Garmin 2001 Annual Report Download - page 47

Note 5. Long-Term Debt
During 1995, GII entered into an agreement with the City of Olathe, Kansas for the construction of a new corporate headquarters
(the project) which was financed through issuance of Series 1995 Industrial Revenue Bonds (the Bonds) totaling $9,500. Upon
completion of the project in 1996, GII retired bonds totaling $155. At December 29, 2001 and December 30, 2000, outstanding
principal under the Bonds totaled $9,345. Interest on the Bonds is payable monthly at a variable interest rate (1.75% and 5.15%
at December 29, 2001 and December 30, 2000, respectively), which is adjusted weekly to the current market rate as determined
by the remarketing agent for the Bonds with principal due upon maturity on January 1, 2025. See Note 9.
The Bonds are secured by an irrevocable letter of credit totaling $9,650, with facility fees of 0.75% annually, through September
30, 2004, renewable on an annual basis thereafter. The bank has the option of requiring GII to establish a sinking fund related to
the principal balance outstanding on the Bonds, which it had not exercised through December 29, 2001. The letter of credit is secured
by a mortgage on all assets financed with the proceeds of the Bonds and is guaranteed by GARMIN.
In connection with the letter of credit agreement entered into with the bank, GII is required to comply with various covenants,
including minimum tangible net worth requirements of both GARMIN and GII and various financial performance ratios.
During 1999, GARMIN borrowed $18,040 to finance the purchase of land and a new manufacturing facility in Taiwan. The balance
was due in 60 equal payments of principal plus interest beginning in November 2001. Through November 2001, interest was payable
at a fixed rate of 6.155%. Subsequent to November 2001, interest is adjustable based on the Republic of China’s government
preferential rate on term deposits plus 0.18%. The Company opted to prepay a significant portion of the outstanding principal
during 2001. The outstanding balance of $2,843 at December 29, 2001 was paid in full in January 2002.
During 2000, GII entered into another agreement with the City of Olathe, Kansas to finance the Company’s expansion of its
manufacturing facilities through the issuance of Series 2000 Industrial Revenue Bonds (the 2000 Bonds) totaling $20,000. The
proceeds from the issuance of the 2000 Bonds were placed in an interest-bearing restricted cash account controlled by a trustee
appointed by the issuer. Disbursements from the account are restricted to purchases of equipment and construction related to
the project and amounted to $5,694 and $14,304 during the years ended December 29, 2001 and December 30, 2000, respectively.
Unexpended bond proceeds in this restricted cash account amounted to $2 at December 29, 2001.
At December 29, 2001, outstanding principal under the 2000 Bonds totaled $20,000. Interest on the 2000 Bonds is payable monthly
at a variable interest rate (2.1% at December 29, 2001), which is adjusted weekly to the current market rate as determined by
the remarketing agent of the 2000 Bonds with principal due upon maturity at April 15, 2020. See Note 9.
The 2000 Bonds are secured by an irrevocable letter of credit totaling $20,288 with facility fees of 0.75%. This renewable letter
of credit initially expires on September 20, 2004. The bank has required a sinking fund be established with semiannual payments
of $667 beginning April 2002.
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