United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 11-K
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File Number: 0-31983
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
Garmin International, Inc. Savings and Profit Sharing Plan
c/o Garmin International, Inc.
1200 East 151st Street
Olathe, KS 66062
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Garmin Ltd.
P.O. Box 30464 SMB
5th Floor, Harbour Place
103 South Church Street
George Town
Grand Cayman, Cayman Islands
Contents
Report of Independent Auditors...............................................1
Financial Statements
Statements of Net Assets Available for Plan Benefits as of December 31,
2001 and 2000................................................................2
Statement of Changes in Net Assets Available for Plan Benefits for the
Years Ended December 31, 2001 and 2000................................... 3
Notes to Financial Statements................................................4
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets Held for Investment
Purposes at End of Year...................................................8
Signature Page...............................................................9
Exhibit
Exhibit 23 - Consent of Independent Accountants.............................10
A schedule of party-in-interest transactions has not been presented because
there were no party-in-interest transactions, which are prohibited by ERISA
Section 406 and for which there is no statutory or administrative exemption.
Schedules of loans, fixed income obligations, and leases in default or
uncollectible are not presented, since such loans, fixed income obligations,
or leases are not present
Report of Independent Auditors
The Plan Administrator
Garmin International, Inc.
Savings and Profit Sharing Plan
We have audited the accompanying statements of net assets available for plan
benefits of Garmin International Inc. Savings and Profit Sharing Plan (the Plan)
as of December 31, 2001 and 2000, and the related statement of changes in net
assets available for plan benefits for the year ended December 31, 2001. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2001 and 2000, and the changes in its net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at end of year as of December 31, 2001is presented
for purposes of additional analysis and is not a required part of the financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
Ernst & Young LLP
May 31, 2002
Garmin International, Inc.
Savings and Profit Sharing Plan
Statements of Net Assets
Available for Benefits
December 31
2001 2000
------------------------------------
Assets
Investments, at fair value $16,555,721 $14,108,801
Receivables:
Employer contributions 46,827
Employee contributions 62,221
------------------------------------
Total receivables 109,048
------------------------------------
Net assets available for plan benefits $16,555,721 $14,217,849
====================================
See accompanying notes.
Garmin International, Inc.
Savings and Profit Sharing Plan
Statement of Changes in Net Assets
Available for Benefits
Year Ended
December 31,
2001
-------------------
Additions
Investment income:
Dividends $ 134,518
Interest 89,492
-------------
224,010
Contributions:
Employee contributions 1,831,406
Employer contributions 1,172,108
-------------
3,003,514
-------------
Total additions 3,227,524
Deductions
Distibutions to participants (343,067)
Administrative expenses (55,012)
-------------
(398,079)
Net decline in fair value of investments (Note 3) (491,573)
-------------
Net increase 2,337,872
Net assets available for plan benefits at beginning of year 14,271,849
-------------
Net assets available for plan benefits at end of year $16,555,721
=============
See accompanying notes.
Garmin International, Inc.
Savings and Profit Sharing Plan
Notes to Financial Statements
1. Description of the Plan
The Savings and Profit Sharing Plan (the Plan) is a contributory defined
contribution plan available to full-time employees who are at least 21 years of
age and have completed three months of service with the Company. Participants
are permitted to enter the Plan after meeting eligibility requirements on either
January 1 or July 1. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Eligible employees may
contribute up to 15% of their annual compensation subject to Internal Revenue
Code maximum limitations. The Company matches 75% of an employee's contributions
up to 7.5% of the employee's compensation. Certain other employer contributions
to the Plan are at the sole discretion of the Company's Board of Directors.
Under provisions of the Plan, participants may elect to have their allocation
invested in one or more of the investment accounts available.
Participants become fully vested in employer contributions to the Plan after
five years of continuous service. The vesting percentages are as follows: 0%
through one year of service, 20% after one year, 40% after two years, 60% after
three years, 80% after four years and 100% after five years of continuous
service. The non-vested portions of terminated participants' account balances
are forfeited, and such forfeitures serve to reduce future employer
contributions. The Plan contained $71,858 in forfeitures at December 31, 2001
and no such forfeitures at December 31, 2000. Upon termination of employment or
at retirement age, a participant may receive either a lump-sum amount equal to
the value of the participant's vested account balance or the Plan will purchase
an annuity with the lump-sum amount.
Participants may borrow from the Plan in the form of a loan. The loan is limited
to the amount the participant may borrow without the loan being treated as a
taxable distribution. The loan and any outstanding loan balance may not be more
than 50% of the participant's vested account or $50,000, whichever is less. The
minimum loan is $500. The participant may be granted two loans during any
one-year period and only three loans may be outstanding at one time. The vested
account provides the security for the loan, and the participant's account may
not be used as security for a loan outside of the Plan. Additionally, loans must
be repaid with interest within five years from the date of the loan unless the
loan is used to buy the participant's principal residence. The loan may be
repaid before it is due.
Garmin International, Inc.
Savings and Profit Sharing Plan
Notes to Financial Statements (Continued)
1. Description of the Plan (continued)
Although the Company has not expressed any intent to do so, it has the right
under the plan provisions to terminate the Plan subject to the provisions of
ERISA. In the event of plan termination, participants will become fully vested
in their benefits. Additional information about the Plan and its vesting and
withdrawal provisions is contained in the Summary Plan Description, Garmin
International, Inc. Savings and Profit Sharing Plan. Copies of the Summary Plan
Description are available from the plan administrator. See Note 6.
On January 1, 2001, the Plan adopted an amendment allowing participants to elect
to have their allocation invested in the common stock of the Company.
2. Summary of Significant Accounting Policies
The following is a summary of significant accounting policies of the Garmin
International, Inc. (the Company) Savings and Profit Sharing Plan (the Plan).
Valuation of Investments
The fair value of the investments owned by the Plan in the mutual funds is based
on quoted redemption values on the last business day of the plan year. Loans to
participants are valued based on outstanding principal amounts owed on the last
business day of the plan year as reported to the Plan by the trustee.
The Guaranteed Interest Account is valued at estimated fair value, determined by
Principal Life Insurance Company, based on discounted cash flows using current
market interest rates with an estimated fair value equal to contributions made
plus interest earnings. The interest rates on the securities in the Guaranteed
Interest Accounts ranged from 4.21% to 6.37% and 5.03% to 6.38% during 2001 and
2000, respectively.
Contributions
Contributions from the Company are accrued and paid in the period in which they
become obligations of the Company.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Garmin International, Inc.
Savings and Profit Sharing Plan
Notes to Financial Statements (Continued)
3. Investments
The Plan's investments are held by Principal Life Insurance Company. During
2001, the Plan's investments (including investments bought and sold, as well as
held, during the year) depreciated in fair value by $491,574 as presented in the
following table:
Garmin Ltd. common stock $ 248,089
Mutual funds (740,641)
Guaranteed interest account 979
----------
$(491,573)
==========
The fair value of individual investments that represent 5% or more of the Plan's
net assets is as follows:
December 31
2001 2000
--------------------------
Fair value as determined by quoted market price:
Vanguard Wellington Fund $1,772,228 $1,527,981
Vanguard Windsor II Fund 2,269,916 2,383,078
Vanguard Star Fund 1,027,302 1,003,588
Principal Money Market Account 1,325,972 1,006,292
Principal Bond and Mortgage Account 1,436,718 877,118
Principal Large Cap Stock Index Account 2,193,669 2,335,043
Garmin Ltd. Common Stock 2,001,008
Principal International Stock Account -- 956,157
T. Rowe Price Science and Technology Account -- 822,007
Loans to participants -- 729,266
4. Income Tax Status
The Internal Revenue Service has determined that the Plan is qualified under
Section 401(a) of the Internal Revenue Code and, therefore, is not subject to
tax under present income tax law. The plan administrator believes that the Plan
continues to qualify as a tax-exempt defined contribution plan, and the plan
administrator is not aware of any course of action or series of events that have
occurred that might adversely affect the Plan's qualified status.
Garmin International, Inc.
Savings and Profit Sharing Plan
Notes to Financial Statements (Continued)
5. Transactions With Parties-In-Interest
The Company pays certain administrative costs and provides certain accounting
and administrative services to the Plan for which no fees are charged.
6. Subsequent Events
On July 1, 2002, the Company plans to combine the Plan with the Garmin
International, Inc. Money Purchase Pension Plan. The trustee and recordkeeper
duties will then be transferred from the Principal Financial Group to T. Rowe
Price.
Garmin International, Inc.
Savings and Profit Sharing Plan
Schedule H, Line 4i - Schedule of Assets Held for
Investment Purposes as of December 31, 2001
Number
of Shares
Identity of Issuer or Units Current Value
--------------------------------------------------------------------------------
American Century Ultra Account 18,027 $ 498,264
Vanguard Wellington Fund 65,012 1,772,228
Vanguard Windsor II Fund 88,703 2,269,916
Vanguard Star Fund 62,488 1,027,302
Principal Money Market Account* 30,978 1,325,972
Principal Bond and Mortgage Account* 2,419 1,436,718
Principal Large Cap Stock Index Account* 53,569 2,193,669
Principal International Stock Account* 25,098 730,520
Principal Guaranteed Interest Account* __ 564,072
Principal Large Company Growth Account* 3,890 77,692
Principal Medium Company Growth Account* 12,274 223,773
Principal Mid Cap Stock Index Account* 15,889 205,156
Principal Small Capital Stock Index Account* 8,587 112,358
Principal Financial Group, Inc. Stock Account* 33,595 435,475
Invesco Small Company Growth Account 26,597 322,883
T. Rowe Price Mid-Cap Growth Account 5,545 218,473
T. Rowe Price Science and Technology Account 26,127 546,579
Garmin Ltd. 93,114 2,001,008
Loans to participants (rates range from 5.25%
to 10.5%) __ 593,663
------------
$16,555,721
============
*Indicates party-in-interest to the Plan.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
GARMIN INTERNATIONAL, INC. SAVINGS AND
PROFIT SHARING PLAN
By______________________________________
Kevin Rauckman
Trustee
Dated: June 20, 2002
EXHIBIT 23
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-52766) pertaining to the Savings and Profit Sharing Plan of
Garmin International, Inc. of our report dated May 31, 2002, with respect to the
financial statements and schedule of the Garmin International, Inc. Savings and
Profit Sharing Plan included in this Annual Report (Form 11-K) for the year
ended December 31, 2001.
Ernst & Young LLP
Kansas City, Missouri
June 20, 2002