SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): July 31, 2002
GARMIN LTD.
(Exact name of registrant as specified in its charter)
Cayman Islands 0-31983 98-0229227
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
P.O. Box 30464SMB
5th Floor, Harbour Place
103 South Church Street
George Town, Grand Cayman, Cayman Islands
(Address of principal executive offices)
Registrant's telephone number, including area code: (345) 946-5203*
Not Applicable
(Former name or former address, if changed since last report)
--------
* 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.
Item 9. Regulation FD Disclosure
See attached as Exhibit 99.1 to this Form 8-K a press release dated July
31, 2002 concerning the announcement of financial results for the fiscal quarter
ended June 29, 2002.
See attached as Exhibit 99.2 to this Form 8-K a press release dated July
31, 2002 announcing the execution of Rule 10b5-1 selling programs by two
shareholders.
The information in this Form 8-K, including the exhibits, is furnished
pursuant to Item 9 and shall not be deemed to be "filed" for the purposes of
Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that Section.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARMIN LTD.
Date: July 31, 2002 /s/ Andrew R. Etkind
--------------------------------
Andrew R. Etkind
General Counsel and Secretary
EXHIBIT INDEX
Exhibit No. Description
99.1 Press release dated July 31, 2002
concerning the announcement of
financial results for the fiscal
quarter ended June 29, 2002.
99.2 Press release dated July 31, 2002
announcing the execution of Rule
10b5-1 selling programs by two
shareholders
Exhibit 99.1
Garmin Reports Record Quarter and Revises Fiscal Year Guidance Upward
CAYMAN ISLANDS, July 31, 2002 /PRNewswire/ -- Garmin Ltd. (Nasdaq: GRMN - news)
today announced a record quarter of revenue that was achieved during its second
fiscal quarter ended June 29, 2002. Revenue for the quarter increased 19 percent
to $122.8 million from $103.6 million in the year-ago quarter. Net income
decreased to $32.1 million, or $0.30 diluted earnings per share, compared to
$36.6 million or $0.34 diluted earnings per share in the year-ago quarter.
Second quarter net income included a $9.0 million foreign currency loss as a
result of a weaker U.S. dollar compared to the Taiwan dollar. Excluding the
effects of foreign currency, diluted EPS for the quarter was $0.36 compared to
$0.28 in the year-ago quarter. The diluted EPS of $0.36 recorded for the second
quarter of 2002 exceeded company guidance of $0.28 to $0.30.
"We are pleased to announce another record quarter of growth as overall demand
for our products remain strong," said Dr. Min Kao, co-CEO and co-chairman of
Garmin Ltd. "Our consumer segment recorded a 32 percent growth in revenues
during the quarter as we continue to exhibit strength in our recreational land,
marine, and automotive product lines. Additionally, we experienced a 29% growth
in EPS when excluding the effects of foreign currency from the prior year
quarter. Despite the negative economic environment, we continue to post record
numbers due to the continued growth in our existing core markets. As a result of
our continued financial strength, we are raising our estimates for the year."
Consumer revenue for the second quarter totaled $93.7 million - a 32 percent
growth compared to the second quarter of 2001. Aviation revenue totaled $29.1
million - an 11.3 percent decline compared to the year-ago quarter. Total units
sold for the quarter increased to 389,000 from 357,000 - representing an
increase of 9 percent.
Revenue growth increased across all geographic regions during the second quarter
of fiscal 2002 when compared to the year-ago quarter:
- North America revenue was $88.3 million compared to $80.1 million, up 10
percent.
- Europe revenue was $29.5 million compared to $20.7 million, up 43 percent.
- Asia revenue was $5.0 million compared to $2.8 million, up 79 percent.
"We are also pleased with our financial performance during the second quarter,"
said Kevin Rauckman, chief financial officer of Garmin Ltd. "As we have
communicated in the past, we are confident that we can continue to grow our core
business without dependency on wireless and PDA products. Even when the $9.0
million foreign currency loss is included in our results, we were able to
achieve the high-end of our guidance range of $0.30 for the quarter, which
excluded any effects of foreign currency. Gross margins improved to 55.1 percent
when compared to 53.1 percent in the prior year quarter primarily due to the
success of our higher margin marine and automotive products that were introduced
last year. We also retired $9.4 million of debt associated with our 1995
industrial revenue bond issuance. And, we generated approximately $27.9 million
of free cash flow for the quarter resulting in a cash and marketable securities
balance of $380.7 million at the end of the second quarter."
Revenue for the six-month year-to-date period ending June 29, 2002 was $223.7
million - up 18 percent from the $189.2 million generated in the year-ago
period. Net income decreased to $58.9 million, or $0.54 diluted earnings per
share, compared to $60.4 million or $0.56 diluted earnings per share in the
year-ago period. Net income for the six-month period ended June 29, 2002
included a $9.7 million foreign currency loss as a result of a weaker U.S.
dollar compared to the Taiwan dollar. Excluding the effects of foreign currency,
diluted EPS for the period was $0.61 compared to $0.51 in the year-ago period.
Consumer revenue for the year-to-date period totaled $168.5 million - a 30
percent growth compared to the year-ago period. Aviation revenue totaled $55.2
million - an 8 percent decline compared to the year-ago period. Total units sold
for the period increased to 702,000 from 682,000 - representing an increase of 3
percent.
Revenue growth increased across all geographic regions during the first six
months of the year when compared to 2001:
- North America revenue was $161.4 million compared to $140.9 million, up 15
percent.
- Europe revenue was $53.2 million compared to $41.6 million, up 28 percent.
- Asia revenue was $9.1 million compared to $6.7 million, up 36 percent.
Third Quarter and Revised Fiscal Year 2002 Outlook
The company estimates that its diluted EPS for the third fiscal quarter of 2002,
excluding effects for foreign currency, will be in the range of $0.23 to $0.25
on revenues between $95.0 million to $100.0 million.
The company has revised its fiscal year 2002 guidance upward and now estimates
that its diluted EPS for the year, excluding effects of foreign currency, will
be in the range of $1.07 to $1.14 (original guidance was $1.00 to $1.07) on
revenues between $415.0 million to $430.0 million (original guidance was $400.0
million to $418.0 million).
Earnings Call Information
The information for Garmin Ltd.'s earnings call is as follows:
When: Wednesday, July 31, 2002 at 11:00 a.m. Eastern
Where: www.garmin.com/aboutGarmin/invRelations/irCalendar.html
How: Simply log on to the web at the address above or call to
listen in at 800-473-8796.
Contact: investor.relations@garmin.com
A phone recording will be available for 24 hours following the earnings call and
can be accessed by dialing 800-252-6030 utilizing the access code 12947397. An
archive of the live webcast will be available until Aug. 31, 2002 on the Garmin
website at http://www.garmin.com. To access the replay, click on the Investor
Relations link and click over to the Events Calendar page.
This release includes projections and other forward-looking statements regarding
Garmin Ltd. and its business. Any statements regarding the company's future
financial position, revenues, earnings, product introductions, plans and
objectives are forward-looking statements. The forward-looking events and
circumstances discussed in this release may not occur and actual results could
differ materially as a result of risk factors affecting Garmin. Information
concerning risk factors that could affect Garmin's actual results is contained
in the Annual Report on Form 10-K for the year ended December 29, 2001 filed by
Garmin with the Securities and Exchange Commission (Commission file number
0-31983). A copy of Garmin's 2001 Form 10-K can be downloaded from
www.garmin.com/aboutGarmin/invRelations/finReports.html.
Through its operating subsidiaries, Garmin Ltd. designs, manufactures, and
markets navigation, communications and information devices, most of which are
enabled by GPS technology. Garmin is a leader in the general aviation and
consumer markets and its products serve aviation, marine, general recreation,
automotive, wireless and OEM applications. Garmin Ltd. is incorporated in the
Cayman Islands, and its principal subsidiaries are located in the United States,
Taiwan and United Kingdom. For more information, visit the investor relations
site of Garmin Ltd. at www.garmin.com or contact the Investor Relations
department at 913-397-8200.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except per share information)
13-Weeks Ended 26-Weeks Ended
------------------------------- -------------------------------
(Unaudited) (Unaudited)
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
------------------------------- -------------------------------
Net sales $122,838 $103,634 $223,694 $189,168
Cost of goods sold 55,176 48,584 101,540 88,200
-------------- -------------- -------------- -------------
Gross profit 67,662 55,050 122,154 100,968
Selling, general and
administrative expenses 11,099 9,801 22,338 19,060
Research and development
expense 7,476 6,765 15,449 13,061
-------------- -------------- -------------- -------------
18,575 16,566 37,787 32,121
-------------- -------------- -------------- -------------
Operating income 49,087 38,484 84,367 68,847
Other income (expense) (A) (7,501) 10,582 (6,909) 12,120
-------------- -------------- -------------- -------------
Income before income taxes 41,586 49,066 77,458 80,967
Income tax provision 9,440 12,463 18,551 20,565
-------------- -------------- -------------- -------------
Net income $32,146 $36,603 $58,907 $60,402
============== ============== ============== =============
Net income per share
Basic $0.30 $0.34 $0.55 $0.56
Diluted $0.30 $0.34 $0.54 $0.56
Weighted average common
shares outstanding:
Basic 107,788 108,242 107,782 108,242
Diluted 108,215 108,648 108,172 108,629
(A) Includes $9.0 million of foreign currency losses in Q2 2002 and $8.4
million of gains in Q2 2001. Includes $9.7 million of foreign currency
losses for the six-month period ended June 29, 2002 and $7.3 million of
gains for the six-month period ended June 30, 2001.
Garmin Ltd. And Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
---------------------------------------
(Unaudited)
June 29, December 29,
2002 2001
---------------------------------------
Assets
Current Assets:
Cash and cash equivalents $146,575 $192,842
Marketable securities 156,752 40,835
Accounts receivable, net 53,169 47,998
Inventories 46,371 61,132
Deferred income taxes 8,535 7,007
Prepaid expenses and other current assets 4,743 2,921
---------------- ----------------
Total current assets 416,145 352,735
Property and equipment, net 73,102 70,086
Restricted cash 1,600 1,600
Marketable securities 77,413 90,749
Other assets, net 28,448 16,985
---------------- ----------------
Total assets $596,708 $532,155
================ ================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $18,000 $18,837
Salaries and benefits payable 3,566 3,308
Warranty reserve 4,138 4,777
Income taxes payable 11,064 12,444
Current portion of long-term debt 1,334 4,177
Other accrued expenses 10,172 5,485
---------------- ----------------
Total current liabilities 48,274 49,028
Long-term debt 18,666 28,011
Deferred income taxes 1,700 1,147
Stockholders' equity:
Common stock 1,078 1,078
Additional paid-in capital 127,294 127,131
Retained earnings 423,994 365,087
Accumulated other comprehensive loss (24,298) (39,327)
---------------- ----------------
Total stockholders' equity 528,068 453,969
---------------- ----------------
Total liabilities and stockholders' equity $596,708 $532,155
================ ================
Exhibit 99.2
Garmin Shareholders Announce Execution of Rule 10b5-1 Selling Programs
CAYMAN ISLANDS/July 31, 2002 / PRNewswire - Garmin Ltd. (Nasdaq: GRMN) today
announced that the Gary L. Burrell 2000 Grantor Retained Annuity Trust, the
Judith M. Burrell 2000 Grantor Retained Annuity Trust, and Ruey-Jeng Kao, a
member of the company's board of directors, have established structured,
prearranged trading plans to sell a small portion of their shares in the company
over a designated period in accordance with Rule 10b5-1 of the Securities and
Exchange Commission.
Jonathan C. Burrell, as trustee, has executed a Rule 10b5-1 selling program for
the Gary L. Burrell 2000 Grantor Retained Annuity Trust ("Gary Burrell GRAT")
and the Judith M. Burrell 2000 Grantor Retained Annuity Trust ("Judith Burrell
GRAT"). Under the plan, Jonathan Burrell has proposed to sell up to 1,000,000
shares of Garmin Ltd. over a 7-month period between September 1, 2002 and April
1, 2003. To the extent practicable, an equal number of shares shall be sold from
the Gary Burrell GRAT and the Judith Burrell GRAT. As of today, the Gary Burrell
GRAT owns 2,491,707 shares and the Judith Burrell GRAT owns 2,491,707 shares.
Gary L. Burrell beneficially owns 16,884,165 shares and Judith M. Burrell
beneficially owns 508,425 shares. The selling program is designed by the trustee
to raise sufficient proceeds to enable the GRATs to distribute cash when making
the GRATs' annual annuity distributions to the Burrells.
Additionally, Ruey-Jeng Kao has executed a Rule 10b5-1 selling program that will
allow for the sale of up to 1,000,000 shares of Garmin Ltd. over a 12-month
period commencing in September 2002. The selling program is part of Mr. Kao's
ongoing personal program for asset diversification. Mr. Kao currently owns
8,902,481 shares of Garmin Ltd.
The company's board of directors approved both Rule 10b5-1 selling programs.
"The concept of Rule 10b5-1 will prove beneficial to Garmin and its shareholders
in the future," said Andrew Etkind, general counsel and secretary of Garmin Ltd.
"The implementation of a personalized Rule 10b5-1 structured trading program
will allow significant shareholders to sell shares without creating unnecessary
volatility in Garmin stock. It will also create a larger public float for our
stock, as more significant shareholders consider selling a portion of their
shares in the future. Garmin's three insider directors, together with their
spouses, children and trusts established by them, currently own approximately 54
million shares of Garmin or approximately 50% of the company's outstanding
shares. The dispositions under the above selling programs will constitute
approximately 1.9% of the outstanding shares."
Rule 10b5-1 allows corporate insiders to establish a prearranged written plan to
buy or sell a specified number of company shares at a time when they are not in
possession of material inside information in order to gradually change their
investment portfolio, to minimize the market effect of share sales or purchases
by spreading them out over an extended period of time, and to avoid concerns
about initiating transactions while in possession of material nonpublic
information.
Notice on forward-looking statements:
This release includes projections and other forward-looking statements regarding
Garmin Ltd. and its business. Any statements regarding the company's future
financial position, revenues, earnings, product introductions, plans and
objectives are forward-looking statements. The forward-looking events and
circumstances discussed in this release may not occur and actual results could
differ materially as a result of risk factors affecting Garmin. Information
concerning risk factors that could affect Garmin's actual results is contained
in the Annual Report on Form 10-K for the year ended December 29, 2001 filed by
Garmin with the Securities and Exchange Commission (Commission file number
0-31983). A copy of Garmin's 2001 Form 10-K can be downloaded from
www.garmin.com/aboutGarmin/invRelations/finReports.html.
Through its operating subsidiaries, Garmin Ltd. designs, manufactures,
and markets navigation, communications and information devices, most of which
are enabled by GPS technology. Garmin is a leader in the general aviation and
consumer markets and its products serve aviation, marine, general recreation,
automotive, wireless and OEM applications. Garmin Ltd. is incorporated in the
Cayman Islands, and its principal subsidiaries are located in the United States,
Taiwan and United Kingdom. For more information, visit the investor relations
site of Garmin Ltd. at www.garmin.com or contact the Investor Relations
department at 913-397-8200.
Source: Garmin Ltd.
-0-
Investor relations:
913-397-8200
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