GARMIN LTD (GRMN) Form 10-Q for Period Ending 6/25/2011
Xcelerate Version: 6.12.8
 
Document and Entity Information
Aug. 1, 2011
6 Months Ended
Jun. 25, 2011
Document Type
 
10-Q 
Amendment Flag
 
FALSE 
Document Period End Date
 
06/25/2011 
Document Fiscal Year Focus
 
2011 
Document Fiscal Period Focus
 
Q2 
Trading Symbol
 
GRMN 
Entity Registrant Name
 
GARMIN LTD 
Entity Central Index Key
 
0001121788 
Current Fiscal Year End Date
 
12/31 
Entity Filer Category
 
Large Accelerated Filer 
Entity Common Stock, Shares Outstanding
208,077,418 
 
Condensed Consolidated Balance Sheets (USD $)
In Thousands
Jun. 25, 2011
Dec. 25, 2010
Assets
 
 
Current assets:
 
 
Cash and cash equivalents
$ 1,418,871 
$ 1,260,936 
Marketable securities
62,626 
24,418 
Accounts receivable, net
493,057 
747,249 
Inventories, net
385,678 
387,577 
Deferred income taxes
27,691 
33,628 
Deferred costs
28,343 
20,053 
Prepaid expenses and other current assets
46,261 
24,894 
Total current assets
2,462,527 
2,498,755 
Property and equipment, net
423,697 
427,805 
Marketable securities
1,016,869 
777,401 
Restricted cash
1,393 
1,277 
Licensing agreements, net
8,305 
1,800 
Noncurrent deferred income tax
73,613 
73,613 
Noncurrent deferred costs
31,047 
24,685 
Other intangible assets, net
181,004 
183,352 
Total assets
4,198,455 
3,988,688 
Liabilities and Stockholders' Equity
 
 
Current liabilities:
 
 
Accounts payable
125,680 
132,348 
Salaries and benefits payable
37,393 
49,288 
Accrued warranty costs
41,691 
49,885 
Accrued sales program costs
48,929 
107,261 
Deferred revenue
134,341 
89,711 
Accrued royalty costs
27,509 
95,086 
Accrued advertising expense
23,544 
21,587 
Other accrued expenses
70,622 
63,043 
Deferred income taxes
4,435 
4,800 
Income taxes payable
13,795 
56,028 
Dividend payable
388,148 
Total current liabilities
916,087 
669,037 
Deferred income taxes
13,180 
6,986 
Non-current income taxes
157,979 
153,621 
Non-current deferred revenue
146,973 
108,076 
Other liabilities
1,542 
1,406 
Stockholders' equity:
 
 
Shares, CHF 10 par value, 208,077,418 shares authorized and issued; 194,087,445 shares outstanding at June 25, 2011; and 194,358,038 shares outstanding at December 25, 2010;
1,797,435 
1,797,435 
Additional paid-in capital
53,707 
38,268 
Treasury stock
(116,099)
(106,758)
Retained earnings
1,097,970 
1,264,613 
Accumulated other comprehensive income
129,681 
56,004 
Total stockholders' equity
2,962,694 
3,049,562 
Total liabilities and stockholders' equity
$ 4,198,455 
$ 3,988,688 
Condensed Consolidated Balance Sheets (Parenthetical) (CHF)
Jun. 25, 2011
Dec. 25, 2010
Shares, par value
CHF 10 
CHF 10 
Shares, shares authorized
208,077,418 
208,077,418 
Shares, shares issued
208,077,418 
208,077,418 
Shares, shares outstanding
194,087,445 
194,358,038 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data
3 Months Ended
Jun. 25, 2011
6 Months Ended
Jun. 25, 2011
3 Months Ended
Jun. 26, 2010
6 Months Ended
Jun. 26, 2010
Net sales
$ 674,099 
$ 1,181,933 
$ 728,765 
$ 1,159,833 
Cost of goods sold
351,999 
621,459 
337,113 
537,272 
Gross profit
322,100 
560,474 
391,652 
622,561 
Advertising expense
34,098 
54,054 
42,440 
59,841 
Selling, general and administrative expense
85,896 
159,082 
73,832 
141,509 
Research and development expense
70,515 
140,994 
73,337 
135,820 
Total operating expense
190,509 
354,130 
189,609 
337,170 
Operating income
131,591 
206,344 
202,043 
285,391 
Other income (expense):
 
 
 
 
Interest income
7,639 
14,854 
5,791 
12,669 
Foreign currency gains (losses)
(14,611)
(2,471)
(43,605)
(90,141)
Other
2,453 
5,271 
180 
2,013 
Total other income (expense)
(4,519)
17,654 
(37,634)
(75,459)
Income before income taxes
127,072 
223,998 
164,409 
209,932 
Income tax provision
17,595 
19,039 
29,593 
37,788 
Net income
109,477 
204,959 
134,816 
172,144 
Net income per share:
 
 
 
 
Basic
0.56 
1.06 
0.68 
0.86 
Diluted
0.56 
1.05 
0.67 
0.86 
Weighted average common shares outstanding:
 
 
 
 
Basic
194,051 
193,986 
198,948 
199,437 
Diluted
194,875 
194,801 
200,102 
200,626 
Dividends declared per share
$ 2.00 
$ 2.00 
$ 1.50 
$ 1.50 
Condensed Consolidated Statements of Cash Flows (USD $)
6 Months Ended
In Thousands
Jun. 25, 2011
Jun. 26, 2010
Operating Activities:
 
 
Net income
$ 204,959 
$ 172,144 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
27,393 
26,746 
Amortization
10,861 
24,809 
Loss (gain) on sale of property and equipment
308 
(6)
Provision for doubtful accounts
3,563 
(552)
Deferred income taxes
7,149 
(30)
Unrealized foreign currency losses/(gains)
16,363 
47,880 
Provision for obsolete and slow moving inventories
(6,998)
10,309 
Stock compensation expense
17,315 
19,099 
Realized losses/(gains) on marketable securities
(4,176)
(470)
Changes in operating assets and liabilities, net of acquisitions:
 
 
Accounts receivable
265,448 
364,401 
Inventories
20,659 
(64,272)
Other current assets
(31,490)
5,142 
Accounts payable
(13,082)
(52,248)
Other current and non-current liabilities
(142,918)
(193,657)
Deferred revenue
83,628 
37,425 
Deferred cost
(14,652)
(6,610)
Income taxes payable
(30,033)
(7,771)
License fees
(3,344)
(472)
Net cash provided by operating activities
410,953 
381,867 
Investing activities:
 
 
Purchases of property and equipment
(14,315)
(13,220)
Purchase of intangible assets
(2,587)
(8,229)
Purchase of marketable securities
(520,759)
(169,062)
Redemption of marketable securities
263,428 
294,350 
Change in restricted cash
(116)
1,111 
Net cash (used in)/provided by investing activities
(274,349)
104,950 
Financing activities:
 
 
Proceeds from issuance of common stock through stock purchase and stock option plans
4,337 
5,452 
Taxes paid related to net share settlement of equity awards
(336)
 
Stock repurchase
 
(84,328)
Dividends
 
(299,103)
Tax benefit related to stock option exercise
1,197 
1,898 
Net cash provided by/(used in) financing activities
5,198 
(376,081)
Effect of exchange rate changes on cash and cash equivalents
16,133 
(29,148)
Net increase in cash and cash equivalents
157,935 
81,588 
Cash and cash equivalents at beginning of period
1,260,936 
1,091,581 
Cash and cash equivalents at end of period
$ 1,418,871 
$ 1,173,169 
Basis of Presentation
6 Months Ended
Jun. 25, 2011
Basis of Presentation
1.
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the 13-week and 26-week periods ended June 25, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The condensed consolidated balance sheet at December 25, 2010 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 25, 2010.

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year.  Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13-weeks.  The quarters and year-to-date periods ended June 25, 2011 and June 26, 2010 both contain operating results for 13-weeks and 26-weeks, respectively.
Inventories
6 Months Ended
Jun. 25, 2011
Inventories
2.
Inventories

The components of inventories consist of the following:

   
June 25, 2011
   
December 25, 2010
 
             
Raw materials
  $ 152,480     $ 103,277  
Work-in-process
    43,259       43,507  
Finished goods
    219,270       278,513  
Inventory reserves
    (29,331 )     (37,720 )
Inventory, net of reserves
  $ 385,678     $ 387,577
Share Repurchase Plan
6 Months Ended
Jun. 25, 2011
Share Repurchase Plan
3.
Share Repurchase Plan

The Board of Directors approved a share repurchase program on February 12, 2010, authorizing the Company to purchase up to $300,000 of its common shares as market and business conditions warrant on the open market or in negotiated transactions in compliance with the SEC’s Rule 10b-18.   The share repurchase authorization expires on December 31, 2011.   As of June 25, 2011, the Company had repurchased 7,366,646 shares using cash of $223,149 with all purchases made prior to fiscal 2011.  There remains approximately $76,851 available for repurchase under this authorization.
 
 
In addition, 522,856 shares repurchased for $16,723 prior to the Company’s redomestication to Switzerland on June 27, 2010, but for which transactions settled after that date, were treated as retired when such shares were still in treasury.  These shares were reflected as additional treasury shares during the 13-weeks ended March 26, 2011 with a corresponding increase to retained earnings.
Earnings Per Share
6 Months Ended
Jun. 25, 2011
Earnings Per Share
4.
Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share:
 
   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
Numerator:
           
Numerator for basic and diluted net income
per share - net income
  $ 109,477     $ 134,816  
                 
Denominator:
               
Denominator for basic net income per share –
               
weighted-average common shares
    194,051       198,948  
                 
Effect of dilutive securities –
               
employee stock options and
               
stock appreciation rights
    824       1,154  
                 
Denominator for diluted net income per share –
               
adjusted weighted-average common shares
    194,875       200,102  
                 
Basic net income per share
  $ 0.56     $ 0.68  
                 
Diluted net income per share
  $ 0.56     $ 0.67  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
Numerator:
               
Numerator for basic and diluted net income
               
per share - net income
  $ 204,959     $ 172,144  
                 
Denominator:
               
Denominator for basic net income per share –
               
weighted-average common shares
    193,986       199,437  
                 
Effect of dilutive securities –
               
employee stock options and
               
stock appreciation rights
    815       1,189  
                 
Denominator for diluted net income per share –
               
adjusted weighted-average common shares
    194,801       200,626  
                 
Basic net income per share
  $ 1.06     $ 0.86  
                 
Diluted net income per share
  $ 1.05     $ 0.86  


There were 5,959,686 anti-dilutive options for the 13-week period ended on June 25, 2011.  There were 6,186,519 anti-dilutive options for the 13-week period ended June 26, 2010.

There were 6,001,583 anti-dilutive options for the 26-week period ended on June 25, 2011.  There were 6,198,202 anti-dilutive options for the 26-week period ended June 26, 2010.

There were 72,545 shares issued as a result of exercises of stock appreciation rights and stock options for the 13-week period ended June 25, 2011.  There were 73,574 shares issued as a result of exercises of stock appreciation rights and stock options for the 13-week period ended June 26, 2010.

There were 251,916 shares issued as a result of exercises of stock appreciation rights and stock options for the 26-week period ended June 25, 2011.  There were 365,288 shares issued as a result of exercises of stock appreciation rights and stock options for the 26 week period ended June 26, 2010.
Comprehensive Income
6 Months Ended
Jun. 25, 2011
Comprehensive Income
5.
Comprehensive Income

Comprehensive income is comprised of the following:

   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
Net income
  $ 109,477     $ 134,816  
Translation adjustment
    21,392       (7,821 )
Change in fair value of available-for-sale marketable securities, net of deferred taxes
    16,911       8,838  
Comprehensive income
  $ 147,780     $ 135,833  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
Net income
  $ 204,959     $ 172,144  
Translation adjustment
    54,145       218  
Change in fair value of available-for-sale marketable securities, net of deferred taxes
    19,525       15,201  
Comprehensive income
  $ 278,629     $ 187,563
Segment Information
6 Months Ended
Jun. 25, 2011
Segment Information
6.
Segment Information

Beginning in 2011, for external reporting purposes, the Company has identified five operating segments – Auto/Mobile, Aviation, Marine, Outdoor and Fitness.  Each operating segment is individually reviewed and evaluated by our Chief Operating Decision Maker, who allocates resources and assesses performance of each segment individually.  Prior to 2011, the Outdoor and Fitness operating segments were combined into a single reportable segment due to the similar nature of those products, their production processes, the types of customers served, their distribution processes, and similar economic conditions.  Management re-evaluated the combination of these operating segments and determined that based on the growth of these segments they should now be reported as two distinct reportable segments.

Net sales, operating income, and income before taxes for each of the Company’s reportable segments are presented below:

 
   
Reportable Segments
 
                     
Auto/
             
   
Outdoor
   
Fitness
   
Marine
   
Mobile
   
Aviation
   
Total
 
13-Weeks Ended June 25, 2011
                                   
                                     
Net sales
  $ 81,007     $ 78,014     $ 79,117     $ 362,706     $ 73,255     $ 674,099  
Operating income
  $ 35,667     $ 25,384     $ 23,357     $ 25,277     $ 21,906     $ 131,591  
Income before taxes
  $ 34,921     $ 24,568     $ 22,094     $ 23,228     $ 22,261     $ 127,072  
                                                 
13-Weeks Ended June 26, 2010
                                               
                                                 
Net sales
  $ 79,847     $ 62,469     $ 74,310     $ 447,225     $ 64,914     $ 728,765  
Operating income
  $ 38,035     $ 24,724     $ 32,146     $ 88,548     $ 18,590     $ 202,043  
Income before taxes
  $ 34,138     $ 21,512     $ 28,616     $ 62,419     $ 17,724     $ 164,409  
                                                 
26-Weeks Ended June 25, 2011
                                               
                                                 
Net sales
  $ 147,458     $ 134,382     $ 130,425     $ 627,255     $ 142,413     $ 1,181,933  
Operating income
  $ 60,474     $ 40,841     $ 38,490     $ 26,872     $ 39,667     $ 206,344  
Income before taxes
  $ 63,109     $ 43,066     $ 40,523     $ 34,884     $ 42,416     $ 223,998  
                                                 
26-Weeks Ended June 26, 2010
                                               
                                                 
Net sales
  $ 139,233     $ 105,819     $ 115,625     $ 668,149     $ 131,007     $ 1,159,833  
Operating income
  $ 62,404     $ 38,923     $ 41,075     $ 105,530     $ 37,459     $ 285,391  
Income before taxes
  $ 54,244     $ 32,571     $ 35,244     $ 52,163     $ 35,710     $ 209,932  

Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis.

Net sales and property and equipment, net by geographic area are as follows as of and 26-week periods ended June 25, 2011 and June 26, 2010:

   
North
                   
   
America
   
Asia
   
Europe
   
Total
 
June 25, 2011
                       
Net sales to external customers
  $ 638,420     $ 119,606     $ 423,907     $ 1,181,933  
Long lived assets
  $ 229,779     $ 145,085     $ 48,833     $ 423,697  
                                 
June 26, 2010
                               
Net sales to external customers
  $ 696,120     $ 91,681     $ 372,032     $ 1,159,833  
Long lived assets
  $ 231,064     $ 146,087     $ 49,654     $ 426,805
Warranty Reserves
6 Months Ended
Jun. 25, 2011
Warranty Reserves
7.
Warranty Reserves
 
The Company’s products sold are generally covered by a warranty for periods ranging from one to three years.   The Company’s estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet.   The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

 
   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
             
Balance - beginning of the period
  $ 44,030     $ 58,814  
Accrual for products sold during the period
    13,530       15,705  
Expenditures
    (15,869 )     (12,074 )
Change in accrual for products sold in prior periods
    -       (21,000 )
Balance - end of the period
  $ 41,691     $ 41,445  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
                 
Balance - beginning of the period
  $ 49,885     $ 87,424  
Accrual for products sold during the period
    24,333       30,618  
Expenditures
    (32,527 )     (33,821 )
Change in accrual for products sold in prior periods
    -       (42,776 )
Balance - end of the period
  $ 41,691     $ 41,445  

The 13-weeks and 26-weeks ended June 26, 2010 include the effect of a refinement in the estimated warranty reserve which decreased the accrual for the periods by $21,000 and $42,776, respectively.
Commitments
6 Months Ended
Jun. 25, 2011
Commitments
8.
Commitments

We are a party to certain commitments, which includes raw materials, advertising and other indirect purchases in connection with conducting our business.  Pursuant to these agreements, the Company is contractually committed to make purchases of approximately $14,697 over the next 5 years.
Income Taxes
6 Months Ended
Jun. 25, 2011
Income Taxes
9.     Income Taxes

Our earnings before taxes decreased from $164,409 in the second quarter of 2010 to $127,072 in the second quarter of 2011, while our income tax expense decreased by $11,998, to $17,595 for the 13-week period ended June 25, 2011, from $29,593 for the 13-week period ended June 26, 2010.  The effective tax rate was 13.8% in the second quarter of 2011 and 18.0% in the second quarter of 2010.  The effective tax rate was 8.5% in the first half of 2011 and 18.0% in the first half of 2010.  The change in the effective tax rate was primarily due to the first quarter release of reserves related to the expiration of certain statutes for Garmin Europe and lower reserves provided in 2011 following favorable audits in both 2010 and 2011.
Fair Value Measurements
6 Months Ended
Jun. 25, 2011
Fair Value Measurements
10.   Fair Value Measurements
 
The Accounting Standards Codification (ASC) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  The ASC classifies the inputs used to measure fair value into the following hierarchy:
 
Level 1
Unadjusted quoted prices in active markets for identical assets or liability
 
 
Level 2
Unadjusted quoted prices in active markets for similar assets or liabilities
 
Level 3
Unobservable inputs for the asset or liability
 
The Company endeavors to utilize the best available information in measuring fair value.  Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
 
For fair value measurements using significant unobservable inputs, an independent third party provided the valuation.  The collateral composition was used to estimate weighted average life based on historical and projected payment information.  Cash flows were projected for the issuing trusts, taking into account underlying loan principal, bonds outstanding, and payout formulas.  Taking this information into account, assumptions were made as to the yields likely to be required, based upon then current market conditions for comparable or similar term asset based securities as well as other fixed income securities.
 
Assets and liabilities measured at estimated fair value on a recurring basis are summarized below:
 
   
Fair Value Measurements as of June 25, 2011
 
Description
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Available for-sale securities
  $ 1,072,339     $ 1,072,339     $ -     $ -  
Failed Auction rate securities
    7,156       -       -       7,156  
Total
  $ 1,079,495     $ 1,072,339     $ -     $ 7,156  
                                 
   
Fair Value Measurements as of December 25, 2010
 
Description
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Available for-sale securities
  $ 781,257     $ 781,257     $ -     $ -  
Failed Auction rate securities
    20,562       -       -       20,562  
Total
  $ 801,819     $ 781,257     $ -     $ 20,562  
 
All Level 3 investments have been in a continuous unrealized loss position for 12 months or longer.  However, it is the Company’s intent to hold these securities until they recover their value.  For assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period, the ASC requires a reconciliation of the beginning and ending balances, separately for each major category of assets.  The reconciliation is as follows:
 
   
Fair Value Measurements Using
 
   
Significant Unobservable Inputs (Level 3)
 
   
13-Weeks Ended
   
26-Weeks Ended
 
   
June 25, 2011
   
June 25, 2011
 
             
Beginning balance of auction rate securities
  $ 20,552     $ 20,562  
Total unrealized appreciation included in other
               
comprehensive income
    2,254       2,494  
Sales out of Level 3
    (15,650 )     (15,900 )
Transfers in and/or out of Level 3
    -       -  
Ending balance of auction rate securities
  $ 7,156     $ 7,156  
 
The following is a summary of the company’s marketable securities classified as available-for-sale securities at June 25, 2011:
 
 
   
Amortized Cost
   
Gross Unrealized
Gains
   
Gross
Unrealized
Losses
   
Other Than
Temporary 
Impairment
   
Estimated Fair 
Value (Net 
Carrying Amount)
 
Mortgage-backed securities
  $ 566,021     $ 15,194     $ -     $ -     $ 581,215  
Auction Rate Securities
    9,877       -       (2,721 )     -       7,156  
Obligations of states and political subdivisions
    340,841       1,954       (432 )     -       342,363  
U.S. corporate bonds
    104,104       1,976       (143 )     (1,274 )     104,663  
Other
    45,054       1,264       (2,220 )     -       44,098  
Total
  $ 1,065,897     $ 20,388     $ (5,516 )   $ (1,274 )   $ 1,079,495  
 
The following is a summary of the company’s marketable securities classified as available-for-sale securities at December 25, 2010:
 
   
Amortized Cost
   
Gross Unrealized
Gains
   
Gross
Unrealized
Losses
   
Other Than
Temporary
Impairment
   
Estimated Fair 
Value (Net 
Carrying
Amount)
 
Mortgage-backed securities
  $ 527,249     $ 1,913     $ (1,520 )   $ -     $ 527,642  
Auction Rate Securities
    25,599       -       (5,037 )     -       20,562  
Obligations of states and political subdivisions
    160,618       347       (3,340 )     -       157,625  
U.S. corporate bonds
    54,348       637       (185 )     (1,274 )     53,526  
Other
    39,838       2,626       -       -       42,464  
Total
  $ 807,652     $ 5,523     $ (10,082 )   $ (1,274 )   $ 801,819  
 
The cost of securities sold is based on the specific identification method.
 
The amortized cost and estimated fair value of marketable securities at June 25, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
 
         
Estimated
 
   
Cost
   
Fair Value
 
             
Due in one year or less
  $ 61,748     $ 62,625  
Due after one year through five years
    375,372       377,881  
Due after five years through ten years
    220,398       222,288  
Due after ten years
    371,350       378,818  
Other (No contractual maturity dates)
    37,029       37,883  
    $ 1,065,897     $ 1,079,495
Subsequent Events
6 Months Ended
Jun. 25, 2011
Subsequent Events
11. Subsequent Events

On July 26, 2011, a subsidiary of Garmin Ltd. acquired Navigon AG, a privately-held navigation provider based in Hamburg, Germany.

On June 30, 2011, a subsidiary of Garmin Ltd. acquired Tri-Tronics Inc., the leading designer and manufacturer of electronic dog training equipment.

In aggregate, these acquisitions are not material.
Inventories (Tables)
6 Months Ended
Jun. 25, 2011
Components of Inventories
Components of Inventories
The components of inventories consist of the following:

   
June 25, 2011
   
December 25, 2010
 
             
Raw materials
  $ 152,480     $ 103,277  
Work-in-process
    43,259       43,507  
Finished goods
    219,270       278,513  
Inventory reserves
    (29,331 )     (37,720 )
Inventory, net of reserves
  $ 385,678     $ 387,577
Earnings Per Share (Tables)
6 Months Ended
Jun. 25, 2011
Computation of Basic and Diluted Net Income Per Share
Computation of Basic and Diluted Net Income Per Share
The following table sets forth the computation of basic and diluted net income per share:
 
   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
Numerator:
           
Numerator for basic and diluted net income
per share - net income
  $ 109,477     $ 134,816  
                 
Denominator:
               
Denominator for basic net income per share –
               
weighted-average common shares
    194,051       198,948  
                 
Effect of dilutive securities –
               
employee stock options and
               
stock appreciation rights
    824       1,154  
                 
Denominator for diluted net income per share –
               
adjusted weighted-average common shares
    194,875       200,102  
                 
Basic net income per share
  $ 0.56     $ 0.68  
                 
Diluted net income per share
  $ 0.56     $ 0.67  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
Numerator:
               
Numerator for basic and diluted net income
               
per share - net income
  $ 204,959     $ 172,144  
                 
Denominator:
               
Denominator for basic net income per share –
               
weighted-average common shares
    193,986       199,437  
                 
Effect of dilutive securities –
               
employee stock options and
               
stock appreciation rights
    815       1,189  
                 
Denominator for diluted net income per share –
               
adjusted weighted-average common shares
    194,801       200,626  
                 
Basic net income per share
  $ 1.06     $ 0.86  
                 
Diluted net income per share
  $ 1.05     $ 0.86
Comprehensive Income (Tables)
6 Months Ended
Jun. 25, 2011
Comprehensive Income
Comprehensive income is comprised of the following:

   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
Net income
  $ 109,477     $ 134,816  
Translation adjustment
    21,392       (7,821 )
Change in fair value of available-for-sale marketable securities, net of deferred taxes
    16,911       8,838  
Comprehensive income
  $ 147,780     $ 135,833  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
Net income
  $ 204,959     $ 172,144  
Translation adjustment
    54,145       218  
Change in fair value of available-for-sale marketable securities, net of deferred taxes
    19,525       15,201  
Comprehensive income
  $ 278,629     $ 187,563
Segment Information (Tables)
6 Months Ended
Jun. 25, 2011
Net Sales, Operating Income, and Income Before Taxes for Each Reportable Segment
Net Sales and Property, Net by Geographic Area
Net sales, operating income, and income before taxes for each of the Company’s reportable segments are presented below:

 
   
Reportable Segments
 
                     
Auto/
             
   
Outdoor
   
Fitness
   
Marine
   
Mobile
   
Aviation
   
Total
 
13-Weeks Ended June 25, 2011
                                   
                                     
Net sales
  $ 81,007     $ 78,014     $ 79,117     $ 362,706     $ 73,255     $ 674,099  
Operating income
  $ 35,667     $ 25,384     $ 23,357     $ 25,277     $ 21,906     $ 131,591  
Income before taxes
  $ 34,921     $ 24,568     $ 22,094     $ 23,228     $ 22,261     $ 127,072  
                                                 
13-Weeks Ended June 26, 2010
                                               
                                                 
Net sales
  $ 79,847     $ 62,469     $ 74,310     $ 447,225     $ 64,914     $ 728,765  
Operating income
  $ 38,035     $ 24,724     $ 32,146     $ 88,548     $ 18,590     $ 202,043  
Income before taxes
  $ 34,138     $ 21,512     $ 28,616     $ 62,419     $ 17,724     $ 164,409  
                                                 
26-Weeks Ended June 25, 2011
                                               
                                                 
Net sales
  $ 147,458     $ 134,382     $ 130,425     $ 627,255     $ 142,413     $ 1,181,933  
Operating income
  $ 60,474     $ 40,841     $ 38,490     $ 26,872     $ 39,667     $ 206,344  
Income before taxes
  $ 63,109     $ 43,066     $ 40,523     $ 34,884     $ 42,416     $ 223,998  
                                                 
26-Weeks Ended June 26, 2010
                                               
                                                 
Net sales
  $ 139,233     $ 105,819     $ 115,625     $ 668,149     $ 131,007     $ 1,159,833  
Operating income
  $ 62,404     $ 38,923     $ 41,075     $ 105,530     $ 37,459     $ 285,391  
Income before taxes
  $ 54,244     $ 32,571     $ 35,244     $ 52,163     $ 35,710     $ 209,932
Net sales and property and equipment, net by geographic area are as follows as of and 26-week periods ended June 25, 2011 and June 26, 2010:

   
North
                   
   
America
   
Asia
   
Europe
   
Total
 
June 25, 2011
                       
Net sales to external customers
  $ 638,420     $ 119,606     $ 423,907     $ 1,181,933  
Long lived assets
  $ 229,779     $ 145,085     $ 48,833     $ 423,697  
                                 
June 26, 2010
                               
Net sales to external customers
  $ 696,120     $ 91,681     $ 372,032     $ 1,159,833  
Long lived assets
  $ 231,064     $ 146,087     $ 49,654     $ 426,805
Warranty Reserves (Tables)
6 Months Ended
Jun. 25, 2011
Changes in Aggregate Warranty Reserve
Changes in Aggregate Warranty Reserve
The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

 
   
13-Weeks Ended
 
   
June 25,
   
June 26,
 
   
2011
   
2010
 
             
Balance - beginning of the period
  $ 44,030     $ 58,814  
Accrual for products sold during the period
    13,530       15,705  
Expenditures
    (15,869 )     (12,074 )
Change in accrual for products sold in prior periods
    -       (21,000 )
Balance - end of the period
  $ 41,691     $ 41,445  
                 
   
26-Weeks Ended
 
   
June 25,
   
June 26,
 
    2011     2010  
                 
Balance - beginning of the period
  $ 49,885     $ 87,424  
Accrual for products sold during the period
    24,333       30,618  
Expenditures
    (32,527 )     (33,821 )
Change in accrual for products sold in prior periods
    -       (42,776 )
Balance - end of the period
  $ 41,691     $ 41,445
Fair Value Measurements (Tables)
6 Months Ended
Jun. 25, 2011
Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis
Reconciliation of Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Unobservable Inputs (Level 3)
Marketable Securities Classified as Available-For-Sale Securities
Amortized Cost and Estimated Fair Value of Marketable Securities, by Contractual Maturity
Assets and liabilities measured at estimated fair value on a recurring basis are summarized below:
 
   
Fair Value Measurements as of June 25, 2011
 
Description
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Available for-sale securities
  $ 1,072,339     $ 1,072,339     $ -     $ -  
Failed Auction rate securities
    7,156       -       -       7,156  
Total
  $ 1,079,495     $ 1,072,339     $ -     $ 7,156  
                                 
   
Fair Value Measurements as of December 25, 2010
 
Description
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Available for-sale securities
  $ 781,257     $ 781,257     $ -     $ -  
Failed Auction rate securities
    20,562       -       -       20,562  
Total
  $ 801,819     $ 781,257     $ -     $ 20,562
For assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period, the ASC requires a reconciliation of the beginning and ending balances, separately for each major category of assets.  The reconciliation is as follows:
 
   
Fair Value Measurements Using
 
   
Significant Unobservable Inputs (Level 3)
 
   
13-Weeks Ended
   
26-Weeks Ended
 
   
June 25, 2011
   
June 25, 2011
 
             
Beginning balance of auction rate securities
  $ 20,552     $ 20,562  
Total unrealized appreciation included in other
               
comprehensive income
    2,254       2,494  
Sales out of Level 3
    (15,650 )     (15,900 )
Transfers in and/or out of Level 3
    -       -  
Ending balance of auction rate securities
  $ 7,156     $ 7,156
The following is a summary of the company’s marketable securities classified as available-for-sale securities at June 25, 2011:
 
 
   
Amortized Cost
   
Gross Unrealized
Gains
   
Gross
Unrealized
Losses
   
Other Than
Temporary 
Impairment
   
Estimated Fair 
Value (Net 
Carrying Amount)
 
Mortgage-backed securities
  $ 566,021     $ 15,194     $ -     $ -     $ 581,215  
Auction Rate Securities
    9,877       -       (2,721 )     -       7,156  
Obligations of states and political subdivisions
    340,841       1,954       (432 )     -       342,363  
U.S. corporate bonds
    104,104       1,976       (143 )     (1,274 )     104,663  
Other
    45,054       1,264       (2,220 )     -       44,098  
Total
  $ 1,065,897     $ 20,388     $ (5,516 )   $ (1,274 )   $ 1,079,495  
 
The following is a summary of the company’s marketable securities classified as available-for-sale securities at December 25, 2010:
 
   
Amortized Cost
   
Gross Unrealized
Gains
   
Gross
Unrealized
Losses
   
Other Than
Temporary
Impairment
   
Estimated Fair 
Value (Net 
Carrying
Amount)
 
Mortgage-backed securities
  $ 527,249     $ 1,913     $ (1,520 )   $ -     $ 527,642  
Auction Rate Securities
    25,599       -       (5,037 )     -       20,562  
Obligations of states and political subdivisions
    160,618       347       (3,340 )     -       157,625  
U.S. corporate bonds
    54,348       637       (185 )     (1,274 )     53,526  
Other
    39,838       2,626       -       -       42,464  
Total
  $ 807,652     $ 5,523     $ (10,082 )   $ (1,274 )   $ 801,819
The amortized cost and estimated fair value of marketable securities at June 25, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
 
         
Estimated
 
   
Cost
   
Fair Value
 
             
Due in one year or less
  $ 61,748     $ 62,625  
Due after one year through five years
    375,372       377,881  
Due after five years through ten years
    220,398       222,288  
Due after ten years
    371,350       378,818  
Other (No contractual maturity dates)
    37,029       37,883  
    $ 1,065,897     $ 1,079,495
Components of Inventories (Detail) (USD $)
In Thousands
Jun. 25, 2011
Dec. 25, 2010
Raw Materials
$ 152,480 
$ 103,277 
Work-in-process
43,259 
43,507 
Finished goods
219,270 
278,513