Garmin Q3 2005 Earnings Conference Call Transcript (GRMN)

GARMIN INTERNATIONAL, INC.
Moderator: Polly Schwerdt
October 26, 2005
10:00 am CT

Operator:

Good morning, my name is (Renee). And I will be your conference facilitator today. At this time I would like to welcome everyone to the Garmin Third Quarter Earnings Call. All lines have been placed on mute to prevent any background noise.

After the speaker’s remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then the number two on your telephone keypad. Thank you. Ms. Polly Schwerdt, you may begin your conference.

Polly Schwerdt:

Good morning. We would like to welcome you to Garmin Limited’s 2005 third quarter earnings call. Please note that a copy of the press release concerning this earnings call is available at Garmin’s Investor Relations site on the Internet at www.garmin.com/stock. Additionally this call is being broadcast live on the Internet and replay of the web cast will be available until November 26, 2005.

A telephone recording will be available for 24 hours after this call. And a transcript of the call will be available on the web site within 48 hours at www.garmin.com/stock under the events calendar tab.

This earnings call includes projections and other forward looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, earnings, market shares, product introductions, future demand for our products, and our plans and objectives are forward looking statements.

The forward looking events and circumstances discussed in this earnings call may not occur and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10K for the fiscal year ended December 25, 2004 filed with the Securities and Exchange Commission.

Attending on behalf of Garmin Limited this morning are Dr. Min Kao, Chairman and CEO; Kevin Rauckman, Chief Financial Officer; Cliff Pemble, Director of Engineering; and Andrew Etkind, General Counsel. The presenters for this morning’s call are Dr. Min Kao and Kevin Rauckman. At this time I would like to turn the call over to Dr. Kao.

Min Kao:

Good morning. From the press release issued this morning, you can see that we again experienced another record quarter. There were many significant accomplishments since our last earnings report:

x We recorded 26% growth in our aviation business, and 31% growth in our consumer business. Sales remained strong in all regions, led by the European region’s 54% increase in revenue.

x More than 700K Garmin products were shipped in the 3rd quarter of 2005, a 31% increase over the 3rd quarter of 2004. We shipped our 13 millionth unit during the quarter - a significant benchmark of the strength of the Garmin brand.

x 49 new products were introduced year to date.

x The response to our portable navigation devices has been especially strong, resulting
in a triple-digit increase in the sales of automotive product line.

x The introduction of C-series, i-series, StreetPilot 2720 and M3, not only provides industry leading features such as real-time traffic and text-to-speech function that speaks street names, but also offers the consumer significant choice on price, form factor, functions and capabilities. This large product portfolio allows us to reach a broad spectrum of retail channels. For instance,

x Our very popular C-series is distributed by most mainstream electronics retailers including Circuit City, Best Buy, Office Depot, CompUSA, Staples, Fry’s and many outdoor retailers such as BassPro, Cabela, and REI.

x Our low cost, and extremely portable i-series is offered by Target, Circuit City, Wal-Mart, REI, and West Marine.

x Our high-end, full-featured StreetPilot 2720 is offered by Best Buy, Circuit City, CompUSA and Car Toys.

x The nuvi “personal travel assistant