Garmin 2009 Annual Report Download

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2009 Annual Report

Table of contents

  • Page 1
    2009 Annual Report

  • Page 2
    2009 highlights...1 About Garmin ...2 Letter to shareholders, Min Kao ...4 Letter to shareholders, Cliff Pemble ...7 Automotive and mobile ...8 Outdoor and fitness ...10 Marine ...12 Aviation ...14 2009 financial summary ...16 Company information...inside back cover

  • Page 3
    ...units •฀Gross฀and฀operating฀margin฀expansion฀of฀450฀and฀200฀basis฀points,฀respectively •฀57%฀return฀on฀invested฀capital฀ •฀Debt-free฀with฀nearly฀$2฀billion฀cash฀and฀marketable฀securities฀at฀the฀end฀of฀2009 •฀Generated฀over...

  • Page 4
    ... Garmin 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...

  • Page 5
    36% Garmin 20% others 3% 11% 34% Garmin 22% others 3% 12% 29% 30% 2009 Worldwide market share Source: Canalys 2008 Worldwide market share Source: Canalys 3

  • Page 6
    ...฀ success฀ has฀ translated฀ into฀ significant฀cash฀flow฀generation,฀as฀we฀had฀approximately฀$1.9฀billion฀in฀cash฀and฀marketable฀securities฀at฀ the฀close฀of฀2009฀and฀we฀continue฀to฀pay฀an฀annual฀dividend.฀Having฀a฀strong฀balance...

  • Page 7
    5

  • Page 8
    6

  • Page 9
    ...our฀aviation฀and฀marine฀businesses,฀we฀continue฀to฀invest฀in฀new฀product฀initiatives.฀For฀boaters,฀we฀ brought฀large,฀high-performance฀touchscreen฀displays฀coupled฀with฀exceptional฀features฀to฀the฀Garmin฀Marine฀Network,฀winning฀some฀key...

  • Page 10
    ... Google™฀Local฀Search,฀traffic,฀weather,฀fuel฀prices,฀ movie฀listings,฀flight฀status,฀local฀events฀and฀White฀Pages฀telephone฀ listings.฀With฀preloaded฀maps,฀millions฀of฀points฀of฀interest,฀and฀a฀ free฀two-year฀subscription฀to฀nüLink...

  • Page 11
    ...equipment I have ever used. My son received it for Christmas and I was amazed to see it in action. It wasn't a long trip, but a trip from Erie, PA to Canton, OH (about 125 miles). I have been taking hockey players all over the country for the past 20 years (ages 5 thru 18). How I wish I had a Garmin...

  • Page 12
    ... for outdoor handhelds also grew in 2009, with free utilities such as Custom Maps and Garmin Connectâ„¢ compatibility. Through a few simple steps, Garmin's Custom Maps can bring the details, labels and landmarks of an existing paper or electronic map to compatible products such as Oregon, Dakota...

  • Page 13
    ... use helped Garmin expand฀ into฀ yet฀ another฀ market,฀ golf,฀ as฀ Garmin฀ introduced฀ the฀ Approach™฀ G5฀ at฀ the฀ 2009฀ Consumer฀ Electronics฀ Show.฀ Featuring฀ thousands฀ of฀ preloaded฀ courses฀ available฀ without฀ subscriptions฀ or฀ annual...

  • Page 14
    ...displays฀sized฀from฀ 8฀ to฀ 12฀ inches.฀ With฀ NMEA฀ 2000฀ and฀ Garmin฀ Marine฀ Network฀ "plug-and-play"฀ connectivity,฀ it's฀ easy฀ to฀ access฀ onboard฀ sensors฀ and฀ control฀ a฀ whole฀ array฀ of฀ network฀ assets฀ from฀ any฀ compatible...

  • Page 15
    ... Garmin฀ was฀ the฀ first฀ manufacturer฀ to฀ bring฀ this฀ unique฀ technology฀to฀the฀AIS฀market.฀ During฀2009฀Garmin฀announced฀HomePort™,฀a฀PC฀application฀that฀allows฀ customers฀to฀plan฀and฀manage฀trips,฀routes,฀tracks฀and฀waypoints...

  • Page 16
    ...world฀turn฀to฀Garmin฀ for comprehensive navigation and communication systems that add safety฀ and฀ situational฀ awareness฀ to฀ each฀ flight.฀ In฀ 2009,฀ Garmin฀ continued฀to฀expand฀its฀aviation฀market฀presence฀by฀introducing฀and฀ certifying฀products...

  • Page 17
    ...and฀real-time฀XM฀WX฀Satellite฀Weather.฀The฀aera฀is฀ also฀multi-mode,฀and฀with฀one฀touch,฀it฀can฀transition฀from฀aviation฀ to฀ automotive฀ mode,฀ where฀ customers฀ will฀ see฀ the฀ same฀ "Where฀ to?"฀and฀"View฀Map"฀interface฀found...

  • Page 18
    ...89 $ 2.35 $ 1.43 2009 $ 733 2007 $ 3,180 $ 855 2009 2008 2007 2006 $ 1,774 $ 514 2005 $ 1,028 revenue net income 2006 2005 $ 311 Revenue and net income ($ in millions) Diluted EPS ($ per share) 2009 2008 2007 2006 2005 $ 238 $ 206 $ 159 $ 113 $ 75 2009 2008 2007 2006 2005 $ 14.10 $ 10...

  • Page 19
    ... or organization) P.O. Box 10670, Grand Cayman KY1‐1006 Suite 3206B, 45 Market Street, Gardenia Court N/A Camana Bay, Cayman Islands (Zip Code) (Address of principal executive offices) Registrant's telephone number, including area code: (345) 640‐9050 Securities registered...

  • Page 20
    ... held by non‐affiliates of the registrant as of June 27, 2009 (based on the closing price of the registrant's common shares on the Nasdaq Stock Market for that date) was $2,975,580,700. Number of shares outstanding of the registrant's common shares as of February...

  • Page 21
    ... Statements and Supplementary Data ... 63 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...91 ... 92 Item 9A. Controls and Procedures Item 9B. Other Information ...94 Part III Item 10. Directors, Executive Officers and Corporate...

  • Page 22
    .... 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...

  • Page 23
    ... module that lets customers access Garmin's nüLink!™ service, which provides direct links to certain online information such as Google™ local search, traffic, weather, fuel prices, movie listings, flight status, local events, white page telephone listings and the Ciao...

  • Page 24
    ... GPS 72H, which is a value‐priced lightweight, waterproof handheld GPS that floats, features a high‐sensitivity GPS, a USB connection and a large screen. Garmin also introduced HomePort™, an application that allows mariners to plan and manage trips, routes, tracks and waypoints...

  • Page 25
    ..., lane assist, 3‐D building view, , junction view, Bluetooth® hands‐free capability, MP3 player, built‐in maps of Europe, and the ability to add custom points of interest. The nüvi model 1690 offers Garmin's nüLink!™ service, which is a subscription...

  • Page 26
    ... GPS navigators. Garmin Mobile XT is a data card that turns many smartphones into full‐featured navigators. Users can simply plug the microSD card into a compatible phone and begin navigating. No network coverage or subscription is required. Outdoor...

  • Page 27
    ... display, high‐sensitivity GPS, and a built‐in worldwide basemap. The Dakota 20 adds a barometric altimeter, 3‐axis electronic compass, and a microSD™ card slot for optional customized maps. The 20 model also allows a user to share waypoints, tracks...

  • Page 28
    ...of our outdoor devices including: barometric altimeter, electronic compass, microSD slot, area calculator and a waterproof exterior. Marine Garmin's marine lineup includes network products and multifunction displays, fixed‐mount GPS/chartplotter products, instruments...

  • Page 29
    ... with NMEA 2000 and Garmin Marine Network connectivity. GPSMAP® 5000 series (6 models) These touch‐screen multifunction displays for the Garmin Marine Network (a system that combines GPS, radar, XM WX Satellite Weather, sonar, and other data) offer ease of...

  • Page 30
    ... (6 models) Building upon the success of the GPSMAP 400 and 500 series, the new chartplotters in the GPSMAP 5x6, 5x1 and 4x1 series come standard with an internal high‐sensitivity GPS receiver that allows for faster acquisition times and better satellite tracking so...

  • Page 31
    ... data than Garmin's current open‐array offerings, Radar (11 models) Aviation Garmin's product line includes GPS‐enabled navigation, VHF communications transmitters/receivers, multi‐function displays, electronic flight instrumentation systems (EFIS), traffic...

  • Page 32
    ... by adding a 7 inch screen, preloaded detailed electronic charts, preloaded airways and IFR map mode. The GPSMAP 696 has a receiver for XM radio and XM WX Satellite Weather (U.S. customers only) that gives next generation radar (NEXRAD), aviation routine weather...

  • Page 33
    ... G600 is designed to communicate and integrate with Garmin's WAAS enabled panel mount products, and provides essential information such as attitude, air data, weather, terrain and traffic. Garmin has received the FAA's Approved Model List Supplemental Type Certification (AML...

  • Page 34
    ... Multifunction displays for the light sport retrofit and experimental aircraft markets (expected to be available in the second quarter of 2009). Panel‐mount aviation products: 400W Series (3 models) 500 W Series (2 models) The GNS 430W is the Wide Area...

  • Page 35
    ... year ended December 26, 2009 (Best Buy's purchases totaled 13.4% of Garmin's 2009 consolidated revenues). Marketing support is provided geographically from Garmin's offices in Olathe, Kansas (North, South and Central America), in the U.K. (Eastern Europe...

  • Page 36
    ... at each retail location. Garmin's Taiwan‐based marketing team handles the Company's Asia sales and marketing effort. Garmin's panel‐mount aviation products are sold through aviation distributors around the world. Garmin's largest aviation distributors include Sportsman...

  • Page 37
    ... 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 are Motorola, Inc. ("Motorola"), Cobra Electronics Corporation...

  • Page 38
    ...Operating its own manufacturing facilities helps Garmin minimize problems, such as component shortages and long component lead times which are common in the electronics industry. Many products can be re‐engineered to bypass component shortages or reduce cost...

  • Page 39
    or if a key manufacturing vendor delayed shipments of completed products to the Company, the Company's financial condition and operating results could be materially adversely affected. The Company's business and financial performance could also be adversely ...

  • Page 40
    ... electronic products. We modified the design of our products and our manufacturing processes and are participating in the collection and recycling programs in order to comply with such laws and regulations. The EU is reviewing the RoHS Directive, and an amended version...

  • Page 41
    ... phasing in starting with 2012 model‐year vehicles that would require vehicles sold in California to have solar reflective window glazing that may interfere with the reception of GPS satellite signals by portable navigation devices. The People's Republic of China...

  • Page 42
    ... in the past We have experienced substantial growth in the automotive/mobile segment of our business in recent years as the products have become mass‐market consumer electronics in both Europe and North America. This market growth may now be slowing as penetration rates increase and...

  • Page 43
    Gross margins for our products may fluctuate or erode. Gross margins on our automotive/mobile products were declining prior to 2009 and are expected to decline in 2010 due to price reductions in the increasingly competitive market for personal navigation devices (...

  • Page 44
    Best Buy is our largest customer and accounted for 13.4% and 12.0% of our total net sales in 2009 and 2008, respectively. If Best Buy's business declines due to the economic conditions, market share losses or other factors, our revenues and profitability will be adversely impacted. In addition, ...

  • Page 45
    ... marine, fishing, and travel season. Sales of our automotive/mobile products also have been higher in our fourth fiscal quarter due to increased consumer spending patterns on electronic devices during the holiday season. In addition, we attempt to time our new product...

  • Page 46
    ... 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...

  • Page 47
    ... cost, quality and availability of components are essential to the successful production and sale of our products. Some components we use are from sole source suppliers. Certain application‐specific integrated circuits incorporating our proprietary designs are manufactured...

  • Page 48
    ... 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...

  • Page 49
    ...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...

  • Page 50
    ... System signals and may materially and adversely affect the utility and reliability of our products, which would, in turn, have a material adverse effect on our operating results. In addition, emissions from mobile satellite service and other equipment operating...

  • Page 51
    ... would begin phasing in starting with 2012 model‐year vehicles that would require vehicles sold in California to have solar reflective window glazing that may interfere with the reception of GPS satellite signals by portable navigation devices Because it is uncertain what laws...

  • Page 52
    ...As of January 25, 2010 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 owned approximately 43.3% of our outstanding...

  • Page 53
    ...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...

  • Page 54
    ... used as a retail store and showroom for Garmin products. This lease expires in November 2016. Garmin International, Inc. also leases an additional: (i) 18,392 square feet of office space in Kansas City, Missouri for a call center operation; (ii) 48,625...

  • Page 55
    ... LLC v. Sony Electronics Inc., Asus Computer International, Best Buy Stores, L.P., Kenwood U.S.A. Corporation, Nextar, Inc., American Suzuki Motor Corporation, TGSP, L.P. d/b/a Empire Suzuki, and Garmin International, Inc. On July 1, 2009, Traffic Information, LLC filed suit in the...

  • Page 56
    ...Display and Navigation Devices and Systems, Components Thereof, and Products Containing the Same. On November 13, 2009, Pioneer Corporation filed a complaint with the United States International Trade Commission against Garmin International, Inc., Garmin Corporation...

  • Page 57
    ...adverse effect on our business, financial condition and results of operations. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of shareholders of Garmin during the fourth fiscal quarter of 2009. Executive Officers of the Registrant...

  • Page 58
    ... 60, 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 Africa of Garmin (Europe) Ltd. from 1994 to 1999...

  • Page 59
    ...payment date based on the Company's cash balance, cash requirements and cash flow generation. The Board of Directors approved a share repurchase program on October 22, 2008, authorizing the Company to repurchase up to $300 million of the Company's shares as market and...

  • Page 60
    ...2009, and compares it to the cumulative total return on the NASDAQ Composite Index and the NASDAQ 100 Index. Garmin is one of the constituent companies of the NASDAQ 100 Index. The comparison... of dividends. Fiscal year ending December 31. Garmin Ltd. NASDAQ Composite ...

  • Page 61
    ...December 29, 2007 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 December 29, 2007...

  • Page 62
    ... per share (5) Balance Sheet Data (at end of Period): Cash and cash equivalents Marketable securities Total assets Total debt Total stockholders' equity Years ended (1) Dec. 29, Dec. 30, Dec. 27, 2008 2007 2006 (in thousands, except per share data) Dec. 31, 2005 $ 2,946...

  • Page 63
    ...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
    ...sales of software products and sales of software bundled with hardware not essential to the functionality of the hardware. The Company generally does not offer specified or unspecified upgrade rights to its customers in connection with software sales. Garmin introduced nüMaps...

  • Page 65
    ...recognized on a straight‐line basis over the 24‐month life of the service. Garmin records estimated reductions to revenue for customer sales programs returns and incentive offerings including rebates, price protection (product discounts offered to retailers to assist...

  • Page 66
    ... made at that time. The economic environment and volatility of securities markets increase the difficulty of determining fair value and assessing investment impairment. Income Taxes Garmin provides deferred tax assets and liabilities based on the difference between the tax...

  • Page 67
    ... 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...

  • Page 68
    ... aviation markets as well as new markets for GPS‐ enabled devices. We continue to grow our research and development budget in absolute terms. Customers Best Buy accounted for 13.4% of our net sales in the year ended December 26, 2009. Our top ten customers...

  • Page 69
    ...such tax incentives will be available indefinitely or that we will receive the incentives for which we apply. Management believes that due to lower operating margins predicted for fiscal 2010, there may be slightly less revenue recognized by entities in lower...

  • Page 70
    ...,430 Automotive/ Mobile $2,054,127 1,192,227 861,900 118,713 110,907 172,473 402,093 459,807 28,777 $488,584 Aviation $245,745 75,591 170,154 3,864 82,247 25,753 111,864 58,290 (1,695) $56,595 Fiscal year ended December 27, 2008 Net sales Cost of goods sold Gross profit Advertising Research...

  • Page 71
    ...aviation and marine segments. In general, management believes that continuous innovation and the introduction of new products are essential for future revenue growth. Gross Profit Outdoor/Fitness Marine Automotive/Mobile Aviation Total 52‐weeks ended December 26, 2009 Gross Profit...

  • Page 72
    ...Gross profit margin percentage for marine and aviation increased compared to 2008 due to increased average selling price and decreases in per unit costs driven by product mix and material cost reductions. Advertising Expenses 52‐weeks ended December 26, 2009...

  • Page 73
    ... the period, and an increase in engineering program costs in 2009 as a result of our continued emphasis on product innovation. Management believes that one of the key strategic initiatives for future growth and success of Garmin is continuous innovation, development, and...

  • Page 74
    ... to strong sales of automotive products, particularly in North America, and outdoor/fitness products. In general, management believes that continuous innovation and the introduction of new products are essential for future revenue growth. Automotive/mobile segment revenue...

  • Page 75
    .... The automotive/mobile segment is by nature a lower‐margin business and the Company has begun to see the impacts expected on gross margin due to falling prices and a product mix shift toward lower end PNDs. Outdoor/fitness gross margin has increased...

  • Page 76
    ... cash and marketable securities balances during the year. Foreign currency gains and losses for the Company are primarily tied to movements by the Taiwan Dollar, the Euro, and the British Pound Sterling. The U.S. Dollar remains the functional currency of Garmin (Europe...

  • Page 77
    ... of our on‐ hand cash balances and the purchase of $7.0 million of intangible assets. The net sale of fixed income securities was primarily related to $239.3 million of cash generated from the tender of our shares of Tele Atlas N.V. Garmin's average return on its investments...

  • Page 78
    ... GmbH, Garmin Iberia S.A., Garmin Italia S.p.A., and the assets of Nautamatic Marine Systems, Inc. for a total of $128.8 million, the net sale of $112.8 million of fixed income securities associated with the investment of our on‐hand cash balances and the purchase of...

  • Page 79
    ...U.S., Taiwan, Europe, and Canada. Purchase obligations are the aggregate of those purchase orders that were outstanding on December 26, 2009; these obligations are created and then paid off within 3 months during the normal course of our manufacturing business...

  • Page 80
    ... currency gain of $5.8 million in Garmin Ltd. and our European subsidiaries. The net result of these currency moves combined with other gains of $4.3 million, and the timing of transactions during the year was a net loss of $6.0 million for the Company and a cumulative translation adjustment...

  • Page 81
    ...and Supplementary Data CONSOLIDATED FINANCIAL STATEMENTS Garmin Ltd. and Subsidiaries Years Ended December 26, 2009, December 27, 2008 and December 29, 2007 Contents Report of Ernst & Young LLP, Independent Registered Public Accounting Firm ...64 Consolidated Balance Sheets...

  • Page 82
    ...of Directors and Shareholders Garmin Ltd. We have audited the accompanying consolidated balance sheets of Garmin Ltd. and Subsidiaries (the Company) as of December 26, 2009 and December 27, 2008 and the related consolidated statements of income, stockholders' equity, and cash...

  • Page 83
    ... and improvements Office furniture and equipment Manufacturing equipment Engineering equipment Vehicles Accumulated depreciation 92,088 268,011 84,544 115,179 65,240 15,247 640,309 198,971) 441,338 Restricted cash (Note 4) Marketable securities (Note 3) License agreements...

  • Page 84
    Garmin Ltd. And Subsidiaries Consolidated Statements of Income (In Thousands, Except Per Share Information) Fiscal Year Ended December 26, 2009 Net sales Cost of goods sold Gross profit Advertising expense Selling, general and administrative expenses Research and development expense Operating ...

  • Page 85
    ... of common stock Issuance of common stock through stock purchase plan Balance at December 29, 2007 Net income Translation adjustment Adjustment related to unrealized gains (losses) on available‐for‐sale securities, net of income tax effects of $150...

  • Page 86
    ...by operating activities Investing activities: Purchases of property and equipment Proceeds from sale of property and equipment Purchase of intangible assets Purchase of marketable securities Redemption of marketable securities Acquistions, net of cash acquired Change in restricted cash Net cash used...

  • Page 87
    ... 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 88
    ...December 26, 2009 and December 27, 2008 1. Description of the Business Garmin Ltd. and subsidiaries (together, the "Company") manufacture, market, and distribute Global Positioning System‐enabled products and other related products. Garmin Corporation (GC), wholly...

  • Page 89
    ...include cash on hand, operating accounts, money 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 The Company...

  • Page 90
    ... estimated useful lives: Buildings and improvements Office furniture and equipment Manufacturing and engineering equipment Vehicles Long‐Lived Assets As required by the Property, Plant and Equipment topic of the FASB ASC, the Company reviews long‐lived assets for...

  • Page 91
    ... 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 26, 2009...

  • Page 92
    ...benefits would impact the Company's effective tax rate within the next 12 months. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates...

  • Page 93
    ... upgrade rights to its customers in connection with software sales. Garmin introduced nüMaps Lifetime™ in January 2009, which is a single fee program that, subject to the program's terms and conditions, enables customers to download the latest map and point...

  • Page 94
    ... sites, e‐mail and other electronic means, and providing free technical support assistance to customers. The technical support is provided within one year after the associated revenue is recognized. The related cost of providing this free support is not material...

  • Page 95
    ...been established, at which time those costs are capitalized until the product is available for general release to customers. Our capitalized software development costs are not significant as the time elapsed from working model to release is typically short. As...

  • Page 96
    ... on the Company's financial condition or operating results in 2009, as the Company does not have a significant amount of sales that contain undelivered software components that are not essential to the product's functionality. 3. Marketable Securities The FASB...

  • Page 97
    ... markets for similar assets or liabilities, or Unadjusted quoted prices for identical or similar assets Level 3 Unobservable inputs for the asset or liability The Company endeavors to utilize the best available information in measuring fair value. Financial assets...

  • Page 98
    ... corporate bonds Other Total Amortized Cost $515,200 91,700 112,419 35,883 33,903 $789,105 The following is a summary of the company's marketable securities classified as available‐for‐sale securities at December 27, 2008: Gross Unrealized Gains $1,184 960 200 79 $2,423 Gross...

  • Page 99
    ...Company's results of operations, financial position or cash flows. 5. Employee Benefit Plans GII sponsors a defined contribution employee retirement plan under which its employees may contribute up to 50% of their annual compensation subject to Internal Revenue Code...

  • Page 100
    ...The income tax provision differs from the amount computed by applying...Company's income before income taxes attributable to non‐U.S. operations was $678,868, $823,364, and $850,102, for the years ended December 26, 2009, December 27, 2008, and December 29, 2007, respectively. The Taiwan...

  • Page 101
    ...Company's deferred tax assets and liabilities are as follows: December 26, 2009 Deferred tax assets: Product warranty accruals Allowance for doubtful accounts Inventory reserves Sales program allowances Reserve for sales returns Other accruals Unrealized intercompany profit...

  • Page 102
    ... marine, automotive/mobile, and outdoor/fitness segments include portable global positioning system (GPS) receivers and accessories sold primarily to retail outlets. These products are produced primarily by the Company's subsidiary in Taiwan. The Company's aviation...

  • Page 103
    ... 309,938 Aviation Net sales to external customers Allocated interest income Allocated interest expense Income before income taxes Assets: Accounts receivable Inventories $323,406 957 (109) 118,737 68,615 39,366 Fiscal Year Ended December 27, 2008 Outdoor/ Auto/ Fitness Marine Mobile $427,783...

  • Page 104
    ...132,564 $3,180,319 374,147 2,350,614 Best Buy, a customer in the outdoor/fitness, marine, and auto/mobile segments, accounted for 13.4% and 12.0% of the Company's consolidated net sales in the year ended December 26, 2009 and December 27, 2008, respectively. 9. Stock...

  • Page 105
    ... 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 26, 2009, December 27, 2008...

  • Page 106
    ... intrinsic value represents the positive difference between the Company's closing stock price on the last trading day of the fiscal period, which was $30.98 on December 26, 2009, and the exercise price multiplied by the number of options exercised. As of...

  • Page 107
    ...repurchase authorization expired on December 31, 2009. During fiscal 2008, 10,000,000 shares were repurchased and retired under this plan. The Board of Directors approved a share repurchase program on February 4, 2008, authorizing the Company to purchase up to 5,000,000 of...

  • Page 108
    ... 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 109
    ... 10b‐18. The timing and amounts of any repurchases will be determined by the Company's management depending on market conditions and other factors including price, regulatory requirements and capital availability. The program does not require the purchase of any minimum number of shares and...

  • Page 110
    ...by this report. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective. (b) Management's Report on Internal Control over Financial Reporting Management of the Company is...

  • Page 111
    ...effective internal control over financial reporting as of December 26, 2009, based on the COSO criteria. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Garmin...

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    Kansas City, Missouri February 24, 2010 (d) Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the year ended December 26, 2009 that have materially affected, or are reasonably ...

  • Page 113
    ... is applicable to all Garmin employees including the Chairman and Chief Executive Officer, the President and Chief Operating Officer, the Chief Financial Officer, the Controller and other officers. A copy of the Code is filed as Exhibit 14.1 to this Annual Report on...

  • Page 114
    ...‐Employee Directors' Option Plan, effective June 5, 2009, and the Garmin Ltd. Amended and Restated Employee Stock Purchase Plan, effective January 1, 2010. The Company has no knowledge of any arrangement, the operation of which may at a subsequent date result...

  • Page 115
    ... headings "Proposal One‐‐ Election of Two Directors" 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...

  • Page 116
    ... Statement Schedules (a) List of Documents filed as part of this Report (1) Consolidated Financial Statements The consolidated financial statements and related notes, together with the report of Ernst & Young LLP, appear in Part II, Item 8 "Financial Statements and Supplementary Data...

  • Page 117
    ... Restated Garmin Ltd. Employee Stock Purchase Plan effective January 1, 2008 (incorporated by reference to Exhibit 10.15 of the Registrant's Annual Report on Form 10‐K filed on February 25, 2009). 10.16 Form of Time Vested Restricted Stock Unit Award Agreement under the Garmin Ltd. 2005...

  • Page 118
    ...Code of Conduct of Garmin Ltd. and Subsidiaries (incorporated by reference to Exhibit 14.1 of the Registrant's Annual Report on Form 10‐K filed on February 25, 2009). List of subsidiaries Consent of Ernst & Young LLP Power of Attorney (included in signature page) Chief Executive Officer...

  • Page 119
    32.2 Chief Financial Officer's Certification pursuant to Section 906 of the Sarbanes‐Oxley Act...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...

  • Page 120
    ... AND QUALIFYING ACCOUNTS Garmin Ltd. and Subsidiaries (In thousands) Balance at Beginning of Period Additions Charged to Charged to Costs and Other Expenses Accounts Balance at End of Period Description Year Ended December 26, 2009: Deducted from asset accounts Allowance for...

  • Page 121
    ... has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GARMIN LTD. Dated: February 24, 2010 By /s/ Min H. Kao Min H. Kao Chief Executive Officer POWER OF ATTORNEY Know...

  • Page 122
    ... Annual Report on Form 10‐K for a complete list of exhibits. Exhibit Document Number 10.22 Amended and Restated Garmin Ltd. Employee Stock Purchase Plan, effective January 1, 2010. 10.23 Form of Time Vested Restricted Stock Unit Award Agreement under the Garmin Ltd. 2005...

  • Page 123
    ... List of Subsidiaries of Company Jurisdiction of Incorporation Name of Subsidiary Garmin Corporation Taiwan Garmin International, Inc Kansas Garmin USA, Inc Kansas Garmin Realty, LLC Kansas Garmin AT, Inc Oregon Digital Cyclone, Inc Minnesota Garmin Australasia Pty Ltd Australia...

  • Page 124
    ... statements and schedule of Garmin Ltd. and Subsidiaries, and the effectiveness of internal control over financial reporting of Garmin Ltd. and Subsidiaries, included in this Annual Report (Form 10‐K) for the year ended December 26, 2009 s/ Ernst & Young LLP Kansas City...

  • Page 125
    ... 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: February 24, 2010 By __/s/ Min H. Kao Min H. Kao Chairman and Chief Executive Officer

  • Page 126
    ...; 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: February 24, 2010 By /s/ Kevin Rauckman Kevin Rauckman Chief Financial Officer

  • Page 127
    ... 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 26, 2009 (the "Form 10‐K") of the Company fully complies with the...

  • Page 128
    ... 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 26, 2009 (the "Form 10‐K") of the Company fully complies with the...

  • Page 129
    ..., Worldwide Sales Garmin International, Inc. Gary฀V.฀Kelley Vice President, Marketing Garmin International, Inc. Brian฀J.฀Pokorny Vice President, Operations Garmin International, Inc. Sean฀Biddlecombe General Manager, Garmin (Europe) Ltd. P.C.฀Huang General Manager, Garmin Corporation...

  • Page 130
    Garmin Ltd. • P.O. Box 10670 • 45 Market Street • Suite 3206B • Gardenia Court Camana Bay • Grand Cayman KY1-1006 • Cayman Islands • (345) 640.9050 • www.garmin.com ©2010 Garmin Ltd. All rights reserved. M00-60239-00 0410