United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 25,~~March 26, ~~2021~~2022


☐	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~~001-41118

GARMIN LTD.

(Exact name of Company as specified in its charter)


Switzerland		98-0229227
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		identification no.)

Mühlentalstrasse 2
8200 Schaffhausen
Switzerland		N/A
(Address of principal executive offices)		(Zip Code)

Company’s telephone number, including area code: +41 52 630 1600

Securities registered pursuant to Section 12(b) of the Act:


Registered Shares, CHF 0.10 Per Share Par Value	GRMN	~~The~~ ~~Nasdaq~~New York Stock ~~Market LLC~~Exchange
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

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 ☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes ☑ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☑	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. YES ☐ NO ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ☐ NO ☑

Number of shares outstanding of the registrant’s common shares as of ~~October~~April 22, ~~2021~~2022

Registered Shares, CHF 0.10 par value: ~~192,322,049~~193,125,036 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended ~~September 25, 2021~~March 26, 2022

Table of Contents


		Page

Part I - Financial Information		1

Item 1.	Condensed Consolidated Financial Statements	1

	Condensed Consolidated Balance Sheets at ~~September~~March 26, 2022 and December 25, 2021 ~~and December 26, 2020~~ (Unaudited)	1

	Condensed Consolidated Statements of Income for the 13-Weeks ended March 26, 2022 and ~~39-Weeks ended September 25,~~March 27, 2021 ~~and September 26, 2020~~ (Unaudited)	2

	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks ended March 26, 2022 and ~~39-Weeks ended September 25,~~March 27, 2021 ~~and September 26, 2020~~ (Unaudited)	3

	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks ended March 26, 2022 and ~~39-Weeks ended September 25,~~March 27, 2021 ~~and September 26, 2020~~ (Unaudited)	4

	Condensed Consolidated Statements of Cash Flows for the ~~39-Weeks~~13-Weeks ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~ (Unaudited)	65

	Notes to Condensed Consolidated Financial Statements (Unaudited)	76

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2518

Item 4.	Controls and Procedures	2518

Part II - Other Information		2619

Item 1.	Legal Proceedings	2619

Item 1A.	Risk Factors	2619

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2719

Item 3.	Defaults Upon Senior Securities	2719

Item 4.	Mine Safety Disclosures	2719

Item 5.	Other Information	2719

Item 6.	Exhibits	2820

Signature Page		2921

Part I - Financial Information

Item I - Condensed Consolidated Financial Statements

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)


	September 25, 2021			December 26, 2020			March 26, 2022			December 25, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,639,056		$	1,458,442		$	1,417,531		$	1,498,058
Marketable securities		345,214			387,642			375,237			347,980
Accounts receivable, net		639,345			849,469			599,733			843,445
Inventories		1,113,503			762,084			1,339,530			1,227,609
Deferred costs		16,046			20,145			15,003			15,961
Prepaid expenses and other current assets		255,802			191,569			335,169			328,719
Total current assets		4,008,966			3,669,351			4,082,203			4,261,772

Property and equipment, net		974,981			855,539			1,092,520			1,067,478
Operating lease right-of-use assets		89,934			94,626			101,198			89,457
Marketable securities		1,253,589			1,131,175
Deferred income taxes		251,983			245,455
Noncurrent marketable securities								1,238,500			1,268,698
Deferred income tax assets								301,718			260,205
Noncurrent deferred costs		13,035			16,510			11,396			12,361
Intangible assets, net		809,163			828,566
Other assets		169,838			190,151
Goodwill								572,996			575,080
Other intangible assets, net								209,325			215,993
Other noncurrent assets								93,393			103,383
Total assets	$	7,571,489		$	7,031,373		$	7,703,249		$	7,854,427

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	318,604		$	258,885		$	298,992		$	370,048
Salaries and benefits payable		173,566			181,937			170,835			211,371
Accrued warranty costs		42,849			42,643			40,698			45,467
Accrued sales program costs		78,251			109,891			68,715			121,514
Other accrued expenses								209,155			225,988
Deferred revenue		87,770			86,865			86,444			87,654
Accrued advertising expense		30,044			31,950
Other accrued expenses		146,426			149,817
Income taxes payable		109,862			68,585			148,268			128,083
Dividend payable		386,567			233,644			129,394			258,023
Total current liabilities		1,373,939			1,164,217			1,152,501			1,448,148

Deferred income taxes		127,733			116,844
Noncurrent income taxes		78,176			92,810
Deferred income tax liabilities								117,649			117,595
Noncurrent income taxes payable								62,732			62,539
Noncurrent deferred revenue		42,022			49,934			39,061			41,618
Noncurrent operating lease liabilities		71,527			75,958			82,127			70,044
Other liabilities		23,354			15,494
Other noncurrent liabilities								337			324

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 192,322 shares outstanding at September 25, 2021 and 191,571 shares outstanding at December 26, 2020		17,979			17,979
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 193,125 shares outstanding at March 26, 2022 and 192,608 shares outstanding at December 25, 2021								17,979			17,979
Additional paid-in capital		1,950,464			1,880,354			1,982,561			1,960,722
Treasury stock		(303,373	)		(320,016	)		(294,711	)		(303,114	)
Retained earnings		4,034,912			3,754,372			4,532,102			4,320,737
Accumulated other comprehensive income		154,756			183,427			10,911			117,835
Total stockholders’ equity		5,854,738			5,516,116			6,248,842			6,114,159
Total liabilities and stockholders’ equity	$	7,571,489		$	7,031,373		$	7,703,249		$	7,854,427

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)


	13-Weeks Ended					39-Weeks Ended						13-Weeks Ended
	September 25, 2021			September 26, 2020		September 25, 2021			September 26, 2020			March 26, 2022			March 27, 2021
Net sales	$	1,191,973		$	1,109,194	$	3,591,206		$	2,835,168		$	1,172,662		$	1,072,327
Cost of goods sold		496,026			441,211		1,472,852			1,144,816			510,183			430,771
Gross profit		695,947			667,983		2,118,354			1,690,352			662,479			641,556

Advertising expense		36,705			33,866		110,705			90,031			34,133			31,061
Selling, general and administrative expenses		162,515			142,134		485,896			411,335			190,784			171,987
Research and development expense		214,057			174,882		618,253			506,013			209,006			188,849
Total operating expense		413,277			350,882		1,214,854			1,007,379			433,923			391,897

Operating income		282,670			317,101		903,500			682,973			228,556			249,659
Other income (expense):
Interest income		6,897			7,777		21,568			30,258			7,553			7,652
Foreign currency (losses) gains		(15,014	)		10,113		(30,621	)		(9,802	)
Foreign currency losses													(3,506	)		(8,281	)
Other income		833			1,726		3,511			8,515			3,261			1,484
Total other income (expense)		(7,284	)		19,616		(5,542	)		28,971			7,308			855

Income before income taxes		275,386			336,717		897,958			711,944			235,864			250,514
Income tax provision		16,347			23,300		101,894			53,168			24,272			30,485
Net income	$	259,039		$	313,417	$	796,064		$	658,776		$	211,592		$	220,029

Net income per share:
Basic	$	1.35		$	1.64	$	4.14		$	3.45		$	1.10		$	1.15
Diluted	$	1.34		$	1.63	$	4.13		$	3.44		$	1.09		$	1.14

Weighted average common shares outstanding:
Basic		192,322			191,234		192,123			191,021			192,887			191,896
Diluted		193,185			191,998		192,955			191,760			193,579			192,810

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)


	13-Weeks Ended					39-Weeks Ended					13-Weeks Ended
	September 25, 2021			September 26, 2020		September 25, 2021			September 26, 2020		March 26, 2022			March 27, 2021
Net income	$	259,039		$	313,417	$	796,064		$	658,776	$	211,592		$	220,029
Foreign currency translation adjustment		(8,702	)		26,721		(16,313	)		45,358		(56,912	)		(35,291	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		(3,169	)		2,528		(12,358	)		17,746		(50,012	)		(7,884	)
Comprehensive income	$	247,168		$	342,666	$	767,393		$	721,880	$	104,668		$	176,854

See accompanying notes.

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~

(In thousands, except per share information)


	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 27, 2020	$	17,979	$	1,851,695		$	(326,310	)	$	3,107,768		$	89,729		$	4,740,861
Balance at December 26, 2020																		$	17,979	$	1,880,354		$	(320,016	)	$	3,754,372		$	183,427		$	5,516,116
Net income		—		—			—			313,417			—			313,417			—		—			—			220,029			—			220,029
Translation adjustment		—		—			—			—			26,721			26,721			—		—			—			—			(35,291	)		(35,291	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $31		—		—			—			—			2,528			2,528
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,231																			—		—			—			—			(7,884	)		(7,884	)
Comprehensive income																342,666																	176,854
Dividends declared		—		—			—			(26	)		—			(26	)		—		—			—			(217	)		—			(217	)
Issuance of treasury stock related to equity awards		—		(1,207	)		1,207			—			—			0			—		(10,118	)		27,775			—			—			17,657
Stock compensation		—		22,031			—			—			—			22,031			—		22,698			—			—			—			22,698
Purchase of treasury stock related to equity awards		—		—			(1,191	)		—			—			(1,191	)		—		—			(17,281	)		—			—			(17,281	)
Balance at September 26, 2020	$	17,979	$	1,872,519		$	(326,294	)	$	3,421,159		$	118,978		$	5,104,341
Balance at March 27, 2021																		$	17,979	$	1,892,934		$	(309,522	)	$	3,974,184		$	140,252		$	5,715,827

	Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Common Stock		Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at June 26, 2021	$	17,979	$	1,927,137		$	(303,369	)	$	3,775,874		$	166,627		$	5,584,248
Balance at December 25, 2021																		$	17,979	$	1,960,722		$	(303,114	)	$	4,320,737		$	117,835		$	6,114,159
Net income		—		—			—			259,039			—			259,039			—		—			—			211,592			—			211,592
Translation adjustment		—		—			—			—			(8,702	)		(8,702	)		—		—			—			—			(56,912	)		(56,912	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $609		—		—			—			—			(3,169	)		(3,169	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $14,701																			—		—			—			—			(50,012	)		(50,012	)
Comprehensive income																247,168																	104,668
Dividends declared		—		—			—			(1	)		—			(1	)		—		—			—			(227	)		—			(227	)
Issuance of treasury stock related to equity awards		—		(28	)		28			—			—			0			—		(2,867	)		23,013			—			—			20,146
Stock compensation		—		23,355			—			—			—			23,355			—		24,706			—			—			—			24,706
Purchase of treasury stock related to equity awards		—		—			(32	)		—			—			(32	)		—		—			(14,610	)		—			—			(14,610	)
Balance at September 25, 2021	$	17,979	$	1,950,464		$	(303,373	)	$	4,034,912		$	154,756		$	5,854,738
Balance at March 26, 2022																		$	17,979	$	1,982,561		$	(294,711	)	$	4,532,102		$	10,911		$	6,248,842

See accompanying notes.

~~Garmin Ltd. and Subsidiaries~~

~~Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)~~

~~For the 39-Weeks Ended September 25, 2021 and September 26, 2020~~

~~(In thousands, except per share information)~~

Common
Stock

Additional
Paid-In
Capital

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total

Balance at December 28, 2019

$
17,979

$
1,835,622

$
(345,040
)

$
3,229,061

$
55,874

$
4,793,496

Net income

—

—

—

658,776

—

658,776

Translation adjustment

—

—

—

—

45,358

45,358

Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,903

—

—

—

—

17,746

17,746

Comprehensive income

721,880

Dividends declared ($2.44 per share)

—

—

—

(466,678
)

—

(466,678
)
Issuance of treasury stock related to equity awards

—

(16,618
)

31,820

—

—

15,202

Stock compensation

—

53,515

—

—

—

53,515

Purchase of treasury stock related to equity awards

—

—

(13,074
)

—

—

(13,074
)
Balance at September 26, 2020

$
17,979

$
1,872,519

$
(326,294
)

$
3,421,159

$
118,978

$
5,104,341

Common
Stock

Additional
Paid-In
Capital

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total

Balance at December 26, 2020

$
17,979

$
1,880,354

$
(320,016
)

$
3,754,372

$
183,427

$
5,516,116

Net income

—

—

—

796,064

—

796,064

Translation adjustment

—

—

—

—

(16,313
)

(16,313
)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,918

—

—

—

—

(12,358
)

(12,358
)
Comprehensive income

767,393

Dividends declared ($2.68 per share)

—

—

—

(515,524
)

—

(515,524
)
Issuance of treasury stock related to equity awards

—

1,454

34,279

—

—

35,733

Stock compensation

—

68,656

—

—

—

68,656

Purchase of treasury stock related to equity awards

—

—

(17,636
)

—

—

(17,636
)
Balance at September 25, 2021

$
17,979

$
1,950,464

$
(303,373
)

$
4,034,912

$
154,756

$
5,854,738

~~See accompanying notes.~~

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)


	39-Weeks Ended						13-Weeks Ended
	September 25, 2021			September 26, 2020			March 26, 2022			March 27, 2021
Operating Activities:
Net income	$	796,064		$	658,776		$	211,592		$	220,029
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		75,272			57,141			28,984			23,988
Amortization		38,485			32,969			12,228			12,902
Loss (gain) on sale or disposal of property and equipment		246			(1,815	)
Unrealized foreign currency losses		24,390			4,384
(Gain) loss on sale or disposal of property and equipment								(1,129	)		133
Unrealized foreign currency (gains) losses								(5,113	)		7,277
Deferred income taxes		8,358			14,353			(25,996	)		497
Stock compensation expense		68,656			53,515			24,706			22,698
Realized gain on marketable securities		(513	)		(1,316	)
Realized (gain) loss on marketable securities								(2	)		22
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts		197,024			59,474			238,134			281,524
Inventories		(357,387	)		(56,063	)		(134,807	)		(87,450	)
Other current and non-current assets		(31,398	)		(27,019	)
Other current and noncurrent assets								(1,628	)		(13,710	)
Accounts payable		57,602			(11,939	)		(61,939	)		(3,470	)
Other current and non-current liabilities		(39,941	)		(18,299	)
Other current and noncurrent liabilities								(119,159	)		(95,977	)
Deferred revenue		(6,914	)		(21,148	)		(3,704	)		(7,998	)
Deferred costs		7,547			9,855			1,904			3,945
Income taxes payable		5,974			(53,419	)
Income taxes								21,563			3,952
Net cash provided by operating activities		843,465			699,449			185,634			368,362

Investing activities:
Purchases of property and equipment		(187,960	)		(137,072	)		(59,715	)		(36,894	)
Proceeds from sale of property and equipment		26			1,965			1,131			0
Purchase of intangible assets		(1,408	)		(1,643	)		(547	)		(760	)
Purchase of marketable securities		(1,081,789	)		(702,487	)		(497,526	)		(404,599	)
Redemption of marketable securities		975,318			808,554			431,604			354,039
Acquisitions, net of cash acquired		(15,893	)		(148,648	)		(10,828	)		(15,893	)
Net cash used in investing activities		(311,706	)		(179,331	)		(135,881	)		(104,107	)

Financing activities:
Dividends		(362,602	)		(333,975	)		(128,856	)		(116,655	)
Proceeds from issuance of treasury stock related to equity awards		35,733			15,202			20,146			17,657
Purchase of treasury stock related to equity awards		(17,636	)		(13,074	)		(14,610	)		(17,281	)
Net cash used in financing activities		(344,505	)		(331,847	)		(123,320	)		(116,279	)

Effect of exchange rate changes on cash and cash equivalents		(6,172	)		7,900			(6,960	)		(6,488	)

Net increase in cash, cash equivalents, and restricted cash		181,082			196,171
Net (decrease) increase in cash, cash equivalents, and restricted cash								(80,527	)		141,488
Cash, cash equivalents, and restricted cash at beginning of period		1,458,748			1,027,638			1,498,843			1,458,748
Cash, cash equivalents, and restricted cash at end of period	$	1,639,830		$	1,223,809		$	1,418,316		$	1,600,236

See accompanying notes.

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~September 25, 2021~~March 26, 2022

(In thousands, except per share information)

1. Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements include the accounts of Garmin Ltd. and wholly-owned subsidiaries (collectively, the “Company” or “Garmin”). Intercompany balances and transactions have been eliminated.

The 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. Certain prior period amounts have been reclassified or presented to conform to the current period presentation. Additionally, the Condensed Consolidated Financial Statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q. Operating results for the 13-week and 39-week periods ended~~September~~The condensed consolidated balance sheet at December 25, 2021 ~~are not necessarily indicative of the results that may be expected for the year ending December 25, 2021.~~

~~The Condensed Consolidated Balance Sheet at December 26, 2020~~ 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~~Additionally, the ~~Consolidated~~condensed consolidated financial statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial ~~Statements~~Condition and ~~footnotes thereto included in~~Results of Operations” of this Form 10-Q, and the Company’s Annual Report on Form 10-K for the year ended December 25, 2021. Operating results for the 13-week period ended March 26, ~~2020.~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week 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 13-week quarters. The quarters ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~ both contain operating results for 13 weeks.

Changes in Classification and Allocation

Certain prior period amounts have been reclassified or presented to conform to the current period presentation.

In the first quarter of fiscal 2022, the Company refined the methodology used in classifying certain indirect costs in accordance with the way the Company's management is now using the information in decision making, which management believes provides a more meaningful representation of costs incurred to support research and development activities. As a result, the Company’s condensed consolidated statements of income have been recast for the three months ended March 27, 2021 to reflect a reclassification of $14,365 from research and development expense to selling, general, and administrative expense.

Additionally, in the first quarter of fiscal 2022, the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined to allocate these expenses in a more direct manner to provide the Company's Chief Operating Decision Maker (CODM) with a more meaningful representation of segment profit or loss. The Company’s composition of operating segments and reportable segments did not change.

These changes in classification and allocation had no effect on the Company’s consolidated operating or net income.

Significant Accounting Policies

For a description of the significant accounting policies and methods used in the preparation of the Company’s ~~Condensed Consolidated Financial Statements,~~condensed consolidated financial statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020.~~25, 2021. There were no material changes to the Company’s significant accounting policies during the ~~39-week~~13-week period ended ~~September 25, 2021.~~March 26, 2022.

Recently Issued Accounting Standards and Pronouncements

~~We do not expect any recently~~Recently adopted accounting standards orand recently issued accounting pronouncements not yet adopted are not expected to have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.

2. Inventories

The components of inventories consist of the following:

September 25,
2021

December 26, 2020

Raw materials

$
463,314

$
282,287

Work-in-process

173,117

147,821

Finished goods

477,072

331,976

Inventories

$
1,113,503

$
762,084


	March 26, 2022		December 25, 2021
Raw materials	$	545,668	$	509,435
Work-in-process		207,340		213,801
Finished goods		586,522		504,373
Inventories	$	1,339,530	$	1,227,609

3. Earnings Per Share

The following table sets forth the computation of basic and diluted net income per share. Stock options, stock appreciation rights, and restricted stock units are collectively referred to as “equity awards”.


	13-Weeks Ended				39-Weeks Ended				13-Weeks Ended
	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		March 26, 2022		March 27, 2021
Numerator:
Numerator for basic and diluted net income per share – net income	$	259,039	$	313,417	$	796,064	$	658,776	$	211,592	$	220,029

Denominator:
Denominator for basic net income per share – weighted-average common shares		192,322		191,234		192,123		191,021		192,887		191,896

Effect of dilutive equity awards		863		764		832		739		692		914

Denominator for diluted net income per share – adjusted weighted-average common shares		193,185		191,998		192,955		191,760		193,579		192,810

Basic net income per share	$	1.35	$	1.64	$	4.14	$	3.45	$	1.10	$	1.15

Diluted net income per share	$	1.34	$	1.63	$	4.13	$	3.44	$	1.09	$	1.14

Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards		311		409		313		410		764		316

4. Segment Information and Geographic Data

Garmin is organized in the 6 operating segments of fitness, outdoor, aviation, marine, consumer auto, and auto OEM. The fitness, outdoor, aviation, and marine operating segments represent reportable segments. The consumer auto and auto OEM operating segments, which serve the auto market, do not meet the quantitative thresholds to separately qualify as reportable segments, and they are therefore reported together in an “all other” category captioned as auto. Fitness, outdoor, aviation, marine, and auto are collectively referred to as ~~our~~the Company's reported segments.

The Company’s Chief Executive Officer, who has been identified as the ~~Chief Operating Decision Maker (CODM),~~CODM, uses operating income as the measure of profit or loss, combined with other measures, to assess segment performance and allocate resources. Operating income represents net sales less costs of goods sold and operating expenses. Net sales are directly attributed to each segment. Most costs of goods sold and the majority of operating expenses are also directly attributed to each segment, while certain other costs of goods sold and operating expenses are allocated to the segments in a manner appropriate to the specific facts and circumstances of the expenses being allocated.

As indicated in Note 1 to the condensed consolidated financial statements, in the first quarter of fiscal 2022 the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined to allocate these expenses in a more direct manner to provide the Company’s CODM with a more meaningful representation of segment profit or loss. The Company’s composition of operating segments and reportable segments did not change. Results for the 13-week period ended March 27, 2021 have been recast below to conform with the current period presentation.

Net sales (“revenue”), gross profit, and operating income for each of the Company’s five reported segments are presented below, along with supplemental financial information for the auto OEM and consumer auto operating segments that management believes is useful.


									Auto																		Auto
	Fitness		Outdoor		Aviation		Marine		Total Auto			Consumer Auto		Auto OEM			Total		Fitness		Outdoor		Aviation		Marine		Total Auto			Consumer Auto		Auto OEM			Total
13-Weeks Ended September 25, 2021
13-Weeks Ended March 26, 2022
Net sales	$	342,316	$	323,856	$	180,165	$	207,534	$	138,102		$	82,914	$	55,188		$	1,191,973	$	220,896	$	384,604	$	174,766	$	254,069	$	138,327		$	65,130	$	73,197		$	1,172,662
Gross profit		183,028		210,522		131,260		116,152		54,985			39,342		15,643			695,947		106,189		247,495		127,543		128,581		52,671			30,960		21,711			662,479
Operating income (loss)		77,788		123,946		51,296		53,726		(24,086	)		11,305		(35,391	)		282,670		580		148,979		40,127		58,882		(20,012	)		3,831		(23,843	)		228,556

13-Weeks Ended September 26, 2020
13-Weeks Ended March 27, 2021
Net sales	$	328,446	$	334,844	$	151,112	$	165,437	$	129,355		$	82,659	$	46,696		$	1,109,194	$	308,125	$	256,455	$	173,889	$	209,372	$	124,486		$	62,395	$	62,091		$	1,072,327
Gross profit		177,794		223,704		107,927		100,423		58,135			43,319		14,816			667,983		173,545		171,676		126,182		121,379		48,774			31,964		16,810			641,556
Operating income (loss)		87,083		147,477		28,597		50,482		3,462			18,178		(14,716	)		317,101		70,682		92,011		45,014		62,906		(20,954	)		9,038		(29,992	)		249,659

39-Weeks Ended September 25, 2021
Net sales	$	1,063,642	$	903,715	$	534,886	$	678,698	$	410,265		$	231,587	$	178,678		$	3,591,206
Gross profit		581,765		590,355		389,376		390,141		166,717			113,567		53,150			2,118,354
Operating income (loss)		268,489		339,031		146,974		205,042		(56,036	)		35,388		(91,424	)		903,500

39-Weeks Ended September 26, 2020
Net sales	$	846,688	$	716,146	$	465,850	$	486,269	$	320,215		$	196,942	$	123,273		$	2,835,168
Gross profit		446,936		469,150		338,770		288,103		147,393			98,348		49,045			1,690,352
Operating income (loss)		190,075		262,057		103,483		134,195		(6,837	)		25,628		(32,465	)		682,973

Net sales to external customers by geographic region were as follows for the 13-week ~~and 39-week~~ periods ended ~~September 25, 2021~~March 26, 2022 and ~~September 26, 2020.~~March 27, 2021. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:


	13-Weeks Ended				39-Weeks Ended				13-Weeks Ended
	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		March 26, 2022		March 27, 2021
Americas	$	573,331	$	521,869	$	1,723,415	$	1,372,360	$	570,634	$	503,691
EMEA		442,622		407,859		1,330,855		1,042,928		397,477		399,508
APAC		176,020		179,466		536,936		419,880		204,551		169,128
Net sales to external customers	$	1,191,973	$	1,109,194	$	3,591,206	$	2,835,168	$	1,172,662	$	1,072,327

~~Net property and equipment by geographic region as of September 25, 2021 and September 26, 2020 are presented below.~~

Americas

APAC

EMEA

Total

September 25, 2021

Property and equipment, net

$
511,182

$
344,263

$
119,536

$
974,981

September 26, 2020

Property and equipment, net

$
465,575

$
255,656

$
92,330

$
813,561

5. Warranty Reserves

The Company’s standard warranty obligation to its end-users provides for a period of one to two years from the date of shipment, while certain auto, aviation, and marine OEM products have a warranty period of two years or more from the date of installation. The Company’s estimates of costs to service its warranty obligations are based on historical experience and management’s expectations and judgments 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						39-Weeks Ended						13-Weeks Ended
	September 25, 2021			September 26, 2020			September 25, 2021			September 26, 2020			March 26, 2022			March 27, 2021
Balance - beginning of period	$	44,575		$	39,293		$	42,643		$	39,758		$	45,467		$	42,643
Accrual for products sold (1)		13,272			15,613			47,717			47,140			10,871			11,456
Expenditures		(14,998	)		(14,904	)		(47,511	)		(46,896	)		(15,640	)		(14,811	)
Balance - end of period	$	42,849		$	40,002		$	42,849		$	40,002		$	40,698		$	39,288

(1) Changes in cost estimates related to pre-existing warranties were not material and aggregated with accruals for new warranty contracts in the ~~‘Accrual~~‘accrual for products sold’ line.

6. Commitments and Contingencies

Commitments

The Company is party to certain commitments ~~which include purchases~~that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of payments for inventory, capital expenditures, ~~advertising,~~ and other ~~services~~indirect purchases in connection with conducting ~~our~~the business. The aggregate amount of purchase orders and other commitments open as of ~~September 25, 2021~~March 26, 2022 that may represent noncancellable unconditional purchase obligations having a remaining term in excess of one year was approximately $~~1,424,000~~357,000. ~~We cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements.~~

Certain cash balances are held as collateral in relation to bank guarantees. This restricted cash is reported within ~~Other~~other assets on the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets and totaled $~~774~~785 and $~~306~~785 on ~~September~~March 26, 2022 and December 25, 2021, ~~and December 26, 2020,~~ respectively. The total of the ~~Cash~~cash and cash equivalents balance and the restricted cash reported within ~~Other~~other assets in the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets equals the total ~~Cash,~~cash, cash equivalents, and restricted cash shown in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Cash Flows.~~cash flows.

Contingencies

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 and annual basis, developments in legal proceedings, investigations, claims, and other loss contingencies that could affect any required accrual or disclosure or estimate of reasonably possible loss or range of loss. An estimated loss from a loss contingency is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, the Company accrues the minimum amount in the range.

If an outcome unfavorable to the Company is determined to be probable, but the amount of loss cannot be reasonably estimated or is determined to be reasonably possible, but not probable, we disclose the nature of the contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. The Company’s aggregate range of reasonably possible losses includes (1) matters where a liability has been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2) matters where a loss is believed to be reasonably possible, but not probable, and a liability therefore has not been accrued. This aggregate range only represents the Company’s estimate of reasonably possible losses and does not represent the Company’s maximum loss exposure. The assessment regarding whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. In assessing the probability of an outcome in a lawsuit, claim or assessment that could be unfavorable to the Company, we consider the following factors, among others: a) the nature of the litigation, claim, or assessment; b) the progress of the case; c) the opinions or views of legal counsel and other advisers; d) our experience in similar cases; e) the experience of other entities in similar cases; and f) how we intend to respond to the lawsuit, claim, or assessment. Costs incurred in defending lawsuits, claims or assessments are expensed as incurred.

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended ~~September 25, 2021.~~March 26, 2022. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

The Company settled or resolved certain matters during the 13-week ~~and 39-week periods~~period ended ~~September 25, 2021~~March 26, 2022 that did not individually or in the aggregate have a material impact on the Company’s business or its consolidated financial position, results of operations or cash flows.

7. Income Taxes

The Company recorded income tax expense of $~~16,347~~24,272 in the 13-week period ended ~~September 25, 2021,~~March 26, 2022, compared to income tax expense of $~~23,300~~30,485 in the 13-week period ended ~~September 26, 2020.~~March 27, 2021. The effective tax rate was ~~5.9~~10.3% in the ~~third~~first quarter of ~~2021,~~2022, compared to ~~6.9~~12.2% in the ~~third~~first quarter of ~~2020.~~2021. The decrease was primarily due to ~~the impact of return-to-provision adjustments associated with filing the~~an increase in U.S. tax ~~return during the 13-week period ended September 25, 2021 compared to the year-ago quarter.~~

~~The Company recorded income tax expense of $101,894~~deductions and credits in the first ~~three quarters~~quarter of ~~2021, compared to income tax expense of $53,168~~ ~~in the first three quarters of 2020. The effective tax rate was~~ ~~11.3% in the first three quarters of 2021, compared to~~ ~~7.5% in the first three quarters of 2020. The increase was primarily due to a decrease in uncertain tax position reserves released in the first three quarters of 2021~~2022 compared to the first ~~three quarters~~quarter of ~~2020.~~2021.

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.

Marketable securities classified as available-for-sale securities are summarized below:


	Available-For-Sale Securities as of September 25, 2021										Available-For-Sale Securities as of March 26, 2022
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	400	$	1	$	—		$	401
Agency securities	Level 2		7,975		0		(43	)		7,932	Level 2		7,000		0		(487	)		6,513
Mortgage-backed securities	Level 2		159,299		707		(625	)		159,381	Level 2		170,419		0		(2,264	)		168,155
Corporate securities	Level 2		1,051,416		16,021		(5,606	)		1,061,831	Level 2		1,124,686		947		(47,717	)		1,077,916
Municipal securities	Level 2		335,507		2,748		(1,845	)		336,410	Level 2		352,245		199		(19,731	)		332,713
Other	Level 2		33,436		56		(644	)		32,848	Level 2		30,675		0		(2,235	)		28,440
Total		$	1,588,033	$	19,533	$	(8,763	)	$	1,598,803		$	1,685,025	$	1,146	$	(72,434	)	$	1,613,737


	Available-For-Sale Securities as of December 26, 2020										Available-For-Sale Securities as of December 25, 2021
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	Level 2	$	400	$	6	$	—		$	406
Agency securities	Level 2		5,954		56		—			6,010	Level 2		7,000		0		(110	)		6,890
Mortgage-backed securities	Level 2		239,445		1,051		(1,923	)		238,573	Level 2		149,692		257		(880	)		149,069
Corporate securities	Level 2		984,696		25,962		(1,637	)		1,009,021	Level 2		1,079,390		9,830		(11,827	)		1,077,393
Municipal securities	Level 2		214,515		3,644		(223	)		217,936	Level 2		356,037		1,870		(4,864	)		353,043
Other	Level 2		47,760		167		(1,056	)		46,871	Level 2		31,134		22		(873	)		30,283
Total		$	1,492,770	$	30,886	$	(4,839	)	$	1,518,817		$	1,623,253	$	11,979	$	(18,554	)	$	1,616,678

The Company’s investment policy targets low risk investments with the objective of minimizing the potential risk of principal loss. The fair value of securities varies from period to period due to changes in interest rates, the performance of the underlying collateral, and the credit performance of the underlying issuer, among other factors.

Accrued interest receivable, which totaled $~~9,671~~10,510 as of ~~September 25, 2021,~~March 26, 2022, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within ~~Prepaid~~prepaid expenses and other current assets on the Company’s ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. NaN accrued interest was written off during the ~~39-week~~13-week period ended ~~September 25, 2021.~~March 26, 2022.

The Company recognizes impairments relating to credit losses of available-for-sale securities through an allowance for credit losses and ~~Other~~other income on the Company’s ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Income.~~income. Impairment not relating to credit losses is recorded in ~~Other~~other comprehensive income on the Company’s ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. The cost of securities sold is based on the specific identification method. Approximately 3780% of securities in the Company’s portfolio were at an unrealized loss position as of ~~September 25, 2021.~~March 26, 2022.

The following tables display 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 ~~September 25, 2021~~March 26, 2022 and December ~~26, 2020.~~25, 2021.


	As of September 25, 2021															As of March 26, 2022
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total					Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	—		$	—	$	—		$	—	$	—		$	—
Agency securities		(43	)		6,957		—			—		(43	)		6,957		(487	)		6,513		0			0		(487	)		6,513
Mortgage-backed securities		(103	)		14,116		(522	)		8,289		(625	)		22,405		(1,757	)		52,201		(507	)		7,476		(2,264	)		59,677
Corporate securities		(4,400	)		377,924		(1,206	)		66,783		(5,606	)		444,707		(32,386	)		669,654		(15,331	)		192,402		(47,717	)		862,056
Municipal securities		(1,746	)		176,509		(99	)		15,287		(1,845	)		191,796		(13,953	)		231,353		(5,778	)		68,672		(19,731	)		300,025
Other		(341	)		15,259		(303	)		7,553		(644	)		22,812		(1,293	)		20,230		(942	)		6,480		(2,235	)		26,710
Total	$	(6,633	)	$	590,765	$	(2,130	)	$	97,912	$	(8,763	)	$	688,677	$	(49,876	)	$	979,951	$	(22,558	)	$	275,030	$	(72,434	)	$	1,254,981

1210


	As of December 26, 2020															As of December 25, 2021
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total					Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	—		$	—	$	—		$	—	$	—		$	—
Agency securities		—			—		—			—		—			—		(110	)		6,890		0			0		(110	)		6,890
Mortgage-backed securities		(1,849	)		85,688		(74	)		2,122		(1,923	)		87,810		(148	)		18,909		(732	)		7,598		(880	)		26,507
Corporate securities		(1,065	)		199,187		(572	)		8,625		(1,637	)		207,812		(9,466	)		499,084		(2,361	)		85,033		(11,827	)		584,117
Municipal securities		(223	)		50,403		—			—		(223	)		50,403		(4,247	)		226,009		(617	)		29,405		(4,864	)		255,414
Other		(726	)		22,600		(330	)		3,426		(1,056	)		26,026		(467	)		17,845		(406	)		7,205		(873	)		25,050
Total	$	(3,863	)	$	357,878	$	(976	)	$	14,173	$	(4,839	)	$	372,051	$	(14,438	)	$	768,737	$	(4,116	)	$	129,241	$	(18,554	)	$	897,978

As of ~~September~~March 26, 2022 and December 25, 2021, ~~and December 26, 2020,~~ the Company had 0t recognized an allowance for credit losses on any securities in an unrealized loss position.

The Company has 0t recorded an allowance for credit losses and charge to ~~Other~~other income for the unrealized losses on agency, mortgage-backed, corporate, municipal, and other securities presented above because ~~we do~~the Company's management does not consider the declines in fair value to have resulted from credit losses. ~~We have~~Management has not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. ~~The Company~~Management does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity.

The amortized cost and fair value of marketable securities at ~~September 25, 2021,~~March 26, 2022, by maturity, are shown below.


	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	342,809	$	345,214	$	375,211	$	375,237
Due after one year through five years		1,174,790		1,183,662		1,275,626		1,206,941
Due after five years through ten years		67,278		67,038		31,106		29,025
Due after ten years		3,156		2,889		3,082		2,534
	$	1,588,033	$	1,598,803	$	1,685,025	$	1,613,737

9. 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 39-week periods~~period ended ~~September 25, 2021:~~March 26, 2022:

13-Weeks Ended September 25, 2021

Foreign currency
translation adjustment

Net gains (losses) on available-for-sale securities

Total

Balance - beginning of period

$
155,342

$
11,285

$
166,627

Other comprehensive income before reclassification, net of income tax benefit of $588

(8,702
)

(3,051
)

(11,753
)
Amounts reclassified from Accumulated other comprehensive income to Other income, net of income tax expense of $21 included in Income tax provision

—

(118
)

(118
)
Net current-period other comprehensive income

(8,702
)

(3,169
)

(11,871
)
Balance - end of period

$
146,640

$
8,116

$
154,756

39-Weeks Ended September 25, 2021

Foreign currency
translation adjustment

Net gains (losses) on available-for-sale securities

Total

Balance - beginning of period

$
162,953

$
20,474

$
183,427

Other comprehensive income before reclassification, net of income tax benefit of $2,864

(16,313
)

(11,900
)

(28,213
)
Amounts reclassified from Accumulated other comprehensive income to Other income, net of income tax expense of $54 included in Income tax provision

—

(458
)

(458
)
Net current-period other comprehensive income

(16,313
)

(12,358
)

(28,671
)
Balance - end of period

$
146,640

$
8,116

$
154,756


	13-Weeks Ended March 26, 2022
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	123,415		$	(5,580	)	$	117,835
Other comprehensive income before reclassification, net of income tax benefit of $14,700		(56,912	)		(50,010	)		(106,922	)
Amounts reclassified from Accumulated other comprehensive income to Other income, net of income tax expense of $1 included in Income tax provision		—			(2	)		(2	)
Net current-period other comprehensive income		(56,912	)		(50,012	)		(106,924	)
Balance - end of period	$	66,503		$	(55,592	)	$	10,911

10. Revenue

In order to further depict how the nature, amount, timing and uncertainty of ~~our~~the Company's revenue and cash flows are affected by economic factors, ~~we disaggregate~~ revenue (or “net sales”) is disaggregated by geographic region, major product category, and pattern of recognition.

Disaggregated revenue by geographic region (Americas, APAC, and EMEA) is presented in Note 4 – Segment ~~Information.~~Information and Geographic Data. Note 4 also contains disaggregated revenue information of the six major product categories identified by the Company – fitness, outdoor, aviation, marine, consumer auto, and auto OEM.

A large majority of the Company’s sales are recognized on a point in time basis, usually once the product is shipped and title and risk of loss have transferred to the customer. Sales recognized over a period of time are primarily within the auto and outdoor segments and relate to performance obligations that are satisfied over the life of the product or contractual service period. Revenue disaggregated by the timing of transfer of the goods or services is presented in the table below:


	13-Weeks Ended				39-Weeks Ended				13-Weeks Ended
	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020		March 26, 2022		March 27, 2021
Point in time	$	1,132,339	$	1,060,718	$	3,429,686	$	2,696,593	$	1,114,200	$	1,022,777
Over time		59,634		48,476		161,520		138,575		58,462		49,550
Net sales	$	1,191,973	$	1,109,194	$	3,591,206	$	2,835,168	$	1,172,662	$	1,072,327

Transaction price and costs associated with the Company’s unsatisfied performance obligations are reflected as deferred revenue and deferred costs, respectively, on the Company’s ~~Condensed Consolidated Balance Sheets.~~condensed consolidated balance sheets. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the ~~39-week~~13-week period ended ~~September 25, 2021~~March 26, 2022 are presented below:


	39-Weeks Ended
	September 25, 2021						13-Weeks Ended March 26, 2022
	Deferred Revenue (1)			Deferred Costs (2)			Deferred Revenue (1)			Deferred Costs (2)
Balance, beginning of period	$	136,799		$	36,655		$	129,272		$	28,322
Deferrals in period		154,513			11,488			54,695			3,527
Recognition of deferrals in period		(161,520	)		(19,062	)		(58,462	)		(5,450	)
Balance, end of period	$	129,792		$	29,081		$	125,505		$	26,399

(1) Deferred revenue is comprised of both ~~Deferred~~deferred revenue and ~~Noncurrent~~noncurrent deferred revenue per the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets

(2) Deferred costs are comprised of both ~~Deferred~~deferred costs and ~~Noncurrent~~noncurrent deferred costs per the ~~Condensed Consolidated Balance Sheets~~condensed consolidated balance sheets

Of the $~~161,520~~58,462 of deferred revenue recognized in the ~~39-week~~13-week period ended ~~September 25, 2021,~~March 26, 2022, $~~68,121~~28,412 was deferred as of the beginning of the period. Approximately ~~two-thirds~~seventy-five percent of the $~~129,792~~125,505 of deferred revenue at the end of the period, ~~September 25, 2021,~~March 26, 2022, is recognized ratably over a period of three years or less.

11. Subsequent Events

On April 22, 2022, the Board of Directors authorized the Company to repurchase up to $300 million of the Company’s shares through December 29, 2023. The timing and volume of any share repurchases under this authorization will be determined by management at its discretion. Share repurchases, which are subject to market conditions, other business conditions and applicable legal requirements, may be made from time to time in the open market or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended.

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, contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by 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 the Company’s assumptions prove incorrect or should unanticipated circumstances arise, 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 Part II, Item 1A of this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December ~~26, 2020.~~25, 2021. 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 website 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 ~~26, 2020.~~25, 2021. Unless the context otherwise requires, references in this document to "we", "us", "our" and similar terms refer to Garmin Ltd. and its subsidiaries.

Unless otherwise indicated, amounts set forth in the discussion below are in thousands.

Company Overview

The Company is a leading worldwide provider of wireless devices, many of which feature Global Positioning System (GPS) navigation, and applications that are designed for people who live an active ~~lifestyle, many of which feature Global Positioning System (GPS) navigation.~~lifestyle. We are organized in the six operating segments of fitness, outdoor, aviation, marine, consumer auto, and auto OEM. The operating segments offer products through our network of subsidiary distributors and independent dealers and distributors, our own webshop, as well as through various auto, aviation, and marine original equipment manufacturers (OEMs). Each of the operating segments is managed separately.

Business Environment Update

~~The~~Persisting headwinds related to the COVID-19 pandemic, ~~has~~along with Russia’s invasion of Ukraine, have created disruption, uncertainty, and ~~uncertainty~~inflationary pressure in the global economy ~~and has~~that have affected our business, suppliers, and customers. The pandemic had an unfavorable impact on net sales and profitability of our aviation and auto segments during 2020, however, both segments have trended positively during 2021. We believe net sales and profitability of our fitness, outdoor, and marine segments have benefited from a shift in consumer behavior and demand toward the products these segments offer, which has continued during 2021.

Our global supply chain is routinely subject to component shortages, increased lead times, cost fluctuations, and logistics constraints. These factors have been further amplified by the ~~pandemic,~~current environment, and we expect these supply chain challenges to continue through at least the end of calendar year ~~2021.~~2022.

The current business environment may evolve in ways that could impact our operations and financial results. Further, the nature and degree of the effects of the pandemic, ~~and~~Russia’s invasion of Ukraine, supply chain challenges, and inflationary pressure over time remains uncertain. Refer to Part II, Item 1A, “Risk Factors” of this Quarterly Report for further discussion of the risks and uncertainties facing our Company.

Results of Operations

~~The following table sets forth~~As indicated in Note 1 to the ~~Company’s results~~condensed consolidated financial statements, in the first quarter of ~~operations~~fiscal 2022 the Company refined the methodology used in classifying certain indirect costs as research and development expense, which we believe provides a ~~percent~~more meaningful representation of ~~net sales during the periods shown (the table may not foot due~~costs incurred to ~~rounding):~~support research and development activities.

15Additionally, as indicated in Note 1 and Note 4 to the condensed consolidated financial statements, in the first quarter of fiscal 2022 the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined to allocate these expenses in a more direct manner to provide the Company’s CODM with a more meaningful representation of segment profit or loss. The Company’s composition of operating segments and reportable segments did not change.

13-Weeks Ended

39-Weeks Ended

September 25,
2021

September 26,
2020

September 25,
2021

September 26,
2020

Net sales

100
%

100
%

100
%

100
%
Cost of goods sold

42
%

40
%

41
%

40
%
Gross profit

58
%

60
%

59
%

60
%
Advertising

3
%

3
%

3
%

3
%
Selling, general and administrative

14
%

13
%

14
%

15
%
Research and development

18
%

16
%

17
%

18
%
Total operating expenses

35
%

32
%

34
%

36
%
Operating income

24
%

29
%

25
%

24
%
Other income (expense)

(1
)%

2
%

(0
)%

1
%
Income before income taxes

23
%

30
%

25
%

25
%
Income tax provision

1
%

2
%

3
%

2
%
Net income

22
%

28
%

22
%

23
%

~~The segment table located~~These changes in ~~Note 4 to the Condensed Consolidated Financial Statements sets forth~~classification and allocation had no effect on the Company’s ~~results of operations including~~consolidated operating or net ~~sales, gross profit,~~income. The amounts presented below for selling, general, and administrative expense, research and development expense, segment operating expense, and segment operating income for ~~each of~~ the ~~Company’s five reported segments during~~13-week period ended March 27, 2021 have been recast to conform with the periods shown, as well as supplemental information for the consumer auto and auto OEM operating segments that management believes is useful. For each line item in the table, the total of the fitness, outdoor, aviation, marine, and auto segments’ amounts equals the amount in the Condensed Consolidated Statements of Income included in Item 1.current period presentation.

Comparison of 13-Weeks ended ~~September 25,~~March 26, 2022 and March 27, 2021 ~~and September 26, 2020~~

Net Sales


Net Sales	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020			13-Weeks Ended March 26, 2022			Year-over-Year Change			13-Weeks Ended March 27, 2021
Fitness	$	342,316			4	%	$	328,446		$	220,896			(28	%)	$	308,125
Percentage of Total Net Sales		29	%					29	%		19	%					29	%
Outdoor		323,856			(3	%)		334,844			384,604			50	%		256,455
Percentage of Total Net Sales		27	%					30	%		33	%					24	%
Aviation		180,165			19	%		151,112			174,766			1	%		173,889
Percentage of Total Net Sales		15	%					14	%		15	%					16	%
Marine		207,534			25	%		165,437			254,069			21	%		209,372
Percentage of Total Net Sales		17	%					15	%		21	%					19	%
Auto		138,102			7	%		129,355			138,327			11	%		124,486
Percentage of Total Net Sales		12	%					12	%		12	%					12	%
Consumer Auto		82,914			—	%		82,659			65,130			4	%		62,395
Percentage of Total Net Sales		7	%					8	%		6	%					6	%
Auto OEM		55,188			18	%		46,696			73,197			18	%		62,091
Percentage of Total Net Sales		5	%					4	%		6	%					6	%
Total	$	1,191,973			7	%	$	1,109,194		$	1,172,662			9	%	$	1,072,327

Net sales increased 7%9% for the 13-week period ended ~~September 25, 2021~~March 26, 2022 when compared to the year-ago quarter. Total unit sales in the ~~third~~first quarter of ~~2021~~2022 decreased to ~~3,798~~3,438 when compared to total unit sales of ~~4,041~~3,463 in the ~~third~~first quarter of ~~2020,~~2021, which differs from the increase in revenue primarily due to shifts in segment and product mix. ~~Fitness~~Outdoor was the largest portion of our revenue mix at 33% in the first quarter of 2022 compared to fitness at 29% in the ~~third~~first quarter of ~~2021 compared to 29% in the third quarter of 2020.~~2021.

The increase in ~~fitness~~outdoor revenue was primarily driven by ~~sales~~strong demand for our adventure watches. Aviation revenue increased primarily due to growth in ~~cycling and advanced wearables products. The increase in aviation revenue was driven by contributions from both~~the OEM ~~and aftermarket~~ product ~~categories.~~category. Marine revenue increased due to growth across multiple product categories, led by strong demand for our chartplotters. ~~Auto~~The increase in auto revenue ~~increased~~was due to sales growth in both consumer auto and auto OEM ~~programs, while consumer auto revenue was relatively flat. Outdoor~~products. Fitness revenue decreased ~~primarily~~ due to declines across all product categories, driven primarily by the ~~timing~~normalization of ~~product introductions~~demand for cycling products compared to the year-ago quarter, which had benefited from a pandemic-driven shift in ~~the prior year.~~consumer behavior.

Gross Profit


Gross Profit	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020			13-Weeks Ended March 26, 2022			Year-over-Year Change			13-Weeks Ended March 27, 2021
Fitness	$	183,028			3	%	$	177,794		$	106,189			(39	%)	$	173,545
Percentage of Segment Net Sales		53	%					54	%		48	%					56	%
Outdoor		210,522			(6	%)		223,704			247,495			44	%		171,676
Percentage of Segment Net Sales		65	%					67	%		64	%					67	%
Aviation		131,260			22	%		107,927			127,543			1	%		126,182
Percentage of Segment Net Sales		73	%					71	%		73	%					73	%
Marine		116,152			16	%		100,423			128,581			6	%		121,379
Percentage of Segment Net Sales		56	%					61	%		51	%					58	%
Auto		54,985			(5	%)		58,135			52,671			8	%		48,774
Percentage of Segment Net Sales		40	%					45	%		38	%					39	%
Consumer Auto		39,342			(9	%)		43,319			30,960			(3	%)		31,964
Percentage of Segment Net Sales		47	%					52	%		48	%					51	%
Auto OEM		15,643			6	%		14,816			21,711			29	%		16,810
Percentage of Segment Net Sales		28	%					32	%		30	%					27	%
Total	$	695,947			4	%	$	667,983		$	662,479			3	%	$	641,556
Percentage of Total Net Sales		58	%					60	%		56	%					60	%

Gross profit dollars in the ~~third~~first quarter of ~~2021~~2022 increased 4%3%, primarily due to the increase in net sales compared to the year-ago quarter, as described above. Consolidated gross margin decreased ~~180~~330 basis points when compared to the year-ago quarter, primarily due to higher freight ~~costs.~~costs and a stronger U.S. Dollar that created downward pressure on revenues denominated in currencies that were weaker against the U.S. Dollar.

The fitness, outdoor, marine, and consumer auto gross margins were adversely impacted by higher freight costs ~~which~~and a stronger U.S. Dollar. In the outdoor segment, these impacts were partially offset ~~in the fitness and outdoor segments~~ by a favorable product mix. The ~~aviation~~auto OEM gross margin increase was primarily attributable to a more favorable product mix and lower per-unit manufacturing overhead costs. The auto OEM gross margin decrease was primarily attributable to product mix associated with growth in certain auto OEM programs. This auto OEM product mix and associated lower gross margin trend is generally expected to continue through 2021 and beyond.mix.

~~Advertising~~Operating Expense


Advertising	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020
Operating Expense										13-Weeks Ended March 26, 2022			Year-over-Year Change			13-Weeks Ended March 27, 2021
Fitness	$	15,109			12	%	$	13,444		$	105,609			3	%	$	102,863
Percentage of Segment Net Sales		4	%					4	%		48	%					33	%
Outdoor		11,543			(8	%)		12,607			98,516			24	%		79,665
Percentage of Segment Net Sales		4	%					4	%		26	%					31	%
Aviation		724			42	%		511			87,416			8	%		81,168
Percentage of Segment Net Sales		0	%					0	%		50	%					47	%
Marine		5,787			40	%		4,121			69,699			19	%		58,473
Percentage of Segment Net Sales		3	%					2	%		27	%					28	%
Auto		3,542			11	%		3,183			72,683			4	%		69,728
Percentage of Segment Net Sales		3	%					2	%		53	%					56	%
Consumer Auto		3,489			10	%		3,178			27,129			18	%		22,926
Percentage of Segment Net Sales		4	%					4	%		42	%					37	%
Auto OEM		53			960	%		5			45,554			(3	%)		46,802
Percentage of Segment Net Sales		0	%					0	%		62	%					75	%
Total	$	36,705			8	%	$	33,866		$	433,923			11	%	$	391,897
Percentage of Total Net Sales		3	%					3	%		37	%					37	%

Total operating expense was relatively flat as a percent of revenue and increased 11% in absolute dollars compared to the year-ago quarter.

Advertising expense as a percent of revenue was relatively flat when compared to the year-ago quarter and increased 8%10% in absolute dollars. The ~~total~~ absolute dollar increase was primarily attributable to increased ~~media spend.~~spend on tradeshows.

~~Selling, General and Administrative Expense~~

Selling, General & Admin. Expenses

13-Weeks Ended September 25, 2021

Year-over-Year Change

13-Weeks Ended September 26, 2020

Fitness

$
52,784

14
%

$
46,239

Percentage of Segment Net Sales

15
%

14
%
Outdoor

42,712

15
%

37,160

Percentage of Segment Net Sales

13
%

11
%
Aviation

18,887

-7
%

20,225

Percentage of Segment Net Sales

10
%

13
%
Marine

27,034

21
%

22,405

Percentage of Segment Net Sales

13
%

14
%
Auto

21,098

31
%

16,105

Percentage of Segment Net Sales

15
%

12
%
Consumer Auto

10,272

10
%

9,333

Percentage of Segment Net Sales

12
%

11
%
Auto OEM

10,826

60
%

6,772

Percentage of Segment Net Sales

20
%

15
%
Total

$
162,515

14
%

$
142,134

Percentage of Total Net Sales

14
%

13
%

Selling, general and administrative expense ~~increased 14% in absolute dollars and~~ was relatively flat as a percent of revenue and increased 11% in absolute dollars compared to the year-ago quarter. The absolute dollar increase in the ~~third~~first quarter of ~~2021~~2022 was primarily attributable to increased personnel related expenses and information technology costs. Absolute dollar increases in outdoor and auto OEM were more than offset by the corresponding increases in sales, resulting in decreases as percent of revenue of 280 and 180 basis points, respectively. Absolute dollar increases in aviation and consumer auto were greater than the corresponding increases in sales, resulting in increases as a percent of revenue of 160 and 100 basis points, respectively. An absolute dollar decrease in fitness was less than the corresponding decrease in sales, resulting in an increase of 670 basis points as a percent of revenue. Marine expense generally increased in line with the increase in sales.

~~Research and Development Expense~~

Research & Development

13-Weeks Ended September 25, 2021

Year-over-Year Change

13-Weeks Ended September 26, 2020

Fitness

$
37,347

20
%

$
31,028

Percentage of Segment Net Sales

11
%

9
%
Outdoor

32,321

22
%

26,460

Percentage of Segment Net Sales

10
%

8
%
Aviation

60,353

3
%

58,594

Percentage of Segment Net Sales

33
%

39
%
Marine

29,605

26
%

23,415

Percentage of Segment Net Sales

14
%

14
%
Auto

54,431

54
%

35,385

Percentage of Segment Net Sales

39
%

27
%
Consumer Auto

14,276

13
%

12,630

Percentage of Segment Net Sales

17
%

15
%
Auto OEM

40,155

76
%

22,755

Percentage of Segment Net Sales

73
%

49
%
Total

$
214,057

22
%

$
174,882

Percentage of Total Net Sales

18
%

16
%

Research and development expense was relatively flat as a percent of revenue ~~increased 220 basis points~~ when compared to the year-ago quarter and increased ~~22%~~11% in absolute dollars. The ~~fitness, outdoor, and marine increases in~~ absolute ~~dollars and as a percent of revenue were~~dollar increase was primarily due to higher engineering personnel costs. ~~The auto~~An absolute dollar increase in ~~absolute dollars~~outdoor was more than offset by the increase in outdoor sales, resulting in a decrease as percent of revenue of 220 basis points. Absolute dollar increases in fitness, aviation, and consumer auto were greater than the corresponding increases in sales, resulting in increases as a percent of revenue of 680, 170, and 280 basis points, respectively. Auto OEM expense was ~~primarily attributable to higher engineering personnel costs related to investments~~relatively flat in ~~certain auto OEM programs~~absolute dollars and ~~a lower proportion of such costs being contractually reimbursable. The aviation decrease~~decreased 1,150 basis points as a percent of revenue ~~was primarily due to~~as revenue grew over the year-ago quarter. Marine expense generally increased in line with the increase in ~~sales, as described above, and greater leverage of expenses.~~sales.

Operating Income


Operating Income (Loss)	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020			13-Weeks Ended March 26, 2022			Year-over-Year Change			13-Weeks Ended March 27, 2021
Fitness	$	77,788			(11	%)	$	87,083		$	580			(99	%)	$	70,682
Percentage of Segment Net Sales		23	%					27	%		0	%					23	%
Outdoor		123,946			(16	%)		147,477			148,979			62	%		92,011
Percentage of Segment Net Sales		38	%					44	%		39	%					36	%
Aviation		51,296			79	%		28,597			40,127			(11	%)		45,014
Percentage of Segment Net Sales		28	%					19	%		23	%					26	%
Marine		53,726			6	%		50,482			58,882			(6	%)		62,906
Percentage of Segment Net Sales		26	%					31	%		23	%					30	%
Auto		(24,086	)		(796	%)		3,462			(20,012	)		(4	%)		(20,954	)
Percentage of Segment Net Sales		(17	%)					3	%		(14	%)					(17	%)
Consumer Auto		11,305			(38	%)		18,178			3,831			(58	%)		9,038
Percentage of Segment Net Sales		14	%					22	%		6	%					14	%
Auto OEM		(35,391	)		140	%		(14,716	)		(23,843	)		(21	%)		(29,992	)
Percentage of Segment Net Sales		(64	%)					(32	%)		(33	%)					(48	%)
Total	$	282,670			(11	%)	$	317,101		$	228,556			(8	%)	$	249,659
Percentage of Total Net Sales		24	%					29	%		19	%					23	%

Operating income decreased ~~11%~~8% in absolute dollars and decreased ~~490~~380 basis points as a percent of revenue when compared to the year-ago quarter. This decrease was due to lower gross margin and ~~higher operating~~relatively flat expenses as a percent of revenue, as described above. Auto OEM experienced an operating loss in the current quarter, and we expect this trend to continue through ~~2021, primarily due~~2022 as we continue to ~~a lower gross margin and increased expense associated with~~invest in certain ~~programs, as described above.~~auto OEM programs.

Other Income (Expense)


Other Income (Expense)	13-Weeks Ended September 25, 2021			13-Weeks Ended September 26, 2020		13-Weeks Ended March 26, 2022			13-Weeks Ended March 27, 2021
Interest income	$	6,897		$	7,777	$	7,553		$	7,652
Foreign currency (losses) gains		(15,014	)		10,113
Foreign currency losses							(3,506	)		(8,281	)
Other income		833			1,726		3,261			1,484
Total	$	(7,284	)	$	19,616	$	7,308		$	855

The average ~~return~~interest rate returns on cash and investments ~~including interest and capital gain/loss returns~~ during the ~~third~~first quarter of ~~2021~~2022 was ~~0.9% compared to 1.3%~~1.0%, consistent with 1.0% during the same quarter of ~~2020. Interest income decreased primarily due to lower yields on fixed-income securities.~~2021.

Foreign currency gains and losses for the Company are typically driven by movements of a number of currencies in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the Euro is the functional currency of several subsidiaries, and the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., although some transactions and balances are denominated in British Pounds. Other notable currency exposures include the Australian Dollar, ~~Chinese Yuan,~~ Japanese Yen, Polish Zloty, and ~~Polish Zloty.~~Swiss Franc. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity.

The ~~$15.0~~$3.5 million currency loss recognized in the ~~third~~first quarter of ~~2021~~2022 was primarily due to the U.S. Dollar strengthening against the ~~Euro,~~ Polish Zloty, ~~Australian~~Euro, and Japanese Yen, partially offset by the U.S. Dollar ~~and British Pound Sterling and weakening~~strengthening against the Taiwan Dollar, within the 13-week period ended ~~September 25, 2021.~~March 26, 2022. During this period, the U.S. Dollar strengthened ~~1.8% against the Euro, 3.6%~~5.7% against the Polish Zloty, ~~3.8%~~3.0% against the ~~Australian Dollar,~~Euro, and ~~1.4%~~6.2% against the ~~British Pound Sterling,~~Japanese Yen, resulting in losses of ~~$4.1~~$6.0 million, ~~$3.0 million, $1.4~~$5.1 million, and ~~$0.9~~$1.6 million, respectively, while the U.S. Dollar ~~weakened 0.6%~~strengthened 3.5% against the Taiwan Dollar, resulting in a ~~loss~~gain of ~~$2.7~~$8.2 million. The remaining net currency ~~loss~~gain of ~~$2.9~~$1.0 million was related to the ~~timing of transactions and~~ impacts of other currencies, each of which was individually immaterial.

The ~~$10.1~~$8.3 million currency ~~gain~~loss recognized in the ~~third~~first quarter of ~~2020~~2021 was primarily due to the U.S. Dollar ~~weakening~~strengthening against the Euro and ~~British Pound Sterling,~~Japanese Yen, partially offset by the U.S. Dollar ~~weakening~~strengthening against the Taiwan Dollar and weakening against the British Pound, within the 13-week period ended ~~September 26, 2020.~~March 27, 2021. During this period, the U.S. Dollar ~~weakened 3.7%~~strengthened 3.3% against the Euro and ~~3.3%~~5.6% against the ~~British Pound Sterling,~~Japanese Yen, resulting in ~~gains~~losses of $11.0 million and ~~$1.8~~$1.4 million, respectively, while the U.S. Dollar ~~weakened 0.8%~~strengthened 1.7% against the Taiwan Dollar and weakened 1.8% against the British Pound, resulting in ~~a loss~~gains of ~~$4.3 million.~~$4.7 million and $1.3 million, respectively. The remaining net currency ~~gain~~loss of ~~$1.6~~$1.9 million was related to the ~~timing of transactions and~~ impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of ~~$16.3~~$24.3 million in the 13-week period ended ~~September 25, 2021,~~March 26, 2022, compared to income tax expense of ~~$23.3~~$30.5 million in the 13-week period ended ~~September 26, 2020.~~March 27, 2021. The effective tax rate was ~~5.9%~~10.3% in the ~~third~~first quarter of ~~2021,~~2022, compared to ~~6.9%~~12.2% in the ~~third~~first quarter of ~~2020.~~2021. The decrease was primarily due to ~~the impact of return-to-provision adjustments associated with filing the~~an increase in U.S. tax ~~return during~~deductions and credits in the 13-week period ended ~~September 25, 2021~~March 26, 2022 compared to the year-ago quarter.

Net Income

As a result of the above, net income for the 13-week period ended ~~September 25, 2021~~March 26, 2022 was ~~$259.0~~$211.6 million compared to ~~$313.4~~$220.0 million for the 13-week period ended ~~September 26, 2020,~~March 27, 2021, a decrease of ~~$54.4~~$8.4 million.

~~Comparison of 39-Weeks ended September 25, 2021 and September 26, 2020~~

~~Net Sales~~

Net Sales

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
1,063,642

26
%

$
846,688

Percentage of Total Net Sales

30
%

30
%
Outdoor

903,715

26
%

716,146

Percentage of Total Net Sales

25
%

25
%
Aviation

534,886

15
%

465,850

Percentage of Total Net Sales

15
%

17
%
Marine

678,698

40
%

486,269

Percentage of Total Net Sales

19
%

17
%
Auto

410,265

28
%

320,215

Percentage of Total Net Sales

11
%

11
%
Consumer Auto

231,587

18
%

196,942

Percentage of Total Net Sales

6
%

7
%
Auto OEM

178,678

45
%

123,273

Percentage of Total Net Sales

5
%

4
%
Total

$
3,591,206

27
%

$
2,835,168

Net sales increased 27% for the 39-week period ended September 25, 2021 when compared to the year-ago period. Net sales of most segments were adversely impacted by the COVID-19 pandemic for part of the prior year period, and therefore a portion of the year-over-year growth is attributable to the relatively low prior year comparable. We believe our fitness, outdoor, and marine segments have since benefited from a shift in consumer behavior and demand, which has continued during 2021, and our aviation and auto segments have trended positively during 2021.

The increase in fitness revenue was driven by sales growth in cycling and advanced wearables products. Outdoor revenue increased due to sales growth in multiple product categories, led by strong demand for our adventure watches. The increase in aviation revenue was driven by contributions from both OEM and aftermarket product categories. Marine revenue increased due to growth across all categories, led by strong demand for our chartplotters. Auto revenue increased due to sales growth in auto OEM programs and consumer auto specialty product categories.

Total unit sales in the first three quarters of 2021 increased to 11,564 when compared to total unit sales of 10,066 in the first three quarters of 2020, which was a smaller increase than that of revenue primarily due to shifts in segment and product mix. Fitness was the largest portion of our revenue mix at 30% in the first three quarters of 2021 compared to 30% in the first three quarters of 2020.

~~Gross Profit~~

Gross Profit

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
581,765

30
%

$
446,936

Percentage of Segment Net Sales

55
%

53
%
Outdoor

590,355

26
%

469,150

Percentage of Segment Net Sales

65
%

66
%
Aviation

389,376

15
%

338,770

Percentage of Segment Net Sales

73
%

73
%
Marine

390,141

35
%

288,103

Percentage of Segment Net Sales

57
%

59
%
Auto

166,717

13
%

147,393

Percentage of Segment Net Sales

41
%

46
%
Consumer Auto

113,567

15
%

98,348

Percentage of Segment Net Sales

49
%

50
%
Auto OEM

53,150

8
%

49,045

Percentage of Segment Net Sales

30
%

40
%
Total

$
2,118,354

25
%

$
1,690,352

Percentage of Total Net Sales

59
%

60
%

Gross profit dollars in the first three quarters of 2021 increased 25%, primarily due to the increase in net sales compared to the year-ago period, as described above. Consolidated gross margin decreased 60 basis points when compared to the year-ago period, primarily due to higher freight costs.

The fitness gross margin increase was primarily attributable to product mix, partially offset by higher freight costs. The marine gross margin decrease was primarily due to higher freight costs. The auto OEM gross margin decrease was primarily attributable to product mix associated with growth in certain auto OEM programs. This auto OEM product mix and associated lower gross margin trend is generally expected to continue through 2021 and beyond.

~~Advertising Expense~~

Advertising

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
47,808

30
%

$
36,802

Percentage of Segment Net Sales

4
%

4
%
Outdoor

32,684

17
%

28,006

Percentage of Segment Net Sales

4
%

4
%
Aviation

2,807

21
%

2,313

Percentage of Segment Net Sales

1
%

0
%
Marine

18,547

18
%

15,733

Percentage of Segment Net Sales

3
%

3
%
Auto

8,859

23
%

7,177

Percentage of Segment Net Sales

2
%

2
%
Consumer Auto

8,795

26
%

6,988

Percentage of Segment Net Sales

4
%

4
%
Auto OEM

64

(66
%)

189

Percentage of Segment Net Sales

0
%

0
%
Total

$
110,705

23
%

$
90,031

Percentage of Total Net Sales

3
%

3
%

Advertising expense as a percent of revenue was relatively flat when compared to the year-ago period and increased 23% in absolute dollars. The total absolute dollar increase was primarily attributable to increased media and cooperative spend.

~~Selling, General and Administrative Expense~~

Selling, General & Admin. Expenses

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
159,947

22
%

$
131,540

Percentage of Segment Net Sales

15
%

16
%
Outdoor

125,378

23
%

102,232

Percentage of Segment Net Sales

14
%

14
%
Aviation

57,165

-1
%

57,871

Percentage of Segment Net Sales

11
%

12
%
Marine

83,036

18
%

70,437

Percentage of Segment Net Sales

12
%

14
%
Auto

60,370

23
%

49,255

Percentage of Segment Net Sales

15
%

15
%
Consumer Auto

29,231

(4
%)

30,334

Percentage of Segment Net Sales

13
%

15
%
Auto OEM

31,139

65
%

18,921

Percentage of Segment Net Sales

17
%

15
%
Total

$
485,896

18
%

$
411,335

Percentage of Total Net Sales

14
%

15
%

Selling, general and administrative expense increased 18% in absolute dollars and was 100 basis points lower as a percent of revenue compared to the year-ago period. The absolute dollar increase in the first three quarters of 2021 was primarily attributable to increased personnel related expenses and information technology costs, and the decrease as a percent of revenue was primarily due to greater leverage of operating costs.

~~Research and Development Expense~~

Research & Development

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
105,521

19
%

$
88,519

Percentage of Segment Net Sales

10
%

10
%
Outdoor

93,262

21
%

76,855

Percentage of Segment Net Sales

10
%

11
%
Aviation

182,430

4
%

175,103

Percentage of Segment Net Sales

34
%

38
%
Marine

83,516

23
%

67,738

Percentage of Segment Net Sales

12
%

14
%
Auto

153,524

57
%

97,798

Percentage of Segment Net Sales

37
%

31
%
Consumer Auto

40,153

13
%

35,398

Percentage of Segment Net Sales

17
%

18
%
Auto OEM

113,371

82
%

62,400

Percentage of Segment Net Sales

63
%

51
%
Total

$
618,253

22
%

$
506,013

Percentage of Total Net Sales

17
%

18
%

Research and development expense as a percent of revenue was relatively flat when compared to the year-ago period and increased 22% in absolute dollars. The absolute dollar increase was primarily due to higher engineering personnel costs across all of our operating segments. The auto increase in absolute dollars and as a percent of revenue was primarily attributable to higher engineering personnel costs related to investments in auto OEM programs and a lower proportion of such costs being contractually reimbursable.

~~Operating Income~~

Operating Income

39-Weeks Ended September 25, 2021

Year-over-Year Change

39-Weeks Ended September 26, 2020

Fitness

$
268,489

41
%

$
190,075

Percentage of Segment Net Sales

25
%

22
%
Outdoor

339,031

29
%

262,057

Percentage of Segment Net Sales

38
%

37
%
Aviation

146,974

42
%

103,483

Percentage of Segment Net Sales

27
%

22
%
Marine

205,042

53
%

134,195

Percentage of Segment Net Sales

30
%

28
%
Auto

(56,036
)

720
%

(6,837
)
Percentage of Segment Net Sales

(14
%)

(2
%)
Consumer Auto

35,388

38
%

25,628

Percentage of Segment Net Sales

15
%

13
%
Auto OEM

(91,424
)

182
%

(32,465
)
Percentage of Segment Net Sales

(51
%)

(26
%)
Total

$
903,500

32
%

$
682,973

Percentage of Total Net Sales

25
%

24
%

Operating income increased 32% in absolute dollars and increased 110 basis points as a percent of revenue when compared to the year-ago period. This increase was due to revenue growth and lower operating expenses as a percent of revenue, as described above. Auto OEM experienced an operating loss in the current quarter, and we expect this trend to continue through 2021, primarily due to a lower gross margin and increased expense associated with certain programs, as described above.

~~Other Income (Expense)~~

Other Income (Expense)

39-Weeks Ended September 25, 2021

39-Weeks Ended September 26, 2020

Interest income

$
21,568

$
30,258

Foreign currency losses

(30,621
)

(9,802
)
Other Income

3,511

8,515

Total

$
(5,542
)

$
28,971

The average returns on cash and investments, including interest and capital gain/loss returns, during the 39-week periods ended September 25, 2021 and September 26, 2020 was 1.0% and 1.6%, respectively. Interest income decreased primarily due to lower yields on fixed-income securities.

Foreign currency gains and losses for the Company are driven by movements of a number of currencies in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the Euro is the functional currency of several subsidiaries, and the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., although some transactions and balances are denominated in British Pounds. Other notable currency exposures include the Australian Dollar, Chinese Yuan, Japanese Yen, and Polish Zloty. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity.

The $30.6 million currency loss recognized in the 39-week period ended September 25, 2021 was primarily due to the U.S. Dollar strengthening against the Euro and Polish Zloty and weakening against the Taiwan Dollar within the 39-week period ended September 25, 2021. During this period, the U.S. Dollar strengthened 4.0% against the Euro and 5.9% against the Polish Zloty, resulting in losses of $13.9 million and $3.8 million, respectively, while the U.S. Dollar weakened 1.4% against the Taiwan Dollar, resulting in a loss of $7.4 million. The remaining net currency loss of $5.5 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

The $9.8 million currency loss recognized in the 39-week period ended September 26, 2020 was primarily due to the U.S. Dollar weakening against the Taiwan Dollar, partially offset by the U.S. Dollar weakening against the Euro within the 39-week period ended September 26, 2020. During this period, the U.S. Dollar weakened 2.9% against the Taiwan Dollar, resulting in a loss of $13.0 million, while the U.S. Dollar weakened 4.1% against the Euro, resulting in a gain of $9.0 million. The remaining net currency loss of $5.8 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

~~Income Tax Provision~~

The Company recorded income tax expense of $101.9 million in the first three quarters of 2021 compared to income tax expense of $53.2 million in the first three quarters of 2020. The effective tax rate was 11.3% in the first three quarters of 2021, compared to 7.5% in the first three quarters of 2020. The increase was primarily due to a decrease in uncertain tax position reserves released in the first three quarters of 2021 compared to the first three quarters of 2020.

~~Net Income~~

As a result of the above, net income for the 39-week period ended September 25, 2021 was $796.1 million compared to $658.8 million for the 39-week period ended September 26, 2020, an increase of $137.3 million.

Liquidity and Capital Resources

As of ~~September 25, 2021,~~March 26, 2022, we had approximately ~~$3.2~~$3.0 billion of cash, cash equivalents and marketable securities. We primarily use cash flow from operations, and expect that future cash requirements may be used, to fund our capital expenditures, support our working capital requirements, pay dividends, fund share repurchases, and fund strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our short- and long-term projected working capital needs, capital expenditures, and other cash requirements.

It is management’s goal to invest the on-hand cash in accordance with the investment policy, which has been approved by the Company’s 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 the first ~~three~~ quarters of ~~2021~~2022 and ~~2020~~2021 were approximately ~~0.9%~~1.0% and ~~1.5%~~1.0%, respectively. 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. See Note 8 for additional information regarding marketable securities.

~~Operating Activities~~Cash Flows

39-Weeks Ended

39-Weeks Ended

September 25, 2021

September 26, 2020

Net cash provided by operating activities

$
843,465

$
699,449

~~The $144.0 million increase in cash~~Cash provided by operating activities ~~during~~totaled $185.6 million for the first ~~three quarters~~quarter of ~~2021~~2022, compared to $368.4 million for the first quarter of 2021. The decrease was primarily due to higher purchases of inventory associated with the Company's strategy to increase days of supply to support our increasingly diversified product lines, and a decrease in collections of accounts receivable when compared to the year-ago quarter.

Cash used in investing activities totaled $135.9 million in the first ~~three quarters~~quarter of ~~2020~~2022, compared to $104.1 million for the first quarter of 2021. The increase was primarily due to ~~an increase~~higher capital expenditures as the Company invested more heavily in net income of $137.3 million and an increase in other non-cash adjustments to net income of $55.6 million. These increases were partially offset by an increase in cash used in working capital of $48.9 million (which included an increase of $301.3 million in cash paidplatforms for inventory and an increase of $14.1 million in net cash used in other activities, partially offset by an increase of $137.6 million in net receipts of accounts receivable, a decrease of $69.5 million net cash used in accounts payable, and a decrease of $59.4 million in net cash used for income taxes).

~~Investing Activities~~growth.

39-Weeks Ended

39-Weeks Ended

September 25, 2021

September 26, 2020

Net cash used in investing activities

$
(311,706
)

$
(179,331
)

Cash used in financing activities totaled $123.3 million for the first quarter of 2022, compared to $116.3 million for the first quarter of 2021. This increase was primarily due to higher cash dividend payments in the first quarter of 2022, as our declared dividend increased from $0.61 per share for the four calendar quarters beginning in June 2020 to $0.67 per share for the four calendar quarters beginning in June 2021.

Use of Cash

Operating Leases

The ~~$132.4~~Company has lease arrangements for certain real estate properties, vehicles, and equipment. Leased properties are typically used for office space, distribution, and retail. As of March 26, 2022, the Company had fixed lease payment obligations of $116.0 million, increase in cash used in investing activities during the first three quarters of 2021 compared to the first three quarters of 2020 was primarily due to an increase in net purchases of marketable securities of $212.5with $24.8 million ~~and an increase in net purchases of property and equipment of $52.8 million, partially offset by a decrease in cash payments for acquisitions of $132.8 million.~~payable within 12 months.

~~Financing Activities~~

39-Weeks Ended

39-Weeks Ended

September 25, 2021

September 26, 2020

Net cash used in financing activities

$
(344,505
)

$
(331,847
)

24Inventory Purchase Obligations

The ~~$12.7~~Company obtains various raw materials and components for its products from a variety of third party suppliers. The Company’s inventory purchase obligations are primarily noncancelable. As of March 26, 2022, the Company had inventory purchase obligations of $1,212.8 million, ~~increase in cash used in financing activities during the first three quarters of 2021 compared to the first three quarters of 2020 was due to an increase in dividend payments of $28.6~~with $941.7 million ~~and an increase in purchases of treasury stock related to equity awards of $4.6 million, partially offset by an increase in proceeds from the issuance of treasury stock of $20.5 million.~~payable within 12 months.

~~Off-Balance Sheet Arrangements~~Other Purchase Obligations

~~We do not have any off-balance sheet arrangements.~~The Company’s other purchase obligations primarily consist of noncancelable commitments for capital expenditures and other indirect purchases in connection with conducting our business. As of March 26, 2022, the Company had other purchase obligations of $549.4 million, with $348.8 million payable within 12 months.

Critical Accounting Policies and Estimates

General

~~Garmin’s~~Our discussion and analysis of ~~its~~ financial condition and results of operations are based upon ~~Garmin’s Condensed Consolidated Financial Statements,~~the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The presentation of these financial statements requires ~~Garmin~~management to make estimates and judgments that affect the reported amounts of assets, liabilities, ~~revenue~~revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, ~~Garmin evaluates its~~we evaluate our estimates, including those related to customer sales programs and incentives, product returns, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, and contingencies ~~customer sales programs~~ and ~~incentives, product returns, relative standalone selling prices, and progress toward completion of performance obligations in certain contracts with customers. Garmin bases its~~litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a description of the significant accounting policies and methods used in the preparation of the Company’s ~~Condensed Consolidated Financial Statements,~~condensed consolidated financial statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020.~~25, 2021. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week ~~and 39-week periods~~period ended ~~September 25, 2021.~~March 26, 2022.

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 ~~26, 2020.~~25, 2021. There have been no material changes during the 13-week ~~and 39-week periods~~period ended ~~September 25, 2021~~March 26, 2022 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 ~~September 25, 2021,~~March 26, 2022, 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 ~~September 25, 2021~~March 26, 2022 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 ~~September 25, 2021~~March 26, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

2518

Part II - Other Information

Item 1. Legal Proceedings

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. For additional information, see Note 6 – Commitments and Contingencies in the above Condensed Consolidated Financial Statements and Part I, Item 3, “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~26, 2020.~~25, 2021.

Item 1A. Risk Factors

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 25, 2021. There have been no material changes during the 13-week period ended March 26, ~~2020, as supplemented by~~2022 in the ~~risk factor set forth below.~~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, including those 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.

The following is an amended and restated version of a risk factor included in Part II, Item 1A, "Risk Factors” of our Quarterly Report on Form 10-Q for the period ended June 26, 2021, and supplemental to the risk factors included in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 26, 2020:

~~Public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases have had and will likely continue to have significant impacts on our business.~~

Widespread public health emergencies or outbreaks of epidemics, pandemics, or contagious diseases, such as the COVID-19 pandemic, have had, and will likely continue to have, significant impacts on our business. The COVID-19 pandemic continues to rapidly evolve, creating disruption and uncertainty around the world, which has resulted in, and we expect will continue to result in, a change in overall demand for certain of our products and other operational impacts. There are unknown factors, such as the duration and severity of the pandemic, evolving variants of the virus that causes COVID-19, the nature and length of actions taken by governments, businesses and individuals to contain or mitigate its impact, the severity and duration of the economic impact caused by the pandemic, the uncertainty surrounding the efficacy, distribution and uptake of vaccines, along with the effectiveness of our response, that may affect the magnitude of effects to our business operations, results of operations, and its ultimate impact on our financial condition.

Demand for certain of our products has been, and may continue to be, affected in several ways during the COVID-19 pandemic. Some consumers have been and may continue to be less able or less likely to purchase certain of our products due to economic hardships, governmental restrictions affecting them and the retail outlets that sell our products, voluntary behavior changes associated with public health guidance, the prioritization of other goods and services by online retailers that sell our products, restrictions on the ability of online retailers to ship products to certain areas, the cancellation of trade shows and other events that are otherwise important in the marketing and sale of our products, and the potential failure and closure of retail outlets and online retailers that sell our products. Certain of our sales and distribution offices have experienced and may again experience temporary closure due to governmental restrictions. Additional or prolonged closures of certain sales and distribution offices could affect our ability to market and distribute products to meet customer demand. The adverse impacts of the pandemic have created economic stress in the global marketplace, high levels of unemployment, loss of income and/or wealth for some individuals, and general economic uncertainty. These conditions have affected and are expected to continue to affect the willingness or ability of some customers to purchase certain of our products or those of original equipment manufacturers in which our products are installed. We have also experienced increased demand for certain of our products during the COVID-19 pandemic as consumer behavior and demand shifted toward products offered by our fitness, outdoor, and marine segments. It is not yet known whether these behaviors and demand will persist, and there could be a decline in the demand for certain of these products as the overall pandemic situation improves.

Our supply chain has been and may continue to be adversely impacted by the COVID-19 pandemic. We have experienced delays in procuring and may be unable to procure certain components from our suppliers, and the cost of procuring certain components has increased and could continue to increase. We have faced logistics constraints and higher freight costs, the scope and severity of which may intensify. Reduced demand for certain of our products has resulted in, and may continue to result in, reduced utilization of certain of our manufacturing facilities and higher per-unit costs for certain products. Certain of our manufacturing facilities have experienced and may in the future experience inopportune temporary closures or reduced hours, which could adversely affect the costs incurred to produce our products and our ability to meet demand.

The COVID-19 pandemic has had and will continue to have several other operational impacts on our business, which will or may include employees working remotely, temporarily ceasing operations in some offices due to government restrictions, business travel restrictions, and the cancellation of events that are otherwise important in the development, marketing and sale of our products. These changes in our business operations may result in reduced efficiency and lower productivity. We have incurred and are expected to continue to incur increased costs as we provide additional benefits to assist our employees during the pandemic and provide a safe and healthy workplace for employees who continue or begin to return to work in our facilities. Similar operational and financial hardships on our business partners may result in aged or uncollectable receivables, and the reduced demand for certain of our products could result in obsolescence of certain inventory. If the economy experiences a sustained downturn of significant proportion that impacts portions of our business, we may also need to incur the costs and organizational impacts of personnel restructuring.

Additional risks and impacts including gross margin fluctuation, foreign currency fluctuations, successful continued product development, impacts to our key personnel, and dependencies on third party suppliers, may be heightened as a result of the COVID-19 pandemic and evolving variants of the virus that causes COVID-19. There are further unknown risks and impacts due to the uncertainty and rapidly evolving nature of the pandemic including, but not limited to, uncertainty around the evolution of the pandemic, the unprecedented imposition of preventative measures by governments that impact the economy and normal operations of a business and the timing and manner of relaxation of those measures. Potential future health emergencies may present risks and impacts similar to the ongoing COVID-19 pandemic. If we are unable to manage these risks and uncertainties, our business, financial condition, and results of operations could be materially impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not ~~applicable~~applicable.

Item 3. Defaults Upon Senior Securities

~~None~~None.

Item 4. Mine Safety Disclosures

Not ~~applicable~~applicable.

Item 5. Other Information

Not ~~applicable~~applicable.

2719

Item 6. Exhibits


Exhibit 10.1		Garmin Ltd. 2005 Equity Incentive Plan, as amended and restated on April 22, 2022.

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 – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Exhibit 101.SCH		Inline XBRL Taxonomy Extension Schema

Exhibit 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

Exhibit 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

Exhibit 104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

2820

SIGNATURES

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: ~~October~~April 27, ~~2021~~2022

2921


Selling, General & Admin. Expenses	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020
Fitness	$	52,784			14	%	$	46,239
Percentage of Segment Net Sales		15	%					14	%
Outdoor		42,712			15	%		37,160
Percentage of Segment Net Sales		13	%					11	%
Aviation		18,887			-7	%		20,225
Percentage of Segment Net Sales		10	%					13	%
Marine		27,034			21	%		22,405
Percentage of Segment Net Sales		13	%					14	%
Auto		21,098			31	%		16,105
Percentage of Segment Net Sales		15	%					12	%
Consumer Auto		10,272			10	%		9,333
Percentage of Segment Net Sales		12	%					11	%
Auto OEM		10,826			60	%		6,772
Percentage of Segment Net Sales		20	%					15	%
Total	$	162,515			14	%	$	142,134
Percentage of Total Net Sales		14	%					13	%


Research & Development	13-Weeks Ended September 25, 2021			Year-over-Year Change			13-Weeks Ended September 26, 2020
Fitness	$	37,347			20	%	$	31,028
Percentage of Segment Net Sales		11	%					9	%
Outdoor		32,321			22	%		26,460
Percentage of Segment Net Sales		10	%					8	%
Aviation		60,353			3	%		58,594
Percentage of Segment Net Sales		33	%					39	%
Marine		29,605			26	%		23,415
Percentage of Segment Net Sales		14	%					14	%
Auto		54,431			54	%		35,385
Percentage of Segment Net Sales		39	%					27	%
Consumer Auto		14,276			13	%		12,630
Percentage of Segment Net Sales		17	%					15	%
Auto OEM		40,155			76	%		22,755
Percentage of Segment Net Sales		73	%					49	%
Total	$	214,057			22	%	$	174,882
Percentage of Total Net Sales		18	%					16	%