Garmin 2007 Annual Report Download

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2007 ANNUAL REPORT
Follow the leader.

Table of contents

  • Page 1
    Follow the leader. 2 0 0 7 A N N U A L R E P O R T

  • Page 2
    ... Highlights Letter to shareholders Follow the leader - Garmin Aviation Automotive and mobile Marine Outdoor and fitness Leading the market with a world-class brand Building for the future Growth initiatives for 2008 Testimonials Financial summary Board of directors 1 2 4 6 8 12 14 16 18 20 22 24...

  • Page 3
    ... billion, up 79% > Net income of $855 million, up 66% > Sold more personal navigation devices than any other company worldwide > Acquired distributors in Germany, France, Italy and Spain and increased European market share > Acquired Digital Cyclone, Inc., a leader in providing personalized weather...

  • Page 4
    ... and stockholders by designing, manufacturing and selling navigation and communication products that provide superior quality, safety and operational features, lower cost of manufacturing and ownership, and sufficient profits to support desired company growth. Garmin's customers know that they...

  • Page 5
    3

  • Page 6
    ...that barely existed 18 years ago. 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, display it on an electronic map and provide guidance...

  • Page 7
    5

  • Page 8
    ... and service, which lowers ownership costs. The system is also expandable, making it possible to add new technologies and capabilities as they become available.The avionics suite is WAAS (wide area augmentation system) certified and offers outstanding situational awareness for flight management...

  • Page 9
    7

  • Page 10
    ...data plan and gives users access to real-time weather, traffic, fuel prices and hotel information. For customers who prefer a service without subscription fees, we created Garmin Mobile XT. This software comes on a plug-in SD card and works in smartphones with internal GPS.The Peer Pointsâ„¢ feature...

  • Page 11
    9

  • Page 12
    ... DNX 7100 was one of the best-selling vehicle multimedia devices to be installed aftermarket, garnering 30% market share. It includes embedded Garmin navigation along with media features (iPod connectivity, Bluetooth, video, satellite radio) from Kenwood. Garmin has also partnered with Panasonic to...

  • Page 13
    11

  • Page 14
    ... tool for navigating unfamiliar waters. Outdoor enthusiasts who split their time among boating, hunting The Garmin GPS and radar became my eyes. M . P. , T E S T I M O N I A L S PA G E 2 2 and fishing continue to enjoy Garmin's rugged GPSMAP® 76 series. These mariner-friendly handheld devices are...

  • Page 15
    13

  • Page 16
    ...dogs' movements and the locations of any bobwhite and scaled quail coveys. In 2008, Garmin expects to continue to develop innovative products with new feature sets to address the demands of the recreational market. Handheld GPS products will include larger screens, and improved mapping data and user...

  • Page 17
    15

  • Page 18
    ...-a Garmin'. G . , T E S T I M O N I A L S PA G E 2 2 to increase brand awareness while selling products and educating hundreds of customers each month. This high-touch, high-tech consumer experience is located in one of the highest foot-traffic retail locations in North America and is a great way...

  • Page 19
    17

  • Page 20
    ... customer, not just sell products. Six additional satellite locations around North America lend their expertise to special markets. Subsidiaries in Calgary,Alberta, Canada, and Minneapolis, Minnesota, focus on fitness and wireless technology. A satellite location for marine R&D is in Newport, Oregon...

  • Page 21
    19

  • Page 22
    ... updates to the computer, plus innovative touch bezel operations. Additionally, Garmin's MotionBasedâ„¢ website, where users can display and analyze fitness activities, will be enhanced and renamed Garmin Connectâ„¢. Our aviation market expects continued growth for WAAS-enabled panel mount equipment...

  • Page 23
    ... panel, with the mounted GPS, was partially broken up as well as completely submerged. Today, four days later, I dried out the XM antenna and have had the unit running for several hours in my home. I'm deeply impressed by the sturdiness and waterproofing of this unit. I haven't checked my radio...

  • Page 24
    ... rental car company offered me a Garmin, and, luckily, I took it! I found your product to be user friendly and a priceless tool when navigating through a strange city. When we were going to dinner it automatically shifted into night mode and showed us the streets in a better light, enhancing the map...

  • Page 25

  • Page 26
    FINANCIAL SUMMARY 2007 stock price return vs NASDAQ & S&P 500 240 220 200 percent return percent return Return on equity 40 36% 33% 27% 24% 22% S&P 500 NASDAQ GRMN 35 30 25 20 15 10 5 0 180 160 140 120 100 80 01.03....

  • Page 27
    ... Islands (Address of principal executive offices) Registrant's telephone number, including area code: (345) 640-9050 Securities registered pursuant to Section 12(b) of the Act: Common Shares, $0.005 Per Share Par Value (Title of each class) NASDAQ Global Select Market (Name of each exchange on which...

  • Page 28
    ... of June 30, 2007 (based on the closing price of the registrant's common shares on the Nasdaq Stock Market for that date) was approximately $10,378,819,020. Number of shares outstanding of the registrant's common shares as of February 22, 2008: Common Shares, $.005 par value - 217,034,785 Documents...

  • Page 29
    ... Officers and Corporate Governance ...80 Executive Compensation...81 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ...81 Certain Relationships and Related Transactions, and Director Independence ...82 Principal Accounting Fees and Services ...82 Part...

  • Page 30
    ... System ("GPS") technology. Garmin designs, develops, manufactures and markets a diverse family of hand-held, portable and fixed-mount GPS-enabled products and other navigation, communications and information products for the automotive/mobile, outdoor/fitness, marine, and general aviation markets...

  • Page 31
    ..., MP3 player, Bluetooth® hands-free technology (in the nüvi 750, 760 and 780), a built-in FM traffic receiver, and the ability to add custom points of interest (POIs). Garmin continued its expansion in the rental car market in 2007 by announcing agreements to supply GPS navigation devices to...

  • Page 32
    ...includes a custom dashboard bracket - that will be sold through certain Volvo dealerships in Europe and North America. Garmin also expanded its Garmin Mobileâ„¢ service and family of products in 2007. In October, Garmin announced Garmin Mobile XT, a pre-loaded (microSD card) software application for...

  • Page 33
    ... a six-year extension to our map data license agreement with NAVTEQ North America, LLC ("NAVTEQ"), the company from whom we license the majority of our automotive map data for our automotive products and applications. NAVTEQ is a leading global provider of digital map data for vehicle navigation and...

  • Page 34
    ... display, automatic routing with turn-by-turn directions and voice guidance, and 115 MB of internal memory. The Quest 2 adds pre-loaded maps of the United States, Canada, and Puerto Rico. zūmo® (4 models) A motorcycle-specific navigator with features including a glove-friendly touch screen...

  • Page 35
    ... street navigation) and a 2.2" color display in addition to tracking vertical profiles, climb and descent, altitude, speed, distance, and time. In January 2008, Garmin introduced the Colorado series of handheld GPS devices for outdoor, marine, and fitness users. The Colorado units feature Garmin...

  • Page 36
    ...64mb microSD card. GPS 72 Rugged, handheld GPS for land or marine navigation. Features include 1 MB internal memory for loading MapSource points of interest and high contrast 4-level gray scale display. GPS 76 (5 models) Handheld GPS with large display and a waterproof case which floats in water...

  • Page 37
    ... the water, water temperature, fuel flow rate, engine data, fuel level, wind direction and more, depending upon what sensors are connected. GHPâ„¢ 10 Marine Autopilot System The GHP 10 Marine Autopilot system is a new generation of the TR-1 Gladiator autopilot. Garmin acquired the TR-1 technology...

  • Page 38
    .... Aviation Garmin's panel-mounted product line includes GPS-enabled navigation, VHF communications transmitters/receivers, multi-function displays, receivers, instrument landing system (ILS) receivers, digital transponders (which transmit an aircraft's altitude and its flight identification number...

  • Page 39
    ... GPS update rate, and pre-loaded automotive maps of North America. Panel-mount aviation products: G1000® The G1000 integrates navigation, communication, attitude, weather, terrain, traffic, surveillance and engine information on large high-resolution color displays. The G1000 offers general...

  • Page 40
    ...-in-one'' IFR certified GPS navigation receiver/traditional VHF navigation receiver/instrument landing systems receiver and VHF communication transmitter/receiver. Features available in different 400 series models include 4-color map graphics, GPS, communication and navigation capabilities. The 430...

  • Page 41
    ...: • Best Buy-one of the largest U.S. electronics retailers; • BDI/Laguna-a large distributor who sells to such dealers as Amazon.com; • Cabela's-a major hunting and fishing catalog retailer for the outdoor marine market with "super store" and "destination store" locations; • Circuit City...

  • Page 42
    ... PLC, Rockwell Collins, Inc., Universal Avionics Systems Corporation, Chelton Flight Systems, Aspen Avionics, and Free Flight Systems for panel-mount GPS and display units. For Garmin's Family Radio Service and General Mobile Radio Service product line, Garmin believes that its principal competitors...

  • Page 43
    ... Olathe, Kansas facility, and its Salem, Oregon facility. Garmin believes that its vertically integrated approach has provided it the following benefits: Reduced time-to-market. Utilizing concurrent engineering techniques, Garmin's products are introduced to production at an early development stage...

  • Page 44
    ... for automotive/mobile products during the holiday buying season, and, to a lesser extent, the second quarter, due to increased demand during the spring and summer marine season and the Father's Day/graduation buying season. Sales of consumer products are also influenced by the timing of the release...

  • Page 45
    ...provide that all foreign exchange transactions must be executed by banks designated to handle such business by the Ministry of Finance of Taiwan and by the Central Bank of China, also referred to as the CBC. Current regulations favor trade-related foreign exchange transactions. Consequently, foreign...

  • Page 46
    ... indicated 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 Augmentation System (WAAS). WAAS is operated by the...

  • Page 47
    ... 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 48
    ... manufacturing and supply of components and other expenses. These higher costs could lower our profit margins. Further, if production is increased rapidly, manufacturing quality could decline, which may also lower our margins and reduce customer satisfaction. y If forecasted demand does not develop...

  • Page 49
    ... our automotive/mobile products, and our business and/or gross margins could be harmed if we become unable to continue licensing such mapping data or if the royalty costs for such data rise. We license digital mapping data for use in our products from various sources. There are only a limited number...

  • Page 50
    ... price reductions in the increasingly competitive market for personal navigation devices (PNDs). We expect that gross margins on automotive/mobile products will continue to erode. In addition, our overall gross margin may fluctuate from period to period due to a number of factors, including product...

  • Page 51
    ... to new or emerging technologies or changes in customer requirements. They may also be able to devote greater resources to the development, promotion and sale of their products. Increased competition could result in price reductions, fewer customer orders, reduced margins and loss of market share...

  • Page 52
    ... our business, financial condition and results of operations 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...

  • Page 53
    ...acquired employees (including cultural differences with foreign acquisitions), operations, and products and diversion of capital and management's attention away from other business issues and opportunities. Integration of acquired companies may result in problems related to integration of technology...

  • Page 54
    ... effect on our income tax provision, net income or cash flows in the period or periods for which that determination is made. Risks Relating to Our Shares The volatility of our stock price could adversely affect investment in our common shares. The market price of our common shares has been, and may...

  • Page 55
    ... related to Garmin, our competitors, our suppliers or our customers; and any significant acts of terrorism against the United States, Taiwan or significant markets where we sell our products. In addition, in recent years the stock market in general and the markets for shares of technology companies...

  • Page 56
    ... on 42 acres in Olathe, Kansas, where the majority of product design and development work is conducted, the majority of aviation panel-mount products are manufactured and products are warehoused, distributed, and supported for North, Central and South America. Garmin's subsidiary, Garmin Realty, LLC...

  • Page 57
    ..., liquidity or financial position, Garmin International believes that the claims are without merit and intends to vigorously defend these actions. Mobile Traffic Systems Corporation and TrafficGauge, Inc. v. Cobra Electronics Corp., Garmin USA, Inc., Magellan Navigation, Inc., and TomTom, Inc...

  • Page 58
    On April 11, 2007, Mobile Traffic Systems Corporation filed a lawsuit in the United States District Court for the Northern District of Alabama claiming that certain products of Garmin and the other defendants infringe U.S. Patents Nos. 7,069,143 and 6,728,628 (the "Asserted Patents"). TrafficGauge, ...

  • Page 59
    ...of CPIM (Certified in Production and Inventory Management). Danny J. Bartel, age 58, has been Vice President, Worldwide Sales of Garmin International, Inc. since 2006. Previously, he was Technical/Survey Sales Manager of Garmin International, Inc. from 1992 to 1993, Director, Europe, Middle East and...

  • Page 60
    ... 15, 2006, a two-for-one stock split of Garmin's common shares was effected. The range of high and low closing sales prices of Garmin's common shares as reported on the Nasdaq Stock Market for each fiscal quarter of fiscal years 2007 and 2006 was as follows: Year Ended December 29, 2007 December 30...

  • Page 61
    ... included in this graph is not necessarily indicative of future stock price performance. Item 6. Selected Financial Data The following table sets forth selected consolidated financial data of the Company. The selected consolidated balance sheet data as of December 29, 2007 and December 30, 2006 and...

  • Page 62
    ... of Income Data: Net sales Cost of goods sold Gross profit Operating expenses: Selling, general and administrative Research and development Total operating expenses Operating income Other income/(expense), net (2), (3) Income before income taxes Income tax provision Net income Net income per share...

  • Page 63
    ...data. Overview We are a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in four business segments, which serve the marine, outdoor/fitness, automotive/mobile, and aviation markets...

  • Page 64
    ...percentage of sales basis. If market conditions were to decline, Garmin may take actions to increase customer incentive offerings possibly resulting in an incremental reduction of revenue at the time the incentive is offered. Warranties Garmin's products sold are generally covered by a warranty for...

  • Page 65
    ... 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 title of the products passes to the customer. Our sales are largely...

  • Page 66
    ... highest volume products. Our manufacturing labor costs historically have been lower 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 our devices sold into the automotive/mobile market have declined...

  • Page 67
    ...and prototype development, and costs of test equipment needed during product development. Approximately 87% of the research and development of our products is performed in the United States. The remainder of our research and development activities are performed by our Taiwan engineering group, which...

  • Page 68
    Net sales Cost of goods sold Gross profit Operating expenses: Selling, general and administrative Research and development Total operating expenses Operating income Other income / (expense) , net Income before income taxes Provision for income taxes Net income Dec. 29, 2007 100.0% 54.0% 46.0% 12.5%...

  • Page 69
    ...544 $71,920 Automotive/ Mobile $2,342,184 1,368,979 973,205 305,065 59,390 364,455 608,750 56,392 $665,142 Aviation $294,995 99,769 195,226 24,400 59,835 84,235 110,991 2,416 $113,407 Fiscal year ended December 30, 2006 Net sales Cost of goods sold Gross profit Selling, general and administrative...

  • Page 70
    ...and products featuring high sensitivity GPS capabilities increased sales of our marine and outdoor fitness segments. The increase in aviation sales for fiscal 2007 was primarily due to increased sales from panel mount products sold into the OEM (original equipment manufacturers) and retrofit markets...

  • Page 71
    ...selling, general and administrative expenses will rise in absolute dollars but decline as a percentage of sales during fiscal 2008 as increased advertising and marketing activities build awareness of the Garmin brand and demand for Garmin products worldwide. Research and Development Expenses Fiscal...

  • Page 72
    ... 1.6% $746,227 72.6% Outdoor/Fitness Marine Automotive/Mobile Aviation Total The increase in total net sales during fiscal 2006 was primarily due to the introduction of over 70 new products and overall demand for our automotive and outdoor/fitness products. Total units sold increased 78% to 5,400...

  • Page 73
    ... of the GPS market in general, as well as enhanced feature sets in our products specifically, have added to our growth. The increase in aviation sales for fiscal 2006 was primarily due to increased sales from panel mount products sold into the OEM (original equipment manufacturers) and retrofit...

  • Page 74
    ... rates and larger cash and marketable securities balances during the year, increasing the returns on the Company's cash and cash equivalents. During fiscal 2006, the Company experienced foreign currency exchange gains of $0.6 million, although the U.S. Dollar weakened slightly versus the Taiwan...

  • Page 75
    ...the related tax benefit, and the employee stock purchase plan ($25.7 million). Cash flow related to financing activities resulted in a net use of cash in 2005 of $70.9 million. During 2005, Garmin repurchased 638,000 shares of its common shares under the 3,000,000-share stock repurchase program that...

  • Page 76
    ...to fully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business, financial condition and results of operations. Foreign Currency Exchange Rate Risk The operation of Garmin's subsidiaries in international markets results in exposure to...

  • Page 77
    ... the Company's exchange rate exposure are the Taiwan Dollar, the Euro, and British Pound. Garmin Corporation, located in Shijr, Taiwan, uses the local currency as the functional currency. The Company translates all assets and liabilities at year-end exchange rates and income and expense accounts at...

  • Page 78
    ... Statements and Supplementary Data CONSOLIDATED FINANCIAL STATEMENTS Garmin Ltd. and Subsidiaries Years Ended December 29, 2007, December 30, 2006 and December 31, 2005 Contents Report of Ernst & Young LLP, Independent Registered Public Accounting Firm...53 Consolidated Balance Sheets at December...

  • Page 79
    ... in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Garmin Ltd.'s internal control...

  • Page 80
    ... (Note 3) Land and improvements Building and improvements Office furniture and equipment Manufacturing equipment Engineering equipment Vehicles Accumulated depreciation 79,445 204,083 48,656 86,037 51,670 13,104 482,995 108,848 374,147 Restricted cash (Note 5) Marketable securities (Note 4) License...

  • Page 81
    Garmin Ltd. And Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Information) Fiscal Year Ended December 29, 2007 Net sales Cost of goods sold Gross profit Selling, general and administrative expenses Research and development expense Operating income Other income (...

  • Page 82
    ... common stock through stock purchase plan Balance at December 31, 2005 Net income Translation adjustment Adjustment related to unrealized gains (losses) on available-for-sale securities, net of income tax effects of $355 Comprehensive income Dividends paid Tax benefit from exercise of employee stock...

  • Page 83
    ... of stock options Tax benefit related to stock option exercise Purchase of common stock Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash...

  • Page 84
    ... disclosures of cash flow information Cash paid during the year for income taxes Cash received during the year from income tax refunds Cash paid during the year for interest Supplemental disclosure of non-cash investing and financing activities Change in marketable securities related to unrealized...

  • Page 85
    ... Positioning System-enabled products and other related products. Garmin Corporation (GC), wholly-owned by Garmin Ltd., is primarily responsible for the manufacturing and distribution of the Company's products to Garmin International, Inc. (GII), a wholly-owned subsidiary of GC, and Garmin (Europe...

  • Page 86
    ...market funds, and securities with maturities of three months or less when purchased. The carrying amount of cash and cash equivalents approximates fair value, given the short maturity of those instruments. Trade Accounts Receivable We sell our products to retailers, wholesalers, and other customers...

  • Page 87
    ... estimated useful lives: Buildings and improvements Office furniture and equipment Manufacturing and engineering equipment Vehicles 39 5 5 5 Long-Lived Assets In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company reviews long-lived assets...

  • Page 88
    ...108, respectively. 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 29...

  • Page 89
    ... can be classified as either relating to seasonal sales variations or to the timing of new product releases by the Company. Revenue Recognition The Company recognizes revenue from product sales when the product is delivered to the customer and title has transferred. The Company assumes no remaining...

  • Page 90
    ... Sold, Leased, or otherwise Marketed," requires companies to expense software development costs as they incur them until technological feasibility has been established, at which time those costs are capitalized until the product is available for general release to customers. Our capitalized software...

  • Page 91
    ... products or after the general release of the service using the product are expensed in the period they are incurred and included in research and development costs on our statement of operations. Accounting for Stock-Based Compensation The Company currently sponsors three stock based employee...

  • Page 92
    ... research and development activities be deferred and capitalized and recognized as an expense as the goods are delivered or the related services are performed. EITF 07-3 is effective, on a prospective basis, for fiscal years beginning after December 15, 2007 and will be adopted by the Company in the...

  • Page 93
    ... U.S. corporate bonds Equity securities Other Total Amortized Cost $99,749 59,497 8,479 188,971 21,333 $378,029 Gross Unrealized Gains/(Losses) ($68) 158 (219) 46,688 (83) $46,476 The following is a summary of the Company's marketable securities classified as available-for-sale securities...

  • Page 94
    ... by a bank securing payment of the United Kingdom value-added tax requirements. The total amount of restricted cash balances were $1,554 and $1,525 at December 29, 2007 and December 30, 2006, respectively. In the normal course of business, the Company and its subsidiaries are parties to various...

  • Page 95
    ... common share outstanding for the years ended December 29, 2007, December 30, 2006, and December 31, 2005, respectively. The Company currently expects to benefit from these Taiwan tax holidays through 2012, at which time these tax benefits expire. Deferred income taxes reflect the net tax effects...

  • Page 96
    ..., 2007 Deferred tax assets: Product warranty accruals Allowance for doubtful accounts Inventory reserves Sales program allowances Reserve for sales returns Other accrual Unrealized intercompany profit in inventory Unrealized investment loss Unrealized foreign currency loss Stock option compensation...

  • Page 97
    ... 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 98
    ..., long-lived assets (property and equipment), and net assets by geographic area are as follows as of and for the years ended December 29, 2007, December 30, 2006, and December 31, 2005: North America December 29, 2007 Net sales to external customers Long-lived assets Net assets December 30, 2006...

  • Page 99
    Stock-Based Compensation Activity A summary of the Company's stock-based compensation activity and related information under the 2005 Equity Incentive Plan, the 2000 Equity Incentive Plan and the 2000 Non-employee Directors' Option Plan for the years ended December 29, 2007, December 30, 2006, and ...

  • Page 100
    ... closing stock price on the last trading day of the fiscal period, which was $99.17 on December 28, 2007, and the exercise price multiplied by the number of options outstanding. As of December 29, 2007, there was $137.8 million of total unrecognized compensation cost related to unvested share-based...

  • Page 101
    ...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 at...

  • Page 102
    ... 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 liability on the balance sheet...

  • Page 103
    ... of the Acquisitions were integrated into the company's financial reporting systems throughout 2007. Therefore, the company did not have the practical ability to perform an assessment of their internal controls in time for this current year end. The company fully expects to include the Acquisitions...

  • Page 104
    ... of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Garmin Ltd. and Subsidiaries as of December 29, 2007 and December 30, 2006 and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the...

  • Page 105
    /s/ Ernst & Young LLP Kansas City, Missouri February 25, 2008 (d) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the year ended December 29, 2007 that have materially affected, or are reasonably likely to materially...

  • Page 106
    .... Garmin's definitive proxy statement in connection with its annual meeting of shareholders scheduled for June 6, 2008 (the "Proxy Statement") will be filed with the Securities and Exchange Commission no later than 120 days after December 29, 2007. (a) Directors of the Company The information set...

  • Page 107
    ... following table gives information as of December 29, 2007 about the Garmin common shares that may be issued under all of the Company's existing equity compensation plans, as adjusted for stock splits. A B C Number of securities remaining available for future issuance under equity compensation plans...

  • Page 108
    ... and "The Board of Directors" in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 13. Item 14. Principal Accounting Fees and Services The information set forth under the headings "Audit Matters -- Independent Registered Public Accounting Firm Fees" and...

  • Page 109
    ... for Employees of Garmin International, Inc. (incorporated by reference to Exhibit 10.1of the Registrant's Current Report on Form 8-K filed on September 7, 2004). Form of Stock Option Agreement pursuant to the Garmin Ltd. 2000 Equity Incentive Plan for Employees of Garmin Corporation (incorporated...

  • Page 110
    ... Garmin Ltd. Employee Stock Purchase Plan effective January 1, 2008. Code of Business Conduct and Ethics for Directors, Officers and Employees of Garmin Ltd. and Subsidiaries (incorporated by reference to Exhibit 14.1 of the Registrant's Annual Report on Form 10-K filed on March 10, 2004). List...

  • Page 111
    ...906 of the Sarbanes-Oxley Act of 2002. Chief Financial Officer's Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.1 32.2 (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...

  • Page 112
    ...Allowance for doubtful accounts Inventory reserve Total Year Ended December 29, 2007: 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 at End of...

  • Page 113
    ... attorney-in-fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and...

  • Page 114
    ... Part IV of this Annual Report on Form 10-K for a complete list of exhibits. Exhibit Number 10.15 21.1 23.1 31.1 31.2 32.1 32.2 Document Amended and Restated Garmin Ltd. Employee Stock Purchase Plan effective January 1, 2008 List of subsidiaries Consent of Ernst & Young LLP Chief Executive Officer...

  • Page 115
    Exhibit 10.15 GARMIN LTD. EMPLOYEE STOCK PURCHASE PLAN Amended and Restated Effective January 1, 2008

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    ... and Effective Date ...2 II. Definitions...2 III. Administration ...4 IV. Number of Shares ...5 V. Eligibility Requirements...6 VI. Enrollment ...6 VII. Grant of Options on Enrollment ...7 VIII. Payroll Deductions ...7 IX. Purchase of Shares...8 X. Withdrawal From the Plan; Termination of Employment...

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    ... is to provide an opportunity for eligible employees to acquire a proprietary interest in Garmin Ltd. through accumulated payroll deductions. It is the intent of the Company to have the Plan qualify as an "employee stock purchase plan" under Section 423 of the Code. The provisions of the Plan shall...

  • Page 118
    ... any applicable date: (a) If the security is listed on any established stock exchange or traded on the Nasdaq Global Select Market or the Nasdaq Global Market (formerly the Nasdaq National Market), the closing price, regular way, of the security on such exchange, or if no such reported sale of the...

  • Page 119
    ... of Section 423 of the Code except as noted in Section 3.3. 2.17 "Plan" means the Garmin Ltd. Employee Stock Purchase Plan as set forth herein and as from time to time amended. 2.18 "Purchase Date" means the specific Trading Day during an Accumulation Period on which Shares are purchased under the...

  • Page 120
    ... applicable laws of the United States, or to obtain any exemption under such laws. IV. Number of Shares 4.1 Two million (2,000,000) Shares (reflecting the Company's 2-for-1 stock split on August 15, 2006) are reserved for sales and authorized for issuance pursuant to the Plan. Shares sold under...

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    ... of the total combined voting power or value of all outstanding shares of all classes of stock of the Company or any Subsidiary (and for purposes of this paragraph, the rules of Code Section 424(d) shall apply, and stock which the Employee may purchase under outstanding options shall be treated as...

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    ...Code Section 423 employee stock purchase plan of the Company or any of its Subsidiaries or parent companies to accrue (when the option first becomes exercisable) at a rate which exceeds $25,000 of Fair Market Value of such Shares (determined at the time such option is granted) for each calendar year...

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    ... As of the last day of any month during an Accumulation Period, a Participant may elect to cease (but not to increase or decrease) payroll deductions made on his or her behalf for the remainder of such Accumulation Period by filing the applicable election with the Company or Participating Subsidiary...

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    ...establish a different purchase price for each Share purchased under any option provided that such purchase price is determined at least thirty (30) days prior to the Accumulation Period for which it is applicable and provided that such purchase price may not be less than the purchase price set forth...

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    ...relating to Shares purchased under the Plan, and if such Participant or former Participant is subject to U.S. federal income tax, then such Participant or former Participant shall notify the Company or Participating Subsidiary in writing of any such sale, transfer or other disposition within 10 days...

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    ... between the employer and the Employee, which policy or written agreement guarantees the Employee's rights to return to employment. 10.4 Death. As soon as administratively feasible after the death of a Participant, amounts accumulated in his or her Account shall be paid in cash to the beneficiary or...

  • Page 127
    ... the Plan shall be paid by the Company or Participating Subsidiaries, including any brokerage fees on the purchased Shares; excepting that any stamp duties, transfer taxes, fees to issue stock certificates, and any brokerage fees on the sale price applicable to participation in the Plan after the...

  • Page 128
    ... approval under Code Section 423 or the requirements of any securities exchange on which the Shares are traded shall be effective unless, within one year after it is adopted by the Board, it is approved by the holders of a majority of the voting power of the Company's outstanding shares. In addition...

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    .... 11.11 Withholding of Taxes. The Company or Participating Subsidiary may withhold from any purchase of Shares under this Plan or any sale, transfer or other disposition thereof any local, state, federal or foreign taxes, employment taxes, or other taxes at such times and from such other amounts...

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    Executed this 27th day of October, 2007. GARMIN LTD. By: /s/ Min H. Kao Min H. Kao Chairman and CEO xv

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    ... Taiwan Kansas Kansas Kansas Oregon Minnesota Australia Brazil Alberta, Canada Denmark Denmark England Germany Germany Germany France Italy Netherlands Antilles Netherlands Netherlands Netherlands Spain Spain Singapore Name of Subsidiary Garmin Corporation Garmin International, Inc. Garmin...

  • Page 132
    ...) pertaining to the Garmin Ltd. Employee Stock Purchase Plan, Garmin Ltd. 2000 Equity Incentive Plan, Garmin Ltd. Non-Employee Director's Option Plan, and (4) Registration Statement (Form S-8 No. 333-52766) pertaining to the Garmin International, Inc. Savings and Profit Sharing Plan; of our reports...

  • Page 133
    ...'s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 5. The registrant's other certifying officer and I have...

  • Page 134
    ...'s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; 5. The registrant's other certifying officer and I have...

  • Page 135
    ...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...be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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    ...-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), I, Kevin Rauckman, Chief Financial Officer of Garmin Ltd. (the "Company") hereby certify that: (1) The Annual Report on Form 10-K for the year ended December 29, 2007 (the "Form 10-K") of the...

  • Page 137
    ... 45 Market Street, Gardenia Court Camana Bay, Cayman Islands Garmin International, Inc. 1200 East 151st Street Olathe, Kansas, 66062, U.S.A. Garmin AT, Inc. 2345 Turner Road SE Salem, Oregon, 97302, U.S.A. Garmin Corporation No. 68, Jangshu 2nd Rd. Shijr, Taipei County, Taiwan Garmin (Europe) Ltd...

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    Garmin Ltd. P.O. Box 10670, Grand Cayman KY1-1006 Suite 3206B, 45 Market Street, Gardenia Court Camana Bay, Cayman Islands 345.640.9050 www.garmin.com ©2008 Garmin Ltd. M00-60191-00