Dec 25, 2010 ... Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or ..... 2011 Suzuki Grand Vitara and SX4 models which would offer connectivity to ...... The GTX 327 offers a digital display with timing.
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UNITEDSTATES SECURITIESANDEXCHANGECOMMISSION Washington,D.C.20549 FORM10‐K ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHE SECURITIESEXCHANGEACTOF1934 ForthefiscalyearendedDecember25,2010 or TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHE SECURITIESEXCHANGEACTOF1934 Forthetransitionperiodfromto Commissionfilenumber0‐31983
GARMINLTD. (Exactnameofregistrantasspecifiedinitscharter) Switzerland 98‐0229227 (Stateorotherjurisdiction (I.R.S.EmployerIdentificationNo.) ofincorporationororganization) Vorstadt40/42 8200Schaffhausen N/A Switzerland (ZipCode) (Addressofprincipalexecutiveoffices) Registrant’stelephonenumber,includingareacode:+41526201401 SecuritiesregisteredpursuanttoSection12(b)oftheAct: RegisteredShares,CHF10.00PerShareParValue NASDAQGlobalSelectMarket (Titleofeachclass) (Nameofeachexchangeonwhichregistered) SecuritiesregisteredpursuanttoSection12(g)oftheAct:None Indicatebycheckmarkiftheregistrantisawell‐knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct. YES[√]NO[] IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct. YES[]NO[√]
Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)ofthe SecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterperiodthattheregistrantwas requiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YES[√]NO[] Indicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporatewebsite,if any,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationsS‐T(§ 232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequired tosubmitandpostsuchfiles).YES[√]NO[] IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS‐K(§229.405ofthis chapter)isnotcontainedherein,andwillnotbecontained,tothebestofregistrant’sknowledge,indefinitiveproxy orinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10‐KoranyamendmenttothisForm10‐ K.[√] Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon‐acceleratedfiler, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reportingcompany”inRule12b‐2oftheExchangeAct. LargeAcceleratedFiler[√] AcceleratedFiler[]
Non‐acceleratedFiler[] Smallerreportingcompany[] (Donotcheckifasmallerreportingcompany) Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b‐2oftheExchangeAct). YES[] NO[√] Aggregate market value of the common shares held by non‐affiliates of the registrant as of June 26, 2010 (based on the closing price of the registrant's common shares on the Nasdaq Stock Market for that date) was $3,954,398,819. Numberofsharesoutstandingoftheregistrant’scommonsharesasofFebruary17,2011: RegisteredShares,CHF10.00parvalue–208,077,418 Documentsincorporatedbyreference: PortionsofthefollowingdocumentareincorporatedhereinbyreferenceintoPartIIIoftheForm10‐Kasindicated:
Document Company'sDefinitiveProxyStatementforthe2010AnnualMeetingofShareholderswhichwill befilednolaterthan120daysafterDecember25,2010.
PartofForm10‐Kinto whichIncorporated PartIII
GarminLtd. 2010Form10‐KAnnualReport TableofContents CautionaryStatementWithRespectToForward‐LookingComments.......................................................4
Item1. Item1A. Item1B. Item2. Item3. Item4.
PartI Business.................................................................................................................................................4 RiskFactors...........................................................................................................................................23 UnresolvedStaffComments...............................................................................................................34 Properties.............................................................................................................................................34 LegalProceedings................................................................................................................................35 RemovedandReserved ExecutiveOfficersoftheRegistrant.....................................................................................................37
PartII Item5. MarketforRegistrant’sCommonEquity,RelatedStockholderMattersandIssuerPurchasesof EquitySecurities...................................................................................................................................39 Item6. SelectedFinancialData........................................................................................................................40 Item7. Management'sDiscussionandAnalysisofFinancialConditionandResultsof Operations...........................................................................................................................................42 Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk..............................................................59 Item8. FinancialStatementsandSupplementaryData...................................................................................61 Item9. ChangesinandDisagreementswithAccountantsonAccountingandFinancial Disclosure.............................................................................................................................................90 Item9A. ControlsandProcedures......................................................................................................................90 Item9B. OtherInformation................................................................................................................................92 PartIII Item10. Directors,ExecutiveOfficersandCorporateGovernance...................................................................93 Item11. ExecutiveCompensation......................................................................................................................94 Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholder Matters................................................................................................................................................94 Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence....................................95 Item14. PrincipalAccountingFeesandServices...............................................................................................95 PartIV Item15. Exhibits,FinancialStatementSchedules..............................................................................................96 Signatures..........................................................................................................................................101
CAUTIONARYSTATEMENTWITHRESPECTTOFORWARD‐LOOKINGCOMMENTS The discussions set forth in this Annual Report on Form 10‐K contain statements concerning potential futureevents.Suchforward‐lookingstatementsarebaseduponassumptionsbytheCompany'smanagement,as ofthedateofthisAnnualReport,includingassumptionsaboutrisksanduncertaintiesfacedbytheCompany.In addition,managementmaymakeforward‐lookingstatementsorallyorinotherwritings,including,butnotlimited to,inpressreleases,intheannualreporttoshareholdersandintheCompany’sotherfilingswiththeSecurities andExchangeCommission. Readers can identify these forward‐looking statements bytheir use of such verbs as “expects,” “anticipates,” “believes” or similar verbs or conjugations of such verbs. Forward‐looking statements include any discussion of the trends and other factors that drive our business and future results in “Item 7. Management’sDiscussionandAnalysisofFinancialConditionsandResultsofOperations.”Readersarecautioned not to place undue reliance on these forward‐looking statements, which speak only as of their date. If any of management's assumptions prove incorrect or should unanticipated circumstances arise, the Company's actual resultscouldmateriallydifferfromthoseanticipatedbysuchforward‐lookingstatements.Thedifferencescould becausedbyanumberoffactorsorcombinationoffactorsincluding,butnotlimitedto,thosefactorsidentified under Item 1A “Risk Factors.” Readers are strongly encouraged to consider those factors when evaluating any forward‐lookingstatementsconcerningtheCompany.TheCompanydoesnotundertaketoupdateanyforward‐ lookingstatementsinthisAnnualReporttoreflectfutureeventsordevelopments. PartI Item1. Business ThisdiscussionofthebusinessofGarminLtd.("Garmin"orthe"Company")shouldbereadinconjunction with,andisqualifiedbyreferenceto,“Management'sDiscussionandAnalysisofFinancialConditionandResultsof Operations”underItem7hereinandtheinformationsetforthinresponsetoItem101ofRegulationS‐Kinsuch Item7isincorporatedhereinbyreferenceinpartialresponsetothisItem1.Garminhasfourbusinesssegments: Marine,Automotive/Mobile,Outdoor/Fitness,andAviation.Thesegmentandgeographicinformationincludedin Item 8, “Financial Statements and Supplementary Data,” under Note 8 is incorporated herein by reference in partialresponsetothisItem1. Garmin was incorporated in Switzerland on February 9, 2010 as successor to Garmin Ltd., a Cayman Islandscompany(“GarminCayman”).GarminCaymanwasincorporatedonJuly24,2000asaholdingcompanyfor GarminCorporation,aTaiwancorporation,inordertofacilitateapublicofferingofGarminCaymansharesinthe United States. On June 27, 2010, Garmin became the ultimate parent holding company of the Garmin group of companies pursuant to a share exchange transaction effected for the purpose of changing the place of incorporation of the ultimate parent holding company of the Garmin group from the Cayman Islands to Switzerland(the“Redomestication”).PursuanttotheRedomestication,allissuedandoutstandingGarminCayman commonsharesweretransferredtoGarminandeachcommonshare,parvalueU.S.$0.005pershare,ofGarmin Caymanwasexchangedforoneregisteredshare,parvalue10Swissfrancs(“CHF”)pershare,ofGarmin.Garmin owns,directlyorindirectly,alloftheoperatingcompaniesintheGarmingroup. Garmin’sannualreportonForm10‐K,quarterlyreportsonForm10‐Q,currentreportsonForm8‐K,proxy statementandForms3,4and5filedbyGarmin’sdirectorsandexecutiveofficersandallamendmentstothose reportswillbemadeavailablefreeofchargethroughtheInvestorRelationssectionofGarmin’sInternetwebsite (http://www.garmin.com) as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (the “SEC”). The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuersthatfileelectronicallywiththeSEC.
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The reference to Garmin’s website address does not constitute incorporation by reference of the informationcontainedonthiswebsite,andsuchinformationshouldnotbeconsideredpartofthisreportonForm 10‐K. CompanyOverview Garmin is a leading, worldwide provider of navigation, communication and information devices and applications, most of which are enabled by Global Positioning 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,andgeneralaviationmarkets. OverviewoftheGlobalPositioningSystem TheGlobalPositioningSystemisaworldwidenavigationsystemwhichenablestheprecisedetermination of geographic location using established satellite technology. The system consists of a constellation of orbiting satellites. The satellites and their ground control and monitoring stations are maintained and operated by the United States Department of Defense, which maintains an ongoing satellite replenishment program to ensure continuousglobalsystemcoverage.AccesstothesystemisprovidedfreeofchargebytheU.S.government. Prior to May 2000, the U.S. Department of Defense intentionally degraded the accuracy of civilian GPS signalsinaprocessknownasSelectiveAvailability(‘‘SA’’)fornationalsecuritypurposes.SAvariablydegradedGPS positionaccuracytoaradiusof100meters.OnMay2,2000,theU.S.DepartmentofDefensediscontinuedSA.Ina presidentialpolicystatementissuedinDecember2004,theBushadministrationindicatedthattheU.S.doesnot intendtoimplementSAagainandiscommittedtopreventinghostileuseofGPSthroughregionaldenialofservice, minimizingtheimpacttopeacefulusers.WithSAremoved,aGPSreceivercancalculateitspositiontoanaccuracy ofapproximately10metersorless,enhancingtheutilityofGPSformostapplications. The accuracy and utility of GPS can be enhanced through augmentation techniques which compute any remainingerrorsinthesignalandbroadcastthesecorrectionstoaGPSdevice.TheFederalAviationAdministration (“FAA”) has developed a Wide Area Augmentation System (‘‘WAAS’’) comprising ground reference stations and additional satellites that improve the accuracy of GPS positioning available in the United States and portions of CanadaandMexicotoapproximately3meters.WAASsupportstheuseofGPSastheprimarymeansofenroute, terminalandapproachnavigationforaviationintheUnitedStates.TheincreasedaccuracyofferedbyWAASalso enhances the utility of WAAS‐enabled GPS receivers for consumer applications. The FAA announced on July 11, 2003 that the WAAS system had achieved initial operating capability and that the system was available for instrument flight use with appropriately certified avionics equipment. Since that time, the FAA has installed additionalgroundreferencestationsandhaslaunchedadditionalWAASsatellites. Japan’s MTSAT‐based Satellite Augmentation System (MSAS) achieved initial operating capability for en route,terminalandapproachnavigationforaviationinSeptember27,2007.Garminisworkingcloselywiththe European Satellite Services Provider (ESSP) in preparation for the European Geostationary Navigation Overlay Service(EGNOS)aviationSafetyofLife(SoL)servicedeclarationwhichisplannedin2011. RecentDevelopmentsintheCompany’sBusiness Since the inception of its business, Garmin has delivered over 81 million products, which includes the deliveryofover16millionproductsduring2010.
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Acquisitions In September2010 GarminacquiredMetriGear, Inc.,the creator of apedal‐basedpower measurement solution for cyclists that integrates a force and motion sensor platform into the spindles of bicycle pedals to measureacyclist’sperformance. InOctober2010GarminacquiredBelanorAS,thedistributorofGarmin’sautomotive,outdoorrecreation, fitnessandmarineproductsinNorway. Automotive/MobileProductIntroductions In January 2010 Garmin announced the zūmo® 220 and zūmo 665 touchscreen navigators for motorcycles, ecoRoute™ hd, a device that transforms a compatible Garmin navigation device into a real‐time onboarddiagnosticscomputer,andVoiceStudio™,afreePCapplicationthatletsanyonerecordtheirownvoiceto createcustompre‐recordednavigationpromptsforuseoncompatibleGarminnavigationdevices. InApril2010Garminannouncedthenüvi®3700seriesofportablenavigationdevicesfeaturinganultra‐ thin,pocket‐friendlydesignandlarge‐screen,high‐resolutionglassdisplayswithcapacitivetouchpanels In September 2010 Garmin announced the nüvi 2200 and nüvi 2300 series of entry‐level portable navigation devices and the nüLink! 1695 five‐inch touchscreen portable navigation device that connects drivers withrelevant,onlineinformationfromGarmin’snüLink!service,includinglinkstoonlineinformationlikeGoogle™ LocalSearch,traffic,weather,fuelprices,flightstatus,andotherreal‐time,location‐relevantcontent. In November 2010 Garmin announced that it would provide an integrated navigation package for the 2011 Suzuki Grand Vitara and SX4 models which would offer connectivity to wireless online information like Google™ local search, traffic, weather, fuel prices, movie listings, flight status, local events, and white page telephonelistings During2010,Garmin‐Asus,aco‐brandedalliancebetweenGarminandASUSTeK®ComputerInc.(“ASUS”), introducedthenüvifone™A10,A50andM10location‐centricmobilehandsetmodels.InOctober2010Garminand ASUS announced that they would not introduce any new co‐branded handset models going forward but would continue to sell and support models that they had already introduced to the market. ASUS announced that it would design and manufacture new models of ASUS‐branded mobile phones, some of which would include preloaded Garmin navigation and Location Based Service (LBS) applications. Garmin announced that it would expand its mobile handset application development and would offer navigation and other applications through certainconsumerapplicationstores. Outdoor/FitnessProductIntroductions Garminexpandeditslineofproductsforgolfersin2010withtheintroductionoftheApproach®G3golf‐ specifichandheldandtheApproachS1GPSwristwatchdesignedspecificallyforgolf. Garmin also expanded its line of products for cyclists in 2010 with the introduction of the Edge® 800 cyclingcomputerwhichcombinesthemostpopularaspectsoftheindustry‐leadingEdge500andEdge705while addingatouchscreeninterface. Garmin added to its line of products for running enthusiasts in 2010 with the introduction of the Forerunner®110,210and410GPS‐enabledsportswatches. InJune2010GarminannouncedtheGPSMAP®62seriesofruggedoutdoorhandhelddevicesforhunters, hikers,geocachersandoutdoorsenthusiasts.AlsoinJune2010GarminannouncedtheDC™40trackingcollar,for Garmin’sAstro®GPSDogTrackingSystem.
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InOctober2010Garminannouncedchirp™,awirelessbeacondesignedspecificallyforgeocaching,which cancommunicatewith,andbeprogrammedby,anycompatiblewireless‐enabledGarminhandheld. In December 2010 Garmin announced the creation of OpenCaching.com, a free online community for creating,sharingandfindinggeocachesaroundtheworld.
MarineProductIntroductions
In January 2010 Garmin announced the GPSMAP® 700 series of seven‐inch touchscreen controlled stand‐ alonemarinechartplotterswithradarcapabilityandbuilt‐insonar. InFebruary2010GarminannouncedtheAIS300receiverthatenablesmonitoringofothernearbyClassA andClassBAutomaticIdentificationSystem(AIS)‐enabledvesselsthatmayposeacollisionrisk. InApril2010GarminannouncedtheGPSMAP®78seriesofmarine‐friendlyGPShandheldsfeaturinganew contemporaryindustrialdesignwithrubbersidegrips. InSeptember2010GarminannouncedtheGHP™12sailboatautopilotsystemfor20‐to70‐footsailboats equippedwithlinear‐actuatedsteeringsystems. In November 2010 Garmin announced the echo™ series of standalone fishfinders with Garmin HD‐ID™ targettrackingtechnology.AlsoinNovember2010GarminannouncedtheGMR™404xHDandGMR406xHD,two new4kilowattopen‐arraymarineradars. AviationProductIntroductionsandCertifications During2010Garminannouncedtwonewproductsforthehelicoptermarket,theG500Hall‐glassavionics systemdesignedspecificallyforhelicoptersandaHelicopterTerrainAwarenessandWarningSystem(HTAWS)for usewithGarmin’sGNS430W/530Wnavigators. In July 2010 Garmin announced that it was developing a new stability augmentation system called Garmin’sElectronicStabilityandProtection(GarminESP)systemwhichwouldbeofferedasanoptionforGarmin’s G1000 and G3000 integrated flight decks and which would assist the pilot in maintaining the aircraft in a safe, flight‐stablecondition,helpingincertainsituationstopreventtheonsetofstallsandspins,steepspiralsorother loss‐of‐control conditions should the pilot become distracted, disoriented or incapacitated during flight. Also in July 2010 Garmin announced the GSR 56 Iridium datalink and GDL 59 data logger and Wi‐Fi datalink and announcedthattheFederalAviationAdministration(FAA)hadgrantedSupplementalTypeCertification(STC)for theG1000integratedflightdeckintheCessnaCitationJet. InOctober2010GarminannouncedthatitwasdevelopingtheG5000™integratedflightdeckforthePart 25 business jet market and Cessna Aircraft Company announced that it was developing a larger version of its CitationXjetwhichwouldfeaturetheGarminG5000flightdeck. InDecember2010GarminannouncedthathadreceivedtheEuropeanAviationSafetyAgency’s(EASA) validationoftheU.S.STC(SupplementalTypeCertificate)fortheinstallationoftheGarminG1000avionicssuitein theKingAir200andB200. Products Garminhasachievedaleadingmarketpositionandahistoryofgrowthinrevenuesandprofitsbyoffering ergonomicallydesigned,user‐friendlyproductswithinnovativefeaturesanddesignscoveringabroadrangeof
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applicationsandpricepoints.Garmin’stargetmarketsarecurrentlybrokendownintoitsfourmainbusiness segments–automotive/mobile,outdoor/fitness,marineandaviation. Automotive/Mobile Garminoffersabroadrangeofautomotivenavigationproducts,aswellasavarietyofproducts andapplicationsdesignedforthemobileGPSmarket.Garminbelievesthatitsproductsareknownfortheirvalue, highperformance,easeofuse,innovation,andergonomics.Thetablebelowincludesasamplingoftheprimary automotiveandmobileproductsthatGarmincurrentlyofferstoconsumersaroundtheworld. nüvi® (52models) ThenüviisGarmin’spopularpersonalnavigationdevice(PND).Allnüvimodelscombine a full‐featured GPS navigator (with built‐in maps) with Garmin’s uniquely simple user interface. Different nüvi models and optional add‐ons offer a plethora of additional featuresets,includingawidescreendisplay,integratedtrafficreceiverfortrafficdata (including some models with lifetime traffic updates), bundled lifetime map updates, spokenstreetnames,voicerecognition,speedlimitindication,laneassist,3‐Dbuilding view,junctionview,Bluetooth®hands‐freecapability,built‐inmapsofEurope,andthe abilitytoaddcustompointsofinterestandacustomGPSvoice.Numerousnewernüvi models also offer a feature called ecoRoute™, which is a feature designed to help improve the vehicle’s fuel efficiency by suggesting route calculations based upon less fuel usage and a driving challenge program that helps reinforce fuel‐efficient driving practices. Garmin’s newest nüvi models – the 3700 series – offer an award‐winning, super‐thin design and such other newer features as a multi‐touch glass display, nüRoute™ technology, 3‐D terrain view, and pedestrian mode. In fiscal years 2010, 2009, and 2008, the nüvi class of products represented approximately 54%, 63%, and 64%ofGarmin’stotalconsolidatedrevenues. zūmo® Motorcycle‐specificnavigatorswithfeaturesincludingaglove‐friendlytouchscreenwith (4models) high bright sunlight‐readable display, motorcycle mount, vibration‐tested design, and Bluetooth wireless technology. An SD (secure digital) card slot allows riders to share their favorite places and rides with fellow zūmo riders. The zūmo 660 features 3‐D buildingviewandlaneassistandadigitalfuelgauge.Thezūmo220offersasmaller form factor than previous models, while the 665 includes an antenna for XM Satellite Radio®,XMNavWeather®andXMNavTraffic®(subscriptionisrequiredforXMcontent). StreetPilot®app LaunchedinJanuary2011,thissmartphoneapplicationallowsAppleiPhone®oriPad® users to download premium Garmin navigation to their device, allowing for turn‐by‐ turn,voice‐prompteddirectionsandotherpopularGarminnavigationfeatures. GarminMobile® for BlackBerry Garmin Mobile for BlackBerry is a subscription‐based software application that lets compatibleBlackBerrydevicesfunctionasversatileGPSnavigators. Outdoor/Fitness ThetablebelowincludesasamplingoftheoutdoorandfitnessproductsthatGarmincurrentlyoffersto consumersaroundtheworld.
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Forerunner® (9models)
Edge® (6models)
Dakota® (2models)
Oregon® (4models)
Rino® (5models)
Compact,lightweighttrainingassistantsforathleteswithintegratedGPSsensor(except forFR60fitnesswatch)thatprovidetime,speed,distance,paceandotherdata.Some models also offer a heart rate monitoring function. The FR 60 is an entry‐level advanced fitness watch that allows runners and walkers to track their workouts and automaticallyuploadtheirdata(viaawirelessUSBANT™Stick)toapersonalcomputer. The Forerunner 405 is a compact‐sized, wrist‐worn GPS‐enabled device that allows runnersandjoggerstotracktheirspeed,distance,heartrateandlocation,accesstheir training history or challenge a Virtual Partner™ and automatically upload their data wirelesslytoapersonalcomputer.TheForerunner405CXaddsheart‐ratebasedcalorie computation and improved comfort to the numerous features available on the Forerunner 405. The Forerunner 310XT model, which was designed specifically for triathletes, iswater‐resistant to50m andtracksbiking and running data (and optional heartratedata).TheForerunner410‐‐thehighestendmodelintheForerunnerfamily ‐‐ offers an enhanced touch bezel designed to allow users to quickly scroll and select featuresontherun.
Integrated personal training systems designed for cyclists. The Edge 205 measures speed,distance,time,caloriesburned,climbanddescent,altitudeandmore.TheEdge 305 adds a heart rate monitor and/or wireless speed/pedaling cadence sensor. The Edge605and705providemappingcapabilities(includingstreetnavigation)anda2.2” colordisplayinadditiontotrackingverticalprofiles,climbanddescent,altitude,speed, distance, and time. The Edge 500 is geared toward performance‐driven cyclists by offeringtheabilitytotrackevenmoreperformancedatainastreamlinedformfactor. Thenewestmodel‐‐theEdge800‐‐addedatouchscreeninterfacetotheEdgefamilyof products.
TheDakotaseriesisGarmin’sentrylevelseriesofhandheldGPSnavigatorswithbuilt‐in mapping. The Dakota 10 is a rugged, palm‐sized navigator that offers a touchscreen display,high‐sensitivityGPS,andabuilt‐inworldwidebasemap.TheDakota20addsa barometricaltimeter,3‐axiselectroniccompass,andamicroSD™cardslotforoptional customizedmaps.The20modelalsoallowsausertosharewaypoints,tracks,routes and geocaches wirelessly with other compatible Dakota, Foretrex®, Oregon® and Colorado®users.
The Oregon series combines a bright 3 inch color touchscreen, rugged design and a variety of hiker‐friendly features. The Oregon 450 and Oregon 450t offer a rugged, sunlight‐readable,touchscreenalongwithabuilt‐inbasemapwithshadedrelief,ahigh‐ sensitivityreceiver,barometricaltimeter,3‐axiselectroniccompass,microSD™cardslot, pictureviewerandmore. Thehigh‐endOregon550and550tmodelseachcomewitha built‐in 3.2 megapixel autofocus digital camera with 4x digital zoom, and each photo taken by these devices is automatically geotagged with the location of where it was taken,allowingtheusertonavigatebacktothatexactspotinthefuture.
Handheldtwo‐wayFamilyRadioService(FRS)andGeneralMobileRadioService(GMRS) radios that integrate two‐way voice communications with GPS navigation. Features includepatented“peer‐to‐peerpositionreporting”soyoucantransmityourlocationto anotherRinoradio.TheRino110offersanFRS/GMRSradioplusbasicGPSnavigator. The Rino 120 adds an internal basemap and MapSource compatibility for street‐level
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mapping. The Rino 130 has 24 MB of internal memory, built‐in electronic compass, barometric sensor, and National Oceanic and Atmospheric Administration (NOAA) weatherradioreceiver.TheRino520HCxhasahighsensitivityGPSreceiver,5wattsof transmit power, color display, mini‐USB interface, and a turn‐by turn automatic route calculationforuseinautomobiles.TheRino530HCxhasallofthefeaturesoftheRino 520HCx, plus a seven‐channel weather receiver, electronic compass, and barometric altimeter. GPSMAP®62 (3models)
Approach® (3models)
Astro®
Rugged outdoor handheld devices for hunters, hikers, geocachers and outdoors enthusiasts.ThebasicGPSMAP62includesabuilt‐inworldwidebasemapwithshaded relief.TheGPSMAP62saddsa3‐axistilt‐compensatedelectroniccompassandwireless connectivity for sharing routes, tracks, waypoints and geocaches between other compatible Garmin handhelds. The GPSMAP 62s also includes a barometric altimeter that tracks changes in pressure to pinpoint the precise altitude. In addition to these features, the GPSMAP 62st includes preloaded 100K topographic maps for the entire United States (or preloaded 50K topographic mapping of Canada for the Canadian version).
TheApproachG5isawaterproof,touchscreen,handheldGPSforgolfersthatfeatures over 14,000 preloaded golf course maps. Approach G5 uses a high‐sensitivity GPS receivertomeasureindividualshotdistancesandshowtheexactyardagetofairways, hazardsandgreens.Anewstatistic‐trackingfeaturewasmadeavailablebydownload for the G5 in 2010 that allows users to track and analyze their golf statistics. The ApproachG3isasmaller,lighterversionoftheG5,yetstilloffersover14,000preloaded courses. Neither model requires any ongoing subscription fees. In October 2010, Garmin announced the newest Approach model – the Approach® S1. The S1 is a wearable golf watch that displays precise yardages to the front, back and middle of greensandcomespreloadedwithover14,000courses. HighsensitivityGPS‐enableddogtrackingsystem.TheAstroisdesignedtopinpointup totendogs’positionsatonetimethroughall‐weathercollarsandahandheldsystem. ThesystemalsoprovidesaDogTrackerpageandaCoveyCounterTMtoassistthehunter. It is loaded with many of the features of our outdoor devices including: barometric altimeter,electroniccompass,microSDslot,areacalculatorandawaterproofexterior.
GTU‐10GPSTracker
OnJanuary4,2011,GarminannouncedtheGTU™10,whichrepresentsanewcategory ofproductforGarmin.TheGTU10isaGPSlocatorthatcombinesaweb‐basedtracking servicewithGPStechnologysotheusercankeeptrackofchildren,petsandpropertyby monitoringthedevice’slocationthrougheitheraphoneortheinternet.TheGTU10is expectedtolaunchinthefirstquarterof2011.
Marine Garmin’smarineproductsincludehandhelds,networkproductsandmultifunctiondisplays,fixed‐mount GPS/chartplotter products, instruments, fishfinders, radar, autopilots, VHF radios, marine networking products, and sounder products. The table below includes a sampling of some of the marine products that Garmin currentlyofferstoconsumers.
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MarineChartplottersandNetworkingProducts GPSMAP®7000series (4models) TheGPSMAP7000seriesoflargeformatmulti‐functiondisplaysintroducedGarmin’sG Motiontechnology,whichrepresentsanupgradeinspeed,smoothnessandclarityover prior plotters. G Motion technology delivers ultra‐smooth map panning and zooming with virtually seamless graphical updating in all dimensions. The 7000 series chartplotters also feature a low‐level backlight display and a backlit keypad for use in low‐light conditions without compromising vision. The GPSMAP 7x15 series offers a huge15‐inchdiagonalXGA(1024x768pixel)sunlightreadabletouchscreendisplay,and is offered in two models – the GPSMAP 7015 with an enhanced worldwide satellite imagerybasemap;andtheGPSMAP7215,whichcomespre‐loadedwithhighlydetailed U.S.coastalchartsandExplorerChartsfortheBahamas.Marinerscanalsooptforthe sameXGAresolutionina12‐inchdiagonalscreenconfigurationwiththeGPSMAP7012 and GPSMAP 7212 models, which offer a worldwide basemap and coastal charts respectively.Allmodelsarecompatiblewithanoptionalwirelessremoteandawireless mouse for additional flexibility and also offer expanded “plug‐and‐play” access to onboard sensors, with NMEA 2000 and Garmin Marine Network connectivity (the Garmin Marine Network is a system that combines GPS, radar, XM WX Satellite Weather,sonar,andotherdata). GPSMAP®6000series (4models) Like the 7000series, the 6000 series models also offer Garmin’s G Motion technology andthefeaturestoimprovevisibilityinlow‐lightconditions.TheGPSMAP6x12series features a traditional soft‐key interface with an alphanumeric keypad and a 12‐inch diagonal XGA (1024 x 768 pixel) sunlight readable display. Within this family, Garmin offerstheGPSMAP6012withanenhancedworldwidesatelliteimagerybasemap;and the GPSMAP 6212 with highly detailed U.S. coastal charts and Explorer Charts for the Bahamas preloaded. For a smaller display, the GPSMAP 6x08 series offers an 8‐inch VGA(640x480)sunlightreadabledisplaywithasoft‐keyinterface.Themodelsinthe GPSMAP6000seriesareallcompatiblewithanoptionalwirelessremoteandalsooffer expanded “plug‐and‐play” access to onboard sensors, with NMEA 2000 and Garmin MarineNetworkconnectivity. GPSMAP®5000series (6models) These touch‐screen multifunction displays for the Garmin Marine Network (a system thatcombinesGPS,radar,XMWXSatelliteWeather,sonar,andotherdata)offerease ofuseandvideo‐qualityresolutionandcolor.The5212and5208comepre‐loadedwith detailedU.S.coastalcharts,includingExplorerCharts,andarecompatiblewithGarmin’s BlueChart® g2 Vision™ charts (sold separately) which offer high‐resolution satellite imagery, 3‐D map perspective, aerial reference photos, and auto guidance. The 5215 and5015offer15‐inchdiagonalsunlight‐readabletouchscreendisplays. GPSMAP®4000series/ 4200series(6models) These multifunction displays for the Garmin Marine Network offer ease of use and video‐qualityresolutionandcolor.The4212and4208comepre‐loadedwithdetailed U.S. coastal charts, including Explorer Charts, and are compatible with Garmin’s BlueChart® g2 Vision™ charts (sold separately) which offer high‐resolution satellite imagery, 3‐D map perspective, aerial reference photos, and auto guidance. The 4210 and 4010 feature 10.4‐inch diagonal sunlight‐ readable displays and Garmin’s newer marineuserinterface.
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GPSMAP®6x0and7x0series (6models) The6x0serieschartplottersofferasuper‐brightWVGAtouchscreendisplayandprovide navigational support for both marine mode and automotive mode (when loaded with optional City Navigator® NT road maps for North America). The 7x0 models are touchscreen controlled stand‐alone marine chartplotters offering radar capability and built‐insonar.. GPSMAP®5x6and5x1 series(12models) BuildinguponthesuccessoftheGPSMAP400and500series,thenewchartplottersin the GPSMAP 5x6 and 5x1 series come standard with an internal high‐sensitivity GPS receiver that allows for faster acquisition times and better satellite tracking so that boatersareabletoacquireandmaintainaGPSfixmoreeasily.Inaddition,theseunits boast an improved, high‐speed digital design that will increase map drawing and panningspeeds.Thesounder(“s”)versionofeachmodelcomeswithapowerfuldual‐ frequencytransducerthatclearlyillustratesdepthcontours,fishtargetsandstructures ineitherfreshorsaltwater.ManyofthenewmodelsinthisseriesarealsoNMEA2000 certifiedandcaninterfacewithGarmin’sfulllineupofNMEA2000marinesensorsand autopilots,aswellasmanyotherthird‐partysensors. GPSMAP®4x1 series(6models) Witha4‐inchQVGAsunlight‐readabledisplay,theGPSMAP4x1serieswasdesignedfor theboaterwhowantshighperformanceinasmallpackage.Theseunitsfeatureahigh‐ sensitivity GPS receiver and faster processors, and are offered with the same cartographyconfigurationastheGPSMAP5x1series.Likewise,theGPSMAP4x1sseries isalsoavailablewithabuilt‐insonarwitha500‐wattRMSdual‐frequencytransducerfor offshore use and a 400‐watt RMS with a dual beam transducer for inland use. For satelliteweatherandradiodata,theGPSMAP441and421arealsocompatiblewiththe GXM51receiver. GSD21and22 These “black‐box” sounders interface with Garmin display units and chartplotters and enhance their utility by providing the depth sounder and fish finder functions in a remotemountedpackage. GMS10 The GMS 10 Network Port Expander is the "nerve center" of the Garmin Marine Network. This 100‐Mbit switch is designed to support the connection of multiple sensorstotheGarminMarineNetwork. OtherMarineProducts GMI10 The GMI 10 is a NMEA2000 andNMEA0183compliant instrumentthat displays data frommultipleremotesensorsononescreen.MarinerscanusetheGMI10todisplay instrumentdatasuchasdepth,speedthroughthewater,watertemperature,fuelflow rate,enginedata,fuellevel,winddirectionandmore,dependinguponwhatsensorsare connected. GPSMAP78 (3models) Marine‐friendly GPS handhelds featuring a new contemporary industrial design with rubbersidegrips.TheflagshipGPSMAP78scmodeladdshigh‐endfeaturessuchasa3‐ axis tilt‐compensated electronic compass, wireless data transfer between compatible unitsandpreloadedcartographyforthecoastalUnitedStates.
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VHFMarineRadios (4models)
Marine AutopilotSystems (4models)
Fishfinders (10models)
Radar (11models)
Thisseriesofmarineradiosoffersdifferingfeaturesetsfortheradioneedsofalltypes ofmariners.TheVHF100isanentry‐level,NMEA0183compatibleVHFmarineradio. The VHF 200 is NMEA 2000 compatible. The next step up is the VHF 300, which is designedfor35+footboatsandisNMEA2000andNMEA0183compatibleandoffers multi‐stationsupport.Alsodesignedfor35+footboats,theVHF300AISisNMEA2000 andNMEA0183compatible,offersmulti‐stationsupport,andmonitorsallAISchannels atthesametime.
The newest entry to Garmin’s marine autopilot lineup is the GHP 12, a full‐featured marineautopilotdesignedspecificallyforsailboats.Thissecond‐generationautopilotis designedfor20‐to70‐footsailboatswithlinear‐actuatedsteeringsystems.Forpower boats,theGHP10autopilotcomeswithGarmin’spatentedShadowDrive™technology, which automatically disengages the autopilot if the helm is turned, allowing the helmsmantomaneuvertheboat.Thisautopilotautomaticallyre‐engageswhenasteady course is held by the helmsman. The TR‐1 Gold Marine Autopilot offers worry‐free remotesteeringandspeedcontroltooperatorsofsmallgasolineoutboardmotorboats up to 20 horsepower. Finally, the GHP 10V Autopilot System for Volvo Penta IPS and SterndriveJoystickSystemsisapprovedforusewithboatsthathaveanintegratedVolvo PentaIPSsteeringandpropulsionsystemandfeaturesGarmin’sprovenandinnovative Shadow Drive™ technology – a patented capability that automatically disengages the autopilotifthehelmisturned,allowingforquickandsafemanualmaneuverswithout manuallydisengagingtheautopilot. Garminoffers10differentfishfinderoptionsspanningvariouspricepoints.Thelatest addition to Garmin’s fishfinder lineup is five different models of Garmin’s new echo™ fishfinderseries,alineofstandalonefishfindersthatallofferanupdatedlookandnew GarminHD‐ID™targettrackingtechnology.Theecho™linerangesinpricepointsfrom models with grayscale displays to the highest‐end echo 550C, which features a video‐ quality 640x480 pixel 5‐inch VGA screen, a powerful 500‐watt sonar transmitter, and offersfisharchdisplayandbottomtrackingasdeepas1,900feet.Inadditiontothe echo™series,Garminalsooffersfiveadditionalfishfinderoptions.Allofthesemodels feature Garmin’s Ultrascroll™ technology, which allows boaters to get a faster refresh rate on their sonar display, and dual‐beam transducer operation. Three of these models offer color displays. The Fishfinder 400C comes with dual beam or dual frequencytransducersforeasyadaptabilitytoeitherfreshwaterorsaltwaterfishing.It alsooffersanew,easy‐to‐useinterfaceandbuiltinCANetconnectivitytoenablesonar datatobesharedwithcompatibleGarminchartplotters. Garmin offers both radomes and open array radar products with compatibility to any network‐compatible Garmin chartplotter so that the chartplotter can double as the radarscreen.TheGMR™18and24modelsaredigitalradomeproductsinvarioussizes and power specifications. The GMR 404 and 406 open array radar scanners provide even greater clarity and a 72 nautical mile range. The GMR 18 HD and GMR 24 HD radomesfeaturedigitalsignalprocessingprovidingsharperradarimageryandimproved targetseparation.Thenewestgenerationofopen‐arraydigitalradarscannersarethe GMR™ 1204/1206 xHD, the GMR 604/606 xHD and the GMR 404/406 xHD models, whichtransmitwith12,6and4kilowattsofpowerrespectively.Allsixoftheseopen‐ array scanners have a maximum effective range of 72 nautical miles. These new xHD
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scanners provide up to eight times more sampling data than Garmin’s current open‐ arrayofferings. Aviation
Garmin’s aviation product line includes GPS‐enabled navigation, VHF communications transmitters/receivers, multi‐function displays, electronic flight instrumentation systems (EFIS), automatic flight control systems, trafficadvisory systems and trafficcollision avoidance systems, instrument landing system (ILS) receivers,surveillanceproducts,audiopanels,cockpitdatalinksystemsandmore. Garmin’s aviation products have won prestigious awards throughout the industry for their innovative features and ease of use. The GNS 430/530W offers multiple features and capabilities integrated into a single product.Thishighlevelofintegrationminimizestheuseofpreciousspaceinthecockpit,enhancesthequalityand safetyofflightthroughtheuseofmoderndesignsandcomponentsandreducesthecostofequippinganaircraft withmodernelectronics.TheGNS430wasrecognizedbyFlyingMagazineastheEditor’sChoiceProductofthe Yearfor1998.In1994,andagainin2000,GarminearnedrecognitionfromtheAircraftElectronicsAssociationfor outstandingcontributiontothegeneralaviationelectronicsindustry.TheGPSMAP295wonAviationConsumer Magazine’sGearoftheYearawardforbestaviationportableproductin2000andagainin2001.FlyingMagazine’s editorsawardedtheGPSMAP396witha2005Editors’ChoiceAwardforoutstandingachievements.TheGPSMAP 496, introduced in 2006, won the “2006 Gear of the Year” award from Aviation Consumer magazine. Flying Magazine’s editors awarded Garmin a 2007 Flying Editors’ Choice Award for making the safety and precision of WAAS (Wide Area Augmentation System) available in its GPS navigation systems. Garmin was also selected as “Best GPS Ever” by Aviation Consumer magazine for the GPSMAP® 696 in 2009, and in 2010 the Garmin aera™ seriesaviationGPSwasselectedasbestportableproduct.GarminhasbeenrankedNo.1amongaviationcockpit electronicsmanufacturersforproductsupportinProfessionalPilotmagazine’ssurveyofitsreadersineachofthe lastsevensurveyyears.AviationInternationalNewsalsorankedGarminNo.1inproductsupportin2010andin eachoftheprecedingsevenyears,aswell.GarminreceivedtheAirlineTechnologyAchievementAwardfromAir Transport World Magazine in January 2005 for championing the development of Automatic Dependent Surveillance‐Broadcast(ADS‐B)technology,anenablingtechnologyforairtrafficmanagement. Garmin’saviationproductsaresoldinbothnewaircraft/helicoptersandtheretrofitmarketwhereexisting aircraft/helicoptersarefittedwiththelatestelectronicsfromGarmin’sbroadproductline. GarminhasalsoexpandeditsrangeofavionicsofferingstoleadingGeneralAviationaircraftmanufacturers suchastheCessnaAircraftCompany,CirrusAircraft,HawkerBeechcraftCorporation,DiamondAircraftIndustries, Embraer,PiperAircraft,Inc.,DAHER‐SOCATAandQuestAircraftthroughtheinstallationoftheG1000integrated flight deck as original equipment aboard new aircraft. This system integrates attitude, heading, air data, navigation, communication, engine monitoring, and other aircraft functions into a single cohesive system which interfaces with the flight crew using a set of large, bright TFT displays. The G1000 also includes an integrated autopilot–theGFC700.GarminalsohasexpandeditsG1000certificationstothebusinessjetsegment,suchas Cessna’sCitationMustangjetandEmbraer’sPhenom100andPhenom300.Garminhasalsoannounceditsnext generationintegratedflightdecksystems,theG3000andG5000.CessnaAircraftCompanyannouncedinOctober 2010thattheyhaveselectedGarmin’sG5000fortheirflagshipbusinessjet,theCitationTen.BothHondaAircraft CorporationandPiperAircraftsimultaneouslyannouncedthattheG3000hasbeenselectedfortheHondaJetand PiperJetrespectively. ThetablebelowincludesasamplingofsomeoftheaviationproductscurrentlyofferedbyGarmin: Handheldandportableaviationproducts: aera®series (4models) Garmin’snewestaviationhandheldseriescombinesthelatestaviationportablewitha full‐featured automotive GPS, allowing pilots to transition between aviation to
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automotivemodewithonetouch.Featuringacrisp4.3‐inchQVGAwide‐formatdisplay withtouchscreeninterface,allfouraeramodelscomewithpreloadedautomotivemaps, abuilt‐interrain/obstaclesaviationdatabase,patentedPanelPageinstrumentdisplay, andotherfeatures.Wheninaviationmode,pilotsseecolorfuliconsthatuseintuitive picturesandlabelstoindicatetheirfunction.Theexteriorofeachaeramodel(500,510, 550and560)isidentical,butthesoftwarefeaturesofeachmodelaretailoredtothose seekinganentry,midorhigh‐levelaviationhandheld. GPSMAP695/696
PilotMy‐Cast℠
The GPSMAP 696 offers a bright 7‐inch screen, preloaded detailed electronic charts, preloadedairwaysandIFRmapmode.TheGPSMAP696hasareceiverforXMradioand XM WX Satellite Weather (U.S. customers only) that gives next generation radar (NEXRAD), aviation routine weather reports (METARs), terminal aerodrome forecasts (TAFs),temporaryflightrestrictions(TFRs),lightning,windsaloft,turbulenceforecasts, andseveralotherimportantweatherproducts(XMsubscriptionrequired).TheGPSMAP 695 has the same features except for XM radio and weather. In July 2010, Garmin announcedthatthe695/696wouldreceivenewenhancedchartcapabilities. Pilot My‐Cast by Garmin is a premium flight planning, flight plan filing, and pre‐flight weather application for display on compatible mobile phones. Compared to other aviation weather cell phone applications, Pilot My‐Cast is unique because it receives aviation data directly from the National Weather Service, Environment Canada, and Federal Aviation Administration. Pilot My‐Cast is available for both the iPhone® and iPad®.
G5000™
G3000™
G1000®
Integratedavionicssystems: Following the announcement of the G3000 one year earlier, in October 2010 Garmin announced the G5000, the first touchscreen‐controlled integrated glass avionics suite designedforFARPart25businessjets.TheG5000‐‐whichisscalableforuseinawide range of two‐crew aircraft, from light jets to super‐midsize and larger models ‐‐ is designed specifically for crew‐flown turbine aircraft and combines a dual multi‐sensor flight management system (FMS), touchscreen vehicle management units, and multi‐ panecockpitdisplays. Thesewidescreendisplays withtouchscreencontrols give pilots more useful information at their fingertips than ever before, such as worldwide weather, Garmin’s synthetic vision technology (SVT™), aircraft synoptics, electronic flightcharts,andmore. AnnouncedinOctober2009,theG3000,whichisdesignedforuseinFARPart23turbine aircraft, is the first touchscreen‐controlled integrated flightdeck for light turbine aircraft. It features extra‐wide 14.1‐inch displays with split‐screen MFD viewing functionalityandPFDterrainsimulationin3‐DperspectivewithSVT™SyntheticVision Technology.InJuly2010,Garminannouncedanewstabilityaugmentationfunctionfor the G3000 (and its predecessor G1000) called Garmin’s Electronic Stability and Protection (Garmin ESP) system. This electronic monitoring and correction technology forG3000andG1000integratedflightdecksworkstoassistthepilotinmaintainingthe aircraft in a safe, flight‐stable condition, helping in certain situations to prevent the onsetofstallsandspins,steepspiralsorotherloss‐of‐controlconditionsshouldthepilot become distracted, disoriented or incapacitated during flight. Garmin ESP will be offeredasanoptiononselectG3000andG1000‐equippedaircraft. The G1000 integrates navigation, communication, attitude, weather, terrain, traffic, surveillanceandengineinformationonlargehigh‐resolutioncolordisplays.TheG1000
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offers general aviation airplane manufacturers an easy‐to‐install solution for flight displays and provides the aircraft owner the benefits of a state‐of‐the‐art avionics systemwhichreliesonmoderntechnologiessuchassolidstatecomponentsandbright, sunlight‐readableTFTdisplays. G600
The G600 brings the style and function of an all‐glass integrated avionics suite to the retrofit market for FAR Part 23 Class I, II or III aircraft. The G600 incorporates two individualdisplays–aPFDandMFD–inacustomizedpackagespecificallydesignedfor easy retrofit installation. The G600 is designed to communicate and integrate with Garmin’sWAASenabledpanelmountproducts,andprovidesessentialinformationsuch as attitude, air data, weather, terrain and traffic. Garmin has received the FAA’s ApprovedModelListSupplementalTypeCertification(AMLSTC)fortheG600,whichwill simplifycertificationforover300differentaircraftmodels.
G500
Designed specifically for FAR Part 23 Class I/Class II aircraft (singles and twins under 6,000 lbs.), the G500 is an affordable, dual‐screen electronic flight display that works with a pilot’s separate Garmin avionics stack to provide a fully TSO’d “glass cockpit” retrofitoption.TheG500doesnotincludeallofthesamestandardfunctionalityasthe G600 (for example, the G500 does not offer SVT (Synthetic Vision Technology) or a standardGAD43interfaceadapter.
G500H
Anall‐glassavionicssystemdesignedspecificallyfortheVFRPart27helicoptermarket. TheG500Hcontainsdual6.5‐inchLCDscreens,mountedside‐by‐sideinasinglebezel, which puts Primary Flight Display (PFD) and Multi‐Function Display (MFD) capabilities right in front the helicopter pilot. The G500H has been optimized for rotorcraft and offers features like helicopter synthetic vision technology (HSVT™), helicopter‐specific databaseswithover7,000heliportsandnearly30,000additionallow‐altitudeobstacles, XMWXSatelliteWeatherwithNEXRAD,andtheabilitytodisplayvideofromaforward lookinginfrared(FLIR)cameraorothervideosources.
G900X™
Anall‐glassintegratedavionicssystemspecificallydesignedforkitplanebuildersofthe LancairandVan’sRV‐seriesaircraft. The G900X is a fully‐customizable glass cockpitforinstallationinexperimental/kitbuiltandlightsportaircraft.TheG900Xoffers acustomizablePFD/MFDcombinationthatfeaturesone,twoorthreeall‐glassdisplays; magnetometer;ADAHRS(combinedairdataandAHRSunit)andenginemonitoring.
GDU370/375
Multifunctiondisplaysforthelightsportretrofitandexperimentalaircraftmarkets. Panel‐mountaviationproducts:
400WSeries (3models)
The GNS 430W is the Wide Area Augmentation System (WAAS) successor to Garmin’s popular GNS 430, which was the world’s first ‘‘all‐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 andnavigation capabilities. In 2010, Garmin announceda new Helicopter Terrain Awareness andWarning System (HTAWS)asanoptionfortheGNS430W/530Wseriesnavigators.Whenaddedtothe GNS430W/530W,helicopterpilotswillreceivegraphicalandaudiblealertsofpotential terrainandobstacleconflictsalongtheflightpath.
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500WSeries (2models)
GTS™TASand TCASISystems
GI‐102A&106A GMA240,340&347
GTX™330&330D
GTX320A,327&328
GDL90
Theseunitscombinethefeaturesofthe400Wseriesalongwithalarger5”colordisplay. The 530W Series comes standard with Wide Area Augmentation System (WAAS) capability and may be ordered with or upgraded to Class B Terrain Awareness and WarningSystem(TAWS‐B)capability.
The GTS 800 series of traffic avoidance products combines active and passive surveillance data topinpoint specific traffic threats. Thesystems use Garmin’s patent‐ pending CLEAR CAS™ technology and correlates automatic dependent surveillance broadcast(ADS‐B)withradartargets. TheGTS800TASisalower‐costsystem,offering 40 watts of transmit power and a range of up to 12 nautical miles. The GTS 820 TAS delivers250wattsoftransmitpowerandupto40nauticalmilesofinterrogationrange. TheGTS850TCASIsatisfies allTCASIcollisionavoidancecriteriaforhigher‐capability turboprops and jets. It features the same 250 watt performanceas the GTS 820, and alsomeetstheFAA’sTCASIcertificationcriteria Coursedeviationindicators(CDIs).TheGI‐106Afeaturesaninstrumentlandingsystem receivertoaidinlanding. The GMA 340 is a feature‐rich audio panel with six‐place stereo intercom and independent pilot/co‐pilot communications capabilities. The GMA 347 has automatic squelch,digitalclearancerecorder,andafull‐duplextelephoneinterface.TheGMA340 and347arebothTSO’d.TheGMA240isaversatile,non‐TSO’daudiopaneldesigned forexperimentalandlightsportaircraft. FAA‐certified Mode S transponders with data link capability, including local air traffic information at FAA radar sites equipped with Traffic Information Service (TIS). These transpondersmayalsobeoptionallyupgradedtoprovide1090MHzExtendedSquitter (ES) transmission capabilities, which will increase situational awareness once the AutomaticDependentSurveillance‐Broadcast(ADS‐B)systemisfullyimplemented. FAA‐certified transponders which transmit altitude or flight identification to air traffic controlradarsystemsorotheraircraft’sairtrafficavoidancedevicesandfeaturesolid‐ state construction for longer life. The GTX 327 offers a digital display with timing functions. The 328 is designed exclusively for Europe and satisfies the European requirement for a Mode S solution that meets the reduced certification requirements fortheVFRModeSmandate. TheGDL90wasthefirstairborneAutomaticDependentSurveillance‐Broadcast(ADS‐B) productcertifiedbytheFAAtoTSOC145Astandards.TheGDL90allowspilotsinthe cockpitandairtrafficcontrollersonthegroundto“see”aircrafttrafficwithmuchmore precisionthanhaseverbeenpossiblebeforewithoutthecostlyinfrastructureofground basedtrackingradar.TheGDL90reliesontheinfrastructurethatispartoftheFAA’s Safe Flight 21 program. This program is currently under development with implementation of theground‐basedportion of theADS‐B network taking place along theEastCoastandotherselectedareasoftheU.S.A.AdditionalinstallationsoftheADS‐ B ground stations are planned. The ground stations can track aircraft movement and eventually are expected to be used to broadcast traffic and weather services. Pilots equipped with the GDL 90 and operatingwithin the ground stationcoverage area will receiveaircrafttrafficandreal‐timeweatherinformationfreeofcharge.
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The GSR56 is Garmin’s newest datalink product. Itprovides pilots with access to on‐ demand global weather information, text/voice communications and near real‐time position tracking through the Iridium satellite network (subscription required). In addition to the many on‐demand satellite weather features, the GSR 56 offers a worldwidetrackingsolutionthatcontinuouslymonitorsanaircraft’sstatusenroute.It can automatically provide GPS‐referenced position reports at predetermined intervals sothoseonthegroundcantrackaplane’sflightstatusandposition.
GSR56
GDL69and69A
GMX200™ SL30andSL40
GWX™68
The GDL 69 offers the ability to provide real‐time weather information to the aircraft whichcanbedisplayedononeofseveralpanel‐mounteddevices,suchastheGNS430, GNS 530, MX20, and G1000 systems. The GDL 69 and GDL 69A receive real‐time weather information broadcast by the XM WX Satellite radio system. In addition, the GDL69AexpandstheutilityofthesystembyprovidingCDqualityaudioprovidedbyXM SatelliteRadio(separatesubscriptionsforweatherdataandaudiorequired). Alarge(6.5inch)sunlight‐readable,high‐resolution,multi‐functiondisplay. The SL30 is a compact VHFnavigation and communications unit thatcombines a 760‐ channelVHFcommunicationsradiowith200‐channelglideslopeandlocalizerreceivers. The SL40 is a 760‐channel VHF communications radio only. Both the SL30 and SL40 feature10wattcommunicationstransmitters. TheGWX68isanall‐in‐oneantenna/receiver/transmitterthatbringsreal‐timeweather toGarmin’snewestmulti‐functiondisplays.
SalesandMarketing Garmin’s non‐aviation products are sold through a worldwide network of approximately 4,000 independent dealers and distributors in approximately 100 countries who meet our sales and customer service qualifications.Nosinglecustomer’spurchasesrepresented10%ormoreofGarmin’sconsolidatedrevenuesinthe fiscal year ended December 25, 2010. Marketing support is provided geographically from Garmin’s offices in Olathe,Kansas(North,SouthandCentralAmerica), intheU.K.(EasternEurope,MiddleEastandAfrica),France, Germany, Italy, Spain, Portugal, Austria, Sweden, Denmark, Finland, Belgium, Norway, Netherlands, Poland, Australia (also covering New Zealand), China and in Taiwan (Asia). Garmin’s distribution strategy is intended to increase Garmin’s global penetration and presence while maintaining high quality standards to ensure end‐user satisfaction. Garmin’sU.S.consumerproductsalesarehandledthroughitsnetworkofdealersanddistributorswhoare serviced by a staff of regional sales managers and in‐house sales associates. Some of Garmin’s larger consumer productsdealersanddistributorsinclude: • BestBuy—oneofthelargestU.S.andCanadianelectronicsretailers; • Amazon.com—internetretailer; • Costco—aninternationalchainofmembershipwarehousesthatcarryquality,brandname merchandise; • Halford’s—alargeEuropeanretailerspecializingincarpartsandaccessories; • Petra—alargedistributorwhosellstoawiderangeofdealers; • Target—oneofthenation’slargestgeneralmerchandiseretailers;
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• Wal‐Mart—theworld’slargestmassretailer;and • Wynit—alargedistributorwhosellstoawiderangeofdealers. Garmin’s Europe, Middle East, Australia/New Zealand and Africa consumer product sales are handled through our in‐country subsidiaries or local distributors who resell to dealers. Working closely withGarmin’s in‐ housesalesandmarketingstaffintheU.K.andU.S.,thesein‐countrysubsidiariesorindependentdistributorsare responsible for inventory levels and staff training requirements at each retail location. Garmin’s Taiwan‐based marketingteamhandlestheCompany’sAsiasalesandmarketingeffort. Garmin’sretrofitavionicsandaviationportableproductsaresoldthroughselectaviationdistributors aroundtheworldand,inthecaseofaviationportableproducts,alsothroughcatalogsandpilotshops.Garmin’s largestaviationdistributorsincludeAircraftSpruce&SpecialtyCo.,Sportsman’sMarket,TGHAviation,Sarasota AvionicsandElliottAviation.Avionicsdistributorshavethetraining,equipmentandcertifiedstaffrequiredforat‐ airportinstallationofGarmin’savionicsequipment. Inadditiontothetraditionaldistributionchannelsmentioned,Garminhasmanyrelationshipswithoriginal equipment manufacturers (OEMs). In the consumer market, Garmin’s products are sold globally to automotive and motorcycle OEMs, either directly or through tier 2 sourcing. These OEMs include Chrysler, Toyota, Suzuki, Volkswagen, Harley‐Davidson, Ford, BMW and BMW Motorrad, Honda, Mercedes Benz, Smart Car, Peugeot, Hyundai,Kia,Mazda,Nissan,Volvo,Bombardier,andPolaris.In2010,ChryslerintroducedGarminnavigationon the 2011 Jeep Grand Cherokee and also announced Garmin navigation on their new uConnect Touch system in partnership with Panasonic, which will launch on select 2011 models. In addition, Garmin continues to sell productsandapplicationstoKenwoodforbundlingwithKenwood’sOEMproducts.Garminalsohasrelationships withcertainrentalcarcompaniesincludingDollar/Thrifty,Enterprise,Avis,Budget,National,Europcar,Alamo,and Hertz (Europe). Garmin has also developed promotional relationships with certain automotive dealerships in certaincountriesincludingBMW,SoutheastToyota,Penske,Mazda,SaabandFord.Garmin’sproductsarealso standardequipmentonvariousmodelsofboatsmanufacturedbyRangerTugs,CutwaterBoats(aDivisionofFluid Motion, LLC), Bayliner Boats (a division of Brunswick Corporation), Bavaria Yacht, Broom Boats Ltd., Chaparral Boats,Inc.,AndrosBoats,Inc.,EdgewaterBoats,LLC,BenningtonMarine,LLC,CigaretteRacingTeam,LLC,Cobalt Boats, LLC, G3 Boats (a division of Yamaha Motor Corp.), Gulf Craft, Inc., Fairline Boats, Ltd. and Regal Marine Industries,Inc.andareoptionalequipmentonboatsmanufacturedbyTiaraYachts,Inc.,GrandBanksYachts,Ltd., Luhrs Corp., Maritimo Offshore Pty Ltd., Mastercraft Boat Company, LLC, Yellowfin Yachts, LLC, Sea Ray Corporation,ScoutBoats,Inc.,TheHinckleyCompany,HuntYachts,Inc.andZodiacHurricaneTechnologies,Inc.In theaviationmarket,Garmin’savionicsareeitherstandardequipmentoroptionsonvariousmodelsofaircraftbuilt by Bell Helicopter Textron, Inc., Cessna Aircraft Company, Cirrus Aircraft, DAHER‐SOCATA, Diamond Aircraft Industries,Inc.,EmbraerSA,Eurocopter,anEADSCompany,HawkerBeechcraftAircraftCompany,PiperAircraft, Inc.,QuestAircraftCompany,andRobinsonHelicopterCompany. Competition
The market for navigation, communications and information products is highly competitive. Garmin believestheprincipalcompetitivefactorsimpactingthemarketforits productsaredesign,functionality,quality and reliability, customer service, brand, price, time‐to‐market and availability. Garmin believes that it generally competesfavorablyineachoftheseareas. Garmin believes that its principal competitors for portable automotive products are TomTom N.V. and MiTAC Digital Corporation (“MiTAC”) (which distributes products under the brand names of Magellan, Mio, and Navman) and Navigon AG. Garmin believes that its principal competitors for outdoor/fitness product lines are Magellan,asubsidiaryofMiTAC,LowranceElectronics,Inc.,asubsidiaryofNavico(“Lowrance”)andDelormeand that its principal competitors for fitness products are Nike, Inc., Polar Electro Oy, Suunto Oy, Timex Corp. and BrytonCorp.Formarinechartplotterproducts,GarminbelievesthatitsprincipalcompetitorsareRaymarineInc. (“Raymarine”), Furuno Electronic Company (“Furuno”), and Simrad and Lowrance (subsidiaries of Navico). For
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Garmin’s fishfinder/depth sounder product lines, Garmin believes that its principal competitors are Lowrance, Raymarine,theHumminbirddivisionofJohnsonOutdoors,Inc.,andFuruno.ForGarmin’sgeneralaviationproduct lines,GarminconsidersitsprincipalcompetitorstobeHoneywell,Inc.,AvidyneCorporation,L‐3AvionicsSystems, RockwellCollins,Inc.,SagemAvionics,Inc.,UniversalAvionicsSystemsCorporation,CheltonFlightSystems,Aspen Avionics,andFreeFlightSystemsforpanel‐mountGPSanddisplayunits.ForGarmin’sFamilyRadioServiceand GeneralMobileRadioServiceproductline,GarminbelievesthatitsprincipalcompetitorsareMotorola,Inc.,Cobra ElectronicsCorporationandMidlandRadioCorporation. ResearchandDevelopment Garmin’s product innovations are driven by its strong emphasis on research and development and the closepartnershipbetweenGarmin’sengineeringandmanufacturingteams.Garmin’sproductsarecreatedbyits engineeringanddevelopmentstaff,whichnumbered2,340peopleworldwideasofDecember25,2010.Garmin’s manufacturingstaffincludesmanufacturingprocessengineerswhoworkcloselywithGarmin’sdesignengineersto ensure manufacturability and manufacturing cost control for its products. Garmin’s development staff includes industrial designers, as well as software engineers, electrical engineers, mechanical engineers and cartographic engineers.GarminbelievestheindustrialdesignofitsproductshasplayedanimportantroleinGarmin’ssuccess. Onceadevelopmentprojectisinitiatedandapproved,amulti‐disciplinaryteamiscreatedtodesigntheproduct andtransitionitintomanufacturing.
BelowisatableofGarmin’sexpendituresonresearchanddevelopmentoverthelastthreefiscalyears. December25, 2010 ($'sinthousands) Researchanddevelopment Percentofnetsales
December26, 2009
$277,261 10.3%
$238,378 8.1%
December27, 2008 $206,109 5.9%
ManufacturingandOperations GarminbelievesthatoneofitscorecompetenciesandstrengthsisitsmanufacturingcapabilityatitsSijhih, JhongliandLinKou,Taiwanfacilities,itsOlathe,Kansasfacility,anditsSalem,Oregonfacility.Garminbelievesthat itsverticallyintegratedapproachhasprovideditthefollowingbenefitswithrespecttoallproductsotherthanthe legacy nüvifone products, which are manufactured by one or more third parties as part of the Garmin‐Asus strategicalliance,afewselectmarineproducts(VHFradiosandAISreceivers),andouraccessoryproducts,allof whicharealsomanufacturedbyoneormorethirdparties. Reducedtime‐to‐market.Utilizingconcurrentengineeringtechniques,Garmin’sproductsareintroduced toproductionatanearlydevelopmentstageandthefeedbackprovidedbymanufacturingisincorporatedintothe designbeforemassproductionbegins.Inthismanner,Garminattemptstoreducethetimerequiredtomovea productfromitsdesignphasetomassproductiondeliveries. Design and process optimization. Garmin uses its manufacturing resources to rapidly prototype design concepts,productsandprocessesinordertoachievehigherefficiency,improvedqualityandyields,lowercostand bettervalueforcustomers.Garmin’sabilitytofullyexploreproductdesignandmanufacturingprocessconcepts hasenabledittooptimizeitsdesignstominimizesizeandweightinGPSdevicesthatarefunctional,waterproof, andrugged. Logisticalagility.OperatingourownmanufacturingfacilitieshelpsGarminminimizeproblems,suchas 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 and the new designs can be deliveredtomarketquickly.Garminreactsrapidlytochangesinmarketdemandbystrivingtomaintainasafety stockoflong‐leadcomponentsandbyreschedulingcomponentsfromoneproductlinetoanother.Operatingour
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ownmanufacturingfacilitiesalsoallowsGarmintoquicklyadjustthemixofproductproduction,helpingtofoster fasterdeliveryresponsetothecustomer. Garmin’sdesign,manufacturing,distribution,andservicingprocessesinourUS,Taiwan,andUKfacilities are certified to ISO 9001, an international quality standard developed by the International Organization for Standardization. Garmin’s Taiwan manufacturing facilities have also achieved TS 16949 certification, a quality standard for automotive suppliers. In addition, Garmin’s aviation operations have achieved certification to AS9100,thequalitystandardfortheaviationindustry. Garmin (Europe) Ltd and Garmin Corporation have also achieved certification of their environmental management systems to the ISO14001 standard. This certification recognizes that Garmin’s UK and Taiwan subsidiarieshavesystemsandprocessesinplacetominimizeorpreventharmfuleffectsontheenvironmentand tostrivecontinuallytoimproveitsenvironmentalperformance. Materials AlthoughmostcomponentsessentialtoGarmin’sbusinessaregenerallyavailablefrommultiplesources, certainkeycomponents,including,butnotlimitedto,microprocessors,certainliquidcrystaldisplays(“LCDs”),and certain application‐specific integrated circuits (“ASICs”) are currently obtained by the Company from single or limitedsources,whichsubjectsGarmintosupplyandpricingrisks.Manyoftheseandotherkeycomponentsthat are available from multiple sources, including, but not limited to, NAND flash memory, dynamic random access memory(“DRAM”),GPSchipsetsandcertainLCDs,aresubjectattimestoindustry‐wideshortagesandcommodity pricingfluctuations. Garminandotherparticipantsinthepersonalcomputer,mobilecommunication,aviationelectronicsand consumerelectronicsindustriesalsocompeteforvariouscomponentswithotherindustriesthathaveexperienced increaseddemandfortheirproducts.Inaddition,Garminusessomecustomcomponentsthatarenotcommonto therestofthepersonalcomputer,mobilecommunicationandconsumerelectronicsindustries,andnewproducts introduced by the Company often utilize custom components available from only one source until Garmin has evaluated whether there is a need for, and subsequently qualifies, additional suppliers. When a component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have matured or manufacturing capacity has increased. Garmin makes efforts to manage risks in these areas through the use of supply agreements for strategically important components. Nevertheless, if Garmin’s supply of a key single‐ sourcedcomponentforaneworexistingproductweredelayedorconstrained,ifsuchcomponentswereavailable onlyatsignificantlyhigherprices,orifakeymanufacturingvendordelayedshipmentsofcompletedproductsto Garmin, the Garmin’s financial condition and operating results could be materially adversely affected. Garmin’s business and financial performance could also be adversely affected depending on the time required to obtain sufficient quantities from the original source, or to identify and obtain sufficient quantities from an alternative source. Continued availability of these components at acceptable prices, or at all, may be affected if those suppliersdecidedtoconcentrateontheproductionofcommoncomponentsinsteadofcomponentscustomizedto meettheGarmin’srequirements Seasonality Our sales are subject to significant seasonal fluctuation. Sales of our consumer products are generally significantly higher in the fourth quarter, due to increased demand for automotive/mobile products during the holidaybuyingseason,and,toalesserextent,thesecondquarter,duetoincreaseddemandduringthespringand summer marine season and the Father’s Day/graduation buying season. Sales of consumer products are also influencedbythetimingofthereleaseofnewproducts.Ouraviationproductsdonotexperiencemuchseasonal variation,butaremoreinfluencedbythetimingofthereleaseofnewproductswhentheinitialdemandistypically thestrongest.
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Backlog Our sales are generally of a consumer nature and there is a relatively short cycle between order and shipment.Therefore,webelievethatbackloginformationisnotmaterialtotheunderstandingofourbusiness. Wetypicallyshipmostorderswithin72hoursofreceipt. IntellectualProperty Our success and ability to compete is dependent in part on our proprietary technology. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to establishandprotectourproprietaryrights.Inaddition,Garminoftenreliesonlicensesofintellectualpropertyfor useinitsbusiness.Forexample,Garminobtainslicensesfordigitalcartographytechnologyforuseinourproducts fromvarioussources. As of January 21, 2010, Garmin’s worldwide IP portfolio includes over 450 patents and 300 trademark registrations. Garmin was selected as a constituent of the 2010/2011 Ocean Tomo® 300 Patent Index which recognizescompanieswithhighintellectualpropertyvalue.Webelievethatourcontinuedsuccessdependsonthe intellectual skills of our employees and their ability to continue to innovate. Garmin will continue to file and prosecute patent applications when appropriate to attempt to protect Garmin’s rights in its proprietary technologies. Thereisnoassurancethatourcurrentpatents,orpatentswhichwemaylateracquire,maysuccessfully withstandanychallenge,inwholeorinpart.Itisalsopossiblethatanypatentissuedtousmaynotprovideuswith any competitive advantages, or that the patents of others will preclude us from manufacturing and marketing certainproducts.Despiteoureffortstoprotectourproprietaryrights,unauthorizedpartiesmayattempttocopy aspects of our products or to obtain and use information that we regard as proprietary. Litigation may be necessaryinthefuturetoenforceourintellectualpropertyrights,toprotectourtradesecrets,todeterminethe validityandscopeoftheproprietaryrightsofothersortodefendagainstclaimsofinfringementorinvalidity. Regulations The telecommunications industry is highly regulated, and the regulatory environment in which Garmin operates is subject to change. In accordance with Federal Communications Commission (“FCC”) rules and regulations, wireless transceiver and cellular handset products are required to be certified by the FCC and comparableauthoritiesinforeigncountrieswheretheyaresold.Garmin’sproductssoldinEuropearerequiredto complywithrelevantdirectivesoftheEuropeanCommission.Adelayinreceivingrequiredcertificationsfornew products, or enhancements to Garmin’s products, or losing certification for Garmin’s existing products could adverselyaffectourbusiness.Inaddition,aviationproductsthatareintendedforinstallationin“typecertificated aircraft”arerequiredtobecertifiedbytheFAA,itsEuropeancounterpart,theEuropeanAviationSafetyAgency, andothercomparableorganizationsbeforetheycanbeusedinanaircraft. Because Garmin Corporation, one of the Company’s principal subsidiaries, is located in Taiwan, foreign exchangecontrollawsandregulationsofTaiwanwithrespecttoremittancesintoandoutofTaiwanmayhavean impact on Garmin’s operations. The Taiwan Foreign Exchange Control Statute, and regulations thereunder, providethatallforeignexchangetransactionsmustbeexecutedbybanksdesignatedtohandlesuchbusinessby theMinistryofFinanceofTaiwanandbytheCentralBankoftheRepublicofChina(Taiwan),alsoreferredtoasthe CBC. Current regulations favor trade‐related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters, while all foreigncurrencyneededfortheimportofmerchandiseandservicesmaybepurchasedfreelyfromthedesignated foreignexchangebanks.Asidefromtrade‐relatedforeignexchangetransactions,Taiwancompaniesandresidents may,withoutforeignexchangeapproval,remitoutsideandintoTaiwanforeigncurrenciesofupto$50millionand $5 million respectively, or their equivalent, each calendar year. Currency conversions within the limits are processedbythedesignatedbanksanddonothavetobereviewedandapprovedbytheCBC.Theabovelimits
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apply to remittances involving a conversion between New Taiwan Dollars and U.S. Dollars or other foreign currencies.TheCBCtypicallyapprovesforeignexchangeinexcessofthelimitsifapartyapplieswiththeCBCfor reviewandpresentslegitimatebusinessreasonsjustifyingthecurrencyconversion.Arequirementisalsoimposed onallenterprisestoregisterallmediumandlong‐termforeigndebtwiththeCBC. EnvironmentalMatters Garmin’soperationsaresubjecttovariousenvironmentallaws,includinglawsaddressingairandwater pollution and management of hazardous substances and wastes. Substantial noncompliance with applicable environmentallawscouldhaveamaterialadverseeffectonourbusiness.Currently,wedonotanticipatematerial capitalexpendituresforenvironmentalcontrolfacilities. EnvironmentalregulationofGarmin’sproductsisincreasing.ManyofGarmin'sproductsaresubject tolawsrelatingtothechemicalandmaterialcompositionofourproductsandtheirenergyefficiency.Garminis alsosubjecttolawsrequiringmanufacturerstobefinanciallyresponsibleforcollection,recoveryandrecyclingof wastesfromcertainelectronicproducts.Compliancewithcurrentenvironmentallawsdoesnothaveamaterial impactonourbusiness,buttheimpactoffutureenactmentofenvironmentallawscannotyetbefullydetermined andcouldbesubstantial. Garmin has implemented multiple Environmental Management System (“EMS”) policies in accordance withtheInternationalOrganizationforStandardization(ISO)14001standardforEnvironmentalHealthandSafety Management. Garmin’s EMS policies set forth practices, standards, and procedures to ensure compliance with applicable environmental laws and regulations at Garmin’s Kansas headquarters facility, Garmin’s European headquartersfacility,andGarmin’sTaiwanmanufacturingfacility. Regulatoryand“GreenProcurement”demandsfromourcustomersarealsoincreasing,particularlyinthe areas of restricted substance use and environmentally‐friendly design and manufacture initiatives. The overall impacts of these customer requirements cannot yet be established. Garmin is committed to improving our productsandprocessestomeetourcustomerneeds. Employees As of December 25, 2010, Garmin had 8,897 full and part‐time employees worldwide, of whom 3,470 wereintheUnitedStates,72wereinCanada,4,419wereinTaiwan,725wereinEurope,and211wereinother globallocations.ExceptforsomeofGarmin’semployeesinBrazilandSweden,noneofGarmin’semployeesare represented by a labor union and none of Garmin's North American or Taiwan employees are covered by a collectivebargainingagreement.Garminconsidersitsemployeerelationstobegood. Item1A.RiskFactors The risks described below are not the only ones facing our company. Additional risks and uncertainties not presentlyknowntousorthatwecurrentlybelievetobeimmaterialmayalsoimpairourbusinessoperations.Ifany of the following risks occur, our business, financial condition or operating results could be materially adversely affected. RisksRelatedtotheCompany The demand for personal navigation devices (PNDs) may be eroded by replacement technologies becoming availableonmobilehandsetsandfactory‐installedsystemsinnewautos. We have historically experienced substantial growth in the automotive/mobile segment which has resultedinGPS/navigationtechnologiesbeingincorporatedintocompetingdevicessuchasmobilehandsetsand
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new automobiles through factory‐installed systems. Mobile handsets are frequently GPS‐enabled and many companies are now offering navigation software for mobile devices. The acceptance of this technology by consumershashaltedourgrowthandcouldfurtherreducemargins.Navigationsystemsarealsobecomingmore prevalent as optional equipment on new automobiles. Increased navigation penetration on new automobiles couldcausefurtherdeclinesinsalesofourportablenavigationdevicesandfurtherreducemargins. Ourfinancialresultsarehighlydependentontheautomotive/mobilesegment,whichrepresentsapproximately 62%ofourrevenuesandismaturing. Wehavehistoricallyexperiencedsubstantialgrowthintheautomotive/mobilesegmentofourbusinessas theproductshavebecomemass‐marketconsumerelectronicsinbothEuropeandNorthAmerica.Thismarkethas peaked as penetration rates increase and competing technologies emerge. This has resulted in lower revenues andlowerearningspershare. Economicconditionsanduncertaintycouldadverselyaffectourrevenueandmargins. Our revenue and margins depend significantly on general economic conditions and the demand for productsinthemarketsin whichwecompete.Thecurrenteconomicweaknessandconstrainedconsumerand business spending has resulted in decreased revenue and in the future, could result in decreased revenue and problems with our ability to manage inventory levels and collect customer receivables. In addition, financial difficulties experienced by our retailer and OEM customers have resulted, and could result in the future, in significantbaddebtwrite‐offsandadditionstoreservesinourreceivablesandcouldhaveanadverseaffectonour resultsofoperations. Grossmarginsforourproductsmayfluctuateorerode. Gross margins on our automotive/mobile products have been declining and are expected to decline in 2011 due to price reductions in the increasinglycompetitive market for personal navigationdevices (PNDs)that arenotfullyoffsetbymaterialcostreductions.Inaddition,ouroverallgrossmarginmayfluctuatefromperiodto periodduetoanumberoffactors,includingproductmix,competitionandunitvolumes.Inparticular,theaverage sellingpricesofaspecificproducttendtodecreaseoverthatproduct’slife.Tooffsetsuchdecreases,weintendto relyprimarilyoncomponentcostreduction,obtainingyieldimprovementsandcorrespondingcostreductionsin the manufacture of existing products and on introducing new products that incorporate advanced features and thereforecanbesoldathigheraveragesellingprices.However,therecanbenoassurancethatwewillbeableto obtainanysuchyieldimprovementsorcostreductionsorintroduceanysuchnewproductsinthefuture.Tothe extentthatsuchcostreductionsandnewproductintroductionsdonotoccurinatimelymannerorourproducts donotachievemarketacceptance,ourbusiness,financialconditionandresultsofoperationscouldbematerially adverselyaffected. ChangesinourUnitedStatesfederalincometaxclassificationorinapplicabletaxlawcouldresultinadversetax consequencestoourshareholders. Wedonotbelievethatwe(oranyofournon‐UnitedStatessubsidiaries)arecurrentlya‘‘passiveforeign investment company’’ for United States federal income tax purposes. We do not expect to become a passive foreigninvestmentcompany.However,becausethepassiveforeigninvestmentcompanydeterminationismade annuallybasedonwhetherthecompany’sincomeorassetsmeetcertainthresholdsasdeterminedunderUnited States federal tax principles which are based on facts and circumstances that may be beyond our control, we cannotassurethatwewillnotbecomeapassiveforeigninvestmentcompanyinthefuture.Ifweareapassive foreign investment company in any year, then any of our shareholders that is a United States person could be liabletopaytaxontheirproratashareofourincomeplusaninterestchargeuponsomedistributionsbyusor when that shareholder sells our common shares at a gain. Further, if we are classified as a passive foreign investmentcompanyinanyyearinwhichaUnitedStatespersonisashareholder,wegenerallywillcontinuetobe treated as a passive foreign investment company with respect to such shareholder in all succeeding years, regardlessofwhetherwecontinuetosatisfytheincomeorassettestsmentionedabove.
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We do not believe that we (or any of our non‐United States subsidiaries) are currently a Controlled ForeignCorporation(CFC)forUnitedStatesfederalincometaxpurposes.WedonotexpecttobecomeaCFC.The CFCdeterminationismadedailybasedonwhethertheUnitedStatesshareholdersownmorethanfiftypercentof thevotingpowerorvalueoftheCompany.OnlyUnitedStatespersonsthatowntenpercentormoreofthevoting poweroftheCompany’ssharesqualifyasUnitedStatesshareholders.IftheCompanyweretobeclassifiedasa CFCforanuninterruptedthirtydayperiodinanyyear,theCompany’sshareholdersthatqualifyasUnitedStates shareholderscouldbeliabletopayUSincometaxatordinaryincometaxratesontheirpro‐ratashareofcertain categoriesoftheCompany’sincomefortheperiodinwhichtheCompanyisclassifiedasaCFC.AstheCompany cannotcontroltheownershipoftheCompany’sstocknorcantheCompanycontrolwhichshareholdersparticipate intheCompany’sstockbuybackprogram,ownershipchangescouldresultthatcreateUnitedStatesshareholders whichincreasetheriskofGarminbeingtreatedasaCFC. LegislativeproposalshavebeenconsideredintheUnitedStateswithinthepastyearthatcouldincrease theUnitedStatestaxburdenofcorporationswithinternationaloperationsandcouldbroadenthecircumstances under which foreign corporations could be considered resident in the United States Our tax position could be adversely impacted by changes in United States or foreign tax laws, tax treaties or tax regulations or the interpretation or enforcement thereof by any tax authority. We cannot predict the outcome of any specific legislativeproposals. If we are not successful in the continued development, introduction or timely manufacture of new products, demandforourproductscoulddecrease. Weexpectthatasignificantportionofourfuturerevenuewillcontinuetobederivedfromsalesofnewly introduced products. The market for our products is characterized by rapidly changing technology, evolving industrystandardsandchangesincustomerneeds.Ifwefailtointroducenewproducts,ortomodifyorimprove ourexistingproducts,inresponsetochangesintechnology,industrystandardsorcustomerneeds,ourproducts couldrapidlybecomelesscompetitiveorobsolete.Wemustcontinuetomakesignificantinvestmentsinresearch and development in order to continue todevelop newproducts, enhance existingproducts and achieve market acceptance for such products. However, there can be no assurance that development stage products will be successfullycompletedor,ifdeveloped,willachievesignificantcustomeracceptance. If we are unable to successfully develop and introduce competitive new products, and enhance our existing products, our future results of operations would be adversely affected. Our pursuit of necessary technologymayrequiresubstantialtimeandexpense.Wemayneedtolicensenewtechnologiestorespondto technologicalchange.Theselicensesmaynotbeavailabletousontermsthatwecanacceptormaymaterially changethegrossprofitsthatweareabletoobtainonourproducts.Wemaynotsucceedinadaptingourproducts to new technologies as they emerge. Development and manufacturing schedules for technology products are difficulttopredict,andtherecanbenoassurancethatwewillachievetimelyinitialcustomershipmentsofnew products.Thetimelyavailabilityoftheseproductsinvolumeandtheiracceptancebycustomersareimportantto ourfuturesuccess.Fromtimetotimewehaveexperienceddelaysinshippingcertainofournewproductsandany future delays, whether due to product development delays, manufacturing delays, lack of market acceptance, delaysinregulatoryapproval,orotherwise,couldhaveamaterialadverseeffectonourresultsofoperations. If we are unable to compete effectively with existing or new competitors, our resulting loss of competitive positioncouldresultinpricereductions,fewercustomerorders,reducedmarginsandlossofmarketshare. Themarketsforourproductsarehighlycompetitive,andweexpectcompetitiontoincreaseinthefuture. Someofourcompetitorshavesignificantlygreaterfinancial,technicalandmarketingresourcesthanwedo.These competitors may be able to respond more rapidly to new or emerging technologies or changes in customer requirements.Theymayalsobeabletodevotegreaterresourcestothedevelopment,promotionandsaleoftheir products. Increased competition could result in price reductions, fewer customer orders, reduced margins and
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loss of market share. Our failure to compete successfully against current or future competitors could seriously harmourbusiness,financialconditionandresultsofoperations. Werelyonindependentdealersanddistributorstosellourproducts,anddisruptiontothesechannelswould harmourbusiness. Because we sell a majority of our products to independent dealers and distributors, we are subject to manyrisks,includingrisksrelatedtotheirinventorylevelsandsupportforourproducts.Inparticular,ourdealers anddistributorsmaintainsignificantlevelsofourproductsintheirinventories.Ifdealersanddistributorsattempt toreducetheirlevelsofinventoryoriftheydonotmaintainsufficientlevelstomeetcustomerdemand,oursales couldbenegativelyimpacted. Many of our dealers and distributors also sell products offered by our competitors. If our competitors offer our dealers and distributors more favorable terms, those dealers and distributors may de‐emphasize or declinetocarryourproducts.Inthefuture,wemaynotbeabletoretainorattractasufficientnumberofqualified dealersanddistributors.Ifweareunabletomaintainsuccessfulrelationshipswithdealersanddistributorsorto expandourdistributionchannels,ourbusinesswillsuffer. Ourquarterlyoperatingresultsaresubjecttofluctuationsandseasonality. Our operating results are difficult to predict. Our future quarterly operating results may fluctuate significantly. If such operating results decline, the price of our stock would likely decline. As we expand our operations, our operating expenses, particularly our advertising and research and development costs, may increaseasapercentageofoursales.Ifrevenuesdecreaseandweareunabletoreducethosecostsrapidly,our operatingresultswouldbenegativelyaffected. Historically,ourrevenueshavebeenweakerinthefirstquarterofeachfiscalyearandhaverecentlybeen lower than the preceding fourth quarter. Our devices are highly consumer‐oriented, and consumer buying is traditionallylowerinthesequarters.Salesofcertainofourmarineandautomotiveproductstendtobehigherin oursecondfiscalquarterduetoincreasedconsumerspendingforsuchproductsduringtherecreationalmarine, fishing, and travel season. Sales of our automotive/mobile products also have been higher in our fourth fiscal quarterduetoincreasedconsumerspendingpatternsonelectronicdevicesduringtheholidayseason.Inaddition, weattempttotimeournewproductreleasestocoincidewithrelativelyhigherconsumerspendinginthesecond andfourthfiscalquarters,whichcontributestotheseseasonalvariations. Ourquarterlyfinancialstatementswillreflectfluctuationsinforeigncurrencytranslation. The operation of Garmin’s subsidiaries in international markets results in exposure to movements in currency exchange rates. We have experienced significant foreign currency gains and losses due to the strengtheningandweakeningoftheU.S.dollar.Thepotentialofvolatileforeignexchangeratefluctuationsinthe futurecouldhaveasignificanteffectonourresultsofoperations. The currencies that create a majority of the Company’s exchange rate exposure are the Taiwan Dollar, Euro,andBritishPoundSterling.GarminCorporation,headquarteredinSijhih,Taiwan,usesthelocalcurrencyas thefunctionalcurrency.TheCompanytranslatesallassetsandliabilitiesatyear‐endexchangeratesandincome andexpenseaccountsataverageratesduringtheyear.Inordertominimizetheeffectofthecurrencyexchange fluctuationsonournetassets,wehaveelectedtoretainmostofourTaiwansubsidiary’scashandinvestmentsin marketablesecuritiesdenominatedinU.S.dollars. Nonetheless, U.S. GAAP requires the Company at the end of each accounting period to translate into TaiwanDollarsallsuchU.S.DollardenominatedassetsheldbyourTaiwansubsidiary.Thistranslationisrequired
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becausetheTaiwanDollaristhefunctionalcurrencyofthesubsidiary.ThisU.S.GAAP‐mandatedtranslationwill cause us to recognize gain or loss on our financial statements as the Taiwan Dollar/U.S. Dollar exchange rate varies. Such gain or loss will create variations inour earningsper share. Because there is minimal cash impact caused by such exchange rate variations, management will continue to focus on the Company’s operating performancebeforetheimpactoftheforeigncurrencytranslation. Ifwedonotcorrectlyanticipatedemandforourproducts,wemaynotbeabletosecuresufficientquantitiesor cost‐effectiveproductionofourproductsorwecouldhavecostlyexcessproductionorinventories. We have generally been able to increase production to meet this increasing demand. However, the demandforourproductsdependsonmanyfactorsandwillbedifficulttoforecast.Weexpectthatitwillbecome moredifficulttoforecastdemandasweintroduceandsupportmultipleproducts,ascompetitioninthemarketfor our products intensifies and as the markets for some of our products mature to the mass market category. Significantunanticipatedfluctuationsindemandcouldcausethefollowingproblemsinouroperations: y Ifdemandincreasesbeyondwhatweforecast,wewouldhavetorapidlyincreaseproduction.Wewould depend on suppliers to provide additional volumes of components and those suppliers might not be abletoincreaseproductionrapidlyenoughtomeetunexpecteddemand. y Rapid increases in production levels to meet unanticipated demand could result in higher costs for manufacturing and supply of components and other expenses. These higher costs could lower our profitmargins.Further,ifproductionisincreasedrapidly,manufacturingqualitycoulddecline,which mayalsolowerourmarginsandreducecustomersatisfaction. y Ifforecasteddemanddoesnotdevelop,wecouldhaveexcessproductionresultinginhigherinventories offinishedproductsandcomponents,whichwouldusecashandcouldleadtowrite‐offsofsomeorall of the excess inventories. Lower than forecasted demand could also result in excess manufacturing capacityorreducedmanufacturingefficienciesatourfacilities,whichcouldresultinlowermargins. We have benefited in the past from Taiwan government tax incentives offered on certain high technology capitalinvestmentsthatmaynotalwaysbeavailable. OureffectivetaxrateislowerthantheU.S.federalstatutoryrate,inpartbecausewehavebenefitedfrom incentivesofferedinTaiwanrelatedtoourhightechnologyinvestmentsinTaiwan.Thelossofthesetaxbenefits couldhaveasignificanteffectonourfinancialresultsinthefuture. WemayexperienceuniqueeconomicandpoliticalrisksassociatedwithcompaniesthatoperateinTaiwan. Relations between Taiwan and the People’s Republic of China, also referred to as the PRC, and other factorsaffectingthepoliticaloreconomicconditionsofTaiwaninthefuturecouldmateriallyadverselyaffectour business,financialconditionandresultsofoperationsandthemarketpriceandtheliquidityofourshares.Our principalmanufacturingfacilitieswherewemanufactureallofourproducts,exceptourpanel‐mountedaviation products,arelocatedinTaiwan. Taiwanhasauniqueinternationalpoliticalstatus.ThePRCassertssovereigntyoverallofChina,including Taiwan,certainotherislandsandallofmainlandChina.ThePRCgovernmentdoesnotrecognizethelegitimacyof theTaiwangovernment.Althoughsignificanteconomicandculturalrelationshavebeenestablishedduringrecent years between Taiwan and the PRC, the PRC government has indicated that it may use military force to gain control over Taiwan in certain circumstances, such as the declaration of independence by Taiwan. Relations betweenTaiwanandthePRChaveonoccasionadverselyaffectedthemarketvalueofTaiwanesecompaniesand couldnegativelyaffectouroperationsinTaiwaninthefuture.
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Ourintellectualpropertyrightsareimportanttoouroperations,andwecouldsufferlossiftheyinfringeupon other’srightsorareinfringeduponbyothers. Werelyonacombinationofpatents,copyrights,trademarksandtradesecrets,confidentialityprovisions andlicensingarrangementstoestablishandprotectourproprietaryrights.Tothisend,weholdrightstoanumber of patents and registered trademarks and regularly file applications to attempt to protect our rights in new technology and trademarks. However, there is no guarantee that our patent applications will become issued patents,orthatourtrademarkapplicationswillbecomeregisteredtrademarks.Moreover,evenifapproved,our patentsortrademarksmaythereafterbesuccessfullychallengedbyothersorotherwisebecomeinvalidatedfora varietyofreasons.Thus,anypatentsortrademarkswecurrentlyhaveormaylateracquiremaynotprovideusa significantcompetitiveadvantage. Thirdpartiesmayclaimthatweareinfringingtheirintellectualpropertyrights.Suchclaimscouldhavea material adverse effect on our business and financial condition. From time to time we receive letters alleging infringementofpatents,trademarksorotherintellectualpropertyrights.Litigationconcerningpatentsorother intellectualpropertyiscostlyandtimeconsuming.Wemayseeklicensesfromsuchparties,buttheycouldrefuse tograntusalicenseordemandcommerciallyunreasonableterms.Wemightnothavesufficientresourcestopay for the licenses. Such infringement claims could also cause us to incur substantial liabilities and to suspend or permanentlyceasetheuseofcriticaltechnologiesorprocessesortheproductionorsaleofmajorproducts. Wemaybecomesubjecttosignificantproductliabilitycosts. Ifouraviationproductsmalfunctionorcontainerrorsordefects,airplanecollisionsorcrashescouldoccur resulting in property damage, personal injury or death. Malfunctions or errors or defects in our marine navigationalproductscouldcauseboatstorunagroundorcauseotherwreckage,personalinjuryordeath.Ifour automotiveormarineproductscontaindefectsorerrorsinthemappingsuppliedbythird‐partymapprovidersor ifourusersdonotheedourwarningsabouttheproperuseoftheseproducts,collisionsoraccidentscouldoccur resulting in property damage, personal injury or death. If any of these events occurs, we could be subject to significantliabilityforpersonalinjuryandpropertydamageandundercertaincircumstancescouldbesubjecttoa judgment for punitive damages. We maintain insurance against accident‐related risks involving our products. However, there can be no assurance that such insurance would be sufficient to cover the cost of damages to othersorthatsuchinsurancewillcontinuetobeavailableatcommerciallyreasonablerates.Inaddition,insurance coveragegenerallywillnotcoverawardsofpunitivedamagesandmaynotcoverthecostofassociatedlegalfees anddefensecosts,whichcouldresultinlowermargins.Ifweareunabletomaintainsufficientinsurancetocover productliabilitycostsorifourinsurancecoveragedoesnotcovertheaward,thiscouldhaveamateriallyadverse impactonourbusiness,financialconditionandresultsofoperations. We depend on our suppliers, some of which are the sole source for specific components, and our production wouldbeseriouslyharmedifthesesuppliersarenotabletomeetourdemandandalternativesourcesarenot available,orifthecostsofcomponentsrise. Wearedependentonthirdpartysuppliersforvariouscomponentsusedinourcurrentproducts.Someof the components that we procure from third party suppliers include semiconductors and electroluminescent panels,liquidcrystaldisplays,memorychips,batteriesandmicroprocessors.Thecost,qualityandavailabilityof componentsareessentialtothesuccessfulproductionandsaleofourproducts.Somecomponentsweuseare fromsolesourcesuppliers.Certainapplication‐specificintegratedcircuitsincorporatingourproprietarydesignsare manufacturedfor usby solesource suppliers. Alternative sources may notbecurrently available for these sole sourcecomponents. Inthepastwehaveexperiencedshortagesofliquidcrystaldisplaysandothercomponents.Inaddition,if there are shortages in supply ofcomponents, thecostsof suchcomponents may rise. If suppliers are unableto meetourdemandforcomponentsonatimelybasisandifweareunabletoobtainanalternativesourceorifthe
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priceofthealternativesourceisprohibitive,orifthecostsofcomponentsrise,ourabilitytomaintaintimelyand cost‐effectiveproductionofourproductswouldbeseriouslyharmed. Wedependonthirdpartylicensorsforthedigitalmapdatacontainedinourautomotive/mobileproducts,and ourbusiness and/or gross margins couldbe harmed if we become unable tocontinue licensingsuch mapping dataoriftheroyaltycostsforsuchdatarise. We license digital mapping data for use in our products from various sources. There are only a limited number of suppliers of mapping data for each geographical region. The two largest digital map suppliers are NAVTEQCorporationandTeleAtlasN.V.NAVTEQCorporationisownedbyNokiaOyjandTeleAtlasN.V.isowned byTomTomN.V.NokiaandTomTomarebothcompetitorsofGarmin. Although we do not foresee difficulty in continuing to license data at favorable pricing due to the long term license extension signed between Garmin and NAVTEQ in November 2007 (extending our NAVTEQ license agreement through 2017 with an option to extend through 2021), if we are unable to continue licensing such mappingdataandareunabletoobtainanalternativesource,orifthenatureofourrelationshipswithNAVTEQ changesdetrimentally,ourabilitytosupplymappingdataforuseinourproductswouldbeseriouslyharmed. Wemaypursuestrategicacquisitions,investments,strategicpartnershipsorotherventures,andourbusiness couldbemateriallyharmedifwefailtosuccessfullyidentify,completeandintegratesuchtransactions. Weintendtoevaluateacquisitionopportunitiesandopportunitiestomakeinvestmentsincomplementary businesses,technologies,servicesorproducts,ortoenterintostrategicpartnershipswithpartieswhocanprovide accesstothoseassets,additionalproductorservicesofferings,additionaldistributionormarketingsynergiesor additional industry expertise. We may not be able to identify suitable acquisition, investment or strategic partnership candidates, or if we do identify suitable candidates in the future, we may not be able to complete thosetransactionsoncommerciallyfavorableterms,oratall. Anypastorfutureacquisitionscouldalsoresultindifficultiesassimilatingacquiredemployees(including culturaldifferenceswithforeignacquisitions),operations,andproductsanddiversionofcapitalandmanagement’s attention away from other business issues and opportunities. Integration of acquired companies may result in problems related to integration of technology and inexperienced management teams. In addition, the key personnel of the acquired company may decide not to work for us. We may not successfully integrate internal controls,complianceundertheSarbanes‐OxleyActof2002andothercorporategovernancematters,operations, personnelorproductsrelatedtoacquisitionswehavemadeinpreviousyearsormaymakeinthefuture.Ifwefail tosuccessfullyintegratesuchtransactions,ourbusinesscouldbemateriallyharmed. Wemayhaveadditionaltaxliabilities. WearesubjecttoincometaxesinboththeUnitedStatesandnumerousforeignjurisdictions.Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary course of our business,therearemanytransactionsandcalculationswheretheultimatetaxdeterminationisuncertain.Weare regularly under audit by tax authorities. Although we believe our tax estimates are reasonable, the final determinationoftaxauditsandanyrelatedlitigationcouldbemateriallydifferentfromourhistoricalincometax provisions and accruals. The results of an audit or litigation could have a material effect on our income tax provision,netincomeorcashflowsintheperiodorperiodsforwhichthatdeterminationismade. Failuretoobtainrequiredcertificationsofourproductsonatimelybasiscouldharmourbusiness. Wehavecertainproducts,especiallyinouraviationsegment,thataresubjecttogovernmentalandsimilar certificationsbeforetheycanbesold.Forexample,FAAcertificationisrequiredforallofouraviationproducts thatareintendedforinstallationintypecertificatedaircraft.Totheextentrequired,certificationisanexpensive and time‐consuming process that requires significant focus and resources. An inability to obtain, or excessive delayinobtaining,suchcertificationscouldhaveanadverseeffectonourabilitytointroducenewproductsand,
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for certain aviation OEM products, our customers’ ability to sell airplanes. Therefore, such inabilities or delays couldadverselyaffectouroperatingresults.Inaddition,wecannotassureyouthatourcertifiedproductswillnot bedecertified.Anysuchdecertificationcouldhaveanadverseeffectonouroperatingresults. Ourbusinessmaysufferifwearenotabletohireandretainsufficientqualifiedpersonnelorifweloseourkey personnel. Ourfuturesuccessdependspartlyonthecontinuedcontributionofourkeyexecutive,engineering,sales, marketing,manufacturingandadministrativepersonnel.Wecurrentlydonothaveemploymentagreementswith anyofourkeyexecutiveofficers.Wedonothavekeymanlifeinsuranceonanyofourkeyexecutiveofficersand donotcurrentlyintendtoobtainsuchinsurance.Thelossoftheservicesofanyofourseniorlevelmanagement, or other key employees, could harm our business. Recruiting and retaining the skilled personnel we require to maintain and grow our market position may be difficult. For example, in some recent years there has been a nationwideshortageofqualifiedelectricalengineersandsoftwareengineerswhoarenecessaryforustodesign anddevelopnewproducts,andtherefore,ithassometimesbeenchallengingtorecruitsuchpersonnel.Ifwefail tohireandretainqualifiedemployees,wemaynotbeabletomaintainandexpandourbusiness. Thereisuncertaintyastoourshareholders’abilitytoenforcecertainforeigncivilliabilitiesinSwitzerlandand Taiwan. We are a Swiss company and a substantial portion of our assets are located outside the United States, particularlyinTaiwan.Asaresult,itmaybedifficulttoeffectserviceofprocesswithintheUnitedStatesuponus. In addition, there is uncertainty as to whether the courts of Switzerland or Taiwan would recognize or enforce judgmentsofUnitedStatescourtsobtainedagainstuspredicateduponthecivilliabilityprovisionsofthesecurities lawsoftheUnitedStatesoranystatethereof,orbecompetenttohearoriginalactionsbroughtinSwitzerlandor TaiwanagainstuspredicateduponthesecuritieslawsoftheUnitedStatesoranystatethereof. AshutdownofU.S.airspaceorimpositionofrestrictionsongeneralaviationwouldharmourbusiness.
FollowingtheSeptember11,2001terroristattacks,theFAAorderedallaircraftoperatingintheU.S.tobe groundedforseveraldays.InadditiontothisshutdownofU.S.airspace,thegeneralaviationindustrywasfurther impactedbytheadditionalrestrictionsimplementedbytheFAAonthoseflightsthatflyutilizingVisualFlightRules (VFR). The FAA restricted VFR flight inside 30 enhanced Class B (a 20‐25 mile radius around the 30 largest metropolitanareasintheUSA)airspaceareas.TheAircraftOwnersandPilotsAssociation(AOPA)estimatedthat these restrictions affected approximately 41,800 general aviation aircraft based at 282 airports inside the 30 enhancedClassBairspaceareas.TheAOPAestimatesthatapproximately90%ofallgeneralaviationflightsare conductedVFR,andthatonly15%ofgeneralaviationpilotsarecurrenttoflyutilizingInstrumentFlightRules(IFR). TheshutdownofU.S.airspacefollowingSeptember11,2001causedreducedsalesofourgeneralaviation products and delays in the shipment of our products manufactured in our Taiwan manufacturing facility to our distributionfacilityinOlathe,Kansas,therebyadverselyaffectingourabilitytosupplynewandexistingproductsto ourdealersanddistributors. Any future shut down of U.S. airspace or imposition of restrictions on general aviation could have a materialadverseeffectonourbusinessandfinancialresults.
ManyofourproductsrelyontheGlobalPositioningSystem. The Global Positioning System is a satellite‐based navigation and positioning system consisting of a constellationoforbitingsatellites.Thesatellitesandtheirgroundcontrolandmonitoringstationsaremaintained andoperatedbytheUnitedStatesDepartmentofDefense.TheDepartmentofDefensedoesnotcurrentlycharge usersforaccesstothesatellitesignals.Thesesatellitesandtheirgroundsupportsystemsarecomplexelectronic systemssubjecttoelectronicandmechanicalfailuresandpossiblesabotage.Thesatelliteswereoriginallydesigned
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to have lives of 7.5 years and are subject to damage by the hostile space environment in which they operate. However,ofthecurrentdeploymentofsatellitesinplace,somehavebeenoperatingformorethan12years. Ifasignificantnumberofsatellitesweretobecomeinoperable,unavailableorarenotreplaced,itwould impairthecurrentutilityofourGlobalPositioningSystemproductsandwouldhaveamaterialnegativeeffecton our business. In addition, there can be no assurance that the U.S. government will remain committed to the operationandmaintenanceofGlobalPositioningSystemsatellitesoveralongperiod,orthatthepoliciesofthe U.S.governmentthatprovidefortheuseoftheGlobalPositioningSystemwithoutchargeandwithoutaccuracy degradationwillremainunchanged.BecauseoftheincreasingcommercialapplicationsoftheGlobalPositioning System,otherU.S.governmentagenciesmaybecomeinvolvedintheadministrationortheregulationoftheuseof GlobalPositioningSystemsignals.However,inapresidentialpolicystatementissuedinDecember2004,theBush administrationindicatedthattheU.S.iscommittedtosupportingandimprovingtheGlobalPositioningSystemand willcontinueprovidingitfreefromdirectuserfees.
Some of our products also use signals from systems that augment GPS, such as the Wide Area AugmentationSystem(WAAS).WAASisoperatedbytheFAA.AnycurtailmentoftheoperatingcapabilityofWAAS couldresultindecreasedusercapabilityformanyofouraviationproducts,therebyimpactingourmarkets. Any of the foregoing factors could affect the willingness of buyers of our products to select Global PositioningSystem‐basedproductsinsteadofproductsbasedoncompetingtechnologies.
Any reallocation or repurposing of radio frequency spectrum could cause harmful interference with the receptionofGlobalPositioningSystemsignals.Thisinterferencecouldharmourbusiness. Our Global Positioning System technology is dependent on the use of the Standard Positioning Service (SPS) provided by the U.S. Government’s Global Positioning System satellites. The Global Positioning System operatesinradiofrequencybandsthataregloballyallocatedforradionavigationsatelliteservices.International allocations of radio frequency are made by the International Telecommunications Union (ITU), a specialized technical agency of the United Nations. These allocations are further governed by radio regulations that have treaty status and which may be subject to modification every two to three years by the World Radio CommunicationConference.Eachcountryalsohasregulatoryauthorityonhoweachbandisused.IntheUnited States, the Federal Communications Commission (FCC) and the National Telecommunications and Information Administrationshareresponsibilityforradiofrequencyallocationsandspectrumusageregulations. AnyITUornationalreallocationofradiofrequencyspectrum,includingfrequencybandsegmentationor sharingofspectrum,orothermodificationsofthepermittedusesofrelevantfrequencybands,maymateriallyand adverselyaffecttheutilityandreliabilityofourproductsandhavesignificantnegativeimpactsonourbusinessand our customers. For example, the FCC is currently considering a proposal by a private party, LightSquared, to repurposespectrumadjacenttotheGPSbandsforterrestrialbroadbandwirelessoperationsinmetropolitanareas throughout the United States. If the FCC were to permit implementation of LightSquared’s proposal as is, terrestrialbroadbandwirelessoperationswouldcreateharmfulinterferencetoGPSreceiverswithinrangeofsuch operations. Ourbusinessissubjecttodisruptionsanduncertaintiescausedbywarorterrorism. Actsofwaroractsofterrorism,especiallyanydirectedattheGPSsignals,couldhaveamaterialadverse impactonourbusiness,operatingresults,andfinancialcondition.Thethreatofterrorismandwarandheightened securityandmilitaryresponsetothisthreat,oranyfutureactsofterrorism,maycausearedeploymentofthe satellitesusedinGPSorinterruptionsofthesystem.Totheextentthatsuchinterruptionshaveaneffectonsales ofourproducts,thiscouldhaveamaterialadverseeffectonourbusiness,resultsofoperations,andfinancial condition.
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Wemaybeexposedtocertainregulatoryandfinancialrisksrelatedtoclimatechange. Climate change is receivingincreasing attention worldwide. Some scientists, legislators and others attribute global warming to increased levels of greenhouse gases, including carbon dioxide, which has led to significantlegislativeandregulatoryeffortstolimitgreenhousegasemissions. Thereareanumberofpendinglegislativeandregulatoryproposalstoaddressgreenhousegasemissions. Forexample,inJune2009theU.S.HouseofRepresentativespassedtheAmericanCleanEnergyandSecurityAct that would phase‐in significant reductions in greenhouse gas emissions if enacted into law. The U.S. Senate is consideringoneormoredifferentbills,anditisuncertainwhether,whenandinwhatformafederalmandatory carbondioxideemissionsreductionprogrammaybeadopted.Similarly,certaincountrieshaveadoptedtheKyoto Protocol.Theseactionscouldincreasecostsassociatedwithouroperations,includingcostsforcomponentsused inthemanufactureofourproductsandfreightcosts. Becauseitisuncertainwhatlawsandregulationswillbeenacted,wecannotpredictthepotentialimpact ofsuchlawsandregulationsonourfutureconsolidatedfinancialcondition,resultsofoperationsorcashflows. RisksRelatingtoOurShares Thevolatilityofourstockpricecouldadverselyaffectinvestmentinourcommonshares. Themarketpriceofourcommonshareshasbeen,andmaycontinuetobe,highlyvolatile.During2010, thepriceofourcommonsharesrangedfromalowof$26.55toahighof$39.94.Avarietyoffactorscouldcause thepriceofourcommonsharestofluctuate,perhapssubstantially,including:
• • • • • • • • • • •
announcementsandrumorsofdevelopmentsrelatedtoourbusiness,ourcompetitors,oursuppliers orthemarketsinwhichwecompete; quarterlyfluctuationsinouractualoranticipatedoperatingresults; theavailability,pricingandtimelinessofdeliveryofcomponents,suchasflashmemoryandliquid crystaldisplays,usedinourproducts; generalconditionsintheworldwideeconomy,includingfluctuationsininterestrates; announcementsoftechnologicalinnovations; newproductsorproductenhancementsbyusorourcompetitors; productobsolescenceandourabilitytomanageproducttransitions; developmentsinpatentsorotherintellectualpropertyrightsandlitigation; developmentsinourrelationshipswithourcustomersandsuppliers; researchreportsoropinionsissuedbysecuritiesanalystsorbrokeragehousesrelatedtoGarmin,our competitors,oursuppliersorourcustomers;and anysignificantactsofterrorismagainsttheUnitedStates,Taiwanorsignificantmarketswherewe sellourproducts.
In addition, in recent years the stock market in general and the markets for shares of technology companies in particular, have experienced extreme price fluctuations which have often been unrelated to the operating performance of affected companies. Any such fluctuations in the future could adversely affect the marketpriceofourcommonshares. Ourofficersanddirectorsexertsubstantialinfluenceoverus. As of January 14, 2011, members and former members of our Board of Directors and our executive officers,togetherwithmembersoftheirfamiliesandentitiesthatmaybedeemedaffiliatesoforrelatedtosuch persons or entities, beneficially owned approximately 44.80% of our outstanding common shares. Accordingly,
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theseshareholdersmaybeabletodeterminetheoutcomeofcorporateactionsrequiringshareholderapproval, suchasmergersandacquisitions.Thislevelofownershipmayhaveasignificanteffectindelaying,deferringor preventingachangeincontrolofGarminandmayadverselyaffectthevotingandotherrightsofotherholdersof ourcommonshares. OnJune27,2010wecompletedtheredomesticationoftheplaceofourincorporationfromtheCaymanIslands to Switzerland (the “Redomestication”). As a result of increased shareholder approval requirements under Swisslaw,wehavelessflexibilitythanwepreviouslyhadasaCaymanIslandscompanywithrespecttocertain aspectsofcapitalmanagement. Swisslawallowsourshareholdersactingatashareholders’meetingtoauthorizesharecapitalthatcanbe issuedbytheboardofdirectorswithoutapprovalofashareholders’meeting,butthisauthorizationislimitedto 50% of the existing registered share capital and must be renewed by a shareholders’ meeting every two years. Additionally,subjecttospecifiedexceptions,includingtheexceptionsdescribedinourarticlesofassociation,Swiss lawgrantspreemptiverightstoexistingshareholderstosubscribefornewissuancesofsharesandothersecurities. Swiss law does not provide as much flexibility as Cayman Islands law in the various terms that can attach to different classes of shares either. For example, while the board of directors of a Cayman Islands company can authorize the issuance of preferred stock without shareholder approval, we will not be able to issue preferred stock without the approval of 66 2/3% of the votes represented and a majority of the par value of the shares representedatageneralmeetingofourshareholders.Swisslawalsoreservesforapprovalbyshareholdersmany corporate actions over which our board of directors previously had authority under Cayman Islands law. For example,dividendsmustbeapprovedbyshareholdersatthegeneralmeetingofourshareholders. TheparvalueofoursharesishigherfollowingtheRedomestication.Asaresult,wehavelessflexibilitythanwe previouslyhadasaCaymanIslandscompanywithrespecttocertainaspectsofcapitalmanagement. The par value of our shares is 10 Swiss francs per share, compared to a par value of $0.005 per share when we were a Cayman Islands company. Under Swiss law, we may not issue shares below par value. In the eventweneedtoraiseequitycapitalatatimewhenthetradingpriceofoursharesisbelowtheparvalueofthe shares,wewillbeunabletoissueshares.Inaddition,wewillnotbeabletoissueoptionsunderourbenefitsplans withanexercisepricebelowtheparvalue,whichwouldlimittheflexibilityofourcompensationarrangements. WearesubjecttovariousSwisstaxesfollowingtheRedomestication. AlthoughwedonotexpectSwisstaxestomateriallyaffectourworldwideeffectivecorporatetaxrate,we are subject to additional corporate taxes in Switzerland following the Redomestication. Switzerland imposes a corporate federal income tax for holding companies at an effective tax rate of 7.83%, although we should be entitledtoa“participationrelief”thatinmostcaseswilleffectivelyeliminateanySwisstaxationontheprofitsof oursubsidiariespaidbythemtousasdividendsaswellasoncapitalgainsrelatedtothesaleofparticipations.We also are subject to a Swiss issuance stamp tax levied on our share issuances, other than in connection with qualifying restructurings, or increases of our equity at a rate of 1% of the fair market value of the issuance or increase. In addition, we are subject to some other Swiss indirect taxes (e.g., VAT, Swiss issuance stamp tax on certaindebtinstrumentsandSwisssecuritiestransferstamptax). WemaynotbeabletomakedistributionsorrepurchaseshareswithoutsubjectingyoutoSwisswithholdingtax. Ifweareunabletomakedistributions,ifany,throughareductionofparvalueortopaydividends,ifany, outofqualifyingcapitalcontributionreserves,thenanydividendspaidbyuswillgenerallybesubjecttoaSwiss federalwithholdingtaxatarateof35%.Thewithholdingtaxmustbewithheldfromthegrossdistributionandpaid totheSwissFederalTaxAdministration.AU.S.holderthatqualifiesforbenefitsundertheConventionbetween theUnitedStatesofAmericaandtheSwissConfederationfortheAvoidanceofDoubleTaxationwithRespectto TaxesonIncomemayapplyforarefundofthetaxwithheldinexcessofthe15%treatyrate(orinexcessofthe5% reducedtreatyrateforqualifyingcorporateshareholderswithatleast10%participationinourvotingstock,orfor a full refund in case of qualified pension funds). Payment of a capital distribution in the form of a par value
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reductionisnotsubjecttoSwisswithholdingtax.However,therecanbenoassurancethatourshareholderswill approveareductioninparvalue,thatwewillbeabletomeettheotherlegalrequirementsforareductioninpar value, or that Swiss withholding rules will not be changed in the future. In addition, over the long term, the amount of par value available for us touse for par value reductionswill be limited. If we are unable to makea distributionthroughareductioninparvalueortopayadividendoutofqualifyingcapitalcontributionreserves,we maynotbeabletomakedistributionswithoutsubjectingyoutoSwisswithholdingtaxes. UnderSwisstaxlawapplicableuntilDecember31,2010,repurchasesofsharesforthepurposesofcapital reduction have been treated as a partial liquidation subject to 35% Swiss withholding tax on the difference between the par value and the repurchase price. On January1, 2011, under Swiss laws the portion of the repurchasepricethatisattributedtothequalifyingcapitalcontributionreservesofthesharesrepurchasedwillnot besubjecttotheSwisswithholdingtax.Wemayfollowasharerepurchaseprocessforfuturesharerepurchases,if any,similartoa"secondtradingline"ontheSwissStockExchangeinwhichSwissinstitutionalinvestorsbuyshares ontheopenmarketandsellthesesharestousandaregenerallyabletoreceivearefundoftheSwisswithholding tax.However,ifweareunabletousethisprocesssuccessfully,wemaynotbeabletorepurchasesharesforthe purposesofcapitalreductionwithoutsubjectingyoutoSwisswithholdingtaxes. Item1B.UnresolvedStaffComments None. Item2.Properties ThefollowingaretheprincipalpropertiesownedorleasedbytheCompanyanditssubsidiaries: GarminInternational,Inc.andGarminUSA,Inc.occupyafacilityofapproximately1,120,000squarefeet 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 supportedforNorth,CentralandSouthAmerica.Garmin’ssubsidiary,GarminRealty,LLCalsoownsanadditional 46acresoflandontheOlathesiteforfutureexpansion.Inconnectionwiththebondfinancingsforthefacilityin Olathe and the previous expansion of that facility, the City of Olathe holds the legal title to the Olathe facility whichisleasedtoGarmin’ssubsidiariesbytheCity.Uponthepaymentinfulloftheoutstandingbonds,theCityof OlatheisobligatedtotransfertitletoGarmin’ssubsidiariesfortheaggregatesumof$200.GarminInternational, Inc.haspurchased all the outstanding bonds and continues to hold the bonds until maturity in order to benefit frompropertytaxabatement. Garmin Corporation owns and occupies a 249,326 square foot facility in Sijhih, Taipei County, Taiwan, a 223,469squarefootfacilityinJhongli,Tao‐YangCounty,Taiwan,andanapproximately580,000squarefootfacility in LinKou, Tao‐Yang County, Taiwan. In these three facilities Garmin Corporation manufactures all of Garmin’s consumer and portable aviation products and warehouses, markets and supports products for the Pacific Rim countries. GarminAT,Inc.leasesapproximately15acresoflandinSalem,Oregonunderagroundlease.Thisground leaseexpiresin2030butGarminAThastheoptiontoextendthegroundleaseuntil2050.GarminAT,Inc.owns andoccupiesa115,000squarefootfacilityforoffice,developmentandmanufacturinguseanda33,000square footaircrafthangar,flighttestandcertificationfacilityonthisland.GarminAT,Inc.alsoleases43,870squarefeet of office space in a separate Salem, OR building for Garmin’s newly‐opened West Coast customer support call center. GarminInternational,Inc.leases148,320squarefeetoflandatNewCenturyAirportinGardner,Kansas underagroundleasewhichexpiresin2026.GarminInternational,Inc.ownsandoccupiesa47,254squarefoot aircrafthangar,flighttestandcertificationfacilityonthislandwhichisusedindevelopmentandcertificationof aviationproducts.
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GarminInternational,Inc.leasesapproximately15,000squarefeetofspaceat669NorthMichiganAvenue in Chicago, Illinois which is used as a retail store and showroom for Garmin products. This lease expires in November2016. GarminInternational,Inc.alsoleasesanadditional:(i)18,392squarefeetofofficespaceinKansasCity, Missouri for a call center operation; (ii) 48,625 square feet of office space in Olathe, Kansas for a call center operation; (iii) 24,748 square feet of aggregate office space in two buildings in Tempe, Arizona for software development;(iv)18,500squarefeetofofficespaceinChanhassan,MNforitsDigitalCyclonesubsidiary;(v)8,183 squarefeetofofficespaceinDiamondBar,Californiaforsoftwaredevelopment;(vi)5,952squarefeetofoffice space(and17,536squarefeetoflandonwhichthepremisessits)inWichita,Kansasforaviationdevelopmentand support;and(vii)5,700squarefeetinNewport,OregonfortheformerNautamatic(nowTR‐1)marineautopilot operations. Garmin(Europe)Ltd.ownsandoccupiesa155,000squarefootbuildinglocatedinTotton,Southampton, England,usedasofficesandadistributionfacility. Item3.LegalProceedings AmbatoMedia,LLCv.ClarionCo.,Ltd.,ClarionCorporationofAmerica,DelphiCorporation,FujitsuLimited,Fujitsu TenCorporationofAmerica,GarminLtd.,GarminInternational,Inc.,VictorCompanyofJapanLtd.,JVCAmericas Corporation,JVCKenwoodHoldings,Inc.,J&KCarElectronicsCorporation,LGElectronics,Inc.,LGElectronicsUSA, Inc.,MiTACInternationalCorporation,MiTACDigitalCorporation,MioTechnologyUSALtd.,Navigon,Inc.Nextar Inc., Panasonic Corporation, Panasonic Corporation of North America, Pioneer Corporation, Pioneer Electronics (USA)Inc.,SanyoElectricCo.,Ltd.,SanyoNorthAmericaCorporation,SanyoElectronicDevice(U.S.A.)Corporation, TomTomN.V.,TomTomInternationalB.V.,andTomTom,Inc. On August 14, 2009, Ambato Media, LLC filed suit in the United States District Court for the Eastern District of Texas against Garmin Ltd. and Garmin International, Inc. along with several codefendants alleging infringement of U.S. Patent No. 5,432,542 (“the ’542 patent”). On September 28, 2009, Garmin filed its Answer andCounterclaimsassertingthe’542patentisinvalidandnotinfringed.Althoughtherecanbenoassurancethat an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidityorfinancialposition,Garminbelievesthattheclaimsarewithoutmeritandintendstovigorouslydefend thisaction. Pioneer Corporation v. Garmin Deutschland GmbH, Garmin Ltd., Garmin International, Inc., Garmin (Europe Ltd. andGarminCorporation On October 9, 2009, Pioneer Corporation filed suit in the District Court in Düsseldorf, Germany against GarminDeutschlandGmbH,GarminLtd.,GarminInternational,Inc.,GarminCorporationandGarmin(Europe)Ltd. alleging infringement of European Patent No. 775 892 (“the ‘892 Patent”) and European Patent No. 508 681 (“the‘681 Patent”). Garmin has filed separate lawsuits in the German Federal Patent Court in Munich seeking declaratoryjudgmentsofinvalidityofthe‘892Patentandthe‘681Patent.OnJanuary11,2011,theDistrictCourt inDüsseldorfissueddecisionsfindinginfringementofthe’892and’681Patents.Garminintendstoappealthese decisions.Althoughtherecanbenoassurancethatanunfavorableoutcomeofthislitigationwouldnothavea materialadverseeffectonouroperatingresults,liquidityorfinancialposition,Garminbelievesthattheclaimsare withoutmeritandintendstovigorouslydefendthisaction. In the Matter of Certain Multimedia Display and Navigation Devices and Systems, Components Thereof, and ProductsContainingtheSame. OnNovember13, 2009, Pioneer Corporation and Pioneer Electronics(USA) Inc. (collectively, “Pioneer”) filed a complaint with the United States International Trade Commission (the “Commission”) against Garmin International, Inc., GarminCorporation, and Honeywell International Inc. alleging violation of Section 337 of the Tariff Act of 1930 and infringement of U.S. Patent No. 5,365,448 (“the ’448 patent”), U.S. Patent No. 6,122,592
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(“the ’592 patent”), and U.S. Patent No. 5,424,951 (“the ’951 patent”). On January 12, 2010, Garmin filed its Answerassertingthe’448patent,the’592patent,andthe’951patentareinvalidandnotinfringed.Ahearing washeldfromSeptember13‐21,2010.Thepartiescompletedtheirpost‐hearingbriefingonOctober14,2010.On December16,2010,theAdministrativeLawJudgeissuedanInitialDeterminationconcludingthereisnoviolation ofSection337andfindingthatthe’448,’592,and’951patentsarenotinfringed.OnJanuary5,2011Pioneerfiled apetitionforreviewoftheclaimconstructionandnon‐infringementholdingsoftheInitialDetermination.Garmin awaitsfinalconfirmationoftheInitialDeterminationbytheCommission.Althoughtherecanbenoassurancethat an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidityorfinancialposition,Garminbelievestheseclaimsarewithoutmeritandintendstovigorouslydefendthis action. VehicleIP,LLCv.AT&TMobilityLLC,CellcoPartnership,GarminInternational,Inc.,GarminUSA,Inc.,Networksin Motion, Inc., Telecommunication Systems, Inc., Telenav Inc., United Parcel Service, Inc., and UPS Logistics Technologies,Inc. On December 31, 2009, Vehicle IP, LLC filed suit in the United States District Court for the District of Delaware against Garmin International, Inc. and Garmin USA, Inc. along with several codefendants alleging infringement of U.S. Patent No. 5,987,377 (“the ’377 patent”). On March 11, 2010, Garmin filed its Answer and Counterclaimsassertingthe’377patentisinvalidandnotinfringed.Althoughtherecanbenoassurancethatan unfavorableoutcomeofthislitigationwouldnothaveamaterialadverseeffectonouroperatingresults,liquidity orfinancialposition,Garminbelievestheseclaimsarewithoutmeritandintendstovigorouslydefendthisaction. NazomiCommunications,Inc.v.NokiaCorporation,NokiaInc.,MicrosoftCorporation,Amazon.com,Inc.,Western Digital Corporation, Western Digital Technologies, Inc., Garmin Ltd., Garmin Corporation, Garmin International, Inc.,GarminUSA,Inc.,SlingMedia,Inc.,VIZIO,Inc.,andIomegaCorporation. On February 8, 2010, Nazomi Communications, Inc. filed suit in the United States District Court for the CentralDistrictofCaliforniaagainstGarminLtd.,GarminCorporation,GarminInternational,Inc.,andGarminUSA, Inc. along with several codefendants alleging infringement of U.S. Patent No. 7,080,362 (“the ’362 patent”) and U.S. Patent No. 7,225,436 (“the ’436 patent”). Garmin believes the ’362 patent and the ’436 patent are not infringed.OnApril27,2010,ARMLtd.,thedesigneroftheaccusedhardware,filedaMotiontoInterveneanda MotiontoTransferthecasetotheNorthernDistrictofCalifornia.OnJune21,2010,thecourtgrantedARMLtd.’s motiontointervene.OnOctober14,2010,thecourtgrantedARMLtd.’srenewedmotiontotransfer.Although therecanbenoassurancethatanunfavorableoutcomeofthislitigationwouldnothaveamaterialadverseeffect onouroperatingresults,liquidityorfinancialposition,Garminbelievestheseclaimsarewithoutmeritandintends tovigorouslydefendthisaction. VisteonGlobalTechnologies,Inc.andVisteonTechnologiesLLCv.GarminInternational,Inc. On February 10, 2010, Visteon Global Technologies, Inc. and Visteon Technologies LLC filed suit in the UnitedStatesDistrictCourtfortheEasternDistrictofMichigan,SouthernDivision,againstGarminInternational, Inc.alleginginfringementofU.S.PatentNo.5,544,060(“the‘060patent”),U.S.PatentNo.5,654,892(“the‘892 patent”), U.S. Patent No. 5,832, 408 (“the ‘408 patent”), U.S. Patent No 5,987,375 (“the ‘375 patent”) and U.S. PatentNo6,097,316(“the‘316patent”).OnMay17,2010,GarminfileditsAnswerassertingthateachclaimofthe ‘060patent,the‘892patent,the‘408patentandthe‘375patentisnotinfringedand/orinvalid.Althoughthere canbenoassurancethatanunfavorableoutcomeofthislitigationwouldnothaveamaterialadverseeffectonour operatingresults,liquidityorfinancialposition,Garminbelievesthattheclaimsinthislawsuitarewithoutmerit andintendstovigorouslydefendthisaction. Bandspeed,Inc.v.Acer,Inc.,AcerAmericanCorporation,BelkinInternational,Inc.,Belkin,Inc.,CasioComputerCo., Ltd.,XasioHitachiMobileCommunicationsCo.Ltd.,XasioAmerica,Inc.,DellInc.,GarminInternational,Inc.,Garmin USA, Inc., GN Netcom A/S, GN U.S. Inc. a/k/a GN Netcom Inc., Hewlett‐Packard Company, Hewlett‐Packard Development Company, L.P., HTC Corporation, HTC America, Inc., Huawei Technologies Co. Ltd., Kyocera Corporation, Kyocera International, Inc., Kyocera Communications, Inc., Kyocera Wireless Corporation, Lenovo
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(United States), Inc., LG Electronics, Inc., LG Electronics U.S.A. Inc., LG Electronics Mobilecomm U.S.A. Inc., Motorola, Inc., Nokia Corporation, Nokia Inc., Pantech Wireless, Inc. Plantronics, inc., Research in Motion Ltd., ResearchinMotionCorporation,SamsungTelecommunicationsAmerica,LLC,TomTomInternationalB.V.,TomTom, Inc.,ToshibaCorporation,ToshibaAmericainformationSystems,Inc.,andToshibaAmerica,Inc. OnJune30,2010,Bandspeed,Inc.filedsuitintheUnitedStatesDistrictCourtfortheEasternDistrictof Texasagainst38companies,includingGarminInternational,Inc.andGarminUSA,Inc.alleginginfringementofU.S. PatentNo7,027,418(“the‘418patent”)andU.S.PatentNo7,670,614(“the‘614patent”).Garminbelievesthat each claim of the ‘418 patent and the ‘614 patent is not infringed and/or invalid. On October 6, 2010, the defendants filed a Motion to Transfer Venue to the Western District of Texas and the parties await the court’s rulingonthismotion.Althoughtherecanbenoassurancethatanunfavorableoutcomeofthislitigationwould not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes the claimsinthislawsuitarewithoutmeritandintendstovigorouslydefendthisaction. Tqranis IP LLC v. Garmin International, Inc., Universal Avionics Systems Corporation, Johnson Outdoors Marine Electronics,Inc.,JohnsonOutdoorsInc.,RaymarineInc.,RaymarineUKLtd.,Navico,Inc.,andNavicoHoldingsA.S. OnNovember22,2010,TaranisIPLLCfiledsuitintheUnitedStatesDistrictCourtfortheNorthernDistrict of Illinois against eight companies, including Garmin International, Inc., alleging infringement of U.S. Patent No. 5,995,903(“the’903patent”).Garminbelievesthateachclaimofthe’903patentisnotinfringedand/orinvalid. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverseeffectonouroperatingresults,liquidity,orfinancialposition,Garminbelievestheclaimsinthislawsuit arewithoutmeritandintendstovigorouslydefendthisaction. Triangle Software, LLC v. Garmin International, Inc., TomTom Inc., Volkswagen Group of America, Inc. and WestwoodOne,Inc. OnDecember28,2010,TriangleSoftware,LLCfiledsuitintheUnitedStatesDistrictCourtfortheEastern DistrictofVirginiaagainstfourcompanies,includingGarminInternational,Inc.,alleginginfringementofU.S.Patent No.7,557,730(“the’730patent”),U.S.PatentNo.7,221,287(“the’287patent”),U.S.PatentNo.7,375,649(“the ’649patent”),U.S. Patent No. 7,508,321 (“the ’321 patent”), and U.S. PatentNo. 7,702,452 (“the’452patent”). Garmin believes that each claim of the ’730, ’287, ’649, ’321, and ’452 patents is not infringed and/or invalid. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverseeffectonouroperatingresults,liquidity,orfinancialposition,Garminbelievestheclaimsinthislawsuit arewithoutmeritandintendstovigorouslydefendthisaction. IntheMatterofCertainSemiconductorChipsandProductsContainingSame On December 1, 2010, Rambus Inc. filed a complaint with the United States International Trade Commission against 33 companies, including Garmin International, Inc., alleging infringement of U.S. Patent No. 6,470,405(“the’405patent”),U.S.PatentNo.6,591,353(“the’353patent”),U.S.PatentNo.7,287,109(“the’109 patent”), U.S. Patent No. 7,602,857 (“the ’857 patent”), U.S. Patent No. 7,602,858 (“the ’858 patent”), and U.S. PatentNo.7,715,494(“the’494patent”).Garmin’ssemiconductorchipsuppliersarealsonamedinthecomplaint andGarminbelievesthesesuppliershaveindemnificationobligationstodefendGarmininthismatter.Garminis preparingtofileitsAnswerassertingthe’405,’353,’109,’857,’858,andthe’494patentsareinvalidand/ornot infringed. Although there can be noassurance that anunfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity orfinancialposition, Garmin believes these claims are withoutmeritandintendstovigorouslydefendthisaction. FromtimetotimeGarminisinvolvedinotherlegalactionsarisingintheordinarycourseofourbusiness. We believe that the ultimate outcome of these actions will not have a material adverse effect on our business, financialconditionandresultsofoperations. ExecutiveOfficersoftheRegistrant
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Pursuant to General Instruction G(3) of Form 10‐K and instruction 3 to paragraph (b) of Item 401 of RegulationS‐K,thefollowinglistisincludedasanunnumberedIteminPartIofthisAnnualReportonForm10‐Kin lieu of being included in the Company’s Definitive Proxy Statement in connection with its annual meeting of shareholdersscheduledforJune3,2011. Dr.MinH.Kao,age62,hasservedasChairmanofGarminLtd.sinceAugust2004andwaspreviouslyCo‐ ChairmanofGarminLtd.fromAugust2000toAugust2004.HehasservedasChiefExecutiveOfficerofGarmin Ltd.sinceAugust2002andpreviouslyservedasCo‐ChiefExecutiveOfficerfromAugust2000toAugust2002.Dr. KaohasservedasadirectorandofficerofvarioussubsidiariesoftheCompanysinceAugust1990.Dr.Kaoholds Ph.D. and MS degrees in Electrical Engineering from the University of Tennessee and a BS degree in Electrical EngineeringfromNationalTaiwanUniversity. CliftonA.Pemble,age45,hasservedasadirectorofGarminLtd.sinceAugust2004,andasPresidentand Chief Operating Officer of Garmin Ltd. since October 2007. Mr. Pemble has served as a director and officer of various Garmin subsidiaries since August 2003. Previously, he was Vice President, Engineering of Garmin International,Inc.from2005toOctober2007,DirectorofEngineeringofGarminInternational,Inc.from2003to 2005,andSoftwareEngineeringManagerofGarminInternational,Inc.from1995to2002andaSoftwareEngineer withGarminInternational,Inc.from1989to1995.Mr.PembleholdsBAdegreesinMathematicsandComputer SciencefromMidAmericaNazareneUniversity. KevinS.Rauckman,age48,hasservedasChiefFinancialOfficerandTreasurerofGarminLtd.sinceAugust 2000.HepreviouslyservedasDirectorofFinanceandTreasurerofGarminInternational,Inc.sinceJanuary1999 and has served asa director and officer of various subsidiaries of theCompany since April 2001.Mr. Rauckman holdsBSandMBAdegreesinBusinessfromtheUniversityofKansas. Andrew R. Etkind, age 55, has served as Vice President, General Counsel and Secretary of Garmin Ltd. sinceJune2008.HewaspreviouslyGeneralCounselandSecretaryofGarminLtd.fromAugust2000toJune2008. He has been Vice President and General Counsel of Garmin International, Inc. since July 2007, General Counsel sinceFebruary1998,andSecretarysinceOctober1998.Mr.Etkindhasservedasadirectorandofficerofvarious GarminsubsidiariessinceDecember2001.Mr.EtkindholdsBA,MAandLLMdegreesfromCambridgeUniversity, EnglandandaJDdegreefromtheUniversityofMichiganLawSchool. Brian J. Pokorny, age 47, has been Vice President, Operations of Garmin International, Inc. since 2005. Previously,hewasDirectorofOperationsofGarminInternational,Inc.from1997to2005andProductionPlanning ManagerofGarminInternational,Inc.from1995to1997.Mr.PokornyholdsaBSdegreeinBusinessManagement andaMBAfromtheUniversityofNebraska‐LincolnandholdstheprofessionalcertificationofCPIM(Certifiedin ProductionandInventoryManagement). DannyJ.Bartel,age61,hasbeenVicePresident,WorldwideSalesofGarminInternational,Inc.since2006. Previously, he was Technical/Survey Sales Manager of Garmin International, Inc. from 1992 to 1993, Director, Europe,MiddleEastandAfricaofGarmin(Europe)Ltd.from1994to1999,andDirectorofConsumerElectronic SalesofGarminInternational,Inc.from1999to2006.HehasbeenadirectorofGarmin(Europe)Ltd.sinceJuly 2004.Mr.BartelholdsaBSinElectricalEngineeringfromSouthDakotaStateUniversityandaBAinManagement fromCentralMichiganUniversity. Gary V. Kelley, age 64, has been Vice President, Marketing of Garmin International, Inc. since 2005. Previously, he was Director of Marketing of Garmin International, Inc. from 1992 to 2005. He has also been DirectorofMarketingofGarminUSA,Inc.sinceJanuary2002.Mr.KelleywasadirectorofGarmin(Europe)Ltd. from1993to2004.Mr.KelleyholdsaBBAdegreefromBakerUniversity.Healsoholdsacommercialpilotlicense withinstrumentandflightinstructorratings. All executive officers are elected by and serve at the discretion of the Company’s Board of Directors. NoneoftheexecutiveofficershasanemploymentagreementwiththeCompany.Therearenoarrangementsor
38
understandingsbetweentheexecutiveofficersandanyotherpersonpursuanttowhichheorshewasoristobe selectedasanofficer.Thereisnofamilyrelationshipamonganyoftheexecutiveofficers.Dr.MinH.Kaoisthe brotherofRuey‐JengKao,whoisasupervisorofGarminCorporation,Garmin’sTaiwansubsidiary,whoservesas anex‐officiomemberofGarminCorporation’sBoardofDirectors.
PARTII Item5.MarketfortheCompany’sCommonShares,RelatedShareholderMattersandIssuerPurchasesofEquity Securities Garmin’scommonshareshavetradedontheNasdaqNationalMarketunderthesymbol“GRMN”sinceits initialpublicofferingonDecember8,2000(the“IPO”).AsofFebruary17,2011,therewere284shareholdersof record. The range of high and low closing sales prices of Garmin’s common shares as reported on the Nasdaq StockMarketforeachfiscalquarteroffiscalyears2010and2009wasasfollows: YearEnded December25,2010 December26,2009 High Low High Low FirstQuarter $39.94 $30.70 $23.48 $15.17 SecondQuarter $39.14 $31.22 $25.99 $19.74 ThirdQuarter $31.60 $26.55 $37.23 $22.67 FourthQuarter $34.00 $28.52 $39.58 $26.84 TheBoardofDirectorsdeclaredacashdividendof$1.50percommonsharetoshareholdersofrecordon April15,2010whichwaspaidonApril30,2010.TheBoardofDirectorsdeclaredacashdividendof$0.75per common share to shareholders of record on December 1, 2009 which was paid on December 15, 2009. Garmin currentlyexpectstopayacashdividendin2011.Thedecisionwhethertopayadividendandtheamountofthe dividend will be voted on by the Company’s shareholders as required by Swiss law. The Boardof Directors will make a recommendation closer to the payment date based on the Company’s cash balance, cash requirements andcashflowgeneration. The Board of Directors approved a share repurchase program on February 12, 2010, authorizing the Companytorepurchaseupto$300millionoftheCompany’ssharesasmarketandbusinessconditionswarrant. ThissharerepurchaseauthorizationexpiresonDecember31,2011.Noshareswererepurchasedundertheplan duringthefourthquarterof2010. We refer you to Item 12 of this report under the caption “Equity Compensation Plan Information” for certainequityplaninformationrequiredtobedisclosedbyItem201(d)ofRegulationS‐K. StockPerformanceGraph This performance graph shall not be deemed ‘‘filed’’ with the SEC or subject to Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any of our filings under the SecuritiesActof1933,asamended.
The following graph illustrates the cumulative total shareholder return (rounded to the nearest whole dollar) of Garmin common shares during the period from December 31, 2005 through December 31, 2010, and comparesittothecumulativetotalreturnontheNASDAQCompositeIndexandtheNASDAQ100Index.Garminis one of the constituent companies of the NASDAQ 100 Index. The comparison assumes a $100 investment on
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December31,2005,inGarmincommonsharesandineachoftheforegoingindexesandassumesreinvestmentof dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among Garmin Ltd., the NASDAQ Composite Index and the NASDAQ 100 Index
$350 $300 $250 $200 $150 $100 $50 $0 12/05
12/06
12/07
Garmin Ltd.
12/08
12/09
NASDAQ Composite
12/10
NASDAQ 100
*$100 invested on 12/31/05 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
Garmin Ltd. NASDAQ Composite NASDAQ 100
12/05
12/06
12/07
12/08
12/09
12/10
100.00 100.00 100.00
169.45 111.74 110.76
297.51 124.67 133.59
61.39 73.77 80.41
100.69 107.12 122.45
105.83 125.93 140.69
Thestockpriceperformanceincludedinthisgraphisnotnecessarilyindicativeoffuturestockpriceperformance.
Item6.SelectedFinancialData The following table sets forth selected consolidated financial data of the Company. The selected consolidatedbalancesheetdataasofDecember25,2010andDecember26,2009andtheselectedconsolidated statementofincomedatafortheyearsendedDecember25,2010,December26,2009,andDecember27,2008 werederivedfromtheCompany’sauditedconsolidatedfinancialstatementsandtherelatednotestheretowhich are included in Item 8 of this annual report on Form 10‐K. The selected consolidated balance sheet data as of December 27, 2008, December 29, 2007, and December 30, 2006 and the selected consolidated statement of incomedatafortheyearsendedDecember29,2007andDecember30,2006werederivedfromtheCompany’s auditedconsolidatedfinancialstatements,notincludedherein.
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Theinformationsetforthbelowisnotnecessarilyindicativeoftheresultsoffutureoperationsandshould bereadtogetherwith"Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations" andtheconsolidatedfinancialstatementsandnotestothosestatementsincludedinItems7and8inPartIIofthis Form10‐K. Dec.25,2010 ConsolidatedStatementsof IncomeData: Netsales Costofgoodssold Grossprofit Operatingexpenses: Advertisingexpense Selling,generaland administrative Researchanddevelopment Totaloperatingexpenses Operatingincome Otherincome/(expense),net(2),(3),(4) Incomebeforeincometaxes Incometaxprovision/(benefit)(5) Netincome Netincomepershare:(6) Basic Diluted Weightedaveragecommon sharesoutstanding:(6) Basic Diluted Cashdividendspershare(6) BalanceSheetData(atendof Period): Cashandcashequivalents Marketablesecurities Totalassets Totaldebt Totalstockholders'equity
Yearsended(1) Dec.26,2009 Dec.27,2008 Dec.29,2007 (inthousands,exceptpersharedata)
Dec.30,2006
$ 2,689,911 1,343,537 1,346,374
$ 2,946,440 1,502,329 1,444,111
$ 3,494,077 1,940,562 1,553,515
$3,180,319 1,717,064 1,463,255
$1,774,000 891,614 882,386
144,613
155,521
208,177
206,948
114,749
287,824 277,261 709,698
264,202 238,378 658,101
277,212 206,109 691,498
189,550 159,406 555,904
99,764 113,314 327,827
636,676 (59,404) 577,272
786,010 22,641 808,651
862,017 52,349 914,366
907,351 70,922 978,273
554,559 39,995 594,554
(7,331) $584,603
104,701 $703,950
181,518 $732,848
123,262 $855,011
80,431 $514,123
$2.97 $2.95
$3.51 $3.50
$3.51 $3.48
$3.95 $3.89
$2.38 $2.35
196,979 198,009
200,395 201,161
208,993 210,680
216,524 219,875
216,340 218,845
$1.50
$1,260,936 801,819 3,988,688 ‐ 3,049,562
$0.75
$1,091,581 766,047 3,828,082 ‐ 2,836,447
$0.75
$696,335 274,895 2,934,421 ‐ 2,225,854
$0.75
$0.50
$707,689 424,505 3,291,460 ‐ 2,350,614
$337,321 480,876 1,897,020 248 1,557,899
(1)Ourfiscalyear‐endisthelastSaturdayofthecalendaryearanddoesnotalwaysfallonDecember31.Allyearspresentedcontain 52weeks. (2)Otherincome/(expense),netmainlyconsistsofgainand/orlossonsaleofequitysecurities,interestincome,interestexpense, andforeigncurrencygain(loss) (3)Includes$23.0millionand$0.6millionforforeigncurrencygainsin2007and2006respectively, and$88.4million,$6.0millionand$35.3millionforforeigncurrencylossesin2010,2009and2008respectively. (4)Includesa$72.4milliongainonsaleofequitysecuritiesprimarilyrelatedtothesaleofourequityinterestinTeleAtlasN.V. andrelatedforeigncurrencyexchangeeffectsin2008. (5)Includesa$98.7millionone‐timeincometaxreservereleaseofuncertaintaxpositionreservesfrom2006to2008relatedto oursettlementwiththeIRSintheUS,partiallyoffsetbytheamountofthesettlementforthe2007taxyearintheUSandTaiwan surtaxexpenseduetothereleaseofreserves. (6)Allpriorperiodcommonstockandapplicableshareandpershareamountshavebeenretroactivelyadjusted toreflecta2‐for‐1splitoftheCompany'scommonstockeffectiveAugust15,2006.
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Item7.Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations Thefollowingdiscussionandanalysisofourfinancialconditionandresultsofoperationsfocusesonandis intendedtoclarifytheresultsofouroperations,certainchangesinourfinancialposition,liquidity,capitalstructure andbusinessdevelopmentsfortheperiodscoveredbytheconsolidatedfinancialstatementsincludedinthisForm 10‐K. This discussion should be read in conjunction with, and is qualified by reference to, the other related information including, but not limited to, the audited consolidated financial statements (including the notes thereto), the description of our business, all as set forth in this Form 10‐K, as well as the risk factors discussed aboveinItem1A. Aspreviouslynoted,thediscussionsetforthbelow,aswellasotherportionsofthisForm10‐K,contain statements concerning potential future events. Readers can identify these forward‐looking statements by their useofsuchverbsas“expects,”“anticipates,”“believes”orsimilarverbsorconjugationsofsuchverbs.Ifanyof ourassumptionsonwhichthestatementsarebasedproveincorrectorshouldunanticipatedcircumstancesarise, our actual results could materially differ from those anticipated by such forward‐looking statements. The differencescouldbecausedbyanumberoffactorsorcombinationoffactorsincluding,butnotlimitedto,those discussedaboveinItem1A.Readersarestronglyencouragedtoconsiderthosefactorswhenevaluatinganysuch forward‐lookingstatement.Wedonotundertaketoupdateanyforward‐lookingstatementsinthisForm10‐K. Garmin’sfiscalyearisa52‐53weekperiodendingonthelastSaturdayofthecalendaryear.Fiscalyears 2010,2009,and2008contained52weeks.Unlessotherwisestated,allyearsanddatesrefertotheCompany’s fiscalyearandfiscalperiods.Unlessthecontextotherwiserequires,referencesinthisdocumentto"we,""us," "our"andsimilartermsrefertoGarminLtd.anditssubsidiaries. Unlessotherwiseindicated,dollaramountssetforthinthetablesareinthousands,exceptpersharedata. Overview We are a leading worldwide provider of navigation, communications and information devices, most of whichareenabledbyGlobalPositioningSystem,orGPS,technology.Weoperateinfourbusinesssegments,which serve the marine, outdoor/fitness, automotive/mobile, and aviation markets. Our segments offer products throughournetworkofsubsidiarydistributorsandindependentdealersanddistributors.However,thenatureof productsandtypesofcustomersforthefoursegmentscanvarysignificantly.Assuch,thesegmentsaremanaged separately. Our portable GPS receivers and accessories for marine, recreation/fitness and automotive/mobile segments are sold primarily to retail outlets. Our aviation products are portable and panel‐mount avionics for VisualFlightRulesandInstrumentFlightRulesnavigationandaresoldprimarilytoretailoutletsandcertainaircraft manufacturers. Sinceourfirstproductsweredeliveredin1991,wehavegeneratedpositiveincomefromoperationseach yearandhavefundedourgrowthfromtheseprofits.Oursaleshaveincreasedatacompoundedannualgrowth rateof11%since2006andournetincomehasincreasedatacompoundedannualgrowthrateof3%since2006. Thevastmajorityofthisgrowthhasbeenorganic;onlyaverysmallamountofnewrevenueoccurredasaresultof theacquisitionofDynastreamInnovationsInc.in2006,DigitalCyclone,Inc.andtheassetsofNautamaticMarine Systems,Inc.in2007,elevenEuropeandistributorsbetween2007and2010,andMetriGear,Inc.in2010.These acquisitionshadnosignificantimpactonnetincomeforthoseyears. SinceourprincipallocationsareintheUnitedStates,TaiwanandtheU.K.,weexperiencesomeforeign currency fluctuations in our operating results. The table below provides a listing of our functional currency by subsidiaryexcludingtheEuropeansubsidiariesthatutilizetheEuro.
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Garmin(Europe)Ltd GarminCorporation GarminInternational GarminNorge DynastreamInnovations GarminDanmark GarminSweden GarminAustralasia GarminPolska GarminJapan GarminChina
USDollar TaiwanDollar USDollar NorwegianKroner CanadianDollar DanishKrone SwedishBrona AustralianDollar PolishZloty JapaneseYen ChineseRenminbi
Approximately77%ofsalesbyourEuropeansubsidiariesarenowdenominatedinBritishPoundsSterling ortheEuro.Weexperienced($88.4)million,($6.0)million,and($35.3)millioninforeigncurrencylossesduring fiscalyears2010,2009,and2008,respectively.The2008foreigncurrencylossincludesarealizedgainof$21.5 millionduetothestrengtheningoftheEurobetweenthedatewepurchasedsharesinTeleAtlasN.V.inOctober 2007 and the tender of shares in February, March, and June 2008. To date, we have not entered into hedging transactionsrelatedtoanycurrency,andwedonotcurrentlyplantoutilizehedgingtransactionsinthefuture. CriticalAccountingPoliciesandEstimates General Garmin’s discussion and analysis of its financial condition and results of operations are based upon Garmin’sconsolidatedfinancialstatements,whichhavebeenpreparedinaccordancewithaccountingprinciples generallyacceptedintheUnitedStates.ThepresentationofthesefinancialstatementsrequiresGarmintomake estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on‐going basis, Garmin evaluates its estimates, including those related to customer sales programs and incentives, product returns, bad debts, inventories, investments,intangibleassets,incometaxes,warrantyobligations,andcontingenciesandlitigation.Garminbases itsestimatesonhistoricalexperienceandonvariousotherassumptionsthatarebelievedtobereasonableunder thecircumstances,theresultsofwhichformthebasisformakingjudgmentsaboutthecarryingvalueofassetsand liabilitiesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimatesunder differentassumptionsorconditions. RevenueRecognition Garmin recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, thesalespriceisfixedordeterminable,andcollectionisprobable.ForthelargemajorityofGarmin’ssales,these criteria are met once product has shipped and title and risk of loss have transferred to the customer. The Company recognizes revenue from the sale of hardware products and software bundled with hardware that is essential to the functionality of the hardware in accordance with general revenue recognition accounting guidance.TheCompanyrecognizesrevenueinaccordancewithindustryspecificsoftwareaccountingguidancefor standalone sales of software products and sales of software bundled with hardware not essential to the functionalityofthehardware.TheCompanygenerallydoesnotofferspecifiedorunspecifiedupgraderightstoits customersinconnectionwithsoftwaresales. GarminintroducednüMapsLifetime™inJanuary2009,whichisasinglefeeprogramthat,subjecttothe program’stermsandconditions,enablescustomerstodownloadthelatestmapandpointofinterestinformation every quarterfor the usefullife of their PND. The revenueand associated cost of royalties for sales of nüMaps
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Lifetime™ products are deferred at the time of sale and recognized ratably on a straight‐line basis over the currentlyestimated36‐monthlifeoftheproducts. Formultiple‐elementarrangementsthatincludetangibleproductsthatcontainsoftwareessentialtothe tangibleproduct’sfunctionalityandundeliveredsoftwareelementsthatrelatetothetangibleproduct’sessential software, the Company allocates revenue to all deliverables based on their relative selling prices. In such circumstances, the accounting principles establish a hierarchy to determine the selling price to be used for allocatingrevenuetodeliverablesasfollows:(i)vendor‐specificobjectiveevidenceoffairvalue(“VSOE”),(ii)third‐ partyevidenceofsellingprice(“TPE”),and(iii)bestestimateofthesellingprice(“ESP”).VSOEgenerallyexistsonly when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable.Inadditiontotheproductslistedbelow,theCompanyhasofferedcertainotherproductsthatinvolve multiple‐elementarrangementsthatareimmaterial. In2010,GarminbeganofferingPNDswithlifetimemapupdates(LMU)bundledintheoriginalpurchase price.SimilartonüMapsLifetime™whichwasintroducedinJanuary2009,thisenablescustomerstodownload thelatestmapandpointofinterestinformationeveryquarterfortheusefullifeoftheirPND.TheCompanyhas identified two deliverables contained in arrangements involving the sale of PNDs including LMU. The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale, and the second deliverable is the LMU. The Company has allocated revenue between these two deliverablesusingtherelativesellingpricemethoddeterminedprimarilyusingVSOE.Amountsallocatedtothe delivered hardware and the related essential software are recognized at the time of sale provided the other conditionsforrevenuerecognitionhavebeenmet.AmountsallocatedtotheLMUaredeferredandrecognizedon astraight‐linebasisovertheestimated36‐monthlifeoftheproducts. In addition, Garmin offers PNDs with premium traffic bundled in the original purchase price in the Europeanmarket.TheCompanyhasidentifiedtwodeliverablescontainedinarrangementsinvolvingthesaleof PNDsincludingpremiumtraffic.Thefirstdeliverableisthehardwareandsoftwareessentialtothefunctionalityof thehardwaredevicedeliveredatthetimeofsale,andtheseconddeliverableisthepremiumtrafficservice.The Company has allocated revenue between these two deliverables using the relative selling price method determined using VSOE. Amounts allocated to the delivered hardware and the related essential software are recognized at the time of sale provided the other conditions for revenue recognition have been met. Amounts allocatedtothepremiumtrafficservicearedeferredandrecognizedonastraight‐linebasisovertheestimated36‐ monthlifeoftheproducts. In 2009, Garmin introduced the nüvi 1690, a premium PND with a built‐in wireless module that lets customers access Garmin’s nüLink!™ service, which provides direct links to certain online information. The Companyhasidentifiedtwodeliverablescontainedinarrangementsinvolvingthesaleofthenüvi1690.Thefirst deliverable is the hardware and software essential to the functionality of the hardware device delivered at the timeofsale,andtheseconddeliverableisthenüLinkservice.TheCompanyhasallocatedrevenuebetweenthese two deliverables using the relative selling price method determined using VSOE. Amounts allocated to the delivered hardware and the related essential software are recognized at the time of sale provided the other conditions for revenue recognition have been met. Amounts allocated to the nüLink services are deferred and recognizedonastraight‐linebasisoverthe24‐monthlifeoftheservice. 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 in clearing older products from their inventories in advance of new product releases), promotions and other volume‐based incentives. The reductions to revenue are based on estimates and judgments using historical experience and expectationoffutureconditions.ChangesintheseestimatescouldnegativelyaffectGarmin’soperatingresults. These incentives are reviewed periodically and, with the exceptions of price protection and certain other promotions,areaccruedforonapercentageofsalesbasis.Ifmarketconditionsweretodecline,Garminmaytake actionstoincreasecustomerincentiveofferingspossiblyresultinginanincrementalreductionofrevenueatthe timetheincentiveisoffered.
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GarminrecordsreductionstorevenueforexpectedfutureproductreturnsbasedonGarmin’shistorical experience. TradeAccountsReceivable We sell our products to retailers, wholesalers, and other customers and extend credit based on our evaluationofthecustomer’sfinancialcondition.Potentiallossesonreceivablesaredependentoneachindividual customer’s financial condition. We carry our trade accounts receivable at net realizable value. Typically, our accountsreceivablearecollectedwithin80daysanddonotbearinterest.Wemonitorourexposuretolosseson receivables and maintain allowances for potential losses or adjustments. We determine these allowances by (1) evaluatingtheagingofourreceivables;and(2)reviewingourhigh‐riskcustomers.Pastduereceivablebalancesare writtenoffwhenourinternalcollectioneffortshavebeenunsuccessfulincollectingtheamountdue. Warranties Garmin’s products are generally covered by a warranty for periods ranging from one to three years. Garminaccruesawarrantyreserveforestimatedcoststoprovidewarrantyservices.Garmin’sestimateofcoststo service its warranty obligations is based on historical experience and expectation of future conditions. To the extent Garmin experiences increased warranty claim activity or increased costs associated with servicing those claims,itswarrantyaccrualwillincrease,resultingindecreasedgrossprofit. Inventory Garmin writes down its inventory for estimated obsolescence or unmarketable inventory equal to the differencebetweenthecostofinventoryandtheestimatedmarketvaluebaseduponassumptionsaboutfuture demand and market conditions. If actual market conditions are less favorable than those projected by management,additionalinventorywrite‐downsmayberequired. Investments Investmentsareclassifiedasavailableforsaleandrecordedatfairvalue,andunrealizedinvestmentgains andlossesarereflectedinstockholders’equity.Investmentincomeisrecordedwhenearned,andcapitalgains and losses are recognized when investments are sold. Fair value of investments in auction rate securities are determinedusingthirdpartyestimateswhichfollowedanincomeapproachvaluationmethodology.Investments arereviewedperiodicallytodetermineiftheyhavesufferedanimpairmentofvaluethatisconsideredotherthan temporary. If investments are determined to be impaired, a capital loss is recognized at the date of determination. Testingforimpairmentofinvestmentsrequiressignificantmanagementjudgment.Theidentificationof potentiallyimpairedinvestments,thedeterminationoftheirfairvalueandtheassessmentofwhetheranydecline in value is other than temporary are the key judgment elements. The discovery of new information and the passageoftimecansignificantlychangethesejudgments.Revisionsofimpairmentjudgmentsaremadewhen new information becomes known, and any resulting impairment adjustments are made at that time. The economic environment and volatility of securities markets increase the difficulty of determining fair value and assessinginvestmentimpairment. IncomeTaxes Garminprovidesdeferredtaxassetsandliabilitiesbasedonthedifferencebetweenthetaxbasisofassets andliabilitiesandtheircarryingamountforfinancialreportingpurposesasmeasuredbytheenactedtaxratesand lawsthatwillbeineffectwhenthedifferencesareexpectedtoreverse.ItisGarmin’spolicytorecordavaluation allowance to reduce its deferred tax assets to an amount that it believes is more likely than not to be realized. WhileGarminhasconsideredfuturetaxableincomeandongoingprudentandfeasibletaxplanningstrategiesin
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assessingtheneedforthevaluationallowance,intheeventGarminweretodeterminethatitwouldnotbeableto realizeallorpartofitsnetdeferredtaxassetsinthefuture,anadjustmenttothedeferredtaxassetswouldbe chargedtoincomeintheperiodsuchdeterminationismade.Likewise,shouldGarmindeterminethatitwouldbe able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferredtaxassetswouldincreaseincomeintheperiodsuchdeterminationismade. In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complextaxregulations.WerecognizeliabilitiesfortaxauditissuesintheU.S.andothertaxjurisdictionsbasedon our estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimatelyprovestobeunnecessary,thereversaloftheliabilitieswouldresultintaxbenefitsbeingrecognizedin theperiodwhenwedeterminetheliabilitiesarenolongernecessary.Ifourestimateoftaxliabilitiesprovestobe lessthantheultimateassessment,afurtherchargetoexpensewouldresult. StockBasedCompensation Garmin awards stock options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and/or performanceshareseachyearaspartofGarmin’scompensationpackageforemployees.Employeeswithcertain levels of responsibility within Garmin are eligible for stock options, SAR grants, RSU grants and/or performance sharesbutthegrantingofoptions,SARs,RSUsand/orperformancesharesisatthediscretionoftheCompensation CommitteeoftheBoardofDirectorsandisnotacontractualobligation. Stock‐basedcompensationcostismeasuredatthegrantdatebasedonthefairvalueoftheawardandis recognizedasexpenseovertherequisiteserviceperiod.Determiningthefairvalueofstock‐basedawardsatthe grant date requires judgment, including estimating expecteddividends. Inaddition,judgment isalso required in estimatingtheamountofstock‐basedawardsthatareexpectedtobeforfeited.Ifactualresultsdiffersignificantly from these estimates, stock‐based compensation expense could be impacted. Stock compensation plans are discussedindetailinNote9oftheNotestoConsolidatedFinancialStatements. AccountingTermsandCharacteristics NetSales Ournetsalesareprimarilygeneratedthroughsalestoourglobaldealeranddistributornetworkandto originalequipmentmanufacturers.RefertotheRevenueRecognitiondiscussionabove.Oursalesarelargelyofa consumer nature; therefore backlog levels are not necessarily indicative of our future sales results. We aim to achieveaquickturnaroundonorderswereceive,andwetypicallyshipmostorderswithin72hours. Netsalesaresubjecttoseasonalfluctuation.Typically,salesofourconsumerproductsarehighestinthe secondquarter,duetoincreaseddemandduringthespringandsummerseason,andinthefourthquarter,dueto increased demand during the holiday buying season. Our aviation products do not experience much seasonal variation,butaremoreinfluencedbythetimingofthereleaseofnewproductswhentheinitialdemandistypically thestrongest. CostofSales/GrossProfit Rawmaterialcostsareourmostsignificantcomponentofcostofgoodssold.In2010,grossmarginfor our automotive/mobile segment declined 160 basis points as the average selling price declines outpaced raw material price declines. In addition, the deferral of high margin revenue and the related costs increased significantly as the product mix shifted toward products bundled with lifetime maps. See Note 2 for further information.Thiswaspartiallyoffsetbyapositiverefinementinthewarrantyreserve.In2009,grossmarginfor our automotive/mobile segment increased 350 basis points as benefits from raw material price declines and operatingefficienciesexceededtheaveragesellingpricedecline.In2008,grossmarginforourautomotive/mobile segmentdeclined310basispointsastheaveragesellingpricecontinuedtodeclineandweexperiencedfurther
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shiftinproductmixtolower‐marginproductgroups.Theseimpactsweresomewhatoffsetbyrawmaterialprice declines,mostsignificantlyflashmemory.Grossmarginsfortheaviation,marine,andoutdoor/fitnesssegments aremorestable.Ourlong‐termgrossmargintargetsare65%,55%and55%,respectively,forthesesegments. Ourexistingpracticeofperformingthedesignandmanufactureofourproductsin‐househasenabledus toutilizealternativelowercostcomponentsfromdifferentsuppliersand,wherepossible,toredesignourproducts to permit us to use these lower cost components. We believe that because of our practice of performing the design,manufactureandmarketingofourproductsin‐house,ourSijhih,Jhongli,andLin‐Koumanufacturingplants inTaiwan,ourOlathe,Kansas,andSalem,Oregonmanufacturingplantshaveexperiencedrelativelylowcostsof manufacturing. In general, products manufactured in Taiwan have been our highest volume products. Our manufacturinglaborcostshistoricallyhavebeenlowerinTaiwanthaninOlatheandSalem. 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 due to market pressures and introductionofnewproductssoldatlowerpricepoints.Theaveragesellingpricesofouraviation,outdoor/fitness, andmarineproductshavebeenstableduetoproductmixandtheintroductionofmoreadvancedproductssoldat higherprices.TheeffectofthesalespricedifferencesinherentwithinthemixofGPS‐enabledproductssoldcould haveasignificantimpactonourgrossprofit. AdvertisingExpense Ouradvertisingexpensesconsistofcostsforbothmediaadvertisingandcooperativeadvertisingwithour retail partners. As revenues grew in 2008, advertising expense also increased. In 2009‐2010, we reduced our advertisingexpenseasrevenuesdeclinedandthepublicbecamemoreawareofGPStechnology.Thereduction didnothaveanegativeimpactonourmarketshare.Weexpectadvertisingcoststodecreasein2011asrevenues decline. Selling,GeneralandAdministrativeExpenses Ourselling,generalandadministrativeexpensesconsistprimarilyof: • salariesforsalesandmarketingpersonnel; • salariesandrelatedcostsforexecutivesandadministrativepersonnel; • marketing,andotherbrandbuildingcosts; • accountingandlegalcosts; • informationsystemsandinfrastructurecosts; • travelandrelatedcosts;and • occupancyandotheroverheadcosts. Selling,generalandadministrativeexpensesincreasedin2010duetolegalcosts,feesassociatedwiththe Swiss redomestication, and growth in product support and information technology to support our growing installedbaseofusers.Duetotheeconomicpressureonourconsumer‐orientedbusiness,wedecreasedselling, general and administrative expenses in 2009. As revenues grew in 2008, selling, general and administrative expenses increased. We expect selling, general and administrative costs, excluding advertising, to be stable or declineslightlyin2011asrevenuesdecline.
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ResearchandDevelopment Themajorityofourresearchanddevelopmentcostsrepresentsalariesforourengineers,costsforhigh technologycomponentsandcostsoftestequipmentusedinproductandprototypedevelopment.Approximately 87% of the research and development of our products is performed in North America. The remainder of our researchanddevelopmentactivitiesisperformedprimarilybyourTaiwanengineeringgroup. Wearecommittedtoincreasingthelevelofinnovativedesignanddevelopmentofnewproductsaswe striveforexpandedabilitytoserveourexistingconsumerandaviationmarketsaswellasnewmarketsforGPS‐ enableddevices.Weexpectourresearchanddevelopmentbudgetinabsolutetermstobestablein2011. Customers Our top ten customers have contributed between 34% and 36% of net sales since 2008. We have experiencedaveragesalesdaysinourcustomeraccountsreceivableofbetween70and78dayssince2008.We have experienced an increase in the level of customer accounts receivable days due to changes in product mix, longer payment terms, and macroeconomic conditions. We expect to reduce the level of customer accounts receivabledaysaswenegotiateshorterpaymenttermswithourcustomers. IncomeTaxes Wehaveexperiencedarelativelyloweffectivecorporatetaxrateduetotheproportionofourrevenue generatedbyentitiesintaxjurisdictionswithlowstatutoryrates.Inparticular,theprofitentitlementafforded ourSwiss‐basedcompaniesbasedontheirintellectualpropertyrightsownershipofourconsumerproductsalong with substantial tax incentives offered by the Taiwanese government on certain high‐technology capital investments have continued to reduce our tax rate. As a result, our consolidated effective tax rate was approximately(1.3%)during2010.Thenegativeratewasduetotheimpactofone‐timeitemsbookedin2010. The one‐time items of ($98.7) million include the release of uncertain tax position reserves from 2006 to 2008 relatedtooursettlementwiththeIRSintheUS,partiallyoffsetbytheamountofthesettlementforthe2007tax yearintheUSandTaiwansurtaxexpenseduetothereleaseofreserves.Withoutone‐timeitems,wewouldhave reported an effective tax rate of 15.8% for 2010 compared to 12.9% for 2009. This increase resulted from an unfavorablemixoftaxableincomeamongthetaxjurisdictionsinwhichtheCompanyoperates.Wehavetaken advantage of the tax benefit in Taiwan since our inception and we expect to continue to benefit from lower effectivetaxratesatleastthrough2015.Managementbelievesthatduetoloweroperatingmarginspredictedfor fiscal2011,theremaybeslightlylessrevenuerecognizedbyentitiesinlowertaxratejurisdictions.Therefore,the effective tax rate for fiscal 2011 is expected to be higher than fiscal 2010. The actual effective tax rate will be dependent upon the operating margins, production volume, additional capital investments made during fiscal 2011,andthecompositionofourearnings. ResultsofOperations The following table sets forth our results of operations as a percentage of net sales during the periods shown:
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Fiscal Years Ended Dec. 25, Dec. 26, Dec. 27, 2010 2009 2008 100% 100% 100% 50% 51% 55% 50% 49% 45%
Net sales Cost of goods sold Gross profit Operating expenses: Advertising 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
5% 11% 10% 26% 24% -2% 22% 0% 22%
5% 9% 8% 22% 27% 0% 27% 3% 24%
6% 8% 6% 20% 25% 1% 26% 5% 21%
Thefollowingtablesetsforthourresultsofoperationsthroughincomebeforeincometaxesforeachof ourfoursegmentsduringtheperiodshown.Foreachlineiteminthetablethetotalofthesegments’amounts equalstheamountintheconsolidatedstatementsofincomedataincludedinItem6.
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Outdoor/ Fitness
Marine
Automotive/ Mobile
Aviation
$559,592 195,136 364,456
$198,860 74,212 124,648
$1,668,939 995,986 672,953
$262,520 78,203 184,317
Advertising Selling, general and administrative expenses Research and development Total expenses
24,485 58,313 30,633 113,431
9,834 23,497 23,854 57,185
106,950 188,799 131,290 427,039
3,344 17,215 91,484 112,043
Operating income Other income / (expense), net
251,025 (13,553)
67,463 (5,032)
245,914 (40,027)
Fiscal year ended December 25, 2010 Net sales Cost of goods sold Gross profit
Income before income taxes
$237,472
Outdoor/ Fitness
Fiscal year ended December 26, 2009 Net sales Cost of goods sold Gross profit Advertising Selling, general and administrative expenses Research and development Total expenses Operating income Other income / (expense), net Income before income taxes
$62,431
$205,887
72,274 (792) $71,482
Marine
Automotive/ Mobile
Aviation
$468,924 162,082 306,842
$177,644 72,429 105,215
$2,054,127 1,192,227 861,900
$245,745 75,591 170,154
23,262 47,799 23,776 94,837
9,682 18,177 21,448 49,307
118,713 172,473 110,907 402,093
3,864 25,753 82,247 111,864
212,005 (5,963)
55,908 1,522
459,807 28,777
$57,430
$488,584
$206,042
Outdoor/ Fitness
58,290 (1,695) $56,595
Marine
Automotive/ Mobile
Aviation
$427,783 181,037 246,746
$204,477 93,052 111,425
$2,538,411 1,560,816 977,595
$323,406 105,657 217,749
27,932 32,800 25,419 86,151
14,532 17,536 19,374 51,442
160,926 206,954 85,610 453,490
4,787 19,922 75,706 100,415
Operating income Other income / (expense), net
160,595 5,391
59,983 3,921
524,105 41,634
117,334 1,403
Income before income taxes
$165,986
$63,904
$565,739
$118,737
Fiscal year ended December 27, 2008 Net sales Cost of goods sold Gross profit Advertising Selling, general and administrative expenses Research and development Total expenses
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Comparisonof52‐WeeksEndedDecember25,2010andDecember26,2009 NetSales Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 NetSales %ofRevenues $559,592 21% 198,860 7% 1,668,939 62% 262,520 10% $2,689,911 100%
52‐weeksendedDecember26,2009 NetSales %ofRevenues $468,924 16% 177,644 6% 2,054,127 70% 245,745 8% $2,946,440 100%
YearoverYear $Change %Change $90,668 19% 21,216 12% (385,188) ‐19% 16,775 7% ($256,529) ‐9%
Net sales decreased 9% in 2010 when compared to the year‐ago period. The decrease occurred in automotive/mobile and was partially offset by revenue growth in outdoor/fitness, marine and aviation. The outdoor/fitness segment experienced the greatest increase at 19%. Automotive/mobile revenue remains the largestportionofourrevenuemix,butdeclinedfrom70%in2009to62%in2010. Totalunitsalesdecreased4%to16.0millionunitsin2010from16.6millionunitsin2009.Thedeclining unitsalesvolumein2010wasattributabletoadeclineinautomotive/mobileunitsduetoincreasedsaturationin thesegmentandcompetingtechnologiespartiallyoffsetbyincreasingvolumesintheoutdoor/fitness,marineand aviationsegments. Automotive/mobile segment revenue declined 19% in 2010, as the average selling price and volumes declined 11% and 9%, respectively. Outdoor/fitness segment revenue increased 19% on the strength of recent product introductions that expand the addressable market and ongoing global penetration. Marine revenues increased12%duetoproductintroductions,slightindustryrecoveryandmarketsharegains.Aviationrevenues increased7%astheCompanydeliveredintoadditionalcockpitsandtheretrofitbusinessbegantorecover. The Company anticipates ongoing revenue declines in 2011 driven by the automotive/mobile segment with partially offsetting growth in the outdoor/fitness, aviation and marine segments. In general, management believesthatcontinuousinnovationandtheintroductionofnewproductsareessentialforfuturerevenuegrowth. CostofGoodsSold Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 CostofGoods %ofRevenues $195,136 35% $74,212 37% $995,986 60% $78,203 30% $1,343,537 50%
52‐weeksendedDecember26,2009 CostofGoods %ofRevenues $162,082 35% $72,429 41% $1,192,227 58% $75,591 31% $1,502,329 51%
YearoverYear $Change %Change $33,054 20% 1,783 2% (196,241) ‐16% 2,612 3% ($158,792) ‐11%
Costofgoodssolddecreased11%in2010whencomparedtotheyear‐agoperiodwhichwasgenerally consistent with the change in revenue. The absolute dollar decrease occurred in automotive/mobile and was partiallyoffsetbycostofgoodsincreasesinoutdoor/fitness,marineandaviation.Costofgoodssoldin2010was positivelyimpactedby160basispointsduetoa$42.8millionwarrantyadjustmentrelatedtorefinementinthe estimatedwarrantyreserve.Thisadjustmentimpactedallsegmentswithautomotive/mobile,outdoor/fitnessand marinehavingthelargestbenefits.Costperunitdeclinedinallsegmentsdrivingstabletoimprovingmarginsin outdoor/fitness,marineandaviation. Managementbelievesthatcostofgoodssoldasapercentageofsaleswillbestablein2011givencurrent componentpricing.
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GrossProfit Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 GrossProfit %ofRevenues $364,456 65% 124,648 63% 672,953 40% 184,317 70% $1,346,374 50%
52‐weeksendedDecember26,2009 GrossProfit %ofRevenues $306,842 65% 105,215 59% 861,900 42% 170,154 69% $1,444,111 49%
YearoverYear $Change %Change $57,614 19% 19,433 18% (188,947) ‐22% 14,163 8% ($97,737) ‐7%
Grossprofitdollarsin2010decreased7%whilegrossprofitmarginpercentageincreased110basispoints compared to 2009. Gross profit margins were stable to increasing in all segments excluding the automotive/mobilesegmentwhencomparedto2009. Theautomotive/mobilesegmentgrossprofitmarginpercentagedecreaseof160basispointswasdriven byan11%decreaseinaveragesellingpricewhichwasonlypartiallyoffsetbyadeclineinperunitcostsincluding thewarrantybenefit.Grossprofitdollarsoftheautomotive/mobilesegmentdeclinedto50%oftotalgrossprofit dollars from 60% in 2009. Gross profit dollars for marine increased 18% compared to 2009 due to product mix shifting toward higher margin units. Gross profit dollars for outdoor/fitness increased by 19% to $364.5 million duetostrongrevenuegrowthinthesegment. Management believes that total company gross margins will be stable in 2011 as growth occurs in segmentswithhighermarginprofilesoffsettingcontinuedmarginpressureintheautomotive/mobilesegmentdue topricedeclines. AdvertisingExpenses
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 Advertising Expense %ofRevenues $24,485 4% 9,834 5% 106,950 6% 3,344 1% $144,613 5%
52‐weeksendedDecember26,2009 Advertising Expense %ofRevenues $23,262 5% 9,682 5% 118,713 6% 3,864 2% $155,521 5%
YearoverYear $Change %Change $1,223 5% 152 2% (11,763) ‐10% (520) ‐13% ($10,908) ‐7%
Advertising expense decreased 7% in absolute dollars and was flat as a percentage of revenues when comparedto2009.Asapercentofrevenues,advertisingexpenseswere5%inboth2010and2009.Theabsolute dollardecreaseoccurredprimarilyintheautomotive/mobilesegmentduetoreducedcooperativeadvertisingpaid to our retail partners partially offset by mobile handset specific advertising. Further offsetting the decline was increasedadvertisingforoutdoor/fitnesswherewecontinuetoinvestforgrowth.
Managementexpectstomaintainadvertisingasapercentageofsalesconstantin2011. Selling,GeneralandAdministrativeExpenses
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 Selling,General& Admin.Expenses %ofRevenues $58,313 10% 23,497 12% 188,799 11% 17,215 7% $287,824 11%
52‐weeksendedDecember26,2009 Selling,General& Admin.Expenses %ofRevenues $47,799 10% 18,177 10% 172,473 8% 25,753 10% $264,202 9%
YearoverYear $Change %Change $10,514 22% 5,320 29% 16,326 9% (8,538) ‐33% $23,622 9%
Selling, general and administrative expense increased in both absolute dollars and as a percentage of revenues compared to 2009. As a percent of revenues, selling, general and administrative expenses increased from9%ofrevenuesin2009to11%ofrevenuesin2010.Theexpenseincreasewasprimarilydrivenbylegalcosts,
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fees associated with the Swiss redomestication, and growth in product support and information technology to supportourgrowinginstalledbaseofusers.Aviationcostsdeclinedyear‐over‐yearduetoa2009baddebtaccrual drivenbycashcollectionrisksassociatedwithseveralofourcustomersthatdidnotreoccurin2010. Management expects selling, general and administrative expenses to decline in absolute dollars but to increaseasapercentageofsalesin2011asrevenuedeclinesoutpacecostreductions. ResearchandDevelopmentExpense
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 Research& Development %ofRevenues $30,633 5% 23,854 12% 131,290 8% 91,484 35% $277,261 10%
52‐weeksendedDecember26,2009 Research& Development %ofRevenues $23,776 5% 21,448 12% 110,907 5% 82,247 33% $238,378 8%
YearoverYear $Change %Change $6,857 29% 2,406 11% 20,383 18% 9,237 11% $38,883 16%
Research and development expense increased 16% due to ongoing development activities for new productsincludingthemobilehandsetinitiativewhichhasnowbeencancelled,andtheadditionofover350new engineering personnel to our staff during the period. In absolute dollars, research and development costs increased $38.9 million primarily in the auto/mobile segment, when compared with the year‐ago period and increased220basispointsasapercentofrevenue. ManagementbelievesthatoneofthekeystrategicinitiativesforfuturegrowthandsuccessofGarminis continuous innovation,development,and introductionof new products. Management expects that its research and development expenses will be stable during fiscal 2011 on an absolute dollar basis in order to deliver innovativenewproductsandtechnologies. OperatingIncome Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember25,2010 OperatingIncome %ofRevenues $251,025 45% 67,463 34% 245,914 15% 72,274 28% $636,676 24%
52‐weeksendedDecember26,2009 OperatingIncome %ofRevenues $212,005 45% 55,908 31% 459,807 22% 58,290 24% $786,010 27%
YearoverYear $Change %Change $39,020 18% 11,555 21% (213,893) ‐47% 13,984 24% ($149,334) ‐19%
Operatingincomedecreased300basispointsasapercentofrevenueand19%inabsolutedollarswhen compared to the year‐ago period as gross margin percentage improvements and reduced advertising expense weremorethanoffsetbydecliningrevenuesandincreasedselling,generalandadministrativeandresearchand developmentexpenses. Theautomotive/mobileoperatingmargindeclinedfrom22%in2009to15%in2010duetoa160basis point decline in gross margins and selling, general and administrative and research and development expense increasesduringaperiodofdecliningrevenues.Theaviationoperatingmarginincreasedfrom24%in2009to28% in2010asgrossmarginsimproved100basispoints
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OtherIncome(Expense) InterestIncome InterestExpense ForeignCurrencyExchange Gain/(Loss)onsaleofmarketablesecurities Other Total
52‐weeksended December25,2010 $24,979 (1,246) (88,377) (2,382) 7,622 ($59,404)
52‐weeksended December26,2009 $23,519 ‐ (6,040) 2,741 2,421 $22,641
Otherincome(expense)principallyconsistsofinterestincomeandforeigncurrencyexchangegainsand losses.Otherincome(expense)waslowerinfiscal2010relativetofiscal2009,withthemajorityofthisdifference causedbyalargeforeigncurrencylossin2010.Interestincomeforfiscal2010increasedduetoincreasingcash andmarketablesecuritiesbalancesduringtheyearpartiallyoffsetbydecreasinginterestrates.
ForeigncurrencygainsandlossesfortheCompanyareprimarilytiedtomovementsbytheTaiwanDollar, theEuro,andtheBritishPoundSterling.Duetotherelativesizeofentitiesusingothercurrencies,movementsare not expected to have a material impact on the Company’s financial statements. The Euro is the functional currencyofallsubsidiariesexcludingthoseshownbelow.Assubsidiarieshavegrown,currencymovesgenerated materialgainsandlosses.Additionally,Euro‐basedinter‐companytransactionsinGarminLtd.canalsogenerate currencygainsandlosses. The$88.4millioncurrencylossin2010wasduetothestrengtheningoftheU.S.Dollarcomparedtothe EuroandtheBritishPoundSterling,aswellastheweakeningoftheU.S.DollarcomparedtotheTaiwanDollar. During 2010, the U.S. Dollar strengthened 8.8% and 3.3% compared to the Euro and the British Pound Sterling, respectively,resultinginalossof$51.0million.Alossof$38.7millionresultedduetotheU.S.Dollarweakening 5.9% against the Taiwan Dollar. The movements of the Taiwan Dollar and Euro/British Pound Sterling have offsetting impacts due to the use of the Taiwan Dollar for manufacturing costs and cash held in non‐functional currencywhiletheEuroandBritishPoundSterlingtransactionsrelatetorevenue.Theremainingnetcurrencygain of$1.3millionrelatedtoothercurrenciesandtimingoftransactions. The$6.0millioncurrencylossin2009wasduetotheweakeningoftheU.S.DollarcomparedtotheEuro, theBritishPoundSterlingandtheTaiwanDollar.During2009,theU.S.Dollarweakened2.4%and8.3%compared totheEuroandtheBritishPoundSterling,respectively,resultinginagainof$5.8million.Alossof$16.1million resultedduetotheU.S.Dollarweakening2.3%againsttheTaiwanDollar.Theremainingnetcurrencygainof$4.3 millionrelatedtoothercurrenciesandtimingoftransactions. IncomeTaxProvision Our earnings before taxes fell 29% when compared to 2009 and our income tax expense decreased by $112.0 million, to ($7.3) million, for fiscal year 2010 from $104.7 million for fiscal year 2009. The significant declineinincometaxexpensewasduetotheimpactofone‐timeitemsbookedin2010.Theone‐timeitemsof ($98.7)millionincludereleaseofuncertaintaxpositionreservesfrom2006to2008relatedtooursettlementwith the IRS in the US, partially offset by the amount of the settlement for the 2007 tax year in the US and Taiwan surtaxexpenseduetothereleaseofreserves.Withoutone‐timeitems,wewouldhavereportedaneffectivetax rateof15.8%for2010comparedto12.9%for2009.Theincreaseintheadjustedeffectivetaxrateascomparedto 2009islargelyduetoanunfavorablemixofincomeamongtaxingjurisdictions. NetIncome Asaresultofthevariousfactorsnotedabove,netincomedecreased17%to$584.6millionforfiscalyear 2010comparedto$704.0millionforfiscalyear2009.
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Comparisonof52‐WeeksEndedDecember26,2009andDecember27,2008 NetSales Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 NetSales %ofRevenues $468,924 16% 177,644 6% 2,054,127 70% 245,745 8% $2,946,440 100%
52‐weeksendedDecember27,2008 NetSales %ofRevenues $427,783 12% 204,477 6% 2,538,411 73% 323,406 9% $3,494,077 100%
YearoverYear $Change %Change $41,141 10% (26,833) ‐13% (484,284) ‐19% (77,661) ‐24% ($547,637) ‐16%
Netsalesdecreased16%in2009whencomparedtotheyear‐agoperiod.Thedecreaseoccurredacross all segments, except outdoor/fitness, with the greatest decreases in the automotive/mobile and aviation segments.Automotive/mobilerevenuewasthelargestportionofourrevenuemix,butdeclinedfrom73%in2008 to70%in2009. Total unit sales decreased 2% to 16.6 million in 2009 from 16.9 million in 2008. The lower unit sales volume was attributable to declining volumes across all segments, excluding outdoor/fitness, with the greatest percentage declines occurring in aviation and marine. The lower volumes were driven primarily by the macroeconomicconditionsandreducedinventorylevelswithmanyofourretailpartners. Automotive/mobilesegmentrevenuedeclined19%in2009astheaveragesellingpricedeclined18%and volumesdeclined2%.Averagesellingpricedeclinescontinuetobeattributabletothecompetitiveenvironmentin which our automotive/mobile products compete. The aviation and marine segments declined 24% and 13%, respectively in 2009, as both industries experienced significant slowdowns associated with the macroeconomic conditions. Outdoor/fitness segment revenue increased 10% due to new product introductions, including the Dakota™series,theForerunner®405CX,theForerunner®310XTandEdge®500,andincreasingglobalpenetration ofthefitnesscategory.Allsegmentsshowedimprovingtrendsinthesecondhalfof2009asthemacroeconomic conditionsimproved. CostofGoodsSold Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 CostofGoods %ofRevenues $162,082 35% $72,429 41% $1,192,227 58% 75,591 31% $1,502,329 51%
52‐weeksendedDecember27,2008 CostofGoods %ofRevenues $181,037 42% $93,052 46% $1,560,816 61% $105,657 33% $1,940,562 56%
YearoverYear $Change %Change ($18,955) ‐10% (20,623) ‐22% (368,589) ‐24% (30,066) ‐28% ($438,233) ‐23%
Costofgoodssolddecreased23%in2009whencomparedto2008dueprimarilytothe16%declinein revenue.Inaddition,costperunitdeclinedinallsegmentsdrivingcostofgoodssoldasapercentageofrevenue lowerduetomaterialcostreductions.Thissavingswaspartiallyoffsetbyinventoryreservesassociatedwiththe mobilehandsetinitiatives. GrossProfit Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 GrossProfit %ofRevenues $306,842 65% 105,215 59% 861,900 42% 170,154 69% $1,444,111 49%
52‐weeksendedDecember27,2008 GrossProfit %ofRevenues $246,746 58% 111,425 54% 977,595 39% 217,749 67% $1,553,515 44%
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YearoverYear $Change %Change $60,096 24% (6,210) ‐6% (115,695) ‐12% (47,595) ‐22% ($109,404) ‐7%
The decrease in gross profit dollars was primarily attributable to the automotive/mobile and aviation segmentswheretheeffectsofrevenuedeclineswerepartiallyoffsetbytheimprovedgrossmarginsearned.Gross profitmarginpercentagefortheCompanyoverallincreased450basispointsasmarginsexpandedinallsegments. Theautomotive/mobilesegmentgrossprofitmarginpercentageincreaseof350basispointswasdriven bymaterialcostsreductionspartiallyoffsetbyinventoryreservesassociatedwiththemobilehandsetinitiativeand pricedeclines.Outdoor/fitnessgrossmarginincreasedprincipallyduetoanewersuiteofhighermarginproducts. Gross profit margin percentage for marine and aviation increased compared to 2008 due to increased average sellingpriceanddecreasesinperunitcostsdrivenbyproductmixandmaterialcostreductions. AdvertisingExpenses
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 Advertising Expense %ofRevenues $23,262 5% 9,682 5% 118,713 6% 3,864 2% $155,521 5%
52‐weeksendedDecember27,2008 Advertising Expense %ofRevenues $27,932 7% 14,532 7% 160,926 6% 4,787 1% $208,177 6%
YearoverYear $Change %Change ($4,670) ‐17% (4,850) ‐33% (42,213) ‐26% (923) ‐19% ($52,656) ‐25%
Advertisingexpensedecreasedbothasapercentageofsalesandinabsolutedollarswhencomparedto 2008.Asapercentofsales,advertisingexpensesdeclinedto5%in2009comparedto6.0%in2008.Thedecrease was a result of actions taken by the company to reduce costs as the macroeconomic conditions impacted sales acrossoursegmentsandaroundtheworldcombinedwithlowercooperativeadvertisingwhichistiedtonetsales levels. Selling,GeneralandAdministrativeExpenses
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 Selling,General& Admin.Expenses %ofRevenues $47,799 10% 18,177 10% 172,473 8% 25,753 10% $264,202 9%
52‐weeksendedDecember27,2008 Selling,General& Admin.Expenses %ofRevenues $32,800 8% 17,536 9% 206,954 8% 19,922 6% $277,212 8%
YearoverYear $Change %Change $14,999 46% 641 4% (34,481) ‐17% 5,831 29% ($13,010) ‐5%
Selling,generalandadministrativeexpensedecreased5%in2009whileitincreasedasapercentageof sales compared to 2008 as costs throughout the Company were reduced but not as rapidly as the revenue declines.Thedeclineincostswasprimarilyrelatedtoareductioninbaddebtexpenseduetospecificreserves recordedin2008asaresultofvendorbankruptciesoffsetbyincreasedcostsforproductsupportandinformation technology. The increased expense for the outdoor/fitness segment and the decreased expense for the automotive/mobile segment were driven by the allocation of costs based on revenues. As outdoor/fitness revenueshaveincreasedasapercentageofrevenues,additionalselling,generalandadministrativeexpensesare shiftedtothesegment.Asapercentofsales,selling,generalandadministrativeexpensesincreasedfrom8%in 2008to9%ofsalesin2009,asrevenuesdeclined. ResearchandDevelopmentExpense
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 Research& Development %ofRevenues $23,776 5% 21,448 12% 110,907 5% 82,247 33% $238,378 8%
52‐weeksendedDecember27,2008 Research& Development %ofRevenues $25,419 6% 19,374 9% 85,610 3% 75,706 23% $206,109 6%
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YearoverYear $Change %Change ($1,643) ‐6% 2,074 11% 25,297 30% 6,541 9% $32,269 16%
Theincreaseinresearchanddevelopmentexpensedollarswasduetoongoingdevelopmentactivitiesfor newproductsincludingthemobilehandsetinitiative,theadditionof230newengineeringpersonneltoourstaff duringtheperiod,andanincreaseinengineeringprogramcostsin2009asaresultofourcontinuedemphasison productinnovation. OperatingIncome
Outdoor/Fitness Marine Automotive/Mobile Aviation Total
52‐weeksendedDecember26,2009 OperatingIncome %ofRevenues $212,005 45% 55,908 31% 459,807 22% 58,290 24% $786,010 27%
52‐weeksendedDecember27,2008 OperatingIncome %ofRevenues $160,595 38% 59,983 29% 524,105 21% 117,334 36% $862,017 25%
YearoverYear $Change %Change $51,410 32% (4,075) ‐7% (64,298) ‐12% (59,044) ‐50% ($76,007) ‐9%
Operatingincomeincreased200basispointsasapercentofrevenuebutdecreased9%inabsolutedollars when compared to the year‐ago period as gross margin percentage improvements and reduced advertising expenseweremorethanoffsetbydecliningrevenuesandincreasedresearchanddevelopmentexpenses. OtherIncome(Expense) 52‐weeksended 52‐weeksended December26,2009 December27,2008 InterestIncome $23,519 $35,535 ForeignCurrencyExchange (6,040) (35,286) Gainonsaleofmarketablesecurities 2,741 50,884 Other 2,421 1,216 Total $22,641 $52,349 Otherincome(expense)principallyconsistsofinterestincomeandforeigncurrencyexchangegainsand losses.Otherincome(expense)waslowerinfiscal2009relativetofiscal2008,withthemajorityofthisdifference causedbyalargegainonsaleofequitysecuritiesin2008.Interestincomeforfiscal2009decreasedduetolower interestrates,partiallyoffsetbyhighercashandmarketablesecuritiesbalances.
The$6.0millioncurrencylossin2009wasduetotheweakeningoftheU.S.DollarcomparedtotheEuro, theBritishPoundSterlingandtheTaiwanDollar.During2009,theU.S.Dollarweakened2.4%and8.3%compared totheEuroandtheBritishPoundSterling,respectively,resultinginagainof$5.8million.Alossof$16.1million resultedduetotheU.S.Dollarweakening2.3%againsttheTaiwanDollar.TherelativeweaknessoftheTaiwan Dollar and Euro/British Pound Sterling have offsetting impacts due to the use of the Taiwan Dollar for manufacturingcostswhiletheEuroandBritishPoundSterlingtransactionsrelatetorevenue.Theremainingnet currencygainof$4.3millionrelatedtoothercurrenciesandtimingoftransactions. The$35.3millioncurrencylossin2008wasrelatedtothestrengtheningoftheU.S.Dollaroffsetbyagain associatedwiththesalesandtenderofourTeleAtlasN.V.shares.During2008,theTaiwanDollarweakened1.6% incomparisontotheU.S.Dollar,resultingina$20.8milliongain.TheEuroweakened4.1%andtheBritishPound Sterlingweakened26.1%relativetotheU.S.Dollarin2008whichresultedina$77.3millionloss.Offsettingthis netlosswasarealizedgainof$21.5millionduetothestrengtheningoftheEurobetweenthedateofpurchaseof theTeleAtlasN.V.sharesinOctober2007tothedatesoftenderinFebruary,March,andJune2008.Othernet currencylossesandthetimingoftransactionscreatedtheremaininglossof$0.3million. Gainonsaleofequityofsecuritiesof$50.9millionin2008wasprimarilygeneratedfromthesaleofour equityinterestinTeleAtlasN.V.whichweacquiredin2007inconnectionwithourannouncedintenttomakea cashofferforalloutstandingshares,whichwassubsequentlyabandoned.
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IncomeTaxProvision Our fiscal 2009 earnings before taxes fell 12% when compared to 2008, while our income tax expense decreased42%.Incometaxesfell$76.8million,to$104.7million,forfiscalyear2009from$181.5millionforfiscal year 2008, due to a lower effective tax rate and the reduced earnings before taxes. The effective tax rate was 12.9%forfiscal2009comparedto19.9%forfiscal2008.Thedecreaseintaxrateisduetothefavorablemixof taxableincomeamongthetaxjurisdictionsinwhichtheCompanyoperatesandthereleaseofincometaxreserves forwhichthestatuteoflimitationshasexpired. NetIncome Asaresultofthevariousfactorsnotedabove,netincomedecreased4%to$704.0millionforfiscalyear 2009comparedto$732.8millionforfiscalyear2008. LiquidityandCapitalResources Netcashgeneratedbyoperationswas$770.6million,$1,094.5million,and$862.2millionforfiscalyears 2010,2009,and2008,respectively.Primarydriversofthecashgenerationin2010included$584.6millionofnet income with non‐cash adjustments for depreciation/amortization of $94.7 million, foreign currency unrealized lossesof$62.8million,stockcompensationexpenseof$40.3million,$129.7millionrelatedtodecreasedaccounts receivableassaleslevelshavedeclinedand$131.3millionofsalesforwhichcashwasreceivedbutrevenuewas deferredasrequiredbyourrevenuerecognitionpolicies.Thiscashgenerationwaspartiallyoffsetbyusesofcash including a$144.5 million reduction in other current and noncurrent liabilities related primarilytothe timing of royalty payments and the $146.4 million reversal of tax reserves associated with both release of uncertain tax positionreservesfrom2006to2008relatedtooursettlementwiththeIRSintheUSandexpirationofstatuteof limitations,a$81.4millionreductioninaccountspayableprimarilyinourTaiwanmanufacturingoperationsdueto timingofpayments,anda$77.1millionincreaseininventoriesfollowingalowinventorylevelexiting2009.The declineincashflowfromoperationsover2009levelswasduetoreducednetincomelevelsandtheeffectofthe noncashincometaxbenefitrealizedfromreducedtaxreserves.Weexpecttogeneratecashflowfromoperations in 2011 with ongoing net income, as well as working capital gains through reduced accounts receivable and inventorylevelsassalesdecline. Cashflowusedininvestingactivitieswas$72.9million,$547.9millionand$56.3millionforfiscal2010, 2009and2008,respectively.Cashflowusedininvestingactivitiesprincipallyrelatestothenetredemptionofor investmentinfixedincomesecurities,capitalexpendituresandacquisitions.Capitalexpendituresin2010totaled $32.2millionandrelatedtobusinessoperationsandmaintenanceactivities.Thishasdeclinedsignificantlyfrom 2008spendinglevelsduetothecompletionofproductionandwarehousefacilityexpansions.Wehavebudgeted approximately $50 million of capital expenditures during fiscal 2011 to include normal ongoing capital expendituresandmaintenanceactivities.In2010and2009,netinvestmentinfixedincomesecuritiesofouron‐ handcashwas$25.5millionand$491.0million,respectively,asweinvestedexcesscash.In2008,thenetsaleof fixedincomesecuritieswasprimarilyrelatedto$239.3millionofcashgeneratedfromthetenderofoursharesof Tele Atlas N.V. It is management’s goal to invest the on‐handcash consistent with Garmin’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 low credit risk. Garmin’s average interest rate returns on cash and investments during fiscal 2010, 2009 and 2008 were approximately1.3%,1.7%and3.4%,respectively.In2010,cashflowusedininvestingactivitiesalsoincludedthe acquisition of MetriGear, Inc. In 2008, cash flow used in investing for acquisitions related to the purchase of Europeandistributors. Net cash used by financing activities in fiscal 2010 was $510.8 million resulting from the use of $298.9 millionforpaymentofourdeclareddividendand$225.9millionforstockrepurchasedunderourstockrepurchase plan,partiallyoffsetby$14.0millionfromtheissuanceofcommonstockrelatedtoourCompanystockoptionplan andstockbasedcompensationtaxbenefits.The2010dividendpaidwassignificantlyhigherthanprioryearsasthe
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dividendwasincreasedto$1.50pershare.Stockrepurchasesaremadeatthediscretionofmanagementunder repurchase programs approved by the Board of Directors as business and market conditions warrant. In 2010, 2009 and 2008, the Company repurchased 7.4 million shares, 0.7 million shares and 17.1 million shares, respectively. We currently use cash flow from operations to fund our capital expenditures, to support our working capitalrequirements,topaydividendsandtorepurchaseshares.Weexpectthatfuturecashrequirementswill principallybeforcapitalexpenditures,workingcapital,repurchaseofshares,paymentofdividendsdeclared,and thefundingofstrategicacquisitions. Webelievethatourexistingcashbalancesandcashflowfromoperationswillbesufficienttomeetour projected capital expenditures, working capital and other cash requirements at least through the end of fiscal 2011. ContractualObligationsandCommercialCommitments FuturecommitmentsofGarmin,asofDecember25,2010,aggregatedbytypeofcontractualobligation, are:
ContractualObligations OperatingLeases
Total $44,920
Paymentsduebyperiod Lessthan 1year 1‐3years 3‐5years $10,397 $17,737 $12,205
Morethan 5years $4,581
OperatingleasesdescribesleaseobligationsassociatedwithGarminfacilitieslocatedintheU.S.,Taiwan, Europe,andCanada. Wemayberequiredtomakesignificantcashoutlaysrelatedtounrecognizedtaxbenefits.However,due totheuncertaintyofthetimingoffuturecashflowsassociatedwithourunrecognizedtaxbenefits,weareunable to make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities. Accordingly, unrecognized tax benefits of $153.6 million as of December 25, 2010, have been excluded from the contractual obligations table above. For further information related to unrecognized tax benefits,seeNote2,“IncomeTaxes”,totheconsolidatedfinancialstatementsincludedinthisReport. Off‐BalanceSheetArrangements Wedonothaveanyoff‐balancesheetarrangements. Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk MarketSensitivity We have market risk primarily in connection with the pricing of our products and services and the purchase of raw materials. Product pricing and raw materials costs are both significantly influenced by semiconductor market conditions. Historically, during cyclical industry downturns, we have been able to offset pricingdeclinesforourproductsthroughacombinationofimprovedproductmixandsuccessinobtainingprice reductionsinrawmaterialscosts.
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Inflation Wedonotbelievethatinflationhashadamaterialeffectonourbusiness,financialconditionorresultsof operations.Ifourcostsweretobecomesubjecttosignificantinflationarypressures,wemaynotbeabletofully offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business,financialconditionandresultsofoperations. ForeignCurrencyExchangeRateRisk The operation of Garmin’s subsidiaries in international markets results in exposure to movements in currency exchange rates. We have experienced significant foreign currency gains and losses due to the strengtheningandweakeningoftheU.S.dollar.Thepotentialofvolatileforeignexchangeratefluctuationsinthe futurecouldhaveasignificanteffectonourresultsofoperations. The currencies that create a majority of the Company’s exchange rate exposure are the Taiwan Dollar, Euro,andBritishPoundSterling.GarminCorporation,headquarteredinSijhih,Taiwan,usesthelocalcurrencyas thefunctionalcurrency.TheCompanytranslatesallassetsandliabilitiesatyear‐endexchangeratesandincome andexpenseaccountsataverageratesduringtheyear.Inordertominimizetheeffectofthecurrencyexchange fluctuationsonournetassets,wehaveelectedtoretainmostofourTaiwansubsidiary’scashandinvestmentsin marketablesecuritiesdenominatedinU.S.dollars. All European subsidiaries excluding Garmin (Europe) Ltd., Garmin Danmark, Garmin Sweden, Garmin PolskaandGarminNorgeusetheEuroasthefunctionalcurrency.ThefunctionalcurrencyofourlargestEuropean subsidiary, Garmin (Europe) Ltd. remains the U.S. dollar, and as some transactions occurred in British Pounds Sterling or Euros, foreign currency gains or losses have been realized historically related to the movements of thosecurrenciesrelativetotheU.S.dollar.TheCompanybelievesthatgainsandlosseswillbecomemorematerial inthefutureasourEuropeanpresencegrows.In2010,theU.S.Dollarstrengthened8.8%relativetotheEuroand 3.3% relative to the British Pound Sterling. These currency moves resulted in a foreign currency loss of $51.0 million in Garmin Ltd. and our European subsidiaries. A loss of $38.7 million resulted due to the U.S. Dollar weakening5.9%againsttheTaiwanDollar.Thenetresultofthesecurrencymovescombinedwithothergainsof $1.3million,andthetimingoftransactionsduringtheyearwasanetlossof$88.4millionfortheCompanyanda cumulativetranslationadjustmentof$61.7millionattheendoffiscal2010. InterestRateRisk Wehavenooutstandinglong‐termdebtasofDecember25,2010.We,therefore,havenomeaningful debt‐relatedinterestraterisk. We are exposed to interest rate risk in connection with our investments in marketable securities. As interestrateschange,theunrealizedgainsandlossesassociatedwiththosesecuritieswillfluctuateaccordingly.A hypotheticalchangeof10%ininterestrateswouldnothaveamaterialeffectonsuchunrealizedgainsorlosses. AtDecember25,2010,cumulativeunrealizedlossesonthosesecuritieswere$4.6million.
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Item8.FinancialStatementsandSupplementaryData CONSOLIDATEDFINANCIALSTATEMENTS GarminLtd.andSubsidiaries YearsEndedDecember25,2010,December26,2009andDecember27,2008 Contents ReportofErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm..........................................62 ConsolidatedBalanceSheetsatDecember25,2010andDecember26,2009............................................63 ConsolidatedStatementsofIncomefortheYearsEndedDecember25,2010,December26,2009and December27,2008...................................................................................................................................64 ConsolidatedStatementsofStockholders’EquityfortheYearsEnded December25,2010,December26,2009andDecember27,2008..........................................................65 ConsolidatedStatementsofCashFlowsfortheYearsDecember25,2010,December26,2009 andDecember27,2008...............................................................................................................................66 NotestoConsolidatedFinancialStatements................................................................................................68
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ReportofErnst&YoungLLP IndependentRegisteredPublicAccountingFirm TheBoardofDirectorsandShareholders GarminLtd. WehaveauditedtheaccompanyingconsolidatedbalancesheetsofGarminLtd.andSubsidiaries(theCompany)as ofDecember25,2010andDecember26,2009andtherelatedconsolidatedstatementsofincome,stockholders' equity, and cash flows for each of the three years in the period ended December 25, 2010. Our audits also included the financial statement schedule listed in the index at Item 15(a)(2). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on thesefinancialstatementsandschedulebasedonouraudits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceabout whetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis, evidencesupportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingthe accounting principles used and significant estimates made by management, as well as evaluating the overall financialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion. Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidated financial position of Garmin Ltd. and Subsidiaries at December 25, 2010 and December 26, 2009 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 25, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,presentsfairlyinallmaterialrespectstheinformationsetforththerein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates),GarminLtd.’sinternalcontroloverfinancialreportingasofDecember25,2010,basedoncriteria establishedintheInternalControl‐IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsof theTreadwayCommissionandourreportdatedFebruary23,2011expressedanunqualifiedopinionthereon.
KansasCity,Missouri February23,2011
/s/Ernst&YoungLLP
62
GarminLtd.AndSubsidiaries ConsolidatedBalanceSheets (Inthousands,exceptshareinformation) December25,
December26,
2010
2009
Assets Currentassets: Cashandcashequivalents Marketablesecurities(Note3)
$1,260,936
$1,091,581
24,418
19,583
Accountsreceivable,lessallowancefordoubtfulaccountsof $31,822in2010and$36,673in2009
747,249
874,110
Inventories,net
387,577
309,938 61,397
Deferredincometaxes(Note6)
33,628
Deferredcosts
20,053
5,314
Prepaidexpensesandothercurrentassets
24,894
34,156
2,498,755
2,396,079
Totalcurrentassets Propertyandequipment,net Landandimprovements Buildingandimprovements Officefurnitureandequipment
94,792
92,088
274,163
268,011
98,779
84,544
119,829
115,179
Engineeringequipment
71,709
65,240
Vehicles
18,437
15,247
677,709
640,309
Manufacturingequipment
Accumulateddepreciation
(249,904) 427,805
Restrictedcash(Note4) Marketablesecurities(Note3) Licenseagreements,net Noncurrentdeferredincometax(Note6) Noncurrentdeferredcosts Otherintangibleassets Totalassets
(198,971) 441,338
1,277
2,047
777,401
746,464
1,800
15,400
73,613
20,498
24,685
7,996
183,352
198,260
$3,988,688
$3,828,082
LiabilitiesandStockholders'Equity Currentliabilities: $132,348
$203,388
Salariesandbenefitspayable
Accountspayable
49,288
45,236
Accruedwarrantycosts
49,885
87,424
107,261
119,150
Accruedsalesprogramcosts Deferredrevenue
89,711
27,910
Accruedroyaltycosts
95,086
103,195
Accruedadvertisingexpense
21,587
34,146
Otheraccruedexpenses
63,043
40,373
Deferredincometaxes(Note6) Incometaxespayable Totalcurrentliabilities Deferredincometaxes(Note6)
4,800
2,208
56,028
22,846
669,037
685,876
6,986
10,170
Non‐currentincometaxes
153,621
255,748
Non‐currentdeferredrevenue
108,076
38,574
1,406
1,267
Otherliabilities Stockholders'equity: Shares,CHF10parvalue,208,077,418sharesauthorizedandissued and194,358,038sharesoutstandingatDecember25,2010; Commonstock,$0.005parvalue,1,000,000,000sharesauthorized Issuedandoutstandingshares‐200,274,000in2009 (Notes9,10,11,and12): Additionalpaid‐incapital Treasurystock Retainedearnings
1,797,435
1,001
38,268
32,221
(106,758)
‐
1,264,613
2,816,607
56,004
Accumulatedothercomprehensivegain/(loss) Totalstockholders'equity Totalliabilitiesandstockholders'equity
Seeaccompanyingnotes.
63
(13,382)
3,049,562
2,836,447
$3,988,688
$3,828,082
GarminLtd.AndSubsidiaries ConsolidatedStatementsofIncome (InThousands,ExceptPerShareInformation) FiscalYearEnded
Netsales
December25,
December26,
December27,
2010
2009
2008
$2,689,911
$2,946,440
$3,494,077
Costofgoodssold
1,343,537
1,502,329
1,940,562
Grossprofit
1,346,374
1,444,111
1,553,515
Advertisingexpense
144,613
155,521
208,177
Selling,generalandadministrativeexpenses
287,824
264,202
277,212
Researchanddevelopmentexpense
277,261
238,378
206,109
709,698
658,101
691,498
636,676
786,010
862,017
23,519
35,535
Operatingincome Otherincome(expense): Interestincome
24,979
Interestexpense
(1,246)
Foreigncurrency
(88,377)
(6,040)
(35,286)
Gain/(loss)onsaleofmarketablesecurities
(2,382)
2,741
50,884
Other
7,622
2,421
1,823
(59,404)
22,641
52,349
577,272
808,651
914,366
Current
(11,636)
128,036
136,252
Deferred
4,305
(23,335)
45,266
(7,331)
104,701
181,518
$584,603
$703,950
$732,848
Basicnetincomepershare(Note10)
$2.97
$3.51
$3.51
Dilutednetincomepershare(Note10)
$2.95
$3.50
$3.48
Incomebeforeincometaxes
‐
(607)
Incometaxprovision(benefit):(Note6)
Netincome
Seeaccompanyingnotes.
64
GarminLtd.AndSubsidiaries ConsolidatedStatementsofStockholders'Equity (InThousands,ExceptShareandPerShareInformation)
BalanceatDecember29,2007 Netincome Translationadjustment Adjustmentrelatedtounrealized gains(losses)onavailable‐for‐sale securities,netofincometaxeffects of$150 Comprehensiveincome Dividendspaid Taxbenefitfromexerciseofemployee stockoptions Issuanceofcommonstockfrom exerciseofstockoptions Stockcompensation Purchaseandretirementof commonstock Issuanceofcommonstockthrough stockpurchaseplan BalanceatDecember27,2008 Netincome Translationadjustment Adjustmentrelatedtounrealized gains(losses)onavailable‐for‐sale securities,netofincometaxeffects of$676 Comprehensiveincome Dividendspaid Taxbenefitfromexerciseofemployee stockoptions Issuanceofcommonstockfrom exerciseofstockoptions Stockcompensation Purchaseandretirementof commonstock Issuanceofcommonstockthrough stockpurchaseplan BalanceatDecember26,2009 Netincome Translationadjustment Adjustmentrelatedtounrealizedgains (losses)onavailable‐for‐salesecurities netofincometaxeffectsof$348 Comprehensiveincome Dividendspaid Taxbenefitfromexerciseofemployee stockoptions Issuanceofcommonstockfrom exerciseofstockoptions Stockcompensation Purchaseandretirementof commonstock(priortoJune27,2010) Purchaseoftreasurystock Impactofredomesticationonparvalue ofcommonshares Deferredtaximpactofredomestication BalanceatDecember25,2010
CommonStock Shares Dollars 216,980 $1,086 – – – –
Additional Paid‐In Capital $132,264 – (3,053)
Treasury Stock $0 – –
Accumulated Other Retained Comprehensive Earnings Gain/(Loss) $2,171,134 $46,130 732,848 – (1,595) (14,991)
Total $2,350,614 732,848 (19,639)
–
–
–
–
–
(68,790)
–
–
–
–
(150,251)
–
–
–
2,143
–
–
–
2,143
158 –
2 –
2,873 38,872
– –
– –
– –
2,875 38,872
(17,138)
(86)
(182,128)
–
(489,633)
–
(671,847)
363 200,363 – –
– $1,002 – –
9,029 $0 – –
– $0 – –
– $2,262,503 703,950 –
– ($37,651) – 24,537
9,029 $2,225,854 703,950 24,537
–
–
–
–
–
(268)
–
–
–
–
(149,846)
–
(268) 728,219 (149,846)
–
–
1,366
–
–
–
1,366
409 –
3 –
3,781 43,616
– –
– –
– –
3,784 43,616
(708)
(4)
(20,254)
–
–
–
(20,258)
210 200,274 – –
– $1,001 – –
3,712 $32,221 – –
– $0 – –
– $2,816,607 584,603 –
– ($13,382) – 52,509
3,712 $2,836,447 584,603 52,509
–
–
–
–
–
–
–
–
–
(298,853)
–
–
–
4,495
–
–
–
4,495
928 –
2 –
(867) 40,332
10,330 –
– –
– –
9,465 40,332
(6,844) –
(16) –
(67,528) –
– (117,088)
(41,296) –
– –
(108,840) (117,088)
– 1,796,448 – – 194,358 $1,797,435
– 29,615 $38,268
– – ($106,758)
(1,796,448) – $1,264,613
– – $56,004
– 29,615 $3,049,562
Seeaccompanyingnotes.
65
16,877
(68,790) 644,419 (150,251)
16,877 653,989 (298,853)
GarminLtd.AndSubsidiaries ConsolidatedStatementsofCashFlows (InThousands) FiscalYearEnded December25,
December26,
December27,
2010
2009
2008
OperatingActivities: Netincome
$584,603
$703,950
$732,848
Depreciation
53,487
56,695
46,910
Amortization
41,164
39,791
31,507
Adjustmentstoreconcilenetincometonetcashprovided byoperatingactivities:
(Gain)/lossonsaleofpropertyandequipment Provisionfordoubtfulaccounts Provisionforobsoleteandslow‐movinginventories Unrealizedforeigncurrencylosses/(gains) Deferredincometaxes
(306)
(14)
124
(4,476)
(1,332)
32,355
5,753
61,323
24,461
62,770
7,480
15,887
(25,096)
50,887
40,332
(471)
43,616
38,872
2,382
(2,741)
(50,884)
Accountsreceivable
129,698
(131,978)
206,101
Inventories
(77,122)
61,189
83,035
9,886
8,054
(4,356)
(3,329)
(13,735)
(15,289)
Stockcompensation Realizedloss/(gains)onmarketablesecurities Changesinoperatingassetsandliabilities,netofacquisitions:
Prepaidexpensesandothercurrentassets Licensefees Accountspayable
(81,354)
38,875
(236,287)
Othercurrentandnon‐currentliabilities
(144,476)
172,215
(4,507)
Deferredrevenue
131,303
65,706
Deferredcosts
(31,445)
(5,314)
Incometaxespayable Netcashprovidedbyoperatingactivities
52,238
15,772
770,637
1,094,456
680 ‐ (90,180) 862,164
Investingactivities: Purchasesofpropertyandequipment
(32,232)
Proceedsfromsaleofpropertyandequipment
(49,199)
139
Purchaseofintangibleassets Purchaseofmarketablesecurities
5
(119,623) 19
(3,883)
(7,573)
(6,971)
(694,038)
(776,966)
(373,580)
Redemptionofmarketablesecurities
668,495
285,970
504,324
Acquistions,netofcashacquired
(12,120)
Changeinrestrictedcash
770
Netcashusedininvestingactivities
‐
(60,131) (106)
(387)
(72,869)
(547,869)
(56,349)
(298,853)
(149,846)
(150,251)
Financingactivities: Dividends Proceedsfromissuanceofcommonstockthrough stockpurchaseplan
‐
3,712
9,029 2,875
Proceedsfromissuanceofcommonstockfrom exerciseofstockoptions
9,465
3,783
Taxbenefitrelatedtostockoptionexercise
4,495
1,366
2,143
Purchaseofcommonstock
(225,928)
(20,258)
(671,847)
Netcashusedinfinancingactivities
(510,821)
(161,243)
(808,051)
Effectofexchangeratechangesoncashandcashequivalents
(17,592)
Netincrease/(decrease)incashandcashequivalents Cashandcashequivalentsatbeginningofyear Cashandcashequivalentsatendofyear
Seeaccompanyingnotes.
9,902
(9,118)
169,355
395,246
(11,354)
1,091,581
696,335
707,689
$1,260,936
$1,091,581
$696,335
66
GarminLtd.AndSubsidiaries ConsolidatedStatementsofCashFlows(continued) (InThousands) FiscalYearEnded December25,
December26,
December27,
2010
2009
2008
Supplementaldisclosuresofcashflowinformation Cashpaidduringtheyearforincometaxes
$43,940
$69,186
$134,421
Cashreceivedduringtheyearfromincometaxrefunds
$4,526
$2,934
$177
Cashpaidduringtheyearforinterest
$1,246
$0
$607
Changeinmarketablesecuritiesrelatedtounrealized appreciation(depreciation)
$17,226
$408
($68,668)
Acquistions: Fairvalueofassetsacquired Liabilitiesassumed Less:cashacquired Netcashpaid
$21,918 (5,547) (4,251) $12,120
$0 0 0 $0
$136,952 (60,336) (16,485) $60,131
Supplementaldisclosureofnon‐cashinvestingand financingactivities
Seeaccompanyingnotes.
67
GARMINLTD.ANDSUBSIDIARIES NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS (InThousands,ExceptShareandPerShareInformation) December25,2010andDecember26,2009 1.DescriptionoftheBusiness Garmin Ltd. and subsidiaries (together, the “Company”) manufacture, market, and distribute Global Positioning System‐enabled products and other related products. Garmin Corporation (GC), wholly‐owned by GarminLtd.,isprimarilyresponsibleforthemanufacturinganddistributionoftheCompany’sproductstoGarmin International, Inc. (GII), a wholly‐owned subsidiary of GC, and Garmin (Europe) Limited (GEL), a wholly‐owned subsidiary of Garmin Ltd., and, to a lesser extent, new product development and sales and marketing of the Company’sproductsinAsiaandtheFarEast.GIIisprimarilyresponsibleforsalesandmarketingoftheCompany’s products in many international markets and in the United States as well as research and new product development.GIIalsomanufacturescertainproductsfortheCompany’saviationsegment.GELisresponsiblefor salesandmarketingoftheCompany’sproducts,principallywithintheEuropeanmarket. 2.SummaryofSignificantAccountingPolicies BasisofPresentationandPrinciplesofConsolidation Theaccompanyingconsolidatedfinancialstatementshavebeenpreparedinaccordancewithaccounting principlesgenerallyacceptedintheUnitedStates.Theaccompanyingconsolidatedfinancialstatementsreflectthe accountsofGarminLtd.anditswhollyownedsubsidiaries.Allsignificantinter‐companybalancesandtransactions havebeeneliminated. FiscalYear TheCompanyhasadopteda52–53‐weekperiodendingonthelastSaturdayofthecalendaryear.Dueto thefactthattherearenotexactly52weeksinacalendaryearandthereisslightlymorethanoneadditionalday peryear(notincludingtheeffectsofleapyear)ineachcalendaryearascomparedtoa52‐weekfiscalyear,the Company will have a fiscal year comprising 53 weeks in certain fiscal years, as determined by when the last Saturdayofthecalendaryearoccurs. Inthoseresultingfiscalyearsthathave53weeks,theCompanywillrecordanextraweekofsales,costs, and related financial activity. Therefore, the financial results of those fiscal years, and the associated 14‐week fourth quarter, will not be entirely comparable to the prior and subsequent 52‐week fiscal years and the associatedquartershavingonly13weeks.Fiscal2010,2009,and2008included52weeks. ForeignCurrencyTranslation Many Garmin Ltd. subsidiaries utilize currencies other than the United States Dollar (USD) as their functional currency. As required by the Foreign Currency Matters topic of the Financial Accounting Standards Board(FASB)AccountingStandardsCodification(ASC),thefinancialstatementsofthesesubsidiariesforallperiods presented have been translated into USD, the functional currency of Garmin Ltd., and the reporting currency herein,forpurposesofconsolidationatratesprevailingduringtheyearforsales,costs,andexpensesandatend‐ of‐year rates for all assets and liabilities. The effect of this translation is recorded in a separate component of stockholders’ equity. Cumulative translation adjustments of $61,740 and $9,231 as of December 25, 2010 and December 26, 2009, respectively, have been included in accumulated other comprehensive gain/(loss) in the accompanyingconsolidatedbalancesheets.
68
Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date.Assetsandliabilitiesresultingfromthesetransactionsaretranslatedattherateofexchangeineffectatthe balancesheetdate.Alldifferencesarerecordedinresultsofoperationsandamountedtoexchangegains/(losses) of($88,377),($6,040),and($35,286)fortheyearsendedDecember25,2010,December26,2009,andDecember 27,2008,respectively.Thelossinfiscal2010wasprimarilytheresultofthestrengtheningoftheUSDagainstthe EuroandtheBritishPoundSterlingandtheweakeningoftheUSDagainsttheTaiwanDollar.Thelossinfiscal2009 wasprimarilytheresultoftheweakeningoftheUSDagainsttheTaiwanDollaroffsetbytheweakeningoftheUSD againsttheEuroandtheBritishPoundSterling.Thelossinfiscal2008wastheresultofthestrengtheningofthe USDoffsetbyagainassociatedwiththesaleandtenderofourTeleAtlasN.V.shares. EarningsPerShare Basic earnings per share amounts are computed based on the weighted‐average number of common sharesoutstanding.Forpurposesofdilutedearningspershare,thenumberofsharesthatwouldbeissuedfrom theexerciseofdilutivestockoptionshasbeenreducedbythenumberofshareswhichcouldhavebeenpurchased from the proceeds of the exercise at the average market price of the Company’s stock during the period the optionswereoutstanding.SeeNote10. CashandCashEquivalents Forpurposesofreportingcashflows,cashandcashequivalentsincludecashonhand,operatingaccounts, moneymarketfunds,andsecuritieswithmaturitiesofthreemonthsorlesswhenpurchased.Thecarryingamount ofcashandcashequivalentsapproximatesfairvalue,giventheshortmaturityofthoseinstruments. TradeAccountsReceivable TheCompanysellsitsproductstoretailers,wholesalers,andothercustomersandextendscreditbasedon its evaluation of the customer’s financial condition. Potential losses on receivables are dependent on each individualcustomer’sfinancialcondition.TheCompanycarriesitstradeaccountsreceivableatnetrealizablevalue. Typically,itsaccountsreceivablearecollectedwithin80daysanddonotbearinterest.TheCompanymonitorsits exposure to losses on receivables and maintains allowances for potential losses or adjustments. The Company determinestheseallowancesby(1)evaluatingtheagingofitsreceivablesand(2)reviewingitshigh‐riskcustomers. Past due receivable balances are written off when its internal collection efforts have been unsuccessful in collectingtheamountdue. Inventories Inventories are stated at the lower of cost or market. Cost is determined using the weighted‐average method(whichapproximatesthefirst‐in,first‐out(FIFO)method)byGCandtheFIFOmethodbyGII,GATandGEL. Inventoriesconsistedofthefollowing: December25,2010 December26,2009
RawMaterials Work‐in‐process Finishedgoods InventoryReserves Inventory,netofreserves
$ 103,277 $43,507 $278,513 ($37,720) $ 387,577
$80,963 32,587 235,286 (38,898) $309,938
PropertyandEquipment Property and equipment are recorded at cost and depreciated using the straight‐line method over the followingestimatedusefullives:
69
Buildingsandimprovements Officefurnitureandequipment Manufacturingandengineeringequipment Vehicles
39 3‐5 5 5
Long‐LivedAssets AsrequiredbytheProperty,PlantandEquipmenttopicoftheFASBASC,theCompanyreviewslong‐lived assetsforimpairmentwhenevereventsorchangesincircumstancesindicatethecarryingamountofanassetmay notbefullyrecoverable.Thecarryingamountofalong‐livedassetisnotrecoverableifitexceedsthesumofthe undiscountedcashflowsexpectedtoresultfromtheuseandeventualdispositionoftheasset.Thatassessmentis based on the carrying amount of the asset at the date it is tested for recoverability. An impairment loss is measuredastheamountbywhichthecarryingamountofalong‐livedassetexceedsitsfairvalue. TheIntangibles–GoodwillandOthertopicoftheFASBASCrequiresthatgoodwillandintangibleassets withindefiniteusefullivesshouldnotbeamortizedbutratherbetestedforimpairmentatleastannuallyorsooner whenevereventsorchangesincircumstancesindicatethattheymaybeimpaired.TheCompanydidnotrecognize anygoodwillorintangibleassetimpairmentchargesin2010,2009,or2008.TheCompanyestablishedreporting unitsbasedonitscurrentreportingstructure.Forpurposesoftestinggoodwillforimpairment,goodwillhasbeen allocated to these reporting units to the extent it relates to each reporting unit. The accounting guidance also requiresthatintangibleassetswithdefinitelivesbeamortizedovertheirestimatedusefullivesandreviewedfor impairment. The Company is currently amortizing its acquired intangible assets with definite lives over periods rangingfrom3to10years. Dividends OnMarch16,2010theBoardofDirectorsdeclaredadividendof$1.50persharetobepaidonApril30, 2010toshareholdersofrecordonApril15,2010.TheCompanypaidoutadividendintheamountof$298,853. Thedividendhasbeenreportedasareductionofretainedearnings. OnJuly30,2009theBoardofDirectorsdeclaredadividendof$0.75persharetobepaidonDecember 15, 2009 to shareholders of record on December 1, 2009. The Company paid out a dividend in the amount of $149,846.Thedividendhasbeenreportedasareductionofretainedearnings. OnJune6,2008theBoardofDirectorsdeclaredadividendof$0.75persharetobepaidonDecember15, 2008 to shareholders of record on December 1, 2008. The Company paid out a dividend in the amount of $150,251.Thedividendhasbeenreportedasareductionofretainedearnings. Approximately$213,486and$199,549ofretainedearningsareindefinitelyrestrictedfromdistributionto stockholderspursuanttothelawsofTaiwanatDecember25,2010andDecember26,2009,respectively. IntangibleAssets AtDecember25,2010andDecember26,2009,theCompanyhadpatents,licenseagreements,customer related intangibles and other identifiable finite‐lived intangible assets recorded at a cost of $152,138 and $165,021,respectively.TheCompany’sexcesspurchasecostoverfairvalueofnetassetsacquired(goodwill)was $136,548atDecember25,2010and$129,066atDecember26,2009. Identifiable,finite‐livedintangibleassetsareamortizedovertheirestimatedusefullivesonastraight‐line basisoverthreetotenyears.Accumulatedamortizationwas$103,534and$80,428atDecember25,2010and December26,2009respectively.Amortizationexpensewas$36,675,$37,444,and$30,874,fortheyearsended December 25, 2010, December 26, 2009, and December 27, 2008, respectively. In the next five years, the amortizationexpenseisestimatedtobe$24,889,$10,584,$4,612,$2,482,and$2,317,respectively.
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MarketableSecurities Managementdeterminestheappropriateclassificationofmarketablesecuritiesatthetimeofpurchase andreevaluatessuchdesignationasofeachbalancesheetdate. AlloftheCompany’smarketablesecuritiesareconsideredavailable‐for‐saleatDecember25,2010.See Note 3. Available‐for‐sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in other comprehensive gain/(loss). At December 25, 2010 and December 26, 2009, cumulative unrealized gains/(losses) of ($5,736) and ($22,613), respectively, were reported in accumulated other comprehensivegain/(loss),netofrelatedtaxes. The amortized cost of debt securities classified as available‐for‐sale is adjusted for amortization of premiumsandaccretionofdiscountstomaturity,orinthecaseofmortgage‐backedsecurities,overtheestimated lifeofthesecurity.Suchamortizationisincludedininterestincomefrominvestments.Realizedgainsandlosses, anddeclinesinvaluejudgedtobeother‐than‐temporaryareincludedinotherincome.Thecostofsecuritiessoldis basedonthespecificidentificationmethod. IncomeTaxes TheCompanyaccountsforincometaxesusingtheliabilitymethodinaccordancewiththeFASBASCtopic Income Taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the differencebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountforfinancialreportingpurposes asmeasuredbytheenactedtaxratesandlawsthatwillbeineffectwhenthedifferencesareexpectedtoreverse. Income taxes of $233,028 and $171,097 at December 25, 2010 and December 26, 2009, respectively, have not beenaccruedbytheCompanyfortheunremittedearningsofseveralofitssubsidiariesbecausesuchearningsare intendedtobereinvestedinthesubsidiariesindefinitely. The Companyadopted the applicable guidance includedin the FASBASC topic Income Taxes related to accounting for uncertainty in income taxeson December31,2006, the beginning of fiscal year 2007. The total amount of unrecognized tax benefits as of December 25, 2010 was $153,621 including interest of $9,580. A reconciliation of the beginning and ending amount of unrecognized tax benefits for years ending December 25, 2010andDecember26,2009isasfollows: December25, December26, 2010 2009 Balanceatbeginningofyear $255,748 $214,366 Additionsbasedontaxpositionsrelatedtoprioryears 11,443 14,241 Reductionsbasedontaxpositionsrelatedtoprioryears (10,392) (16,141) Additionsbasedontaxpositionsrelatedtocurrentperiod 43,202 63,053 Reductionsbasedontaxpositionsrelatedtocurrentperiod ‐ ‐ (122,314) ‐ Reductionsrelatedtosettlementswithtaxauthorities Expirationofstatuteoflimitations (24,066) (19,771) Balanceatendofyear $153,621 $255,748 The December 25, 2010 balance of $153,621 of unrecognized tax benefits, if recognized, would reduce theeffectivetaxrate.Noneoftheunrecognizedtaxbenefitsareduetouncertaintyinthetimingofdeductibility. Accountingguidancerequiresunrecognizedtaxbenefitstobeclassifiedasnon‐currentliabilities,except fortheportionthatisexpectedtobepaidwithinoneyearofthebalancesheetdate.Theentire$153,621and $255,748arerequiredtobeclassifiedasnon‐currentatDecember25,2010andDecember26,2009,respectively. Interestexpenseandpenalties,ifany,accruedontheunrecognizedtaxbenefitsarereflectedinincome taxexpense.AtDecember25,2010andDecember26,2009,theCompanyhadaccruedapproximately$9,580and $20,160respectivelyforinterest.InterestexpenseincludedinincometaxexpensefortheyearsendingDecember
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25,2010andDecember26,2009are($10,580)and$9,000,respectively.TheCompanyhadnoamountsaccrued for penalties as the nature of the unrecognized tax benefits, if recognized, would not warrant the imposition of penalties. TheCompanyfilesincometaxreturnsintheU.S.federaljurisdiction,andvariousstate,localandforeign jurisdictions.TheCompanyisnolongersubjecttoU.S.federal,state,orlocaltaxexaminationsbytaxauthorities foryearspriorto2007.TheCompanyisnolongersubjecttoTaiwanincometaxexaminationsbytaxauthorities foryearspriorto2005.TheCompanyisnolongersubjecttoUnitedKingdomtaxexaminationsbytaxauthorities foryearspriorto2008. The Company also considers 2007 and 2008 US federal returns to have been effectively settled due to completion of an audit examination by the Internal Revenue Service. A reduction of income tax expense of ($122,314)wasrecognizedtoreflectthissettlement.Inaddition,theCompanyrecognizedareductionofincome tax expense of $24,066 and $19,771 in fiscal years ended December 25, 2010 and December 26, 2009, respectively,toreflecttheexpirationofstatuteoflimitationsinvariousjurisdictions. TheCompanybelievesthatitisreasonablypossiblethatapproximately$14,069millionofitsreservesfor certainunrecognizedtaxbenefitswilldecreasewithinthenext12monthsastheresultoftheexpirationofstatute oflimitations.ThispotentialdecreaseinunrecognizedtaxbenefitswouldimpacttheCompany’seffectivetaxrate withinthenext12months. UseofEstimates The preparation of consolidated financial statements in conformity with accountingprinciples generally acceptedintheUnitedStatesrequiresmanagementtomakeestimatesandassumptionsthataffecttheamounts reportedintheconsolidatedfinancialstatementsandaccompanyingnotes.Actualresultscoulddifferfromthose estimates. ConcentrationofCreditRisk The Company grants credit to certain customers who meet the Company’s pre‐established credit requirements.Generally,theCompanydoesnotrequiresecuritywhentradecreditisgrantedtocustomers.Credit losses are provided for in the Company’s consolidated financial statements and typically have been within management’s expectations. Certain customers are allowed extended terms consistent with normal industry practice.Mostoftheseextendedtermscanbeclassifiedaseitherrelatingtoseasonalsalesvariationsortothe timingofnewproductreleasesbytheCompany. RevenueRecognition Garmin recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, thesalespriceisfixedordeterminable,andcollectionisprobable.ForthelargemajorityofGarmin’ssales,these criteria are met once product has shipped and title and risk of loss have transferred to the customer. The Company recognizes revenue from the sale of hardware products and software bundled with hardware that is essential to the functionality of the hardware in accordance with general revenue recognition accounting guidance.TheCompanyrecognizesrevenueinaccordancewithindustryspecificsoftwareaccountingguidancefor standalone sales of software products and sales of software bundled with hardware not essential to the functionalityofthehardware.TheCompanygenerallydoesnotofferspecifiedorunspecifiedupgraderightstoits customersinconnectionwithsoftwaresales. GarminintroducednüMapsLifetime™inJanuary2009,whichisasinglefeeprogramthat,subjecttothe program’stermsandconditions,enablescustomerstodownloadthelatestmapandpointofinterestinformation every quarterfor the usefullife of their PND. The revenueand associated cost of royalties for sales of nüMaps Lifetime™ products are deferred at the time of sale and recognized ratably on a straight‐line basis over the currentlyestimated36‐monthlifeoftheproducts.
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Formultipleelementarrangementsthatincludetangibleproductsthatcontainsoftwarethatisessential to the tangible product’s functionality and undelivered software elements that relate to the tangible product’s essentialsoftware,theCompanyallocatesrevenuetoalldeliverablesbasedontheirrelativesellingprices.Insuch circumstances, the new accounting principles establish a hierarchy to determine the selling price tobe used for allocatingrevenuetodeliverablesasfollows:(i)vendor‐specificobjectiveevidenceoffairvalue(“VSOE”),(ii)third‐ partyevidenceofsellingprice(“TPE”),and(iii)bestestimateofthesellingprice(“ESP”).VSOEgenerallyexistsonly when the Company sells the deliverable separately and is the price actually charged by the Company for that deliverable.Inadditiontotheproductslistedbelow,theCompanyhasofferedcertainotherproductsthatinvolve multiple‐elementarrangementsthatareimmaterial. In2010,GarminbeganofferingPNDswithlifetimemapupdates(LMU)bundledintheoriginalpurchase price.SimilartonüMapsLifetime™whichwasintroducedinJanuary2009,thisenablescustomerstodownload thelatestmapandpointofinterestinformationeveryquarterfortheusefullifeoftheirPND.TheCompanyhas identified two deliverables contained in arrangements involving the sale of PNDs including LMU. The first deliverable is the hardware and software essential to the functionality of the hardware device delivered at the time of sale, and the second deliverable is the LMU. The Company has allocated revenue between these two deliverablesusingtherelativesellingpricemethoddeterminedprimarilyusingVSOE.Amountsallocatedtothe delivered hardware and the related essential software are recognized at the time of sale provided the other conditionsforrevenuerecognitionhavebeenmet.Therevenueandassociatedcostofroyaltiesallocatedtothe LMUaredeferredandrecognizedonastraight‐linebasisovertheestimated36‐monthlifeoftheproducts. In addition, Garmin offers PNDs with premium traffic bundled in the original purchase price in the Europeanmarket.TheCompanyhasidentifiedtwodeliverablescontainedinarrangementsinvolvingthesaleof PNDsincludingpremiumtraffic.Thefirstdeliverableisthehardwareandsoftwareessentialtothefunctionalityof thehardwaredevicedeliveredatthetimeofsale,andtheseconddeliverableisthepremiumtrafficservice.The Company has allocated revenue between these two deliverables using the relative selling price method determined using VSOE. Amounts allocated to the delivered hardware and the related essential software are recognizedatthetimeofsaleprovidedtheotherconditionsforrevenuerecognitionhavebeenmet.Therevenue andassociatedcostallocatedtothepremiumtrafficservicearedeferredandrecognizedonastraight‐linebasis overtheestimated36‐monthlifeoftheproducts. In2009and2010respectively,Garminintroducedthenüvi1690and1695,premiumPNDswithabuilt‐in wirelessmodulethatletscustomersaccessGarmin’snüLink!™service,whichprovidesdirectlinkstocertainonline information. The Company has identified two deliverables contained in arrangements involving the sale of the nüvi 1690 and 1695. The first deliverable is the hardware and software essential to the functionality of the hardwaredevicedeliveredatthetimeofsale,andtheseconddeliverableisthenüLinkservice.TheCompanyhas allocatedrevenuebetweenthesetwodeliverablesusingtherelativesellingpricemethoddeterminedusingVSOE. Amounts allocated to the delivered hardware and the related essential software are recognized at the time of sale provided the other conditions for revenue recognition have been met. The revenue and associated cost allocatedtothenüLinkservicesaredeferredandrecognizedonastraight‐linebasisoverthe24‐monthlifeofthe 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 in clearing older products from their inventories in advance of new product releases), promotions and other volume‐based incentives. The reductions to revenue are based on estimates and judgments using historical experience and expectationoffutureconditions.ChangesintheseestimatescouldnegativelyaffectGarmin’soperatingresults. These incentives are reviewed periodically and, with the exceptions of price protection and certain other promotions,areaccruedforonapercentageofsalesbasis.Ifmarketconditionsweretodecline,Garminmaytake actionstoincreasecustomerincentiveofferingspossiblyresultinginanincrementalreductionofrevenueatthe timetheincentiveisoffered.
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TheCompanyrecordsreductionstorevenueforexpectedfutureproductreturnsbasedontheCompany’s historicalexperience. DeferredRevenuesandCosts AtDecember25, 2010 andDecember 26,2009, the Company haddeferred revenues totaling$197,787 and$66,484,respectively,andrelateddeferredcoststotaling$44,738and$13,310,respectively. Thedeferredrevenuesandcostsarerecognizedovertheirestimatedeconomiclivesoftwotothreeyears onastraight‐linebasis.Inthenextthreeyears,thegrossmarginrecognitionofdeferredrevenueandcostforthe currentlydeferredamountsisestimatedtobe$69,623,$56,617,and$26,809,respectively. ShippingandHandlingCosts Shippingandhandlingcostsareincludedincostofgoodssoldintheaccompanyingconsolidatedfinancial statements. ProductWarranty TheCompanyprovidesforestimatedwarrantycostsatthetimeofsale.Thewarrantyperiodisgenerally foroneyearfromdateofshipmentwiththeexceptionofcertainaviationproductsforwhichthewarrantyperiod istwoyearsfromthedateofinstallationandcertainmarineproductsforwhichthewarrantyperiodisthreeyears fromthedateofshipment. SalesPrograms TheCompanyprovidescertainmonthlyandquarterlyincentivesforitsdealersanddistributorsbasedon various factors including dealer purchasing volume and growth. Additionally, from time to time, the Company provides rebates to end users on certain products. Estimated rebates and incentives payable to dealers and distributors are regularly reviewed and recorded as accrued expenses on a monthly basis. In addition, the Company provides dealers and distributors with product discounts to assist these customers in clearing older productsfromtheirinventoriesinadvanceofnewproductreleases.Eachdiscountistiedtoaspecificproductand can be applied to all customers who have purchased the product or a special discount may be agreed to on an individualcustomerbasis.Theserebates,incentives,anddiscountsarerecordedasreductionstonetsalesinthe accompanyingconsolidatedstatementsofincomeintheperiodtheCompanyhassoldtheproduct. AdvertisingCosts The Company expenses advertising costs as incurred. Advertising expense amounted to approximately $144,613,$155,521,and$208,177fortheyearsendedDecember25,2010,December26,2009,andDecember 27,2008,respectively. ResearchandDevelopment AmajorityoftheCompany’sresearchanddevelopmentisperformedintheUnitedStates.Researchand development costs, which are expensed as incurred, amounted to approximately $277,261, $238,378, and $206,109fortheyearsendedDecember25,2010,December26,2009,andDecember27,2008,respectively. CustomerServiceandTechnicalSupport
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Customerserviceandtechnicalsupportcostsareincludedasselling,generalandadministrativeexpenses intheaccompanyingconsolidatedstatementsofoperations.Customerserviceandtechnicalsupportcostsinclude costsassociatedwithperformingorderprocessing,answeringcustomerinquiriesbytelephoneandthroughWeb 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 providingthisfreesupportisnotmaterial. SoftwareDevelopmentCosts TheFASBASCtopicentitledSoftwarerequirescompaniestoexpensesoftwaredevelopmentcostsasthey incurthemuntiltechnologicalfeasibilityhasbeenestablished,atwhichtimethosecostsarecapitalizeduntilthe product is available for general release to customers. Our capitalized software development costs are not significantasthetimeelapsedfromworkingmodeltoreleaseistypicallyshort.AsrequiredbytheResearchand DevelopmenttopicoftheFASBASC,costsweincurtoenhanceourexistingproductsorafterthegeneralreleaseof the service using the product are expensed in the period they are incurred and included in research and developmentcostsintheaccompanyingconsolidatedstatementsofoperations. AccountingforStock‐BasedCompensation The Company currently sponsors three stock based employee compensation plans. The FASB ASC topic entitled Compensation – Stock Compensation requires the measurement and recognition of compensation expensesforallshare‐basedpaymentawardsmadetoemployeesanddirectorsincludingemployeestockoptions andrestrictedstockbasedonestimatedfairvalues.SeeNote9. Accountingguidancerequirescompaniestoestimatethefairvalueofshare‐basedpaymentawards on the date of grant using an option‐pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as stock‐based compensation expenses over the requisite service period in the Company’sconsolidatedfinancialstatements. Asstock‐basedcompensationexpensesrecognizedintheaccompanyingconsolidatedstatementofincome arebasedonawardsultimatelyexpectedtovest,theyhavebeenreducedforestimatedforfeitures.Accounting guidancerequiresforfeiturestobeestimatedatthetimeofgrantandrevised,ifnecessary,insubsequentperiods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical experience and management’sestimates. RecentlyIssuedAccountingPronouncements InJanuary2010,theFASBissuedAccountingStandardsUpdate(ASU)No.2010‐06,"ImprovingDisclosures about Fair Value Measurements" ("ASU 2010‐06"), which is included in the ASC Topic 820 (Fair Value MeasurementsandDisclosures).ASU2010‐06requiresnewdisclosuresontheamountandreasonfortransfersin and out of Level 1 and 2 fair value measurements. ASU 2010‐06 also requires disclosure of activities, including purchases, sales, issuances, and settlements within the Level 3 fair value measurements and clarifies existing disclosurerequirementsonlevelsofdisaggregationanddisclosuresaboutinputsandvaluationtechniques.Except as otherwise provided, ASU 2010‐06 is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard did not have a material effect on the Company’s financial statements. InFebruary2010,theFASBissuedASUNo.2010‐09,"AmendmentstoCertainRecognitionandDisclosure Requirements" ("ASU2010‐09"), which is included in ASC Topic855(Subsequent Events). ASU 2010‐09 clarifies that an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued.ASU2010‐09waseffectiveupontheissuanceofthefinalupdateanddidnothaveasignificantimpacton theCompany'sfinancialstatements.
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3.MarketableSecurities TheFASBASCtopicentitledFairValueMeasurementsandDisclosuresdefinesfairvalueasthepricethat would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participantsatthemeasurementdate(exitprice).Theaccountingguidanceclassifiestheinputsusedtomeasure fairvalueintothefollowinghierarchy: Level1 Unadjustedquotedpricesinactivemarketsforidenticalassetsorliability Level2 Unadjustedquotedpricesinactivemarketsforsimilarassetsorliabilities,or unadjustedquotedpricesforidenticalorsimilarassets Unobservableinputsfortheassetorliability Level3 TheCompanyendeavorstoutilizethebestavailableinformationinmeasuringfairvalue.Financialassets andliabilitiesareclassifiedintheirentiretybasedonthelowestlevelofinputthatissignificanttothefairvalue measurement. Forfairvaluemeasurementsusingsignificantunobservableinputs,anindependentthirdpartyprovided thevaluation.Theinputsusedinthevaluationsusedthefollowingmethodology.Thecollateralcompositionwas usedtoestimateWeightedAverageLifebasedonhistoricalandprojectedpaymentinformation.Cashflowswere projected for the issuing trusts, taking into account underlying loan principal, bonds outstanding, and payout formulas. Taking this information into account, assumptions were made as to the yields likely to be required, baseduponthencurrentmarketconditionsforcomparableorsimilartermAssetBasedSecuritiesaswellasother fixedincomesecurities. Assetsandliabilitiesmeasuredatestimatedfairvalueonarecurringbasisaresummarizedbelow: FairValueMeasurementsas ofDecember25,2010 Description
Total
Level1
Level2
Level3
Availablefor‐salesecurities FailedAuctionratesecurities
$ 781,257 $ 781,257 $‐ 20,562 ‐ ‐
$ ‐ 20,562
Total
$ 801,819 $ 781,257 $‐
$20,562
FairValueMeasurementsas ofDecember26,2009 Description
Total
Level1
Level2
Level3
Availablefor‐salesecurities FailedAuctionratesecurities
$ 695,795 $ 695,795 $‐ 70,252 ‐ ‐
$ ‐ 70,252
Total
$ 766,047 $ 695,795 $‐
$70,252
All Level 3 investments have been in a continuous unrealized loss position for 12 months or longer. However,itistheCompany’sintenttoholdthesesecuritiesuntiltheyrecovertheirvalue.Forassetsandliabilities measuredatfairvalueonarecurringbasisusingsignificantunobservableinputs(Level3)duringtheperiod,the
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accounting guidance requires a reconciliation of the beginning and ending balances, separately for each major categoryofassets.Thereconciliationisasfollows: FairValueMeasurementsUsing SignificantUnobservableInputs(Level3) YearEnded YearEnded December25,2010 December26,2009
Beginningbalanceofauctionratesecurities Totalunrealizedgainsincludedinother comprehensiveincome Purchasesinand/orsalesoutofLevel3 Transfersinand/oroutofLevel3 Endingbalanceofauctionratesecurities
$ 70,252
$71,303
16,410 (66,100)
99 (1,150)
‐ $ 20,562
‐ $70,252
The following is a summary of the company’s marketable securities classified as available‐for‐sale securitiesatDecember25,2010:
Mortgage‐backedsecurities AuctionRateSecurities Obligationsofstatesandpoliticalsubdivisions U.S.corporatebonds Other Total
AmortizedCost $ 527,249 25,599 160,618 54,348 39,838 $ 807,652
Gross UnrealizedGains $1,913 ‐ 347 637 2,626 $5,523
Gross Unrealized Losses $ (1,519) (5,038) (3,340) (185) ‐ $ (10,082)
OtherThan Temporary Impairment $‐ ‐ ‐ (1,274) ‐ $(1,274)
EstimatedFair Value(NetCarrying Amount) $527,643 20,561 157,625 53,526 42,464 $801,819
The following is a summary of the company’s marketable securities classified as available‐for‐sale securitiesatDecember26,2009:
Mortgage‐backedsecurities AuctionRateSecurities Obligationsofstatesandpoliticalsubdivisions U.S.corporatebonds Other Total
AmortizedCost $ 515,200 91,700 112,419 35,883 33,903 $ 789,105
Gross UnrealizedGains $2,682 ‐ 908 768 1,070 $5,428
Gross Unrealized Losses $ (4,674) (21,448) (181) (701) (208) $ (27,212)
OtherThan Temporary Impairment $‐ ‐ ‐ (1,274) ‐ $(1,274)
EstimatedFair Value(NetCarrying Amount) $513,208 70,252 113,146 34,676 34,765 $766,047
Thecostofsecuritiessoldisbasedonthespecificidentificationmethod.
TheunrealizedlossesontheCompany’sinvestmentsin2009and2010werecausedprimarilybychanges ininterestrates,specifically,wideningcreditspreads.TheCompany’sinvestmentpolicyrequiresinvestmentsto beratedAorbetterwiththeobjectiveofminimizingthepotentialriskofprincipalloss.TheCompanydoesnot intendtosellthesecuritiesthathaveanunrealizedlossshowninthetableaboveanditisnotmorelikelythannot that the Company will be required to sell the investment before recovery of their amortized costs bases, which may be maturity. Therefore, the Company considers the declines to be temporary in nature. Fair values were determinedforeachindividualsecurityintheinvestmentportfolio.Whenevaluatingtheinvestmentsforother‐ than‐temporary impairment, the Company reviews factors such as the length of time and extent to which fair valuehasbeenbelowcostbasis,thefinancialconditionoftheissuer,andtheCompany’sabilityandintenttohold theinvestmentforaperiodoftime,whichmaybesufficientforanticipatedrecoveryinmarketvalue.During2009 and2010,theCompanydidnotrecordanymaterialimpairmentchargesonitsoutstandingsecurities.
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The amortized cost and estimated fair value of marketable securities at December 25, 2010, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuersofthesecuritiesmayhavetherighttoprepayobligationswithoutprepaymentpenalties. Cost Dueinoneyearorless(2011) Dueafteroneyearthroughfiveyears(2012‐2016) Dueafterfiveyearsthroughtenyears(2017‐2021) Dueaftertenyears(2022andthereafter) Other(Nocontractualmaturitydates)
$24,314 196,567 229,761 322,681 34,329 $ 807,652
Estimated FairValue $24,418 195,604 224,395 320,779 36,623 $801,819
ForcertainoftheCompany’sfinancialinstruments,includingaccountsreceivable,accountspayableand otheraccruedliabilities,thecarryingamountsapproximatefairvalueduetotheirshortmaturities. 4.CommitmentsandContingencies Rental expense related to office, equipment, warehouse space and real estate amounted to $11,768, $10,293, and $8,419 for the years ended December 25, 2010, December 26, 2009, and December 27, 2008, respectively. Futureminimumleasepaymentsareasfollows: Year
Amount
2011 2012 2013 2014 2015 Thereafter Total
$ 10,397 9,430 8,307 7,172 5,033 4,581 $ 44,920
Certain cash balances of GEL are held as collateral by a bank securing payment of the United Kingdom value‐addedtaxrequirements.Thetotalamountofrestrictedcashbalanceswere$1,277and$2,047atDecember 25,2010andDecember26,2009,respectively. In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions,andcomplaints,includingmattersinvolvingpatentinfringementandotherintellectualpropertyclaimsand variousotherrisks.ItisnotpossibletopredictwithcertaintywhetherornottheCompanyanditssubsidiarieswill ultimately be successful in any of these legal matters, or if not, what the impact might be. However, the Company’s management does not expect that the results in any of these legal proceedings will have a material adverseeffectontheCompany’sresultsofoperations,financialpositionorcashflows. 5.EmployeeBenefitPlans GIIsponsorsadefinedcontributionemployeeretirementplanunderwhichitsemployeesmaycontribute upto50%oftheirannualcompensationsubjecttoInternalRevenueCodemaximumlimitationsandtowhichGII contributesaspecifiedpercentageofeachparticipant’sannualcompensationuptocertainlimitsasdefinedinthe Plan.Additionally,GELhasadefinedcontributionplanunderwhichitsemployeesmaycontributeupto7.5%of
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theirannualcompensation.BothGIIandGELcontributeanamountdeterminedannuallyatthediscretionofthe Board of Directors. During the years ended December 25, 2010, December 26, 2009, and December 27, 2008, expenserelatedtotheseplansof$17,952,$16,399,and$14,927waschargedtooperations. Certain of the Company’s foreign subsidiaries participate in local defined benefit pension plans. Contributions are calculated by formulas that consider final pensionable salaries. Neither obligations nor contributions for the years ended December 25, 2010, December 26, 2009, and December 27, 2008, were significant. 6.IncomeTaxes TheCompany’sincometaxprovision(benefit)consistsofthefollowing: FiscalYearEnded December25, December26, 2010 2009 Federal: Current ($46,674) $104,186 Deferred 284 (12,021) (46,390) 92,165 State: Current 3,929 5,381 Deferred (257) (947) 3,672 4,434 Foreign: Current 31,109 18,469 Deferred 4,278 (10,367) 35,387 8,102 Total ($7,331) $104,701
December27, 2008 $90,655 23,639 114,294 1,318 1,090 2,408 44,279 20,537 64,816 $181,518
Theincometaxprovisiondiffersfromtheamountcomputedbyapplyingthestatutoryfederalincometax ratetoincomebeforetaxes.Thesourcesandtaxeffectsofthedifferences,includingtheimpactofestablishingtax contingencyaccruals,areasfollows: December25, December26, December27, 2010 2009 2008 Federalincometaxexpenseat U.S.statutoryrate $202,045 $287,228 $332,278 Stateincometaxexpense,netof federaltaxeffect 2,482 2,604 2,030 Foreigntaxratedifferential (115,633) (219,482) (233,928) Taiwantaxholidaybenefit (13,536) (18,556) (24,904) Netchangeinuncertaintaxpostions (102,100) 41,400 87,800 Otherforeigntaxesless incentivesandcredits 26,707 10,379 20,428 Other,net (7,296) 1,128 (2,186) Incometaxexpense ($7,331) $104,701 $181,518 TheCompany’sincomebeforeincometaxesattributabletonon‐U.S.operationswas$413,550,$678,868, and$823,364,fortheyearsendedDecember25,2010,December26,2009,andDecember27,2008,respectively.
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TheTaiwantaxholidaybenefitsincludedinthetableabovereflect$0.07,$0.09,and$0.12perweighted‐average commonshareoutstandingfortheyearsendedDecember25,2010,December26,2009,andDecember27,2008, respectively.The Companycurrently expects to benefitfrom these Taiwan tax holidays through2015, at which timethesetaxbenefitsmightexpire. Deferredincometaxesreflectthenettaxeffectsoftemporarydifferencesbetweenthecarryingamounts ofassetsandliabilitiesforfinancialreportingpurposesandtheamountsusedforincometaxpurposes.Significant componentsoftheCompany’sdeferredtaxassetsandliabilitiesareasfollows:
Deferredtaxassets: Productwarrantyaccruals Allowancefordoubtfulaccounts Inventoryreserves Salesprogramallowances Reserveforsalesreturns Otheraccruals Unrealizedintercompanyprofitininventory Unrealizedforeigncurrencyloss Stockoptioncompensation Taxcreditcarryforwards,net Amortization Deferredrevenue Netoperatinglossesofsubsidiaries Other Valuationallowancerelatedtolosscarryforwardandtaxcredits Deferredtaxliabilities: Depreciation Prepaidexpenses Bookbasisinexcessoftaxbasisforacquiredentities Unrealizedinvestmentgain Marketablesecurities Other Netdeferredtaxassets
December25, 2010
December26, 2009
$1,646 11,572 5,749 9,080 2,715 5,684 2,792 266 40,785 48,784 28,431 10,671 11,583 3,750 (51,352) 132,156
$1,642 15,346 10,145 12,902 ‐ 5,293 12,967 248 31,034 36,834 ‐ 121 3,480 3,211 (35,617) 97,606
16,030 4,145 6,604 5,951 3,038 933 36,701 $95,455
13,839 2,014 11,201 833 ‐ 202 28,089 $69,517
The Company recognized a $29,615 deferred tax asset during 2010 for the future tax benefit of thefair market value step‐up in basis of intangible assets related to the redomestication to Switzerland and local statutory tax reporting requirements. The deferred tax asset was recognized as an increase to Additional Paid‐In Capital in 2010. AtDecember25,2010,theCompanyhad$48,784millionoftaxcreditcarryoverwhichincludes$46,234 of Taiwan surtax credit with no expiration. There is a full valuation allowance for the Taiwan surtax credits. Additionally, the Company had $479 in Taiwan investment credit which will expire in 2012. The valuation allowanceincreasedby$15,735during2010including$12,109relatedtoTaiwansurtaxcredits. 7.FairValueofFinancialInstruments As required by the Financial Instruments topic of the FASB ASC, the following summarizes required information about the fair value of certain financial instruments for which it is currently practicable to estimate suchvalue.Noneofthefinancialinstrumentsareheldorissuedfortradingpurposes.Thecarryingamountsand fairvaluesoftheCompany’sfinancialinstrumentsareasfollows:
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Cashandcashequivalents Restrictedcash Marketablesecurities
December25,2010 Carrying Fair Amount Value
December26,2009 Carrying Fair Amount Value
$1,260,936 1,277 801,819
$1,091,581 2,047 766,047
$1,260,936 1,277 801,819
$1,091,581 2,047 766,047
For certain of the Company’s financial instruments, including accounts receivable, accounts payable and other accruedliabilities,thecarryingamountsapproximatefairvalueduetotheirshortmaturities. 8.SegmentInformation TheCompanyoperateswithinitstargetedmarketsthroughfourreportablesegments,thosebeingrelated toproductssoldintothemarine,automotive/mobile,outdoor/fitness,andaviationmarkets.Forexternalreporting purposes, we aggregate operating segments which have similar economic characteristics, products, production processes,typesorclassesofcustomersanddistributionmethodsintoreportablesegments.AlloftheCompany’s reportable segments offer products through the Company’s network of independent dealers and distributors as wellasthroughOEM’s.However,thenatureofproductsandtypesofcustomersforthefourreportablesegments vary significantly. The Company’s 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 products are portable and panel mount avionics for Visual Flight Rules and Instrument Flight Rules navigation and are sold primarily to aviationdealersandcertainaircraftmanufacturers. The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (CODM).TheCODMevaluatesperformanceandallocatesresourcesbasedonincomebeforeincometaxesofeach segment. Income before income taxes represents net sales less operating expenses including certain allocated general and administrative costs, interest income and expense, foreign currency adjustments, and other non‐ operatingcorporateexpenses.Theaccountingpoliciesofthereportablesegmentsarethesameasthosedescribed inthesummaryofsignificantaccountingpolicies.Therearenointer‐segmentsalesortransfers. TheidentifiableassetsassociatedwitheachreportablesegmentreviewedbytheCODMincludeaccounts receivableandinventories.TheCompanydoesnotreportpropertyandequipment,intangibleassets,depreciation andamortization,orcapitalexpendituresbysegmenttotheCODM. Revenues,interestincomeandinterestexpense,incomebeforeincometaxes,andidentifiableassetsfor eachoftheCompany’sreportablesegmentsarepresentedbelow:
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Aviation Net sales to external customers Allocated interest income Allocated interest expense Income before income taxes Assets: Accounts receivable Inventories
$262,520 1,251 (122) 71,482 72,927 37,825
Aviation Net sales to external customers Allocated interest income Allocated interest expense Income before income taxes Assets: Accounts receivable Inventories
$559,592 3,879 (259) 237,472 155,453 80,629
$198,860 1,624 (92) 62,431 55,243 28,653
$1,668,939 18,225 (773) 205,887 463,626 240,470
Fiscal Year Ended December 26, 2009 Outdoor/ Auto/ Fitness Marine Mobile
Total $2,689,911 24,979 (1,246) 577,272 747,249 387,577
Total
$245,745 737 0 56,595
$468,924 1,836 0 206,042
$177,644 1,469 0 57,430
$2,054,127 19,477 0 488,584
$2,946,440 23,519 0 808,651
72,904 25,850
139,114 49,326
52,701 18,687
609,391 216,075
874,110 309,938
Aviation Net sales to external customers Allocated interest income Allocated interest expense Income before income taxes Assets: Accounts receivable Inventories
Fiscal Year Ended December 25, 2010 Outdoor/ Auto/ Fitness Marine Mobile
$323,406 957 (109) 118,737 68,615 39,366
Fiscal Year Ended December 27, 2008 Outdoor/ Auto/ Fitness Marine Mobile $427,783 5,006 (23) 165,986 90,761 52,071
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$204,477 1,867 (104) 63,904 43,383 24,890
$2,538,411 27,705 (371) 565,739 538,562 308,985
Total $3,494,077 35,535 (607) 914,366 741,321 425,312
Netsales,long‐livedassets(propertyandequipment),andnetassetsbygeographicareaareasfollowsas ofandfortheyearsendedDecember25,2010,December26,2009,andDecember27,2008: North America Asia Europe Total December25,2010 Netsalestoexternalcustomers $ 1,646,590 $220,478 $ 822,843 $2,689,911 Longlivedassets 231,569 146,859 49,377 427,805 Netassets(1) 1,149,826 1,719,769 179,967 3,049,562
December26,2009 Netsalestoexternalcustomers Longlivedassets Netassets(1)
$ 1,972,451 $149,920 $ 824,069 $2,946,440 233,573 153,878 53,887 441,338 1,177,849 1,467,903 190,695 2,836,447
December27,2008 Netsalestoexternalcustomers Longlivedassets Netassets(1)
$ 2,333,585 $144,740 $ 1,015,752 $3,494,077 221,158 168,528 55,566 445,252 687,638 1,371,240 166,976 2,225,854
(1)MajorityofassetsheldintheUnitedStatesandTaiwan.
BestBuy,acustomerintheoutdoor/fitness,marine,andauto/mobilesegments,accountedforlessthan 10%,13.4%and12.0%oftheCompany’sconsolidatednetsalesintheyearsendedDecember25,2010,December 26,2009,andDecember27,2008,respectively. 9.StockCompensationPlans AccountingforStock‐BasedCompensation The various Company stock compensation plans are summarized below. For all Stock Compensation Plans, the company’s policy is to issue Treasury Shares or purchase shares on the open market for option/SAR exercises,RSUreleasesandESPPpurchases. 2005EquityIncentivePlan InJune2005,theshareholdersadoptedanequityincentiveplan(the“2005Plan”)providingforgrantsof incentiveandnonqualifiedstockoptions,stockappreciationrights(“SARs”),restrictedstockunits(“RSUs”)and/or performance shares to employees of the Company and its subsidiaries, pursuant to which up to 10,000,000 common shares were available for issuance. The stock options and stock appreciation rights vest evenly over a periodoffiveyearsorasotherwisedeterminedbytheBoardofDirectorsortheCompensationCommitteeand generallyexpiretenyearsfromthedateofgrant,ifnotexercised.During2010,2009,and2008,theCompany granted 0, 0, and 1,454,050 stock appreciation rights, respectively. During 2010, 2009, and 2008, 494,995, 470,950,and1,043,800restrictedstockunitsweregrantedunderthe2005Plan.In2010,2009,and2008,20,000, 30,000,and0performanceshareswerealsograntedunderthe2005Plan.
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2000EquityIncentivePlan InOctober2000,theshareholdersadoptedanequityincentiveplan(the“2000Plan”)providingforgrants of incentive and nonqualified stock options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and/orperformancesharestoemployeesoftheCompanyanditssubsidiaries,pursuanttowhichupto7,000,000 common shares were available for issuance. The stock options and stock appreciation rights vest evenly over a periodoffiveyearsorasotherwisedeterminedbytheBoardofDirectorsortheCompensationCommitteeand generallyexpiretenyearsfromthedateofgrant,ifnotexercised.TheCompanydidnotgrantanystockawards fromthe2000Planin2010,2009or2008. 2000Non‐employeeDirectors’OptionPlan Also in October 2000, the stockholders adopted a stock option plan for non‐employee directors (the DirectorsPlan)providingforgrantsofoptionsforupto100,000commonshares.Thetermofeachawardisten years.Allawardsvestevenlyoverathree‐yearperiod.During2010,2009,and2008,optionstopurchase23,924, 34,648, and 15,696 shares, respectively, were granted under this plan. In 2009, the stockholders approved an additional150,000sharestotheplan,makingthetotalsharesauthorizedundertheplan250,000. Stock‐BasedCompensationActivity AsummaryoftheCompany’sstock‐basedcompensationactivityandrelatedinformationunderthe2005 EquityIncentivePlan,the2000EquityIncentivePlanandthe2000Non‐employeeDirectors’OptionPlanforthe yearsendedDecember25,2010,December26,2009,andDecember27,2008isprovidedbelow: StockOptionsandSARs Weighted‐Average ExercisePrice NumberofShares (InThousands) OutstandingatDecember29,2007(3,111Exercisableat$23.21) Granted Exercised Forfeited OutstandingatDecember27,2008(4,656Exercisableat$33.27) Granted Exercised Forfeited OutstandingatDecember26,2009(6,148Exercisableat$39.37) Granted Exercised Forfeited OutstandingatDecember25,2010 ExercisableatDecember25,2010 ExpectedtovestafterDecember25,2010
$46.82 $51.00 $22.35 $53.89 $47.76 $23.09 $18.08 $59.55 $48.28 $33.44 $15.52 $62.57 $50.87 $45.95 $65.19
9,531 1,470 (226) (249) 10,526 35 (278) (174) 10,109 24 (826) (221) 9,086 6,761 2,299
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StockOptionsandSARsasofDecember25,2010 Exercise Options Remaining Options Price Outstanding Life(Years) Exercisable (InThousands) (InThousands) $8.00‐$20.00 $20.01‐$40.00 $40.01‐$60.00 $60.01‐$80.00 $80.01‐$100.00 $100.01‐$120.00 $120.01‐$140.00
1,180 1,871 3,440 1,266 3 1,323 3 9,086
2.93 4.26 6.34 6.39 5.05 6.87 5.49 5.55
1,177 1,825 2,199 761 2 795 2 6,761
RestrictedStockUnits Weighted‐Average GrantPrice NumberofShares (InThousands) OutstandingatDecember29,2007 Granted Released/Vested Cancelled OutstandingatDecember27,2008 Granted Released/Vested Cancelled OutstandingatDecember26,2009 Granted Released/Vested Cancelled OutstandingatDecember25,2010
‐ $19.59 ‐ $19.59 $19.59 $29.79 $19.59 $19.63 $23.47 $30.29 $23.02 $23.32 $25.90
‐ 1,044 ‐ (1) 1,043 501 (204) (24) 1,316 515 (291) (37) 1,503
Theweighted‐averageremainingcontractlifeforstockoptionsandSARsoutstandingandexercisableat December25,2010is5.55and5.14years,respectively.Theweighted‐averageremainingcontractlifeofrestricted stockunitsatDecember25,2010was2.39years. ThefairvaluefortheseoptionswasestimatedatthedateofgrantusingaBlack‐Scholesoptionpricing modelwiththefollowingweighted‐averageassumptionsfor2010,2009,and2008: Weightedaveragefairvalueofoptionsgranted Expectedvolatility Dividendyield Expectedlifeofoptionsinyears Risk‐freeinterestrate
2010 $8.99 0.4178 4.94% 6.3 2.5%
2009 $7.32 0.4286 2.42% 6.2 3.0%
2008 $18.47 0.3845 3.75% 6.0 1.6%
The Black‐Scholes option valuation model was developed for use in estimating the fair value of traded optionswhichhavenovestingrestrictionsandarefullytransferable.Inaddition,optionvaluationmodelsrequire the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion,theexistingmodelsdonotnecessarilyprovideareliablesinglemeasureofthefairvalueofitsemployee stockoptions.Theweighted‐averagefairvalueforallawardsgrantedduring2010,2009,and2008was$29.09, $29.20,and$37.96,respectively.
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The total fair value of awards vested during 2010,2009, and2008 was $41,249, $41,527, and$35,384, respectively.TheaggregateintrinsicvaluesofoptionsandSARsoutstandingandexercisableatDecember25,2010 were $21,723 and $21,563, respectively. The aggregate intrinsic value of options and SARs exercised during the yearendedDecember25,2010was$12,259.TheaggregateintrinsicvalueofRSUsoutstandingatDecember25, 2010was$45,645.TheaggregateintrinsicvalueofRSUsreleasedduringtheyearendedDecember25,2010was $8,828.AggregateintrinsicvaluerepresentsthepositivedifferencebetweentheCompany’sclosingstockpriceon thelasttradingdayofthefiscalperiod,whichwas$30.36onDecember25,2010,andtheexercisepricemultiplied by the number of options exercised. As of December 25, 2010, there was $83,559 of total unrecognized compensationcostrelatedtounvestedshare‐basedcompensationawardsgrantedtoemployeesunderthestock compensation plans. That cost is expected to be recognized over the weighted average remaining contractual term. EmployeeStockPurchasePlan The shareholders also adopted an employee stock purchase plan (ESPP). Up to 4,000,000 shares of common stock have been reserved for the ESPP with shareholders approving an additional 2,000,000 shares in May2010.Shareswillbeofferedtoemployeesatapriceequaltothelesserof85%ofthefairmarketvalueofthe stock on thedate of purchase or 85% of the fair market value on the enrollment date. The ESPP is intended to qualifyasan“employeestockpurchaseplan”underSection423oftheInternalRevenueCode.During2010,2009, and2008,349,173,209,416,and362,902shares,respectivelywerepurchasedundertheplanforatotalpurchase priceof$8,134,$3,874,and$8,782,respectively.During2010,thepurchasesweremadeontheopenmarket.At December25,2010,approximately2,075,284shareswereavailableforfutureissuance. 10.EarningsPerShare Thefollowingtablesetsforththecomputationofbasicanddilutednetincomepershare:
December25, 2010 Numerator(inthousands): Numeratorforbasicanddiluted netincomepershare‐netincome Denominator(inthousands): Denominatorforbasicnetincomepershare‐ weighted‐averagecommonshares Effectofdilutivesecurities‐ employeestock‐basedawards Denominatorfordilutednetincomepershare‐ weighted‐averagecommonshares Basicnetincomepershare
FiscalYearEnded December26, 2009
December27, 2008
$584,603
$703,950
$732,848
196,979
200,395
208,993
1,030
766
1,687
198,009
201,161
210,680
$2.97
$3.51
$3.51
Dilutednetincomepershare $2.95 $3.50 $3.48 Options to purchase 6,192,043, 7,814,000, and 5,846,000 common shares were outstanding during 2010, 2009, and2008,respectively,butwerenotincludedinthecomputationofdilutedearningspersharebecausetheeffect wasantidilutive. 11.ShareRepurchaseProgram
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The Board of Directors approved a share repurchase program on February 12, 2010, authorizing the Company to purchase up to $300,000 of its common shares as market and business conditions warrant on the open market or in negotiated transactions in compliance with the SEC’s Rule 10b‐18. The share repurchase authorizationexpiresonDecember31,2011.AsofDecember25,2010,theCompanyhadrepurchased7,366,646 shares using cash of $223,149. There remains approximately $76,851 available for repurchase under this authorization. The Board of Directors approved a share repurchase program on October 22, 2008, authorizing the Companytopurchaseupto$300millionofitscommonsharesasmarketandbusinessconditionswarrant.The share repurchase authorization expired on December 31, 2009. From inception to expiration, $60 million of commonshareswererepurchasedandretiredunderthisplan. TheBoardofDirectorsapprovedasharerepurchaseprogramonJune6,2008,authorizingtheCompany to purchase up to 10,000,000 of its common shares as market and business conditions warrant. The share repurchaseauthorizationexpiredonDecember31,2009.Duringfiscal2008,10,000,000shareswererepurchased andretiredunderthisplan. The Board of Directors approved a share repurchase program on February 4, 2008, authorizing the Company to purchase up to 5,000,000 of its common shares as market and business conditions warrant. The share repurchase authorization expired on December 31, 2009. During fiscal 2008, 5,000,000 shares were repurchasedandretiredunderthisplan.
12.Redomestication Theredomesticationeffectivelychangedtheplaceofincorporationoftheultimateparentholdingcompanyof GarminfromtheCaymanIslandstoSwitzerland. Theredomesticationinvolvedseveralsteps.OnFebruary9,2010,GarminLtd.(Cayman)formedGarminLtd. (Switzerland)asadirectsubsidiary.OnApril6,2010,GarminLtd.(Cayman)petitionedtheCaymanCourttoorder, amongotherthings,thecallingofameetingofGarminLtd.(Cayman)commonshareholderstoapproveascheme of arrangement. On April7,2010, the Cayman Court ordered us to seek shareholderapproval of the scheme of arrangement.OnMay20,2010weobtainedthenecessaryshareholderapproval.OnJune4,2010,ahearingwas heldbytheCaymanCourtandatwhichhearingtheCaymanCourtwasaskedtoanddidapprovetheschemeof arrangement. The scheme of arrangement became effective at 3:00 a.m., Cayman Islands time, on Sunday, June27,2010(the“TransactionTime”). AtandshortlyfollowingtheTransactionTime,thefollowingstepsoccurred: 1.
all issued and outstanding Garmin Ltd. (Cayman) common shares were transferred to Garmin Ltd. (Switzerland);and
2.
in consideration, Garmin Ltd. (Switzerland) (a)issued registered shares (on a one‐for‐one basis) to the holdersoftheGarminLtd.(Cayman)commonsharesthatweretransferredtoGarminLtd.(Switzerland), and (b)increased the par value of the 10,000,000 sharesof Garmin Ltd. (Switzerland)issued to Garmin Ltd.(Cayman)inconnectionwiththeformationofGarminLtd.(Switzerland)(the“FormationShares”)to the same par value as the shares of Garmin Ltd. (Switzerland) issued to the Garmin Ltd. (Cayman) shareholders. The Formation Shares were subsequently transferred by Garmin Ltd. (Cayman) to its subsidiary, Garmin Luxembourg S.à r.l. for future use to satisfy our obligations to deliver shares in connection with awards granted under our equity incentive plans for employees and other general corporatepurposes. Asaresultoftheredomestication,theshareholdersofGarminLtd.(Cayman)becameshareholdersofGarmin Ltd.(Switzerland),andGarminLtd.(Cayman)becameasubsidiaryofGarminLtd.(Switzerland).Inaddition,Garmin Ltd.(Switzerland)assumed,onaone‐for‐onebasis,GarminLtd.(Cayman)’sexistingobligationsinconnectionwith
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awardsgrantedunderGarminLtd.(Cayman)’sequityincentiveplansandothersimilarequityawards.Anystock options, stock appreciation rights, restricted stock units or performance shares issued by Garmin Ltd. (Cayman) that are convertible, exchangeable or exercisable into common shares of Garmin Ltd. (Cayman) became convertible,exchangeableorexercisable,asthecasemaybe,intoregisteredsharesofGarminLtd.(Switzerland). Subsequently on July 26, 2010, Garmin Ltd. (Cayman) relocated its registered office to Switzerland and changeditsnametoGarminSwitzerlandGmbH.ThereportedcapitalizationoftheCompanyalsochangedtothat ofGarminLtd.(Switzerland).Accordingly,commonstockwasincreasedby$1,796,448to$1,797,435(198,077,418 shares*CHF10/USD9.0744),andretainedearningswasreducedbythesameamount. ThesummaryofthecomponentsofauthorizedsharesatDecember25,2010isasfollows: Outstanding Shares Componentsofauthorizedshares December25,2010
1 2 3
4
194,358,038
Issued Shares1
Treasury Shares 13,719,380
2
208,077,418
Conditional Capital 2,3
104,038,709
Authorized Capital 4
104,038,709
4
SharesatCHF10parvalue(USD9.0744) Includes10,000,000formationsharesatUSD0historicalcost Theparvalueofthesharecapitalpresentedonthefaceofthebalancesheetandintheconsolidatedstatementsofstockholders equityexcludestheparvalueofthe10,000,000formationshares. Upto104,038,709conditionalsharesmaybeissuedthroughtheexerciseofoptionrightswhicharegrantedtoGarminemployees and/ormembersofitsBoardofDirectors.Inaddition,theBoardofDirectorsisauthorizedtoissueupto104,038,709additional sharesnolaterthanJune27,2012.
The general terms of Garmin Ltd. (Switzerland)'s capitalization (rights of shareholders, limitations on dividends,etc.)maybefoundintheproxystatementandForm8‐A/AregistrationstatementfiledwiththeSECon April9,2010andJune28,2010,respectively.
13.WarrantyReserves TheCompany’sproductssoldaregenerallycoveredbyawarrantyforperiodsrangingfromonetotwo years.TheCompany’sestimateofcoststoserviceitswarrantyobligationsarebasedonhistoricalexperienceand expectationoffutureconditionsandarerecordedasaliabilityonthebalancesheet.Thefollowingreconciliation providesanillustrationofchangesintheaggregatewarrantyreserve: FiscalYearEnded December25, December26, December27, 2010 2009 2008 Balance‐beginningofperiod Changeinaccrualforproductssoldinpriorperiods Accrualforproductssoldduringtheperiod Expenditures Balance‐endofperiod
$87,424 (42,776) 93,172 (87,935) $49,885
$87,408 ‐ 164,909 (164,893) $87,424
$71,636 ‐ 132,644 (116,872) $87,408
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14.SelectedQuarterlyInformation(Unaudited)
March 27 Net sales Gross profit Net income Basic net income per share
$431,067 230,909 37,329 $0.19
March 28 Net sales Gross profit Net income Basic net income per share
$436,699 195,995 48,538 $0.24
Fiscal Year Ended December 25, 2010 Quarter Ending September 25 (1) June 26 $728,765 391,652 134,816 $0.68
$692,364 344,020 279,552 $1.43
Fiscal Year Ended December 26, 2009 Quarter Ending June 27 September 26 $669,104 351,614 161,871 $0.81
$781,254 409,742 215,133 $1.07
December 25 $
837,715 379,793 132,906 $0.67
December 26 $ 1,059,383 486,760 278,408 $1.39
(1) Net income and Basic net income per share for quarter ending September 25, 2010 include a one-time tax adjustment of ($98.7) million which includes release of uncertain tax position reserves from 2006 to 2008 related to our settlement with the IRS in the US, partially offset by the amount of the settlement for the 2007 tax year in the US and Taiwan surtax expense due to the release of reserves.
The above quarterly financial data is unaudited, but in the opinion of management, all adjustments necessary for a fair presentation of the selected data for these interim periods presented have been included. Theseresultsarenotnecessarilyindicativeoffuturequarterlyresults.
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Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure None. Item9A.ControlsandProcedures (a)ConclusionRegardingtheEffectivenessofDisclosureControlsandProcedures Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosurecontrolsandprocedurespursuanttoExchangeActRule13a‐15(b)asoftheendoftheperiodcoveredby thisreport.Basedontheevaluation,theChiefExecutiveOfficerandChiefFinancialOfficerhaveconcludedthat thesedisclosurecontrolsandproceduresareeffective. (b)Management’sReportonInternalControloverFinancialReporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthat controls may become inadequate because of changes in conditions, or that the degree of compliance with the policiesorproceduresmaydeteriorate. Management’s assessment of and conclusion on the effectiveness of internal control over financial reportingareincludedasExhibits31.1,31.2,32.1and32.2. ManagementoftheCompanyassessedtheeffectivenessoftheCompany’sinternalcontroloverfinancial reporting as of December 25, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control‐Integrated Framework”. Based on such assessment and those criteria, management believes that the Company maintained effectiveinternalcontroloverfinancialreportingasofDecember25,2010. Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s consolidatedfinancialstatements,issuedanattestationreportonmanagement’seffectivenessoftheCompany’s internalcontroloverfinancialreportingasofDecember25,2010,asstatedintheirreportwhichisincludedherein. Thatattestationreportappearsbelow. (c)AttestationReportoftheIndependentRegisteredPublicAccountingFirm
ReportofIndependentRegisteredPublicAccountingFirm
TheBoardofDirectorsandShareholders GarminLtd.
WehaveauditedGarminLtd.’sinternalcontroloverfinancialreportingasofDecember25,2010,basedoncriteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of
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theTreadwayCommission(theCOSOcriteria).GarminLtd.’smanagementisresponsibleformaintainingeffective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreporting basedonouraudit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates).Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceabout whether effective internal control over financial reporting was maintained in all material respects. Our audit includedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterial weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelieve thatourauditprovidesareasonablebasisforouropinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesin accordance with generally accepted accounting principles. A company’s internal control over financial reporting includesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail, accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonable assurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordance withgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmade onlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;and(3)providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’sassetsthatcouldhaveamaterialeffectonthefinancialstatements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthat controls may become inadequate because of changes in conditions, or that the degree of compliance with the policiesorproceduresmaydeteriorate. Inouropinion,GarminLtd.maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreporting asofDecember25,2010,basedontheCOSOcriteria.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Garmin Ltd. and Subsidiaries as of December 25, 2010 and December26,2009andtherelatedconsolidatedstatementsofincome,stockholders’equity,andcashflowsfor each of the three years in the period ended December 25,2010 of Garmin Ltd. and Subsidiaries and our report datedFebruary23,2011expressedanunqualifiedopinionthereon.
/s/Ernst&YoungLLP
KansasCity,Missouri February23,2011
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(d)ChangesinInternalControloverFinancialReporting There were no changes in our internal control over financial reporting during the quarter ended December 25, 2010thathavemateriallyaffected,orarereasonablylikelytomateriallyaffect,ourinternalcontroloverfinancial reporting Item9B.OtherInformation Notapplicable.
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PARTIII Item10.Directors,ExecutiveOfficersandCorporateGovernance GarminhasincorporatedbyreferencecertaininformationinresponseorpartialresponsetotheItemsunder thisPartIIIofthisAnnualReportonForm10‐KpursuanttoGeneralInstructionG(3)ofthisForm10‐KandRule 12b‐23 under the Exchange Act. Garmin’s definitive proxy statement in connection with its annual meeting of shareholders scheduled for June 3, 2011 (the “Proxy Statement”) will be filed with the Securities and Exchange Commissionnolaterthan120daysafterDecember25,2010. (a) DirectorsoftheCompany TheinformationsetforthinresponsetoItem401ofRegulationS‐Kundertheheadings“Proposal1‐Election ofTwoDirectors”and“TheBoardofDirectors”intheProxyStatementisherebyincorporatedhereinbyreference inpartialresponsetothisItem10. (b) ExecutiveOfficersoftheCompany TheinformationsetforthinresponsetoItem401ofRegulationS‐Kundertheheading“ExecutiveOfficersof theRegistrant”inPartIofthisForm10‐KisincorporatedhereinbyreferenceinpartialresponsetothisItem10. (c) CompliancewithSection16(a)oftheExchangeAct The information set forth in response to Item 405 of Regulation S‐K under the heading “Section 16(a) BeneficialOwnershipReportingCompliance”intheProxyStatementisherebyincorporatedhereinbyreferencein partialresponsetothisItem10. (d) AuditCommitteeandAuditCommitteeFinancialExpert The information set forth in response to Item 402 of Regulation S‐K under the heading “The Board of Directors ‐‐ Audit Committee” in the Proxy Statement is hereby incorporated herein by reference in partial responsetothisItem10. TheAuditCommitteeconsistsofGeneM.Betts,CharlesW.PefferandThomasP.Poberezny.Mr.Peffer servesastheChairmanoftheAuditCommittee.AllmembersoftheAuditCommitteeare“independent”within the meaning of the rules of the SEC and the NASDAQ Marketplace Rules. Garmin’s Board of Directors has determined that Mr. Betts and Mr. Peffer, are “audit committee financial experts” as defined by the SEC regulationsimplementingSection407oftheSarbanes‐OxleyActof2002. (e) CodeofEthics Garmin’s Board of Directors has adopted the Code of Conduct of Garmin Ltd. and Subsidiaries (the “Code”).TheCodeisapplicabletoallGarminemployeesincludingtheChairmanandChiefExecutiveOfficer,the PresidentandChiefOperatingOfficer,theChiefFinancialOfficer,theControllerandotherofficers.Acopyofthe CodeisfiledasExhibit14.1tothisAnnualReportonForm10‐K.IfanyamendmentstotheCodearemade,orany waiverswithrespecttotheCodearegrantedtotheChiefExecutiveOfficer,ChiefFinancialOfficerorController, suchamendmentorwaiverwillbedisclosedinaForm8‐KfiledwiththeSecuritiesandExchangeCommission.
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Item11.ExecutiveCompensation The information set forth in response to Item 402 of Regulation S‐K under the headings “Executive Compensation Matters” and “The Board of Directors – Non‐Management Director Compensation” in the Proxy StatementisherebyincorporatedhereinbyreferenceinpartialresponsetothisItem11. TheinformationsetforthinresponsetoItem407(e)(4)ofRegulationS‐Kundertheheading“TheBoardof Directors ‐‐ Compensation Committee Interlocks and Insider Participation; Certain Relationships” in the Proxy StatementisherebyincorporatedhereinbyreferenceinpartialresponsetothisItem11. TheinformationsetforthinresponsetoItem407(e)(5)ofRegulationS‐Kundertheheading“Executive Compensation Matters – Report of Compensation Committee” in the Proxy Statement is hereby incorporated hereinbyreferenceinpartialresponsetothisItem11. Item12.SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholder Matters TheinformationsetforthinresponsetoItem403ofRegulationS‐Kundertheheading“StockOwnership ofCertainBeneficialOwnersandManagement”intheProxyStatementisherebyincorporatedhereinbyreference inpartialresponsetothisItem12. EquityCompensationPlanInformation The following table gives information as of December 25, 2010 about the Garmin common shares that maybeissuedunderalloftheCompany’sexistingequitycompensationplans,asadjustedforstocksplits. A B C Number of securities remaining available for Plan Category Number of securities to be Weighted-average future issuance under issued upon exercise of exercise price of equity compensation outstanding options, outstanding options, plans (excluding warrants and rights warrants and rights securities reflected in column A) Equity compensation 10,589,930 $50.87 3,614,232 plans approved by shareholders Equity compensation ---plans not approved by shareholders Total
10,589,930
$50.87
3,614,232
TableconsistsoftheGarminLtd.2005EquityIncentivePlan(asAmendedandRestatedEffectiveJune5, 2009), the Garmin Ltd. 2000Equity Incentive Plan, the Garmin Ltd. Amended andRestated 2000 Non‐Employee Directors’ Option Plan, effective June 5, 2009, and the Garmin Ltd. Amended and Restated Employee Stock PurchasePlan,effectiveJanuary1,2010.Theweighted‐averageexercisepricedoesnotreflectthesharesthatwill beissueduponthepaymentofoutstandingawardsofRSUs. TheCompanyhasnoknowledgeofanyarrangement,theoperationofwhichmayatasubsequentdate resultinachangeincontroloftheCompany.
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Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence The information set forth in response to Item 404 of Regulation S‐K under the heading “Compensation Committee Interlocks and Insider Participation; Certain Relationships” in the Proxy Statement is incorporated hereinbyreferenceinpartialresponsetothisItem13. TheinformationsetforthinresponsetoItem407(a)ofRegulationS‐Kundertheheadings“ProposalOne‐‐ ElectionofTwoDirectors”and“TheBoardofDirectors”intheProxyStatementisherebyincorporatedhereinby referenceinpartialresponsetothisItem13. Item14.PrincipalAccountingFeesandServices Theinformationsetforthundertheheadings“AuditMatters‐‐IndependentRegisteredPublicAccounting FirmFees”and“Pre‐ApprovalofServicesProvidedbytheIndependentAuditor”intheProxyStatementishereby incorporatedbyreferenceinresponsetothisItem14.
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PARTIV
Item15.Exhibits,andFinancialStatementSchedules (a) ListofDocumentsfiledaspartofthisReport (1) ConsolidatedFinancialStatements Theconsolidatedfinancialstatementsandrelatednotes,togetherwiththereportofErnst&YoungLLP, appearinPartII,Item8“FinancialStatementsandSupplementaryData”ofthisForm10‐K. (2) ScheduleIIValuationandQualifyingAccounts Allotherscheduleshavebeenomittedbecausetheyarenotapplicable,areinsignificantortherequired informationisshownintheconsolidatedfinancialstatementsornotesthereto. (3) Exhibits‐‐Thefollowingexhibitsarefiledaspartof,orincorporatedbyreferenceinto,thisAnnualReport onForm10‐K: EXHIBIT DESCRIPTION NUMBER ________ _____________ 3.1 ArticlesofAssociation,asamended,ofGarminLtd.(incorporatedbyreferencetoExhibit 3.1oftheRegistrant’sCurrentReportonForm8‐KfiledonJune28,2010). 3.2 OrganizationalRegulationsofGarminLtd.(incorporatedbyreferencetoExhibit3.1of theRegistrant’sCurrentReportonForm8‐KfiledonJune28,2010). 10.1 GarminLtd.2000EquityIncentivePlan(incorporatedbyreferencetoExhibit10.1of theRegistrant’sRegistrationStatementonFormS‐1filedDecember6,2000 (CommissionFileNo.333‐45514)). 10.2 FormofStockOptionAgreementpursuanttotheGarminLtd.2000EquityIncentivePlan forEmployeesofGarminInternational,Inc.(incorporatedbyreferencetoExhibit10.1of theRegistrant’sCurrentReportonForm8‐KfiledonSeptember7,2004). 10.3 FormofStockOptionAgreementpursuanttotheGarminLtd.2000EquityIncentivePlan forEmployeesofGarminCorporation(incorporatedbyreferencetoExhibit10.3ofthe Registrant’sCurrentReportonForm8‐KfiledonSeptember7,2004). 10.4 FormofStockOptionAgreementpursuanttotheGarminLtd.2000EquityIncentivePlan forUK‐ApprovedStockOptionsforEmployeesofGarmin(Europe)Ltd.(incorporatedby referencetoExhibit10.4oftheRegistrant’sCurrentReportonForm8‐Kfiledon September7,2004). 10.5 FormofStockOptionAgreementpursuanttotheGarminLtd.2000EquityIncentivePlan forNonUK‐ApprovedStockOptionsforEmployeesofGarmin(Europe)Ltd. (incorporatedbyreferencetoExhibit10.5oftheRegistrant’sCurrentReportonForm8‐ KfiledonSeptember7,2004).
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10.6
GarminLtd.2000Non‐EmployeeDirectors’OptionPlan(incorporatedbyreferenceto Exhibit10.2oftheRegistrant’sRegistrationStatementonFormS‐1filedDecember6, 2000(CommissionFileNo.333‐45514)).
10.7
FormofStockOptionAgreementpursuanttotheGarminLtd.Non‐EmployeeDirectors’ OptionPlanforNon‐EmployeeDirectorsofGarminLtd.(incorporatedbyreferenceto Exhibit10.2oftheRegistrant’sCurrentReportonForm8‐KfiledonSeptember7,2004).
10.8
GarminLtd.AmendedandRestatedEmployeeStockPurchasePlan(incorporatedby referencetoExhibit10.1oftheRegistrant’sQuarterlyReportonForm10‐QfiledAugust 9,2006).
10.9
FirstAmendmenttoGarminLtd.EmployeeStockPurchasePlan(incorporatedby referencetoExhibit10.4oftheRegistrant’sAnnualReportonForm10‐KfiledonMarch 27,2002).
10.10
SecondAmendmenttoGarminLtd.EmployeeStockPurchasePlan(incorporatedby referencetoExhibit10.1oftheRegistrant’sQuarterlyReportonForm10‐Qfiledon August13,2003).
10.11
GarminLtd.2005EquityIncentivePlan(incorporatedbyreferencetoExhibit10.1of theRegistrant’sCurrentReportonForm8‐KfiledonJune7,2005).
10.12 FormofStockOptionAgreementpursuanttotheGarminLtd.2005EquityIncentive Plan(incorporatedbyreferencetoExhibit10.2oftheRegistrant’sCurrentReporton Form8‐KfiledonJune7,2005). 10.13 FormofStockAppreciationRightsAgreementpursuanttotheGarminLtd. 2005EquityIncentivePlan(incorporatedbyreferencetoExhibit10.3oftheRegistrant’s CurrentReportonForm8‐KfiledonJune7,2005). 10.14 FormofStockAppreciationRightsAgreementpursuanttotheGarminLtd. 2000EquityIncentivePlan(incorporatedbyreferencetoExhibit10.4oftheRegistrant’s QuarterlyReportonForm10‐QfiledonMay8,2007). 10.15 AmendedandRestatedGarminLtd.EmployeeStockPurchasePlaneffectiveJanuary1, 2008(incorporatedbyreferencetoExhibit10.15oftheRegistrant’sAnnualReporton Form10‐KfiledonFebruary25,2009). 10.16 FormofTimeVestedRestrictedStockUnitAwardAgreementundertheGarminLtd. 2005EquityIncentivePlan(incorporatedbyreferencetoExhibit10.1oftheRegistrant’s CurrentReportonForm8‐KfiledonDecember17,2008). 10.17
FormofPerformanceSharesAwardAgreementundertheGarminLtd.2005Equity IncentivePlan(incorporatedbyreferencetoExhibit10.2oftheRegistrant’sCurrent ReportonForm8‐KfiledonDecember17,2008).
10.18
GarminLtd.2009CashIncentiveBonusPlan(incorporatedbyreferencetoExhibit10.18 oftheRegistrant’sAnnualReportonForm10‐KfiledonFebruary25,2009).
10.19
VendorAgreementdatedFebruary27,2004betweenBestBuyPurchasingLLCand GarminUSA,Inc.(incorporatedbyreferencetoExhibit10.19oftheRegistrant’sAnnual ReportonForm10‐KfiledonFebruary25,2009).
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10.20
10.21
10.22
BestBuyVendorProgramAgreementdatedFebruary29,2008(incorporatedby referencetoExhibit10.20oftheRegistrant’sAnnualReportonForm10‐Kfiledon February25,2009). BestBuyVendorProgramAgreementandAddendumtheretodatedMarch30,2009 (incorporatedbyreferencetoExhibit10.1oftheRegistrant’sQuarterlyReportonForm 10‐QfiledonAugust5,2009). AmendedandRestatedGarminLtd.EmployeeStockPurchasePlan,effectiveJanuary1, 2010(incorporatedbyreferencetoExhibit10.22oftheRegistrant’sAnnualReporton Form10‐KfiledonFebruary24,2010).
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
FormofTimeVestedRestrictedStockUnitAwardAgreementundertheGarminLtd. 2005EquityIncentivePlan,asrevisedbytheRegistrant’sBoardofDirectorson December11,2009(incorporatedbyreferencetoExhibit10.22oftheRegistrant’s AnnualReportonForm10‐KfiledonFebruary24,2010). FormofPerformanceSharesAwardAgreementundertheGarminLtd.2005Equity IncentivePlan,asrevisedbytheRegistrant’sBoardofDirectorsonDecember11,2009 (incorporatedbyreferencetoExhibit10.22oftheRegistrant’sAnnualReportonForm 10‐KfiledonFebruary24,2010). GarminLtd.2005EquityIncentivePlan(asAmendedandRestatedEffectiveJune5, 2009)(incorporatedbyreferencetoSchedule1oftheRegistrant’sProxyStatementon Schedule14AfiledonApril21,2009). GarminLtd.AmendedandRestated2000Non‐EmployeeDirectors’OptionPlan, EffectiveJune5,2009(incorporatedbyreferencetoSchedule2oftheRegistrant’sProxy StatementonSchedule14AfiledonApril21,2009). GarminLtd.AmendedandRestated2000EquityIncentivePlan(incorporatedby referencetoExhibit10.2oftheRegistrant’sCurrentReportonForm8‐KfiledonJune 28,2010). GarminLtd.AmendedandRestated2000Non‐EmployeeDirectors’OptionPlan (incorporatedbyreferencetoExhibit10.3oftheRegistrant’sCurrentReportonForm8‐ KfiledonJune28,2010). GarminLtd.AmendedandRestatedEmployeeStockPurchasePlan(incorporatedby referencetoExhibit10.4oftheRegistrant’sCurrentReportonForm8‐KfiledonJune 28,2010). GarminLtd.AmendedandRestated2005EquityIncentivePlan(incorporatedby referencetoExhibit10.5oftheRegistrant’sCurrentReportonForm8‐KfiledonJune 28,2010). FormofStockOptionAgreementpursuanttotheGarminLtd.AmendedandRestated 2000Non‐EmployeeDirectors’OptionPlan(incorporatedbyreferencetoExhibit10.6of theRegistrant’sCurrentReportonForm8‐KfiledonJune28,2010). FormofPerformanceSharesAwardAgreementpursuanttotheGarminLtd.2005Equity IncentivePlan(incorporatedbyreferencetoExhibit10.7oftheRegistrant’sCurrent ReportonForm8‐KfiledonJune28,2010).
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10.33
FormofRestrictedStockUnitAwardAgreementpursuanttotheGarminLtd.2005 EquityIncentivePlan,forSwissresidents(incorporatedbyreferencetoExhibit10.8of theRegistrant’sCurrentReportonForm8‐KfiledonJune28,2010).
10.34
FormofRestrictedStockUnitAwardAgreementpursuanttotheGarminLtd.2005 EquityIncentivePlan,fornon‐Swissresidents(incorporatedbyreferencetoExhibit10.9 oftheRegistrant’sCurrentReportonForm8‐KfiledonJune28,2010).
10.35
14.1 21.1 23.1
TransactionAgreementbetweenGarminLtd.,aCaymanIslandscompany,andthe Registrant,datedasofMay21,2010((incorporatedbyreferencetoExhibit10.1ofthe Registrant’sCurrentReportonForm8‐KfiledonJune28,2010). CodeofConductofGarminLtd.andSubsidiaries
Listofsubsidiaries ConsentofErnst&YoungLLP
24.1
PowerofAttorney(includedinsignaturepage)
31.1
ChiefExecutiveOfficer’sCertificationpursuanttoSection302oftheSarbanes‐OxleyAct of2002.
31.2
ChiefFinancialOfficer’sCertificationpursuanttoSection302oftheSarbanes‐OxleyAct of2002.
32.1
ChiefExecutiveOfficer’sCertificationpursuanttoSection906oftheSarbanes‐OxleyAct of2002.
32.2 ChiefFinancialOfficer’sCertificationpursuanttoSection906oftheSarbanes‐OxleyAct of2002. Exhibit101.INS XBRLInstanceDocument Exhibit101.SCH XBRLTaxonomyExtensionSchema Exhibit101.CAL XBRLTaxonomyExtensionCalculationLinkbase Exhibit101.LAB XBRLTaxonomyExtensionLabelLinkbase Exhibit101.PRE XBRLTaxonomyExtensionPresentationLinkbase Exhibit101.DEF XBRLTaxonomyExtensionDefinitionLinkbase (b) Exhibits. TheexhibitslistedontheaccompanyingExhibitIndexinItem15(a)(3)arefiledaspartof,orareincorporated byreferenceinto,thisAnnualReportonForm10‐K. (c) FinancialStatementSchedules. ReferenceismadetoItem15(a)(2)above.
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SCHEDULEII‐VALUATIONANDQUALIFYINGACCOUNTS GarminLtd.andSubsidiaries (Inthousands)
Description YearEndedDecember25,2010: Deductedfromassetaccounts Allowancefordoubtfulaccounts Inventoryreserve Deferredtaxassetvaluationallowance Total
Balanceat Beginningof Period
Additions Chargedto Chargedto Costsand Other Expenses Accounts
Deductions
Balanceat Endof Period
$36,673 38,898 35,617 $111,188
($4,476) 5,753 15,735 $17,012
‐ ‐ ‐ ‐
($375) (6,931) ‐ ($7,306)
$31,822 37,720 51,352 $120,894
YearEndedDecember26,2009: Deductedfromassetaccounts Allowancefordoubtfulaccounts Inventoryreserve Deferredtaxassetvaluationallowance Total
$42,409 23,204 34,487 $100,100
($1,332) 61,323 1,468 $61,459
‐ ‐ ‐ ‐
($4,404) (45,629) (338) ($50,371)
$36,673 38,898 35,617 $111,188
YearEndedDecember27,2008: Deductedfromassetaccounts Allowancefordoubtfulaccounts Inventoryreserve Deferredtaxassetvaluationallowance Total
$10,246 31,186 15,491 $56,923
$32,355 24,461 18,996 $75,812
‐ ‐ ‐ ‐
($192) (32,443) ‐ ($32,635)
$42,409 23,204 34,487 $100,100
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SIGNATURES
PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistrant hasdulycausedthisreporttobesignedonitsbehalfbytheundersigned,thereuntodulyauthorized.
Dated:February23,2011
GARMINLTD.
By/s/MinH.Kao MinH.Kao ChiefExecutiveOfficer
POWEROFATTORNEY Know all persons by these presents, that each person whose signature appears below constitutes and appointsMinH.KaoandKevinRauckmanandAndrewR.Etkind,andeachofthem,ashisattorney‐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 confirming all that said attorney‐in‐fact,orhissubstituteorsubstitutes,maydoorcausetobedonebyvirtuehereof.
PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreportonForm10‐Khasbeen signedbelowbythefollowingpersonsonbehalfoftheregistrantandinthecapacitiesindicatedonFebruary 23,2011.
/s/MinH.Kao /s/GeneM.Betts MinH.Kao GeneM.Betts Chairman,Chief Director ExecutiveOfficerandDirector (PrincipalExecutiveOfficer) /s/KevinRauckman /s/DonaldH.Eller KevinRauckman DonaldH.Eller (PrincipalFinancialOfficerandPrincipalAccountingOfficer) Director ChiefFinancialOfficerandTreasurer /s/CharlesW.Peffer /s/ThomasP.Poberezny CharlesW.Peffer ThomasP.Poberezny Director Director /s/CliftonA.Pemble. CliftonAPemble Director
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GarminLtd. 2010Form10‐KAnnualReport ExhibitIndex Thefollowingexhibitsareattachedhereto.SeePartIVofthisAnnualReportonForm10‐Kforacomplete listofexhibits. Exhibit Document Number 14.1 CodeofConductofGarminLtd.andSubsidiaries 21.1 Listofsubsidiaries 23.1 ConsentofErnst&YoungLLP 31.1 ChiefExecutiveOfficer’sCertificationpursuanttoSection302oftheSarbanes‐OxleyActof2002 31.2 ChiefFinancialOfficer’sCertificationpursuanttoSection302oftheSarbanes‐OxleyActof2002 32.1 ChiefExecutiveOfficer’sCertificationpursuanttoSection906oftheSarbanes‐OxleyActof2002 32.2 ChiefFinancialOfficer’sCertificationpursuanttoSection906oftheSarbanes‐OxleyActof2002 Exhibit101.INS XBRLInstanceDocument Exhibit101.SCH XBRLTaxonomyExtensionSchema Exhibit101.CAL XBRLTaxonomyExtensionCalculationLinkbase Exhibit101.LAB XBRLTaxonomyExtensionLabelLinkbase Exhibit101.PRE XBRLTaxonomyExtensionPresentationLinkbase Exhibit101.DEF XBRLTaxonomyExtensionDefinitionLinkbase
EXHIBIT21.1 GARMINLTD. ListofSubsidiariesofCompany JurisdictionofIncorporation NameofSubsidiary GarminCorporation Taiwan GarminInternational,Inc. Kansas GarminUSA,Inc. Kansas GarminRealty,LLC Kansas GarminAT,Inc. Oregon DigitalCyclone,Inc. Minnesota GarminAustralasiaPtyLtd. Australia GarminDesenvolvimentodeSistemasdeAviaçãoeComercio deTecnologiasdoBrasilLtda Brazil DynastreamInnovations,Inc. Alberta,Canada Austria GarminAustriaHoldingGmbH GarminAustriaGmbH Austria GarminBeluxNV/SA Belgium GarminChinaCo.Ltd. China GarminDanmarkA/S Denmark GarminDanmarkEjendommeApS Denmark Garmin(Europe)Ltd. England GarminSuomiHoldingOy Finland GarminSuomiOy Finland GarminFranceSAS France GarminDeutschlandGmbH Germany GarminDeutschlandVerwaltungsGmbH Germany GarminDeutschlandBeteligungsGmbH&Co,KG Germany GarminIndiaPrivateLtd. India GarminItaliaS.p.A. Italy GarminJapanLtd. Japan GarminLuxembourgS.àr.l. Luxembourg GarminN.V. NetherlandsAntilles GarminB.V. Netherlands GarminCoöperatiefUA Netherlands GarminAcquisitionB.V. Netherlands GarminNederlandB.V. Netherlands GarminNorgeAS Norway Norway GarminNorwayHoldingAS GarminPolskaSp.zo.o. Poland GarminPortugal–EquipamentosdeComunicaçõesedeNavegaçãoLtda. Portugal GarminIberiaS.A. Spain GarminSpainS.L.U. Spain GarminSingaporePte.Ltd Singapore GarminSwedenHoldingAB Sweden GarminSwedenAB Sweden GarminSwitzerlandGmbH Switzerland
EXHIBIT23.1 ConsentofIndependentRegisteredPublicAccountingFirm WeconsenttotheincorporationbyreferenceinthefollowingRegistrationStatements: (1) Registration Statement (Form S‐8 No. 333‐124818) pertaining to the Garmin International, Inc. 401(k)andPensionPlan, (2) Registration Statement (Form S‐8 No. 333‐125717) pertaining to the Garmin Ltd. Amended and Restated2005EquityIncentivePlan, (3) Registration Statement (Form S‐8 No. 333‐51470) pertaining to the Garmin Ltd. Amended and RestatedEmployeeStockPurchasePlan,GarminLtd.AmendedandRestated2000EquityIncentive Plan,GarminLtd.AmendedandRestated2000Non‐EmployeeDirectors’OptionPlan, (4) RegistrationStatement(FormS‐8No.333‐52766)pertainingtotheGarminInternational,Inc.401(k) andPensionPlan, (5) Registration Statement (Form S‐8 No. 333‐160297) pertaining to the Garmin Ltd. Amended and Restated2000Non‐EmployeeDirectors’OptionPlan,and (6) Registration Statement (Form S‐8 No. 333‐149450) pertaining to the Garmin International, Inc. 401(k)andPensionPlan; ofourreportsdatedFebruary23,2011,withrespecttotheconsolidatedfinancialstatementsandscheduleof GarminLtd.andSubsidiaries,andtheeffectivenessofinternalcontroloverfinancialreportingofGarminLtd. andSubsidiaries,includedinthisAnnualReport(Form10‐K)fortheyearendedDecember25,2010. /s/Ernst&YoungLLP KansasCity,Missouri February23,2011
EXHIBIT31.1 CERTIFICATION I,MinH.Kao,certifythat: 1. IhavereviewedthisreportonForm10‐KofGarminLtd.; 2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromitto stateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuch statementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport; 3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport, fairly present in all material respects the financial condition, results of operations and cash flows of the registrantasof,andfor,theperiodspresentedinthisreport; 4. Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosure controlsandprocedures(asdefinedinExchangeActRules13a‐15(e)and15d‐15(e))andinternalcontrolover financialreporting(asdefinedinExchangeActRules13a‐15(f)and15d‐15(f))fortheregistrantandhave: (a)designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandproceduresto bedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,includingits consolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentitiesparticularlyduringtheperiodin whichthisreportisbeingprepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with generallyacceptedaccountingprinciples; (c) evaluatedthe effectiveness of the registrant’sdisclosure controls and procedures andpresented in this reportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendofthe periodcoveredbythisreportbasedonsuchevaluation;and (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduringtheregistrant’smostrecentfiscalquarter(theregistrant’sfourthfiscalquarterinthecaseof an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontroloverfinancialreporting;and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeandreportfinancialinformation;and (b)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificant roleintheregistrant’sinternalcontroloverfinancialreporting. Date:February23,2011 By __/s/MinH.Kao_______________ MinH.Kao ChairmanandChief ExecutiveOfficer
EXHIBIT31.2 CERTIFICATION I,KevinRauckman,certifythat: 1. IhavereviewedthisreportonForm10‐KofGarminLtd.; 2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromitto stateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuch statementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport; 3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport, fairly present in all material respects the financial condition, results of operations and cash flows of the registrantasof,andfor,theperiodspresentedinthisreport; 4. Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosure controlsandprocedures(asdefinedinExchangeActRules13a‐15(e)and15d‐15(e))andinternalcontrolover financialreporting(asdefinedinExchangeActRules13a‐15(f)and15d‐15(f))fortheregistrantandhave: (a)designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandproceduresto bedesignedunderoursupervision,toensurethatmaterialinformationrelatingtotheregistrant,includingits consolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentitiesparticularlyduringtheperiodin whichthisreportisbeingprepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reportingtobedesignedunderoursupervision,toprovidereasonableassuranceregardingthereliabilityof financial reporting and the preparation of financial statements for external purposes in accordance with generallyacceptedaccountingprinciples; (c) evaluatedthe effectiveness of the registrant’sdisclosure controls and procedures andpresented in this reportourconclusionsabouttheeffectivenessofthedisclosurecontrolsandprocedures,asoftheendofthe periodcoveredbythisreportbasedonsuchevaluation;and (d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurredduringtheregistrant’smostrecentfiscalquarter(theregistrant’sfourthfiscalquarterinthecaseof an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontroloverfinancialreporting;and 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’sboardofdirectors(orpersonsperformingtheequivalentfunctions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeandreportfinancialinformation;and (b)anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificant roleintheregistrant’sinternalcontroloverfinancialreporting. Date:February23,2011 By /s/KevinRauckman KevinRauckman ChiefFinancialOfficer
EXHIBIT32.1 Certification PursuanttoSection906oftheSarbanes‐OxleyActof2002 (Subsections(a)and(b)ofSection1350,Chapter63ofTitle18,UnitedStatesCode) Pursuant to section 906 of the Sarbanes‐Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter63ofTitle18,UnitedStatesCode),I,MinH.Kao,ChairmanandChiefExecutiveOfficerofGarminLtd.(the “Company”)herebycertifythat: (1) The Annual Report on Form 10‐K for the year ended December 25, 2010 (the “Form 10‐K”) of the Company fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Actof1934;and (2) the information contained in the Form 10‐K fairly presents, in all material respects, the financial conditionandresultsofoperationsoftheCompany.
Dated:February23,2011 /s/MinH.Kao MinH.Kao ChairmanandChiefExecutiveOfficer AsignedoriginalofthiswrittenstatementrequiredbySection906hasbeenprovidedtotheCompanyandwill be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. ThiscertificationaccompaniestheForm10‐KpursuanttoSection906oftheSarbanes‐OxleyActof2002and shallnot,excepttotheextentrequiredbytheSarbanes‐OxleyActof2002,bedeemedfiledbytheCompany forpurposesofSection18oftheSecuritiesExchangeActof1934,asamended.
EXHIBIT32.2 Certification PursuanttoSection906oftheSarbanes‐OxleyActof2002 (Subsections(a)and(b)ofSection1350,Chapter63ofTitle18,UnitedStatesCode) 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), I, Kevin Rauckman, Chief Financial Officer of Garmin Ltd. (the “Company”)herebycertifythat: (1) The Annual Report on Form 10‐K for the year ended December 25, 2010 (the “Form 10‐K”) of the CompanyfullycomplieswiththerequirementsofSection13(a)or15(d)oftheSecuritiesExchangeActof 1934;and (2) the information contained in the Form 10‐K fairly presents, in all material respects, the financial conditionandresultsofoperationsoftheCompany.
Dated:February23,2011 /s/KevinRauckman KevinRauckman ChiefFinancialOfficer AsignedoriginalofthiswrittenstatementrequiredbySection906hasbeenprovidedtotheCompanyandwill beretainedbytheCompanyandfurnishedtotheSecuritiesandExchangeCommissionoritsstaffupon request. ThiscertificationaccompaniestheForm10‐KpursuanttoSection906oftheSarbanes‐OxleyActof2002and shallnot,excepttotheextentrequiredbytheSarbanes‐OxleyActof2002,bedeemedfiledbytheCompany forpurposesofSection18oftheSecuritiesExchangeActof1934,asamended.