Garmin 2004 Annual Report Download

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2004 ANNUAL REPORT

Table of contents

  • Page 1
    2 0 0 4 A N N U A L R E P O R T

  • Page 2
    ... Promoting world-class products Building for the future Growth initiatives for 2005 Assisting a world in need Adventures from around the world Financial summary Annual Report on Form 10-K Board of directors Market for the company's common stock Selected financial data Management's discussion and...

  • Page 3
    ... 50 new products Revenue of $762.5M, up 33% Net income of $205.7M, up 15% Occupied new building as part of our expansion in Olathe, Kansas Increased manufacturing capabilities at both the U.S. and Taiwan facilities Began deliveries of G1000 glass cockpit system Introduced marine network system with...

  • Page 4
    ...avionics that add an extra measure of flight safety to rugged GPS handhelds in action around the world to navigation systems for cars that help drivers look up an address or find the nearest ATM. I'm deeply grateful for the support of all those who've had a hand in building our company over these 15...

  • Page 5
    4

  • Page 6
    5

  • Page 7
    ...our long-standing customers in the aviation, marine and outdoor recreation categories. Garmin designs, manufactures and markets navigation, communication and information devices, many of which are enabled by GPS (Global Positioning System) technology. GPS uses satellites to locate a user's position...

  • Page 8
    ... for an air traffic management concept known as "Free Flight." In 2004, we introduced Terrain Awareness and Warning System (TAWS) functionality for two of our popular installed systems, the GNS 530 and GPS 500, as well as primary-means WAAS (Wide Area Augmentation System) certification for the...

  • Page 9
    8

  • Page 10
    ... the box without the need to download maps from their computer. Like their predecessors, the 2610 and 2650, these systems offer bright color displays, touch screen or remote control operations, turn-by-turn directions and voice prompts. New features include options to find services near a route and...

  • Page 11
    ... a black box in-car navigation system that drives onboard LCD displays. The GVNâ„¢ 51, successor to the GVN 50, is being sold in China and through certain Asian OEMs, including Toyota Thailand and Volvo Taiwan. The integration of our GPS technology with mobile electronics devices has spun off a new...

  • Page 12
    ...eTrex Legend® C and Vista® C. These units are Garmin's smallest, most affordable handhelds to offer sunlight-readable color displays. Early in 2004, we introduced the Rino® 130, an addition to our line of two-way radios with GPS. The 130 adds an electronic compass and barometric altimeter to the...

  • Page 13
    12

  • Page 14
    13

  • Page 15
    ... Garmin Marine Networkâ„¢, which delivers marine chartplotting, sonar, offshore cartography, satellite weather and radar capabilities from one integrated system. The Garmin network is the first to bring live weather and CD-quality audio options onboard through provider XM WX Satellite Weather, and...

  • Page 16
    ... sets and prices for core markets. At the same time, today's competitive electronics environment demands that we look to future trends and develop unique products for different applications. This dual approach has resulted in growth for Garmin and for our dealers around the world. In 2004, all...

  • Page 17
    16

  • Page 18
    ..., Office Max, Radio Shack, REI, Target, Wal-Mart and West Marine. We added Staples to our family of national accounts in 2004 and increased our number of product offerings at nearly every other store. Some of the major European retailers include Argos, Decathlon, Dixons, Maplin and Saturn. Garmin...

  • Page 19
    ... print and broadcast advertising exposure, we are building the Garmin brand so that consumers think of Garmin first for navigation and consumer electronics. In 2004, Garmin advertised in a variety of print publications across all markets. Those publications range from titles targeting very specific...

  • Page 20
    ... Design Center, plus room to grow our aviation manufacturing operations. Expanded call center space demonstrates Garmin's commitment to keeping product support services in-house. We have received several commendations on our customer service recently, including an article in a Kansas City business...

  • Page 21
    Increased demand for Garmin products has necessitated an increase in manufacturing capabilities. We added a new automated assembly line at our Olathe, Kansas facility. Our Shijr, Taiwan facility was operating eight automated assembly lines at the beginning of 2004. During the year, we added four ...

  • Page 22
    ... and exceptional product support that turns a first-time buyer into a repeat customer and, potentially an advocate for the brand. This is where Garmin has the edge over new competitors. Our product development plan for 2005 includes the introduction of approximately 60 new products. In aviation, we...

  • Page 23
    ...color touch screen display, automatic route calculation and turn-by-turn voice-prompted directions. Navus will give drivers proven GPS technology at a price that's significantly less than most built-in systems. On the motorcycle OEM side, Garmin will continue developing customized navigation systems...

  • Page 24
    ... about planning workouts and analyzing performance, the 301 comes with Training Center™ software to do this all from their PC. The popularity of our GPSMAP® 60C and 60CS handhelds led to the recent introduction of lower-cost versions with grayscale displays. The GPS 60, a basic navigator, and...

  • Page 25
    ... and generate greater awareness of Garmin products and the Garmin brand, we struck a multi-year sponsorship agreement with internationally recognized basketball great, Yao Ming. The three-time NBA all-star's character, talent, work ethic and humility make him an ideal candidate to help generate...

  • Page 26
    ... requested Garmin's help. We provided aviation units as well as several handheld GPS devices, which MAF teams used to set up communications infrastructure support in Indonesia. In stark contrast to the tsunami-ravaged landscape, MAF workers installed high-tech equipment, including VSAT satellite and...

  • Page 27
    ...the "find address feature," our crews have been able to reach their assigned areas more quickly. This has saved driving time and general confusion, allowing for very precise navigation and subsequently enabling us to turn the power back on for thousands of customers. Thank you, Garmin, for providing...

  • Page 28
    ...VFR center advisories (especially in busy corridors) and how difficult it is to "see and avoid" without some help. Another great use of the unit is knowing when to turn base from the downwind when the tower says, "You're number three, following two on straight in final." The in-trail traffic clearly...

  • Page 29
    ... on GPS systems at his school. The school had about a dozen Garmin eTrex units for student use. Taylor and his classmates loved using the instruments for a variety of activities, and his favorite was geocaching. They logged on to Web sites to research caches in our area, and they searched and traded...

  • Page 30
    ... 2004 Stock Price Return vs. NASDAQ & S&P 500 120% 110 100 90 80 70 60 percent return 50 40 30 12.29.03 2.27.04 Book Value per Share 120% 110 100 90 80 70 60 $9.00 8.59 8.00 7.00 6.88 6.00 5.57 5.00 4.00 3.63 4.19 3.00 percent return 2.00 1.00 0 2000 2001 2002 2003 2004 Garmin NASDAQ S&P 500...

  • Page 31
    ... Garmin International, Inc. Gary V. Kelley Director of Marketing Garmin International, Inc. I N V E S T O R R E L AT I O N S Polly M. Schwerdt Manager-Investor Relations Security analysts, investment professionals and shareholders can find investor relations information on the Company's Web site...

  • Page 32
    ... Place, P.O. Box 30464 SMB, 103 South Church Street George Town, Grand Cayman, Cayman Islands (Address of principal executive offices) 98-0229227 (I.R.S. Employer identification no.) N/A (Zip Code) [ ] Company's telephone number, including area code: (345) 946-5203 Securities registered pursuant...

  • Page 33
    ...16 Executive Officers and Significant Employees of the Company...16 Part II Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Market for the Company's Common Shares, Related Shareholder Matters and Issuer Purchases of Equity Securities ...18 Selected Financial Data ...19 Management...

  • Page 34
    ... as a holding company for Garmin Corporation, a Taiwan corporation, in order to facilitate a public offering of Garmin shares in the United States. Garmin owns, directly or indirectly, all of the operating companies in the Garmin group. Garmin' s annual report on Form 10-K, quarterly reports on Form...

  • Page 35
    ... to support certification of aviation products. Garmin' s Taiwan subsidiary also improved its manufacturing capability in 2004 by adding additional Surface Mount Technology (SMT) manufacturing lines and adding 300 new manufacturing associates at its Taiwan factory. Company Overview Garmin is...

  • Page 36
    ... mapping information for the United States and Canada, Australia, South Africa and a number of European, Middle East and Asian countries. With this information, many of Garmin' s products can provide the customer with detailed information concerning business listings and points of interest. A user...

  • Page 37
    ...automatic route calculation with turn-by-turn directions. The GPS 60 is a basic GPS without mapping while the GPSMAP 60 offers a monochrome display and 24 MB of downloadable memory. Rugged, handheld GPS for land or marine navigation. Features include 1 MB internal memory for loading MapSource points...

  • Page 38
    .... Pocket-sized, portable, easy-to-use GPS unit with high-end navigation features, including 256-color, bright, sunlight-readable display, automatic routing with turn-by-turn directions and voice guidance, and 115 MB of internal memory. cfQue 1620 GPS 10 GPS 18 Quest Marine fixed-mount units...

  • Page 39
    ...-in electronic compass, barometric sensor, and NOAA weather radio receiver. Waterproof, portable, handheld marine two-way radio with 5-watt power output provides Very High Frequency (VHF) communication capabilities for all types of boaters. VHF 725 Aviation Garmin' s panel-mounted product line...

  • Page 40
    ... management (PIM) applications, voice recorder, MP3 player and Secure Digital card slot for memory expansion. Optional MapSource CD downloads and user-selectable formats enable the iQue 3600a to move from plane to automobile. GPSMAP 196 GPSMAP 296 iQue 3600a Panel-mount aviation products...

  • Page 41
    ... receive real-time weather information broadcast by the XM WX Satellite radio system. In addition, the GDL 69A expands the utility of the system by providing CD quality audio provided by XM Satellite Radio. Integrated avionics unit with GPS navigation receiver certified for primary means Wide Area...

  • Page 42
    ...; and Ÿ West Marine-the largest U.S. marine retailer specializing in offshore boating equipment. Garmin' s Europe, Middle East and Africa consumer segment marketing is handled through in-country distributors who resell to dealers. Working closely with Garmin' s in-house sales and marketing staff in...

  • Page 43
    ..., Garmin' s products are standard equipment on boats manufactured by Allison Boats, Cigarette Racing Team, Inc., Cobalt Boats, Pro Sports Boats and Ranger Boats. In the aviation market, Garmin' s avionics are standard equipment on aircraft built by Cessna Aircraft Company, Cirrus Design Corporation...

  • Page 44
    ... aviation navigation and communications systems with GPS in a single package. Design and process optimization. Garmin uses its manufacturing resources to rapidly prototype design concepts, products and processes in order to achieve higher efficiency, lower cost and better value for customers. Garmin...

  • Page 45
    ... countries where they are sold. Garmin' s products sold in Europe are required to comply with relevant directives of the European Commission. A delay in receiving required certifications for new products or enhancements to Garmin' s products or losing certification for Garmin' s existing products...

  • Page 46
    ... its employee relations to be good. Item 2. Properties Garmin International, Inc. and Garmin USA, Inc., occupy a facility of approximately 750,000 square feet on 42 acres in Olathe, Kansas, where the majority of product design and development work is conducted, the majority of aviation panel-mount...

  • Page 47
    ..., Taipei County, Taiwan where it manufactures all of Garmin' s consumer and portable aviation products and warehouses, markets and supports products for the Pacific Rim countries. During 2004, we experienced manufacturing capacity constraints that impacted our ability to meet customer orders for our...

  • Page 48
    ... a director of Garmin Corporation and Garmin (Europe) Ltd. since July 2004. Mr. Pemble has been a director of Garmin AT, Inc. since August 2003. He has been Director of Engineering of Garmin International, Inc. since 2003. Previously, he was Software Engineering Manager of Garmin International, Inc...

  • Page 49
    ... its initial public offering on December 8, 2000 (the "IPO"). As of March 1, 2005, there were 186 shareholders of record. The range of high and low closing sales prices of the Company' s common shares as reported on the Nasdaq Stock Market for each fiscal quarter of fiscal years 2004 and 2003 was...

  • Page 50
    ...for the years ended December 25, 2004, December 27, 2003, and December 28, 2002 were derived from the Company' s audited consolidated financial statements and the related notes thereto which are included in Item 8 of this annual report on Form 10-K. The selected consolidated balance sheet data as of...

  • Page 51
    ...Part II of this Form 10-K. Years ended (1) Dec. 27, Dec. 28, Dec. 29, 2003 2002 2001 (in thousands, except per share data) Dec. 25, 2004 Consolidated Statements of Income Data: Net sales Cost of goods sold Gross profit Operating expenses: Selling, general and administrative Research and development...

  • Page 52
    .... As such, the segments are managed separately. Our consumer segment includes portable GPS receivers and accessories for marine, recreation, land and automotive applications sold primarily to retail outlets. Our aviation products are portable and panel-mount avionics for Visual Flight Rules and...

  • Page 53
    ... of sales basis and reviewed periodically. If market conditions were to decline, the Company may take actions to increase customer incentive offerings possibly resulting in an incremental reduction of revenue at the time the incentive is offered. Warranties The Company' s products sold are...

  • Page 54
    ... Financial Statements. Accounting Terms and Characteristics Net Sales Our net sales are primarily generated through sales to our global dealer and distributor network and to original equipment manufacturers. We recognize sales when products are shipped. Our sales are largely of a consumer...

  • Page 55
    ... in Taiwan than in Olathe and Salem. Sales price variability has had and can be expected to have an effect on our gross profit. In the past, prices of some of our devices sold into the consumer market have declined due to market pressures and introduction of new products sold at lower price points...

  • Page 56
    ... average sales days in our customer accounts receivable between 35 and 53 days since 2001. The average sales days in our customer accounts receivable was 53 days as of December 25, 2004. We have experienced an increase in the level of customer accounts receivable days due to changes in product mix...

  • Page 57
    ... and overall increased consumer awareness of the capabilities and applications of GPS. The increase in aviation sales for fiscal 2004 was primarily due to increased sales from panel mount products sold into the OEM (original equipment manufacturers) and retrofit markets and sales from Garmin AT, 26

  • Page 58
    ... and overall demand for our consumer products. The reduction in gross margin percentage was primarily due to reduced prices on older products in advance of new product releases, a change in product mix towards certain lower gross margin product lines and increases in certain raw material costs early...

  • Page 59
    ... 2004 and the Garmin AT engineering team contributing for the full fiscal year. Management believes that one of the key strategic initiatives for future growth and success of the Company is continuous innovation, development, and introduction of new products. Management expects that its research...

  • Page 60
    ... demand for the Company' s consumer products is due to the emergence of the GPS market in general, and overall increased consumer awareness of the capabilities and applications of GPS. The increase in aviation sales for fiscal 2003 was primarily due to increased sales from panel mount products sold...

  • Page 61
    ... products, ORACLE software implementation costs, and additional staffing in our customer call center. In the past, selling, general and administrative expenses increased at a lower rate than revenues due to strong demand for newly introduced and existing consumer products. Research and Development...

  • Page 62
    ... and purchases of production machinery and equipment to expand capacity in the Shijr, Taiwan facility. In addition to capital expenditures, in 2004 cash flow used in investing related to the purchase of fixed income securities associated with the investment of our on-hand cash balances and...

  • Page 63
    ... represented the remainder of an outstanding issue of industrial revenue bonds. The employee stock option exercises and employee stock purchase plan purchases generated a $4.3 million source of cash in 2003. Cash flow used in financing activities during 2002 relates primarily to the reduction of our...

  • Page 64
    ...statement issued in December 2004, the Bush administration stated that the U.S. is committed to supporting and improving the Global Positioning System and will continue providing it free from direct user fees. Some of our products also use signals from systems that augment GPS, such as the Wide Area...

  • Page 65
    ... reduced sales of our general aviation products and delays in the shipment of our products manufactured in our Taiwan manufacturing facility to our distribution facility in Olathe, Kansas, thereby adversely affecting our ability to supply new and existing products to our dealers and distributors...

  • Page 66
    ... cash and could lead to write-offs of some or all of the excess inventories. Lower than forecasted demand could also result in excess manufacturing capacity at our facilities, which could result in lower margins. We may become subject to significant product liability costs. If our aviation products...

  • Page 67
    ... our management systems and resources. Our business may suffer if we are not able to hire and retain sufficient qualified personnel or if we lose our key personnel. Our future success depends partly on the continued contribution of our key executive, engineering, sales, marketing, manufacturing and...

  • Page 68
    ... do not achieve market acceptance, our business, financial condition and results of operations could be materially adversely affected. As we introduce new product lines that serve personal digital assistant ("PDA"), and original equipment manufacturer automotive and sensor board applications, we may...

  • Page 69
    ... they can be sold. For example, Federal Aviation Administration (''FAA' ' ) certification is required for all of our aviation products that are intended for installation in type certificated aircraft. To the extent required, certification is an expensive and time-consuming process that requires...

  • Page 70
    ... the future could affect our business and the market price and the liquidity of our shares. Our principal manufacturing facilities where we manufacture all of our products, except our panel-mounted aviation products, are located in Taiwan. Taiwan has a unique international political status. The PRC...

  • Page 71
    ... away from other business issues and opportunities. Integration of acquired companies may result in problems related to integration of technology and inexperienced management teams. In addition, the key personnel of the acquired company may decide not to work for us. Our management has had limited...

  • Page 72
    ... litigation; developments in our relationships with our customers and suppliers; and any significant acts of terrorism against the United States. In addition, in recent years the stock market in general and the markets for shares of technology companies in particular, have experienced extreme price...

  • Page 73
    ... 1, 2005 members and former members of our Board of Directors and our executive officers, together with members of their families and entities that may be deemed affiliates of or related to such persons or entities, beneficially own approximately 40% of our outstanding common shares. Accordingly...

  • Page 74
    ... of the Companies Law. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Market Sensitivity We have market risk primarily in connection with the pricing of our products and services and the purchase of raw materials. Product pricing and raw materials costs are both significantly...

  • Page 75
    ..., and therefore no debt-related interest rate risk. We are exposed to interest rate risk in connection with our investments in marketable securities. As interest rates change, the unrealized gains and losses associated with those securities will fluctuate accordingly. A hypothetical change of 10% in...

  • Page 76
    ... CONSOLIDATED FINANCIAL STATEMENTS Garmin Ltd. and Subsidiaries Years Ended December 25, 2004, December 27, 2003, and December 28, 2002 Contents Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements...46 Consolidated Balance Sheets at December 25, 2004 and...

  • Page 77
    Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements The Board of Directors and Shareholders Garmin Ltd. We have audited the accompanying consolidated balance sheets of Garmin Ltd. and Subsidiaries (the Company) as of December 25, 2004 and December 27, 2003, ...

  • Page 78
    Garmin Ltd. And Subsidiaries Consolidated Balance Sheets (In thousands, except share information) December 25, 2004 Assets Current assets: Cash and cash equivalents Marketable securities ( Note 3) Accounts receivable, less allowance for doubtful accounts of $3,565 in 2004 and $3,576 in 2003 ...

  • Page 79
    Garmin Ltd. And Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Information) Fiscal Year Ended December 25, 2004 Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Research and development expense Operating income Other income (...

  • Page 80
    ...-sale securities, net of income tax effects of $1,260 Comprehensive income Dividends paid Tax benefit from exercise of employee stock options Issuance of common stock from exercise of stock options Purchase and retirement of common stock Issuance of common stock through stock purchase plan Balance...

  • Page 81
    ...and equipment Purchase of marketable securities Sales of marketable securities Purchase of UPS Aviation Technologies, Inc. Change in restricted cash Other Net cash used in investing activities Financing activities: Dividends Proceeds from issuance of common stock through stock purchase plan Proceeds...

  • Page 82
    ...non-cash investing and financing activities Change in liability recognized in accrued expenses related to cash flow hedges and charged to accumulated other comprehensive loss Change in marketable securities related to unrealized appreciation (depreciation) Fair value of assets acquired (UPS Aviation...

  • Page 83
    ... 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...

  • Page 84
    ... market price of the Company' s stock during the period the options were outstanding. See Note 12. Cash and Cash Equivalents For purposes of reporting cash flows, cash and cash equivalents include cash on hand, operating accounts, money market funds, and securities with maturities of three months...

  • Page 85
    ... exceeds its fair value. Dividends On July 23, 2004 the Board of Directors declared a dividend of $0.50 per share to be paid on December 15, 2004 to shareholders of record on December 1, 2004. The Company paid out a dividend in the amount of $54,095. The dividend has been reported as a reduction of...

  • Page 86
    .... Marketable Securities Management determines the appropriate classification of marketable securities at the time of purchase and reevaluates such designation as of each balance sheet date. All of the Company' s marketable securities are considered available-for-sale at December 25, 2004. See...

  • Page 87
    ... retailers in clearing older products from their inventories in advance of new product releases. These rebates, incentives, and price protections are recorded as reductions to net sales in the accompanying consolidated statements of income. Advertising Costs The Company expenses advertising costs...

  • Page 88
    ... in the financial statements based on their fair values. As permitted by SFAS No. 123, the company currently accounts for share-based payments to employees using APB Opinion No. 25' s intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options at...

  • Page 89
    ... summary of the Company' s marketable securities classified as available-for-sale securities at December 25, 2004: Estimated Fair Value (Net Carrying Amount) $193,185 58,355 41,601 29,074 $322,215 Mortgage-backed securities Obligations of states and political subdivisions U.S. corporate bonds Other...

  • Page 90
    ...The Company invests in auction rate securities which effectively mature every 28 days. the proceeds are reinvested in the same security. 4. Long-Term Debt Upon maturity, During 1995, GII entered into an agreement with the City of Olathe, Kansas for the construction of a new corporate headquarters...

  • Page 91
    ...474 3,452 At December 25, 2004, the Company expects future costs of approximately $900 for the completion of its facility expansion in Olathe, Kansas. Certain cash balances of GEL are held as collateral by a bank securing payment of the United Kingdom value-added tax requirements. These amounted to...

  • Page 92
    ... $0.10 per weighted-average common share outstanding for the years ended December 25, 2004, December 27, 2003, and December 28, 2002, respectively. The Company currently expects to benefit from the incentives and credits being offered by Taiwan through 2009, at which time these tax benefits expire...

  • Page 93
    ...2004 Deferred tax assets: Product warranty accruals Allowance for doubtful accounts Inventory carrying value Sales...changes on future income. The agreement was renewed in 2001. Pursuant to this "pay-fixed" swap agreement, GII agreed to exchange, at specified intervals, the difference between the fixed...

  • Page 94
    ...by the Company' s subsidiary in Taiwan. The Company' s aviation products are portable and panel mount avionics for Visual Flight Rules and Instrument Flight Rules navigation and are sold primarily to aviation dealers and certain aircraft manufacturers. The Company' s Chief Executive Officer has been...

  • Page 95
    ... income before income taxes, and identifiable assets for each of the Company' s reportable segments are presented below: Fiscal Year Ended December 25, 2004 Consumer Aviation Total Net sales to external customers Allocated interest income Allocated interest expense Income before income taxes Assets...

  • Page 96
    ... as of December 25, 2004 representing 9.7% of total accounts receivable. As of March 1, 2005, payments from this customer have reduced the customer' s accounts receivable balance to $0.8 million. 11. Stock Compensation Plans The various Company stock compensation plans are summarized below: 2000...

  • Page 97
    ... the Company' s stock option activity and related information under the 2000 Equity Incentive Plan and the 2000 Non-employee Directors' Option Plan for the years ended December 25, 2004, December 27, 2003, and December 28, 2002 is provided below: Weighted-Average Exercise Price Number of Shares (In...

  • Page 98
    ... 85% of the fair market value on the enrollment date. The ESPP is intended to qualify as an "employee stock purchase plan" under Section 423 of the Internal Revenue Code. During 2004, 2003, and 2002, 58,950, 70,857, and 70,035 shares were purchased under the plan for a total purchase price of $2,690...

  • Page 99
    ... than those held by the new 15% shareholder) will then be exercisable to purchase preferred shares of Garmin (or in certain instances other securities of Garmin) having at that time a market value equal to two times the then current exercise price. Garmin' s Board of Directors may redeem the rights...

  • Page 100
    ...capital stock of UPS Aviation Technologies, Inc. for $38 million in cash. UPS Aviation Technologies, headquartered in Salem, Oregon, designs and manufactures multiple lines of communications, navigation and surveillance products for general aviation and air transport customers. The purchase price of...

  • Page 101
    17. Warranty Reserves The Company' s products sold are generally covered by a warranty for periods ranging from one to two 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 ...

  • Page 102
    ... over financial reporting as of December 25, 2004. Ernst & Young LLP, the independent registered public accounting firm that audited the Company' s consolidated financial statements, issued an attestation report on management' s assessment of the Company' s internal control over financial reporting...

  • Page 103
    ... respects, effective internal control over financial reporting as of December 25, 2004, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Garmin Ltd. and Subsidiaries...

  • Page 104
    ...Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 25, 2004 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting Item 9B. Other Information Not applicable...

  • Page 105
    .... Garmin' s definitive proxy statement in connection with its annual meeting of stockholders scheduled for June 3, 2005 (the "Proxy Statement") will be filed with the Securities and Exchange Commission no later than 120 days after December 25, 2004. (a) Directors of the Company The information set...

  • Page 106
    ... this Item 12. Equity Compensation Plan Information The following table gives information as of December 25, 2004 about the Garmin Common Shares that may be issued under all of the Company' s existing equity compensation plans. A B C Number of securities remaining available for future issuance under...

  • Page 107
    ... Stock Purchase Plan Second Amendment to Garmin Ltd. Employee Stock Purchase Plan Code of Business Conduct and Ethics for Directors, Officers and Employees of Garmin Ltd. and Subsidiaries List of subsidiaries Consent of Ernst & Young LLP Power of Attorney (included in signature page) Chief Executive...

  • Page 108
    ... on Form 10-K filed on March 10, 2003. (b) Exhibits. The exhibits listed on the accompanying Exhibit Index in Item 15(a)(3) are filed as part of, or are incorporated by reference into, this Annual Report on Form 10-K. (c) Financial Statement Schedules. Reference is made to Item 15(a)(2) above. 77

  • Page 109
    GARMIN LTD. AND SUBSIDIARIES INDEX TO FINANCIAL STATEMENT SCHEDULE Garmin Ltd. Financial Statement Schedule for the years ended December 25, 2004, December 27, 2003 and December 28, 2002 . Schedule II - Valuation and qualifying accounts...79 78

  • Page 110
    ... II - VALUATION AND QUALIFYING ACCOUNTS Garmin Ltd. and Subsidiaries (In thousands)...2004: Deducted from asset accounts Allowance for doubtful accounts Inventory reserve Total Balance at Beginning of Period Additions Charged to Charged to Costs and Other Expenses Accounts Deductions Balance...

  • Page 111
    ... Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GARMIN LTD. By /s/ Min H. Kao Min H. Kao Chief Executive Officer Dated: March 9, 2005 POWER OF ATTORNEY Know all persons by...

  • Page 112
    ...See Part IV of this Annual Report on Form 10-K for a complete list of exhibits. Exhibit Number 21.1 23.1 31.1 31.2 32.1 32.2 Document List of subsidiaries Consent of Ernst & Young LLP Chief Executive Officer' s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Chief Financial...

  • Page 113
    EXHIBIT 21.1 GARMIN LTD. List of Subsidiaries of Company Name of Subsidiary Garmin Corporation Garmin International, Inc. Garmin USA, Inc. Garmin Realty, LLC Garmin AT, Inc. Garmin (Europe) Ltd. Jurisdiction of Incorporation Taiwan Kansas Kansas Kansas Oregon England

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    ... to the Garmin Ltd. Employee Stock Purchase Plan, Garmin Ltd. 2000 Equity Incentive Plan, Garmin Ltd. Non-Employee Director Option Plan, and the Garmin International, Inc. Savings and Profit Sharing Plan of our reports dated March 7, 2005, with respect to the consolidated financial statements and...

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    ... financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant' s internal control over financial reporting. Date: March 9, 2005 By __/s/ Min H. Kao_____ Min H. Kao Chairman and Chief Executive Officer

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    ...' s ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant' s internal control over financial reporting. Date: March 9, 2005 By /s/ Kevin Rauckman...

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    ... 1350, Chapter 63 of Title 18, United States Code), I, Min H. Kao, Chairman and Chief Executive Officer of Garmin Ltd. (the "Company") hereby certify that: (1) The Annual Report on Form 10-K for the year ended December 25, 2004 (the "Form 10-K") of the Company fully complies with the requirements of...

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    ... Chapter 63 of Title 18, United States Code), I, Kevin Rauckman, Co-Chairman and Chief Executive Officer of Garmin Ltd. (the "Company") hereby certify that: (1) The Annual Report on Form 10-K for the year ended December 25 2004 (the "Form 10-K") of the Company fully complies with the requirements of...

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    ©2005 Garmin Ltd. Garmin Ltd. P.O. Box 30464 SMB 5th Floor, Harbour Place 103 South Church Street Grand Cayman, Cayman Islands (345) 946-5203 www.garmin.com M00-60098-02