Strong)
DEGREE OF RIVALRY/COMPETITION Very Strong Garmins primary competitor is TomTom with 25% market share; Garmin holds 50% (Newsweek.com) of the Personal Navigation Device market (PND) including GPS consumer products for automotive navigation. They also have stiff competition from their aviation-centered products from L-3 Avionics Systems and Rockwell Collins. Another source of rivalry is the mobile industry that has incorporated low cost GPS navigation services into mobile phones and PDAs using 3G, EDGE and wireless internet technology as a base to download interactive maps. The iPhone and Blackberry are the strongest competition in regards to their personal GPS navigation line as GPS devices have proliferated the market. Garmin has swiftly replied to this threat by releasing the nvifone with downloaded maps. THREAT OF SUBSTITUTES - Weak Garmin is at the forefront of providing directional information. The only substitute to the GPS navigation system offered by Garmin are maps that are periodically updated, printed and sold in local book and corner stores. Another option to obtain directional information is the use of online map and locations services such as Google Maps and MapQuest, which allow you to route a journey, print it, and follow the provided directions to your final destination. The threat of substitutes is weak is because the GPS based technology has been bundled with features like route mappings, frequently updated maps, voice turn-by-turn command and location based services (i.e. gas stations, weather information, traffic and entertainment information). These bundled services give Garmin an edge and give consumers greater benefit. SUPPLIER POWER- Strong for data supplier and Weak for manufacturing Garmin has a single supplier Navteq for its data to digital mapping services. There is only one other possible supplier (Tele Atlas NV) for the same services but were outbidded by rival TomTom for their services thus making Navteq a powerful supplier as bundled services are what create the added value to Garmin products. The same is true in regards to a strong supplier power when it comes to SiRF Technology Holdings, Inc. who as of 2005 provides an architecture on which Garmin devices are built. (SiRF Architecture.) In respect to suppliers for product components, Garmin has a select number of suppliers that individually provide sub components to their factories. The individual and separate suppliers with whom Garmin has arrangements for component supplies have little power.

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BUYER POWER Medium By the end of 2008, Best Buy accounted for 10% of Garmins total sales as per the 2008 Annual report. In the U.S consumer product sales channeled through Garmins network of dealers and distributors. Major retailers carrying Garmin products (Garmin, 2008 Annual Report): Best Buyone of the largest U.S. and Canadian electronics retailers; Amazon.cominternet retailer; Costcoan international chain of membership warehouses that carry quality, brand name merchandise; Halfordsa large European retailer specializing in car parts and accessories; Petraa large distributor who sells to such dealers as Costco and Amazon.com; Target one of the nations largest general merchandise retailers; Wal-Martthe worlds largest mass retailer; and Wynita large distributor who sells to such dealers as Radio Shack and Amazon.com.

Garmin depends on their automotive/mobile segment for 70% of their revenues but because of the maturing nature of this segment of their business, there is less growth. (Garmin, 2008 Annual report) BARRIERS TO ENTRY - Medium First-mover companies like Garmin and its competitors (i.e. Cobra, Lowrance, Thales, Navman, Raymarine, Mitac, TomTom, Honeywell, Dell, Hewlett-Packard, and PalmOne), have invested heavily in GPS technology-based infrastructure and have intellectual property rights protecting their businesses making it difficult for new entrants. New entrants stake claim by creating add-on services sold either to the GPS market competitors. It is important to note that there is vigorous price competition among the competitors. Gone are the days when TomTom and Garmin used to charge $500 for GPS navigation units. Garmin has gone down to as much as $150 a unit and that does not include the cheaper bundled GPS models bundled with mobile cellular devices that have recently hit the market in the last 1 years. The telecommunications industry is heavily regulated by the FCC, the same is true for the companys operations in Europe where they are subject to regulation and certification for each product they bring to market. Thus, any loss in certification or delay in attaining these credentials may lead to loss of market share.

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Financial Ratio Analysis Garmin Ltd (GRMN)

Garmin had fantastic growth year in FY07 in which it grew revenues 79%. In FY08, however Garmin has grown revenue to $3.5B at a conservative 9% rate. FY08 was a challenging year for Garmin which saw its profits rise slightly by 6% behind the 9% revenue growth but this was misleading because its net income fell significantly as a percentage of revenue by 3% due mainly to an increase in R&D, SG&A and COGS. Net Income fell to $732 million from $855 million in FY07. Garmin has outperformed the S&P500 on profit margin but is only slightly trailing the industry by 1%. Total Profit margin for FY08 was 22% but decreased 5% from FY07. Return on Assets has declined 1% and Return on Equity declined 3% to 33% from 36%. Clearly, high expectations and slowing economy have had an impact on Garmins capability to maintain this level of performance. Garmin has apparently not become more efficient because of its growth as evident by its declining operating income and a decrease in inventory turnover.). Inventory as a percentage of revenue has grown significantly which may either be a temporary condition due to the slowing economy and missed forecasts or a lesser efficient model. The Quick Ratio or acid test of Garmins financial health shows that Garmin has 3.8 times assets in short-term investments (cash flow, A/R and short-term investments) versus liability. Cost of Sales rose to 55% as a percentage of revenue, which is up 2% from FY07. Likewise, R&D rose .9% to 5.9% as a percentage of revenue and SG&A rose 1% to 13% as a percentage of revenue. If we compare Garmins liquidity to TomTom NV a $2.3B competitor, we find that TomTom carries much more debt and risk with a Current Ratio of .35. This means that TomTom carries .35 cents in assets for every $1 in liability compared to Garmin, which carries $4 of assets to $1 liability. If Garmin were able to increase its inventory turnover even further and maximize its use of cash store it may be able to put more pressure on a struggling competitor like TomTom with either a leveraged buy-out or increasing pricing pressure. One area the company has improved upon is in decreasing the average days of A/R by reducing a total of 38 days by moving A/R from 121 days to 83 days. The potential use of this cash was offset by the increase in COGS. Garmin is healthy financially although less efficient over the last 2 years. The current equity return and profit margin is above the S&P 500 average however, Garmin has to deal with managing costs as a percentage of revenue. Garmin carries almost no risk to solvency and its ability to cover its liabilities as the Current Ratio shows it has more than 4.5 times assets to liabilities. Garmin carries no debt. Many investors can construe this as a lack of innovation, efficient use of capital, vision and capacity for expansion. Garmins growth trend has slowed significantly and it will need to become more efficient and expand its revenue base either through a better use of cash or a reduction of inventory for a better return on capital. See Appendix for financial statements and charts.

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Critical Success Factors

1. Leverage use of cash and control expenses Garmin has the strength afforded a company with significant assets and no long-term debt. Garmin could put price pressure on smaller competitors by becoming even more efficient with its own expenses and use of inventory and build up a stronger cash position in order to reduce prices or use the cash for purchase into a marketplace through its competitors or incentives to partners. 2. Diversify Product Line The popularity of smartphones and online mapping software is a risk to Garmins business model as there will be less desire to purchase stand-alone navigation devices. Garmin must either diversify its product line or find a new way to collaborate with auto and boat manufacturers. Of course, Garmin can continue to compete in the phone space or expand nvifone partnerships. The risk is the margins of these businesses are typically much less and have greater competition. Garmin has sufficient cash to purchase its way into IP or diversify in the phone market or buyout a smaller competitor that has valuable IP such as TOMTOM.

Evaluation
Garmin Ltd is a financially healthy, market leading company that supplies navigational products which finds itself in 2010 on the verge of a paradigm shift. If Garmin wishes to remain a market leader in the years to come, it should leverage its assets and capability to diversify and re-examine how it delivers these services and respond to a very real market shift as consumers embrace alternative platforms.

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APPENDIX

Income Statement Garmin Ltd (GRMN) in thousands U.S. Dollars

PERIOD ENDING

27-Dec-08 3,494,077 1,940,562 1,553,515

29-Dec-07 3,180,319 1,717,064 1,463,255

30-Dec-06 1,774,000 891,614 882,386

Total Revenue Cost of Revenue Gross Profit

Operating Expenses Research Development Selling General and Administrative Non Recurring Others 206,109 485,389 159,406 396,498 113,314 214,513 -

Total Operating Expenses

Operating Income or Loss

862,017

907,351

554,559

Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest And Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest 52,956 914,973 607 914,366 181,518 71,129 978,480 207 978,273 123,262 40,036 594,595 41 594,554 80,431 -

Net Income From Continuing Ops Non-recurring Events Discontinued Operations Extraordinary Items Effect Of Accounting Changes Other Items Net Income Preferred Stock And Other Adjustments Net Income Applicable To Common Shares

732,848

855,011

514,123

732,848 $732,848

855,011 $855,011

514,123 $514,123

A1

Balance Sheet Garmin Ltd (GRMN)

27-Dec-08
PERIOD ENDING

29-Dec-07

30-Dec-06

Assets
Current Assets Cash And Cash Equivalents Short Term Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets 696,335 12,886 791,146 425,312 58,746 1,984,425 262,009 445,252 230,954 1,941 2,924,581 707,689 37,551 1,059,889 505,467 22,179 2,332,775 386,954 374,147 196,030 1,554 3,291,460 337,321 73,033 459,520 271,008 28,202 1,169,084 407,843 250,988 67,580 1,525 1,897,020

Liabilities
Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets 1,002 2,262,503 (37,651) 2,225,854 $1,994,900 1,086 2,171,134 132,264 46,130 2,350,614 $2,154,584 479,176 479,176 215,481 4,070 698,727 1,082 1,478,654 83,438 (5,275) 1,557,899 $1,490,319 801,883 801,883 127,028 11,935 940,846 337,682 337,682 248 1,191 339,121

A2

Cash Flow Garmin Ltd (GRMN)

PERIOD ENDING

27-Dec-08 732,848

29-Dec-07 855,011

30-Dec-06 514,123

Net Income

Operating Activities, Cash Flows Provided By or Used In Depreciation Adjustments To Net Income Changes In Accounts Receivables Changes In Liabilities Changes In Inventories Changes In Other Operating Activities 78,417 111,702 206,101 (330,294) 83,035 (19,645) 64,037 (2,554) (477,108) 484,238 (224,180) (17,356) 44,475 (3,076) (230,111) 136,459 (95,658) (4,357)

Total Cash Flow From Operating Activities

862,164

682,088

361,855

Investing Activities, Cash Flows Provided By or Used In Capital Expenditures Investments Other Cashflows from Investing Activities (119,623) 130,744 (67,470) (156,777) 112,775 (131,693) (92,906) (93,772) (39,707)

Total Cash Flows From Investing Activities

(56,349)

(175,695)

(226,385)

Financing Activities, Cash Flows Provided By or Used In Dividends Paid Sale Purchase of Stock Net Borrowings Other Cash Flows from Financing Activities (150,251) (659,943) 2,143 (162,531) 9,228 (248) 17,434 (107,923) (34,376) (11) 9,660

Total Cash Flows From Financing Activities Effect Of Exchange Rate Changes

(808,051) (9,118)

(136,117) 92

(132,650) 149

Change In Cash and Cash Equivalents

($11,354)

$370,368

$2,969

A3

Other Financials
Growth Rates % Sales (Qtr vs year ago qtr) Net Income (YTD vs YTD) Net Income (Qtr vs year ago qtr) Sales (5-Year Annual Avg.) Net Income (5-Year Annual Avg.) Dividends (5-Year Annual Avg.) Company Industry S&P 500 -26.60 -47.90 -36.80 43.56 32.62 24.57 -12.60 -10.50 -38.60 23.69 18.72 3.18 -9.10 -5.00 -11.30 13.14 12.74 11.70

Profit Margins % Gross Margin Pre-Tax Margin Net Profit Margin 5Yr Gross Margin (5-Year Avg.) 5Yr PreTax Margin (5-Year Avg.) 5Yr Net Profit Margin (5-Year Avg.) Financial Condition Debt/Equity Ratio Current Ratio Quick Ratio Interest Coverage Leverage Ratio Book Value/Share Investment Returns % Return On Equity Return On Assets Return On Capital Return On Equity (5-Year Avg.) Return On Assets (5-Year Avg.) Return On Capital (5-Year Avg.) Management Efficiency Income/Employee Revenue/Employee Receivable Turnover Inventory Turnover Asset Turnover Company 0.00 4.5 3.8 21.4 1.3 12.28

Company Industry S&P 500 45.1 22.3 17.8 47.3 30.4 25.6 Industry 0.40 3.3 2.5 61.6 1.9 20.33 Company 22.6 17.2 20.9 35.0 27.4 33.8 Company 60,469 339,059 5.0 3.4 1.0 46.8 0.9 5.1 46.6 11.2 8.5 38.1 10.4 7.1 37.8 16.5 11.5 S&P 500 1.39 1.5 1.2 23.4 5.2 21.10 Industry 9.7 5.1 6.4 14.8 7.8 10.0 Industry 19,667 280,441 5.7 4.1 0.7 S&P 500 15.7 5.9 8.2 19.1 7.9 10.6 S&P 500 56,806 846,884 13.1 9.4 0.8

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SOURCES

Corporate Overview Sources:

1

Garmin Company: About Us (2009). Retrieved September 25, 2009, from Garmin Website: http://www8.garmin.com/aboutGarmin 2 Garmin Culture: Stories from the Inside (2009). Retrieved September 25, 2009, from Garmin Website: http://www8.garmin.com/careers/culture.html?activeBranchId=careers 3 Wikipedia - The Free Encyclopedia: Garmin (Sept 18, 2009). Retrieved September 25, 2009, from Wikipedia Website: http://en.wikipedia.org/wiki/Garmin 4 Wichita Business Journal: Report: Garmin smartphone will cost $500 (Sept 22, 2009). Retrieved September 25, 2009, from Wichita Business Journal Website: http://wichita.bizjournals.com/wichita/stories/2009/09/21/daily23.html 5 Wall Street Journal: Garmin Tried to Find Ways Around Smartphone Threat (Sept 22, 2009). By Ben Charney; Retrieved September 25, 2009, from Wichita Business Journal Website: http://online.wsj.com/article/BT-CO-20090921-703769.html

Technological Innovations & Marketing Strategy Sources:

1.

Becky H. GPS brownout unlikely. Colorado Springs Business Journal (CO). n.d.;Available from: Regional Business News, Ipswich, MA. Accessed September 25, 2009. 2. Bertolucci J. Let a GPS Be Your Trail Guide. Kiplinger's Personal Finance. August 2009;63(8):p70. 3. Event Brief of Q2 2009 Garmin Ltd. Earnings Conference Call - Final. Fair Disclosure Wire (Quarterly Earnings Reports). 4. Garmin Signals The Worst Is Past. Wall Street Journal - Eastern Edition, August 6, 2009:pB5. 5. Kiley D. THE RIGHT DIRECTION. BusinessWeek. September 28, 2009;(4148):p75. 6. Mott G. Golf & GPS Technology. Cigar Aficionado. September 2009;17(6):pp81-85. Available from: Business Source Premier, Ipswich, MA. Accessed October 1, 2009. 7. Norman J. Garmin Changes Strategy to Focus on Specialty Bike Channel. Bicycle Retailer & Industry News. April 15, 2009;18(6):p10. 8. http://electronics.pricegrabber.com/gps 9. http://finance.yahoo.com/q?s=GRMN 10. http://www.garmin.com 11. http://www10.giscafe.com/nbc/articles/view_article.php?articleid=493609 12. http://www.gpslodge.com 13. http://www.mobilewhack.com/garmin-and-tomtom-sold-over-10-million-pnds-in-2007/ 14. http://www.tomtom.com

PEST Analysis Sources:

1

Garmin Tries To Find Ways Around Smartphone Threat >GRMN (September 21, 2009) By Ben Charney; Retrieved September 25, 2009, from Wichita Business Journal Website: http://online.wsj.com/article/BT-CO-20090921-703769.html 2 Wikipedia - The Free Encyclopedia: Global Navigation Satellite System (Sept 18, 2009). Retrieved September 25, 2009, from Wikipedia Website: http://en.wikipedia.org/wiki/Global_Navigation_Satellite_System 3, 4 Wikipedia - The Free Encyclopedia: Global Navigation Satellite System (September 19, 2009). Retrieved September 25, 2009, from Wikipedia Website: http://en.wikipedia.org/wiki/Galileo_positioning_system 5 2008 National Trade Estimate Report on Foreign Trade Barriers China (September 21, 2009) Released by US Trade Representative; Retrieved October 18, 2009, from government website: http://www.ustr.gov/sites/default/files/uploads/reports/2008/NTE/asset_upload_file930_14640.pdf 6 2008 National Trade Estimate Report on Foreign Trade Barriers European Union (September 21, 2009) Released by US Trade Representative; Retrieved October 18, 2009, from government website: http://www.ustr.gov/sites/default/files/uploads/reports/2008/NTE/asset_upload_file991_14650.pdf 7 2008 National Trade Estimate Report on Foreign Trade Barriers Canada (September 21, 2009) Released by US Trade Representative; Retrieved October 18, 2009, from government website: http://www.ustr.gov/sites/default/files/uploads/reports/2008/NTE/asset_upload_file165_14638.pdf 8 GPS Enabled Handsets Expected Bypass Economic Downturn (January 23, 2009) GPS World Magazine; Retrieved September 23, 2009, from GPS World website: http://www.gpsworld.com/consumer-oem/news/gps-enabled-handsets-expected-bypass-economic-downturn-3109

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Economy in U.S. Shrank 0.7%, Less Than Anticipated (January 30, 2009) By Shobhana Chandra; Retrieved September 25, 2009, from Bloomberg website: http://www.bloomberg.com/apps/news?pid=20601068&sid=a3g5lqDmy2N8 10 Eurpoean Economy Contracts More Than Estimated (July 30, 2009) By Simone Meier; Retrieved September 25, 2009, from Bloomberg website: http://www.bloomberg.com/apps/news?pid=20601068&sid=aGu9Z_GJCYoQ 11 Chinese Economy May Be Headed Into an Iceberg (July 30, 2009) By Anna Fedec; Retrieved September 23, 2009, from Trading Economics website: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=CNY 12 Garmin Hit By The Tax Man (April 30, 2008) By Carl Gutierrez; Retrieved October 18, 2009, from Forbes website: http://www.forbes.com/2008/04/30/garmin-navigational-technology-markets-equity-cx_cg_0430markets17.html 13 Mobile navigation subscribers increase two-fold to reach 28 million (October 11, 2009) Telecom Tiger Magazine; Retrieved September 24, 2009, from TelecomTiger website: http://www.telecomtiger.com/fullstory.aspx?passfrom=vasstory&storyid=7371 14 Sendng GPS Devices the Way of the Tape Deck (July 7, 2009) By Jenna Wortham; Retrieved September 26, 2009, from New York TImes website: http://www.nytimes.com/2009/07/08/technology/08gps.html?scp=1&sq=needing%20to%20pull%20the%20Garmin%20out%2 0of%20my%20glove%20compartment%20is%20enough&st=cse 15 Garmin Company: Product Design (2009). Retrieved October 18, 2009, from Garmin Website: http://www8.garmin.com/aboutGarmin/environment/productdesign.html 16 The Need to Redirect Chinas GPS Market (September 24, 2007). Retrieved September 24, 2009, from Garmin Website:

http://www.eetasia.com/ART_8800480860_499488_NT_8bbe4c58.HTM
17

Air Force Polls Receiver Makers for Solutions to Satellite Problems (June 30, 2009). GPS World Magazine; Retrieved September 26, 2009, from GPS World Website: http://www.gpsworld.com/gnss-system/receiver-design/news/air-force-polls-receiver-makers-solutions-satellite-problems8487
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SWOT Analysis Sources , Garmin Tries To Find Ways Around Smartphone Threat (September 21 2009) th By Ben Charny; Retrieved September 25 2009 , from The Wall Street Journal : http://online.wsj.com/article/BT-CO-20090921-703769.html New NavTrac Wi-Fi-enabled GPS Devices Support Asset and Inventory Tracking (April 27, 2009) By Ekahau Inc.; Retrieved October 19, 2009, from Industrial Embeded Systems website: http://www.industrial-embedded.com/news/Contracts/16967 US says GPS satellite coverage may fail soon (May 16, 2009) By J. Mark Lytle; Retrieved September 23, 2009, from TechRada: SATNAV News website: http://www.techradar.com/news/portable-devices/satnav/us-says-gps-satellite-coverage-may-fail-soon-599431 rd Garmin to sponsor well known UK football club Middlesbrough (Jul 23 2007) By Ludovic Privat; Retrieved September 23, 2009 from GPS Business News, http://www.gpsbusinessnews.com/Garmin-to-sponsor-well-known-UK-football-club-Middlesbrough_a278.html Garmin in a Good Position (April 17, 2007) rd By Katy Marquardt; Retrieved Sep 23 2009, from Kiplinger.com website: http://www.kiplinger.com/columns/picks/archive/2007/pick0417.htm Garmin Company: Investor information; Retrieved September 25, 2009, from Garmin website: http://www8.garmin.com/aboutGarmin/invRelations/execBios.html?activeBranchId=investor

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Competitive Analysis Sources: Setting a New Course (November 7, 2007) By Daniel McGinn; Retrieved October 4, 2009, from News Week Article: http://www.newsweek.com/id/68909 Garmin hits iPhone directly with Nvifone (January 30, 2009) Retrieved October 8, 2009, from Electronista website: http://www.electronista.com/articles/08/01/30/garmin.nviphone/ Garmin Limited (NASDAQ: GRMN) Retrieved October 4, 2009, from Forbes.com website: http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=grmn GPS Devices and Systems Will Generate Revenues of $240 Billion by 2013 (April 28, 2009) Retrieved October 7, 2009, from ABIresearch website: http://www.abiresearch.com/press/1115GPS+Devices+and+Systems+Will+Generate+Revenues+of+%24240+Billion+by+2013 Who Keeps Digital Maps Going in The Right Direction? (January 14, 2009) By Amol Sharma; Retrieved October 10, 2009, from The Wall Street Journal website: http://online.wsj.com/article/SB120027487946287479.html Garmin Company: Garmin Chooses SiRF as Supplier on Selected New Garmin Devices (August 30, 2005) Retrieved October 11, 2008, from Garmin Press Release: http://www8.garmin.com/pressroom/corporate/083005.html Garmin company: 10-K 2008 Filing Retrieved October 11, 2009, from Garmin company website: http://www8.garmin.com/aboutGarmin/invRelations/reports/10-K_2008.pdf

Critical Success Factors Sources

MSN Money. (2009, 10 6). Retrieved from http://www.msn.com: http://moneycentral.msn.com/detail/stock_quote?Symbol=GRMN%2C Press, A. (2009, September 9). http://online.wsj.com/article/SB12542356078994945. Retrieved from The Wall Street Journal Online.

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