Garmin 2002 Annual Report Download - page 45

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands, Except Share and Per Share Information)
December 28, 2002 and December 29, 2001
Note 1. Organization
On July 24, 2000, the stockholders of Garmin Corporation (GARMIN) incorporated Garmin Ltd. (the Company) under the laws of
the Cayman Islands. Subsequently, the stockholders of GARMIN executed a Shareholders Agreement to transfer to Garmin Ltd.
their investments in 88,988,394 common shares of stock of GARMIN. These shares, which represented approximately 100% of the
issued and outstanding common stock of GARMIN as of July 24, 2000, were used by the stockholders to pay for their
subscriptions to 100,000,000 common shares of Garmin Ltd. at a par value of $0.01 or an aggregate value of $1,000. As such, the
exchange of shares in this reorganization between GARMIN and the newly formed holding company, Garmin Ltd., completed on
September 22, 2000, has been accounted for at historical cost similar to that in pooling-of-interests accounting. Until April 15,
2002, one share of GARMIN stock was held by each of six shareholders as nominees under nominee trusts in order to comply with
Article 2 of the Company Law of Taiwan which required that, as a “company limited by stock”, GARMIN have at least seven
shareholders, and 4,000 shares of GARMIN were held by two shareholders who did not convert their GARMIN shares to common
shares of the Company. These 4,006 shares represented approximately 0.004% of the outstanding shares of GARMIN. Taiwan
company law was recently changed to remove the requirement that a Taiwan company have a minimum of seven shareholders
and to permit single shareholder companies. As of April 15, 2002, the Company has acquired the 4,000 shares of GARMIN that
were held by the two shareholders and the six nominee shareholders have each transferred their own share of GARMIN stock to
the Company. As a result, the Company now owns all of the outstanding shares of GARMIN. As discussed in Note 12, Garmin Ltd.
completed an initial public offering of its common stock in December 2000.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States. Accordingly, the accompanying consolidated financial statements reflect the accounts of Garmin
Ltd. and its wholly owned subsidiaries as if the reorganization described in Note 1 was effective for all periods presented. All
significant inter-company balances and transactions have been eliminated.
Nature of Business
Garmin Ltd. and subsidiaries (together, the Company) manufacture, market, and distribute Global Positioning System-enabled
products and other related products. GARMIN was incorporated in Taiwan, Republic of China on January 16, 1990. GARMIN is
primarily responsible for the manufacturing and distribution of the Company’s products to Garmin International, Inc. (GII) and
Garmin (Europe) Limited (GEL) and, to a lesser extent, new product development and sales and marketing of the Company’s
products in Asia and the Far East. In April 1990, a 100%-owned subsidiary, Garmin International, Inc., was incorporated in the
United States. GII is primarily responsible for sales and marketing of the Company’s products in many international markets and
in the United States as well as research and new product development. GII also manufactures certain products for the Company’s
aviation segment. During June 1992, GII formed Garmin (Europe) Limited, a wholly owned subsidiary in the United Kingdom, to
sell its products principally within the European market. During 2000, GII sold its interest in GEL to Garmin Ltd. As a result, GEL is
now a direct subsidiary of Garmin Ltd. Also during 2000, Garmin Realty LLC was formed by GII to hold certain real estate. In
December 2001, GII formed Garmin USA as a sales organization.
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