Garmin 2003 Annual Report Download - page 39

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In addition to capital expenditures, in 2003 cash flow used in investing relates to the $38.2 million acquisition of UPS
Aviation Technologies (renamed Garmin AT), the purchase of fixed income securities associated with the investment of our on-hand
cash balances and approximately $2.3 million of intangible assets. The Company’s average return on its investments during fiscal
2003 was approximately 1.5%. In 2002, cash flow used in investing principally related to the purchase of fixed income securities
associated with the investment of our on-hand cash balances and approximately $13.5 million related to the purchase of licenses, of
which $11.5 million consists of prepaid royalties under our license agreement with PalmSource, Inc. for the Palm Operating System.
It is management’s goal to invest the on-hand cash consistent with the Company’s investment policy, which has been approved by the
Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and
maximize yield within the constraint of maximum safety. The Company’s average return on its investments during fiscal year 2002
was approximately 1.6%.
Cash flow used in financing activities during 2003 relates primarily to the payment of a dividend ($54.0 million), and
reduction of our debt ($20.0 million). The Company retired approximately $20.0 million of long-term debt during fiscal 2003, which
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 debt. The Company retired approximately $12.2 million of its long-term debt during fiscal
2002, consisting in good part of an outstanding issue of industrial revenue bonds. The employee stock purchase plan and stock option
exercises were a $2.1 million source of cash in 2002. During 2001, the Company repurchased 595,200 shares of its common shares
under its stock repurchase program that was approved by the Board of Directors on September 24, 2001 and expired on December 31,
2002.
We currently use cash flow from operations to fund our capital expenditures and to support our working capital requirements.
We expect that future cash requirements will principally be for capital expenditures and working capital requirements.
Cash dividends paid to shareholders were $54.0 million, $0.0 million, $0.0 million, and $29.0 million during fiscal years
2003, 2002, 2001 and 2000, respectively. Included in cash dividends for fiscal 2000 was a special one-time dividend of $17.4 million
that was paid in order to provide funds to shareholders to pay withholding taxes and stock transfer taxes related to the reorganization
of Garmin Corporation.
We believe that our existing cash balances and cash flow from operations will be sufficient to meet our projected capital
expenditures, working capital and other cash requirements at least through the end of fiscal 2004.
Contractual Obligations and Commercial Commitments
On March 23, 2000, Garmin International, Inc. completed a $20.0 million 20-year Taxable Industrial Revenue Bond issuance
(the “2000 Bonds”) for the expansion of its Olathe, Kansas facility. During May of fiscal 2003, these outstanding bonds were retired
by Garmin International, Inc. for a total of $20.0 million.
On January 1, 1995, Garmin International, Inc. completed a $9.5 million 30-year Tax-Exempt Industrial Revenue Bond
issuance for the construction of its new corporate headquarters located in Olathe, Kansas. Upon completion of the project in 1996,
Garmin International retired bonds totaling $0.1 million. During May of fiscal 2002, the remainder of the outstanding bonds were
retired by Garmin International, Inc. for a total of $9.4 million.
We utilize interest rate swap agreements from time to time to manage interest rate exposure. The principal objective of such
financial derivative contracts is to moderate the effect of fluctuations in interest rates. We, as a matter of policy, do not speculate in
financial markets and therefore do not hold these contracts for trading purposes.