United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 27, 2015
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)
Switzerland (State or other jurisdiction of incorporation or organization) |
98-0229227 (I.R.S. Employer identification no.) |
Mühlentalstrasse 2 8200 Schaffhausen Switzerland (Address of principal executive offices) |
N/A (Zip Code) |
Company's telephone number, including area code: +41 52 630 1600
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 þ NO ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES þ NO ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer þ Accelerated Filer ¨ Non-accelerated Filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨ NO þ
Number of shares outstanding of the registrant’s common shares as of July 27, 2015
CHF 10.00 par value: 208,077,418 (including treasury shares)
Garmin Ltd.
Form 10-Q
Quarter Ended June 27, 2015
Table of Contents
| 2 |
Part I - Financial Information
Item I - Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
(In thousands, except per share information)
| (Unaudited) | ||||||||
| June 27, | December 27, | |||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 938,183 | $ | 1,196,268 | ||||
| Marketable securities | 199,007 | 167,989 | ||||||
| Accounts receivable, net | 502,034 | 570,191 | ||||||
| Inventories, net | 458,451 | 420,475 | ||||||
| Deferred income taxes | 53,858 | 56,102 | ||||||
| Deferred costs | 48,033 | 51,336 | ||||||
| Prepaid expenses and other current assets | 83,730 | 48,615 | ||||||
| Total current assets | 2,283,296 | 2,510,976 | ||||||
| Property and equipment, net | 445,672 | 430,887 | ||||||
| Marketable securities | 1,309,405 | 1,407,344 | ||||||
| Restricted cash | 279 | 308 | ||||||
| Noncurrent deferred income tax | 67,246 | 67,712 | ||||||
| Noncurrent deferred costs | 32,504 | 36,140 | ||||||
| Intangible assets, net | 222,968 | 218,083 | ||||||
| Other assets | 62,039 | 21,853 | ||||||
| Total assets | $ | 4,423,409 | $ | 4,693,303 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 146,088 | $ | 149,094 | ||||
| Salaries and benefits payable | 55,185 | 62,764 | ||||||
| Accrued warranty costs | 26,101 | 27,609 | ||||||
| Accrued sales program costs | 40,924 | 58,934 | ||||||
| Deferred revenue | 174,365 | 203,598 | ||||||
| Accrued royalty costs | 9,509 | 51,889 | ||||||
| Accrued advertising expense | 29,762 | 26,334 | ||||||
| Other accrued expenses | 76,003 | 67,780 | ||||||
| Deferred income taxes | 3,848 | 17,673 | ||||||
| Income taxes payable | 10,609 | 182,260 | ||||||
| Dividend payable | 389,287 | 185,326 | ||||||
| Total current liabilities | 961,681 | 1,033,261 | ||||||
| Deferred income taxes | 41,628 | 39,497 | ||||||
| Non-current income taxes | 85,436 | 80,611 | ||||||
| Non-current deferred revenue | 124,625 | 135,130 | ||||||
| Other liabilities | 1,534 | 1,437 | ||||||
| Stockholders' equity: | ||||||||
| Shares, CHF 10 par value, 208,077 shares authorized and issued; 190,936 shares outstanding at June 27, 2015 and 191,815 shares outstanding at December 27, 2014 | 1,797,435 | 1,797,435 | ||||||
| Additional paid-in capital | 85,233 | 73,521 | ||||||
| Treasury stock | (374,839 | ) | (330,132 | ) | ||||
| Retained earnings | 1,676,601 | 1,859,972 | ||||||
| Accumulated other comprehensive income | 24,075 | 2,571 | ||||||
| Total stockholders' equity | 3,208,505 | 3,403,367 | ||||||
| Total liabilities and stockholders' equity | $ | 4,423,409 | $ | 4,693,303 | ||||
See accompanying notes.
| 3 |
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share information)
| 13-Weeks Ended | 26-Weeks Ended | |||||||||||||||
| June 27, | June 28, | June 27, | June 28, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net sales | $ | 773,830 | $ | 777,848 | $ | 1,359,224 | $ | 1,361,069 | ||||||||
| Cost of goods sold | 354,580 | 333,363 | 595,852 | 585,750 | ||||||||||||
| Gross profit | 419,250 | 444,485 | 763,372 | 775,319 | ||||||||||||
| Advertising expense | 45,794 | 34,918 | 73,466 | 59,346 | ||||||||||||
| Selling, general and administrative expense | 97,552 | 92,409 | 196,302 | 182,282 | ||||||||||||
| Research and development expense | 109,240 | 98,404 | 215,242 | 194,568 | ||||||||||||
| Total operating expense | 252,586 | 225,731 | 485,010 | 436,196 | ||||||||||||
| Operating income | 166,664 | 218,754 | 278,362 | 339,123 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 7,420 | 9,670 | 15,444 | 19,437 | ||||||||||||
| Foreign currency gains (losses) | (487 | ) | (20,378 | ) | (44,751 | ) | (7,563 | ) | ||||||||
| Other income (loss) | (39 | ) | 674 | 698 | 190 | |||||||||||
| Total other income (expense) | 6,894 | (10,034 | ) | (28,609 | ) | 12,064 | ||||||||||
| Income before income taxes | 173,558 | 208,720 | 249,753 | 351,187 | ||||||||||||
| Income tax provision | 35,805 | 26,737 | 45,208 | 50,387 | ||||||||||||
| Net income | $ | 137,753 | $ | 181,983 | $ | 204,545 | $ | 300,800 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.72 | $ | 0.94 | $ | 1.07 | $ | 1.55 | ||||||||
| Diluted | $ | 0.72 | $ | 0.93 | $ | 1.07 | $ | 1.54 | ||||||||
| Weighted average common | ||||||||||||||||
| shares outstanding: | ||||||||||||||||
| Basic | 191,101 | 193,771 | 191,432 | 194,431 | ||||||||||||
| Diluted | 191,600 | 194,955 | 191,939 | 195,464 | ||||||||||||
| Dividends declared per share | $ | 2.04 | $ | 1.92 | $ | 2.04 | $ | 1.92 | ||||||||
See accompanying notes.
| 4 |
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In thousands)
| 13-Weeks Ended | 26-Weeks Ended | |||||||||||||||
| June 27, | June 28, | June 27, | June 28, | |||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income | $ | 137,753 | $ | 181,983 | $ | 204,545 | $ | 300,800 | ||||||||
| Foreign currency translation adjustment | 17,716 | 22,757 | 20,471 | 7,239 | ||||||||||||
| Change in fair value of available-for-sale marketable securities, net of deferred taxes | (10,216 | ) | 15,234 | 1,033 | 28,013 | |||||||||||
| Comprehensive income | $ | 145,253 | $ | 219,974 | $ | 226,049 | $ | 336,052 | ||||||||
See accompanying notes.
| 5 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| 2015 | 2014 | |||||||
| Operating Activities: | ||||||||
| Net income | $ | 204,545 | $ | 300,800 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 24,915 | 23,736 | ||||||
| Amortization | 13,215 | 13,722 | ||||||
| Loss (gain) on sale of property and equipment | 420 | (662 | ) | |||||
| Provision for doubtful accounts | (1,499 | ) | 2,383 | |||||
| Deferred income taxes | (9,325 | ) | 3,071 | |||||
| Unrealized foreign currency loss | 59,046 | 7,483 | ||||||
| Provision for obsolete and slow moving inventories | 6,569 | 16,414 | ||||||
| Stock compensation expense | 14,742 | 13,459 | ||||||
| Realized (gain) loss on marketable securities | (364 | ) | 192 | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 60,016 | 65,317 | ||||||
| Inventories | (45,635 | ) | (61,812 | ) | ||||
| Other current and non-current assets | (74,725 | ) | (4,291 | ) | ||||
| Accounts payable | (7,084 | ) | (14,598 | ) | ||||
| Other current and non-current liabilities | (53,808 | ) | (75,826 | ) | ||||
| Deferred revenue | (38,836 | ) | (66,265 | ) | ||||
| Deferred cost | 6,892 | 9,783 | ||||||
| Income taxes payable | (174,788 | ) | 2,446 | |||||
| Net cash (used by)/provided by operating activities | (15,704 | ) | 235,352 | |||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (39,732 | ) | (36,761 | ) | ||||
| Proceeds from sale of property and equipment | 665 | 669 | ||||||
| Purchase of intangible assets | (1,939 | ) | (1,556 | ) | ||||
| Purchase of marketable securities | (480,090 | ) | (534,952 | ) | ||||
| Redemption of marketable securities | 540,785 | 590,887 | ||||||
| Proceeds from repayment on loan receivable | - | 137,379 | ||||||
| Change in restricted cash | 29 | (1 | ) | |||||
| Acquisitions, net of cash acquired | (12,632 | ) | - | |||||
| Net cash provided by investing activities | 7,086 | 155,665 | ||||||
| Financing activities: | ||||||||
| Dividends paid | (183,925 | ) | (175,574 | ) | ||||
| Purchase of treasury stock under share repurchase plan | (57,295 | ) | (162,359 | ) | ||||
| Purchase of treasury stock related to equity awards | (240 | ) | (11,249 | ) | ||||
| Proceeds from issuance of treasury stock related to equity awards | 8,560 | 11,398 | ||||||
| Tax benefit from issuance of equity awards | 1,239 | 3,434 | ||||||
| Net cash used in financing activities | (231,661 | ) | (334,350 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (17,806 | ) | (930 | ) | ||||
| Net decrease in cash and cash equivalents | (258,085 | ) | 55,737 | |||||
| Cash and cash equivalents at beginning of period | 1,196,268 | 1,179,149 | ||||||
| Cash and cash equivalents at end of period | $ | 938,183 | $ | 1,234,886 | ||||
See accompanying notes.
| 6 |
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 27, 2015
(In thousands, except per share information)
| 1. | Basis of Presentation |
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Additionally, the condensed consolidated financial statements should be read in conjunction with Item 2 of Management's Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q. Operating results for the 13-week and 26-week periods ended June 27, 2015 are not necessarily indicative of the results that may be expected for the year ending December 26, 2015.
The condensed consolidated balance sheet at December 27, 2014 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014.
The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore the financial results of certain fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated quarters having only 13 weeks. The quarters ended June 27, 2015 and June 28, 2014 both contain operating results for 13 weeks.
| 2. | Inventories |
The components of inventories consist of the following:
| June 27, | December 27, | |||||||
| 2015 | 2014 | |||||||
| Raw materials | $ | 190,974 | $ | 161,444 | ||||
| Work-in-process | 59,736 | 53,824 | ||||||
| Finished goods | 244,662 | 244,282 | ||||||
| Inventory reserves | (36,921 | ) | (39,075 | ) | ||||
| Inventory, net of reserves | $ | 458,451 | $ | 420,475 | ||||
| 7 |
| 3. | Earnings Per Share |
The following table sets forth the computation of basic and diluted net income per share:
| 13-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| 2015 | 2014 | |||||||
| Numerator: | ||||||||
| Numerator for basic and diluted net income per share - net income | $ | 137,753 | $ | 181,983 | ||||
| Denominator: | ||||||||
| Denominator for basic net income per share – weighted-average common shares | 191,101 | 193,771 | ||||||
| Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units | 499 | 1,184 | ||||||
| Denominator for diluted net income per share – adjusted weighted-average common shares | 191,600 | 194,955 | ||||||
| Basic net income per share | $ | 0.72 | $ | 0.94 | ||||
| Diluted net income per share | $ | 0.72 | $ | 0.93 | ||||
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| 2015 | 2014 | |||||||
| Numerator: | ||||||||
| Numerator for basic and diluted net income per share - net income | $ | 204,545 | $ | 300,800 | ||||
| Denominator: | ||||||||
| Denominator for basic net income per share – weighted-average common shares | 191,432 | 194,431 | ||||||
| Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units | 507 | 1,033 | ||||||
| Denominator for diluted net income per share – adjusted weighted-average common shares | 191,939 | 195,464 | ||||||
| Basic net income per share | $ | 1.07 | $ | 1.55 | ||||
| Diluted net income per share | $ | 1.07 | $ | 1.54 | ||||
| 8 |
There were 3,558 and 2,230 anti-dilutive stock options, stock appreciation rights and restricted stock units (collectively “equity awards”) outstanding during the 13-week periods ended June 27, 2015 and June 28, 2014, respectively.
There were 3,598 and 2,277 anti-dilutive stock options, stock appreciation rights and restricted stock units (collectively “equity awards”) outstanding during the 26-week periods ended June 27, 2015 and June 28, 2014, respectively.
There were 91 and 124 shares issued as a result of exercises and releases of equity awards for the 13-week periods ended June 27, 2015 and June 28, 2014, respectively.
There were 128 and 366 shares issued as a result of exercises and releases of equity awards for the 26-week periods ended June 27, 2015 and June 28, 2014, respectively.
There were 214 employee stock purchase plan (ESPP) shares issued from outstanding Treasury stock during the 13-week and 26-week periods ended June 27, 2015.
| 4. | Segment Information |
The Company has identified five reportable segments – Auto, Aviation, Marine, Outdoor and Fitness. The Company’s Chief Operating Decision Maker (CODM), assesses segment performance and allocates resources to each segment individually.
During the fiscal quarter ended June 27, 2015, the measure of segment profit or loss used by the CODM to assess segment performance and allocate resources changed from income before income taxes to operating income. This change did not impact the measurement methods used to determine reported segment profit or loss in the 13-week and 26-week periods ended June 27, 2015 and June 28, 2014.
| 9 |
Net sales, gross profit, and operating income for each of the Company’s reportable segments are presented below:
Garmin Ltd. And Subsidiaries
Net Sales, Gross Proft and Operating Income by Segment (Unaudited)
| Reportable Segments | ||||||||||||||||||||||||
| Outdoor | Fitness | Marine | Auto | Aviation | Total | |||||||||||||||||||
| 13-Weeks Ended June 27, 2015 | ||||||||||||||||||||||||
| Net sales | $ | 110,324 | $ | 158,649 | $ | 103,713 | $ | 298,878 | $ | 102,266 | $ | 773,830 | ||||||||||||
| Gross profit | $ | 66,946 | $ | 88,458 | $ | 58,577 | $ | 131,006 | $ | 74,263 | $ | 419,250 | ||||||||||||
| Operating income | $ | 37,417 | $ | 33,070 | $ | 23,901 | $ | 44,871 | $ | 27,405 | $ | 166,664 | ||||||||||||
| 13-Weeks Ended June 28, 2014 | ||||||||||||||||||||||||
| Net sales | $ | 106,059 | $ | 150,678 | $ | 73,780 | $ | 350,036 | $ | 97,295 | $ | 777,848 | ||||||||||||
| Gross profit | $ | 64,668 | $ | 98,063 | $ | 42,536 | $ | 167,593 | $ | 71,625 | $ | 444,485 | ||||||||||||
| Operating income | $ | 35,281 | $ | 62,872 | $ | 17,657 | $ | 74,642 | $ | 28,302 | $ | 218,754 | ||||||||||||
| 26-Weeks Ended June 27, 2015 | ||||||||||||||||||||||||
| Net sales | $ | 186,239 | $ | 289,644 | $ | 168,010 | $ | 515,004 | $ | 200,327 | $ | 1,359,224 | ||||||||||||
| Gross profit | $ | 117,166 | $ | 171,534 | $ | 94,090 | $ | 234,809 | $ | 145,773 | $ | 763,372 | ||||||||||||
| Operating income | $ | 61,250 | $ | 67,709 | $ | 28,468 | $ | 67,350 | $ | 53,585 | $ | 278,362 | ||||||||||||
| 26-Weeks Ended June 28, 2014 | ||||||||||||||||||||||||
| Net sales | $ | 190,044 | $ | 250,965 | $ | 133,783 | $ | 592,988 | $ | 193,289 | $ | 1,361,069 | ||||||||||||
| Gross profit | $ | 115,578 | $ | 162,148 | $ | 73,588 | $ | 281,384 | $ | 142,621 | $ | 775,319 | ||||||||||||
| Operating income | $ | 58,964 | $ | 96,384 | $ | 21,467 | $ | 105,206 | $ | 57,102 | $ | 339,123 | ||||||||||||
Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis.
Net sales and property and equipment, net by geographic area are as follows as of and for the 26-week periods ended June 27, 2015 and June 28, 2014. Note that APAC includes Asia Pacific and EMEA includes Europe, the Middle East and Africa:
| Americas | APAC | EMEA | Total | |||||||||||||
| June 27, 2015 | ||||||||||||||||
| Net sales to external customers | $ | 722,317 | $ | 154,102 | $ | 482,805 | $ | 1,359,224 | ||||||||
| Property and equipment, net | $ | 287,171 | $ | 110,524 | $ | 47,977 | $ | 445,672 | ||||||||
| June 28, 2014 | ||||||||||||||||
| Net sales to external customers | $ | 716,156 | $ | 123,883 | $ | 521,030 | $ | 1,361,069 | ||||||||
| Property and equipment, net | $ | 255,422 | $ | 120,369 | $ | 52,691 | $ | 428,482 | ||||||||
| 10 |
| 5. | Warranty Reserves |
The Company’s products sold are generally covered by a warranty for periods ranging from one to two years. The Company’s estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.
| 13-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| 2015 | 2014 | |||||||
| Balance - beginning of period | $ | 23,866 | $ | 25,016 | ||||
| Accrual for products sold during the period | 10,348 | 11,806 | ||||||
| Expenditures | (8,113 | ) | (9,473 | ) | ||||
| Balance - end of period | $ | 26,101 | $ | 27,349 | ||||
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| 2015 | 2014 | |||||||
| Balance - beginning of period | $ | 27,609 | $ | 26,767 | ||||
| Accrual for products sold during the period | 17,090 | 21,291 | ||||||
| Expenditures | (18,598 | ) | (20,709 | ) | ||||
| Balance - end of period | $ | 26,101 | $ | 27,349 | ||||
| 6. | Commitments and Contingencies |
The Company is party to certain commitments, which include purchases of raw materials, advertising expenditures, investments in certain low income housing tax credit projects, and other indirect purchases in connection with conducting our business. Pursuant to these agreements, the Company is contractually committed to make payments of approximately $333,281 over the next five years. Subsequent to June 27, 2015, a portion of a commitment was satisfied with a $43,000 prepayment to a supplier, all of which will be classified as a noncurrent asset.
In the normal course of business, the Company and its subsidiaries are parties to various legal claims, investigations and complaints, including matters alleging patent infringement and other intellectual property claims. The Company evaluates, on a quarterly basis, developments in legal proceedings, investigations or claims that could affect the amount of any accrual or disclosure. The assessment regarding whether a loss is probable or a reasonable possibility, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events.
Management of the Company currently does not believe there is at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies individually and in the aggregate, for the fiscal quarter ended June 27, 2015. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. Although management considers the likelihood to be remote, an adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect on the Company’s results of operations in a particular quarter or fiscal year.
The Company settled or resolved certain matters during the fiscal quarter ended June 27, 2015 that did not individually or in the aggregate have a material impact on the Company’s financial condition or results of operations.
| 11 |
| 7. | Income Taxes |
The Company’s income tax expense increased by $9,068, to $35,805 for the 13-week period ended June 27, 2015, from $26,737 for the 13-week period ended June 28, 2014. The effective tax rate was 20.6% in the second quarter of 2015 compared to 12.8% in the second quarter of 2014. The second quarter 2015 effective tax rate increased compared to the second quarter 2014 due to the release of uncertain tax position reserves due to expiration of certain statutes of limitations or completion of tax audits reducing our expense by $1,637 and $5,190, respectively, in second quarter 2015 and second quarter 2014. In addition, the second quarter 2015 effective tax rate increased as compared to second quarter 2014 due to the current projected full year income mix for 2015 compared to the same projection at second quarter of 2014.
Our income tax expense decreased by $5,179 to $45,208 for the first half of 2015, from $50,387 for the first half of 2014. The effective tax rate was 18.1% in the first half of 2015 compared to 14.3% in the first half of 2014. The first half 2015 effective tax rate increased as compared to first half of 2014 due to the release of uncertain tax position reserves due to expiration of certain statutes of limitations or completion of tax audits reducing our expense by $6,924 and $10,985, respectively, in the first half of 2015 and the first half of 2014. The first half 2015 effective tax rate increased as compared to first half 2014 primarily due to the current projected full year income mix for 2015 compared to the same projection at second quarter of 2014.
| 8. | Marketable Securities |
The FASB ASC topic entitled Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:
| Level 1 | Unadjusted quoted prices in active markets for the identical asset or liability |
| Level 2 | Observable inputs for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability |
| Level 3 | Unobservable inputs for the asset or liability |
The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Valuation is based on prices obtained from an independent pricing vendor using both market and income approaches. The primary inputs to the valuation include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, and credit spreads.
The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Available-for-sale securities measured at estimated fair value on a recurring basis are summarized below:
| 12 |
| Fair Value Measurements as | ||||||||||||||||
| of June 27, 2015 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| U.S. Treasury securities | $ | 27,255 | $ | - | $ | 27,255 | $ | - | ||||||||
| Agency securities | 255,200 | - | 255,200 | - | ||||||||||||
| Mortgage-backed securities | 404,838 | - | 404,838 | - | ||||||||||||
| Corporate securities | 532,555 | - | 532,555 | - | ||||||||||||
| Municipal securities | 215,846 | - | 215,846 | - | ||||||||||||
| Other | 72,718 | - | 72,718 | - | ||||||||||||
| Total | $ | 1,508,412 | $ | - | $ | 1,508,412 | $ | - | ||||||||
| Fair Value Measurements as | ||||||||||||||||
| of December 27, 2014 (1) | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| U.S. Treasury securities | $ | 30,144 | $ | - | $ | 30,144 | $ | - | ||||||||
| Agency securities | 428,320 | - | 428,320 | - | ||||||||||||
| Mortgage-backed securities | 324,307 | - | 324,307 | - | ||||||||||||
| Corporate securities | 594,402 | - | 594,402 | - | ||||||||||||
| Municipal securities | 125,410 | - | 125,410 | - | ||||||||||||
| Other | 72,750 | - | 72,750 | - | ||||||||||||
| Total | $ | 1,575,333 | $ | - | $ | 1,575,333 | $ | - | ||||||||
(1) Certain available-for-sale securities held as of December 27, 2014 have been reclassified among major security types to conform to the current year presentation. These reclassifications had no effect on fair value measurement.
Marketable securities classified as available-for-sale securities are summarized below:
| Available-For-Sale Securities as | ||||||||||||||||||||
| of June 27, 2015 | ||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses-OTTI (2) | Gross Unrealized Losses-Other (3) | Estimated Fair Value (Net Carrying Amount) | ||||||||||||||||
| U.S. Treasury securities | $ | 27,194 | $ | 72 | $ | - | $ | (10 | ) | $ | 27,256 | |||||||||
| Agency securities | 261,054 | 119 | (5,477 | ) | (496 | ) | 255,200 | |||||||||||||
| Mortgage-backed securities | 411,376 | 342 | (1,540 | ) | (5,340 | ) | 404,838 | |||||||||||||
| Corporate securities | 537,232 | 291 | (2,354 | ) | (2,614 | ) | 532,555 | |||||||||||||
| Municipal securities | 216,967 | 318 | (21 | ) | (1,418 | ) | 215,846 | |||||||||||||
| Other | 72,750 | 12 | (21 | ) | (24 | ) | 72,717 | |||||||||||||
| Total | $ | 1,526,573 | $ | 1,154 | $ | (9,413 | ) | $ | (9,902 | ) | $ | 1,508,412 | ||||||||
| 13 |
| Available-For-Sale
Securities as of December 27, 2014 (3) | ||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses-OTTI (2) | Gross Unrealized Losses- Other (3) | Estimated Fair Value (Net Carrying Amount) | ||||||||||||||||
| U.S. Treasury securities | $ | 30,185 | $ | 26 | $ | (25 | ) | $ | (42 | ) | $ | 30,144 | ||||||||
| Agency securities | 436,817 | 169 | (8,259 | ) | (407 | ) | 428,320 | |||||||||||||
| Mortgage-backed securities | 329,048 | 580 | (1,813 | ) | (3,508 | ) | 324,307 | |||||||||||||
| Corporate securities | 600,674 | 689 | (2,874 | ) | (4,087 | ) | 594,402 | |||||||||||||
| Municipal securities | 125,183 | 497 | (48 | ) | (222 | ) | 125,410 | |||||||||||||
| Other | 72,857 | 59 | (12 | ) | (154 | ) | 72,750 | |||||||||||||
| Total | $ | 1,594,764 | $ | 2,020 | $ | (13,031 | ) | $ | (8,420 | ) | $ | 1,575,333 | ||||||||
| (1) | Certain available-for-sale securities held as of December 27, 2014 have been reclassified among major security types to conform to the current year presentation. These reclassifications had no effect on fair value measurement. |
| (2) | Represents impairment not related to credit for those investment securities that have been determined to be other-than-temporarily impaired. |
| (3) | Represents unrealized losses on investment securities that have not been determined to be other-than-temporarily impaired. |
The Company’s investment policy requires investments to be rated A or better with the objective of minimizing the potential risk of principal loss. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. The Company does not intend to sell the securities that have an unrealized loss shown in the table above and it is not more likely than not that the Company will be required to sell the investment before recovery of their amortized costs bases, which may be maturity.
The Company recognizes the credit component of other-than-temporary impairments of debt securities in "Other Income" and the noncredit component in "Other comprehensive income (loss)" for those securities that we do not intend to sell and for which it is not more likely than not that we will be required to sell before recovery. During 2014 and the 26-week period ended June 27, 2015, the Company did not record any material impairment charges on its outstanding securities.
The amortized cost and estimated fair value of the securities at an unrealized loss position at June 27, 2015 were $1,175,780 and $1,156,465, respectively. Approximately 56% of securities in our portfolio were at an unrealized loss position at June 27, 2015. We have the ability to hold these securities until maturity or their value is recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has been no deterioration in credit quality and no change in the cash flows of the underlying securities. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities; therefore, no impairment has been recorded in the accompanying condensed consolidated statement of income.
The cost of securities sold is based on the specific identification method.
The following table displays additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of June 27, 2015.
| 14 |
| As of June 27, 2015 | ||||||||||||||||
| Less than 12 Consecutive Months | 12 Consecutive Months or Longer | |||||||||||||||
Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | |||||||||||||
| U.S. Treasury securities | $ | (10 | ) | $ | 6,158 | $ | - | $ | - | |||||||
| Agency securities | $ | (519 | ) | $ | 53,678 | $ | (5,455 | ) | $ | 174,780 | ||||||
| Mortgage-backed securities | $ | (4,337 | ) | $ | 258,964 | $ | (2,543 | ) | $ | 102,575 | ||||||
| Corporate securities | $ | (2,397 | ) | $ | 291,522 | $ | (2,571 | ) | $ | 120,916 | ||||||
| Municipal securities | $ | (1,362 | ) | $ | 106,358 | $ | (77 | ) | $ | 16,005 | ||||||
| Other | $ | (21 | ) | $ | 20,304 | $ | (24 | ) | $ | 5,205 | ||||||
| Total | $ | (8,646 | ) | $ | 736,984 | $ | (10,670 | ) | $ | 419,481 | ||||||
The amortized cost and estimated fair value of marketable securities at June 27, 2015, 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 | $ | 198,988 | $ | 199,007 | ||||
| Due after one year through five years | 1,009,357 | 1,001,271 | ||||||
| Due after five years through ten years | 230,612 | 223,721 | ||||||
| Due after ten years | 87,616 | 84,413 | ||||||
| $ | 1,526,573 | $ | 1,508,412 | |||||
9. Share Repurchase Plan
On February 13, 2015, the Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $300,000 of the common shares of Garmin Ltd. The repurchases may be made from time to time as market and business conditions warrant on the open market or in negotiated transactions in compliance with the SEC’s Rule 10b-18. The timing and amounts of any repurchases will be determined by the Company’s management depending on market conditions and other factors including price, regulatory requirements and capital availability. The program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. The share repurchase authorization expires on December 31, 2016. As of June 27, 2015, the Company had repurchased 1,221 shares using cash of $57,295. There remains approximately $242,705 available to repurchase additional shares under this authorization.
10. Accumulated Other Comprehensive Income
The following provides required disclosure of changes in accumulated other comprehensive income (AOCI) balances by component for the 13-week and the 26-week periods ended June 27, 2015:
| 15 |
| 13-Weeks Ended June 27, 2015 | ||||||||||||||||
| Foreign Currency Translation Adjustment | Gross unrealized losses on available-for-sale securities- OTTI(4) | Net unrealized gains (losses) on available-for-sale securities-Other(5) | Total | |||||||||||||
| Beginning Balance | $ | 23,629 | $ | (6,027 | ) | $ | (1,027 | ) | $ | 16,575 | ||||||
| Other comprehensive income before reclassification | 17,716 | (3,387 | ) | (6,826 | ) | 7,503 | ||||||||||
| Amounts reclassified from accumulated other comprehensive income | - | - | (3 | ) | (3 | ) | ||||||||||
| Net current-period other comprehensive income | 17,716 | (3,387 | ) | (6,829 | ) | 7,500 | ||||||||||
| Ending Balance | $ | 41,345 | $ | (9,414 | ) | $ | (7,856 | ) | $ | 24,075 | ||||||
| 26-Weeks Ended June 27, 2015 | ||||||||||||||||
| Foreign Currency Translation Adjustment | Gross unrealized losses on available-for-sale securities- OTTI(4) | Net unrealized gains (losses) on available-for-sale securities-Other(5) | Total | |||||||||||||
| Beginning Balance | $ | 20,874 | $ | (13,031 | ) | $ | (5,272 | ) | $ | 2,571 | ||||||
| Other comprehensive income before reclassification | 20,471 | 3,617 | (2,258 | ) | 21,830 | |||||||||||
| Amounts reclassified from accumulated other comprehensive income | - | - | (326 | ) | (326 | ) | ||||||||||
| Net current-period other comprehensive income | 20,471 | 3,617 | (2,584 | ) | 21,504 | |||||||||||
| Ending Balance | $ | 41,345 | $ | (9,414 | ) | $ | (7,856 | ) | $ | 24,075 | ||||||
(4) Represents the change in impairment, not related to credit, for those investment securities that have been determined to be other-than- temporarily impaired.
(5) Represents the change in unrealized gains (losses) on investment securities that have not been determined to be other-than-temporarily impaired.
The following provides required disclosure of reporting reclassifications out of AOCI for the 13-week and 26-week periods ended June 27, 2015:
| 16 |
| 13-Weeks Ended June 27, 2015 | ||||||
| Details about accumulated other comprehensive income components | Amount reclassified from accumulated other comprehensive income | Affected line item in the statement where net income is presented | ||||
| Unrealized gains (losses) on available-for-sale securities | $ | 24 | Other income (expense) | |||
| $ | (21 | ) | Income tax (provision) benefit | |||
| $ | 3 | Net of tax | ||||
| 26-Weeks Ended June 27, 2015 | ||||||
| Details about accumulated other comprehensive income components | Amount reclassified from accumulated other comprehensive income | Affected line item in the statement where net income is presented | ||||
| Unrealized gains (losses) on available-for-sale securities | $ | 364 | Other income (expense) | |||
| $ | (38 | ) | Income tax (provision) benefit | |||
| $ | 326 | Net of tax | ||||
11. Recently Issued Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09 “Revenue from Contracts with Customers” (ASU 2014-09), which supersedes previous revenue recognition guidance. ASU 2014-09 requires that a company will recognize revenue at an amount that reflects the consideration to which the company expects to be entitled in exchange or transferring goods or services to a customer. In applying the new guidance, a company will (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The provisions of this new guidance are effective for reporting periods beginning after December 15, 2017 and can be adopted using either a full retrospective or modified approach. The Company is currently evaluating the impact of adopting this new guidance on the Company’s financial statements.
| 12. | Stock Compensation Plans |
In February 2015, Restricted Stock Units (RSUs) were granted to certain employees under the Company’s 2005 Equity Incentive Plan (the “2005 Plan”). The vesting of these RSUs is contingent upon the achievement of certain revenue and profitability goals, as well as on time-based vesting requirements. The compensation expense related to these grants did not have a material impact on the results of operations for the 13-week or 26-week periods ended June 27, 2015 and is not expected to have a material impact on the results of operations for the fiscal year ending December 26, 2015. The 2005 Plan is discussed further in our Annual Report on Form 10-K for the fiscal year ended December 27, 2014.
| 17 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion set forth below, as well as other portions of this Quarterly Report, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by our management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of our assumptions prove incorrect or should unanticipated circumstances arise, our actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014. This report has been filed with the Securities and Exchange Commission (the "SEC" or the "Commission") in Washington, D.C. and can be obtained by contacting the SEC's public reference operations or obtaining it through the SEC's web site on the World Wide Web at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.
The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 27, 2014.
The Company is a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in five business segments, the outdoor, fitness, marine, auto and aviation markets. Our segments offer products through our network of independent dealers and distributors. However, the nature of products and types of customers for the five segments may vary significantly. As such, the segments are managed separately.
Results of Operations
The following table sets forth our results of operations as a percentage of net sales during the periods shown:
| 18 |
| 13-Weeks Ended | ||||||||
| June 27, 2015 | June 28, 2014 | |||||||
| Net sales | 100 | % | 100 | % | ||||
| Cost of goods sold | 46 | % | 43 | % | ||||
| Gross profit | 54 | % | 57 | % | ||||
| Advertising | 6 | % | 4 | % | ||||
| Selling, general and administrative | 13 | % | 12 | % | ||||
| Research and development | 14 | % | 13 | % | ||||
| Total operating expenses | 33 | % | 29 | % | ||||
| Operating income | 22 | % | 28 | % | ||||
| Other income (expense), net | 1 | % | -1 | % | ||||
| Income before income taxes | 22 | % | 27 | % | ||||
| Provision for income taxes | 5 | % | 4 | % | ||||
| Net income | 18 | % | 23 | % | ||||
| 26-Weeks Ended | ||||||||
| June 27, 2015 | June 28, 2014 | |||||||
| Net sales | 100 | % | 100 | % | ||||
| Cost of goods sold | 44 | % | 43 | % | ||||
| Gross profit | 56 | % | 57 | % | ||||
| Advertising | 5 | % | 4 | % | ||||
| Selling, general and administrative | 14 | % | 14 | % | ||||
| Research and development | 16 | % | 14 | % | ||||
| Total operating expenses | 36 | % | 32 | % | ||||
| Operating income | 20 | % | 25 | % | ||||
| Other income (expense), net | -2 | % | 1 | % | ||||
| Income before income taxes | 18 | % | 26 | % | ||||
| Provision for income taxes | 3 | % | 4 | % | ||||
| Net income | 15 | % | 22 | % | ||||
The Company manages its operations in five segments: outdoor, fitness, marine, auto, and aviation, and each of its segments employs the same accounting policies. Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis. The segment table located in Note 4 sets forth our results of operations (in thousands) including revenue (net sales), operating income, and income before taxes for each of our five segments during the periods shown. For each line item in the table, the total of the outdoor, fitness, marine, auto, and aviation segments' amounts equals the amount in the condensed consolidated statements of income included in Item 1.
| 19 |
Comparison of 13-Weeks Ended June 27, 2015 and June 28, 2014
(Dollar amounts included in the following discussion are stated in thousands unless otherwise indicated)
Net Sales
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | Year over Year | ||||||||||||||||||||||
| Net Sales | % of Revenues | Net Sales | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 110,324 | 14 | % | $ | 106,059 | 14 | % | $ | 4,265 | 4 | % | ||||||||||||
| Fitness | 158,649 | 21 | % | 150,678 | 19 | % | 7,971 | 5 | % | |||||||||||||||
| Marine | 103,713 | 13 | % | 73,780 | 9 | % | 29,933 | 41 | % | |||||||||||||||
| Auto | 298,878 | 39 | % | 350,036 | 45 | % | (51,158 | ) | -15 | % | ||||||||||||||
| Aviation | 102,266 | 13 | % | 97,295 | 13 | % | 4,971 | 5 | % | |||||||||||||||
| Total | $ | 773,830 | 100 | % | $ | 777,848 | 100 | % | $ | (4,018 | ) | -1 | % | |||||||||||
Net sales decreased 1% for the 13-week period ended June 27, 2015 when compared to the year-ago quarter. All segments, excluding aviation, were impacted by revenues denominated in currencies that have weakened against the U.S. Dollar. In total, it is estimated that the strong U.S. Dollar reduced revenues by approximately $59 million, which represents over 750 basis points. Auto revenue remains the largest portion of our revenue mix at 39% in the second quarter of 2015 compared to 45% in the second quarter of 2014.
Total unit sales increased to 4,150 in the second quarter of 2015 from 3,841 in the same period of 2014. Unit sales volume in the second quarter of fiscal 2015 primarily grew in fitness and marine.
Auto segment revenue decreased 15% from the year-ago quarter, as both PND volumes and the contribution of amortization of previously deferred revenue declined when compared to second quarter 2014. Revenues in our fitness segment increased 5% from the year-ago quarter on the strength of wellness products and multisport products. Revenues in our marine segment increased 41% due to new product introductions and the Fusion® Electronics acquisition which was completed in the back half of 2014. Aviation revenues increased 5% from the year-ago quarter as gains in aftermarket were partially offset by OEM weakness. Outdoor revenues increased 4% from the year-ago quarter with growth in our wearable products more than offsetting weakness in the handheld and golf business.
Cost of Goods Sold
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | Year over Year | ||||||||||||||||||||||
| Cost of Goods | % of Revenues | Cost of Goods | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 43,378 | 39 | % | $ | 41,391 | 39 | % | $ | 1,987 | 5 | % | ||||||||||||
| Fitness | 70,191 | 44 | % | 52,615 | 35 | % | 17,576 | 33 | % | |||||||||||||||
| Marine | 45,136 | 44 | % | 31,244 | 42 | % | 13,892 | 44 | % | |||||||||||||||
| Auto | 167,872 | 56 | % | 182,443 | 52 | % | (14,571 | ) | -8 | % | ||||||||||||||
| Aviation | 28,003 | 27 | % | 25,670 | 26 | % | 2,333 | 9 | % | |||||||||||||||
| Total | $ | 354,580 | 46 | % | $ | 333,363 | 43 | % | $ | 21,217 | 6 | % | ||||||||||||
Cost of goods sold increased 300 basis points as a percentage of revenue from the year ago quarter with increases primarily in the fitness and auto segments, while increasing 6% in absolute dollars. Cost of goods as a percentage of revenue increased in part due to a stronger U.S. Dollar that created downward pressure on revenue in all segments excluding aviation as discussed above. The absolute dollar increase of 6% reflects increased unit sales and product mix.
In the auto segment, the 8% cost of goods sold decrease reflects lower PND shipments partially offset by product mix shift toward software-focused OEM solutions. In the fitness segment, the 33% cost of goods sold increase reflects strong volume growth partially offset by product mix shift toward lower cost per unit activity trackers. In the marine segment, the 44% cost of goods sold increase reflects strong volume growth partially offset by product mix shift toward lower cost per unit Fusion® entertainment products. In the outdoor segment, the 5% increase in cost of goods sold reflects product mix shift toward higher cost per unit wearables partially offset by inventory reserves recorded in the second quarter of 2014 which negatively impacted cost of goods in that period. The 9% increase in cost of goods sold for aviation was largely consistent with the segment revenue growth.
| 20 |
Gross Profit
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | Year over Year | ||||||||||||||||||||||
| Gross Profit | % of Revenues | Gross Profit | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 66,946 | 61 | % | $ | 64,668 | 61 | % | $ | 2,278 | 4 | % | ||||||||||||
| Fitness | 88,458 | 56 | % | 98,063 | 65 | % | (9,605 | ) | -10 | % | ||||||||||||||
| Marine | 58,577 | 56 | % | 42,536 | 58 | % | 16,041 | 38 | % | |||||||||||||||
| Auto | 131,006 | 44 | % | 167,593 | 48 | % | (36,587 | ) | -22 | % | ||||||||||||||
| Aviation | 74,263 | 73 | % | 71,625 | 74 | % | 2,638 | 4 | % | |||||||||||||||
| Total | $ | 419,250 | 54 | % | $ | 444,485 | 57 | % | $ | (25,235 | ) | -6 | % | |||||||||||
Gross profit dollars in the second quarter of 2015 decreased 6% while gross profit margin decreased 300 basis points compared to the second quarter of 2014. Fitness and auto suffered gross margin decline, as discussed above. Outdoor, marine, and aviation gross margins were relatively stable to prior year results, as discussed above.
Advertising Expense
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | |||||||||||||||||||||||
| Advertising | Advertising | Year over Year | ||||||||||||||||||||||
| Expense | % of Revenues | Expense | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 6,010 | 5 | % | $ | 9,019 | 9 | % | $ | (3,009 | ) | -33 | % | |||||||||||
| Fitness | 19,955 | 13 | % | 8,996 | 6 | % | 10,959 | 122 | % | |||||||||||||||
| Marine | 6,037 | 6 | % | 3,035 | 4 | % | 3,002 | 99 | % | |||||||||||||||
| Auto | 11,999 | 4 | % | 12,571 | 4 | % | (572 | ) | -5 | % | ||||||||||||||
| Aviation | 1,793 | 2 | % | 1,297 | 1 | % | 496 | 38 | % | |||||||||||||||
| Total | $ | 45,794 | 6 | % | $ | 34,918 | 4 | % | $ | 10,876 | 31 | % | ||||||||||||
Advertising expense increased 31% in absolute dollars and 140 basis points as a percent of revenues. The increase in absolute dollars primarily occurred in fitness and marine to support new product introductions with increased media spend, point of sale presence at key retailers and cooperative advertising. This increase was partially offset by decreased spending in outdoor due to higher spending in second quarter of 2014 to support new product introductions.
Selling, General and Administrative Expense
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | |||||||||||||||||||||||
| Selling, General & | Selling, General & | Year over Year | ||||||||||||||||||||||
| Admin. Expenses | % of Revenues | Admin. Expenses | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 14,124 | 13 | % | $ | 12,979 | 12 | % | $ | 1,145 | 9 | % | ||||||||||||
| Fitness | 22,120 | 14 | % | 17,909 | 12 | % | 4,211 | 24 | % | |||||||||||||||
| Marine | 15,299 | 15 | % | 9,924 | 13 | % | 5,375 | 54 | % | |||||||||||||||
| Auto | 39,968 | 13 | % | 45,470 | 13 | % | (5,502 | ) | -12 | % | ||||||||||||||
| Aviation | 6,041 | 6 | % | 6,127 | 6 | % | (86 | ) | -1 | % | ||||||||||||||
| Total | $ | 97,552 | 13 | % | $ | 92,409 | 12 | % | $ | 5,143 | 6 | % | ||||||||||||
Selling, general and administrative expense increased 6% in absolute dollars and 70 basis points as a percent of revenues compared to the year-ago quarter. The absolute dollar increase is related to product support, legal fees associated with the defense of multiple matters, and IT. Variances by segment are primarily due to the allocation of certain selling, general and administrative expenses based on percentage of total revenues.
| 21 |
Research and Development Expense
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | |||||||||||||||||||||||
| Research & | Research & | Year over Year | ||||||||||||||||||||||
| Development | % of Revenues | Development | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 9,395 | 9 | % | $ | 7,389 | 7 | % | $ | 2,006 | 27 | % | ||||||||||||
| Fitness | 13,313 | 8 | % | 8,286 | 5 | % | 5,027 | 61 | % | |||||||||||||||
| Marine | 13,340 | 13 | % | 11,920 | 16 | % | 1,420 | 12 | % | |||||||||||||||
| Auto | 34,168 | 11 | % | 34,910 | 10 | % | (742 | ) | -2 | % | ||||||||||||||
| Aviation | 39,024 | 38 | % | 35,899 | 37 | % | 3,125 | 9 | % | |||||||||||||||
| Total | $ | 109,240 | 14 | % | $ | 98,404 | 13 | % | $ | 10,836 | 11 | % | ||||||||||||
Research and development expense increased 11% due to ongoing development activities for new products and the addition of more than 100 new engineering personnel to our staff since the year-ago quarter. In absolute dollars, research and development costs increased $10.8 million when compared with the year-ago quarter and increased as a percent of revenue by 150 basis points. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.
Operating Income
| 13-weeks ended June 27, 2015 | 13-weeks ended June 28, 2014 | Year over Year | ||||||||||||||||||||||
| Operating Income | % of Revenues | Operating Income | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 37,417 | 34 | % | $ | 35,281 | 33 | % | $ | 2,136 | 6 | % | ||||||||||||
| Fitness | 33,070 | 21 | % | 62,872 | 42 | % | (29,802 | ) | -47 | % | ||||||||||||||
| Marine | 23,901 | 23 | % | 17,657 | 24 | % | 6,244 | 35 | % | |||||||||||||||
| Auto | 44,871 | 15 | % | 74,642 | 21 | % | (29,771 | ) | -40 | % | ||||||||||||||
| Aviation | 27,405 | 27 | % | 28,302 | 29 | % | (897 | ) | -3 | % | ||||||||||||||
| Total | $ | 166,664 | 22 | % | $ | 218,754 | 28 | % | $ | (52,090 | ) | -24 | % | |||||||||||
Operating income decreased 24% in absolute dollars and 660 basis points as a percent of revenue when compared to the second quarter of 2014. Declines in the gross margin percentage, as discussed above, coupled with increases in all categories of operating expense, contributed to the decline.
Other Income (Expense)
| 13-weeks ended | 13-weeks ended | |||||||
| June 27, 2015 | June 28, 2014 | |||||||
| Interest Income | $ | 7,420 | $ | 9,670 | ||||
| Foreign Currency gains (losses) | $ | (487 | ) | (20,378 | ) | |||
| Other | $ | (39 | ) | 674 | ||||
| Total | $ | 6,894 | $ | (10,034 | ) | |||
The average return on cash and investments during the second quarter of 2015 was 1.2% compared to 1.4% during the same quarter of 2014. Lower interest income in the second quarter of 2015, as compared to the same period of 2014, is due to a reduced interest rate and a lower cash balance.
Foreign currency gains and losses for the Company are primarily tied to movements by the Taiwan Dollar, the Euro, and the British Pound Sterling in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation. The U.S. Dollar is the functional currency of Garmin (Europe) Ltd. The Euro is the functional currency of most European subsidiaries. As these entities have grown, currency fluctuations can generate material gains and losses. Additionally, Euro-based inter-company transactions can also generate currency gains and losses. Due to the relative size of the entities using a functional currency other than the Taiwan Dollar, the Euro and the British Pound Sterling, currency fluctuations related to these entities are not expected to have a material impact on the Company’s financial statements.
The $0.5 million currency loss in the second quarter 2015 was due to the U.S. Dollar weakening against both the Taiwan Dollar and the Euro. During the second quarter of 2015, the U.S. Dollar weakened 2.8% compared to the Euro resulting in a gain of $6.0 million while the U.S. Dollar weakened against the Taiwan Dollar 0.6% resulting in a loss of $6.4 million. The remaining net currency loss of $0.1 million is related to other currencies and timing of transactions.
| 22 |
The majority of the $20.4 million currency loss in the second quarter of 2014 was due to the weakening of the U.S. Dollar compared to the Taiwan Dollar. The strengthening of the U.S. Dollar compared to the Euro contributed a loss as well, which was partially offset by the U.S. Dollar weakening compared to the British Pound Sterling. During the second quarter of 2014, the U.S. Dollar weakened 2.0% compared to the Taiwan Dollar resulting in a loss of $18.3 million. In addition, the U.S. Dollar strengthened 0.8% compared to the Euro and weakened 2.5% compared to the British Pound Sterling resulting in a net loss of $2.2 million. The remaining net currency gain of $0.1 million is related to other currencies and timing of transactions.
Income Tax Provision
Our income tax expense increased by $9.1 million, to $35.8 million for the 13-week period ended June 27, 2015, from $26.7 million for the 13-week period ended June 28, 2014. The effective tax rate was 20.6% in the second quarter of 2015 compared to 12.8% in the second quarter of 2014. The second quarter 2015 effective tax rate increased compared to second quarter 2014 due to the release of uncertain tax position reserves due to expiration of certain statutes of limitations or completion of tax audits reducing our expense by $1.6 million and $5.2 million, respectively, in second quarter 2015 and second quarter 2014. The second quarter 2015 effective tax rate increased as compared to second quarter 2014 due to the current projected full year income mix for 2015 compared to the same projection at second quarter of 2014.
Net Income
As a result of the above, net income decreased 24% for the 13-week period ended June 27, 2015 to $137.8 million compared to $182 million for the 13-week period ended June 28, 2014.
Comparison of 26-Weeks Ended June 27, 2015 and June 28, 2014
(Amounts included in the following discussion are stated in thousands unless otherwise indicated)
Net Sales
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | Year over Year | ||||||||||||||||||||||
| Net Sales | % of Revenues | Net Sales | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 186,239 | 14 | % | $ | 190,044 | 14 | % | $ | (3,805 | ) | -2 | % | |||||||||||
| Fitness | 289,644 | 21 | % | 250,965 | 18 | % | 38,679 | 15 | % | |||||||||||||||
| Marine | 168,010 | 12 | % | 133,783 | 10 | % | 34,227 | 26 | % | |||||||||||||||
| Auto | 515,004 | 38 | % | 592,988 | 44 | % | (77,984 | ) | -13 | % | ||||||||||||||
| Aviation | 200,327 | 15 | % | 193,289 | 14 | % | 7,038 | 4 | % | |||||||||||||||
| Total | $ | 1,359,224 | 100 | % | $ | 1,361,069 | 100 | % | $ | (1,845 | ) | 0 | % | |||||||||||
Net sales did not change materially for the 26-week period ended June 27, 2015 when compared to the year-ago period. All segments, excluding aviation, experienced significant declines due to revenues denominated in currencies that have weakened against the U.S. Dollar. In total, the strong U.S. Dollar reduced revenues by approximately $97 million, which represents over 700 basis points. Auto revenue remains the largest portion of our revenue mix at 38% in the first half of 2015 compared to 44% in the first half of 2014.
Total unit sales increased 13% to 7,194 in the first half of 2015 from 6,340 in the same period of 2014. The increase in unit sales volume was attributable to fitness and marine volumes partially offset by declines in each of the other segments.
Auto segment revenue decreased 13% from the year-ago period, as both the contribution of amortization of previously deferred revenue declined when compared to first half 2014 and volumes declined. Fitness revenues increased 15% on the strength of our vivo line of products and multisport offset by declines in our runner and bike categories, which experienced significant growth in the first half of 2014 due to new product introductions. Aviation revenues increased 4% from the year-ago period as OEM market share gains and aftermarket products contributed to growth. Outdoor revenues decreased 2% from the year-ago period due to declines in the handheld and golf product categories. Revenues in our marine segment increased 26% as the release of new marine products drove strong revenue growth and the Fusion® Electronics acquisition was integrated when compared to the same period of 2014.
| 23 |
Cost of Goods Sold
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | Year over Year | ||||||||||||||||||||||
| Cost of Goods | % of Revenues | Cost of Goods | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 69,073 | 37 | % | $ | 74,466 | 39 | % | $ | (5,393 | ) | -7 | % | |||||||||||
| Fitness | 118,110 | 41 | % | 88,817 | 35 | % | 29,293 | 33 | % | |||||||||||||||
| Marine | 73,920 | 44 | % | 60,195 | 45 | % | 13,725 | 23 | % | |||||||||||||||
| Auto | 280,195 | 54 | % | 311,604 | 53 | % | (31,409 | ) | -10 | % | ||||||||||||||
| Aviation | 54,554 | 27 | % | 50,669 | 26 | % | 3,886 | 8 | % | |||||||||||||||
| Total | $ | 595,852 | 44 | % | $ | 585,750 | 43 | % | $ | 10,102 | 2 | % | ||||||||||||
Cost of goods sold increased 2% in absolute dollars for the first half of 2015 when compared to the year ago period.
In the auto segment, the cost of goods decline was largely consistent with the segment revenue decline. In the fitness segment, the cost of goods increase outpaced revenue growth due to product mix and competitive pricing dynamics. In the outdoor segment, the cost of goods decreases were largely consistent with the revenue decline when excluding the impact of the inventory reserves recorded in the second quarter of 2014. The cost of goods increases in marine and aviation were largely consistent with the segment revenue growth.
Gross Profit
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | Year over Year | ||||||||||||||||||||||
| Gross Profit | % of Revenues | Gross Profit | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 117,166 | 63 | % | $ | 115,578 | 61 | % | $ | 1,588 | 1 | % | ||||||||||||
| Fitness | 171,534 | 59 | % | 162,148 | 65 | % | 9,386 | 6 | % | |||||||||||||||
| Marine | 94,090 | 56 | % | 73,588 | 55 | % | 20,502 | 28 | % | |||||||||||||||
| Auto | 234,809 | 46 | % | 281,384 | 47 | % | (46,575 | ) | -17 | % | ||||||||||||||
| Aviation | 145,773 | 73 | % | 142,621 | 74 | % | 3,152 | 2 | % | |||||||||||||||
| Total | $ | 763,372 | 56 | % | $ | 775,319 | 57 | % | $ | (11,947 | ) | -2 | % | |||||||||||
Gross profit dollars in the first half of 2015 decreased 2% while gross profit margin decreased 80 basis points compared to the first half of 2014. The auto gross margin declined slightly to 46% driven by the lower amortization of previously deferred high margin revenues, as discussed above. Outdoor margins increased while fitness, marine and aviation margins declined, as discussed above.
Advertising Expense
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | |||||||||||||||||||||||
| Advertising | Advertising | Year over Year | ||||||||||||||||||||||
| Expense | % of Revenues | Expense | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 10,355 | 6 | % | $ | 14,196 | 7 | % | $ | (3,841 | ) | -27 | % | |||||||||||
| Fitness | 31,125 | 11 | % | 14,864 | 6 | % | 16,261 | 109 | % | |||||||||||||||
| Marine | 9,800 | 6 | % | 7,197 | 5 | % | 2,603 | 36 | % | |||||||||||||||
| Auto | 19,031 | 4 | % | 19,978 | 3 | % | (947 | ) | -5 | % | ||||||||||||||
| Aviation | 3,155 | 2 | % | 3,111 | 2 | % | 44 | 1 | % | |||||||||||||||
| Total | $ | 73,466 | 5 | % | $ | 59,346 | 4 | % | $ | 14,120 | 24 | % | ||||||||||||
Advertising expense increased 24% in absolute dollars and 100 basis points as a percent of revenue compared to the year-ago period. The increase in absolute dollars primarily occurred in fitness and marine to support new product introductions with increased media spend, point of sale presence at key retailers and cooperative advertising. This increase was partially offset by decreased spending in outdoor due to higher spending in second quarter of 2014 to support new product introductions.
| 24 |
Selling, General and Administrative Expenses
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | |||||||||||||||||||||||
| Selling, General & | Selling, General & | Year over Year | ||||||||||||||||||||||
| Admin. Expenses | % of Revenues | Admin. Expenses | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 27,339 | 15 | % | $ | 27,723 | 15 | % | $ | (384 | ) | -1 | % | |||||||||||
| Fitness | 47,203 | 16 | % | 33,991 | 14 | % | 13,212 | 39 | % | |||||||||||||||
| Marine | 29,277 | 17 | % | 21,706 | 16 | % | 7,571 | 35 | % | |||||||||||||||
| Auto | 80,164 | 16 | % | 87,017 | 15 | % | (6,853 | ) | -8 | % | ||||||||||||||
| Aviation | 12,319 | 6 | % | 11,845 | 6 | % | 474 | 4 | % | |||||||||||||||
| Total | $ | 196,302 | 14 | % | $ | 182,282 | 13 | % | $ | 14,020 | 8 | % | ||||||||||||
Selling, general and administrative expense increased 8% in absolute dollars and 100 basis points as a percent of revenues compared to the year-ago period. The absolute dollar increase is related to product support and legal fees associated with the defense of multiple matters. Variances by segment are primarily due to the allocation of certain selling, general and administrative expenses based on percentage of total revenues.
Research and Development Expense
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | |||||||||||||||||||||||
| Research & | Research & | Year over Year | ||||||||||||||||||||||
| Development | % of Revenues | Development | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 18,222 | 10 | % | $ | 14,695 | 8 | % | $ | 3,527 | 24 | % | ||||||||||||
| Fitness | 25,497 | 9 | % | 16,909 | 7 | % | 8,588 | 51 | % | |||||||||||||||
| Marine | 26,545 | 16 | % | 23,218 | 17 | % | 3,327 | 14 | % | |||||||||||||||
| Auto | 68,264 | 13 | % | 69,183 | 12 | % | (919 | ) | -1 | % | ||||||||||||||
| Aviation | 76,714 | 38 | % | 70,563 | 37 | % | 6,151 | 9 | % | |||||||||||||||
| Total | $ | 215,242 | 16 | % | $ | 194,568 | 14 | % | $ | 20,674 | 11 | % | ||||||||||||
Research and development expense increased 11% due to ongoing development activities for new products and the addition of over 100 new engineering personnel to our staff since the year-ago period. In absolute dollars, research and development costs increased $20.7 million when compared with the year-ago period and increased 150 basis point as a percent of revenues compared to the year-ago period. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.
Operating Income
| 26-weeks ended Jun 27, 2015 | 26-weeks ended Jun 28, 2014 | Year over Year | ||||||||||||||||||||||
| Operating Income | % of Revenues | Operating Income | % of Revenues | $ Change | % Change | |||||||||||||||||||
| Outdoor | $ | 61,250 | 33 | % | $ | 58,964 | 31 | % | $ | 2,286 | 4 | % | ||||||||||||
| Fitness | 67,709 | 23 | % | 96,384 | 38 | % | (28,675 | ) | -30 | % | ||||||||||||||
| Marine | 28,468 | 17 | % | 21,467 | 16 | % | 7,001 | 33 | % | |||||||||||||||
| Auto | 67,350 | 13 | % | 105,206 | 18 | % | (37,856 | ) | -36 | % | ||||||||||||||
| Aviation | 53,585 | 27 | % | 57,102 | 30 | % | (3,517 | ) | -6 | % | ||||||||||||||
| Total | $ | 278,362 | 20 | % | $ | 339,123 | 25 | % | $ | (60,761 | ) | -18 | % | |||||||||||
Operating income declined 18% in absolute dollars and 440 basis points as a percent of revenue when compared to the year-ago period. Declining gross margin percentages and increases in all operating expenses as a percentage of revenue, as discussed above, contributed to the decline.
| 25 |
Other Income (Expense)
| 26-weeks ended | 26-weeks ended | |||||||
| June 27, 2015 | June 28, 2014 | |||||||
| Interest Income | $ | 15,444 | 19,437 | |||||
| Foreign Currency gains(losses) | (44,751 | ) | (7,563 | ) | ||||
| Other | 699 | 190 | ||||||
| Total | $ | (28,608 | ) | $ | 12,064 | |||
The average return on cash and investments during the first half of 2015 was 1.2% compared to 1.3% during the same period of 2014. The decrease in interest income is attributable to decreasing cash balances and a slight decrease in interest rates.
The majority of the $44.8 million currency loss in the first half of 2015 was due to the strengthening of the U.S. Dollar against the Euro in congruence with the U.S. Dollar weakening against the Taiwan Dollar. During the first half of 2015, the U.S. Dollar strengthened 8.3% compared to the Euro resulting in a loss of $25.0 million while weakening against the Taiwan Dollar by 2.5% resulting in a loss of $20.5 million. The remaining net currency gain of $0.7 million is related to other currencies and timing of transactions.
The majority of the $7.6 million currency loss in the first half of 2014 was due to the weakening of the U.S. Dollar compared to the Taiwan Dollar. The strengthening of the U.S. Dollar compared to the Euro contributed a loss as well, which was partially offset by the U.S. Dollar weakening compared to the British Pound Sterling. During the first half of 2014, the U.S. Dollar weakened 0.5% compared to the Taiwan Dollar resulting in a loss of $4.9 million. In addition, the U.S. Dollar strengthened 0.9% compared to the Euro and weakened 3.4% compared to the British Pound Sterling resulting in a net loss of $2.9 million. The remaining net currency gain of $0.2 million is related to other currencies and timing of transactions.
Income Tax Provision
Our income tax expense decreased by $5.2 million, to $45.2 million for the first half of 2015, from $50.4 million for the first half of 2014. The effective tax rate was 18.1% in the first half of 2015 compared to 14.3% in the first half of 2014. The first half 2015 effective tax rate increased as compared to first half of 2014 due to the release of uncertain tax position reserves due to expiration of certain statutes of limitations or completion of tax audits reducing our expense by $6.9 million and $11.0 million, respectively, in the first half of 2015 and the first half of 2014. The first half 2015 effective tax rate also increased as compared to first half 2014 due to the current projected full year income mix for 2015 compared to the same projection at second quarter of 2014.
Net Income
As a result of the above, net income declined 32% for the 26-week period ended June 27, 2015 to $204.5 million compared to $300.8 million for the 26-week period ended June 28, 2014.
Liquidity and Capital Resources
Operating Activities
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| (In thousands) | 2015 | 2014 | ||||||
| Net cash used by operating activities | $ | (15,704 | ) | $ | 235,352 | |||
The $251.1 million decrease in cash provided by operating activities in first half 2015 compared to first half 2014 was primarily due to the following:
| · | the impact of income taxes payable providing $177.2 million less cash due primarily to the timing of disbursements related to the inter-company restructuring announced in the third quarter 2014 |
| 26 |
| · | net income decreasing by $96.3 million as discussed in the Results of Operations section above |
| · | other current and noncurrent assets providing $70.4 million less cash primarily due to royalties and timing of payments for insurance and |
| · | the impact of deferred income taxes providing $12.4 million less cash primarily due to timing of withholding taxes paid |
Partially offset by:
| · | the impact of increasing unrealized foreign currency losses providing $51.6 million more cash due primarily to foreign currency rate fluctuations as discussed in the Results of Operations section above | |
| · | deferred revenue/costs providing $24.5 million more working capital benefit due to the decreased amortization of previously deferred revenue/cost as discussed in the Results of Operations section above |
| · | other current and noncurrent liabilities providing $22.0 million more cash primarily due to timing of payments for advertising and sales programs and |
Investing Activities
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| (In thousands) | 2015 | 2014 | ||||||
| Net cash provided by investing activities | $ | 7,086 | $ | 155,665 | ||||
The $148.6 million decrease in cash provided by investing activities in the first half 2015 compared to the first half of 2014 was primarily due to the following:
| · | collection of cash advanced under a loan receivable commitment with Bombardier of $137.4 million in the first half of 2014 and |
| · | increased cash payments for acquisitions of $12.6 million |
Partially offset by:
| · | increased net redemptions of marketable securities of $4.8 million |
It is management’s goal to invest the on-hand cash consistent with Garmin’s investment policy, which has been approved by the Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest rate returns on cash and investments during first half 2015 and 2014 were approximately 1.2% and 1.3%, respectively.
Financing Activities
| 26-Weeks Ended | ||||||||
| June 27, | June 28, | |||||||
| (In thousands) | 2015 | 2014 | ||||||
| Net cash used in financing activities | $ | (231,661 | ) | $ | (334,350 | ) | ||
The $102.7 million decrease in cash used in financing activities in the first half of 2015 compared to the first half of 2014 was primarily due to the following:
| · | decreased purchase of treasury stock of $105.1 million under a share repurchase authorization |
Partially offset by:
| · | increased dividend payments of $8.4 million due to the increase in our year-over-year dividend rate |
| 27 |
We currently use cash flow from operations to fund our capital expenditures, to support our working capital requirements, to pay dividends, and to fund share repurchases. We expect that future cash requirements will principally be for capital expenditures, working capital, payment of dividends declared, share repurchases and the funding of strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our long-term projected capital expenditures, working capital and other cash requirements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There are numerous market risks that can affect our future business, financial condition and results of operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 27, 2014. There have been no material changes during the 13-week period ended June 27, 2015 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.
Item 4. Controls and Procedures
(a) Evaluation of disclosure controls and procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of June 27, 2015, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of June 27, 2015 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission ("SEC") reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended June 27, 2015 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| 28 |
Harbinger Capital Partners LLC et al v. Deere & Company et al; LightSquared Inc. et al. v. Deere & Company et al.
On August 9, 2013, Harbinger Capital Partners LLC and ten related entities (“Harbinger”) filed a lawsuit (the “Harbinger Lawsuit”) in the United States District Court for the Southern District of New York against Deere & Company (“Deere”), Garmin International, Inc. (“Garmin”), Trimble Navigation Ltd. (“Trimble”), The U.S. GPS Industry Council (the “Council”), and the Coalition to Save Our GPS. The Coalition to Save Our GPS is no longer a defendant. Plaintiffs filed a first amended complaint on August 16, 2013, a second amended complaint on January 21, 2014, and a third amended complaint on March 18, 2014. The third amended complaint seeks damages of at least $1.9 billion based on allegations of violation of Rule 10b5-1 of the Securities Exchange Act of 1934 (the “1934 Act”), violation of Section 20(a) of the 1934 Act, fraud, negligent misrepresentation, constructive fraud, equitable estoppel, breach of contract, and violation of Section 349 of the New York General Business Law. Plaintiffs allege that they invested in a company now called LightSquared in the belief that LightSquared would be able to operate a new terrestrial, mobile telecommunications network (the “Terrestrial Plan”) on certain satellite radio frequencies. Plaintiffs also allege that LightSquared was not able to obtain approval from the Federal Communications Commission (FCC) to operate the proposed Terrestrial Plan because of interference it would cause to Global Positioning System (GPS) receivers operating in an adjacent frequency band. Plaintiffs further allege that defendants concealed the likelihood of such interference and breached an earlier alleged agreement with a predecessor of LightSquared regarding a different technical issue. Plaintiffs allege they were third-party beneficiaries of the agreement.
| 29 |
On November 1, 2013, LightSquared, Inc. and two related entities (collectively, “LightSquared”) filed an adversary proceeding (the “LightSquared Lawsuit”) in the United States Bankruptcy Court for the Southern District of New York (where a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code filed by LightSquared and certain related entities is pending) against Deere, Garmin, Trimble, the Council, and the Coalition to Save Our GPS. LightSquared filed a first amended complaint on March 18, 2014. LightSquared’s amended complaint seeks damages based on claims of promissory estoppel, quantum meruit, breach of contract, breach of implied covenant of good faith, unjust enrichment, negligent misrepresentation, constructive fraud, civil conspiracy, and tortious interference with contractual or business relationships. Like the allegations in the Harbinger Lawsuit, LightSquared alleges that it was not able to obtain approval from the FCC to operate its proposed Terrestrial Plan because of interference it would cause to GPS receivers. LightSquared also alleges that the inability to obtain FCC approval caused LightSquared damages, including the loss of third-party contracts. LightSquared further alleges that defendants concealed the likelihood of such interference and/or represented to LightSquared that any interference issues had been resolved and that defendants breached earlier alleged agreements with LightSquared regarding a different technical issue. On November 15, 2013, Garmin, Deere, Trimble, and the Council filed a motion to withdraw the reference of the LightSquared adversary proceeding from the Bankruptcy Court to the United States District Court for the Southern District of New York (the “District Court”). On January 31, 2014 the District Court granted the defendants’ motion to withdraw the reference.
The defendants filed joint motions to dismiss all counts of both the Harbinger and LightSquared Lawsuits on May 29, 2014. On February 5, 2015 the District Court issued an order dismissing with prejudice all counts of the Harbinger Lawsuit and all counts of the LightSquared Lawsuit except for the claims alleging negligent misrepresentation and constructive fraud. Harbinger has filed an appeal with the U.S. Court of Appeals for the Second Circuit against the dismissal of the Harbinger Lawsuit. In the LightSquared Lawsuit, Garmin has requested permission to file a dispositive motion, which the District Court is expected to consider at a status conference scheduled for September 2, 2015. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in the Harbinger and LightSquared Lawsuits are without merit and intends to vigorously defend these actions.
ICON Health & Fitness, Inc. v. Garmin Ltd., Garmin International, Inc., and Garmin USA, Inc.
On November 18, 2011, ICON Health & Fitness, Inc. filed suit in the United States District Court for the District of Utah against Garmin Ltd., Garmin International, Inc., and Garmin USA, Inc. (collectively “Garmin”), alleging infringement of U.S. Patent Nos. 7,789,800 (the ‘800 patent”) and 6,701,271 (“the ‘271 patent”). On June 8, 2012, ICON filed an amended complaint alleging infringement of U.S. Patent Nos. 6,626,799 and 6,921,351. On June 25, 2012, Garmin filed its answer asserting that each asserted claim of these additional patents-in-suit is invalid and/or not infringed. On April 11, 2013, the Court dismissed ICON’s allegations of infringement of the ‘800 and ‘271 patents against Garmin without prejudice pursuant to a motion filed by ICON. A claim construction hearing was held by the court on October 23, 2013 and the parties await the court’s claim construction order. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
| 30 |
In the Matter of Certain Marine Sonar Imaging Systems, Products Containing the Same and Components Thereof
On July 18, 2014, Johnson Outdoors Inc. and Johnson Outdoors Marine Electronics Inc. filed a complaint with the United States International Trade Commission (“ITC”) against Garmin International, Inc., Garmin North America, Inc., Garmin USA, Inc. and Garmin Corporation (collectively “Garmin”) alleging a violation of Section 337 of the Tariff Act of 1930, as amended, through alleged infringement by Garmin of U.S. Patents 7,652,952 (“the ’952 patent”); 7,710,825 (“the ’825 patent”); and 7,755,974 (“the ’974 patent”). On August 15, 2014 the ITC instituted an investigation pursuant to the complaint. Garmin believes that each asserted claim of the ‘952 patent, the ‘825 patent, and the ‘974 patent is invalid and/or not infringed and, in addition, that the ’952, ’825, and ’974 patents are unenforceable under the doctrine of inequitable conduct and that Johnson Outdoors’ claims are barred in whole or in part by the doctrines of prosecution history estoppel and/or prosecution disclaimer. A trial hearing before the Administrative Law Judge (“ALJ”) was held on April 7 through April 10, 2015. On July 13, 2015 the ALJ issued an Initial Determination finding that the ’952, ’825, and ’974 patents are valid and enforceable but that there is no infringement by Garmin of any of the asserted claims of the ’952 and ’825 patents and that there is no infringement by Garmin of claim 25 of the ’974 patent. The ALJ found that there is infringement by Garmin of claims 14, 18, 21, 22, 23 and 33 of the ’974 patent. This initial determination is subject to review by the ITC and the final decision will be contained in a final determination issued by the ITC. Garmin disagrees with the ALJ’s finding of infringement of the ‘974 patent and will seek review by the ITC of this finding. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this investigation are without merit and intends to vigorously defend the investigation.
In the Matter of Certain Marine Sonar Imaging Devices, Including Downscan and Sidescan Devices, Products Containing the Same , and Components Thereof
On June 9, 2014 Navico Inc. and Navico Holding AS filed a complaint with the United States International Trade Commission (“ITC”) against Garmin International, Inc., Garmin North America, Inc., Garmin USA, Inc. and Garmin (Asia) Corporation (collectively “Garmin”) alleging a violation of Section 337 of the Tariff Act of 1930, as amended, through alleged infringement by Garmin of U.S. Patents 8,300,499 (“the ’499 patent”); 8,305,840 (“the ’840 patent”); and 8,605,550 (“the ’550 patent”). On July 9, 2014 the ITC instituted an investigation pursuant to the complaint. Garmin believes that each asserted claim of the ‘499 patent, the ‘840 patent, and the ‘550 patent is invalid and/or not infringed. A trial hearing before the Administrative Law Judge was held on March 18 through March 24, 2015. The Administrative Law Judge issued his initial determination on July 2, 2015 finding that the ‘840, ‘499 and ‘550 patents are valid but that there is no infringement by Garmin of the ‘840 patent, the ‘499 patent or the ‘550 patent. This initial determination is subject to review by the ITC and the final decision will be contained in a final determination issued by the ITC. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this investigation are without merit and intends to vigorously defend the investigation
Johnson Outdoors Inc. and Johnson Outdoors Marine Electronics, Inc. v. Garmin International, Inc., Garmin North America, Inc. and Garmin USA, Inc.
On July 17, 2014, Johnson Outdoors Inc and Johnson Outdoors Marine Electronics Inc. filed suit in the United States District Court for the Middle District of Alabama, Northern Division, against Garmin International, Inc., Garmin North America, Inc. and Garmin USA, Inc. (collectively, “Garmin “) alleging infringement of U.S. Patents 7,652,952 (“the ’952 patent”); 7,710,825 (“the ’825 patent”); and 7,755,974 (“the ’974 patent”). On August 15, 2014, Garmin filed an answer. On October 17, 2014, Garmin filed an amended answer. In its amended answer Garmin asserts that each asserted claim of the ‘952 patent, the ‘825 patent and the ‘974 patent is invalid and/or not infringed and, in addition, that the ’952, ’825, and ’974 patents are unenforceable under the doctrine of inequitable conduct, and that Johnson Outdoors’ claims are barred in whole or in part by the doctrines of prosecution history estoppel and/or prosecution disclaimer and Garmin seeks treble damages against Johnson Outdoors for antitrust violations under Section 2 of the Sherman Act, 15 U.S.C. § 2. Garmin intends to vigorously defend this action. On May 12, 2015, pursuant to an agreement between the parties, the court entered an order staying this lawsuit until there is a final decision in the ITC investigation described above under In the Matter of Certain Marine Sonar Imaging Systems, Products Containing the Same and Components Thereof including any Federal Circuit appeals but not including any Supreme Court petitions or appeals. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
| 31 |
Andrea Katz, on behalf of herself and all others similarly situated, v. Garmin Ltd. and Garmin International, Inc.
On December 18, 2013, a purported class action lawsuit was filed against Garmin International, Inc. and Garmin Ltd. in the U.S. District Court for the Northern District of Illinois. The lead plaintiff was Andrea Katz, on behalf of herself and all others similarly situated. The class of plaintiffs that Andrea Katz purported to represent includes all individuals who purchased any model of Forerunner watch in the State of Illinois and the United States. Plaintiff asserted claims for breach of contract, breach of express warranty, breach of implied warranties, negligence, negligent misrepresentation, and violations of Illinois statutory law. Plaintiff alleged that Forerunner watch bands have an unacceptable rate of failure in that they detach from the watch. Plaintiff sought compensatory and punitive damages, prejudgment interest, costs, and attorneys’ fees, and injunctive relief. On January 29, 2014 the court dismissed the lawsuit without prejudice. On January 30, 2014, the plaintiff re-filed the lawsuit with the same claims for relief as the earlier action and adding an additional claim for unjust enrichment. On February 4, 2014, the court ordered the case to be transferred to the United States District Court for the District of Utah. The plaintiff voluntarily dismissed the case filed in Illinois and, on March 6, 2014, she refiled the lawsuit in the District Court for the District of Utah with the same claims, but with additional claims for violations of the Utah Consumers Sales Practice Act, Lanham Act, and Utah Truth in Advertising Act. The relief she requested is the same. On March 31, 2014, Garmin filed a motion to transfer the venue of the Utah action back to the Northern District of Illinois. On October 21, 2014, the United States District Court for the District of Utah denied Garmin’s motion to transfer venue. On December 26, 2014, Garmin filed a motion to dismiss certain counts of the complaint. On April 16, 2015, the court granted Garmin’s motion in part and dismissed with prejudice (1) Mr. Katz’s (but not Mrs. Katz’s) claim for breach of the implied warranty of merchantability, (2) the plaintiffs’ Lanham Act claim, (3) the plaintiffs’ negligence claim and (4) the plaintiffs’ negligent misrepresentation claim. No class has been certified at this time. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
Brian Meyers, on behalf of himself and all others similarly situated, v. Garmin International, Inc. Garmin USA, Inc. and Garmin Ltd.
On August 13, 2013, Brian Meyers filed a putative class action complaint against Garmin International, Inc., Garmin USA, Inc. and Garmin Ltd. in the United States District Court for the District of Kansas. Meyers alleges that lithium-ion batteries in certain Garmin products are defective and alleges violations of the Kansas Consumer Protection Act, breach of an implied warranty of merchantability, breach of contract, unjust enrichment, breach of express warranty and also requests declaratory relief that the batteries are defective and must be covered by Garmin’s warranties. The complaint seeks an order for class certification, a declaration that the batteries are defective, an order of injunctive relief, payment of damages in an unspecified amount on behalf of a putative class of all purchasers of certain Garmin products, and an award of attorneys’ fees. On September 18, 2013 the plaintiff voluntarily dismissed Garmin Ltd. as a defendant without prejudice. On October 18, 2013 the plaintiff filed an amended class action complaint. On November 1, 2013 the remaining Garmin defendants filed a motion to dismiss all counts of the complaint for failure to state a claim on which relief can be granted. On January 24, 2014, the Court granted the motion to dismiss in part and denied it in part, dismissing the count for declaratory relief and the prayer for a declaration that the batteries are defective, but allowing the case to proceed on other substantive counts. On March 17, 2015, the plaintiff filed a motion for leave to file a second amended complaint. On April 7, 2015, Garmin filed an opposition to plaintiff’s motion for leave to file a second amended complaint. On April 28, 2015 the court granted plaintiff’s motion for leave to file a second amended complaint. On May 11, 2015 the plaintiff filed a motion for class certification. On July 10, 2015 Garmin filed its opposition to the motion for class certification. No class has been certified at this time, and Garmin believes that its defenses to Plaintiff’s motion for class certification are meritorious and that no class will be certified. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
| 32 |
Navico Inc. and Navico Holding AS v. Garmin International, Inc .and Garmin USA, Inc.
On June 4, 2014 Navico Inc. and Navico Holding AS filed suit in the United States District Court for the Northern District of Oklahoma against Garmin International, Inc. and Garmin USA, Inc. alleging infringement of U.S. Patents 8,300,499 (“the ’499 patent”); 8,305,840 (“the ’840 patent”); and 8,605,550 (“the ’550 patent”). On October 21, 2014, Garmin filed its answer asserting that each asserted claim of the ‘499, ‘840, and ‘550 patents is invalid and/or not infringed. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this lawsuit.
Silver State Intellectual Technologies, Inc. v. Garmin International, Inc. and Garmin USA, Inc.
On September 29, 2011, Silver State Intellectual Technologies, Inc. filed suit in the United States District Court for the District of Nevada against Garmin International, Inc. and Garmin USA, Inc. (collectively “Garmin”), alleging infringement of U.S. Patent Nos. 6,525,768; 6,529,824; 6,542,812; 7,343,165; 7,522,992; 7,593,812; 7,650,234; 7,702,455 and 7,739,039. On December 8, 2011, Garmin filed its answer asserting that each asserted claim of the patents-in-suit is invalid and/or not infringed. On April 5, 2013, the Court held a claim construction hearing and on August 15, 2013 the Court issued an order construing the clams of the patents in suit. On March 21, 2014, Garmin filed a motion for partial summary judgment. On July 24, 2014, the court denied the motion for partial summary judgment. On March 6, 2014, Garmin filed a request for ex parte reexamination of certain claims of the ‘992 patent. On May 5, 2014, Garmin filed a request for ex parte reexamination of certain claims of the ‘812 patent. On February 6, 2015, the U.S. Patent Office issued a final rejection for the identified claims of the ‘992 patent. On September 24, 2014, the U.S. Patent Office issued a non-final rejection of the identified claims of the ‘812 patent. On January 29, 2015, the U.S. Patent Office issued a second non-final rejection of the identified claims of the ‘812 patent. This lawsuit was tried before a jury in a trial commencing on May 11, 2015. On May 28, 2015 the jury issued a verdict finding that all of the asserted claims of the patents-in-suit are invalid. The jury also found that the asserted claims of the ‘992 and ’812 patents were not infringed by Garmin’s accused products but that the asserted claims of the ‘039 and ‘455 patents were infringed by Garmin’s accused products. On May 29, 2015 the court entered judgment in favor of Garmin. On July 8, 2015 the curt entered a stipulation regarding post-trial matters in which Silver State agreed not to pursue any appeal or post-trial motions in consideration for Garmin withdrawing its Bill of Costs against Silver State.
Technology Properties Limited, LLC et al v. Garmin Ltd., Garmin International, Inc. and Garmin USA, Inc.
On July 24, 2012 Technology Properties Limited LLC, Phoenix Digital Solutions LLC, and Patriot Scientific Corporation filed suit in the U.S. District Court for the Northern District of California against Garmin Ltd., Garmin International, Inc., and Garmin USA, Inc. (collectively “Garmin”) alleging infringement by Garmin of one or more of the following patents: U.S. Patent No. 5,809,336, U.S. Patent 5,440,749 and U.S. Patent No. 5,530,890. By agreement of the parties, on October 29, 2012 this lawsuit was stayed pending the resolution of the investigation by the International Trade Commission in In the Matter of Certain Wireless Consumer Electronics Devices and Components Thereof. Such Investigation was terminated with a finding of no violation by Garmin. On March 21, 2012, Technology Properties Limited LLC filed a petition for reorganization under Chapter 11 of the federal bankruptcy laws. On September 24, 2014, the court related the Garmin case with other cases brought by TPL, effectively lifting the stay. On December 18, 2014, Garmin filed its answer asserting that each asserted claim of the ‘336, ‘749, and ‘890 patents is invalid and/or not infringed. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity, or financial position, Garmin believes that the claims in this action are without merit and intends to vigorously defend this action.
| 33 |
Visteon Global Technologies, Inc. and Visteon Technologies LLC v. Garmin International, Inc.
On February 10, 2010, Visteon Global Technologies, Inc. and Visteon Technologies LLC filed suit in the United States District Court for the Eastern District of Michigan, Southern Division, against Garmin International, Inc. alleging infringement of U.S. Patent No. 5,544,060 (“the ‘060 patent”), U.S. Patent No. 5,654,892 (“the ‘892 patent”), U.S. Patent No. 5,832,408 (“the ‘408 patent”), U.S. Patent No 5,987,375 (“the ‘375 patent”) and U.S. Patent No 6,097,316 (“the ‘316 patent”). On May 17, 2010, Garmin filed its answer asserting that each claim of the ‘060 patent, the ‘892 patent, the ‘408 patent and the ‘375 patent is invalid and/or not infringed. On April 12, 2011, the special master appointed by the court held a claim construction hearing. On December 12, 2011, the court issued an order adopting the special master’s report construing the claims of the patents-in-suit. On September 14, 2012, Garmin filed with the U.S. Patent and Trademark Office petitions for ex parte reexamination of the ‘408 patent and the ‘060 patent as being anticipated and obvious in view of the prior art. The U.S. Patent and Trademark Office subsequently granted Garmin’s requests for ex parte reexaminations and initially rejected all identified claims. On April 15, 2013, the U.S. Patent and Trademark Office issued a reexamination certificate confirming the patentability of the challenged claims of the ‘060 patent. On November 30, 2012, Garmin filed motions for summary judgment of non-infringement and/or invalidity for the ‘892, ‘316, and ‘375 patents. Visteon filed its own motions for summary judgment of infringement of the ‘408 patent and validity, under section 112, of the ‘375 and ‘060 patents. On February 4, 2013, the summary judgment motions were referred to the special master for consideration. On May 23, 2014 the special master held a hearing on the summary judgment motions. Prior to the hearing Visteon dropped its claim that Garmin infringes the ‘316 patent. On September 17, 2014, the special master issued a report recommending that Garmin’s motion for summary judgment of non-infringement of the ‘375 patent be granted, Visteon’s motion for summary judgment of validity under section 112 of the ‘375 and ‘060 patents be granted, and that all other motions for summary judgment be denied. On March 18, 2015, the court issued an order granting Garmin’s motion for summary judgment of non-infringement of the ‘375 patent, denying Visteon’s motion for summary judgment as to the ‘408 patent, rejecting the Special Master’s recommendation to grant Visteon’s motion for summary judgment as to the Garmin’s Section 112 defenses and denying Visteon’s motion for summary judgment as to Garmin’s Section 112 defenses, denying Garmin’s motion for summary judgment as to the ‘892 patent and dismissing as withdrawn Visteon’s claim of infringement of the ‘316 patent, On November 21, 2014, Garmin filed a second request for ex parte reexamination of the ‘408 patent. On March 23, 2015, the U.S. Patent Office issued a non-final office action finding the challenged claims of the ‘408 patent to be invalid and/or obvious in view of the prior art. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions, and complaints, including matters involving patent infringement, other intellectual property, product liability, customer claims and various other risks. It is not possible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in any of these legal matters, or if not, what the impact might be. However, the Company’s management does not expect that the results in any of these legal proceedings will have a material adverse effect on the Company’s results of operations, financial position or cash flows.
| 34 |
There are many risks and uncertainties that can affect our future business, financial performance or share price. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 27, 2014. There have been no material changes during the 13-week period ended June 27, 2015 in the risks described in our Annual Report on Form 10-K. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Items (a) and (b) are not applicable.
(c) Issuer Purchases of Equity Securities
The Board of Directors approved a share repurchase program on February 13, 2015, authorizing the Company to purchase up to $300 million of its common shares as market and business conditions warrant. The share repurchase authorization expires on December 31, 2016. The following table lists the Company’s share purchases during the second quarter of fiscal 2015:
| 35 |
| Total Number of Shares | Maximum Number of Shares | |||||||||||||||
| Purchased as Part of | (or approx. Dollar Value of Shares | |||||||||||||||
| Total # of | Average Price | Publicly Announced | in Thousands) That May Yet Be | |||||||||||||
| Period | Shares Purchased | Paid Per Share | Plans or Programs | Purchased Under the Plans or Programs | ||||||||||||
| March 29, 2015 - April 25, 2015 | 272,646 | $ | 46.88 | 272,646 | $ | 270,958 | ||||||||||
| April 26, 2015 - May 23, 2015 | 310,785 | $ | 45.88 | 310,785 | $ | 256,698 | ||||||||||
| May 24, 2015 - June 27, 2015 | 306,231 | $ | 45.69 | 306,231 | $ | 242,705 | ||||||||||
| Total | 889,662 | $ | 46.12 | 889,662 | $ | 242,705 | ||||||||||
| Item 3. | Defaults Upon Senior Securities |
None
| Item 4. | Mine Safety Disclosures |
Not applicable
| Item 5. | Other Information |
Not applicable
| 36 |
| Item 6. | Exhibits |
| 3.1 | Garmin Ltd. Articles of Association, as Amended and Restated on June 6, 2014. |
| 10.1 | Garmin Ltd. Employee Stock Purchase Plan, as Amended and Restated on June 5, 2015 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on June 8, 2015). |
| Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). |
| Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). |
| Exhibit 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| Exhibit 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| Exhibit 101.INS | XBRL Instance Document | |
| Exhibit 101.SCH | XBRL Taxonomy Extension Schema | |
| Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase | |
| Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase
| |
| Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
| 37 |
Pursuant to the requirements 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/ Douglas G. Boessen | ||
| Douglas G. Boessen | |||
| Chief Financial Officer | |||
| (Principal Financial Officer and | |||
| Principal Accounting Officer) | |||
Dated: July 29, 2015
| 38 |
| Exhibit No. | Description | |
| 3.1 | Garmin Ltd. Articles of Association, as Amended and Restated on June 6, 2014. | |
| Exhibit 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). | |
| Exhibit 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a). | |
| Exhibit 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 101.INS | XBRL Instance Document | |
| Exhibit 101.SCH | XBRL Taxonomy Extension Schema | |
| Exhibit 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |
| Exhibit 101.LAB | XBRL Taxonomy Extension Label Linkbase | |
| Exhibit 101.PRE | XBRL Taxonomy Extension Presentation Linkbase
| |
| Exhibit 101.DEF | XBRL Taxonomy Extension Definition Linkbase | |
| 39 |
Exhibit 3.1
| Statuten | Articles of Association | |
| der | of | |
| Garmin Ltd. | Garmin Ltd. | |
| (Garmin AG) | (Garmin AG) | |
| mit Sitz in Schaffhausen | with registered office in Schaffhausen |
| I. | Firma, Sitz und Zweck | 3 | |
| I. | Company Name, Registered Office and Objects | 3 | |
| Art. 1 | Firma und Sitz | 3 | |
| Art. 1 | Company Name and Registered Office | 3 | |
| Art. 2 | Zweck | 3 | |
| Art. 2 | Objects | 3 | |
| II. | Aktienkapital und Aktien | 3 | |
| II. | Share Capital and Shares | 3 | |
| Art. 3 | Aktienkapital | 3 | |
| Art. 3 | Share Capital | 3 | |
| Art. 3 a) | Sacheinlage | 3 | |
| Art. 3 a) | Contribution in Kind | 3 | |
| Art. 4 | Anerkennung der Statuten | 4 | |
| Art. 4 | Recognition of Articles of Association | 4 | |
| Art. 5 | absichtlich leer gelassen | 4 | |
| Art. 5 | intentionally omitted | 4 | |
| Art. 6 | Bedingtes Aktienkapital | 4 | |
| Art. 6 | Conditional Share Capital | 4 | |
| Art. 7 | Aktienzertifikate | 4 | |
| Art. 7 | Share Certificates | 4 | |
| Art. 8 | Aktienbuch, Eintragungsbeschränkungen, Nominees | 5 | |
| Art. 8 | Share Register, Restrictions on Registration, Nominees | 5 | |
| Art. 9 | Übertragung | 6 | |
| Art. 9 | Transfer | 6 | |
| Art. 10 | Umwandlung und Zerlegung von Aktien | 6 | |
| Art. 10 | Conversion and Splitting of Shares | 6 | |
| Art. 11 | Bezugsrechte | 6 | |
| Art. 11 | Subscription Rights | 6 | |
| III. | Organisation | 7 | |
| III. | Organization | 7 | |
| A. | Die Generalversammlung | 7 | |
| A. | The General Meeting | 7 | |
| Art. 12 | Befugnisse | 7 | |
| Art. 12 | Authority | 7 | |
| Art. 13 | Recht zur Einberufung | 7 | |
| Art. 13 | Right to call a General Meeting | 7 | |
| Art. 14 | Form der Einberufung | 7 | |
| Art. 14 | Form of the calling of a General Meeting | 7 | |
| Art. 15 | Universalversammlung | 8 | |
| Art. 15 | Universal Meeting | 8 | |
| Art. 16 | Vorsitz und Protokoll | 8 | |
| Art. 16 | Chairperson and Minutes | 8 | |
| Art. 17 | Stimmrecht und Vertretung | 9 | |
| Art. 17 | Voting Rights and Representation | 9 | |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 2 |
| Art. 18 | Teilnahme der Mitglieder des Verwaltungsrates | 9 | |
| Art. 18 | Participation of the Members of the Board of Directors | 9 | |
| Art. 19 | Beschlussfassung und Wahlen | 9 | |
| Art. 19 | Resolutions and Voting | 9 | |
| Art. 20 | Besonderes Stimmen Quorum | 9 | |
| Art. 20 | Special Vote | 9 | |
| Art. 21 | Auskunfts- und Einsichtsrecht der Aktionäre | 11 | |
| Art. 21 | Information and Inspection Rights of the Shareholders | 11 | |
| Art. 22 | Recht auf Einleitung einer Sonderprüfung | 11 | |
| Art. 22 | Right to Initiate a Special Audit | 11 | |
| Art. 23 | Präsenzquorum | 12 | |
| Art. 23 | Presence Quorum | 12 | |
| B. | Der Verwaltungsrat | 12 | |
| B. | The Board of Directors | 12 | |
| Art. 24 | Zusammensetzung | 12 | |
| Art. 24 | Composition | 12 | |
| Art. 25 | Amtsdauer | 12 | |
| Art. 25 | Term of Office | 12 | |
| Art. 26 | Konstituierung | 13 | |
| Art. 26 | Constitution | 13 | |
| Art. 27 | Aufgaben | 13 | |
| Art. 27 | Duties | 13 | |
| Art. 28 | Entschädigung | 14 | |
| Art. 28 | Compensation | 14 | |
| Art. 29 | Einberufung und Beschlussfassung | 15 | |
| Art. 29 | Calling of Meetings and Quorum | 15 | |
| Art. 30 | Delegation und Ausschüsse | 16 | |
| Art. 30 | Delegation and Committees | 16 | |
| Art. 31 | Protokoll | 16 | |
| Art. 31 | Minutes | 16 | |
| Art. 32 | Recht auf Auskunft und Einsicht | 16 | |
| Art. 32 | Right to Information and Inspection | 16 | |
| Art. 33 | Zeichnungsberechtigung | 17 | |
| Art. 33 | Signature Power | 17 | |
| C. | Die Revisionsstelle | 17 | |
| C. | The Auditors | 17 | |
| Art. 34 | Revision | 17 | |
| Art. 34 | Audit | 17 | |
| Art. 35 | Organisation der Revisionsstelle | 17 | |
| Art. 35 | Organisation of the Auditor | 17 | |
| D. | Rechnungslegung und Verwendung des Bilanzgewinns | 18 | |
| D. | Rendering of Accounts and Allocation of Balance Sheet Profit | 18 | |
| Art. 36 | Jahresrechnung | 18 | |
| Art. 36 | Annual Financial Accounts | 18 | |
| Art. 37 | Verwendung des Jahresgewinnes | 18 | |
| Art. 37 | Application of the Annual Profit | 18 | |
| E. | Schlussbestimmungen | 18 | |
| E. | Final Provisions | 18 | |
| Art. 38 | Auflösung und Liquidation | 18 | |
| Art. 38 | Winding-up and Liquidation | 18 | |
| Art. 39 | Mitteilungen und Bekanntmachungen | 19 | |
| Art. 39 | Communications and Notifications | 19 | |
| Art. 40 | Verbindlicher Originaltext | 19 | |
| Art. 40 | Original Language | 19 | |
| Art. 41 | Definitionen | 20 | |
| Art. 41 | Definitions | 20 | |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 3 |
| I. Firma, Sitz und Zweck | I. Company Name, Registered Office and Objects | |
| Art. 1 Firma und Sitz | Art. 1 Company Name and Registered Office | |
| Unter der Firma Garmin Ltd. (Garmin AG) besteht eine Aktiengesellschaft gemäss den vorliegenden Statuten und den Vorschriften des Schweizerischen Obligationenrechtes (OR). Der Sitz der Gesellschaft ist in Schaffhausen. | Under the company name of Garmin Ltd. (Garmin AG) exists a corporation pursuant to the present Articles of Association and the provisions of the Swiss Code of Obligations (CO). The registered office of the Company is in Schaffhausen. | |
| Art. 2 Zweck | Art. 2 Objects | |
| Die Gesellschaft bezweckt den Erwerb, das Halten, die Finanzierung, die Verwaltung und den Verkauf von Beteiligungen an inländischen sowie auch an ausländischen Unternehmen jeglicher Art. | The objects of the Company are the acquisition, holding, financing, management and sale of participations in Swiss and foreign enterprises of all kinds. | |
| Die Gesellschaft kann jede Art von finanzieller Unterstützung für und an Gruppengesellschaften gewähren, einschliesslich der Leistung von Garantien. | The Company may provide any kind of financial assistance, including guarantees, to and for group companies. | |
| Die Gesellschaft kann ferner im In- und Ausland Zweigniederlassungen und Tochtergesellschaften errichten, sich an anderen Unternehmen im In- und Ausland beteiligen sowie solche Unternehmen erwerben und finanzieren. Im Weiteren kann die Gesellschaft im In- und Ausland Grundstücke und gewerbliche Schutzrechte erwerben, belasten, veräussern und verwalten sowie alle Geschäfte tätigen, die geeignet sein können, den Zweck der Gesellschaft zu fördern, oder die direkt oder indirekt damit in Zusammenhang stehen. | The Company may establish branches and subsidiaries in Switzerland and abroad as well as participate in, acquire and finance other enterprises in Switzerland and abroad. The company may acquire, encumber, sell and manage real estate and intellectual property rights in Switzerland and abroad. It may furthermore make all transactions which may be appropriate to promote the purpose of the company or which are directly or indirectly connected therewith. | |
| II. Aktienkapital und Aktien | II. Share Capital and Shares | |
| Art. 3 Aktienkapital | Art. 3 Share Capital | |
| Das Aktienkapital der Gesellschaft („Aktienkapital“) beträgt CHF 2,080,774,180 und ist eingeteilt in 208,077,418 Namenaktien („Aktien“) mit einem Nennwert von je CHF 10. Die Aktien sind vollständig liberiert. | The share capital of the Company (“Share Capital”) amounts to CHF 2,080,774,180 and is divided into 208,077,418 registered shares (“Shares”) with a nominal value of CHF 10 each. The Shares are fully paid up. |
| Art. 3 a) Sacheinlage | Art. 3 a) Contribution in Kind | |
| Die Gesellschaft übernimmt bei der Kapitalerhöhung vom 27. Juni 2010 von der Garmin Ltd. mit Sitz in Camana Bay, Cayman Islands („Garmin-Cayman”), gemäss Sacheinlagevertrag vom 27. Juni 2010 („Sacheinlagevertrag”) 198,077,418 Aktien (common shares) von Garmin-Cayman. Diese Aktien werden zu einem Übernahmewert von insgesamt CHF 9,515,296,140 übernommen. Als Gegenleistung für die Sacheinlage (i) wird der Nennwert jeder Aktie von bisher CHF 0.01 auf neu CHF 10 erhöht und (ii) gibt die Gesellschaft insgesamt 198,077,418 voll einbezahlte Aktien mit einem Nennwert von je CHF 10 an Garmin-Cayman, handelnd im eigenen Namen und auf Rechnung derjenigen Aktionäre der Garmin-Cayman, die im Zeitpunkt unmittelbar vor Vollzug des Sacheinlagevertrages Aktionäre der Garmin Cayman waren, aus. Die Gesellschaft weist den Differenzbetrag von CHF 7,434,621,960 den Reserven aus Kapitaleinlage der Gesellschaft zu. | In connection with the capital increase of June 27, 2010, and in accordance with the contribution in kind agreement dated as of June 27, 2010 (“Contribution in Kind Agreement”), the Company acquires 198,077,418 common shares of Garmin Ltd., with registered office in Camana Bay, Cayman Islands (“Garmin-Cayman”) from Garmin-Cayman. The shares of Garmin-Cayman have a total value of CHF 9,515,296,140. As consideration for this contribution, (i) the nominal value of each Share is increased from CHF 0.01 to CHF 10 and (ii) the Company issues a total of 198,077,418 fully paid up Shares with a par value of CHF 10 each to Garmin-Cayman, acting in its own name and for the account of the holders of common shares of Garmin-Cayman outstanding immediately prior to the completion of the Contribution in Kind Agreement. The difference of CHF 7,434,621,960 is allocated to the reserves from capital contribution of the Company. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 4 |
| Art. 4 Anerkennung der Statuten | Art. 4 Recognition of Articles of Association | |
| Jede Ausübung von Aktionärsrechten schliesst die Anerkennung der Gesellschaftsstatuten in der jeweils gültigen Fassung in sich ein. | Any exercise of shareholders’ rights automatically comprises recognition of the version of these Articles of Association in force at the time. | |
| Art. 5 [absichtlich leer gelassen] | Art. 5 [intentionally omitted] | |
| Art. 6 Bedingtes Aktienkapital | Art. 6 Conditional Share Capital | |
| Das Aktienkapital kann sich durch Ausgabe von höchstens 104,038,709 voll zu liberierenden Namenaktien im Nennwert von je CHF 10 um höchstens CHF 1'040'387'090 erhöhen durch: | The Share Capital may be increased in an amount not to exceed CHF 1,040,387,090 through the issuance of up to 104,038,709 fully paid-up registered Shares with a par value of CHF 10 each through: | |
| die Ausübung von Optionsrechten, die Mitarbeitern und / oder Mitgliedern des Verwaltungsrates der Gesellschaft oder einer Gruppengesellschaft gewährt werden. | the exercise of option rights which are granted to employees and / or members of the board of directors of the Company or group companies. | |
| Das Bezugsrecht der Aktionäre ist ausgeschlossen. | The preferential subscription rights of the shareholders are excluded. | |
| Die Aktien, welche über die Ausübung von Umwandlungsrechten erworben werden, unterliegen den Eintragungsbeschränkungen in das Aktienbuch gemäss Art. 8 dieser Statuten. | The Shares acquired through the exercise of rights shall be subject to the limitations for registration in the share register pursuant to Art. 8 of these Articles of Association. | |
| Art. 7 Aktienzertifikate | Art. 7 Share Certificates | |
| Anstelle von einzelnen Aktien können Aktienzertifikate über mehrere Aktien ausgestellt werden. Aktien und Zertifikate sind durch ein Mitglied des Verwaltungsrates zu unterzeichnen. | In lieu of single shares, the Company may issue share certificates covering several shares. Shares and certificates shall be signed by a member of the Board of Directors. | |
| Ein Aktionär hat nur dann Anspruch auf die Ausgabe eines Aktienzertifikates, wenn der Verwaltungsrat die Ausgabe von Aktienzertifikaten beschliesst. Aktienzertifikate werden in der vom Verwaltungsrat festgelegten Form ausgegeben. Ein Aktionär kann jederzeit eine Bescheinigung über die Anzahl der von ihm gehaltenen Aktien verlangen. | A shareholder shall be entitled to a share certificate only if the Board of Directors resolves that share certificates shall be issued. Share certificates, if any, shall be in such form as the Board of Directors may determine. A shareholder may at any time request an attestation of the number of registered Shares held by it. | |
| Die Gesellschaft kann jederzeit auf die Ausgabe und Aushändigung von Zertifikaten verzichten und mit Zustimmung des Aktionärs ausgegebene Urkunden, die bei ihr eingeliefert werden, ersatzlos annullieren. | The Company may dispense with the obligation to issue and deliver certificates, and may, with the consent of the shareholder, cancel without replacement issued certificates delivered to the Company. | |
| Der Verwaltungsrat kann beschliessen, den Aktionären anstelle von Wertpapieren einfache Beweisurkunden über ihre Beteiligung auszustellen. | The Board of Directors may decide to issue to the shareholders, in lieu of securities, simple documentary evidence for their participation. | |
| Die Gesellschaft kann ihre Aktien als Wertrechte gemäss Schweizerischem Obligationenrecht und Bucheffekten gemäss Bucheffektengesetz ausgeben. | The Company may issue its Shares as uncertificated securities within the meaning of the Swiss Code of Obligations and as intermediated securities within the meaning of the Intermediated Securities Act. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 5 |
| Art. 8 Aktienbuch, Eintragungsbeschränkungen, Nominees | Art. 8 Share Register, Restrictions on Registration, Nominees | |
| Die Gesellschaft selbst oder ein von ihr beauftragter Dritter führt ein Aktienbuch („Aktienbuch“). Darin werden die Eigentümer und Nutzniesser der Namenaktien sowie Nominees mit Namen und Vornamen, Adresse und Staatsangehörigkeit (bei Rechtseinheiten mit Firma und Sitz) eingetragen. Ändert eine im Aktienbuch eingetragene Zivilrechtliche Person ihre Adresse, so hat sie dies dem Aktienbuchführer mitzuteilen. Solange dies nicht geschehen ist, gelten alle schriftlichen Mitteilungen der Gesellschaft an die im Aktienbuch eingetragenen Zivilrechtlichen Personen als rechtsgültig an die bisher im Aktienbuch eingetragene Adresse erfolgt. | The Company shall maintain, itself or through a third party, a share register (“Share Register”) that lists the surname, first name, address and citizenship (or the name and registered office for legal entities) of the owners and usufructuaries of the registered Shares as well as the nominees. A Person recorded in the Share Register shall notify the share registrar of any change in address. Until such notification shall have occurred, all written communication from the Company to Persons of record shall be deemed to have validly been made if sent to the address recorded in the Share Register. | |
| Ein Erwerber von Namenaktien wird auf Gesuch als Aktionär mit Stimmrecht im Aktienbuch eingetragen, vorausgesetzt, dass ein solcher Erwerber auf Aufforderung durch die Gesellschaft ausdrücklich erklärt, die Namenaktien im eigenen Namen und auf eigene Rechnung erworben zu haben. Der Verwaltungsrat kann Nominees, welche Namenaktien im eigenen Namen aber auf fremde Rechnung halten, als Aktionäre mit Stimmrecht im Aktienbuch der Gesellschaft eintragen. Der Verwaltungsrat kann Kriterien für die Billigung solcher Nominees als Aktionäre mit Stimmrecht festlegen. Die an den Namenaktien wirtschaftlich Berechtigten, welche die Namenaktien über einen Nominee halten, üben Aktionärsrechte mittelbar über den Nominee aus. | An acquirer of registered Shares shall be recorded upon request in the Share Register as a shareholder with voting rights; provided, however, that any such acquirer upon request of the Company expressly declares to have acquired the registered Shares in its own name and for its own account. The Board of Directors may record nominees who hold registered Shares in their own name, but for the account of third parties, as shareholders with voting rights in the Share Register of the Company. The Board of Directors may set forth the relevant requirements for the acceptance of nominees as shareholders with voting rights. Beneficial owners of registered Shares who hold registered Shares through a nominee exercise the shareholders’ rights through the intermediation of such nominee. | |
| Sollte der Verwaltungsrat die Eintragung eines Aktionärs als Aktionär mit Stimmrecht ablehnen, muss dem Aktionär diese Ablehnung innerhalb von 20 Tagen nach Erhalt des Eintragungsgesuches mitgeteilt werden. Aktionäre, die nicht als Aktionäre mit Stimmrecht anerkannt wurden, sind als Aktionäre ohne Stimmrecht im Aktienbuch einzutragen. | If the Board of Directors refuses to register a shareholder as a shareholder with voting rights, it shall notify the shareholder of such refusal within 20 days upon receipt of the application. Nonrecognized shareholders shall be entered in the Share Register as shareholders without voting rights. | |
| Der Verwaltungsrat kann nach Anhörung des eingetragenen Aktionärs dessen Eintragung im Aktienbuch als Aktionär mit Stimmrecht mit Rückwirkung auf das Datum der Eintragung streichen, wenn diese durch falsche oder irreführende Angaben zustande gekommen ist. Der Betroffene muss über die Streichung sofort informiert werden. | After hearing the registered shareholder concerned, the Board of Directors may cancel the registration of such shareholder as a shareholder with voting rights in the Share Register with retroactive effect as of the date of registration if such registration was made based on false or misleading information. The relevant shareholder shall be informed promptly of the cancellation. | |
| Sofern die Gesellschaft an einer Börse im Ausland kotiert ist, ist es der Gesellschaft mit Bezug auf den Regelungsgegenstand dieses Art. 8 und soweit gesetzlich zulässig gestattet, die in der jeweiligen Rechtsordnung geltenden Vorschriften und Normierungen anzuwenden. | In case the Company is listed on any foreign Exchange, the Company is permitted to comply with the relevant rules and regulations that are applied in that foreign jurisdiction with regard to the subject of this Art. 8 to the extent permitted by Swiss law. | |
| Zehn Tage vor einer Generalversammlung bis zu dem auf die Generalversammlung folgenden Tag nimmt die Gesellschaft keine Eintragungen in das Aktienbuch vor. | From ten days prior to a general meeting of the shareholders until the day following the general meeting of the shareholders, the Company shall not undertake any registration in the Share Register. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 6 |
| Art. 9 Übertragung | Art. 9 Transfer | |
| Die Übertragung von Namenaktien und aller damit verbundenen Rechte zu Eigentum oder zur Nutzniessung erfolgt durch Indossament (Unterschrift) auf dem Aktientitel oder Zertifikat und Besitzesübertragung. Falls keine Aktientitel oder Zertifikate bestehen, erfolgt die Übertragung der Aktien zu Eigentum oder zur Nutzniessung durch eine schriftliche Abtretungserklärung. | The transfer of ownership or the granting of a usufruct in registered Shares and in all the rights connected therewith shall be made by endorsement (signature) of the share title or certificate and by transfer of possession. If neither share titles nor certificates have been issued, such transfer shall be made by written declaration of assignment. | |
| Die Verfügung über die als Bucheffekten ausgegebenen Aktien erfolgt gemäss Bucheffektengesetz. | The transfer of Shares issued as intermediated securities, including the granting of security interests, shall be made according to the Intermediated Securities Act. | |
| Im Rahmen des gesetzlich zulässigen und unter Vorbehalt der übrigen Bestimmungen dieses Art. 9 darf die Übertragung von unzertifizierten Aktien, die im Namen eines Aktionärs durch einen Transfer Agenten, Trust oder einer ähnlichen Einrichtung (der „Transfer Agent“) verwaltet werden, nur in Co-Operation mit diesem Transfer Agenten erfolgen. | Subject to the provisions contained in this Art. 9 and to the extent permitted by applicable law if uncertificated securities are administered on behalf of a shareholder by a transfer agent, trust company or similar entity (“Transfer Agent”), such securities and the rights deriving from them may be transferred only with the cooperation of the Transfer Agent. |
| Art. 10 Umwandlung und Zerlegung von Aktien | Art. 10 Conversion and Splitting of Shares | |
| Durch Änderung der Statuten kann die Generalversammlung jederzeit Namenaktien in Inhaberaktien umwandeln und umgekehrt. | The general meeting of the shareholders may at any time convert registered shares into bearer shares and vice versa by amending the Articles of Association. | |
| Sie ist ferner befugt, Aktien in solche von kleinerem Nennwert zu zerlegen oder mit Zustimmung des Aktionärs zu solchen von grösserem Nennwert zusammenzulegen. | Furthermore, it is authorized to split shares into shares with lower nominal value or with the approval of the shareholder to consolidate shares into shares with higher nominal value. | |
| Art. 11 Bezugsrechte | Art. 11 Subscription Rights | |
| Im Falle der Erhöhung des Aktienkapitals durch Ausgabe neuer Aktien haben die bisherigen Aktionäre ein Bezugsrecht im Verhältnis ihrer bisherigen Beteiligung, sofern die Generalversammlung dieses Recht nicht aus wichtigen Gründen einschränkt oder ausschliesst. Wichtige Gründe sind insbesondere die Übernahme von Unternehmen, Unternehmensteilen oder Beteiligungen sowie die Beteiligung der Arbeitnehmer. | In the event of an increase of the Share Capital by issuing new shares, each existing shareholder has subscription rights in proportion to his/her existing shareholding, to the extent the general meeting of the shareholders does not restrict or exclude this right for important reasons. Important reasons are, in particular, the takeover of companies, of company parts, or of participations, as well as the participation of employees. | |
| Die Generalversammlung setzt die Emissionsbedingungen fest, sofern sie nicht durch Beschluss den Verwaltungsrat dazu ermächtigt. Der Verwaltungsrat setzt die Einzahlungsbedingungen fest und gibt die Emissions- und Einzahlungsbedingungen den bezugsberechtigten Aktionären bekannt. | The general meeting of the shareholders shall determine the terms of the share issue to the extent it has not, by resolution, authorized the Board of Directors to do so. The Board of Directors shall determine the payment terms and communicate the issue and payment terms to the shareholders entitled to subscription rights. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 7 |
| III. Organisation | III. Organization | |
| A. Die Generalversammlung | A. The General Meeting | |
| Art. 12 Befugnisse | Art. 12 Authority | |
| Oberstes Organ der Gesellschaft ist die Generalversammlung. Ihr stehen folgende unübertragbare Befugnisse zu: | The general meeting of the shareholders is the supreme corporate body of the Company. It has the following non-transferable powers: | |
| 1. Festsetzung und Änderung der Statuten; vorbehalten bleibt Art. 27; | 1. adoption and amendment of the Articles of Association; Art. 27 remains reserved; | |
| 2. Festsetzung der Zahl der Mitglieder des Verwaltungsrates sowie Wahl und Abberufung derselben; | 2. determination of the number of members of the Board of Directors as well as their appointment and removal; | |
| 3. Wahl und Abberufung der Revisionsstelle; | 3. appointment and removal of the Auditors; | |
| 4. Genehmigung des Jahresberichtes des Verwaltungsrates; | 4. approval of the annual report of the Board of Directors; | |
| 5. Genehmigung der Jahresrechnung und einer allfälligen Konzernrechnung; | 5. approval of the annual financial accounts and (if applicable) the group accounts; | |
| 6. Beschlussfassung über die Verwendung des Bilanzgewinnes, insbesondere Festsetzung der Dividende sowie der Tantième des Verwaltungsrates; | 6. resolution on the application of the balance sheet profit, in particular, determination of dividend and the profit share of the Board of Directors; | |
| 7. Entlastung der Mitglieder des Verwaltungsrates und der übrigen mit der Geschäftsführung betrauten Zivilrechtlichen Personen; | 7. discharge of the members of the Board of Directors and the Persons entrusted with the management; | |
| 8. Beschlussfassung über die Gegenstände, die der Generalversammlung durch das Gesetz oder die Statuten vorbehalten sind; | 8. resolution on matters which are reserved to the general meeting of the shareholders either by law or the Articles of Association; | |
| 9. Die Genehmigung von Zusammenschlüssen (die Definition eines Zusammenschlusses findet sich in Art. 41 dieser Statuten), (i) soweit sich die Zuständigkeit der Generalversammlung nicht bereits aus Art. 12 Ziff. 1. bis 8 ergibt und (ii) soweit nicht zwingend ein anderes Organ der Gesellschaft zuständig ist. | 9. the approval of Business Combinations (definition of this term is in Art. 41 of these Articles of Association), if and to the extent that such approval (i) is not covered by the powers of the general meeting pursuant to Art. 12 (1) to (8) and (ii) that it is not an inalienable power of another corporate body of the Company. | |
| Art. 13 Recht zur Einberufung | Art. 13 Right to call a General Meeting | |
| Die Generalversammlung wird vom Verwaltungsrat, nötigenfalls von der Revisionsstelle, einberufen. Das Einberufungsrecht steht auch den Liquidatoren und den Vertretern der Anleihensgläubiger zu. Sie findet am Gesellschaftssitz oder an einem anderen Ort im In- oder Ausland statt. | The general meeting of the shareholders shall be called by the Board of Directors or, if necessary, by the Auditors. Liquidators and representatives of bond creditors are also entitled to call the general meeting of the shareholders. It shall be held at the Company's registered office or at another place in Switzerland or abroad. | |
| Die ordentliche Generalversammlung findet alljährlich innerhalb von sechs Monaten nach Abschluss des Geschäftsjahres statt, ausserordentliche Versammlungen werden nach Bedürfnis abgehalten. | The ordinary general meeting of the shareholders shall take place annually within six months after the end of the business year, extraordinary general meetings of the shareholders shall be held as necessary. | |
| Art. 14 Form der Einberufung | Art. 14 Form of the calling of a General Meeting | |
| Die Generalversammlung wird durch einmalige Anzeige in der in Art. 39 für Mitteilungen an die Aktionäre vorgeschriebenen Art und Weise einberufen. Diese Anzeige muss mindestens 20 Tage vor der Generalversammlung ergehen. | The general meeting of the shareholders shall be convened by a single notice as provided for in Art. 39 regarding the manner of communications to shareholders. Such notice must be given at least 20 days prior to the general meeting of the shareholders. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 8 |
| Tag, Zeit und Ort der Generalversammlung, die Verhandlungsgegenstände (Traktandenliste) sowie die Anträge des Verwaltungsrates und der Aktionäre, welche die Durchführung der Generalversammlung oder die Traktandierung eines Verhandlungsgegenstandes verlangt haben, sind bei der Einberufung bekannt zu geben. | The calling shall state the date, time and place of the general meeting of the shareholders as well as the agenda and motions of the Board of Directors and of the shareholders who have requested the holding of a general meeting of the shareholders or the inclusion of an item on the agenda. |
| Die Aktionäre sind bei der ordentlichen Generalversammlung darüber zu orientieren, dass der Geschäftsbericht (Jahresbericht des Verwaltungsrates und Jahresrechnung, bestehend aus Erfolgsrechnung, Bilanz und Anhang) und der Revisionsbericht mindestens 20 Tage vor dem Versammlungstag zur Einsicht der Aktionäre am Sitz der Gesellschaft aufliegen, sowie dass jeder Aktionär verlangen kann, dass ihm unverzüglich eine Ausfertigung dieser Unterlagen zugestellt wird. | As far as the ordinary general meeting is concerned, the shareholders have to be notified, that the annual business report (the management report of the Board of Directors and the annual financial accounts, comprising the profit and loss statement, the balance sheet and notes) and the audit report are open to inspection by the shareholders at the registered office at least 20 days prior to the date of the general meeting of the shareholders and that any shareholder may request that a copy of these documents be immediately sent to him/her. | |
| Über Gegenstände, die nicht in dieser Weise angekündigt worden sind, können Beschlüsse nicht gefasst werden, ausser über einen Antrag auf Einberufung einer ausserordentlichen Generalversammlung, auf Durchführung einer Sonderprüfung oder auf Wahl einer Revisionsstelle infolge eines Begehrens eines Aktionärs nach Art. 727a Abs. 4 OR. | No resolutions may be passed on agenda items which have not been announced in this manner, except on motions for the calling of an extraordinary general meeting of the shareholders, for the conduct of a special audit or the appointment of auditors at the request of a shareholder pursuant to Art. 727a paragraph 4 CO. | |
| Art. 15 Universalversammlung | Art. 15 Universal Meeting | |
| Die Eigentümer oder Vertreter sämtlicher Aktien können, falls kein Widerspruch erhoben wird, eine Generalversammlung ohne Einhaltung der für die Einberufung vorgeschriebenen Formvorschriften abhalten. | The holders of all Shares or their representatives may, if no objection is raised, hold a general meeting of the shareholders without observing the formalities required for the calling of a general meeting of the shareholders. | |
| In dieser Versammlung kann über alle in den Geschäftskreis der Generalversammlung fallenden Gegenstände gültig verhandelt und Beschluss gefasst werden, solange die Eigentümer oder Vertreter sämtlicher Aktien anwesend sind. | Provided the holders of all shares or their representatives are present, all items within the powers of a general meeting of the shareholders may validly be discussed and resolved at such a meeting. | |
| Art. 16 Vorsitz und Protokoll | Art. 16 Chairperson and Minutes | |
| Die Generalversammlung wird durch den Präsidenten bzw. Vizepräsidenten des Verwaltungsrates oder einen von der Generalversammlung ad hoc gewählten Tagespräsidenten geleitet. | The general meeting of the shareholders shall be chaired by the Chairman, respectively the vice-chairman of the Board of Directors or a chairman-for-the-day appointed by the general meeting of the shareholders. | |
| Der Vorsitzende ernennt den Protokollführer und den oder die Stimmenzähler. Der Protokollführer und der oder die Stimmenzähler müssen nicht Aktionäre sein. Der Vorsitzende kann zugleich auch Protokollführer und Stimmenzähler sein. | The chairperson shall appoint the keeper of the minutes and the scrutineer(s). The keeper of the minutes and the scrutineer(s) need not be shareholders. The chairperson may also be the keeper of the minutes and the scrutineer. | |
| Über die Beschlüsse und Wahlen der Generalversammlung ist ein Protokoll zu führen, das vom Vorsitzenden und vom Protokollführer zu unterzeichnen ist. Es hält die Angaben gemäss Art. 702 Abs. 2 OR fest. | Minutes shall be kept of the resolutions and votes of the general meeting of the shareholders that shall be signed by the chairperson and the keeper of the minutes. They shall contain the information required by Art. 702 paragraph 2 CO. | |
| Die Aktionäre sind berechtigt, das Protokoll einzusehen. | Shareholders may inspect the minutes. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 9 |
| Art. 17 Stimmrecht und Vertretung | Art. 17 Voting Rights and Representation | |
| Jede Aktie berechtigt zu einer Stimme. | Each share carries one vote. | |
| Sofern die Statuten es vorsehen, ist jeder an einem bestimmten, durch den Verwaltungsrat vorgegebenen Stichtag, im Aktienbuch eingetragene Aktionär berechtigt, an der Generalversammlung teilzunehmen und an der Beschlussfassung mitzuwirken. | If provided in these Articles of Association, each shareholder recorded in the Share Register on a specific qualifying day which may be designated by the Board of Directors shall be entitled to participate at the general meeting of the shareholders and in any vote taken. | |
| Jeder Aktionär kann sich in der Generalversammlung durch einen anderen Aktionär oder einen Dritten vertreten lassen. Vertreter haben sich durch eine schriftliche Vollmacht auszuweisen. | Each shareholder may arrange representation through another shareholder or third party. The representative must produce a written power of attorney. | |
| Die Gesellschaft anerkennt nur einen Vertreter für jede Aktie. | The Company shall acknowledge only one representative for each share. | |
| Der Verwaltungsrat kann die Einzelheiten über die Vertretung und Teilnahme an der Generalversammlung in Verfahrensvorschriften regeln. | The Board of Directors may issue the particulars of the right to representation and participation at the general meeting of the shareholders in procedural rules. | |
| Stimmrechte und die damit verbundenen Rechte können der Gesellschaft gegenüber von einem Aktionär oder Nutzniesser der Aktien jeweils nur in dem Umfang ausgeübt werden, wie diese Person mit Stimmrecht im Aktienbuch eingetragen ist. | Voting rights and rights derived from them may be exercised in relation to the Company by a shareholder or usufructuary of Shares only to the extent that such Person is recorded in the Share Register with the right to exercise his voting rights. | |
| Art. 18 Teilnahme der Mitglieder des Verwaltungsrates | Art. 18 Participation of the Members of the Board of Directors | |
| Die Mitglieder des Verwaltungsrates sind berechtigt, an der Generalversammlung teilzunehmen. Sie können Anträge stellen. | The members of the Board of Directors may take part in the general meeting of the shareholders. They may submit motions. | |
| Art. 19 Beschlussfassung und Wahlen | Art. 19 Resolutions and Voting | |
| Die Generalversammlung fasst ihre Beschlüsse und vollzieht ihre Wahlen mit der Mehrheit der abgegebenen Aktienstimmen, unter Ausschluss der leeren, ungültigen und nicht ausübbaren Stimmen, soweit Gesetz oder Statuten nichts anderes bestimmen. Bei Stimmengleichheit gilt ein Beschluss als nicht zustande gekommen; bei Wahlen entscheidet das Los. | The general meeting of the shareholders shall pass its resolutions and votes with a majority of the share votes cast, excluding unmarked, invalid and non-exercisable votes, to the extent not otherwise stated by the law or the Articles of Association. Where the votes are tied, a resolution shall be deemed not to be passed; in the case of a vote, the decision shall be by lot. | |
| Art. 20 Besonderes Stimmen Quorum | Art. 20 Special Vote | |
| Folgende Beschlüsse müssen von Gesetzes wegen mindestens zwei Drittel der vertretenen Stimmen und die absolute Mehrheit der vertretenen Aktiennennwerte auf sich vereinigen: | The following resolutions require by law two thirds of the votes represented and the absolute majority of the nominal value of the Shares represented in favor: | |
| 1. Änderung des Gesellschaftszweckes; | 1. amendment of the Company objects; | |
| 2. Einführung von Stimmrechtsaktien; | 2. creation of Shares with privileged voting rights; | |
| 3. Beschränkung der Übertragbarkeit von Namenaktien; | 3. restriction on the transferability of registered Shares; | |
| 4. Genehmigte oder bedingte Kapitalerhöhung; | 4. approved or conditional capital increase; | |
| 5. Kapitalerhöhung aus Eigenkapital, gegen Sacheinlage oder zwecks Sachübernahme und die Gewährung von besonderen Vorteilen; | 5. capital increase out of equity, by way of contributions in kind or for the purpose of acquisition of assets and the granting of special benefits; |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 10 |
| 6. Einschränkung oder Aufhebung des Bezugsrechtes; | 6. restriction or withdrawal of subscription rights; | |
| 7. Verlegung des Sitzes der Gesellschaft; | 7. relocation of the registered office of the Company; | |
| 8. Auflösung der Gesellschaft; | 8. winding-up of the Company; | |
| 9. Fusionsbeschluss gemäss Art. 18 des Fusionsgesetzes (FusG), Spaltungsbeschluss gemäss Art. 43 FusG und Umwandlungsbeschluss gemäss Art. 64 FusG. | 9. merger resolution pursuant to Art. 18 of the Merger Act (FusG), demerger resolution pursuant to Art. 43 FusG and transformation resolution pursuant to Art. 64 FusG. |
| Im Rahmen des gesetzlich Zulässigen und unter Vorbehalt anderslautender Vorschriften in diesem Art. 20 ist für folgende Gegenstände ein Beschluss der Generalversammlung erforderlich, der mindestens 75 % der an der Generalversammlung vertretenen Aktien auf sich vereinigt: | Subject to the provisions of the applicable law and except as otherwise expressly provided in this Art. 20, the approval of at least 75 % of the Shares represented at a general meeting of the shareholders shall be required for: | |
| 1. Die Genehmigung von Zusammenschlüssen (die Definition eines Zusammenschlusses findet sich in Art. 41 dieser Statuten) gemäss Art. 12 (9) dieser Statuten. Dieses besondere Zustimmungserfordernis ist nicht erforderlich für Zusammenschlüsse, welche von der Mehrheit der Unparteiischen Mitgliedern des Verwaltungsrates (die Definition der Unparteiischen Mitglieder des Verwaltungsrates findet sich in Art. 41 der Statuten) genehmigt wurden. Für solche von der Mehrheit der Unparteiischen Mitgliedern des Verwaltungsrates genehmigte Zusammenschlüsse genügen die im Gesetz oder in den Statuten vorgesehenen Mehrheiten, je nach dem welche strenger sind. Für den Zweck dieser Bestimmung ist die Mehrheit der Unparteiischen Mitglieder des Verwaltungsrates berechtigt und verpflichtet, gestützt auf die ihnen nach angemessenem Aufwand zur Verfügung stehenden Informationen zu bestimmen, (i) ob eine Person ein Nahestehender Aktionär ist; (ii) die Anzahl Aktien, die eine Person oder eine Gesellschaft direkt oder indirekt hält; (iii) ob eine Gesellschaft eine Nahestehende Gesellschaft einer anderen ist; und ob (iv) die Aktiven, welche Gegenstand eines solchen Zusammenschlusses sind oder die von der Gesellschaft oder einer ihrer Tochtergesellschaften im Zusammenhang mit einem solchen Zusammenschluss ausgegebenen oder übertragenden Effekten einen aggregierten Marktwert von mindestens 25 % des Marktwertes der gesamten Aktiven unmittelbar vor dem Zusammenschluss haben. Die Mehrheit der Unparteiischen Mitglieder des Verwaltungsrates hat zudem das Recht, sämtliche Bestimmungen und Begriffe dieses Art. 20 auszulegen. | 1. The approval of Business Combinations (definition of this term is in Art. 41 of these Articles of Association) pursuant to Art. 12 (9) of these Articles of Association. The foregoing requiring a special resolution of the shareholders shall not be applicable to any particular Business Combination, and such Business Combination shall require only such vote as is required by the law or by these Articles of Association, whichever is greater, if the Business Combination shall have been approved by a majority of the Disinterested Directors (as hereinafter defined in Art. 41 of these Articles of Association) whereby it is understood that such majority of the Disinterested Directors shall have the power and duty to determine for the purposes of this Article, on the basis of information known to them after reasonable inquiry, (i) whether a person is an Interested Shareholder; (ii) the number of Shares of which any person is the beneficial owner; (iii) whether a Person is an Affiliate of another; and (iv) whether the assets which are the subject of any Business Combination have, or any securities to be issued or transferred by the Company or any Subsidiary in any Business Combination have, an aggregate Fair Market Value equaling or exceeding twenty-five percent (25 %) of the Fair Market Value of the combined assets immediately prior to such transfer of the Company and its subsidiaries. A majority of the Disinterested Directors shall have the further power to interpret all of the terms and provisions of this Art. 20. | |
| 2. Jede Änderung dieser Bestimmung. | 2. Any change to this paragraph of Art. 20 of the Articles of Association. | |
| Ein Beschluss der Generalversammlung der mindestens zwei Drittel der Gesamtstimmen (die Definition von Gesamtstimmen findet sich in Art. 41 dieser Statuten) auf sich vereinigt, ist erforderlich für: | The approval of at least two thirds of the Total Voting Shares shall be required for (definition of the term Total Voting Shares is in Art. 41 of these Articles of Association): | |
| 1. Die Abwahl eines amtierenden Mitglieds des Verwaltungsrates | 1. A resolution with respect to the removal of a serving member of the Board of Directors. | |
| 2. Jede Änderung dieser Bestimmung | 2. Any change to this paragraph of Art. 20 of the Articles of Association. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 11 |
| Ein Beschluss der Generalversammlung der mindestens 75 % der Gesamtstimmen (die Definition von Gesamtstimmen findet sich in Art. 41 dieser Statuten) auf sich vereinigt, ist erforderlich für: | The approval of at least 75 % of the Total Voting Shares shall be required for (definition of the term Total Voting Shares is in Art. 41 of these Articles of Association): | |
| 1. Die Reduktion oder Erhöhung der Anzahl Verwaltungsräte in Art. 24 dieser Statuten. | 1. The increase or reduction of the number of members of the Board of Directors in Art. 24 of these Articles of Association. | |
| 2. Jede Änderung dieser Bestimmung. | 2. Any change to this paragraph of Art. 20 of the Articles of Association. | |
| Auf Verlangen eines Aktionärs erfolgt die Wahl der Mitglieder des Verwaltungsrates in geheimer Abstimmung. Die übrigen Wahlen und Beschlussfassungen erfolgen in offener Abstimmung, falls die Generalversammlung nichts anderes beschliesst. | At the request of a shareholder the election of members of the Board of Directors shall take place by secret ballot. All other voting and passing of resolutions shall occur by open ballot unless otherwise resolved by the general meeting of the shareholders. |
| Ist die Gesellschaft verpflichtet, ihre Jahresrechnung und gegebenenfalls ihre Konzernrechnung durch eine Revisionsstelle prüfen zu lassen, muss der Revisionsbericht vorliegen, bevor die Generalversammlung die Jahresrechnung und die Konzernrechnung genehmigt und über die Verwendung des Bilanzgewinns beschliesst. Wird eine ordentliche Revision durchgeführt, so muss die Revisionsstelle an der Generalversammlung anwesend sein. Die Generalversammlung kann durch einstimmigen Beschluss auf die Anwesenheit der Revisionsstelle verzichten. | Where the Company is required to have its annual financial accounts and, where relevant, its group accounts audited by auditors, the audit report shall be presented to the general meeting of the shareholders prior to approval of the annual financial accounts and group accounts and prior to resolving on the application of the balance sheet profit. Where an ordinary audit is to be conducted, the Auditors shall be present at the general meeting of the shareholders. The general meeting of the shareholders may by way of a unanimous resolution, waive the requirement for the presence of the Auditors. | |
| Art. 21 Auskunfts- und Einsichtsrecht der Aktionäre | Art. 21 Information and Inspection Rights of the Shareholders | |
| Jeder Aktionär ist berechtigt, an der Generalversammlung vom Verwaltungsrat Auskunft über die Angelegenheiten der Gesellschaft und von der Revisionsstelle über Durchführung und Ergebnis ihrer Prüfung zu verlangen. | At the general meeting of the shareholders, any shareholder is entitled to request information from the Board of Directors concerning the affairs of the Company and from the Auditors concerning the conduct and the results of their review. | |
| Die Auskunft ist insoweit zu erteilen, als sie für die Ausübung der Aktionärsrechte erforderlich ist. Sie kann verweigert werden, wenn durch sie Geschäftsgeheimnisse oder andere schutzwürdige Interessen der Gesellschaft gefährdet werden. | The information shall be given to the extent necessary for the exercising of shareholders' rights. It may be denied if business secrets or other interests of the Company worth being protected are jeopardized. | |
| Die Geschäftsbücher und Korrespondenzen können nur mit ausdrücklicher Ermächtigung der Generalversammlung oder durch Beschluss des Verwaltungsrates und unter Wahrung des Geschäftsgeheimnisses eingesehen werden. | Company books and correspondence may only be inspected with the express authorization of the general meeting of the shareholders or by resolution of the Board of Directors and under the condition that business secrets are safeguarded. | |
| Art. 22 Recht auf Einleitung einer Sonderprüfung | Art. 22 Right to Initiate a Special Audit | |
| Jeder Aktionär kann der Generalversammlung beantragen, bestimmte Sachverhalte durch eine Sonderprüfung abklären zu lassen, sofern dies zur Ausübung der Aktionärsrechte erforderlich ist und er das Recht auf Auskunft oder das Recht auf Einsicht bereits ausgeübt hat. | Any shareholder may, at the general meeting of the shareholders, request that certain matters be subject to a special audit to the extent this is necessary for the exercising of shareholders' rights and he/she has previously exercised the right to information or the right to inspection. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 12 |
| Art. 23 Präsenzquorum | Art. 23 Presence Quorum | |
| Jede Beschlussfassung oder Wahl setzt zu ihrer Gültigkeit im Zeitpunkt der Konstituierung der Generalversammlung ein Präsenzquorum von Aktionären, welche mindestens die Mehrheit aller Gesamtstimmen vertreten, voraus. Die Aktionäre können mit der Behandlung der Traktanden fortfahren, selbst wenn Aktionäre nach Bekanntgabe des Quorums durch den Vorsitzenden die Generalversammlung verlassen. | The adoption of any resolution or election requires the presence of at least a majority of the Total Voting Shares at the time when the general meeting of the shareholders proceeds to business. The shareholders present at a general meeting of the shareholders may continue to transact business, despite the withdrawal of shareholders from such general meeting of the shareholders following announcement of the presence quorum at that meeting. | |
| B. Der Verwaltungsrat | B. The Board of Directors | |
| Art. 24 Zusammensetzung | Art. 24 Composition | |
| Der Verwaltungsrat besteht aus mindestens einem und höchstens zehn Mitgliedern. | The Board of Directors shall consist of no less than one and no more than ten members. | |
| Solange die Namenaktien der Gesellschaft an einer in- oder ausländischen Börse kotiert sind, soll der Verwaltungsrat mindestens drei unabhängige Verwaltungsräte (Unabhängige Verwaltungsräte) ausweisen. | As long as the registered Shares of the Company are listed on a domestic or foreign Exchange, the Company shall maintain a minimum of three Independent Directors on its Board of Directors. | |
| Art. 25 Amtsdauer | Art. 25 Term of Office | |
| Die Verwaltungsräte werden vom Verwaltungsrat in drei Klassen aufgeteilt, welche als Klasse I, Klasse II und Klasse III bezeichnet werden. Die Verwaltungsräte sollen gleichmässig auf die drei Klassen aufgeteilt werden. Die erste Amtszeit der gewählten Verwaltungsräte endet wie folgt: | The Board of Directors shall divide its members into three classes, designated Class I, Class II and Class III. All Classes shall be as nearly equal in number as possible. The members of the Board of Directors as initially classified shall hold office for terms as follows: | |
| Die Amtszeit der Verwaltungsratsmitglieder der Klasse I endet mit der ordentlichen Generalversammlung des Jahres 2011 oder mit der Wahl ihrer Nachfolger; | The Class I members of the Board of Directors shall hold office until the date of the ordinary general meeting of the shareholders in 2011 or until their successors shall be elected and qualified; | |
| Die Amtszeit der Verwaltungsratsmitglieder der Klasse II endet mit der ordentlichen Generalversammlung des Jahres 2012 oder mit der Wahl ihrer Nachfolger; | The Class II members of the Board of Directors shall hold office until the date of the ordinary general meeting of the shareholders in 2012 or until their successors shall be elected and qualified; | |
| Die Amtszeit der Verwaltungsratsmitglieder der Klasse III endet mit der ordentlichen Generalversammlung des Jahres 2013 oder mit der Wahl ihrer Nachfolger. | The Class III members of the Board of Directors shall hold office until the date of the ordinary general meeting of the shareholders in 2013 or until their successors shall be elected and qualified. | |
| An jeder ordentlichen Generalversammlung soll jede Klasse Verwaltungsräte, deren Amtsdauer abläuft, für eine Amtsdauer von drei Jahren bzw. bis zur Wahl ihrer Nachfolger gewählt werden. Die Verwaltungsräte sind wieder wählbar. | At each ordinary general meeting of the shareholders, each class of the members of the Board of Directors whose term shall then expire shall be elected to hold office for a three-year term or until the election of their respective successor in office. The members of the Board of Directors are re-electable. | |
| Der Verwaltungsrat legt die Reihenfolge der Wiederwahl fest, wobei die erste Amtszeit einer bestimmten Klasse von Verwaltungsräten auch weniger als drei Jahre betragen kann. Für den Zweck dieser Bestimmung ist unter einem Jahr der Zeitabschnitt zwischen zwei ordentlichen Generalversammlungen zu verstehen. | The Board of Directors shall establish the order of rotation, whereby the first term of office of members of a particular class may be less than three years. For purposes of this provision, one year shall mean the period between two ordinary general meetings of the shareholders. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 13 |
| Wenn ein Verwaltungsratsmitglied vor Ablauf seiner Amtsdauer aus welchen Gründen auch immer ersetzt wird, endet die Amtsdauer des an seiner Stelle gewählten neuen Verwaltungsratsmitgliedes mit dem Ende der Amtsdauer seines Vorgängers. | If, before the expiration of his term of office, a member of the Board of Director should be replaced for whatever reason, the term of office of the newly elected member of the Board of Directors shall expire at the end of the term of office of his predecessor. | |
| Ist an der Gesellschaft eine juristische Person oder eine Handelsgesellschaft beteiligt, so ist sie als solche nicht als Mitglied des Verwaltungsrates wählbar; dagegen können an ihrer Stelle ihre Vertreter gewählt werden. | If a legal entity or another commercial enterprise is a shareholder of the Company, it shall not be eligible for membership on the Board of Directors; however, its representatives may be elected in lieu thereof. | |
| Art. 26 Konstituierung | Art. 26 Constitution | |
| Besteht der Verwaltungsrat aus mehreren Personen, so konstituiert er sich selbst, indem er seinen Präsidenten („Verwaltungsratspräsident“ oder „Präsident“), seinen Sekretär sowie allfällige Vizepräsidenten wählt. Der Sekretär muss dem Verwaltungsrat nicht angehören. | Where the Board of Directors consists of several persons it shall organize itself so that it elects its own chairman (“Chairman of the Board of Directors” or “Chairman”) and the Secretary and it may elect one or more vice-chairman. The Secretary need not belong to the Board of Directors. | |
| Art. 27 Aufgaben | Art. 27 Duties | |
| Der Verwaltungsrat besorgt die laufenden Geschäfte und vertritt die Gesellschaft nach aussen. | The Board of Directors shall manage the ongoing business and represent the Company externally. | |
| Der Verwaltungsrat hat die folgenden unübertragbaren und unentziehbaren Aufgaben: | The Board of Directors has the following non-transferable and inalienable duties: | |
| Oberleitung der Gesellschaft und Erteilung der nötigen Weisungen; | Supreme management of the Company and issuance of the relevant instructions; | |
| Festlegung der Organisation; | Determination of the organisation; | |
| Ausgestaltung des Rechnungswesens, der Finanzkontrolle sowie der Finanzplanung, sofern diese für die Führung der Gesellschaft notwendig ist; | Structuring of the accounting system, the financial controls and the financial planning to the extent that this is necessary for the management of the Company; | |
| Ernennung und Abberufung der mit der Geschäftsführung und der Vertretung betrauten Personen sowie Regelung der Zeichnungsberechtigung; | Appointment and removal of the persons entrusted with the management and representation of the Company as well as regulation of signatory power; | |
| Oberaufsicht über die mit der Geschäftsführung betrauten Personen, namentlich im Hinblick auf die Befolgung der Gesetze, Statuten, Reglemente und Weisungen; | Overall supervision of the persons entrusted with the management of the Company, in particular with regard to their compliance with the law, the Articles of Association and other internal rules and regulations; | |
| Erstellung des Geschäftsberichtes sowie Vorbereitung der Generalversammlung und Ausführung ihrer Beschlüsse; | Preparation of the annual business report and the general meeting of the shareholders, as well as implementation of its resolutions; | |
| Benachrichtigung des Richters im Falle der Überschuldung; | Notification of the judge in the case of over-indebtedness; | |
| Beschlussfassung über die nachträgliche Leistung von Einlagen auf nicht voll liberierte Aktien; | Passing of resolutions regarding retroactive payments related to partly paid-in shares; | |
| Feststellungsbeschlüsse bei Kapitalerhöhungen und daraus folgende Statutenänderungen. | Declaratory resolutions regarding capital increases and consequential amendments of the Articles of Association. |
| Er hat überdies die folgenden Aufgaben: | In addition, the Board of Directors shall have the following duties: |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 14 |
| Führung der gemäss Organisationsreglement dem Verwaltungsrat vorbehaltenen Geschäfte (vgl. Art. 30 Abs. 2); | Management of transactions reserved to the Board of Directors by the Organizational Regulations (cf. Art. 30 paragraph 2); | |
| Antragstellung betreffend Verwendung des Bilanzgewinnes; | Proposals regarding the application of the balance sheet profit; | |
| Festlegung des Geschäftsjahres (vgl. Art. 36); | Defining the business year (cf. Art. 36). | |
| Behandlung von Eintragungsgesuchen (vgl. Art. 8). | Treatment of registration applications (cf. Art. 8). | |
| Im Übrigen kann der Verwaltungsrat in allen Angelegenheiten Beschluss fassen, die nicht nach Gesetz, Statuten oder Reglement der Generalversammlung oder einem anderen Organ der Gesellschaft vorbehalten oder übertragen sind. | Otherwise, the Board of Directors may resolve on all matters not reserved or assigned to the general meeting of the shareholders or another corporate body of the Company by law, the Articles of Association or other internal rules and regulations. | |
| Die Mitglieder des Verwaltungsrates zeichnen kollektiv zu zweien. Gehört dem Verwaltungsrat nur eine Person an, so ist diese einzelzeichnungsberechtigt. | The members of the Board of Directors shall have the power of joint signatories. Where the Board of Directors consists of just one person, he shall have the power of single signatory. | |
| Art. 28 Entschädigung | Art. 28 Compensation | |
| Die Mitglieder des Verwaltungsrates haben Anspruch auf Ersatz ihrer im Interesse der Gesellschaft aufgewendeten Auslagen sowie auf eine ihrer Tätigkeit entsprechende Entschädigung. Der Betrag wird vom Verwaltungsrat festlegt. | The members of the Board of Directors shall have a claim to compensation for their expenses incurred in the interests of the Company as well as remuneration for their activities. The amount of the remuneration shall be determined by the Board of Directors. | |
| Im Rahmen des gesetzlich Zulässigen, hält die Gesellschaft sämtliche Personen sowie deren Erben, Konkurs- oder Nachlassmassen, welche wegen ihrer Tätigkeit als Verwaltungsrat, Mitglied der Geschäftsleitung, Angestellte, Agent oder weil sie in einer anderen Funktion für oder im Namen der Gesellschaft (einschliesslich solcher Tätigkeiten, die diese Personen für eine andere Gesellschaft, eine nicht rechtsfähige Personengesellschaft, einen Joint Ventures, einen Trusts, eine sonstige Geschäftseinheit oder fiduziarisch im Zusammenhang mit von der Gesellschaft unterhaltenen Mitarbeiterbeteiligungsplänen für oder im Namen oder auf Aufforderung der Gesellschaft ausübten oder ausüben) tätig wurden, Partei in drohenden, hängigen oder abgeschlossenen Klagen, Verfahren oder Untersuchungen zivil-, straf-, verwaltungsrechtlicher oder anderer Natur (einschliesslich allfälliger Klagen der Gesellschaft) waren oder werden, schadlos von sämtlichen Auslagen (einschliesslich Anwaltskosten), Abgaben, Verlusten und Schäden, die diese in diesem Zusammenhang zu bezahlen und damit erlitten haben. Im Rahmen des gesetzlich zulässigen soll die Gesellschaft Gerichts- und Anwaltskosten im Zusammenhang mit solchen Klagen und Verfahren (einschliesslich Rechtsmittelverfahren) bevorschussen. | The Company shall indemnify, to the full extent now or hereafter permitted by law, any person (including his heirs, executors and administrators) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including, without limitation, an action by or in the right of the Company), by reason of his acting as, or having in the past acted as, a member of the Board of Director, officer, employee or agent of, or his acting in any other capacity for or on behalf of, the Company (including his serving for, on behalf of or at the request of the Company as a member of the Board of Director, officer employee or agent of another company, partnership, joint venture, trust or other enterprise, or in a fiduciary or other capacity with respect to any employee benefit plan maintained by the Company) against any expense (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person (or his heirs, executors and administrators) in respect thereof. The Company shall advance the expenses of defending any such action, suit or proceeding (including appeals) in accordance with and to the full extent now or hereafter permitted by law. |
| Der Verwaltungsrat ist unabhängig von der Interessenlage des einzelnen Mitgliedes berechtigt, namens der Gesellschaft und zugunsten der in Art. 28 Abs. 2 dieser Statuten erwähnten Personen Versicherungen für die gegen diese Personen im Zusammenhang mit den oben beschriebenen Funktionen erhobenen Haftungsansprüche sowie deren Folgen abzuschliessen, unabhängig davon, ob die Gesellschaft das Recht bzw. die Macht hätte, diese Person in Anwendung von Art. 28 schadlos zu halten. | The Board of Directors may, notwithstanding any interest of the member of the Board of Directors in such action, authorize the Company to purchase and maintain insurance on behalf of any person described in Art. 28 paragraph 2 of these Articles of Association, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions of this Art. 28. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 15 |
| Art. 28 ist auf alle Ansprüche, Klagen, Prozesse anwendbar, die nach Inkrafttreten dieser Bestimmung eingeleitet werden, unabhängig davon, ob sich diese auf Tätigkeiten oder Unterlassungen vor Inkrafttreten dieser Bestimmung stützen. Die Vorschrift in diesem Art. 28 soll als Vertrag zwischen der Gesellschaft und jedem Verwaltungsratsmitglied, Mitglied der Geschäftsleitung, Direktor, Angestellten und Agenten, der in den weiter oben beschriebenen Funktionen zu einem beliebigen Zeitpunkt während der Gültigkeit dieser Bestimmung und des anwendbaren Rechts tätig war, gelten, und die Aufhebung oder Änderung dieser Bestimmung soll die zu jenem Zeitpunkt bestehenden Rechte und Pflichten bezüglich des zu jenem Zeitpunkt bestehenden Tatbestandes oder der zu jenem oder einem späteren Zeitpunkt gestützt auf diesen Sachverhalt geltend gemachten oder angedrohten Klagen, Ansprüchen oder Prozessen nicht berühren. Sollten einzelne Bestimmungen dieses Art. 28 aus gesetzlichen oder regulatorischen Gründen ungültig sein oder in ihrer Anwendung eingeschränkt werden, soll dies die Anwendung dieser Bestimmung oder die Gültigkeit dieser Bestimmung nicht berühren. Die Rechte im Zusammenhang mit der Schadloshaltung und der Bevorschussung in diesem Artikel sind weder exklusiv noch sollen sie allfällige bestehende andere Rechte der betroffenen Verwaltungsratsmitglieder, Geschäftsleitungsmitgliedern, Direktoren, Angestellten oder Agenten limitieren, die diese gestützt auf Verträge oder gestützt auf Beschlüsse der Organe der Gesellschaft oder in ihrer Funktion haben, limitieren. Die Gesellschaft ist dem Grundsatz verpflichtet, wonach die Schadloshaltung der in diesem Artikel definierten Personen im Rahmen des gesetzlich zulässigen entsprochen werden soll. | The provisions of this Art. 28 shall be applicable to all actions, claims, suits or proceedings made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after its adoption. The provisions of this Art. 28 shall be deemed to be a contract between the Company and each member of the Board of Director, officer, employee or agent who serves in such capacity at any time while this Article and the relevant provisions of the law, if any, are in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts or any action, suit or proceeding then or theretofore existing, or any action, suit or proceeding thereafter brought or threatened based in whole or in part on any such state of facts. If any provision of this Art. 28 shall be found to be invalid or limited in application by reason of any law or regulation, it shall not affect any other application of such provision or the validity of the remaining provisions hereof. The rights of indemnification and advancement of expenses provided in this Article shall neither be exclusive of, nor be deemed in limitation of, any rights to which any such member of the Board of Director, officer, employee or agent may otherwise be entitled or permitted by contract, vote of members or directors or otherwise, or as a matter of law, both as to actions in his official capacity and actions in any other capacity while holding such office, it being the policy of the Company that indemnification of the specified individuals shall be made to the fullest extent permitted by law. | |
| Art. 29 Einberufung und Beschlussfassung | Art. 29 Calling of Meetings and Quorum | |
| Der Verwaltungsrat versammelt sich, so oft es die Geschäfte erfordern, jedoch mindestens einmal im Jahr. Er wird durch seinen Präsidenten oder den Vizepräsidenten einberufen. Jedes Mitglied hat jederzeit das Recht, unter schriftlicher Angabe der Gründe die unverzügliche Einberufung einer Verwaltungsratssitzung zu verlangen. | The Board of Directors shall meet as often as business demands but at least once a year. It shall be called by the Chairman of the Board of Directors or the vice-chairman. Each member may, by giving written reasons therefore, demand that a meeting of the Board of Directors be held without delay. | |
| Die Einberufung des Verwaltungsrates hat in der Regel mindestens fünf Werktage vor dem Sitzungstage zu erfolgen. Tag, Zeit und Ort der Sitzung und die Verhandlungsgegenstände (Traktandenliste) sind bei der Einberufung bekannt zu geben. Gleichzeitig werden die massgebenden Sitzungsunterlagen zugestellt. Über Gegenstände, die in der Traktandenliste nicht aufgeführt sind, können in dringenden Fällen Beschlüsse gefasst werden. | The calling of a meeting of the Board of Directors shall, as a rule, be made at least five working days before the date of the meeting. Day, time, and place of the meeting as well as the matters for discussion (agenda) shall be notified at the time of the calling. At the same time, the related documents for the meeting shall be provided. Matters not contained in the agenda may be resolved upon in urgent cases. | |
| Der Verwaltungsrat ist beschlussfähig, wenn die absolute Mehrheit der Mitglieder anwesend ist. Für Beschlüsse, die im Rahmen von Kapitalerhöhungen zu treffen sind, ist der Verwaltungsrat auch beschlussfähig, wenn nur ein Mitglied anwesend ist. | The Board of Directors is quorate when the absolute majority of members is present. Where a resolution is to be taken in the context of a capital increase, the Board of Directors is also quorate when only one member is present. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 16 |
| Der Verwaltungsrat fasst seine Beschlüsse und trifft seine Wahlen mit der Mehrheit der abgegebenen Stimmen. Er kann höhere Beschlussfassungsquoren einführen. Diese müssen in einem Reglement festgehalten werden. Bei Stimmengleichheit gibt der Vorsitzende den Stichentscheid, bei Wahlen entscheidet das Los. | The Board of Directors shall pass its resolutions and votes with a majority of the votes cast. The Board of Directors may introduce higher requirements to pass votes. Such requirements shall be contained in an internal regulation. Where votes are tied, the chairperson shall give the casting vote; in the case of elections this shall be decided by lot. | |
| Beschlüsse können auch auf dem Weg der schriftlichen Zustimmung (durch Brief, Telefax oder E-Mail) zu einem Antrag gefasst werden, sofern nicht ein Mitglied mündliche Beratung verlangt. Diese Beschlüsse bedürfen der Einstimmigkeit und sind zusammen mit den anderen Verwaltungsratsprotokollen aufzubewahren. | Resolutions may also be passed by way of written consent (by letter, fax or email) provided no member has demanded an oral consultation. These resolutions require unanimity and shall be kept with the minutes of the meetings of the Board of Directors. | |
| Art. 30 Delegation und Ausschüsse | Art. 30 Delegation and Committees | |
| Der Verwaltungsrat kann die Vorbereitung, die Ausführung seiner Beschlüsse und die Überwachung von Geschäften Ausschüssen oder einzelnen Mitgliedern zuweisen. | The Board of Directors may delegate the preparation and implementation of its resolutions and the oversight of business to committees or individual members. | |
| Unter Vorbehalt seiner unübertragbaren und unentziehbaren Aufgaben ist der Verwaltungsrat ferner befugt, die Geschäftsführung oder einzelne Zweige derselben und die Vertretung der Gesellschaft an eine oder mehrere Personen, Mitglieder des Verwaltungsrates (Delegierte) oder Dritte (Direktoren oder Geschäftsführer), zu übertragen. Er legt die dazu notwendigen Einzelheiten in einem Organisationsreglement fest. | Subject to its non-transferable and inalienable duties, the Board of Directors is furthermore empowered to transfer management of the business or individual branches of the same and the representation of the Company to one or more persons, members of the Board of Directors (delegates) or third parties (directors or managers). The Board of Directors shall stipulate the necessary details in the Organizational Regulations. | |
| Art. 31 Protokoll | Art. 31 Minutes | |
| Über die Verhandlungen und Beschlüsse des Verwaltungsrates ist ein Protokoll zu führen. Das Protokoll ist vom Vorsitzenden und vom Sekretär zu unterzeichnen. Besteht der Verwaltungsrat aus nur einem Mitglied, muss auch dieser über seine Entscheidungen Protokoll führen. | Minutes shall be recorded of the discussions and resolutions of the Board of Directors. The minutes shall be signed by the Chairperson and the Secretary. Where the Board of Directors consists of only one member, such person must also keep a record of his decisions. | |
| Die Protokolle sind vom Verwaltungsrat jeweils in der nächsten Sitzung zu genehmigen. | The minutes shall be approved by the Board of Directors in the next meeting. | |
| Art. 32 Recht auf Auskunft und Einsicht | Art. 32 Right to Information and Inspection | |
| Jedes Mitglied des Verwaltungsrates kann Auskunft über alle Angelegenheiten der Gesellschaft verlangen. In den Sitzungen sind alle Mitglieder des Verwaltungsrates sowie die mit der Geschäftsführung betrauten Personen zur Auskunft verpflichtet. Ausserhalb der Sitzungen kann jedes Mitglied von den mit der Geschäftsführung betrauten Personen Auskunft über den Geschäftsgang und, mit Ermächtigung des Präsidenten, auch über einzelne Geschäfte verlangen. | Each member of the Board of Directors may demand information on all matters concerning the Company. At meetings, all members of the Board of Directors as well as the persons entrusted with the management of the Company are under a duty to provide information. Outside the meetings, each member can demand information from those persons entrusted with the management about the course of business and, with the authorization of the president, about individual transactions. | |
| Soweit es für die Erfüllung einer Aufgabe erforderlich ist, kann jedes Mitglied dem Präsidenten beantragen, dass ihm Bücher und Akten vorgelegt werden. Weist der Präsident ein Gesuch auf Auskunft, Anhörung oder Einsicht ab, so entscheidet der Verwaltungsrat. Regelungen oder Beschlüsse des Verwaltungsrates, die das Recht auf Auskunft und Einsichtnahme der Mitglieder des Verwaltungsrates erweitern, bleiben vorbehalten. | To the extent it is necessary for the performance of a task, each member may apply to the Chairman of the Board of Directors that the books and files are made available to him. Where the Chairman of the Board of Directors rejects an application for information, a hearing or inspection, the Board of Directors shall decide. Regulations or resolutions of the Board of Directors that provide the members of the Board of Directors with the right to information and inspection remain reserved. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 17 |
| Art. 33 Zeichnungsberechtigung | Art. 33 Signature Power | |
| Die rechtsverbindliche Vertretung der Gesellschaft durch Mitglieder des Verwaltungsrates und durch Dritte wird in einem Organisationsreglement festgelegt. | The due and valid representation of the Company by members of the Board of Directors and other persons shall be set forth in Organizational Regulations. | |
| C. Die Revisionsstelle | C. The Auditors | |
| Art. 34 Revision | Art. 34 Audit | |
| Die Generalversammlung wählt die Revisionsstelle. | The general meeting of the shareholders shall elect the Auditor. | |
| Sie kann auf die Wahl einer Revisionsstelle verzichten, wenn: | It can waive the election of auditors where: | |
| die Voraussetzungen für eine ordentliche Revision nicht gegeben sind; | the requirements for an ordinary audit are not present; | |
| die Zustimmung sämtlicher Aktionäre vorliegt und; | the consent of all shareholders has been given; and | |
| die Gesellschaft nicht mehr als zehn Vollzeitstellen im Jahresdurchschnitt hat. | the Company does not have more than ten full-time positions on average per year. | |
| Haben die Aktionäre auf eine eingeschränkte Revision verzichtet, so gilt dieser Verzicht auch für die nachfolgenden Jahre. Jeder Aktionär hat jedoch das Recht, spätestens zehn Tage vor der Generalversammlung eine eingeschränkte Revision zu verlangen. Die Generalversammlung muss diesfalls die Revisionsstelle wählen. | Where the shareholders have waived a limited statutory examination, this waiver applies also to the following year. Each shareholder may, however, demand a limited statutory examination at the latest ten days prior to the general meeting of the shareholders. The general meeting of the shareholders must in this case elect the Auditor. | |
| Art. 35 Organisation der Revisionsstelle | Art. 35 Organisation of the Auditor | |
| Als Revisionsstelle können eine oder mehrere natürliche oder juristische Personen oder Personengesellschaften gewählt werden. | One or several individuals or legal persons or partnerships may be elected as Auditors. | |
| Wenigstens ein Mitglied der Revisionsstelle muss seinen Wohnsitz, seinen Sitz oder eine eingetragene Zweigniederlassung in der Schweiz haben. | As a minimum one member of the Auditor shall be resident or have a registered branch in Switzerland. | |
| Muss die Gesellschaft ihre Jahresrechnung durch eine Revisionsstelle ordentlich prüfen lassen im Sinne von: | Where the Company is required to arrange an ordinary audit of its annual financial accounts by auditors pursuant to: | |
| Art. 727 Abs. 1 Ziff. 2 oder Ziff. 3 OR; | Art. 727 paragraph 1 section 2 or section 3 CO; | |
| Art. 727 Abs. 2 OR | Art. 727 paragraph 2 CO | |
| wählt die Generalversammlung einen zugelassenen Revisionsexperten nach den Vorschriften des Revisionsaufsichtsgesetzes (RAG) als Revisionsstelle. | the general meeting of the shareholders shall elect a licensed audit expert in accordance with the provisions of the Audit Oversight Act (RAG) as auditors. | |
| Ist die Gesellschaft zur eingeschränkten Revision verpflichtet, kann als Revisionsstelle auch ein zugelassener Revisor nach den Vorschriften des RAG bezeichnet werden. Vorbehalten bleibt der Verzicht auf die Wahl einer Revisionsstelle nach Art. 34. | Where the Company is required to arrange a limited statutory examination a licensed auditor in accordance with the provisions of the RAG may also be appointed as auditors. Waiver of the election of auditors pursuant to Art. 34 remains reserved. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 18 |
| Die Revisionsstelle muss im Sinne von Art. 728 bzw. 729 OR unabhängig sein. | The Auditor must be independent in accordance with Art. 728 respectively 729 CO. | |
| Die Revisionsstelle wird für ein Geschäftsjahr gewählt. Ihr Amt endet mit der Abnahme der letzten Jahresrechnung. Die Wiederwahl ist möglich. Die Generalversammlung kann die Revisionsstelle jederzeit mit sofortiger Wirkung abberufen. | The Auditor shall be appointed for one business year. Their term of office shall end with the approval of the final annual financial accounts. Re-appointment is possible. The general meeting of the shareholders may remove the Auditor with immediate effect at any time. | |
| D. Rechnungslegung und Verwendung des Bilanzgewinnes | D. Rendering of Accounts and Allocation of Balance Sheet Profit | |
| Art. 36 Jahresrechnung | Art. 36 Annual Financial Accounts | |
| Die Jahresrechnung wird jährlich auf den 31. Dezember oder auf einen anderen, durch den Verwaltungsrat zu beschliessenden Termin abgeschlossen. | The annual financial accounts shall be closed annually on the 31 December or another date determined by the Board of Directors. | |
| Die Erfolgsrechnung, die Bilanz und der Anhang sind mindestens gemäss den gesetzlichen Bestimmungen von Art. 662a - 670 und 957 - 961 OR aufzustellen. | The profit and loss statement, the balance sheet and notes shall be compiled as a minimum in accordance with the provisions of Art. 662a-670 and 957-961 CO. | |
| Art. 37 Verwendung des Jahresgewinnes | Art. 37 Application of the Annual Profit | |
| Vom in der Jahresbilanz ausgewiesenen Jahresgewinn ist jährlich ein Betrag von 5 % der allgemeinen Reserve zuzuweisen, bis diese 20 % des einbezahlten Aktienkapitals erreicht hat. | An amount of 5 % of the annual profit identified in the annual financial accounts is to be allotted to the general reserves until this has reached 20 % of the paid-up share capital. | |
| Der verbleibende Jahresgewinnsaldo und ein allfälliger Gewinnvortrag früherer Geschäftsjahre stehen unter Vorbehalt der zwingenden gesetzlichen Bestimmungen (Art. 671 ff. OR) zur freien Verfügung der Generalversammlung. Der Verwaltungsrat unterbreitet der Generalversammlung seine Vorschläge betreffend die Behandlung sämtlicher Zuweisungen. | The remaining annual profit and any balance of profit brought forward from previous business years shall, pursuant to binding provisions of the law (Art. 671 et seq. CO), be at the free disposal of the general meeting of the shareholders. The Board of Directors shall submit its proposals with respect to the treatment of any allocation to the general meeting of the shareholders. | |
| Die Generalversammlung kann jederzeit die Errichtung von speziellen Reserven neben den vom Gesetz vorgeschriebenen Reserven beschliessen und über deren Verwendung bestimmen. | The general meeting of the shareholders may at any time resolve to set up special reserves in addition to those required by law and determine their application. | |
| Dividenden, welche nicht innerhalb von fünf Jahren nach ihrem Auszahlungsdatum bezogen werden, fallen an die Gesellschaft und werden in die allgemeinen gesetzlichen Reserven gebucht. | Dividends that have not been collected within five years after their payment date shall enure to the Company and be allocated to the general statutory reserves. | |
| E. Schlussbestimmungen | E. Final Provisions | |
| Art. 38 Auflösung und Liquidation | Art. 38 Winding-up and Liquidation | |
| Die Generalversammlung kann jederzeit die Auflösung der Gesellschaft beschliessen. Die Auflösung und Liquidation sind gemäss den Vorschriften von Art. 736 ff. OR durchzuführen. | The general meeting of the shareholders may at any time resolve to wind-up the Company. The winding-up and liquidation of the Company shall be performed in accordance with Art. 736 et seq. CO. | |
| Die Befugnisse der Generalversammlung bleiben auch während der Liquidation mit der Einschränkung gemäss Art. 739 OR bestehen. Insbesondere unterliegt die Liquidationsrechnung der Genehmigung durch die Generalversammlung. | The powers of the general meeting of the shareholders shall also continue during the liquidation, limited in accordance with Art. 739 CO. In particular, the liquidation accounts are subject to the approval of the general meeting of the shareholders. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 19 |
| Der Verwaltungsrat besorgt die Liquidation, sofern diese nicht durch Beschluss der Generalversammlung Dritten übertragen wird. | The Board of Directors shall conduct the liquidation to the extent that this is not transferred to a third party by a resolution of the general meeting of the shareholders. | |
| Die Liquidatoren sind berechtigt, die Aktiven der Gesellschaft freihändig zu veräussern. | The liquidators may freely dispose of the assets of the Company. | |
| Nach erfolgter Tilgung der Schulden wird das Vermögen nach Massgabe der eingezahlten Beträge unter den Aktionären verteilt, soweit diese Statuten nichts anderes vorsehen. | Upon discharge of all liabilities, the assets of the Company shall be distributed to the shareholders pursuant to the amounts paid-up, unless these Articles of Association provide otherwise. | |
| Art. 39 Mitteilungen und Bekanntmachungen | Art. 39 Communications and Notifications | |
| Publikationsorgan der Gesellschaft ist das Schweizerische Handelsamtsblatt. Der Verwaltungsrat kann weitere Publikationsorgane bestimmen. | The Company shall make any announcements in the Swiss Official Gazette of Commerce. The Board of Directors may appoint other publication bodies. | |
| Soweit keine individuelle Benachrichtigung durch das Gesetz, börsengesetzliche Bestimmungen oder diese Statuten verlangt wird, gelten sämtliche Mitteilungen an die Aktionäre als gültig erfolgt, wenn sie im Schweizerischen Handelsamtsblatt veröffentlicht worden sind. Die Mitteilungen an die Namenaktionäre erfolgen im Falle der in Art. 14 Abs. 3 erwähnten Hinweise an ihre letzte im Aktienbuch eingetragene Adresse durch Brief oder E-Mail. In allen anderen Fällen können die Mitteilungen durch Veröffentlichung im Publikationsorgan erfolgen. Bekanntmachungen an die Gläubiger erfolgen in den vom Gesetz vorgeschriebenen Fällen durch Veröffentlichung im Publikationsorgan. Finanzinstitute, welche Aktien für wirtschaftlich Berechtigte halten und entsprechend im Aktienbuch eingetragen sind, gelten als bevollmächtigte Empfänger. | To the extent that individual notification is not required by law, stock Exchange regulations or these Articles of Association, all communications to the shareholders shall be deemed valid if published in the Swiss Official Gazette of Commerce. Notices to the registered shareholders shall in the case of the notifications set forth in Art. 14 paragraph 3 be sent by letter or electronic mail to the last address registered in the Share Register. In all other cases, they may be made by publication in the Company's official instrument for publications. Notices to creditors shall be given in the cases prescribed by law by publication in the Swiss Official Gazette of Commerce. Financial institutions holding Shares for beneficial owners and recorded in such capacity in the Share Register shall be deemed to be authorized recipients. | |
| Art. 40 Verbindlicher Originaltext | Art. 40 Original Language | |
| Falls sich zwischen der deutsch- und der englischsprachigen Fassung dieser Statuten Differenzen ergeben, hat die deutschsprachige Fassung Vorrang. | In the event of deviations between the German and English version of these Articles of Association, the German text shall prevail. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 20 |
| Art. 41 Definitionen | Art. 41 Definitions | |
| Aktie | Shares | |
| Der Begriff Aktie(n) hat die in Art. 3 dieser Statuten aufgeführte Bedeutung. | The term Share(s) has the meaning assigned to it in Art. 3 of these Articles of Association. | |
| Aktienbuch | Share Register | |
| Der Begriff Aktienbuch hat die in Art. 8 dieser Statuten aufgeführte Bedeutung. | The term Share Register has the meaning assigned to it in Art. 8 of these Articles of Association. | |
| Aktienkapital | Share Capital | |
| Der Begriff Aktienkapital hat die in Art. 3 dieser Statuten aufgeführte Bedeutung. | The term Share Capital has the meaning assigned to it in Art. 3 of these Articles of Association. | |
| Börse | Exchange | |
| Der Begriff Börse bedeutet Einrichtungen des Wertschriftenhandels oder vergleichbare Systeme, an welchen die Aktien der Gesellschaft gehandelt oder anderweitig zeitweise zum Handel zugelassen sind. | The term Exchange shall mean any securities exchange or other system on which the registered Shares of the Company may be listed or otherwise authorized for trading from time to time. | |
| CHF | CHF | |
| Der Begriff CHF bedeutet Schweizer Franken und ist die gültige Schweizer Währung. | The term CHF shall mean Swiss Francs, the legal currency in Switzerland. | |
| Gesamtstimmen | Total Voting Shares | |
| Der Begriff Gesamtstimmen bedeutet die Gesamtzahl aller an einer Generalversammlung stimmberechtigen Aktien unabhängig davon, ob die stimmberechtigten Aktien an der Generalversammlung vertreten sind oder nicht. | Total Voting Shares means the total number of Shares entitled to vote at a general meeting of the shareholders whether or not represented at such meeting. | |
| Gesellschaft | Company | |
| Der Begriff Gesellschaft bedeutet Garmin Ltd. | The term Company shall mean Garmin Ltd. |
| Marktwert | Fair Market Value | |
| Der Begriff Marktwert bedeutet (i) im Falle von Aktien den höchsten Schlusskurs dieser Aktien während der letzten 30 Tage vor dem massgeblichen Stichtag. Dabei entspricht der Marktwert dem höchsten von der betreffenden Börse gemeldeten Schlusskurs während der letzten 30 Tage vor dem massgeblichen Stichtag und, falls eine solche Meldung nicht vorliegt, soll der Marktwert dieser Aktien vom Verwaltungsrat in guten Treuen bestimmt werden, wobei er dabei die Art der Aktien, allfällige Dividenden, Zuteilung von Aktien sowie Aufteilungen oder Zusammenlegungen von Aktien berücksichtigt, und (ii) im Fall von Vermögenswerten, die weder Aktien noch Bargeld sind, soll der Marktwert vom Verwaltungsrat in guten Treuen per Stichtag bestimmt werden. | The term Fair Market Value shall mean (i) in the case of shares, the highest closing sale price of a share during the 30-day period immediately preceding the date in question of such share admitted to trading on an Exchange or any other system then in use, the Fair Market Value shall be the highest closing sale price reported by the Exchange or such other system during the 30-day period preceding the date in question, or, if no such quotations are available, the Fair Market Value on the date in question of such share as determined by the Board of Directors in good faith, in each case with respect to any class of share, appropriately adjusted for any dividend or distribution in shares or any combination or reclassification of outstanding shares of such share into a smaller number of shares, and (ii) in the case of property other than cash or shares, the Fair Market Value of such property on the date in question as determined by the Board of Directors in good faith. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 21 |
| Monat | Month | |
| Der Begriff Monat bedeutet ein Kalendermonat. | The term Month shall mean a calendar month. | |
| Nahestehender Aktionär | Interested Shareholder | |
| Der Begriff Nahestehender Aktionär bedeutet jede natürliche oder juristische Person (unter Ausschluss der Gesellschaft) sowie deren Muttergesellschaften, (i) die direkte oder indirekte Eigentümerin von mehr als 20 % der Stimmrechte der ausgegebenen Aktien ist, oder die (ii) eine Nahestehende Gesellschaft der Gesellschaft ist und irgendwann in den zwei unmittelbar vorangehenden Jahren vor dem Zeitpunkt, zu dem bestimmt werden muss, ob diese Person ein Nahestehender Aktionär ist, direkte oder indirekte Eigentümerin von 20 % oder mehr der Stimmrechte der ausgegebenen Aktien war; oder (iii) Aktien übertragen bekommen hat, die irgendwann in den zwei unmittelbar vorangehenden Jahren vor dem Zeitpunkt, zu dem bestimmt werden muss, ob eine Person ein Nahestehender Aktionär ist, direkt oder indirekt im Eigentum eines Nahestehenden Aktionärs standen, sofern die Übertragung (unabhängig davon ob in einer oder mehreren Transaktionen) ausserhalb eines öffentlichen Angebots stattgefunden hat. | The term Interested Shareholder shall mean any person (other than the Company) and any holding company thereof who or which (i) is the beneficial owner directly or indirectly, of more than twenty per cent (20%) of the voting power of the outstanding shares of the Company; or, (ii) is an Affiliate of the Company and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of twenty per cent (20%) or more of the voting power of the then-outstanding shares; or (iii) is an assignee of or has otherwise succeeded to any shares which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering. | |
| Eine natürliche oder juristische Person gilt dann nicht als Nahestehender Aktionär, falls eine solche Person nur darum ein Nahestehender Aktionär wird, weil die Anzahl der ausgegebenen Aktien der Gesellschaft reduziert werden, unabhängig davon ob eine solche Reduktion auf den Rückkauf von Aktien der Gesellschaft durch die Gesellschaft zurückzuführen ist. Die Reduktion der ausgegebenen Aktien erhöht den prozentualen Anteil der ausgegebenen Aktien im direkten oder indirekten Eigentum der betreffenden Person bis diese Person direkte oder indirekte Eigentümerin zusätzlicher Aktien wird. | A person shall not be deemed an Interested Shareholder if such person would become an Interested Shareholder solely as a result of a reduction of the number of shares of the Company outstanding, including repurchases of outstanding shares of the Company by the Company, which reduction increases the percentage of outstanding shares of the Company of which such person is the beneficial owner, until such person shall thereafter become the beneficial owner of any additional shares. | |
| Nahestehende Gesellschaft | Affiliate | |
| Der Begriff Nahestehende Gesellschaft bedeutet bezüglich einer Person, jede andere Person, die direkt oder indirekt über eine oder mehrere Mittelspersonen die andere Person kontrolliert, von dieser anderen Person kontrolliert wird, oder unter gemeinsamer Kontrolle mit dieser anderen Person steht. Kontrolle einschliesslich der Begriffe kontrollierend und kontrolliert im Sinne dieser Definition bedeutet die Möglichkeit, direkt oder indirekt auf die Geschäftsführung und die Geschäftspolitik einer Person Einfluss zu nehmen, sei es aufgrund des Haltens von Stimmrechten oder auf andere Weise. | The term Affiliate shall mean with respect to any person, any other person controlling or controlled by or under common control with such specified person. For the purposes of this definition, "control", "controlling" and "controlled" when used with respect to any specified person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities or otherwise. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 22 |
| Nahestehende Person | Associate | |
| Der Begriff Nahestehende Person bedeutet, wenn verwendet zur Bezeichnung einer Beziehung zu einer Zivilrechtlichen Person, (i) jede Kapitalgesellschaft, rechts- oder nicht-rechtsfähige Personengesellschaft oder ein anderer Rechtsträger, von welcher diese Zivilrechtliche Person Mitglied des Leitungs- oder Verwaltungsorgans, der Geschäftsleitung oder Gesellschafter ist oder von welcher diese Person, direkt oder indirekt, Eigentümerin von 20 % oder mehr einer Kategorie von Aktien oder anderen Anteilsrechten ist, die ein Stimmrecht vermitteln, (ii) jedes Treuhandvermögen (Trust) oder jede andere Vermögenseinheit, an der diese Zivilrechtliche Person wirtschaftlich einen Anteil von 20 % oder mehr hält oder in Bezug auf welche diese Zivilrechtliche Person als Verwalter (trustee) oder in ähnlich treuhändischer Funktion tätig ist, und (iii) jeder Verwandte, Ehe- oder Lebenspartner dieser Person, oder jede Verwandte des Ehe- oder Lebenspartners, jeweils soweit diese den gleichen Wohnsitz haben wie diese Person. | The term Associate, when used to indicate a relationship with any Person, means (i) any corporation, partnership, unincorporated association or other entity of which such Person is a director, officer or partner or is, directly or indirectly, the Owner of 20 % or more of any class of voting shares, (ii) any trust or other estate in which such Person has at least a 20 % beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity, and (iii) any relative or spouse of such Person, or any relative of such spouse, who has the same residence as such Person. | |
| OR | CO | |
| Der Begriff OR hat die in Art. 1 dieser Statuten aufgeführte Bedeutung. | The term CO has the meaning assigned to it in Art. 1 of these Articles of Association. | |
| Revisionsstelle | Auditor | |
| Der Begriff Revisionsstelle hat die in Abschnitt C dieser Statuten aufgeführte Bedeutung. | The term Auditor has the meaning assigned to it in section C of these Articles of Association. | |
| Sekretär | Secretary | |
| Der Begriff Sekretär hat die in Art. 26 dieser Statuten aufgeführte Bedeutung. | The term Secretary has the meaning assigned to it in Art. 26 of these Articles of Association. | |
| Sitz | Registered Office | |
| Der Begriff Sitz hat die in Art. 1 dieser Statuten aufgeführte Bedeutung. | The term Registered Office has the meaning assigned to it in Art. 1 of these Articles of Association. | |
| Statuten | Articles of Association | |
| Der Begriff Statuten bedeutet die Statuten der Garmin Ltd. jeweils in ihrer aktuellsten Fassung. | The term Articles of Association shall mean the Articles of Association of Garmin Ltd. in their most recent version. | |
| Tochtergesellschaft | Subsidiary | |
| Der Begriff Tochtergesellschaft bedeutet sämtliche juristischen Personen oder Personenvereinigung, welche von einer anderen juristischen Person beherrscht werden. | The term Subsidiary shall mean any corporation, company, association, foundation or other incorporated legal entity, that directly, or indirectly through one or more intermediaries is under control of the person specified. | |
| Unabhängige Verwaltungsräte | Independent Directors | |
| Der Begriff unabhängige Verwaltungsräte bedeutet Verwaltungsräte, welche im Sinne der anwendbaren Bestimmungen derjenigen Börse, an welcher die Gesellschaft kotiert ist, unabhängig sind. | The term Independent Directors shall mean members of the board who are recognized as such by the rules and regulations of the Exchange. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 23 |
| Unparteiische Mitglieder des Verwaltungsrates | Disinterested Directors | |
| Der Begriff Unparteiische Mitglieder des Verwaltungsrates bedeutet diejenigen Mitglieder des Verwaltungsrates, welche keine Nahestehenden Personen von Nahestehenden Aktionären sind und bereits Mitglieder des Verwaltungsrates waren, bevor ein Nahestehender Aktionär ein Nahestehender Aktionär wurde und jedes Verwaltungsratsmitglied, welches erst nachträglich eine Vakanz im Verwaltungsrat schloss oder erst nachträglich gewählt wurde und in jedem Fall keine Nahestehende Person des Nahestehenden Aktionärs ist und auf Empfehlung einer Mehrheit der damaligen Unparteiischen Mitgliedern des Verwaltungsrates gewählt wurde. | The term Disinterested Directors shall mean any members of the Board of Directors who are unaffiliated with the Interested Shareholder and who were a member of the Board of Directors prior to the time that the Interested Shareholder became an Interested Shareholder, and any director who is thereafter chosen to fill any vacancy on the Board of Directors or who is elected and who, in either event, is unaffiliated with the Interested Shareholder, and in connection with his or her initial assumption of office is recommended for appointment or election by a majority of Disinterested Directors then on the Board of Directors. |
| Verwaltungsrat | Board of Directors | |
| Der Begriff Verwaltungsrat hat die in Abschnitt B dieser Statuten aufgeführte Bedeutung. | The term Board of Directors has the meaning assigned to it in section B of these Articles of Association. | |
| Vewaltungsratspräsident | Chairman of the Board of Directors | |
| Der Begriff Verwaltungsratspräsident (Präsident) hat die in Art. 26 dieser Statuten aufgeführte Bedeutung. | The term Chairman of the Board of Directors (Chairman) has the meaning assigned to it in Art. 26 of these Articles of Association. | |
| Zivilrechtliche Person | Person | |
| Der Begriff Zivilrechtliche Person bedeutet jede natürliche Person, Kapitalgesellschaft, rechts- oder nichtrechtsfähige Personengesellschaft oder jeder andere Rechtsträger. | The term Person shall mean any individual, corporation, partnership, unincorporated association or other entity. |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 24 |
| Zusammenschluss | Business Combination | |
| Der Begriff Zusammenschluss bedeutet (i) jede Fusion oder andere Form des Zusammenschlusses der Gesellschaft oder einer ihrer Tochtergesellschaften mit (i) einem Nahestehenden Aktionär (gemäss Definition in diesem Artikel) oder mit (ii) einer anderen Gesellschaft oder Unternehmung (unabhängig davon, ob diese selber ein Nahestehender Aktionär ist), falls diese eine Nahestehende Gesellschaft eines Nahestehenden Aktionärs ist oder durch die Fusion oder Zusammenführung eine solche wird oder (ii) jeder Verkauf, Vermietung oder Verpachtung, Austausch, hypothekarische Belastung oder andere Verpfändung, Übertragung oder andere Verfügung (ob in einer oder mehreren Transaktionen) an oder für einen Nahestehenden Aktionär oder eine Nahestehenden Gesellschaft eines solchen Nahestehenden Aktionärs bezüglich Vermögenswerten der Gesellschaft oder einer ihrer Tochtergesellschaften mit einem aggregierten Marktwert (gemäss Definition in diesem Artikel) der mindestens 25 % des Marktwertes der gesamten Aktiven unmittelbar vor der Transaktion entspricht, oder (iii) die Ausgabe oder Übertragung von Anteilen der Gesellschaft oder einer ihrer Tochtergesellschaften (ob in einer oder mehreren Transaktionen) mit einem aggregierten Marktwert, der mindestens 25 % des Marktwertes der gesamten Aktiven unmittelbar vor der Transaktion entspricht, an einen Nahestehenden Aktionär oder eine Nahestehende Gesellschaft eines solchen Nahestehenden Aktionärs im Austausch gegen Bargeld, Effekten oder anderen Vermögenswerten (oder einer Kombination solcher Werte) mit Ausnahme der Ausgabe oder Übertragung von Anteilen der Gesellschaft oder einer ihrer Tochtergesellschaften im Zusammenhang mit einem Mitarbeiterbeteiligungsprogramm der Gesellschaft oder einer ihrer Tochtergesellschaften, oder (iv) der Beschluss über die Liquidation oder Auflösung der Gesellschaft auf Antrag oder im Namen eines Nahestehenden Aktionärs oder einer einem Nahestehenden Aktionär Nahestehenden Gesellschaft, oder (v) jede Änderung in der Klassifizierung der Anteile der Gesellschaft (einschliesslich das Zusammenlegen von Aktien), Rekapitalisierung der Gesellschaft, Fusion oder andere Form des Zusammenschlusses der Gesellschaft mit einer ihrer Tochtergesellschaften oder jede andere Transaktion (unabhängig davon, ob ein Nahestehender Aktionär involviert ist), die zu einer direkten oder indirekten Erhöhung des proportionalen Anteils der ausstehenden Anteile der Gesellschaft oder einer ihrer Tochtergesellschaften unabhängig von der Art der ausstehenden Anteilen (Aktien, Wandelanleihen) führen und die direkt oder indirekt einem Nahestehenden Aktionär oder einer Nahestehenden Gesellschaft eines Nahestehenden Aktionärs gehören („Unverhältnismässige Transaktion“), wobei eine solche Transkation dann nicht als Unverhältnismässige Transaktion gelten soll, wenn die Erhöhung des Anteils des Nahestehenden Aktionärs bzw. der Nahestehenden Gesellschaft des Nahestehenden Aktionärs als Folge dieser Transaktion nicht grösser ist als die Erhöhung der Anteile der übrigen Aktionäre. | The term Business Combination shall mean (i) any merger or consolidation of the Company or any subsidiary with (i) any Interested Shareholder (as defined in this Article) or (ii) any other company or other entity (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate of an Interested Shareholder; or (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder, or any Affiliate of any Interested Shareholder, of any assets of the Company or any subsidiary having an aggregate Fair Market Value (as defined in this Article) equaling or exceeding twenty-five percent (25%) of the Fair Market Value of the combined assets immediately prior to such transfer of the Company and its subsidiaries; or (iii) the issuance or transfer by the Company or any subsidiary (in one transaction or a series of transactions) to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof), of any securities of the Company or any subsidiary having an aggregate Fair Market Value equaling or exceeding twenty-five percent (25%) of the Fair Market Value of the combined assets immediately prior to such transfer of the Company and its subsidiaries except pursuant to an employee benefit plan of the Company or any subsidiary thereof; or (iv) the adoption of any plan or proposal for the liquidation or dissolution of the Company proposed by or on behalf of any Interested Shareholder or any Affiliate of any Interested Shareholder; or (v) any reclassification of securities of the Company (including any reverse share split), recapitalization of the Company, merger or consolidation of the Company with any of its subsidiaries or other transaction (whether or not with or into or otherwise involving an Interested Shareholder), which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Company or any subsidiary which is directly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder (a “Disproportionate Transaction”); provided, however, that no such transaction shall be deemed a Disproportionate Transaction if the increase in the proportionate ownership of the Interested Shareholder or Affiliate as a result of such transaction is no greater than the increase experienced by the other stockholders generally. | |
| Schaffhausen, 25. April 2014 | Schaffhausen, April 25, 2014 | |
| Der Vorsitzende: | Der Protokollführer und Stimmenzähler: | |
| The chairperson: | The secretary and scrutineer: |
| Min H. Kao | Andrew R. Etkind |
| Garmin Ltd., Schaffhausen: Statuten / Articles of Association | 25 |
Beglaubigung
Notarization
Die unterzeichnende Urkundsperson bescheinigt hiermit, dass es sich bei den vorliegenden Statuten um die vollständigen, unter Berücksichtigung der heutigen Änderung gültigen Statuten der Garmin Ltd., in Schaffhausen, handelt.
The signing Notary Public herewith certifies that the present Articles of Association are the complete and valid Articles of Association (including today's amendments) of Garmin Ltd., Schaffhausen.
Schaffhausen,
Handelsregisteramt Schaffhausen
Die Urkundsperson / The Notary public
| Marcel Dubois |
EXHIBIT 31.1
CERTIFICATION
I, Clifton A. Pemble, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Garmin Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 29, 2015 | By | /s/ Clifton A. Pemble | |
| Clifton A. Pemble | |||
| President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Douglas G. Boessen, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Garmin Ltd.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this quarterly report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 29, 2015 | By | /s/ Douglas G. Boessen | |
| Douglas G. Boessen | |||
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Garmin Ltd. (the “Company”) on Form 10-Q for the period ending June 27, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifton A. Pemble, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: July 29, 2015 | By | /s/ Clifton A. Pemble | |
| Clifton A. Pemble | |||
| President and Chief Executive Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Garmin Ltd. (the “Company”) on Form 10-Q for the period ending June 27, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas G. Boessen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: July 29, 2015 | By | /s/ Douglas G. Boessen | |
| Douglas G. Boessen | |||
| Chief Financial Officer |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
)4-I2IZZU@OMW&CU+`!0!X;VA'Y
MQ`?:ZR 0`F]V#RNS(0H:+PWW-0!E?P,4[A<(H`CM?UKKBK\RDKUC#U<$*R
M=8(_\.EAAX,#.-C#P7>?!,I7*/=Q`C+]VN]PP.)L#N1,?Q!Q;GL9';C2Q]P>
MQA/GBNK(Y$DWU^C;URT8/2DSQ7HNI@MI6B@^W*Y7=\=7?P%02P,$%`````@`
M;WW]1D?*W>2Y`@``!`H``!D```!X;"]W;W)K