United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number: 0-31983
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Garmin International, Inc. 401(k) and Pension Plan
c/o Garmin International, Inc.
1200 East 151st Street
Olathe, KS 66062
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Garmin Ltd.
P.O. Box 30464 SMB
5th Floor, Harbour Place
103 South Church Street
George Town
Grand Cayman, Cayman Islands
Contents
Report of Independent Auditors................................................1
Financial Statements
Statements of Net Assets Available for Plan Benefits as of December 31, 2002
and 2001......................................................................2
Statement of Changes in Net Assets Available for Plan Benefits for the Year
Ended December 31, 2002.......................................................3
Notes to Financial Statements.................................................4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)................9
Signature Page...............................................................10
Exhibits
Exhibit 23 - Consent of Independent Accountants..............................11
Exhibit 99 - Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002....................12
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions which are prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
Schedules of loans, fixed income obligations, and leases in default or
uncollectible are not presented, since such loans, fixed income obligations, or
leases that are required to be listed in the respective schedule are not
present.
Report of Independent Auditors
The Plan Administrator
Garmin International, Inc.
401(k) and Pension Plan
(Formerly the Garmin International,
Inc. Savings and Profit Sharing Plan)
We have audited the accompanying statements of net assets available for plan
benefits of Garmin International Inc. 401(k) and Pension Plan (formerly the
Garmin International, Inc. Savings and Profit Sharing Plan) (the "Plan") as of
December 31, 2002 and 2001, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2002. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2002 and 2001, and the changes in its net assets available for
benefits for the year ended December 31, 2002 in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held for investment purposes at end of year) as of December 31, 2002 is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Kansas City, Missouri
May 31, 2003
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Statements of Net Assets
Available for Benefits
December 31
2002 2001
-----------------------------------------
Assets
Investments, at fair value $25,587,709 $16,555,721
Receivables:
Employer contributions 125,148 -
Employee contributions 78,348 -
-----------------------------------------
Total receivables 203,496 -
-----------------------------------------
Net assets available for benefits $25,791,205 $16,555,721
=========================================
See accompanying notes.
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Statement of Changes in Net Assets
Available for Benefits
Year Ended
December 31,
2002
----------------
Additions
Investment income:
Dividends $ 384,871
Interest 46,887
----------------
431,758
Contributions:
Employee contributions 2,279,302
Employer contributions 2,516,307
Rollover contributions 402,752
----------------
5,198,361
Transfer of Garmin International, Inc. Money Purchase Pension
Plan balances 5,725,673
----------------
Total additions 11,355,792
Deductions
Distributions to participants (774,307)
Administrative expenses (47,674)
Excess contribution refunds (14,252)
----------------
(836,233)
Net depreciation in fair value of investments (Note 3) (1,284,075)
----------------
Net increase 9,235,484
Net assets available for benefits at beginning of year 16,555,721
----------------
Net assets available for benefits at end of year $25,791,205
================
See accompanying notes.
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Notes to Financial Statements
December 31, 2002
1. Description of the Plan
The Garmin International, Inc. 401(k) and Pension Plan, formerly the Garmin
International, Inc. Savings and Profit Sharing Plan, (the Plan) is a
contributory defined contribution plan available to full-time employees who are
at least 21 years of age and have completed three months of service with Garmin
International, Inc. (the Company), a wholly owned subsidiary of Garmin Ltd.
Participants are permitted to enter the Plan after meeting eligibility
requirements on either January 1 or July 1. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Eligible employees may contribute up to 50% of their annual compensation subject
to Internal Revenue Code maximum limitations. The Company matches 75% of an
employee's contributions up to 10% of the employee's compensation. Certain other
discretionary employer contributions to the Plan are at the sole discretion of
the Company's Board of Directors.
Under provisions of the Plan, participants direct the investment of their
contributions into one or more of the investment accounts available.
Participants become fully vested in employer matching contributions to the Plan
after five years of continuous service. The vesting percentages are as follows:
0% through one year of service, 20% after one year, 40% after two years, 60%
after three years, 80% after four years and 100% after five years of continuous
service. Participants become fully vested in discretionary profit sharing
contributions after seven years of continuous service. The vesting percentages
are as follows: 0% through two years of service, 10% after two years, 20% after
three years, 40% after four years, 60% after five years, 80% after six years,
and 100% after seven years. The non-vested portions of terminated participants'
account balances are forfeited, and such forfeitures serve to reduce future
employer contributions. The Plan retained $70,389 in forfeitures at December 31,
2002 and $71,858 at December 31, 2001. Upon termination of employment or at
retirement age, a participant may receive either a lump-sum amount equal to the
value of the participant's vested account balance or the Plan will purchase an
annuity with the lump-sum amount.
Participants may borrow from the Plan in the form of a loan. The loan is limited
to the amount the participant may borrow without the loan being treated as a
taxable distribution. The loan and any outstanding loan balance may not be more
than 50% of the participant's vested account not including discretionary profit
sharing contributions or
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Notes to Financial Statements (continued)
1. Description of the Plan (continued)
merged Garmin International, Inc. Money Purchase Pension Plan (the MPP)
contribution balances, or $50,000, whichever is less. The vested account
provides the security for the loan, and the participant's account may not be
used as security for a loan outside of the Plan. Additionally, loans must be
repaid with interest within five years from the date of the loan unless the loan
is used to buy the participant's principal residence. The loan may be repaid
before it is due.
Although the Company has not expressed any intent to do so, it has the right
under the plan provisions to terminate the Plan subject to the provisions of
ERISA. In the event of plan termination, participants will become fully vested
in their benefits. Additional information about the Plan and its vesting and
withdrawal provisions is contained in the Summary Plan Description, Garmin
International, Inc. 401(k) and Pension Plan. Copies of the Summary Plan
Description are available from the plan administrator.
On January 1, 2001, the Plan adopted an amendment allowing participants to elect
to have their allocation invested in the common stock of the Garmin Ltd.
On July 1, 2002, the Garmin International, Inc. Money Purchase Pension Plan was
merged into the Garmin International, Inc. Savings and Profit Sharing Plan. The
Garmin International, Inc. Savings and Profit Sharing Plan was then renamed the
Garmin International, Inc. 401(k) and Pension Plan.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies of the Plan.
Valuation of Investments
The fair value of the mutual fund investments owned by the Plan is based on
quoted redemption values on the last business day of the plan year. The fair
value of the investments owned by the Plan in Garmin Ltd. common stock is based
on the quoted market price on the last business day of the plan year. Loans to
participants are valued based on outstanding principal amounts owed on the last
business day of the plan year as reported to the Plan by the trustee.
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Contributions
Contributions from the Company are accrued and paid in the period in which they
become obligations of the Company.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Investments
The Plan's investments were held by T. Rowe Price Trust Company at December 31,
2002 and Principal Life Insurance Company at December 31, 2001, respectively.
During 2002, the Plan's investments (including investments bought and sold, as
well as held, during the year) depreciated in fair value by $1,284,075, as
presented in the following table:
Garmin Ltd. common stock $ 780,037
Mutual funds (2,064,112)
-------------
$(1,284,075)
=============
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Notes to Financial Statements (continued)
3. Investments (continued)
The fair value of individual investments that represent 5% or more of the Plan's
net assets is as follows:
December 31
2002 2001
------------------------------------
Fair value as determined by quoted market price:
Oakmark Equity and Income Fund $4,085,078 $ -
T. Rowe Price Equity Income Fund 3,614,312 -
Garmin Ltd. common stock 2,970,854 2,001,008
T. Rowe Price Equity Index 500 Fund 2,940,210 -
T. Rowe Price Prime Reserve Fund 2,253,008 -
T. Rowe Price New Income Fund 1,910,321 -
Vanguard Wellington Fund - 1,772,228
Vanguard Windsor II Fund - 2,269,916
Vanguard Star Fund - 1,027,302
Principal Money Market Account - 1,325,972
Principal Bond and Mortgage Account - 1,436,718
Principal Large Cap Stock Index Account - 2,193,669
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc.
Savings and Profit Sharing Plan)
Notes to Financial Statements (continued)
4. Income Tax Status
The Internal Revenue Service has determined that the Plan is qualified under
Section 401(a) of the Internal Revenue Code and, therefore, is not subject to
tax under present income tax law. The plan administrator believes that the Plan
continues to qualify as a tax-exempt defined contribution plan, and the plan
administrator is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
5. Transactions With Parties in Interest
The Company pays certain administrative costs and provides certain accounting
and administrative services to the Plan for which no fees are charged.
Garmin International, Inc.
401(k) and Pension Plan (Formerly the Garmin International, Inc. Savings
and Profit Sharing Plan)
Employee Identification Number: 48-1088407
Plan Number: 001
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Number
of Shares
Identity of Issuer or Units Current Value
-----------------------------------------------------------------------------------------------------------
Liberty Acorn Fund 9,965 $ 154,458
Ariel Appreciation Fund 6,615 218,704
PBHG Real Estate Fund 14,333 115,236
T. Rowe Price Stable Value Fund* 1,140,691 1,140,691
Neuberger Berman Focus Fund 1,281 20,580
BGI Lifepath 2010 30 320
BGI Lifepath 2020 572 6,801
BGI Lifepath 2030 529 6,115
BGI Lifepath 2040 667 8,181
Oakmark Equity and Income Fund 227,075 4,085,078
Oakmark International Fund 2,381 31,285
Calvert Social Investment Fund (Equity A) 746 19,697
Lord Abbett Mid-Cap Value Fund 9,604 147,806
Garmin Ltd. common stock* 101,394 2,970,854
Pimco Total Return Fund 41,110 438,640
T. Rowe Price Mid-Cap Value Fund* 36,363 545,443
T. Rowe Price Total Equity Market Index Fund* 3,629 32,334
T. Rowe Price International Stock Fund* 134,268 1,192,303
T. Rowe Price New Income Fund* 214,884 1,910,321
T. Rowe Price Prime Reserve Fund* 2,253,008 2,253,008
T. Rowe Price Small-Cap Value Fund* 20,543 450,707
T. Rowe Price Equity Index 500 Fund* 124,217 2,940,210
T. Rowe Price Science and Technology Fund* 48,076 597,580
T. Rowe Price Mid-Cap Growth Fund* 19,469 604,317
T. Rowe Price Small-Cap Stock Fund* 29,486 633,951
T. Rowe Price Equity Income Fund* 182,633 3,614,312
T. Rowe Price Blue Chip Growth Fund* 1,143 25,083
T. Rowe Price Growth Stock Fund* 47,716 886,567
Loans to participants - 537,127
--------------------
$25,587,709
====================
*Indicates party-in-interest to the Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
GARMIN INTERNATIONAL, INC. 401(k) AND
PENSION PLAN
By /s/ Kevin Rauckman
Kevin Rauckman
Chief Financial Officer
Garmin International, Inc.
Dated: June 27, 2003
EXHIBIT 23
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-52766) pertaining to the Garmin International, Inc. 401(k) and
Pension Plan (formerly the Garmin International, Inc. Savings and Profit Sharing
Plan) of our report dated May 31, 2003, with respect to the financial statements
and schedule of the Garmin International, Inc. 401(k) and Pension Plan included
in this Annual Report (Form 11-K) for the year ended December 31, 2002.
/s/ Ernst & Young LLP
Kansas City, Missouri
June 23, 2003
EXHIBIT 99
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18,
United States Code)
The undersigned hereby certifies, for the purposes of Chapter 63 of Title 18, of
the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, in his capacity as the person who performs the functions equivalent
to both the chief executive officer and chief financial officer of the Garmin
International, Inc. 401(k) and Pension Plan (the "Plan") for purposes of this
certification, that:
(1) The Annual Report on Form 11-K for the year ended December 31, 2002
(the "Report") of the Plan fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in
all material respects, the net assets available for benefits,
and changes in net assets available for benefits, of the Plan.
Dated: June 27, 2003 /s/ Kevin Rauckman
Kevin Rauckman
Chief Financial Officer
Garmin International, Inc.
A signed original of this written statement has been provided to the Plan and
will be retained by the Plan and furnished to the Securities and Exchange
Commission or its staff upon request.