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Garmin Ltd – ‘10-K/A’ for 12/29/01

On:  Tuesday, 4/2/02   ·   For:  12/29/01   ·   Accession #:  1121788-2-5   ·   File #:  0-31983

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  As Of                Filer                Filing    For·On·As Docs:Size

 4/02/02  Garmin Ltd                        10-K/A     12/29/01    1:67K

Amendment to Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Amendment to Annual Report                            29    132K

Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
3Item 8. Financial Statements and Supplementary Data
4Report of Independent Auditors 
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 United States
Securities and Exchange Commission
Washington, D.C. 20549

   FORM 10-K/A
(Amendment No. 1) 
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934
For the year ended December 29, 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
________________
 GARMIN LTD.
 (Exact name of Company as specified in its charter)

  Cayman Islands                                  98-0229227
      (State or other jurisdiction        (I.R.S. Employer identification no.)
of incorporation or organization)                                 
5th Floor, Harbour Place, P.O. Box 30464 SMB,                 N/A           
 103 South Church Street                          (Zip Code)
George Town, Grand Cayman, Cayman Islands                               
(Address of principal executive offices)                                

      Company's telephone number, including area code: (345)-946-5203*

Securities registered pursuant to Section 12(b) of the Act:  None               
Securities registered pursuant to Section 12(g) of the Act:                     

Common Shares, $0.01 Per Share Par Value
(Title of Class)

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by  Section 13 or 15(d) of the  Securities  Exchange Act of 1934 during
the  preceding  12 months  (or for such  shorter  period  that the  Company  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. YES [X] NO [ ]                               

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of  Regulation S-K is not contained  herein,  and will not be contained,  to the
best of Company's  knowledge,  in a definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]                                                                  

     Aggregate  market  value  of the  voting  and  non-voting  shares  held  by
non-affiliates  of the Company as of March 22, 2002,  based on the closing price
of the  Registrant's  common  shares on the  Nasdaq  Stock  Market for that date

Common Shares, $.01 par value - $1,166,074,202
     Number of shares outstanding of the Company's common shares as of March 22,
2002:                                                                           
 Common Shares, $.01 par value - 107,779,568
Documents incorporated by reference:                                            
Portions of the following  documents are  incorporated  herein by reference into
Part of the Form 10-K as indicated:                                             

                                      Part of Form 10-K into
Document                                           which Incorporated           
                                          Part III
Company's Definitive Proxy Statement for the 2002 Annual Meeting of Shareholders
which will be filed no later than 120 days after December 29, 2001              

*The executive offices of the Registrant's principal United States subsidiary   
are located at 1200 East 151st Street, Olathe, Kansas  66062.                 
The telephone number there is (913) 397-8200.                                   


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On March 27,  2002,  the  Company  filed an  Annual  Report on Form 10-K for the
fiscal year ended December 29, 2001.  This amendment on Form 10-K/A is filed for
the sole purpose of adding the name and conformed  signature of the  independent
auditors  to the  Report  in Item 8.  The  name  and  conformed  signature  were
inadvertently omitted in the March 27, 2002 electronic filing.                  


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Item 8.  Financial Statements and Supplementary Data                            

Garmin Ltd. and Subsidiaries

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Contents

Report of Independent Auditors...............................................37 

Consolidated Balance Sheets at December 29, 2001 and December 30, 2000.......38 
Consolidated Statements of Income for the Years Ended December 29, 2001,        
  December 30, 2000, and December 25, 1999..................................39
Consolidated Statements of Stockholders' Equity for the Years Ended             
  December 29, 2001, December 30, 2000, and December 25, 1999...............40
Consolidated Statements of Cash Flows for the Years Ended December 29, 2001,    
  December 30, 2000, and December 25, 1999..................................41
Notes to Consolidated Financial Statements...................................43 


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Report of Independent Auditors

The Board of Directors and Stockholders                                         
Garmin Ltd.                                                                     

     We have audited the accompanying consolidated balance sheets of Garmin Ltd.
and  subsidiaries  (the  Company) as of December 29, 2001 and December 30, 2000,
and the related  consolidated  statements of income,  stockholders'  equity, and
cash flows for each of the three years in the period  ended  December  29, 2001.
Our audits also included the financial statement schedule listed in the index at
Item 14(a)(2). These financial statements and schedule are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements and schedule 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 consolidated financial position of Garmin Ltd. and
subsidiaries  at December 29, 2001 and December 30, 2000, and the  consolidated 
results of their  operations and their cash flows for each of the three years in
the period ended  December 29, 2001, in conformity  with  accounting  principles
generally  accepted in the United  States.  Also,  in our  opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole,  presents  fairly,  in all material  respects,  the
information set forth therein.                                                  

                     /s/ Ernst & Young LLP
                         Ernst & Young LLP

Kansas City, Missouri                                                           
February 1, 2002                                                                


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                          Garmin Ltd. and Subsidiaries                                                 

                           Consolidated Balance Sheets                                                 
                    (In Thousands, Except Share Information)                                           

                                                                     December 29,      December 30,    
                                                                         2001              2000        
                                                                   ------------------------------------
                                                                                                       
Assets                                                                                                 
Current assets:                                                                                        
   Cash and cash equivalents                                             $192,842         $251,731     
   Marketable securities (Note 3)                                          40,835                -     
   Accounts receivable, less allowance for doubtful accounts of                                        
     $2,627 in 2001 and $1,866 in 2000                                     47,998           32,719     
   Inventories                                                             61,132           89,855     
   Deferred income taxes (Note 8)                                           7,007           12,293     
   Prepaid expenses and other current assets                                2,921            1,423     
                                                                   ------------------------------------
Total current assets                                                      352,735          388,021     

Property and equipment (Note 5):                                                                       
   Land and improvements                                                   20,414           21,135     
   Building and improvements                                               32,864           29,493     
   Office furniture and equipment                                          11,365            9,151     
   Manufacturing equipment                                                 17,282           16,543     
   Engineering equipment                                                   11,671            8,237     
   Vehicles                                                                 1,671              245     
                                                                   ------------------------------------
                                                                           95,267           84,804     
   Accumulated depreciation                                                25,181           20,100     
                                                                   ------------------------------------
                                                                           70,086           64,704     

Restricted cash (Note 5)                                                    1,600            5,848     
Marketable securities (Note 3)                                             90,749                -     
Intangible assets                                                          16,985            4,774     
                                                                   ------------------------------------
Total assets                                                             $532,155         $463,347     
                                                                   ====================================

Liabilities and stockholders' equity                                                                   
Current liabilities:                                                                                   
   Accounts payable                                                     $  18,837        $  22,496     
   Salaries and benefits payable                                            3,308            3,441     
   Accrued warranty costs                                                   4,777            5,228     
   Accrued sales program costs                                              2,518            3,403     
   Other accrued expenses (Note 9)                                          2,967            1,091     
   Income taxes payable                                                    12,444           13,725     
   Current portion of long-term debt (Note 5)                               4,177              587     
                                                                   ------------------------------------
Total current liabilities                                                  49,028           49,971     

Long-term debt (Note 5)                                                    28,011           46,359     
Deferred income taxes (Note 8)                                              1,147            1,686     
Other liabilities                                                               -               92     

Stockholders' equity:                                                                                  
   Preferred stock, $1.00 par value, 1,000,000 shares authorized,                                      
     none issued                                                                -                -     
   Common stock, $0.01 par value 500,000,000 shares authorized                                         
     (Notes 12 and 13):                                                                                
       Shares issued and outstanding - 107,774,918 in 2001 and                                         
         108,242,111 in 2000                                                1,078            1,082     
   Additional paid-in capital                                             127,131          133,925     
   Retained earnings (Notes 5 and 6)                                      365,087          253,140     
   Accumulated other comprehensive loss                                   (39,327)         (22,908)    
                                                                   ------------------------------------
Total stockholders' equity                                                453,969          365,239     
                                                                   ------------------------------------
Total liabilities and stockholders' equity                               $532,155         $463,347     
                                                                   ====================================
See accompanying notes.                                                                                


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                                                     Garmin Ltd. and Subsidiaries                          

                                                   Consolidated Statements of Income                       
                                        (In Thousands, Except Share and Per Share Information)             

                                                                           Year Ended                      
                                                      -----------------------------------------------------
                                                      December 29,     December 30,      December 25,      
                                                             2001             2000               1999      
                                                      -----------------------------------------------------

                                                                                                           
Net sales                                                   $369,119        $345,741          $232,586     
Cost of goods sold                                           170,960         162,015           105,654     
                                                      -----------------------------------------------------
Gross profit                                                 198,159         183,726           126,932     

Selling, general, and administrative expenses                 38,709          32,669            27,063     
Research and development expense                              28,164          21,764            17,339     
                                                      -----------------------------------------------------
                                                              66,873          54,433            44,402     
                                                      -----------------------------------------------------
Operating income                                             131,286         129,293            82,530     

Other income (expense):                                                                                    
   Interest income                                            11,164           6,925             4,327     
   Interest expense                                           (2,174)         (2,287)             (577)    
   Foreign currency                                           11,573           6,962            (1,469)    
   Other                                                         186              29              (679)    
                                                      -----------------------------------------------------
                                                              20,749          11,629             1,602     
                                                      -----------------------------------------------------
Income before income taxes                                   152,035         140,922            84,132     

Income tax provision (benefit):                                                                            
   Current                                                    33,781          39,723            19,130     
   Deferred                                                    4,806          (4,464)              835     
                                                      -----------------------------------------------------
                                                              38,587          35,259            19,965     
                                                      -----------------------------------------------------
Net income                                                  $113,448        $105,663         $  64,167     
                                                      =====================================================

Basic and diluted net income per share (Note 14)         $     1.05      $     1.05         $    0.64      
                                                      =====================================================

See accompanying notes.                                                                                    


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                                            Consolidated Statements of Stockholders' Equity                
                                             (In Thousands, Except Per Share Information)                  

                                                                                Accumulated                
                                                       Additional                  Other                   
                                     Common Stock       Paid-In     Retained   Comprehensive               
                                   Shares    Dollars    Capital     Earnings        Loss         Total     
                                 ------------------------------------------------------------------------  

                                                                                                           
Balance at December 26, 1998        55,555   $   555    $  17,585    $132,247      $(14,447)     $135,940  
   Net income                            -         -            -      64,167             -        64,167  
   Translation adjustment                -         -            -           -         2,022         2,022  
                                                                                                 --------  
     Comprehensive income                                                                          66,189  
   Cash dividend ($0.13 per                                                                                
     share)                              -         -            -      (7,530)            -        (7,530) 
   80% stock dividend               44,445       445       12,008     (12,453)            -             -  
                                 ------------------------------------------------------------------------- 
Balance at December 25, 1999       100,000     1,000       29,593     176,431       (12,425)      194,599  
   Net income                            -         -            -     105,663             -       105,663  
   Translation adjustment                -         -            -           -       (10,483)      (10,483) 
                                                                                                 --------  
     Comprehensive income                                                                          95,180  
   Cash dividend ($0.29 per                                                                                
     share)                              -         -            -     (28,954)            -       (28,954) 
   Issuance of common stock in                                                                             
     initial public offering,                                                                              
     net of offering costs           8,242        82      104,332           -             -       104,414  
                                 ------------------------------------------------------------------------  
Balance at December 30, 2000       108,242     1,082      133,925     253,140       (22,908)      365,239  
   Net income                            -         -            -     113,448             -       113,448  
   Translation adjustment                -         -            -           -       (15,519)      (15,519) 
   Adjustment related to                                                                                   
     effective portion of cash                                                                             
     flow hedges, net of                                                                                   
     deferred taxes of $579              -         -            -           -          (900)         (900) 
                                                                                                 --------  
      Comprehensive income                                                                           97,029
   Issuance of common stock                                                                                
     from exercise of stock                                                                                
     options                             5         1           70           -             -            71  
   Issuance of common stock                                                                                
     through stock purchase plan       123         1        1,463           -             -         1,464  
   Purchase and retirement of                                                                              
     common stock                     (595)       (6)      (8,327)     (1,501)            -        (9,834) 
                                 ------------------------------------------------------------------------- 
Balance at December 29, 2001        107,775    $1,078     $127,131    $365,087     $(39,327)      $453,969 
                                 ========================================================================= 

See accompanying notes.                                                                                    


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                                          Garmin Ltd. and Subsidiaries                                     

                                      Consolidated Statements of Cash Flows                                
                                                 (In Thousands)                                            

                                                                           Year Ended                      
                                                      -----------------------------------------------------
                                                         December 29,     December 30,     December 25,    
                                                                 2001             2000             1999    
                                                      -----------------------------------------------------
                                                                                                           
Operating activities                                                                                       
Net income                                                   $113,448         $105,663         $64,167     
Adjustments to reconcile net income to net cash                                                            
   provided by operating activities:                                                                       
     Depreciation                                               7,341            7,104           5,554     
     Amortization                                               3,527              465              18     
     Loss on disposal of property and equipment                    23            1,605             136     
     Provision for doubtful accounts                            1,137              911             825     
     Provision for obsolete and slow-moving                                                                
       inventories                                              4,000            5,915           1,202     
     Foreign currency translation                              (5,593)          (4,831)          4,128     
     Deferred income taxes                                      4,806           (4,464)            835     
     Net sale of trading securities                                -                 -           2,173     
     Changes in operating assets and liabilities:                                                          
       Accounts receivable                                    (17,894)          (3,250)        (14,657)    
       Inventories                                             22,958          (48,024)        (14,119)    
       Prepaid expenses and other current assets                 (447)            (373)           (508)    
       Accounts payable                                        (2,657)           7,961           5,888     
       Accrued expenses                                        (1,016)             999           1,278     
       Income taxes payable                                       358           13,812          (8,450)    
                                                      -----------------------------------------------------
Net cash provided by operating activities                     129,991           83,493          48,470     

Purchases of property and equipment                           (14,883)         (24,821)        (32,195)    
Proceeds from sale of property and equipment                      239            5,919              69     
Purchases of marketable securities                         (1,684,985)               -               -     
Sales of marketable securities                              1,553,401                -               -     
Purchase of assets of Sequoia Instruments, Inc.                (3,625)               -               -     
Purchases of licenses                                         (12,028)          (4,251)              -     
Change in restricted cash                                       4,239           (5,856)              -     
Other                                                            (748)              95            (176)    
                                                      -----------------------------------------------------
Net cash used in investing activities                        (158,390)         (28,914)        (32,302)    

Financing activities                                                                                       
Dividends                                                           -          (28,954)          (7,530)   
Proceeds from issuance of common stock, net of                                                             
   offering costs                                                   -          104,414                -    
Proceeds from issuance of common stock through stock                                                       
   purchase plan                                                1,464                -                -    
Proceeds from issuance of common stock from exercise                                                       
   of stock options                                                71                -                -    
Proceeds from issuance of notes payable and long-term                                                      
   debt                                                             -                -           18,040    
Proceeds from issuance of Industrial Revenue Bonds                  -           20,000                -    
Principal payments on long-term debt                          (14,189)               -                -    
Principal payments on notes payable                                 -               (5)            (357)   
Purchases of common stock                                      (9,834)               -                -    
                                                      -----------------------------------------------------
Net cash (used in) provided by financing activities           (22,488)          95,455           10,153    

Effect of exchange rate changes on cash                        (8,002)          (2,382)          (2,602)   
                                                      -----------------------------------------------------
Net (decrease) increase in cash and cash equivalents          (58,889)         147,652           23,719    
Cash and cash equivalents at beginning of year                251,731          104,079           80,360    
                                                      -----------------------------------------------------
Cash and cash equivalents at end of year                     $192,842         $251,731         $104,079    
                                                      =====================================================


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                                 GARMIN LTD.SUBSIDIARIES
                               Consolidated Statements of Cash Flows (continued)
                                (In Thousands)

                                                        [Enlarge/Download Table]

                                                                           Year Ended                      
                                                      -----------------------------------------------------
                                                         December 29,     December 30,     December 25,    
                                                                 2001             2000             1999    
                                                      -----------------------------------------------------
                                                                                                           
Supplemental disclosures of cash flow information                                                          

Cash paid during the year for income taxes               $     38,844        $  28,788       $   28,733    
                                                      =====================================================

Cash received during the year from income tax refunds    $           -       $      12       $    1,517    
                                                      =====================================================

Cash paid during the year for interest, net of $405                                                        
   of capitalized interest in 2000                       $       2,011       $   2,223       $     558     
                                                      =====================================================

Supplemental disclosures of noncash investing and                                                          
   financing activities                                                                                    
Liability recognized in accrued expenses related to                                                        
   cash flow hedges and charge to accumulated other                                                        
   comprehensive loss                                    $      1,479        $       -       $             
                                                      =====================================================

Issuance of stock dividends                              $              -    $       -       $    12,453   
                                                      =====================================================

See accompanying notes.                                                                                    


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization                                                            

On July 24, 2000, the stockholders of Garmin Corporation  (GARMIN)  incorporated
Garmin Ltd. (the Company)  under the laws of the Cayman  Islands.  Subsequently,
the  stockholders  of GARMIN  executed a  Shareholders  Agreement to transfer to
Garmin Ltd. their  investments  in 88,988,394  common shares of stock of GARMIN.
These shares, which represented approximately 100% of the issued and outstanding
common stock of GARMIN as of July 24, 2000, were used by the stockholders to pay
for their  subscriptions  to  100,000,000  common shares of Garmin Ltd. at a par
value of $0.01 or an aggregate value of $1,000.  As such, the exchange of shares
in this  reorganization  between  GARMIN and the newly formed  holding  company,
Garmin  Ltd.,  completed  on  September  22,  2000,  has been  accounted  for at
historical cost similar to that in pooling-of-interests  accounting. In addition
to the  shares of GARMIN  owned by Garmin  Ltd.,  one share of GARMIN is held by
each of six  shareholders  pursuant  to the  requirement  of  Taiwan  law that a
company have at least seven  shareholders  and 4,000 shares owned by two related
stockholders  who did not convert GARMIN shares to shares of the Company.  These
4,006 shares are not reported as or considered to be held by minority  interests
in the accompanying consolidated financial statements due to immateriality. As a
result,  GARMIN is considered  herein to be a wholly owned  subsidiary of Garmin
Ltd. As discussed in Note 12, Garmin Ltd.  completed an initial public  offering
of its common stock in December 2000.                                           

Note 2. Summary of Significant Accounting Policies                              

Basis of Presentation and Principles of Consolidation                           

The  accompanying  consolidated  financial  statements  have  been  prepared  in
accordance with accounting  principles  generally accepted in the United States.
Accordingly, the accompanying consolidated financial statements                 


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

reflect the accounts of Garmin Ltd. and its wholly owned  subsidiaries as if the
reorganization  described in Note 1 was effective for all periods presented. All
significant inter-company balances and transactions have been eliminated.       

Nature of Business                                                              

Garmin Ltd. and subsidiaries  (together,  the Company) manufacture,  market, and
distribute  Global  Positioning   System-enabled   products  and  other  related
products.  GARMIN was  incorporated in Taiwan,  Republic of China on January 16,
1990.  GARMIN is primarily  responsible for the  manufacturing  of the Company's
consumer and portable  aviation  products and, to a lesser  extent,  new product
development  and sales and marketing of the  Company's  products in Asia and the
Far East.  Effective April 2001, the Company now acts as distributor for GARMIN.
In April 1990, a 100%-owned  subsidiary,  Garmin International,  Inc. (GII), was
incorporated  in the United States.  GII is primarily  responsible for sales and
marketing of the  Company's  products in many  international  markets and in the
United  States  as well  as  research  and new  product  development.  GII  also
manufactures  certain products for the Company's  aviation segment.  During June
1992, GII formed Garmin (Europe) Limited (GEL), a wholly owned subsidiary in the
United Kingdom,  to sell its products  principally  within the European  market.
During 2000, GII sold its interest in GEL to Garmin Ltd. As a result, GEL is now
a direct  subsidiary  of Garmin Ltd.  Also during  2000,  Garmin  Realty LLC was
formed by GII to hold certain real estate.  In December  2001, GII formed Garmin
USA as a sales organization.                                                    

Fiscal Year                                                                     

The Company has adopted a 52-53-week  period  ending on the last Saturday of the
calendar year. Due to the fact that there are not exactly 52 weeks in a calendar
year and there is slightly more than one  additional day per year (not including
the effects of leap year) in each calendar year as compared to a 52-week  fiscal
year, the Company will have a fiscal year  comprising 53 weeks in certain fiscal
years,  as determined by when the last Saturday of the calendar year occurs.  In
those  resulting  fiscal  years that have 53 weeks,  the Company  will record an
extra week of sales,  costs,  and related  financial  activity.  Therefore,  the
financial  results of those fiscal years,  and the associated  14-week  quarter,
will not be exactly  comparable to the prior and subsequent 52-week fiscal years
and the associated  quarters having only 13 weeks.  Fiscal 2001 and 1999 include
52 weeks while fiscal 2000 was comprised of 53 weeks.                           

Foreign Currency Translation                                                    

GARMIN utilizes the New Taiwan Dollar as its functional currency. Prior to 2001,
GEL utilized the British pound sterling as its functional currency.  However, as
a result of an increase in United States  dollar-denominated  transactions,  GEL
changed its functional  currency to the United States dollar effective  December
31,  2000.  The  impact of this  change was not  material.  In  accordance  with
Statement of Financial  Accounting  Standards  (SFAS) No. 52,  Foreign  Currency
Translation,  the financial  statements of GARMIN for all periods  presented and
GEL for fiscal 2000 and 1999 have been  translated  into United States  dollars,
the  functional  currency of Garmin Ltd.  and GII,  and the  reporting  currency
herein,  for purposes of consolidation  at rates prevailing  during the year for
sales,  costs,  and  expenses  and at  end-of-year  rates  for  all  assets  and
liabilities.  The effect of this translation is recorded in a separate component
of stockholders' equity.                                                        


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

     Transactions in foreign  currencies are recorded at the approximate rate of
     exchange at the transaction  date.  Assets and  liabilities  resulting from
     these  transactions are translated at the rate of exchange in effect at the
     balance sheet date. All  differences  are recorded in results of operations
     and amounted to exchange gains (losses) of approximately  $11,573,  $6,962,
     and $(1,469) for the years ended December 29, 2001,  December 30, 2000, and
     December 25, 1999, respectively. These gains (losses) are included in other
     income (expense) in the accompanying consolidated statements of income. The
     gain in fiscal 2001 is the result of the strengthening of the United States
     dollar  compared to the New Taiwan Dollar in the second and fourth quarters
     of fiscal 2001 while the gain in fiscal 2000 is principally attributable to
     the  strengthening  of the United States dollar  compared to the New Taiwan
Dollar in the fourth quarter of fiscal 2000.                          

     Cumulative  translation  adjustments  of $38,427 and $22,908 as of December
     29,  2001 and  December  30,  2000,  respectively,  have been  included  in
     accumulated  other  comprehensive  loss  in the  accompanying  consolidated
balance sheets.                                                       

Earnings Per Share                                                              

     Basic earnings per share amounts are computed based on the weighted-average
     number of common shares  outstanding.  For purposes of diluted earnings per
     share,  the number of shares  that  would be issued  from the  exercise  of
     dilutive stock options has been reduced by the number of shares which could
     have been purchased from the proceeds of the exercise at the average market
     price  of  the   Company's   stock  during  the  period  the  options  were
outstanding. See Note 14.                                             

Common Stock                                                                    

     The amount of retained  earnings  capitalized in connection  with the stock
     dividends  previously issued by the Company has been based on the par value
     of the underlying  GARMIN common stock,  which was the United States dollar
equivalent of ten New Taiwan Dollars.                                 

Cash and Cash Equivalents                                                       

     For purposes of reporting  cash flows,  cash and cash  equivalents  include
     cash on hand,  operating accounts,  money market funds, and securities with
     maturities of three months or less when  purchased.  The carrying amount of
     cash and cash equivalents approximates fair value, given the short maturity
of those instruments.                                                 

Inventories                                                                     

     Inventories  are stated at the lower of cost or market.  Cost is determined
     using  the  weighted-average   method  (which  approximates  the  first-in,
     first-out  (FIFO)  method)  by GARMIN  and the FIFO  method by GII and GEL.
Inventories consisted of the following:                               


10-K/A13th Page of 29TOC1stPreviousNext↓BottomJust 13th

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

                                              December 29,        December 30,
                                                 2001                 2000
                                     -----------------------------------------
Raw materials                                 $26,381              $46,418
Work-in-process                                 9,582                8,116
Finished goods                                 34,723               41,825
Inventory reserv                              (9,554)              (6,504)
                                     -----------------------------------------
                                              $61,132              $89,855
                                     =========================================

Property and Equipment                                                          

     Property  and  equipment  are  recorded at cost and  depreciated  using the
straight-line method over the following estimated useful lives:       

    Buildings and improvements                                      8-55 years
    Office furniture and equipment                                   3-8 years
    Manufacturing and engineering equipment                          3-8 years
    Vehicles                                                           3 years

Long-Lived Assets                                                               

     In  accordance  with  SFAS  No.  121,  Accounting  for  the  Impairment  of
     Long-Lived  Assets and  Long-Lived  Assets to be  Disposed  Of, the Company
     reviews  long-lived  assets for  impairment  whenever  events or changes in
     circumstances  indicate  the  carrying  amount of an asset may not be fully
     recoverable.  SFAS  No.  121  has  not  had  an  impact  on  the  Company's
consolidated financial statements.                                    

Intangible Assets                                                               

     Intangible  assets  principally  consist  of costs  incurred  with  certain
     licensing agreements totaling  approximately $11,400 and $4,700 at December
     29, 2001 and December 30, 2000, respectively.  Licenses are being amortized
     over the lives of the related license agreements, which are generally three
     years.  Accumulated  amortization  is  approximately  $5,100  and $2,300 at
December 29, 2001 and December 30, 2000, respectively.                

     Other  intangible  assets  consist of patents as well as goodwill and other
     intangible   assets   acquired  in  the   Company's   purchase  of  Sequoia
     Instruments,  Inc. in November 2001. The total purchase price of $3,625 was
     allocated to goodwill,  developed  technology,  and other intangibles.  The
     purchase  includes  additional  consideration  of $1,000  contingent on the
    completion of certain activities expected to occur in 2002 and thereafter.

     Patents and other  intangible  assets are being  amortized  over the useful
     lives  of the  related  assets,  which  is  generally  five  to ten  years.
     Accumulated amortization is $391 and $204 at December 29, 2001 and December
30, 2000, respectively.                                               

Investments in Debt Securities                                                  

     Management   determines  the  appropriate   classification   of  marketable
     securities at the time of purchase and reevaluates  such  designation as of
each balance sheet date.                                              


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

     Debt securities not classified as  held-to-maturity  and marketable  equity
     securities not classified as trading are classified as  available-for-sale.
     All   of   the   Company's    marketable    securities    are    considered
     available-for-sale  at December  29, 2001.  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 income. During 2001, there were
     no significant  unrealized gains or losses reported in other  comprehensive
income.                                                               

     The amortized cost of debt securities  classified as  available-for-sale is
     adjusted  for  amortization  of premiums  and  accretion  of  discounts  to
     maturity, or in the case of mortgage-backed  securities, over the estimated
     life of the security. Such amortization is included in interest income from
     investments.  Realized gains and losses, and declines in value judged to be
     other-than-temporary  are included in net securities  gains  (losses).  The
     cost of  securities  sold is based on the specific  identification  method.
     Realized  gains  and  losses  on  available-for-sale  securities  were  not
material.                                                             

Financial Instruments                                                           

     GII has entered into interest  rate swap  agreements to modify the interest
     characteristics  of  portions  of its  outstanding  long-term  debt  from a
     floating rate to a fixed rate basis.  These agreements  involve the receipt
     of floating rate amounts in exchange for fixed rate interest  payments over
     the life of the agreements without an exchange of the underlying  principal
     amount.  The  differential  to be paid or  received  is accrued as interest
     rates change and recognized as an adjustment to interest expense related to
     the debt. The related amount payable to or receivable from the counterparty
is included in other liabilities or assets. See Note 9.               

Income Taxes                                                                    

     The  Company  accounts  for  income  taxes  using the  liability  method in
     accordance  with SFAS No. 109,  Accounting for Income Taxes.  The liability
     method provides that deferred tax assets and liabilities are recorded based
     on the difference between the tax bases of assets and liabilities and their
     carrying amount for financial reporting purposes as measured by the enacted
     tax rates and laws that will be in effect when the differences are expected
     to reverse.  Income taxes have not been accrued at the GARMIN level for the
     unremitted  earnings  of GII  or GEL  totaling  approximately  $96,948  and
     $77,544 at December 29, 2001 and December 30, 2000,  respectively,  because
     such  earnings  are  intended  to  be  reinvested  in  these   subsidiaries
indefinitely.                                                         

Use of Estimates                                                                

     The  preparation of  consolidated  financial  statements in conformity with
     accounting  principles  generally  accepted in the United  States  requires
     management  to make  estimates  and  assumptions  that  affect the  amounts
     reported in the consolidated  financial  statements and accompanying notes.
Actual results could differ from those estimates.                     

Concentration of Credit Risk                                                    

     The  Company  grants  credit to certain  customers  who meet the  Company's
     pre-established  credit  requirements.  Generally,  the  Company  does  not
     require  security when trade credit is granted to customers.  Credit losses
     are provided for in the Company's  consolidated  financial  statements  and
consistently have been within management's expectations.              

Revenue Recognition                                                             

     The  Company  recognizes  revenue  from  product  sales when the product is
     shipped to the customer and title has  transferred.  The Company assumes no
     remaining  significant  obligations  associated with the product sale other
than that related to its warranty programs discussed below.           


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

  Shipping  and  handling  costs  are  included in cost of  sales  in  the
accompanying consolidated financial statements.                       

Product Warranty                                                                

     The Company provides for estimated  warranty costs at the time of sale. The
     warranty  period is generally  for one year from date of shipment  with the
     exception of certain aviation products for which the warranty period is two
years from the date of installation.                                  

Sales Programs                                                                  

     The Company  provides  certain  monthly and  quarterly  incentives  for its
     dealers based on various factors  including  dealer  purchasing  volume and
     growth. Additionally,  the Company provides rebates to end users on certain
     products.  Estimated  rebates and incentives  payable to  distributors  are
     regularly  reviewed  and recorded as accrued  expenses on a monthly  basis.
     These rebates and incentives are recorded as reductions to net sales in the
accompanying consolidated statements of income.                       

Advertising Costs                                                               

     The Company expenses  advertising  costs as incurred.  Advertising  expense
     charged to  operations  amounted to  approximately  $14,714,  $11,529,  and
     $8,574 for the years ended  December  29,  2001,  December  30,  2000,  and
December 25, 1999, respectively.                                      

Research and Development                                                        

     Substantially  all  research  and  development  is  performed by GII in the
     United  States.  Research  and  development  costs,  which are  expensed as
     incurred,  amounted to approximately $28,164,  $21,764, and $17,339 for the
     years ended  December 29, 2001,  December 30, 2000,  and December 25, 1999,
respectively.                                                         

Accounting for Stock-Based Compensation                                         

     In accordance  with  Accounting  Principles  Board (APB) Opinion No. 25 and
     related interpretations,  the Company uses the intrinsic value-based method
     for measuring  stock-based  compensation  cost which measures  compensation
     cost as the excess,  if any, of the quoted  market price of Company  common
     stock at the  grant  date over the  amount  the  employee  must pay for the
     stock.  Required pro forma disclosures of compensation  expense  determined
     under the fair value  method of SFAS No. 123,  Accounting  for  Stock-Based
Compensation, are presented in Note 13.                               

Derivative Investments and Hedging Activities                                   

     In June 1998, the Financial  Accounting  Standards Board (FASB) issued SFAS
     No. 133,  Accounting for  Derivative  Instruments  and Hedging  Activities,
     which is required to be adopted in years beginning after June 15, 2000. The
     Company  adopted  the  new  statement  effective  December  31,  2000,  the
     beginning of fiscal 2001. This statement  requires the Company to recognize
     all  derivatives  on the  balance  sheet  at fair  value.  Derivatives  not
     considered  hedges  must be  adjusted to fair value  through  income.  If a
     derivative is a hedge, depending on the nature of the hedge, changes in the
     fair value of the  derivative  will either be offset  against the change in
     fair  value of the  hedged  asset,  liability  or firm  commitment  through
     earnings or recognized in other comprehensive  income until the hedged item
     is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. See Note 9. 


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 2.  Summary of Significant Accounting Policies (continued)                 

Recent Pronouncements                                                           

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived  Assets,  which  addresses  financial  accounting  and
reporting for the  impairment or disposal of  long-lived  assets and  supersedes
SFAS No.  121,  Accounting  for the  Impairment  of  Long-Lived  Assets  and for
Long-Lived Assets to be Disposed Of, and the accounting and reporting provisions
of APB Opinion No. 30, Reporting the Results of Operations,  for a disposal of a
segment of a business.  SFAS No. 144 is  effective  for fiscal  years  beginning
after  December  15,  2001,  with earlier  application  encouraged.  The Company
expects to adopt SFAS No. 144 as of December  30,  2001,  and it does not expect
that the  adoption  of the  statement  will  have a  significant  impact  on the
Company's financial position and results of operations.                         

     In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142,  Goodwill and Other  Intangible  Assets.  SFAS No. 141  supercedes  APB
Opinion No. 16, Business Combinations, and FASB Statement No. 28, Accounting for
Preacquisition  Contingencies of Purchased Enterprises.  This statement requires
accounting for all business  combination using the purchase method,  and changes
the  criteria  for  recognizing  intangible  assets  apart from  goodwill.  This
statement is effective for all business  combinations  initiated  after June 30,
2001.  SFAS No. 142  supercedes  APB  Opinion  No. 17,  Intangible  Assets,  and
addresses how purchased  intangibles  should be accounted for upon  acquisition.
The statement also addresses how goodwill and other intangible  assets should be
accounted  for after  they  have  been  initially  recognized  in the  financial
statements.  All intangibles will be subject to periodic  impairment testing and
will be adjusted to fair value.                                                 

     The Company will adopt SFAS No. 142 beginning in the first quarter of 2002.
Application of the nonamortization and impairment provisions of the statement is
not expected to be significant.                                                 

Reclassifications                                                               

     Certain  amounts  in  the  fiscal  1999  and  2000  consolidated  financial
statements have been reclassified to conform with the fiscal 2001 presentation. 

Note 3. Investments                                                             

          The  following  is a summary of the  Company's  marketable  securities
classified as available-for-sale-securities at December 29, 2001:     


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 3.  Investments (continued)                                                

                                                        [Enlarge/Download Table]


                                                                               Estimated Fair   
                                                         Gross Unrealized         Value (Net    
                                       Amortized Cost      Gains/Losses         Carrying Amount)
                                     -----------------------------------------------------------
                                                                                                
Mortgage-backed securities                $  31,320            $  -              $  31,320      
Obligations of states and political                                                             
  subdivisions                               55,116               -                 55,116      
U.S. corporate bonds                         39,575               -                 39,575      
Other                                         5,573               -                  5,573      
                                     -----------------------------------------------------------
Total                                      $131,584            $  -               $131,584      
                                     ===========================================================

     The amortized cost and estimated fair value of debt  securities at December
     29, 2001, by contractual  maturity,  are shown below.  Expected  maturities
     will  differ  from  contractual  maturities  because  the  issuers  of  the
     securities  may have the right to  prepay  obligations  without  prepayment
penalties.                                                            

                                                                     Estimated
                                                   Cost             Fair Value
                                      ----------------------------------------

  Due in one year or less                        $ 40,835             $ 40,835
  Due after one year through five years            11,948               11,948
  Due after five years through ten years            3,126                3,126
  Due after ten years                              75,675               75,675
                                      ----------------------------------------
                                                 $131,584             $131,584
                                      ========================================

Note 4. Line of Credit                                                          

     During December 2000, the Company renewed a line of credit agreement with a
     bank  providing for maximum  borrowings of $5,000 less indirect  borrowings
     under certain standby letters of credit which totaled  approximately $4,000
     at  December  30,  2000.  There  were  no  direct  or  indirect  borrowings
     outstanding  under the line of credit as of December 30, 2000.  The line of
     credit, which bears interest at the bank's prime rate less 1% or LIBOR plus
1.5%, expired June 28, 2001 and was unsecured.                        

Note 5. Long-Term Debt                                                          

     During 1995, GII entered into an agreement with the City of Olathe,  Kansas
     for the  construction of a new corporate  headquarters  (the project) which
     was financed through issuance of Series 1995 Industrial  Revenue Bonds (the
     Bonds) totaling $9,500. Upon completion of the project in 1996, GII retired
     bonds   totaling  $155.  At  December  29,  2001  and  December  30,  2000,
     outstanding principal under the Bonds totaled $9,345. Interest on the Bonds
     is payable monthly at a variable interest rate (1.75% and 5.15% at December
     29, 2001 and December 30, 2000, respectively),  which is adjusted weekly to
     the current  market rate as  determined  by the  remarketing  agent for the
Bonds with principal due upon maturity on January 1, 2025. See Note 9.

     The Bonds are secured by an irrevocable  letter of credit totaling  $9,650,
     with facility fees of 0.75% annually, through September 30, 2004, renewable
     on an annual basis thereafter.  The bank has the option of requiring GII to
     establish a sinking fund related to the principal  balance  outstanding  on
     the Bonds, which it had not exercised through December 29, 2001. The letter
     of credit is secured by a mortgage on all assets financed with the proceeds
of the Bonds and is guaranteed by GARMIN.                             

     In  connection  with the letter of credit  agreement  entered into with the
     bank, GII is required to comply with various  covenants,  including minimum
     tangible  net  worth  requirements  of both  GARMIN  and  GII  and  various
financial performance ratios.                                         


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 5.  Long-Term Debt (continued)                                             

     During 1999,  GARMIN borrowed $18,040 to finance the purchase of land and a
     new  manufacturing  facility  in Taiwan.  The  balance  was due in 60 equal
     payments of principal  plus interest  beginning in November  2001.  Through
     November 2001,  interest was payable at a fixed rate of 6.155%.  Subsequent
     to November 2001,  interest in adjustable  based on the Republic of China's
     government preferential rate on term deposits plus 0.18%. The Company opted
     to prepay a significant  portion of the outstanding  principal during 2001.
     The outstanding  balance of $2,843 at December 29, 2001 was paid in full in
January 2002.                                                         

     During 2000,  GII entered into another  agreement  with the City of Olathe,
     Kansas to finance the Company's  expansion of its manufacturing  facilities
     through  the  issuance of Series 2000  Industrial  Revenue  Bonds (the 2000
     Bonds) totaling  $20,000.  The proceeds from the issuance of the 2000 Bonds
     were placed in an interest-bearing  restricted cash account controlled by a
     trustee  appointed  by the  issuer.  Disbursements  from  the  account  are
     restricted  to  purchases  of  equipment  and  construction  related to the
     project and amounted to $5,694 and $14,304  during the years ended December
     29, 2001 and December 30, 2000,  respectively.  Unexpended bond proceeds in
this restricted cash account amounted to $2 at December 29, 2001.     

     At December 29, 2001,  outstanding  principal  under the 2000 Bonds totaled
     $20,000.  Interest  on the 2000  Bonds is  payable  monthly  at a  variable
     interest rate (2.1% at December 29, 2001),  which is adjusted weekly to the
     current  market rate as  determined  by the  remarketing  agent of the 2000
Bonds with principal due upon maturity at April 15, 2020. See Note 9. 

     The 2000 Bonds are  secured  by an  irrevocable  letter of credit  totaling
     $20,288  with  facility  fees of  0.75%.  This  renewable  letter of credit
     initially  expires on September  20, 2004.  The bank has required a sinking
    fund be established with semiannual payments of $667 beginning April 2002.

Principal payments on long-term debt through 2006 and thereafter are:           

Year                 Amount               
---------------------------               

2002                 $4,177               
2003                  1,334               
2004                  1,334               
2005                  1,334               
2006                  1,334               
Thereafter           22,675               
------------- 
     $32,188
============= 

Note 6. Leases and Other Commitments                                            

     Rental  expense  related to office and warehouse  space for GEL amounted to
     $232,  $139 and $140 for the years ended  December 29,  2001,  December 30,
     2000, and December 25, 1999, respectively. Future minimum lease payments on
     the related lease are $236 per year through 2006. In the years 2007 through
   lease expiration in 2015, total future minimum lease payments are $2,122.


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 6. Leases and Other Commitments (continued)                                

     At December  29, 2001 and  December  30,  2000,  standby  letters of credit
     amounting to $871 and $869, respectively, were issued by banks on behalf of
the Company.                                                          

     Approximately  $39,000  and  $35,000  of  Garmin's  retained  earnings  are
     indefinitely  restricted from distribution to stockholders  pursuant to the
 law of Taiwan at December 29, 2001 and December 30, 2000, respectively.

     Substantially  all of the  assets of GEL are held as  collateral  by a bank
securing payment of the United Kingdom value-added tax requirements.  

Note 7. Employee Benefit Plans                                                  

     GII has an employee  savings plan under which its employees may  contribute
     up to 15% of their  annual  compensation  subject to Internal  Revenue Code
     maximum  limitations.  Additionally,  GEL has a defined  contribution  plan
     under  which  its  employees  may  contribute  up  to 5%  of  their  annual
     compensation.  Both GII and GEL contribute an amount determined annually at
     the  discretion of the Board of Directors.  During the years ended December
     29,  2001,  December 30, 2000,  and December 25, 1999,  expense  related to
     these  plans of $1,172,  $1,144,  and $930,  respectively,  was  charged to
operations.                                                           

     Additionally,  GII has a defined  contribution money purchase plan (the MPP
     Plan) which covers substantially all employees. GII contributes a specified
     percentage of each participant's  annual  compensation up to certain limits
     as  defined in the MPP Plan.  During the years  ended  December  29,  2001,
     December 30, 2000, and December 25, 1999, GII recorded  expense  related to
the Plan of $1,184, $849, and $721, respectively.                     

Note 8. Income Taxes                                                            

The Company's income tax provision consists of the following:                   

                                Year Ended
                        ------------------------------------------------------
                      December 29,   December 30,   December 25,
                              2001           2000           1999
                        ------------------------------------------------------
Federal:                                                                  
Current                    $10,208           $14,638         $  8,883 
Deferred                     (338)             (450)            (710) 
                        ------------------------------------------------------
                            9,870            14,188            8,173
State:                                                                    
Current                      2,237             3,479            1,332 
Deferred                      (74)           (2,051)             (85) 
                        ------------------------------------------------------
                            2,163             1,428            1,247
Foreign:                                                                  
Current                     21,336            21,606            8,915 
Deferred                     5,218           (1,963)            1,630 
                        ------------------------------------------------------
                           26,554            19,643           10,545
                        ------------------------------------------------------
Total                        $38,587           $35,259          $19,965   
                        ======================================================


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 8. Income Taxes (continued)                                                

     The income tax provision  differs from the amount  computed by applying the
     statutory  federal income tax rate to income before taxes.  The sources and
tax effects of the differences are as follows:                        

                                                        [Enlarge/Download Table]

                                                              Year Ended                        
                                          ------------------------------------------------------
                                             December 29,   December 30,   December 25,         
                                                     2001           2000           1999         
                                          ------------------------------------------------------
                                                                                                
Federal income tax expense at                                                                   
  U.S. statutory rate                            $53,212          $49,323          $29,446      
State income tax expense, net of federal                                                        
  tax effect                                       1,406              928              810      
Foreign tax rate differential                   (13,640)          (9,623)          (5,604)      
Taiwan tax incentives and credits                (3,260)          (5,181)          (3,817)      
Other, net                                           869            (188)            (870)      
                                          ------------------------------------------------------
Income tax expense                               $38,587          $35,259          $19,965      
                                          ======================================================

     The Company's income before income taxes attributable to foreign operations
     was $120,550,  $99,171,  and $58,467 for the years ended December 29, 2001,
     December 30, 2000, and December 25, 1999, respectively.  The tax incentives
     and credits received from Taiwan included in the table above reflect $0.03,
     $0.05,  and $0.04 per  weighted-average  common share  outstanding  for the
     years ended  December 29, 2001,  December 30, 2000,  and December 25, 1999,
     respectively.  The Company currently expects to benefit from the incentives
     and credits being  offered by Taiwan  through 2004, at which time these tax
benefits expire.                                                      

     Deferred income taxes reflect the net tax effects of temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting   purposes  and  the  amounts  used  for  income  tax   purposes.
     Significant components of the Company's deferred tax assets and liabilities
are as follows:                                                       

                                                     December 29, December 30,
                                                     2001         2000
                                               -------------------------------
Deferred tax assets:                                                      
    Product warranty accruals                         $1,833            $1,808
    Allowance for doubtful accounts                      888               705
    Inventory carrying value                           2,241             7,678
    Sales program allowances                           1,696             1,668
    Vacation accrual                                     438               324
    Interest-rate swaps                                  579                 -
    Other                                                 46               452
                                              --------------------------------
                                                       7,721            12,635
Deferred tax liabilities:                                                 
    Unrealized foreign currency gains                    844             1,098
    Depreciation                                       1,017               930
                                              --------------------------------
                                                       1,861             2,028
                                              --------------------------------
  Net deferred tax assets                             $5,860           $10,607
                                              ================================


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 9. Interest Rate Risk Management                                           

     During  1996,   GII  entered  into  an  interest  rate  swap  agreement  to
     effectively   convert  a  portion  of  its  floating  rate  long-term  debt
     associated with the Bonds to a fixed rate basis, thus,  reducing the impact
     of interest  rate changes on future  income.  The  agreement was renewed in
     2001. Pursuant to this 'pay-fixed' swap agreement,  GII agreed to exchange,
     at specified  intervals,  the difference between the fixed and the floating
     interest  amounts  calculated on the notional  amount of the swap agreement
     totaling  $5,000 at December 29, 2001 and  December  30, 2000.  GII's fixed
     interest rate under the swap agreement is 5.1%. The counterparty's floating
     rate is based on the  nontaxable  PSA Municipal  Swap Index and amounted to
     1.75% and 5.15% at December 29, 2001 and  December 30, 2000,  respectively.
     Notional  amounts do not quantify risk or represent  assets and liabilities
     of the Company, but are used in the determination of cash settlements under
     the  agreement.  The Company is exposed to credit losses from  counterparty
     nonperformance but does not anticipate any losses from its agreement, which
    is with a major financial institution. The agreement expires June 6, 2004.

     During 2000,  GII entered into an additional  swap agreement to effectively
     convert a portion of additional  floating rate  long-term  debt  associated
     with the 2000 Bonds to a fixed rate basis.  Pursuant to this pay-fixed swap
     agreement,  GII agreed to exchange, at specified intervals,  the difference
     between  the fixed and the  floating  interest  amounts  calculated  on the
     notional amount of the swap agreement totaling $10,000 at December 29, 2001
     and December 30, 2000.  GII's fixed  interest rate under the swap agreement
     is 7.26% compared to the  counterparty's  floating rate of 2.1% and 6.7% at
     December 29, 2001 and December 30, 2000,  respectively.  The counterparty's
     floating  rate is  based  on the  bank's  Taxable  Low  Floater  Rate.  The
agreement expires June 1, 2004.                                       

     The fair value of the  interest  rate swap  agreements  is a  liability  of
     $1,479 at  December  29,  2001.  The fair  value of the  agreement  was not
     significant  at December 30, 2000. The liability has been included in other
     accrued expenses in the consolidated  balance sheets. None of the Company's
cash flow hedges were deemed ineffective.                             

     At December 29, 2001, the Company expects to reclassify $621 of loss on the
     interest rate swaps from accumulated other  comprehensive  loss to earnings
     during the next 12 months  related to the payment of  variable  interest on
     floating rate debt,  assuming market interest rates remain  consistent with
rates at that date.                                                   


10-K/A22nd Page of 29TOC1stPreviousNext↓BottomJust 22nd

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 10. Fair Value of Financial Instruments                                    

     In accordance with SFAS No. 107,  Disclosures about Fair Value of Financial
     Instruments,  the following  summarizes required information about the fair
     value  of  certain   financial   instruments  for  which  it  is  currently
     practicable to estimate such value.  None of the financial  instruments are
     held or issued for trading  purposes.  The carrying amounts and fair values
of the Company's financial instruments are as follows:                

                                                        [Enlarge/Download Table]

                                       December 29, 2001                  December 30, 2000     
                               -----------------------------------------------------------------
                                  Carrying            Fair           Carrying            Fair   
                                   Amount            Value            Amount            Value   
                               -----------------------------------------------------------------
                                                                                                
Cash and cash equivalents           $192,842         $192,842          $251,731         $251,731
Restricted cash                        1,600            1,600             5,848            5,848
Marketable securities                131,584          131,584                 -                -
Interest rate swap agreements                                                                   
  (liability)                          1,479            1,479                 -                -
Long-term debt:                                                                                 
  Term loan                            2,843            2,843            17,601           17,481
  Series 1995 Bonds                    9,345            9,345             9,345            9,345
  Series 2000 Bonds                   20,000           20,000            20,000           20,000

     The  carrying  value  of  cash  and  cash  equivalents,   restricted  cash,
     marketable securities, and interest rate swap agreements approximates their
     fair value. The fair values of the Company's  long-term  floating-rate debt
     have  been  estimated  using  discounted  cash flow  analyses,  based on an
     estimate of the interest rate the Company would have to pay on the issuance
     of debt with a similar  maturity  and terms.  The fair values of  long-term
     debt  as  reported  are not  necessarily  the  amounts  the  Company  would
currently have to pay to extinguish any of this debt.                 

Note 11. Segment Information                                                    

     The Company  operates  within its targeted  markets  through two reportable
     segments,  those  being  related to  products  sold into the  consumer  and
     aviation markets.  Both of the Company's reportable segments offer products
     through the  Company's  network of  independent  dealers and  distributors.
     However, the nature of products and types of customers for the two segments
     vary  significantly.  As such,  the  segments are managed  separately.  The
     Company's  consumer segment  includes  portable global  positioning  system
     (GPS)  receivers  and  accessories  for  marine,   recreation,   land,  and
     automotive use sold  primarily to retail  outlets.  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 retail outlets
and certain aircraft manufacturers.                                   

     The Company's Co-Chief Executive Officers have been identified as the Chief
     Operating  Decision  Makers  (CODM).  The CODM  evaluates  performance  and
     allocates  resources  based on income  before income taxes of each 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 nonoperating
     corporate expenses.  The accounting policies of the reportable segments are
     the  same as those  described  in the  summary  of  significant  accounting
policies. There are no intersegment sales or transfers.               


10-K/A23rd Page of 29TOC1stPreviousNext↓BottomJust 23rd

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 11. Segment Information (continued)                                        

     The identifiable assets associated with each reportable segment reviewed by
     CODM include  accounts  receivable  and  inventories.  The Company does not
     report property and equipment,  depreciation and  amortization,  or capital
expenditures by segment to the CODM.                                  

     Revenues, interest income and interest expense, income before income taxes,
     and identifiable  assets for each of the Company's  reportable segments are
presented below:                                                      

                                      Year Ended December 29, 2001
                                      ----------------------------------------
                                        Consumer      Aviation           Total
                                      ----------------------------------------

  Sales to external customers          $263,358       $105,761        $369,119
  Allocated interest income               7,960          3,204          11,164
  Allocated interest expense              1,550            624           2,174
  Income before income taxes            102,511         49,524         152,035
Assets:                                                                   
    Accounts receivable                  34,222         13,776          47,998
    Inventory                            43,587         17,545          61,132

                                      Year Ended December 30, 2000
                                     -----------------------------------------
                                        Consumer      Aviation           Total
                                     -----------------------------------------

  Sales to external customers          $230,183       $115,558        $345,741
  Allocated interest income               4,610          2,315           6,925
  Allocated interest expense              1,522            765           2,287
  Income before income taxes             88,103         52,819         140,922
Assets:                                                                   
    Accounts receivable                  21,791         10,928          32,719
    Inventory                            59,843         30,012          89,855

                                        Year Ended December 25, 1999
                                     -----------------------------------------
                                        Consumer      Aviation           Total
                                     -----------------------------------------

  Sales to external customers          $169,164        $63,422        $232,586
  Allocated interest income               3,147          1,180           4,327
  Allocated interest expense                420            157             577
  Income before income taxes             60,449         23,683          84,132
Assets:                                                                   
    Accounts receivable                  22,804          8,549          31,353
    Inventory                            31,093         20,155          51,248


10-K/A24th Page of 29TOC1stPreviousNext↓BottomJust 24th

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 11. Segment Information (continued)                                        

     Net sales and long-lived assets (property and equipment) by geographic area
     are as follows as of and for the years ended  December 29,  2001,  December
30, 2000, and December 25, 1999:                                      

                                                        [Enlarge/Download Table]


                               North America         Asia            Europe            Total     
                             --------------------------------------------------------------------
                                                                                                 
December 29, 2001                                                                                
Sales to external customers        $275,630          $15,039           $78,450         $369,119  
Long-lived assets                    40,183           29,321               582           70,086  

December 30, 2000                                                                                
Sales to external customers        $256,782          $16,569           $72,390         $345,741  
Long-lived assets                    32,737           31,453               514           64,704  

December 25, 1999                                                                                
Sales to external customers        $172,742          $11,146           $48,698         $232,586  
Long-lived assets                    17,433           38,228               190           55,851  


     No single customer accounted for 10% or more of the Company's  consolidated
net sales in any period.                                              

Note 12. Initial Public Offering                                                

     On December 8, 2000, the Company  completed an underwritten  initial public
     offering of 12,075,000 (including shares sold pursuant to the underwriters'
     over-allotment  option)  shares of its common  stock,  8,242,111  shares of
     which were  offered by the Company (the  Offering) at an offering  price of
     $14.00 per share.  Prior to but in connection with the offering,  the Board
     of  Directors  approved a  1.12379256-for-1  stock  split of the  Company's
     common shares,  effected  through a stock dividend on November 6, 2000. All
     share and per share information  included in the accompanying  consolidated
     financial  statements has been adjusted to give  retroactive  effect to the
common stock split.                                                   

Note 13. Stock Compensation Plans                                               

     During 2000, the Company  adopted  several stock  compensation  plans.  The
     Company  accounts  for  all of  these  plans  under  APB  Opinion  No.  25,
     Accounting  for Stock  Issued to  Employees,  and related  interpretations.
     Accordingly, as all awards are granted at the fair market value on the date
of grant, no compensation expense is recognized.                      

The various plans are summarized below:                                         


10-K/A25th Page of 29TOC1stPreviousNext↓BottomJust 25th

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 13.  Stock Compensation Plans (continued)                                  

2000 Equity Incentive Plan                                                      

     In October 2000,  the  stockholders  adopted an equity  incentive plan (the
     Plan) providing for grants of incentive and nonqualified  stock options and
    'other' stock  compensation  awards to  employees  of the  Company and its
     subsidiaries,  pursuant to which up to 3,500,000 shares of common stock are
     available for issuance.  The stock options  generally vest over a period of
     five years or as  otherwise  determined  by the Board of  Directors  or the
     Compensation  Committee  and  generally  expire  ten years from the date of
     grant,  if not  exercised.  Option  activity under the Plan during 2000 and
    2001 is summarized  below.  There have been no 'other' stock  compensation
awards granted under the Plan.                                        

2000 Nonemployee Directors' Option Plan                                         

     Also in October  2000,  the  stockholders  adopted a stock  option plan for
     nonemployee  directors (the Directors Plan) providing for grants of options
     for up to 50,000  common shares of the  Company's  stock.  The term of each
     award is ten years. All awards vest evenly over a three-year period. During
     2001,  options to purchase  5,325 shares were granted  under this plan.  No
     options  associated with the Directors Plan had been granted as of December
30, 2000.                                                             

     A summary of the Company's  stock option  activity and related  information
     under the Equity  Incentive Plan and 2000  Nonemployee  Directors' Plan for
    the years ended December 29, 2001 and December 30, 2000 is provided below:

                     Weighted-
                     Average
                                           Exercise Price   Number of Shares
                                        ------------------------------------
                                                              (In Thousands)

Outstanding at December 25, 1999                $  -                   -  
Granted                                         14.00            1,201
Exercised                                        -                   -
Canceled                                         -                   -
                                                               ---------------
Outstanding at December 30, 2000                  14.00            1,201  
Granted                                         19.96              369
 Exercised                                       14.00               (5)
Canceled                                         -                   -
                                                               ---------------
Outstanding at December 29, 2001                  15.59            1,565  
                                                               ===============
                                                December 29,      December 30,
                                                2001              2000
                                         -------------------------------------
Weighted-average fair value of                                            
options granted during the year                  $12.28            $8.53  


10-K/A26th Page of 29TOC1stPreviousNext↓BottomJust 26th

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 13.  Stock Compensation Plans (continued)                                  

     The  weighted-average  remaining  contract life for options  outstanding at
     December  29, 2001 is  approximately  nine years.  Options  outstanding  at
     December 29, 2001 have exercise  prices  ranging from $14.00 to $22.54.  At
     December 29, 2001,  options to purchase 234,150 shares are exercisable.  No
options were exercisable at December 30, 2000.                        

     Pro forma  information  regarding  net  income  and  earnings  per share is
     required by SFAS No. 123.  SFAS No. 123 requires the pro forma  information
     be  determined  as if the  Company has  accounted  for its  employee  stock
     options under the fair value method of that statement.  As described below,
     the fair value  accounting  provided under SFAS No. 123 requires the use of
     option valuation models that were not developed for use in valuing employee
     stock  options.  The fair value for these options was estimated at the date
     of grant using a  Black-Scholes  option  pricing  model with the  following
     weighted-average  assumptions  for 2001 and 2000 (no options  were  granted
     prior to 2000):  risk-free interest rate of 5.11% and 5.75%,  respectively;
     no dividend  yield;  volatility  factor of the expected market price of the
     Company's   common   stock  of  0.591  and  0.530,   respectively;   and  a
weighted-average expected life of the option of seven years.          

     The  Black-Scholes   option  valuation  model  was  developed  for  use  in
     estimating  the  fair  value  of  traded  options  which  have  no  vesting
     restrictions  and are fully  transferable.  In addition,  option  valuation
     models require 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,  the
     existing models do not necessarily provide a reliable single measure of the
fair value of its employee stock options.                             

     For  purposes of pro forma  disclosures,  the  estimated  fair value of the
     options is  amortized  to expense over the  option's  vesting  period.  The
     Company's pro forma  information  for the years ended December 29, 2001 and
December 30, 2000 is as follows:                                      

                                               December 29,       December 30,
                                               2001               2000
                                        --------------------------------------
                                        --------------------------------------

  Pro forma net income                               $112,150         $105,580
Pro forma net income per share:                                           
    Basic                                            $   1.04         $   1.05
    Diluted                                          $   1.03         $   1.05

Employee Stock Purchase Plan                                                    

     The stockholders also adopted an employee stock purchase plan (ESPP). Up to
     1,000,000  shares of common stock have been  reserved for the ESPP.  Shares
     will be offered to  employees  at a price equal to the lesser of 85% of the
     fair  market  value of the stock on the date of purchase or 85% of the fair
     market value on the enrollment  date. The ESPP is intended to qualify as an
    'employee stock purchase  plan' under Section 423 of the Internal  Revenue
     Code. During 2001, 123,007 shares were purchased under the plan for a total
purchase price of $1,464. No shares were purchased during 2000.       


10-K/A27th Page of 29TOC1stPreviousNext↓BottomJust 27th

GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 14. Earnings Per Share                                                     

  The  following table sets forth the computation of basic and diluted net
income per share:                                                     

                                                        [Enlarge/Download Table]


                                                                      Year Ended                    
                                                  --------------------------------------------------
                                                     December 29,     December 30,      December 25,
                                                        2001             2000              1999     
                                                  --------------------------------------------------
                                                                                                    
Numerator:                                                                                          
  Numerator for basic and diluted net income per                                                    
    share - net income                                 $113,448          $105,663        $  64,167  
                                                  ==================================================
Denominator (in thousands):                                                                         
  Denominator for basic net income per share -                                                      
    weighted-average common shares                      108,097           100,489          100,000  
  Effect of dilutive securities - employee stock                                                    
    options (Note 13)                                       350                17                -  
                                                  --------------------------------------------------
  Denominator for diluted net income per share -        108,447           100,506          100,000  
    adjusted weighted-average common shares                                                         
                                                  ==================================================
Basic net income per share                             $   1.05          $   1.05        $    0.64  
                                                  ==================================================
Diluted net income per share                           $   1.05          $   1.05        $    0.64  
                                                  ==================================================


     Options to purchase  361,875  shares of common stock at prices ranging from
     $20.25  to $22.54  per  share  were  outstanding  during  2001 but were not
     included  in the  computation  of diluted  earnings  per share  because the
    options' exercise  price was greater than the average  market price of the
common shares and, therefore, the effect would be antidilutive.       

Note 15. Share Repurchase Program                                               

     On September  24, 2001,  the Board of Directors  authorized  the Company to
     repurchase  up to 5,000,000  shares of the  Company's  common stock through
     December 31, 2002. At December 29, 2001, the Company had purchased  595,200
shares at $9,834.                                                     

Note 16. Shareholder Rights Plan                                                

     On October 24,  2001,  Garmin's  Board of Directors  adopted a  shareholder
    rights plan (the 'Rights Plan').  Pursuant to the Rights  Plan,  the Board
     declared  a  dividend  of  one  preferred  share  purchase  right  on  each
     outstanding common share of Garmin to shareholders of record as of November
     1, 2001. The rights trade together with Garmin's common shares.  The rights
     generally  will  become  exercisable  if a  person  or  group  acquires  or
     announces   an  intention  to  acquire  15  percent  or  more  of  Garmin's
     outstanding common shares.  Each right (other than those held by the new 15
     percent  shareholder) will then be exercisable to purchase preferred shares
     of Garmin (or in certain  instances  other  securities of Garmin) having at
     that  time a market  value  equal to two times  the then  current  exercise
     price.  Garmin's  Board of  Directors  may  redeem the rights at $0.002 per
     right at any time before the rights become  exercisable.  The rights expire
October 31, 2011.                                                     


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GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Note 17. Selected Quarterly Information (Unaudited)                             

                                                        [Enlarge/Download Table]


                                           Year Ended December 29, 2001                    
                      ---------------------------------------------------------------------
                                                  Quarter Ended                            
                      ---------------------------------------------------------------------
                           March 31          June 30        September 29      December 29  
                      ---------------------------------------------------------------------
                                                                                           
Net sales                    $85,534          $103,634          $86,930           $93,021  
Gross profit                  45,918            55,050           47,729            49,462  
Net income                    23,799            36,603           25,001            28,045  
Net income per share         $  0.22          $   0.34          $  0.23           $  0.26  

                                           Year Ended December 30, 2000                    
                      ---------------------------------------------------------------------
                                                  Quarter Ended                            
                      ---------------------------------------------------------------------
                           March 25          June 24        September 23      December 30  
                      ---------------------------------------------------------------------
Net sales                    $76,576         $  93,964          $89,539           $85,662  
Gross profit                  41,913            50,025           49,031            42,757  
Net income                    20,599            29,161           28,292            27,611  
Net income per share         $  0.21         $    0.29          $  0.28           $  0.27  


     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. 


10-K/ALast Page of 29TOC1stPreviousNext↓BottomJust 29th

SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
     Exchange Act of 1934,  the Company has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.          

                                                 GARMIN LTD.

                                             By /s/ Min H. Kao
                                                    Min H. Kao
                                                    Co-Chief Executive Officer

Dated:  April 2, 2002

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