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 ~~June 29,~~September 28, 2019

☐

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

For the transition period from ~~_____~~ to ~~_____~~

Commission file number 0-31983

GARMIN ~~LTD.~~

LTD.

(Exact name of Company as specified in its charter)

Switzerland		98-0229227
(State or other jurisdiction of		(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 52630 1600

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

~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common~~Registered Shares, CHF 0.10 Per Share Par Value	GRMN	The Nasdaq Stock Market, LLC
(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 ☒þ 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 ☒þ 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 ☒	þ	Accelerated Filer ☐	~~Non-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 ~~July 29,~~October 28, 2019

Registered Shares, CHF 0.10 par value: 198,077,418 (including treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended ~~June 29,~~September 28, 2019

Table of Contents

~~Part I - Financial Information~~				Page

Part I - Financial Information

Item 1.		Condensed Consolidated Financial Statements		1

		Condensed Consolidated Balance Sheets at ~~June 29,~~September 28, 2019 and December 29, 2018 (Unaudited)		1

		Condensed Consolidated Statements of Income for the 13-Weeks and ~~26-Weeks~~39-Weeks ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 (Unaudited)		2

		Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and ~~26-Weeks~~39-Weeks ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 (Unaudited)		3

		Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and ~~26-Weeks~~39-Weeks ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 (Unaudited)	~~4-5~~	4 - 5

		Condensed Consolidated Statements of Cash Flows for the ~~26-Weeks~~39-Weeks ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 (Unaudited)		6

		Notes to Condensed Consolidated Financial Statements (Unaudited)		7

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3.		Quantitative and Qualitative Disclosures About Market Risk		30

Item 4.		Controls and Procedures		30

Part II - Other Information

Item 1.		Legal Proceedings		31

Item 1A.		Risk Factors		31

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		31

Item 3.		Defaults Upon Senior Securities		31

Item 4.		Mine Safety Disclosures		31

Item 5.		Other Information		31

~~Item 6.~~	~~Exhibits~~	31

~~Signature Page~~Item 6.		Exhibits		32

Signature Page				33

Index to Exhibits			33	34

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)

June 29, December 29,
2019 2018
Assets
Current assets:
Cash and cash equivalents $ 820,181 $ 1,201,732
Marketable securities 239,765 182,989
Accounts receivable, net 583,913 569,833
Inventories 648,140 561,840
Deferred costs 27,040 28,462
Prepaid expenses and other current assets 141,539 120,512
Total current assets 2,460,578 2,665,368

Property and equipment, net 702,108 663,527
Operating lease right-of-use assets 59,166 —

Restricted cash 73 73
Marketable securities 1,319,026 1,330,123
Deferred income taxes 162,739 176,959
Noncurrent deferred costs 27,018 29,473
Intangible assets, net 653,014 417,080
Other assets 141,061 100,255
Total assets $ 5,524,783 $ 5,382,858

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 214,763 $ 204,985
Salaries and benefits payable 106,331 113,087
Accrued warranty costs 39,330 38,276
Accrued sales program costs 74,302 90,388
Deferred revenue 94,980 96,372
Accrued royalty costs 14,578 24,646
Accrued advertising expense 28,444 31,657
Other accrued expenses 90,439 69,777
Income taxes payable 39,879 51,642
Dividend payable 324,655 200,483
Total current liabilities 1,027,701 921,313

Deferred income taxes 105,865 92,944
Noncurrent income taxes 121,997 127,211
Noncurrent deferred revenue 71,700 76,566
Noncurrent operating lease liabilities 46,281 —
Other liabilities 273 1,850

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 190,102 shares outstanding at June 29, 2019; and 189,461 shares outstanding at December 29, 2018; 17,979 17,979
Additional paid-in capital 1,825,135 1,823,638
Treasury stock (368,200 ) (397,692 )
Retained earnings 2,641,371 2,710,619
Accumulated other comprehensive income 34,681 8,430
Total stockholders’ equity 4,150,966 4,162,974
Total liabilities and stockholders’ equity $ 5,524,783 $ 5,382,858

	September 28,			December 29,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	976,402		$	1,201,732
Marketable securities		300,542			182,989
Accounts receivable, net		558,299			569,833
Inventories		749,825			561,840
Deferred costs		26,450			28,462
Prepaid expenses and other current assets		146,325			120,512
Total current assets		2,757,843			2,665,368

Property and equipment, net		710,591			663,527
Operating lease right-of-use assets		55,399			-

Restricted cash		1,036			73
Marketable securities		1,252,219			1,330,123
Deferred income taxes		158,963			176,959
Noncurrent deferred costs		25,156			29,473
Intangible assets, net		637,716			417,080
Other assets		156,182			100,255
Total assets	$	5,755,105		$	5,382,858

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	235,548		$	204,985
Salaries and benefits payable		109,323			113,087
Accrued warranty costs		37,998			38,276
Accrued sales program costs		58,459			90,388
Deferred revenue		95,572			96,372
Accrued royalty costs		11,673			24,646
Accrued advertising expense		21,246			31,657
Other accrued expenses		87,333			69,777
Income taxes payable		60,728			51,642
Dividend payable		325,075			200,483
Total current liabilities		1,042,955			921,313

Deferred income taxes		113,225			92,944
Noncurrent income taxes		105,309			127,211
Noncurrent deferred revenue		69,600			76,566
Noncurrent operating lease liabilities		42,855			-
Other liabilities		267			1,850

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 190,103 shares outstanding at September 28, 2019; and 189,461 shares outstanding at December 29, 2018;		17,979			17,979
Additional paid-in capital		1,841,696			1,823,638
Treasury stock		(368,187	)		(397,692	)
Retained earnings		2,868,816			2,710,619
Accumulated other comprehensive income		20,590			8,430
Total stockholders’ equity		4,380,894			4,162,974
Total liabilities and stockholders’ equity	$	5,755,105		$	5,382,858

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2019 2018 2019 2018
Net sales $ 954,840 $ 894,452 $ 1,720,890 $ 1,605,325

Cost of goods sold 379,475 371,182 693,827 655,520

Gross profit 575,365 523,270 1,027,063 949,805

Advertising expense 41,523 43,549 69,139 68,861
Selling, general and administrative expense 128,738 120,500 255,519 237,564
Research and development expense 148,883 141,713 294,801 283,670
Total operating expense 319,144 305,762 619,459 590,095

Operating income 256,221 217,508 407,604 359,710

Other income:
Interest income 13,735 10,995 27,439 21,222
Foreign currency gains 3,413 2,647 3,727 3,463
Other income 2,409 4,918 3,273 5,653
Total other income 19,557 18,560 34,439 30,338

Income before income taxes 275,778 236,068 442,043 390,048

Income tax provision 52,122 45,726 78,214 70,333

Net income $ 223,656 $ 190,342 $ 363,829 $ 319,715

Net income per share:
Basic $ 1.18 $ 1.01 $ 1.92 $ 1.70
Diluted $ 1.17 $ 1.00 $ 1.91 $ 1.69

Weighted average common shares outstanding:
Basic 189,855 188,542 189,728 188,432
Diluted 190,714 189,461 190,657 189,377


	13-Weeks Ended						39-Weeks Ended
	September 28,			September 29,			September 28,			September 29,
	2019			2018			2019			2018
Net sales	$	934,383		$	810,011		$	2,655,273		$	2,415,336

Cost of goods sold		366,925			329,264			1,060,752			984,783

Gross profit		567,458			480,747			1,594,521			1,430,553

Advertising expense		32,668			31,140			101,808			100,000
Selling, general and administrative expense		124,769			114,669			380,289			352,234
Research and development expense		148,561			138,979			443,361			422,649
Total operating expense		305,998			284,788			925,458			874,883

Operating income		261,460			195,959			669,063			555,670

Other income (expense):
Interest income		12,309			11,089			39,748			32,310
Foreign currency losses		(16,296	)		(6,868	)		(12,568	)		(3,405	)
Other income		294			1,147			3,567			6,800
Total other income (expense)		(3,693	)		5,368			30,747			35,705

Income before income taxes		257,767			201,327			699,810			591,375

Income tax provision		29,901			17,113			108,115			87,445

Net income	$	227,866		$	184,214		$	591,695		$	503,930

Net income per share:
Basic	$	1.20		$	0.98		$	3.12		$	2.67
Diluted	$	1.19		$	0.97		$	3.10		$	2.66

Weighted average common shares outstanding:
Basic		190,102			188,799			189,853			188,554
Diluted		190,962			190,005			190,790			189,586

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2019 2018 2019 2018
Net income $ 223,656 $ 190,342 $ 363,829 $ 319,715
Foreign currency translation adjustment 314 (49,868 ) (8,920 ) (26,368 )
Change in fair value of available-for-sale marketable securities, net of deferred taxes 16,029 (4,842 ) 35,171 (19,876 )
Comprehensive income $ 239,999 $ 135,632 $ 390,080 $ 273,471


	13-Weeks Ended						39-Weeks Ended
	September 28,			September 29,			September 28,			September 29,
	2019			2018			2019			2018
Net income	$	227,866		$	184,214		$	591,695		$	503,930
Foreign currency translation adjustment		(18,885	)		(3,940	)		(27,805	)		(30,308	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		4,794			(1,168	)		39,965			(21,044	)
Comprehensive income	$	213,775		$	179,106		$	603,855		$	452,578

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018

(In thousands, except per share information)

Accumulated
Additional Other
Common Paid-In Treasury Retained Comprehensive
Stock Capital Stock Earnings Income (Loss) Total
Balance at March 31, 2018 $ 17,979 $ 1,818,532 $ (450,160 ) $ 2,546,400 $ 64,442 $ 3,997,193
Net income — — — 190,342 — 190,342
Translation adjustment — — — — (49,868 ) (49,868 )
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 492 — — — — (4,842 ) (4,842 )
Comprehensive income 135,632
Dividends declared ($ 2.12 per share) — — — (400,128 ) — (400,128 )
Issuance of treasury stock related to equity awards — (4,324 ) 16,539 — — 12,215
Stock compensation — 14,307 — — — 14,307
Purchase of treasury stock related to equity awards — — (338 ) — — (338 )
Balance at June 30, 2018 $ 17,979 $ 1,828,515 $ (433,959 ) $ 2,336,614 $ 9,732 $ 3,758,881
Accumulated
Additional Other
Common Paid-In Treasury Retained Comprehensive
Stock Capital Stock Earnings Income (Loss) Total
Balance at March 30, 2019 $ 17,979 $ 1,810,196 $ (381,815 ) $ 2,850,588 $ 18,338 $ 4,315,286
Net income — — — 223,656 — 223,656
Translation adjustment — — — — 314 314
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 2,406 — — — — 16,029 16,029
Comprehensive income 239,999
Dividends declared ($ 2.28 per share) — — — (432,873 ) — (432,873 )
Issuance of treasury stock related to equity awards — (893 ) 13,875 — — 12,982
Stock compensation — 15,832 — — — 15,832
Purchase of treasury stock related to equity awards — — (260 ) — — (260 )
Balance at June 29, 2019 $ 17,979 $ 1,825,135 $ (368,200 ) $ 2,641,371 $ 34,681 $ 4,150,966

Common Stock

Additional Paid-In Capital

Treasury Stock

Retained Earnings

Accumulated Other Comprehensive Income (Loss)

											Accumulated
			Additional								Other
	Common		Paid-In			Treasury			Retained		Comprehensive
	Stock		Capital			Stock			Earnings		Income (Loss)			Total
Balance at June 30, 2018	$	17,979	$	1,828,515		$	(433,959	)	$	2,336,614	$	9,732		$	3,758,881
Net income		–		–			–			184,214		–			184,214
Translation adjustment		–		–			–			–		(3,940	)		(3,940	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $107		–		–			–			–		(1,168	)		(1,168	)
Comprehensive income															179,106
Dividends declared		–		–			–			–		–			–
Issuance of treasury stock related to equity awards		–		(311	)		693			–		–			382
Stock compensation		–		14,347			–			–		–			14,347
Purchase of treasury stock related to equity awards		–		–			(8	)		–		–			(8	)
Reclassification under ASU 2016-06
Reclassification under ASU 2018-02
Balance at September 29, 2018	$	17,979	$	1,842,551		$	(433,274	)	$	2,520,828	$	4,624		$	3,952,708

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at June 29, 2019	$	17,979	$	1,825,135		$	(368,200	)	$	2,641,371		$	34,681		$	4,150,966
Net income		–		–			–			227,866			–			227,866
Translation adjustment		–		–			–			–			(18,885	)		(18,885	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $657		–		–			–			–			4,794			4,794
Comprehensive income																213,775
Dividends declared		–		–			–			(421	)		–			(421	)
Issuance of treasury stock related to equity awards		–		(30	)		30			–			–			–
Stock compensation		–		16,591			–			–			–			16,591
Purchase of treasury stock related to equity awards		–		–			(17	)		–			–			(17	)
Balance at September 28, 2019	$	17,979	$	1,841,696		$	(368,187	)	$	2,868,816		$	20,590		$	4,380,894

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the ~~26-Weeks~~39-Weeks Ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018

(In thousands, except per share information)

Accumulated
Additional Other
Common Paid-In Treasury Retained Comprehensive
Stock Capital Stock Earnings Income (Loss) Total
Balance at December 30, 2017 $ 17,979 $ 1,828,386 $ (468,818 ) $ 2,418,444 $ 56,428 $ 3,852,419
Net income — — — 319,715 — 319,715
Translation adjustment — — — — (26,368 ) (26,368 )
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 2,907 — — — — (19,876 ) (19,876 )
Comprehensive income 273,471
Dividends declared ($ 2.12 per share) — — — (400,297 ) — (400,297 )
Issuance of treasury stock related to equity awards — (27,617 ) 41,759 — — 14,142
Stock compensation — 27,746 — — — 27,746
Purchase of treasury stock related to equity awards — — (6,900 ) — — (6,900 )
Reclassification under ASU 2016-06 — — — (1,700 ) — (1,700 )
Reclassification under ASU 2018-02 — — — 452 (452 ) —
Balance at June 30, 2018 $ 17,979 $ 1,828,515 $ (433,959 ) $ 2,336,614 $ 9,732 $ 3,758,881
Accumulated
Additional Other
Common Paid-In Treasury Retained Comprehensive
Stock Capital Stock Earnings Income (Loss) Total
Balance at December 29, 2018 $ 17,979 $ 1,823,638 $ (397,692 ) $ 2,710,619 $ 8,430 $ 4,162,974
Net income — — — 363,829 — 363,829
Translation adjustment — — — — (8,920 ) (8,920 )
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 5,311 — — — — 35,171 35,171
Comprehensive income 390,080
Dividends declared ($ 2.28 per share) — — — (433,077 ) — (433,077 )
Issuance of treasury stock related to equity awards — (29,464 ) 42,446 — — 12,982
Stock compensation — 30,961 — — — 30,961
Purchase of treasury stock related to equity awards — — (12,954 ) — — (12,954 )
Balance at June 29, 2019 $ 17,979 $ 1,825,135 $ (368,200 ) $ 2,641,371 $ 34,681 $ 4,150,966

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at December 30, 2017	$	17,979	$	1,828,386		$	(468,818	)	$	2,418,444		$	56,428		$	3,852,419
Net income		–		–			–			503,930			–			503,930
Translation adjustment		–		–			–			–			(30,308	)		(30,308	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $3,014		–		–			–			–			(21,044	)		(21,044	)
Comprehensive income																452,578
Dividends declared ($2.12 per share)		–		–			–			(400,298	)		–			(400,298	)
Issuance of treasury stock related to equity awards		–		(27,929	)		42,453			–			–			14,524
Stock compensation		–		42,094			–			–			–			42,094
Purchase of treasury stock related to equity awards		–		–			(6,909	)		–			–			(6,909	)
Reclassification under ASU 2016-06		–		–			–			(1,700	)		–			(1,700	)
Reclassification under ASU 2018-02		–		–			–			452			(452	)		-
Balance at September 29, 2018	$	17,979	$	1,842,551		$	(433,274	)	$	2,520,828		$	4,624		$	3,952,708

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at December 29, 2018	$	17,979	$	1,823,638		$	(397,692	)	$	2,710,619		$	8,430		$	4,162,974
Net income		–		–			–			591,695			–			591,695
Translation adjustment		–		–			–			–			(27,805	)		(27,805	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $5,968		–		–			–			–			39,965			39,965
Comprehensive income																603,855
Dividends declared ($2.28 per share)		–		–			–			(433,498	)		–			(433,498	)
Issuance of treasury stock related to equity awards		–		(29,495	)		42,477			–			–			12,982
Stock compensation		–		47,553			–			–			–			47,553
Purchase of treasury stock related to equity awards		–		–			(12,972	)		–			–			(12,972	)
Balance at September 28, 2019	$	17,979	$	1,841,696		$	(368,187	)	$	2,868,816		$	20,590		$	4,380,894

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

26-Weeks Ended
June 29, June 30,
2019 2018
Operating activities:
Net income $ 363,829 $ 319,715
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 34,526 31,800
Amortization 16,208 16,420
Loss (gain) on sale or disposal of property and equipment 94 (1,042 )
Provision for doubtful accounts 660 616
Provision for obsolete and slow moving inventories 17,842 11,725
Unrealized foreign currency (gain) loss (6,811 ) 2,401
Deferred income taxes 7,077 11,000
Stock compensation expense 30,961 27,747
Realized (gains) losses on marketable securities (60 ) 231
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable 5,529 48,099
Inventories (86,059 ) (4,666 )
Other current and non-current assets (68,370 ) (4,841 )
Accounts payable 5,960 1,618
Other current and non-current liabilities (33,001 ) (49,237 )
Deferred revenue (6,252 ) (7,483 )
Deferred costs 3,876 962
Income taxes payable (10,791 ) 32,998
Net cash provided by operating activities 275,218 438,063

Investing activities:
Purchases of property and equipment (60,495 ) (93,072 )
Proceeds from sale of property and equipment 271 1,282
Purchase of intangible assets (853 ) (2,452 )
Purchase of marketable securities (192,168 ) (209,387 )
Redemption of marketable securities 182,860 127,152
Acquisitions, net of cash acquired (276,014 ) (9,417 )
Net cash used in investing activities (346,399 ) (185,894 )

Financing activities:
Dividends (308,905 ) (196,086 )
Proceeds from issuance of treasury stock related to equity awards 12,982 14,142
Purchase of treasury stock related to equity awards (12,954 ) (6,900 )
Net cash used in financing activities (308,877 ) (188,844 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash (1,493 ) (8,217 )

Net (decrease) increase in cash, cash equivalents, and restricted cash (381,551 ) 55,108
Cash, cash equivalents, and restricted cash at beginning of period 1,201,805 891,759
Cash, cash equivalents, and restricted cash at end of period $ 820,254 $ 946,867


	39-Weeks Ended
	September 28,			September 29,
	2019			2018
Operating activities:
Net income	$	591,695		$	503,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		52,503			47,902
Amortization		25,112			23,574
Gain on sale or disposal of property and equipment		(5	)		(491	)
Provision for doubtful accounts		933			1,265
Provision for obsolete and slow moving inventories		32,501			17,719
Unrealized foreign currency loss		14,653			4,158
Deferred income taxes		18,012			20,177
Stock compensation expense		47,553			42,094
Realized (gains) losses on marketable securities		(213	)		481
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		14,311			111,955
Inventories		(210,622	)		(69,139	)
Other current and non-current assets		(86,538	)		5,102
Accounts payable		27,523			32,601
Other current and non-current liabilities		(54,401	)		(57,245	)
Deferred revenue		(7,750	)		(14,923	)
Deferred costs		6,326			5,581
Income taxes payable		(7,423	)		27,041
Net cash provided by operating activities		464,170			701,782

Investing activities:
Purchases of property and equipment		(91,469	)		(122,846	)
Proceeds from sale of property and equipment		370			1,296
Purchase of intangible assets		(1,862	)		(2,982	)
Purchase of marketable securities		(333,320	)		(314,179	)
Redemption of marketable securities		333,783			229,066
Acquisitions, net of cash acquired		(275,310	)		(29,170	)
Net cash used in investing activities		(367,808	)		(238,815	)

Financing activities:
Dividends		(308,905	)		(296,149	)
Proceeds from issuance of treasury stock related to equity awards		12,982			14,524
Purchase of treasury stock related to equity awards		(12,972	)		(6,909	)
Net cash used in financing activities		(308,895	)		(288,534	)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(11,834	)		(9,650	)

Net (decrease) increase in cash, cash equivalents, and restricted cash		(224,367	)		164,783
Cash, cash equivalents, and restricted cash at beginning of period		1,201,805			891,759
Cash, cash equivalents, and restricted cash at end of period	$	977,438		$	1,056,542

See accompanying notes.

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~June 29,~~

September 28, 2019

(In thousands, except per share information)

~~1. Accounting Policies~~

Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Additionally, the Condensed Consolidated Financial Statements should be read in conjunction with Item 2 of Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in this Form 10-Q. Operating results for the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019 are not necessarily indicative of the results that may be expected for the year ending December 28, 2019.

The Condensed Consolidated Balance Sheet at December 29, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018.

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 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 ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 both contain operating results for 13 weeks.

Recently Adopted Accounting Standards

Leases

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. The FASB subsequently issued Accounting Standards Update No. 2018-10 and Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU 2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented. The new lease standard requires lessees to present a right-of-use asset and a corresponding lease liability on the balance sheet.

The Company adopted the new lease standard as of the beginning of the 2019 fiscal year using the optional transition method. The Company did not have a cumulative effect adjustment to retained earnings as a result of adopting the new lease standard and does not expect the new lease standard to have a material impact on the Company’s Consolidated Statements of Income or Consolidated Statements of Cash Flows in future periods. The Company elected the package of transitional practical expedients upon adoption which, among other provisions, allowed the Company to carry forward historical lease classification. See Note 11 – Leases for additional information regarding leases.

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, 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 29, 2018. Other than the policy discussed below, there were no material changes to the Company’s significant accounting policies during the ~~26-week~~39-week period ended ~~June 29,~~September 28, 2019.

Preproduction Costs Related to Long-Term Supply Arrangements

Preproduction design and development costs related to long-term supply arrangements are expensed as incurred, and classified as Research and development, unless the customer has provided a contractual guarantee for reimbursement of such costs. Contractually reimbursable costs are capitalized as incurred in the Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets if reimbursement is expected to be received within one year, or within Other assets if expected to be received beyond one year. Such capitalized costs were approximately ~~$11~~$22 million as of ~~June 29,~~September 28, 2019, and there were no0 such capitalized costs as of December 29, 2018.

~~2. Inventories~~

Inventories

The components of inventories consist of the following:

June 29, December 29,
2019 2018

Raw materials $ 253,133 $ 205,696
Work-in-process 115,930 96,564
Finished goods 279,077 259,580
Inventories $ 648,140 $ 561,840

~~3. Earnings Per Share~~

Schedule of inventories
	September 28,		December 29,
	2019		2018

Raw materials	$	267,718	$	205,696
Work-in-process		133,290		96,564
Finished goods		348,817		259,580
Inventories	$	749,825	$	561,840

Earnings Per Share

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

Schedule of computation of basic and diluted net income per share
	13-Weeks Ended
	September 28,		September 29,
	2019		2018
Numerator:
Numerator for basic and diluted net income per share - net income	$	227,866	$	184,214

Denominator:
Denominator for basic net income per share – weighted-average common shares		190,102		188,799

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units		860		1,206

Denominator for diluted net income per share – adjusted weighted-average common shares		190,962		190,005

Basic net income per share	$	1.20	$	0.98

Diluted net income per share	$	1.19	$	0.97

13-Weeks Ended
June 29, June 30,
2019 2018
Numerator:
Numerator for basic and diluted net income per share - net income $ 223,656 $ 190,342

Denominator:
Denominator for basic net income per share – weighted-average common shares 189,855 188,542

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units 859 919

Denominator for diluted net income per share – adjusted weighted-average common shares 190,714 189,461

Basic net income per share $ 1.18 $ 1.01

Diluted net income per share $ 1.17 $ 1.00

26-Weeks Ended
June 29, June 30,
2019 2018
Numerator:
Numerator for basic and diluted net income per share - net income $ 363,829 $ 319,715

Denominator:
Denominator for basic net income per share – weighted-average common shares 189,728 188,432

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units 929 945

Denominator for diluted net income per share – adjusted weighted-average common shares 190,657 189,377

Basic net income per share $ 1.92 $ 1.70

Diluted net income per share $ 1.91 $ 1.69


	39-Weeks Ended
	September 28,		September 29,
	2019		2018
Numerator:
Numerator for basic and diluted net income per share - net income	$	591,695	$	503,930

Denominator:
Denominator for basic net income per share – weighted-average common shares		189,853		188,554

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units		937		1,032

Denominator for diluted net income per share – adjusted weighted-average common shares		190,790		189,586

Basic net income per share	$	3.12	$	2.67

Diluted net income per share	$	3.10	$	2.66

There were ~~400~~398 and 266 anti-dilutive stock options, stock appreciation rights and restricted stock units (collectively “equity awards”) outstanding during the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019, respectively, and no0 anti-dilutive equity awards outstanding during the 13-week and ~~26-week~~39-week periods ended ~~June 30,~~September 29, 2018.

There were ~~10 and 46~~less than 1 net shares issued as a result of exercises and releases of equity awards for the 13-week ~~periods~~period ended ~~June 29,~~September 28, 2019, and ~~June 30, 2018, respectively.~~

~~There~~there were ~~396 and 378~~12 net shares issued as a result of exercises and releases of equity awards for the ~~26-week~~13-week period ended September 29, 2018.

There were 396 and 390 net shares issued as a result of exercises and releases of equity awards for the 39-week periods ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018, respectively.

There were 245 employee stock purchase plan (ESPP) shares issued from outstanding Treasury stock during the ~~13-week and 26-week periods~~39-week period ended ~~June 29,~~September 28, 2019.

There were 230 ESPP shares issued from outstanding Treasury stock during the ~~13-week and 26-week periods~~39-week period ended ~~June 30,~~September 29, 2018.

~~4. Segment Information~~

Segment Information

The Company has identified ~~five~~5 reportable segments – auto, aviation, fitness, marine, and outdoor. The Company’s Chief Executive Officer, who has been identified as the Chief Operating Decision Maker (CODM), uses operating income as the measure of profit or loss 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.

In the first quarter of fiscal 2019, the methodology used to allocate certain selling, general, and administrative expenses to the segments was refined, endeavoring to provide the Company’s CODM with a more meaningful representation of segment profit or loss in light of the evolution of its segments. The Company’s composition of operating segments and reportable segments did not change. Prior year amounts are presented here as they were originally reported, as it is not practicable to accurately restate prior period activity in accordance with the refined allocation methodology. For comparative purposes, we estimate operating income for the 13-weeks ended ~~June 30,~~September 29, 2018 would have been approximately $5$4 million less for the aviation segment, approximately $4$2 million more for the marine segment, approximately $1$2 million more for the outdoor segment, and not significantly different for the auto and fitness segments. We estimate operating income for the ~~26-weeks~~39-weeks ended ~~June 30,~~September 29, 2018 would have been approximately $9$13 million less for the aviation segment, approximately $8$10 million more for the marine segment, approximately $1$3 million more for the outdoor segment, and not significantly different for the auto and fitness segments.

Net sales (“revenue”), gross profit, and operating income for each of the Company’s reportable segments are presented below.

Reportable Segments
Outdoor Fitness Marine Auto Aviation Total

13-Weeks Ended June 29, 2019

Net sales $ 210,404 $ 251,653 $ 151,407 $ 157,411 $ 183,965 $ 954,840
Gross profit 135,508 135,136 91,683 74,861 138,177 575,365
Operating income 71,336 50,413 42,730 24,908 66,834 256,221

13-Weeks Ended June 30, 2018

Net sales $ 201,640 $ 225,095 $ 134,583 $ 180,128 $ 153,006 $ 894,452
Gross profit 128,872 126,431 78,785 75,452 113,730 523,270
Operating income 71,916 52,548 27,768 12,612 52,664 217,508

26-Weeks Ended June 29, 2019

Net sales $ 364,455 $ 431,908 $ 285,376 $ 284,410 $ 354,741 $ 1,720,890
Gross profit 232,996 225,970 169,739 132,198 266,160 1,027,063
Operating income 113,290 68,537 68,205 33,121 124,451 407,604

26-Weeks Ended June 30, 2018

Net sales $ 345,899 $ 391,130 $ 248,138 $ 321,439 $ 298,719 $ 1,605,325
Gross profit 222,158 223,032 145,468 136,463 222,684 949,805
Operating income 115,739 85,922 40,899 16,079 101,071 359,710

Net sales (“revenue”), gross profit, and operating income		Outdoor [Member]		Fitness [Member]		Marine [Member]		Auto [Member]		Aviation [Member]
	Reportable Segments
	Outdoor		Fitness		Marine		Auto		Aviation		Total

13-Weeks Ended September 28, 2019

Net sales	$	258,294	$	243,099	$	107,694	$	137,722	$	187,574	$	934,383
Gross profit		170,846		126,835		64,275		65,814		139,688		567,458
Operating income		105,051		49,831		20,008		20,857		65,713		261,460

13-Weeks Ended September 29, 2018

Net sales	$	209,415	$	190,185	$	98,770	$	165,214	$	146,427	$	810,011
Gross profit		136,671		103,441		58,508		70,925		111,202		480,747
Operating income		78,972		37,378		13,908		15,032		50,669		195,959

39-Weeks Ended September 28, 2019

Net sales	$	622,748	$	675,007	$	393,070	$	422,132	$	542,316	$	2,655,273
Gross profit		403,842		352,805		234,014		198,012		405,848		1,594,521
Operating income		218,340		118,369		88,212		53,978		190,164		669,063

39 -Weeks Ended September 29, 2018

Net sales	$	555,314	$	581,315	$	346,908	$	486,653	$	445,146	$	2,415,336
Gross profit		358,829		326,473		203,976		207,389		333,886		1,430,553
Operating income		194,711		123,299		54,806		31,113		151,741		555,670

Net sales to external customers by geographic region were as follows for the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:

Americas [Member]

EMEA [Member]

APAC [Member]

Schedule of net sales and property and equipment, net by geographic area
	13-Weeks Ended				39-Weeks Ended
	September 28,		September 29,		September 28,		September 29,
	2019		2018		2019		2018
Americas	$	439,113	$	370,239	$	1,289,409	$	1,153,330
EMEA		344,010		307,087		942,625		862,116
APAC		151,260		132,685		423,239		399,890
Net sales to external customers	$	934,383	$	810,011	$	2,655,273	$	2,415,336

13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2019 2018 2019 2018
Americas $ 470,840 $ 437,116 $ 850,296 $ 783,091
EMEA 338,595 309,116 598,615 555,029
APAC 145,405 148,220 271,979 267,205
Net sales to external customers $ 954,840 $ 894,452 $ 1,720,890 $ 1,605,325

Net property and equipment by geographic region as of ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018 are presented below.

Americas APAC EMEA Total
June 29, 2019
Property and equipment, net $ 424,127 $ 216,648 $ 61,333 $ 702,108

June 30, 2018
Property and equipment, net $ 395,638 $ 202,455 $ 39,152 $ 637,245


	Americas		APAC		EMEA		Total
September 28, 2019
Property and equipment, net	$	431,062	$	217,184	$	62,345	$	710,591

September 29, 2018
Property and equipment, net	$	403,556	$	202,790	$	44,459	$	650,805

Warranty Reserves

Warranty Reserves

Textual

The Company’s products sold are generally covered by a standard warranty for periods ranging from one to three years ... The Company’s ~~estimate~~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
June 29, June 30,
2019 2018

Balance - beginning of period $ 35,042 $ 35,422
Accrual for products sold during the period⁽¹⁾
17,366 17,113
Expenditures (13,078 ) (14,106 )
Balance - end of period $ 39,330 $ 38,429

26-Weeks Ended
June 29, June 30,
2019 2018

Balance - beginning of period $ 38,276 $ 36,827
Accrual for products sold during the period⁽¹⁾
28,215 27,125
Expenditures (27,161 ) (25,523 )
Balance - end of period $ 39,330 $ 38,429

Schedule of changes in the aggregate warranty reserve
	13-Weeks Ended
	September 28,			September 29,
	2019			2018

Balance - beginning of period	$	39,330		$	38,429
Accrual for products sold during the period⁽¹⁾		12,981			13,558
Expenditures		(14,313	)		(16,027	)
Balance - end of period	$	37,998		$	35,960


	39-Weeks Ended
	September 28,			September 29,
	2019			2018

Balance - beginning of period	$	38,276		$	36,827
Accrual for products sold during the period⁽¹⁾		41,196			40,682
Expenditures		(41,474	)		(41,549	)
Balance - end of period	$	37,998		$	35,960

⁽¹⁾

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

~~Changes in cost estimates related to pre-existing warranties are not material~~6.

Commitments and ~~aggregated with accruals for new warranty contracts in the ‘accrual for products sold during the period’ line.~~Contingencies

Commitments ~~and Contingencies~~

~~Commitments~~

The Company is party to certain commitments, which include purchases of raw materials, advertising expenditures, and other indirect purchases in connection with conducting our business. The aggregate amount of purchase orders and other commitments open as of ~~June 29,~~September 28, 2019 was approximately ~~$463,200.~~$467,300. 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. Our purchase orders are based on our current needs and are typically fulfilled within short periods of time.

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 ~~June 29,~~September 28, 2019. 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 ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019 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~~

Income Taxes

The Company recorded income tax expense of ~~$52,122~~$29,901 in the 13-week period ended ~~June 29,~~September 28, 2019, compared to income tax expense of ~~$45,726~~$17,113 in the 13-week period ended ~~June 30,~~September 29, 2018. The effective tax rate was ~~18.9%~~11.6% in the ~~second~~third quarter of 2019, compared to ~~19.4%~~8.5% in the ~~second~~third quarter of 2018.

The 310 basis points increase to the third quarter of 2019 effective tax rate compared to the prior year quarter is primarily due to a decrease in uncertain tax position reserves released due to expiring statutes of limitations in the third quarter of 2019 compared to the third quarter of 2018.

The Company recorded income tax expense of ~~$78,214~~$108,115 in the first ~~half~~three quarters of 2019, compared to income tax expense of ~~$70,333~~$87,445 in the first ~~half~~three quarters of 2018. The effective tax rate was ~~17.7%~~15.4% in the first ~~half~~three quarters of 2019, compared to ~~18.0%~~14.8% in the first ~~half~~three quarters of 2018.

~~8. Marketable Securities~~

Marketable Securities

The Financial Accounting Standards Board (“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 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 either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

~~Level 3~~

~~Unobservable inputs for the asset or liability~~

The Company endeavors to utilize the best available information in measuring fair value. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Valuation is based on prices obtained from an independent pricing vendor using both market and income approaches. The primary inputs to the valuation include quoted prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, contractual cash flows, benchmark yields, and credit spreads.

The method described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Available-for-sale securities measured at fair value on a recurring basis are summarized below:

U.S.Treasury Securities [Member]

Agency Securities [Member]

Mortgage-Backed Securities [Member]

Corporate Securities [Member]

Municipal Securities [Member]

Other [Member]

Recurring Basis [Member]

Schedule of available-for-sale securities
	Fair Value Measurements as of September 28, 2019
	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	16,557	$	-	$	16,557	$	-
Agency securities		67,926		-		67,926		-
Mortgage-backed securities		129,564		-		129,564		-
Corporate securities		1,066,438		-		1,066,438		-
Municipal securities		158,530		-		158,530		-
Other		113,746		-		113,746		-
Total	$	1,552,761	$	-	$	1,552,761	$	-

	Fair Value Measurements as of December 29, 2018
	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	22,128	$	-	$	22,128	$	-
Agency securities		59,116		-		59,116		-
Mortgage-backed securities		135,865		-		135,865		-
Corporate securities		980,524		-		980,524		-
Municipal securities		173,137		-		173,137		-
Other		142,342		-		142,342		-
Total	$	1,513,112	$	-	$	1,513,112	$	-

Fair Value Measurements as of June 29, 2019
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 19,550 $ — $ 19,550 $ —
Agency securities 61,922 — 61,922 —
Mortgage-backed securities 127,352 — 127,352 —
Corporate securities 1,059,434 — 1,059,434 —
Municipal securities 165,765 — 165,765 —
Other 124,768 — 124,768 —
Total $ 1,558,791 $ — $ 1,558,791 $ —

Fair Value Measurements as of December 29, 2018
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 22,128 $ — $ 22,128 $ —
Agency securities 59,116 — 59,116 —
Mortgage-backed securities 135,865 — 135,865 —
Corporate securities 980,524 — 980,524 —
Municipal securities 173,137 — 173,137 —
Other 142,342 — 142,342 —
Total $ 1,513,112 $ — $ 1,513,112 $ —

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

Available-For-Sale Securities as of June 29, 2019
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $ 19,657 $ 3 $ (110 ) $ 19,550
Agency securities 61,950 146 (174 ) 61,922
Mortgage-backed securities 129,851 88 (2,587 ) 127,352
Corporate securities 1,058,920 6,640 (6,126 ) 1,059,434
Municipal securities 164,980 1,001 (216 ) 165,765
Other 125,414 59 (705 ) 124,768
Total $ 1,560,772 $ 7,937 $ (9,918 ) $ 1,558,791

Available-For-Sale Securities as of December 29, 2018
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $ 22,485 $ — $ (357 ) $ 22,128
Agency securities 60,088 28 (1,000 ) 59,116
Mortgage-backed securities 142,176 1 (6,312 ) 135,865
Corporate securities 1,010,590 33 (30,099 ) 980,524
Municipal securities 175,630 73 (2,566 ) 173,137
Other 144,606 0 (2,264 ) 142,342
Total $ 1,555,575 $ 135 $ (42,598 ) �� $ 1,513,112

Schedule of marketable securities classified as available-for-sale securities
	Available-For-Sale Securities as of September 28, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	16,633	$	3	$	(79	)	$	16,557
Agency securities		67,875		130		(79	)		67,926
Mortgage-backed securities		131,507		174		(2,117	)		129,564
Corporate securities		1,061,714		8,965		(4,241	)		1,066,438
Municipal securities		157,456		1,173		(99	)		158,530
Other		114,106		129		(489	)		113,746
Total	$	1,549,291	$	10,574	$	(7,104	)	$	1,552,761

	Available-For-Sale Securities as of December 29, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	22,485	$	-	$	(357	)	$	22,128
Agency securities		60,088		28		(1,000	)		59,116
Mortgage-backed securities		142,176		1		(6,312	)		135,865
Corporate securities		1,010,590		33		(30,099	)		980,524
Municipal securities		175,630		73		(2,566	)		173,137
Other		144,606		0		(2,264	)		142,342
Total	$	1,555,575	$	135	$	(42,598	)	$	1,513,112

The Company’s investment policy targets low risk investments with the objective of minimizing the potential risk of principal loss. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. The Company does not intend to sell the securities that have an unrealized loss shown in the table above, and it is not more likely than not that the Company will be required to sell a security before recovery of its amortized costs basis, which may be maturity.

The Company recognizes the credit component of other-than-temporary impairments of debt securities in “Other Income” and the noncredit component in “Other comprehensive income (loss)” for those securities that we do not intend to sell and for which it is not more likely than not that we will be required to sell before recovery. During 2018 and the ~~26-week~~39-week period ended ~~June 29,~~September 28, 2019, the Company did not record any material impairment charges on its outstanding securities.

The amortized cost and fair value of the securities at an unrealized loss position as of ~~June 29,~~September 28, 2019 were ~~$856,094~~$626,766 and ~~$846,176~~ $619,662, respectively. Approximately ~~55%~~44% of securities in our portfolio were at an unrealized loss position as of ~~June 29,~~September 28, 2019. We have the ability to hold these securities until maturity or their value is recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has been no material deterioration in credit quality and no change in the cash flows of the underlying securities. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the securities; therefore, no material impairment has been recorded in the accompanying Condensed Consolidated Statements of Income.

The cost of securities sold is based on the specific identification method.

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 ~~June 29,~~September 28, 2019 and December 29, 2018.

As of June 29, 2019
Less than 12 Consecutive Months 12 Consecutive Months or Longer
Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value
U.S. Treasury securities $ — $ — $ (110 ) $ 17,148
Agency securities — — (174 ) 39,347
Mortgage-backed securities ( 5 ) 5,662 (2,582 ) 113,253
Corporate securities (307 ) 79,025 (5,819 ) 440,815
Municipal securities (0 ) 886 (216 ) 54,151
Other (28 ) 15,246 (677 ) 80,643
Total $ (340 ) $ 100,819 $ (9,578 ) $ 745,357

Schedule of gross unrealized losses and fair value by major security type
	As of September 28, 2019
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	(0	)	$	1,690	$	(79	)	$	14,464
Agency securities		(10	)		5,988		(69	)		30,753
Mortgage-backed securities		(149	)		17,478		(1,968	)		93,550
Corporate securities		(672	)		163,205		(3,569	)		191,739
Municipal securities		(59	)		24,305		(40	)		15,022
Other		(141	)		27,181		(348	)		34,287
Total	$	(1,031	)	$	239,847	$	(6,073	)	$	379,815

	As of December 29, 2018
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	(3	)	$	3,975	$	(354	)	$	18,153
Agency securities		(5	)		4,656		(995	)		40,508
Mortgage-backed securities		(1	)		361		(6,311	)		135,323
Corporate securities		(4,028	)		323,633		(26,071	)		640,439
Municipal securities		(454	)		38,371		(2,112	)		118,362
Other		(102	)		8,015		(2,162	)		114,120
Total	$	(4,593	)	$	379,011	$	(38,005	)	$	1,066,905

The amortized cost and fair value of marketable securities at ~~June 29,~~September 28, 2019, by maturity, are shown below.

Schedule of amortized cost and estimated fair value of marketable securities by contractual maturity
	Amortized Cost		Fair Value
Due in one year or less	$	300,566	$	300,542
Due after one year through five years		1,061,239		1,066,607
Due after five years through ten years		174,371		172,546
Due after ten years		13,115		13,066
	$	1,549,291	$	1,552,761

Amortized Cost Fair Value

Due in one year or less $ 239,947 $ 239,765
Due after one year through five years 1,221,956 1,222,332
Due after five years through ten years 91,375 89,361
Due after ten years 7,494 7,333
$ 1,560,772 $ 1,558,791

~~9. Accumulated Other Comprehensive Income~~

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 ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019:

13-Weeks Ended June 29, 2019
Foreign Currency Translation Adjustment Net unrealized gains (losses) on available-for-sale securities Total
Beginning Balance $ 38,093 $ (19,755 ) $ 18,338
Other comprehensive income before reclassification, net of income tax expense of $ 2,406 314 16,148 16,462
Amounts reclassified from accumulated other comprehensive income — (119 ) (119 )
Net current-period other comprehensive income 314 16,029 16,343
Ending Balance $ 38,407 $ (3,726 ) $ 34,681

26-Weeks Ended June 29, 2019
Foreign Currency Translation Adjustment Net unrealized gains (losses) on available-for-sale securities Total
Beginning Balance $ 47,327 $ (38,897 ) $ 8,430
Other comprehensive income before reclassification, net of income tax expense of $ 5,311 (8,920 ) 35,248 26,328
Amounts reclassified from accumulated other comprehensive income — (77 ) (77 )
Net current-period other comprehensive income (8,920 ) 35,171 26,251
Ending Balance $ 38,407 $ (3,726 ) $ 34,681

Schedule of changes in accumulated other comprehensive income (AOCI)
	13-Weeks Ended September 28, 2019
	Foreign Currency Translation Adjustment			Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	38,407		$	(3,726	)	$	34,681
Other comprehensive income before reclassification, net of income tax expense of $657		(18,885	)		4,933			(13,952	)
Amounts reclassified from accumulated other comprehensive income		-			(139	)		(139	)
Net current-period other comprehensive income		(18,885	)		4,794			(14,091	)
Ending Balance	$	19,522		$	1,068		$	20,590

	39-Weeks Ended September 28, 2019
	Foreign Currency Translation Adjustment			Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	47,327		$	(38,897	)	$	8,430
Other comprehensive income before reclassification, net of income tax expense of $5,968		(27,805	)		40,180			12,375
Amounts reclassified from accumulated other comprehensive income		-			(215	)		(215	)
Net current-period other comprehensive income		(27,805	)		39,965			12,160
Ending Balance	$	19,522		$	1,068		$	20,590

The following provides required disclosure of reporting reclassifications out of AOCI for the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019:

Accumulated Net Investment Gain (Loss) Attributable to Parent Reclassification from Accumulated Other Comprehensive Income [Member]

Schedule of of reporting reclassifications out of AOCI
13-Weeks Ended September 28, 2019
Details About Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income			Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains (losses) on available-for-sale securities	$	153		Other income (expense)
		(14	)	Income tax benefit (provision)
	$	139		Net of tax

39-Weeks Ended September 28, 2019
Details About Accumulated Other Comprehensive Income Components	Amount Reclassified from Accumulated Other Comprehensive Income		Affected Line Item in the Statement Where Net Income is Presented
Unrealized gains (losses) on available-for-sale securities	$	213	Other income (expense)
		2	Income tax benefit (provision)
	$	215	Net of tax

13-Weeks Ended June 29, 2019
Details About Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented

Unrealized gains (losses) on available-for-sale securities $ 121 Other income (expense)
(2 ) Income tax benefit (provision)
$ 119 Net of tax

26-Weeks Ended June 29, 2019
Details About Accumulated Other Comprehensive Income Components Amount Reclassified from Accumulated Other Comprehensive Income Affected Line Item in the Statement Where Net Income is Presented

Unrealized gains (losses) on available-for-sale securities $ 60 Other income (expense)
17 Income tax benefit (provision)
$ 77 Net of tax

~~10. Revenue~~

10.

Revenue

In order to further depict how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors, we disaggregate revenue (or “net sales”) 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. The Company has identified six major product categories – auto PND, auto OEM, aviation, fitness, marine, and outdoor. Note 4 contains disaggregated revenue information of the aviation, fitness, marine, and outdoor major product categories. Auto segment revenue presented in Note 4 is comprised of the auto PND and auto OEM major product categories, as depicted below.

Auto Revenue by Major Product Category
13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2019 2018 2019 2018
Auto PND 68 % 70 % 64 % 67 %
Auto OEM 32 % 30 % 36 % 33 %

Auto PND [Member]

Auto OEM [Member]

Schedule of disaggregated revenue by geographic region
	Auto Revenue by Major Product Category
	13-Weeks Ended						39-Weeks Ended
	September 28,			September 29,			September 28,			September 29,
	2019			2018			2019			2018
Auto PND		69	%		64	%		66	%		66	%
Auto OEM		31	%		36	%		34	%		34	%

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 segment 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:

Point in time [Member]

Over time [Member]

Schedule of revenue disaggregated
	13-Weeks Ended				39-Weeks Ended
	September 28,		September 29,		September 28,		September 29,
	2019		2018		2019		2018
Point in time	$	886,954	$	761,216	$	2,522,229	$	2,286,740
Over time		47,429		48,795		133,044		128,596
Net sales	$	934,383	$	810,011	$	2,655,273	$	2,415,336

13-Weeks Ended 26-Weeks Ended
June 29, June 30, June 29, June 30,
2019 2018 2019 2018
Point in time $ 911,099 $ 854,260 $ 1,635,275 $ 1,525,524
Over time 43,741 40,192 85,615 79,801
Net sales $ 954,840 $ 894,452 $ 1,720,890 $ 1,605,325

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. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the ~~26-week~~39-week period ending ~~June 29,~~September 28, 2019 are presented below:

26-Weeks Ended
June 29,
2019

Deferred Revenue⁽¹⁾

Deferred Costs⁽²⁾

Balance, beginning of period $ 172,938 $ 57,935
Deferrals in period 79,357 13,950
Recognition of deferrals in period (85,615 ) (17,827 )
Balance, end of period $ 166,680 $ 54,058

Schedule of deferred revenue and costs		Deferred Revenue⁽¹⁾			Deferred Costs⁽²⁾
	39-Weeks Ended
	September 28,
	2019
	Deferred Revenue⁽¹⁾			Deferred Costs⁽²⁾
Balance, beginning of period	$	172,938		$	57,935
Deferrals in period		125,278			20,284
Recognition of deferrals in period		(133,044	)		(26,613	)
Balance, end of period	$	165,172		$	51,606

⁽¹⁾

Deferred revenue is comprised of both Deferred revenue and Noncurrent deferred revenue per the Condensed Consolidated Balance Sheets

⁽²⁾

Deferred costs are comprised of both Deferred ~~revenue~~costs and Noncurrent deferred ~~revenue per the Condensed Consolidated Balance Sheets~~

⁽²⁾

~~Deferred~~ costs ~~are comprised of both Deferred costs and Noncurrent deferred costs~~ per the Condensed Consolidated Balance Sheets

Of the ~~$85,615~~$133,044 of deferred revenue recognized in the ~~26-weeks~~39-weeks ended ~~June 29,~~September 28, 2019, ~~$56,686~~$78,092 was deferred as of the beginning of the period.

Approximately two-thirds of the ~~$166,680~~$165,172 of deferred revenue at the end of the period, ~~June 29,~~September 28, 2019, is recognized ratably over a period of three years or less.

~~11.~~

11.

Leases

Leases

Textual

The Company leases certain real estate properties, vehicles, and equipment in various countries around the world. Leased properties are typically used for office space, distribution, and retail. The Company’s leases are classified as operating leases with remaining terms of 1 to 34 years, some of which include an option to extend or renew. If the exercise of an option to extend or renew is determined to be reasonably certain, the associated right-of-use asset and lease liability reflects the extended period and payments. For all real estate leases, any non-lease components, including common area maintenance, have been separated from lease components and excluded from the associated right-of-use asset and lease liability calculations. For all equipment and vehicle leases, an accounting policy election has been made to not separate lease and non-lease components.

Leases with an initial term of 12 months or less (“short-term leases”) are not recognized on the Company’s Condensed Consolidated Balance Sheets as a right-of-use asset or lease liability.

The following table represents lease costs recognized in the Company’s Condensed Consolidated Statements of Income for the 13-weeks and ~~26-weeks~~39-weeks ended ~~June 29,~~September 28, 2019. Lease costs are included in Selling, general and administrative expense and Research and development expense on the Company’s Condensed Consolidated Statements of Income.

13-Weeks Ended 26-Weeks Ended
June 29, June 29,
2019 2019
Operating lease cost⁽¹⁾
$ 6,018 $ 11,660

Schedule of operating lease cost
	13-Weeks Ended		39-Weeks Ended
	September 28,		September 28,
	2019		2019
Operating lease cost⁽¹⁾	$	6,023	$	17,683

⁽¹⁾

Operating lease cost includes short-term lease costs and variable lease costs, ~~and variable lease costs,~~ which were not material in the periods presented.

The following table represents the components of leases that are recognized on the Company’s Condensed Consolidated Balance Sheets as of ~~June 29,~~September 28, 2019.

June 29,
2019

Operating lease right-of-use assets $ 59,166

Other accrued expenses $ 14,455
Noncurrent operating lease liabilities 46,281
Total lease liabilities $ 60,736

Weighted average remaining lease term 5.6 years
Weighted average discount rate 4.0 %

Schedule of amounts recognized in balance sheet
	September 28,
	2019
Operating lease right-of-use assets	$	55,399

Other accrued expenses	$	13,438
Noncurrent operating lease liabilities		42,855
Total lease liabilities	$	56,293

Weighted average remaining lease term		5.6 years
Weighted average discount rate		4.0	%

The following table represents the maturity of lease liabilities.

Fiscal Year Lease payments
2019, excluding the 26-weeks ended June 29, 2019 $ 9,022
2020 15,765
2021 12,339
2022 8,536
2023 7,808
Thereafter 15,418
Total $ 68,888
Less: imputed interest (8,152 )
Present value of lease liabilities $ 60,736

Schedule of maturity of lease liabilities
Fiscal Year	Lease payments
2019, excluding the 39-weeks ended September 28, 2019	$	4,347
2020		15,447
2021		12,259
2022		8,736
2023		7,955
Thereafter		15,389
Total	$	64,133
Less: imputed interest		(7,840	)
Present value of lease liabilities	$	56,293

The following table presents supplemental cash flow and noncash information related to leases.

26-Weeks Ended
June 29,
2019
Cash paid for amounts included in the measurement of operating lease liabilities⁽²⁾
$ 9,134
Right-of-use assets obtained in exchange for new operating lease liabilities $ 7,391

Schedule of cash flow supplemental
	39-Weeks Ended
	September 28,
	2019
Cash paid for amounts included in the measurement of operating lease liabilities⁽²⁾	$	13,528
Right-of-use assets obtained in exchange for new operating lease liabilities	$	7,853

⁽²⁾

Included in Net cash provided by operating activities on the Company’s Condensed Consolidated Statements of Cash Flows.

12.

Recently Issued Accounting Pronouncements Not Yet Adopted

~~12. Recently Issued Accounting Pronouncements Not Yet Adopted~~

Financial Instruments – Credit Losses

In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 provides new guidance on assessment of expected credit losses of certain financial instruments. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its Consolidated Financial Statements.

Receivables – Nonrefundable Fees and Other Costs

In March 2017, the FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-08”), which shortens the amortization period for certain callable debt securities held at a premium, requiring the premium to be amortized to the earliest call date. Callable debt securities held at a discount continue to be amortized to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its Consolidated Financial Statements.

13. Subsequent Events

Switzerland corporate tax reform was approved by public referendum in May 2019 and enacted in October 2019. Accordingly, the Company expects to record an income tax benefit of approximately $20 to $220 million in the fourth quarter of 2019 due to an increase in certain Switzerland deferred tax assets resulting from enactment of Switzerland Federal and Schaffhausen cantonal tax reform. The Company is evaluating transitional measures in Switzerland tax law that may affect the overall increase in deferred tax assets as well as the impact of tax reform to its ongoing effective tax rate, the materiality of which is not yet known.

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

Overview

The discussion set forth below, as well as other portions of this Quarterly Report, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by 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 the Company’s Annual Report on Form 10-K for the year ended December 29, 2018. 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 29, 2018.

The Company is a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in five reportable segments, which serve the outdoor, fitness, marine, auto and aviation markets. The Company’s segments offer consumer products through its network of subsidiary distributors and independent dealers and distributors and some also maintain relationships with original equipment manufacturers (OEMs). However, the nature of products and types of customers for the five segments may vary significantly. As such, the segments are managed separately.

Results of Operations

The following table sets forth the Company’s results of operations as a percent of net sales during the periods shown (the table may not foot due to rounding):

13-Weeks Ended
June 29, 2019 June 30, 2018

Net sales 100 % 100 %
Cost of goods sold 40 % 41 %
Gross profit 60 % 59 %
Advertising expense 4 % 5 %
Selling, general and administrative expense 13 % 13 %
Research and development expense 16 % 16 %
Total operating expense 33 % 34 %
Operating income 27 % 24 %
Other income 2 % 2 %
Income before income taxes 29 % 26 %
Income tax provision 5 % 5 %
Net income 23 % 21 %

26-Weeks Ended
June 29, 2019 June 30, 2018

Net sales 100 % 100 %
Cost of goods sold 40 % 41 %
Gross profit 60 % 59 %
Advertising expense 4 % 4 %
Selling, general and administrative expense 15 % 15 %
Research and development expense 17 % 18 %
Total operating expense 36 % 37 %
Operating income 24 % 22 %
Other income 2 % 2 %
Income before income taxes 26 % 24 %
Income tax provision 5 % 4 %
Net income 21 % 20 %

	13-Weeks Ended
	September 28, 2019			September 29, 2018
Net sales		100	%		100	%
Cost of goods sold		39	%		41	%
Gross profit		61	%		59	%
Advertising expense		3	%		4	%
Selling, general and administrative expense		13	%		14	%
Research and development expense		16	%		17	%
Total operating expense		33	%		35	%
Operating income		28	%		24	%
Other income (expense)		(0	)%		1	%
Income before income taxes		28	%		25	%
Income tax provision		3	%		2	%
Net income		24	%		23	%

	39-Weeks Ended
	September 28, 2019			September 29, 2018
Net sales		100	%		100	%
Cost of goods sold		40	%		41	%
Gross profit		60	%		59	%
Advertising expense		4	%		4	%
Selling, general and administrative expense		14	%		15	%
Research and development expense		17	%		17	%
Total operating expense		35	%		36	%
Operating income		25	%		23	%
Other income (expense)		1	%		1	%
Income before income taxes		26	%		24	%
Income tax provision		4	%		4	%
Net income		22	%		21	%

The segment table located in Note 4 to the Condensed Consolidated Financial Statements sets forth the Company’s results of operations (in thousands) including net sales, gross profit, and operating income for each of the Company’s five segments during the periods shown. For each line item in the table, the total of the outdoor, fitness, marine, auto, and aviation segments’ amounts equals the amount in the Condensed Consolidated Statements of Income included in Item 1.

As indicated in Note 4 to the Condensed Consolidated Financial Statements, the methodology used to allocate certain selling, general, and administrative expenses was refined in the first quarter of 2019. The amounts presented below for the 13-weeks and ~~26-weeks~~39-weeks ended ~~June 30,~~September 29, 2018 are presented here as they were originally reported.

Comparison of 13-Weeks ended ~~June 29,~~September 28, 2019 and ~~June 30,~~September 29, 2018

(Amounts included in the following discussion are stated in thousands unless otherwise indicated)

Net Sales

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Net Sales % of Total Net Sales % of Total $ Change % Change
Outdoor $ 210,404 22 % $ 201,640 23 % $ 8,764 4 %
Fitness 251,653 26 % 225,095 25 % 26,558 12 %
Marine 151,407 16 % 134,583 15 % 16,824 13 %
Auto 157,411 17 % 180,128 20 % (22,717 ) (13 )%
Aviation 183,965 19 % 153,006 17 % 30,959 20 %
Total $ 954,840 100 % $ 894,452 100 % $ 60,388 7 %

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Net Sales		% of Total			Net Sales		% of Total			$ Change			% Change
Outdoor	$	258,294		28	%	$	209,415		26	%	$	48,879			23	%
Fitness		243,099		26	%		190,185		24	%		52,914			28	%
Marine		107,694		11	%		98,770		12	%		8,924			9	%
Auto		137,722		15	%		165,214		20	%		(27,492	)		(17	)%
Aviation		187,574		20	%		146,427		18	%		41,147			28	%
Total	$	934,383		100	%	$	810,011		100	%	$	124,372			15	%

Net sales increased 7%15% for the 13-week period ended ~~June 29,~~September 28, 2019 when compared to the year-ago quarter. The outdoor, fitness, marine, and aviation segments collectively increased by ~~12%~~24%, contributing ~~83%~~85% of total revenue. ~~Fitness~~Outdoor was the largest portion of our revenue mix at ~~26%~~28% in the ~~second~~third quarter of 2019 compared to ~~25%~~26% in the ~~second~~third quarter of 2018.

Total unit sales in the ~~second~~third quarter of 2019 increased to ~~3,838~~3,659 when compared to total unit sales of ~~3,783~~3,527 in the ~~second~~third quarter of 2018.

Outdoor, fitness, marine, and aviation segment revenue increased 4%23%, ~~12%~~28%, ~~13%~~9%, and ~~20%~~28%, respectively, when compared to the year-ago quarter. The outdoor segment revenue increase was ~~primarily~~ driven by ~~strong~~ sales growth in ~~golf and inReach~~multiple product ~~lines.~~categories, led primarily by adventure watches. The fitness segment revenue increase was primarily driven by strong sales in wearables and sales from Tacx, a newly acquired group of subsidiaries that designs and manufactures indoor bike trainers. The current quarter marine segment revenue increase was ~~primarily~~ driven by sales growth in ~~chartplotters and sonar products.~~multiple product categories, led primarily by chartplotters. The aviation segment revenue increase was driven by sales growth ~~across most product lines~~ in both OEM and aftermarket categories. Auto segment revenue decreased ~~13%~~17% from the year-ago quarter, primarily due to lower OEM sales in the current quarter and the ongoing PND market contraction.

Gross Profit

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Gross Profit % of Revenue Gross Profit % of Revenue $ Change % Change
Outdoor $ 135,508 64 % $ 128,872 64 % $ 6,636 5 %
Fitness 135,136 54 % 126,431 56 % 8,705 7 %
Marine 91,683 61 % 78,785 59 % 12,898 16 %
Auto 74,861 48 % 75,452 42 % (591 ) (1 )%
Aviation 138,177 75 % 113,730 74 % 24,447 21 %
Total $ 575,365 60 % $ 523,270 59 % $ 52,095 10 %

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Gross Profit		% of Revenue			Gross Profit		% of Revenue			$ Change			% Change
Outdoor	$	170,846		66	%	$	136,671		65	%	$	34,175			25	%
Fitness		126,835		52	%		103,441		54	%		23,394			23	%
Marine		64,275		60	%		58,508		59	%		5,767			10	%
Auto		65,814		48	%		70,925		43	%		(5,111	)		(7	)%
Aviation		139,688		74	%		111,202		76	%		28,486			26	%
Total	$	567,458		61	%	$	480,747		59	%	$	86,711			18	%

Gross profit dollars in the ~~second~~third quarter of 2019 increased ~~10%~~18%, primarily due to growth in net sales along with a gross margin increase of ~~180~~140 basis points compared to the year-ago quarter. Gross margin increased in the auto segment, was relatively flat in the outdoor and marine ~~auto,~~segments, and decreased in the fitness and aviation segments ~~slightly offset by a gross margin decrease in the fitness segment~~ when compared to the year-ago quarter.

~~The marine segment gross margin increase of 200 basis points was primarily attributable to product mix.~~

The auto segment gross margin increase of ~~570~~490 basis points was primarily attributable to lower license ~~expense and product mix.~~expense. A portion of license expense favorability in the auto segment is expected to continue for the remainder of the year. Gross margin remained relatively flat within the outdoor and marine segments. The fitness and aviation segment gross margin ~~decrease was~~decreases were primarily attributable to ~~lower average selling prices and~~ product mix.

Advertising Expense

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Advertising
Expense % of Revenue Advertising
Expense % of Revenue $ Change % Change
Outdoor $ 11,965 6 % $ 10,700 5 % $ 1,265 12 %
Fitness 17,928 7 % 18,534 8 % (606 ) (3 )%
Marine 5,585 4 % 5,142 4 % 443 9 %
Auto 4,403 3 % 6,691 4 % (2,288 ) (34 )%
Aviation 1,642 1 % 2,482 2 % (840 ) (34 )%
Total $ 41,523 4 % $ 43,549 5 % $ (2,026 ) (5 )%

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Advertising		% of			Advertising		% of
	Expense		Revenue			Expense		Revenue			$ Change			% Change
Outdoor	$	11,327		4	%	$	9,455		5	%	$	1,872			20	%
Fitness		13,403		6	%		12,296		6	%		1,107			9	%
Marine		3,875		4	%		3,594		4	%		281			8	%
Auto		2,874		2	%		4,180		3	%		(1,306	)		(31	)%
Aviation		1,189		1	%		1,615		1	%		(426	)		(26	)%
Total	$	32,668		3	%	$	31,140		4	%	$	1,528			5	%

Advertising expense as a percent of revenue was ~~slightly lower~~relatively flat when compared to the year-ago quarter and ~~decreased~~increased 5% in absolute dollars. The total absolute dollar ~~decrease~~increase was primarily attributable to ~~decreased cooperative advertising and point-of-sale display advertising expense in the auto segment and decreased media advertising in the fitness segment, slightly offset by~~ increased ~~media and~~ cooperative advertising in the outdoor, ~~segment.~~

fitness, and marine segments, partially offset by decreased cooperative advertising in the auto and aviation segments.

Selling, General and Administrative Expense

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Selling, General &
Admin. Expenses % of Revenue Selling, General &
Admin. Expenses % of Revenue $ Change % Change
Outdoor $ 30,409 14 % $ 28,591 14 % $ 1,818 6 %
Fitness 39,964 16 % 32,797 15 % 7,167 22 %
Marine 23,309 15 % 25,683 19 % (2,374 ) (9 )%
Auto 19,373 12 % 24,987 14 % (5,614 ) (22 )%
Aviation 15,683 9 % 8,442 6 % 7,241 86 %
Total $ 128,738 13 % $ 120,500 13 % $ 8,238 7 %

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Selling, General &		% of			Selling, General &		% of
	Admin. Expenses		Revenue			Admin. Expenses		Revenue			$ Change			% Change
Outdoor	$	32,679		13	%	$	31,240		15	%	$	1,439			5	%
Fitness		37,119		15	%		31,370		16	%		5,749			18	%
Marine		20,232		19	%		21,704		22	%		(1,472	)		(7	)%
Auto		17,818		13	%		21,418		13	%		(3,600	)		(17	)%
Aviation		16,921		9	%		8,937		6	%		7,984			89	%
Total	$	124,769		13	%	$	114,669		14	%	$	10,100			9	%

Selling, general and administrative expense increased 7%9% in absolute dollars and was relatively flat as a percent of revenue compared to the year-ago quarter. The absolute dollar increase in the ~~second~~third quarter of 2019 was primarily attributable to personnel costs ~~legal related costs,~~ and expenses from recent acquisitions. The fitness ~~segment increase as a percent of revenue was primarily due to expenses from newly acquired Tacx. The auto~~ segment decrease as a percent of revenue was primarily due to ~~less amortization expense associated with intangible assets.~~

greater leverage of operating costs.

As noted above and in Note 4 to the Condensed Consolidated Financial Statements, the Company refined its methodology to allocate certain selling, general and administrative expenses in the beginning of the 2019 fiscal year. The prior year amounts are presented here as originally reported. For comparative purposes, we estimate selling, general and administrative expenses for the ~~second~~third quarter of 2018 would have been approximately $5$4 million more for the aviation segment, approximately $4$2 million less for the marine segment, approximately $1$2 million less for the outdoor segment, and not significantly different for the fitness and auto segments.

Selling, general and administrative expense as a percent of revenue also decreased in the outdoor and marine segments due to greater leverage of operating costs.

Considering the refined allocation methodology noted above, we estimate selling, general and administrative expenses for the 52-weeks ended December 29, 2018 would have been approximately $18 million more for the aviation segment, approximately $11 million less for the marine segment, approximately $7 million less for the outdoor segment, and not significantly different for the fitness and auto segments.

Research and Development Expense

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Research &		% of			Research &		% of
	Development		Revenue			Development		Revenue			$ Change			% Change
Outdoor	$	21,789		8	%	$	17,004		8	%	$	4,785			28	%
Fitness		26,482		11	%		22,397		12	%		4,085			18	%
Marine		20,160		19	%		19,302		20	%		858			4	%
Auto		24,265		18	%		30,295		18	%		(6,030	)		(20	)%
Aviation		55,865		30	%		49,981		34	%		5,884			12	%
Total	$	148,561		16	%	$	138,979		17	%	$	9,582			7	%

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Research &
Development % of Revenue Research &
Development % of Revenue $ Change % Change
Outdoor $ 21,798 10 % $ 17,665 9 % $ 4,133 23 %
Fitness 26,831 11 % 22,552 10 % 4,279 19 %
Marine 20,059 13 % 20,192 15 % (133 ) (1 )%
Auto 26,177 17 % 31,162 17 % (4,985 ) (16 )%
Aviation 54,018 29 % 50,142 33 % 3,876 8 %
Total $ 148,883 16 % $ 141,713 16 % $ 7,170 5 %

Research and development expense as a percent of revenue ~~was relatively flat~~decreased 130 basis points when compared to the year-ago quarter and increased 5%7% in absolute dollars. The absolute dollar increase was primarily due to higher engineering personnel costs related to wearable and aviation product offerings and expenses resulting from recent acquisitions, partially offset by the capitalization of certain contractually reimbursable preproduction design and development personnel costs within the auto segment. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.

Operating Income

13-Weeks Ended
June 29, 2019 13-Weeks Ended
June 30, 2018 Year over Year
Operating Income % of Revenue Operating Income % of Revenue $ Change % Change
Outdoor $ 71,336 34 % $ 71,916 36 % $ (580 ) (1 )%
Fitness 50,413 20 % 52,548 23 % (2,135 ) (4 )%
Marine 42,730 28 % 27,768 21 % 14,962 54 %
Auto 24,908 16 % 12,612 7 % 12,296 97 %
Aviation 66,834 36 % 52,664 34 % 14,170 27 %
Total $ 256,221 27 % $ 217,508 24 % $ 38,713 18 %

	13-Weeks Ended September 28, 2019					13-Weeks Ended September 29, 2018					Year over Year
	Operating Income		% of Revenue			Operating Income		% of Revenue			$ Change		% Change
Outdoor	$	105,051		41	%	$	78,972		38	%	$	26,079		33	%
Fitness		49,831		20	%		37,378		20	%		12,453		33	%
Marine		20,008		19	%		13,908		14	%		6,100		44	%
Auto		20,857		15	%		15,032		9	%		5,825		39	%
Aviation		65,713		35	%		50,669		35	%		15,044		30	%
Total	$	261,460		28	%	$	195,959		24	%	$	65,501		33	%

Operating income increased ~~18%~~33% in absolute dollars and ~~increased 250~~380 basis points as a percent of revenue when compared to the year-ago quarter. In the current quarter, the operating income growth in absolute dollars ~~was primarily attributable to revenue growth~~ and ~~gross margin improvement. The increase in operating income~~ as a percent of revenue was primarily attributable to revenue growth, improved gross margin, and greater leverage of operating expenses, as discussed above.

Other Income (Expense)

13-Weeks Ended 13-Weeks Ended
June 29,
2019 June 30,
2018
Interest income $ 13,735 $ 10,995
Foreign currency gains 3,413 2,647
Other 2,409 4,918
Total $ 19,557 $ 18,560

	13-Weeks Ended			13-Weeks Ended
	September 28, 2019			September 29, 2018
Interest income	$	12,309		$	11,089
Foreign currency losses		(16,296	)		(6,868	)
Other		294			1,147
Total	$	(3,693	)	$	5,368

The average return on cash and investments, including interest and capital gains/losses, during the ~~second~~third quarter of 2019 was ~~2.2%~~2.0% compared to ~~1.9%~~1.8% during the same quarter of 2018. Interest income increased primarily due to slightly higher yields on fixed-income securities.

Foreign currency gains and losses for the Company are typically driven by movements in the Taiwan Dollar, Euro, and British Pound Sterling in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., and the Euro is the functional currency of most of our other European subsidiaries, although some transactions and balances are denominated in British Pounds. 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. Due to the relative size of the entities using a functional currency other than the Taiwan Dollar, Euro, and British Pound Sterling, currency fluctuations related to these entities are not expected to have a material impact on the Company’s financial statements.

The ~~$3.4~~$16.3 million currency ~~gain~~loss recognized in the ~~second~~third quarter of 2019 was primarily due to the U.S. Dollar ~~weakening~~strengthening against the Euro and ~~strengthening against the Taiwan Dollar,~~British Pound Sterling, partially offset by the U.S. Dollar strengthening against the ~~British Pound Sterling,~~Taiwan Dollar, within the 13-weeks ended ~~June 29,~~September 28, 2019. During this period, the U.S. Dollar ~~weakened 1.4%~~strengthened 3.8% against the Euro and 3.2% against the British Pound Sterling, resulting in losses of $9.8 million and $1.5 million, respectively, while the U.S. Dollar strengthened 0.3% against the Taiwan Dollar, resulting in ~~gains~~a gain of ~~$3.7 million and $1.7 million, respectively, while the U.S. Dollar strengthened 2.6% against the British Pound Sterling, resulting in a loss of $0.7~~$1.2 million. The remaining net currency loss of ~~$1.3~~$6.2 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

The ~~$2.6~~$6.9 million currency ~~gain~~loss recognized in the ~~second~~third quarter of 2018 was primarily due to the strengthening of the U.S. Dollar against the ~~Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the~~ Euro and British Pound Sterling within the 13-weeks ended ~~June 30,~~September 29, 2018. During this period, the U.S. Dollar strengthened ~~4.7% against the Taiwan Dollar, resulting in a gain of $26.7 million, while the U.S. Dollar strengthened 5.2%~~0.7% against the Euro and ~~5.8%~~1.3% against the British Pound Sterling, resulting in losses of ~~$14.0~~$2.7 million and ~~$1.9~~$0.6 million, ~~respectively.~~respectively, while the U.S. Dollar remained relatively flat against the Taiwan Dollar. The remaining net currency loss of ~~$8.2~~$3.6 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 ~~$52.1~~$29.9 million in the 13-week period ended ~~June 29,~~September 28, 2019, compared to income tax expense of ~~$45.7~~$17.1 million in the 13-week period ended ~~June 30,~~September 29, 2018. The effective tax rate was ~~18.9%~~11.6% in the ~~second~~third quarter of 2019, compared to ~~19.4%~~8.5% in the ~~second~~third quarter of 2018.

As discussed in Note 13 to the Condensed Consolidated Financial Statements, Switzerland corporate tax reform was approved by public referendum in May 2019 and enacted in October 2019. Accordingly, the Company expects to record an income tax benefit of approximately $20 to $220 million in the fourth quarter of 2019 due to ~~the revaluation of~~an increase in certain Switzerland deferred tax assets resulting from ~~Swiss~~enactment of Switzerland Federal and Schaffhausen cantonal tax reform. ~~However, the~~The Company is ~~unable~~evaluating transitional measures in Switzerland tax law that may affect the overall increase in deferred tax assets as well as the impact of tax reform to ~~estimate~~its ongoing effective tax rate, the ~~timing and the amount~~materiality of ~~the income tax benefit due to the dependency on the future enactment of Swiss cantonal tax rate.~~

which is not yet known.

Net Income

As a result of the above, net income for the 13-weeks ended ~~June 29,~~September 28, 2019 was ~~$223.7~~$227.9 million compared to ~~$190.3~~$184.2 million for the 13-week period ended ~~June 29,~~September 28, 2018, an increase of ~~$33.4~~$43.7 million.

Comparison of ~~26-Weeks~~39-Weeks Ended ~~June 29,~~September 28, 2019 and ~~26-Weeks~~39-Weeks Ended ~~June 30,~~September 29, 2018

Net Sales

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Operating Income
% of Revenue
Operating Income
% of Revenue
$ Change
% Change
Outdoor $ 364,455 21 % $ 345,899 22 % $ 18,556 5 %
Fitness 431,908 25 % 391,130 24 % 40,778 10 %
Marine 285,376 17 % 248,138 15 % 37,238 15 %
Auto 284,410 16 % 321,439 20 % (37,029 ) (12 )%
Aviation 354,741 21 % 298,719 19 % 56,022 19 %
Total $ 1,720,890 100 % $ 1,605,325 100 % $ 115,565 7 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Net Sales		% of Total			Net Sales		% of Total			$ Change			% Change
Outdoor	$	622,748		24	%	$	555,314		23	%	$	67,434			12	%
Fitness		675,007		25	%		581,315		24	%		93,692			16	%
Marine		393,070		15	%		346,908		14	%		46,162			13	%
Auto		422,132		16	%		486,653		20	%		(64,521	)		(13	)%
Aviation		542,316		20	%		445,146		19	%		97,170			22	%
Total	$	2,655,273		100	%	$	2,415,336		100	%	$	239,937			10	%

Net sales increased 7%10% for the ~~26-week~~39-week period ended ~~June 29,~~September 28, 2019 when compared to the year-ago period. The outdoor, fitness, marine, and aviation segments collectively increased by ~~12%~~16%, contributing 84% of total revenue. Fitness was the largest portion of our revenue mix at 25% in the first ~~half~~three quarters of 2019 compared to 24% in the first ~~half~~three quarters of 2018.

Total unit sales in the first ~~half~~three quarters of 2019 increased to ~~7,019~~10,678 when compared to the total unit sales of ~~6,739~~10,266 in the first ~~half~~three quarters of 2018.

Outdoor, fitness, marine, and aviation segment revenues increased 5%12%, ~~10%~~16%, ~~15%~~13%, and ~~19%~~22%, respectively, when compared to the year-ago period. The outdoor segment revenue increase was primarily driven by strong sales in adventure watches, golf and inReach product lines. Fitness segment revenue increases were primarily driven by strong sales in wearables and sales from newly acquired Tacx. Marine segment revenue increases were ~~primarily~~ driven by sales growth in multiple product categories, led primarily by chartplotters and sonar products. The aviation segment revenue increase was driven by sales growth ~~across most product lines~~ in both OEM and aftermarket categories. Auto segment revenue decreased ~~12%~~13% from the year-ago period, primarily due to the ongoing PND market contraction.

Gross Profit

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Gross Profit
% of Revenue
Gross Profit
% of Revenue
$ Change
% Change
Outdoor $ 232,996 64 % $ 222,158 64 % $ 10,838 5 %
Fitness 225,970 52 % 223,032 57 % 2,938 1 %
Marine 169,739 59 % 145,468 59 % 24,271 17 %
Auto 132,198 46 % 136,463 42 % (4,265 ) (3 )%
Aviation 266,160 75 % 222,684 75 % 43,476 20 %
Total $ 1,027,063 60 % $ 949,805 59 % $ 77,258 8 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Gross Profit		% of Revenue			Gross Profit		% of Revenue			$ Change			% Change
Outdoor	$	403,842		65	%	$	358,829		65	%	$	45,013			13	%
Fitness		352,805		52	%		326,473		56	%		26,332			8	%
Marine		234,014		60	%		203,976		59	%		30,038			15	%
Auto		198,012		47	%		207,389		43	%		(9,377	)		(5	)%
Aviation		405,848		75	%		333,886		75	%		71,962			22	%
Total	$	1,594,521		60	%	$	1,430,553		59	%	$	163,968			11	%

Gross profit dollars in the ~~26-week~~39-week period ended ~~June 29,~~September 28, 2019 increased 8%11% while gross margin remained relatively flat compared to the year-ago period. Gross margin increased ~~400~~430 basis points in the auto segment when compared to the year-ago period, primarily attributable to lower license expense and product mix. A portion of license expense favorability in the auto segment is expected to continue for the remainder of the year. Gross margin remained relatively flat within the outdoor, marine, and aviation segments. Gross margin decreased in the fitness segment primarily due to lower average selling prices and product mix.

Advertising Expense

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Advertising Expense
% of Revenue
Advertising Expense
% of Revenue
$ Change
% Change
Outdoor $ 19,136 5 % $ 16,500 5 % $ 2,636 16 %
Fitness 27,917 6 % 28,219 7 % (302 ) (1 )%
Marine 11,916 4 % 10,428 4 % 1,488 14 %
Auto 7,305 3 % 9,921 3 % (2,616 ) (26 )%
Aviation 2,865 1 % 3,793 1 % (928 (24 )%
Total $ 69,139 4 % $ 68,861 4 % $ 278 0 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Advertising		% of			Advertising		% of
	Expense		Revenue			Expense		Revenue			$ Change			% Change
Outdoor	$	30,464		5	%	$	25,955		5	%	$	4,509			17	%
Fitness		41,319		6	%		40,515		7	%		804			2	%
Marine		15,791		4	%		14,022		4	%		1,769			13	%
Auto		10,180		2	%		14,100		3	%		(3,920	)		(28	)%
Aviation		4,054		1	%		5,408		1	%		(1,354	)		(25	)%
Total	$	101,808		4	%	$	100,000		4	%	$	1,808			2	%

Advertising expense ~~was relatively flat~~increased 2% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period. ~~Increases in~~Increased cooperative advertising in the outdoor, fitness, and marine segments and increased media advertising in the outdoor segment ~~were generally~~was partially offset by ~~decreases in~~decreased cooperative advertising ~~and point-of-sale display advertising expense~~ in the auto ~~segment.~~

and aviation segments.

Selling, General and Administrative Expense

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Selling, General &
Admin. Expenses
% of Revenue
Selling, General &
Admin. Expenses
% of Revenue
$ Change
% Change
Outdoor $ 58,711 16 % $ 54,647 16 % $ 4,064 7 %
Fitness 77,538 18 % 64,092 16 % 13,446 21 %
Marine 49,291 17 % 54,136 22 % (4,845 ) (9 )%
Auto 38,668 14 % 47,046 15 % (8,378 ) (18 )%
Aviation 31,311 9 % 17,643 6 % 13,668 77 %
Total $ 255,519 15 % $ 237,564 15 % $ 17,955 8 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Selling, General & Admin.		% of			Selling, General & Admin.		% of
	Expenses		Revenue			Expenses		Revenue			$ Change			% Change
Outdoor	$	91,390		15	%	$	85,887		15	%	$	5,503			6	%
Fitness		114,657		17	%		95,462		16	%		19,195			20	%
Marine		69,524		18	%		75,841		22	%		(6,317	)		(8	)%
Auto		56,486		13	%		68,465		14	%		(11,979	)		(17	)%
Aviation		48,232		9	%		26,579		6	%		21,653			81	%
Total	$	380,289		14	%	$	352,234		15	%	$	28,055			8	%

Selling, general and administrative expense increased 8% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period. The absolute dollar increase was primarily attributable to personnel costs, legal related costs, and expenses from recent acquisitions. The fitness segment increase as a percent of revenue was primarily due to expenses from newly acquired Tacx. ~~The auto segment decrease as a percent of revenue was primarily due to less amortization expense associated with intangible assets.~~

As noted above and in Note 4 to the Condensed Consolidated Financial Statements, the Company refined its methodology to allocate certain selling, general and administrative expenses in the beginning of the 2019 fiscal year. The prior year amounts are presented here as originally reported. For comparative purposes, we estimate selling, general and administrative expenses for the first ~~half~~three quarters of 2018 would have been approximately $9$13 million more for the aviation segment, approximately $8$10 million less for the marine segment, approximately $1$3 million less for the outdoor segment, and not significantly different for the fitness and auto segments. Selling, general and administrative expense as a percent of revenue also decreased in marine due to greater leverage of operating costs.

Research and Development Expense

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Research &
Development
% of Revenue
Research &
Development
% of Revenue
$ Change
% Change
Outdoor $ 41,859 11 % $ 35,272 10 % $ 6,587 19 %
Fitness 51,978 12 % 44,799 11 % 7,179 16 %
Marine 40,327 14 % 40,005 16 % 322 1 %
Auto 53,104 19 % 63,417 20 % (10,313 ) (16 )%
Aviation 107,533 30 % 100,177 34 % 7,356 7 %
Total $ 294,801 17 % $ 283,670 18 % $ 11,131 4 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Research &		% of			Research &		% of
	Development		Revenue			Development		Revenue			$ Change			% Change
Outdoor	$	63,648		10	%	$	52,276		9	%	$	11,372			22	%
Fitness		78,460		12	%		67,197		12	%		11,263			17	%
Marine		60,487		15	%		59,307		17	%		1,180			2	%
Auto		77,368		18	%		93,711		19	%		(16,343	)		(17	)%
Aviation		163,398		30	%		150,158		34	%		13,240			9	%
Total	$	443,361		17	%	$	422,649		17	%	$	20,712			5	%

Research and development expense as a percent of revenue was ~~slightly lower~~relatively flat when compared to the year-ago period and increased ~~$11.1 million~~5% in absolute dollars. The absolute dollar increase in research and development expenses when compared with the year-ago period was primarily due to engineering personnel costs related to our wearable and aviation product offerings and expenses resulting from recent acquisitions, partially offset by the capitalization of certain contractually reimbursable preproduction design and development personnel costs within the auto segment. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.

Operating Income

26-Weeks Ended
June 29, 2019
26-Weeks Ended
June 30, 2018
Year over Year

Operating Income
% of Revenue
Operating Income
% of Revenue
$ Change
% Change
Outdoor $ 113,290 31 % $ 115,739 33 % $ (2,449 ) (2 )%
Fitness 68,537 16 % 85,922 22 % (17,385 ) (20 )%
Marine 68,205 24 % 40,899 16 % 27,306 67 %
Auto 33,121 12 % 16,079 5 % 17,042 106 %
Aviation 124,451 35 % 101,071 34 % 23,380 23 %
Total $ 407,604 24 % $ 359,710 22 % $ 47,894 13 %

	39-Weeks Ended September 28, 2019					39-Weeks Ended September 29, 2018					Year over Year
	Operating		% of			Operating		% of
	Income		Revenue			Income		Revenue			$ Change			% Change
Outdoor	$	218,340		35	%	$	194,711		35	%	$	23,629			12	%
Fitness		118,369		18	%		123,299		21	%		(4,930	)		(4	)%
Marine		88,212		22	%		54,806		16	%		33,406			61	%
Auto		53,978		13	%		31,113		6	%		22,865			73	%
Aviation		190,164		35	%		151,741		34	%		38,423			25	%
Total	$	669,063		25	%	$	555,670		23	%	$	113,393			20	%

Operating income increased ~~13%~~20% in absolute dollars and increased ~~130~~220 basis points as a percent of revenue when compared to the year-ago period. The growth in operating income on an absolute dollar basis and as a percent of revenue was the result of revenue growth, ~~slight increase in~~improved gross margin, and greater leverage of operating expenses, as discussed above.

Other Income (Expense)

26-Weeks Ended
26-Weeks Ended

June 29,
2019
June 30,
2018
Interest income $ 27,439 $ 21,222
Foreign currency gains 3,727 3,463
Other 3,273 5,653
Total $ 34,439 $ 30,338

	39-Weeks Ended			39-Weeks Ended
	September 28, 2019			September 29, 2018
Interest income	$	39,748		$	32,310
Foreign currency losses		(12,568	)		(3,405	)
Other		3,567			6,800
Total	$	30,747		$	35,705

The average returns on cash and investments, including interest and capital gains/losses, during the ~~26-weeks~~39-weeks ended ~~June 29,~~September 28, 2019 and the ~~26-weeks~~39-weeks ended ~~June 30,~~September 29, 2018 were ~~2.2%~~2.0% and 1.8%, respectively. Interest income increased primarily due to slightly higher yields on fixed-income securities.

The ~~$3.7~~$12.6 million currency ~~gain~~loss recognized in the first ~~half~~three quarters of 2019 was primarily due to the strengthening of the U.S. Dollar against ~~the Taiwan Dollar,~~most other currencies, partially offset by the U.S. Dollar strengthening against the ~~Euro~~Taiwan Dollar within the ~~26-weeks~~39-weeks ended ~~June 29,~~September 28, 2019. During this period, the U.S. Dollar strengthened ~~1.2%~~1.5% against the Taiwan Dollar, resulting in a gain of ~~$7.4 million while~~$8.6 million. This was more than offset by the U.S. Dollar ~~strengthened 0.6%~~strengthening 4.4% against the Euro ~~resulting in a loss of $4.1 million. The U.S. Dollar remained relatively flat~~and 3.3% against the British Pound ~~Sterling. The remaining~~Sterling, resulting in losses of $13.9 million and $0.9 million, respectively, and additional net currency ~~gain~~losses of ~~$0.4~~$6.4 million ~~was~~ related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

The ~~$3.5~~$3.4 million currency ~~gain~~loss recognized in the first ~~half~~three quarters of 2018 was primarily due to the strengthening of the U.S. Dollar against ~~the Taiwan Dollar,~~most other currencies, partially offset by the U.S. Dollar strengthening against the ~~Euro and British Pound Sterling~~Taiwan Dollar within the ~~26-weeks~~39-weeks ended ~~June 30,~~September 29, 2018. During this period, the U.S. Dollar strengthened 2.7% against the Taiwan Dollar, resulting in a gain of ~~$13.9 million, while~~$13.6 million. This was more than offset by the U.S. Dollar ~~strengthened 2.6%~~strengthening 3.2% against the Euro and ~~2.3%~~3.6% against the British Pound Sterling, resulting in losses of ~~$5.1~~$7.7 million and ~~$0.1~~$0.6 million, ~~respectively. The remaining~~respectively, and additional net currency ~~loss~~losses of ~~$5.2~~$8.7 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 ~~$78.2~~$108.1 million in the first ~~half~~three quarters of 2019, compared to income tax expense of ~~$70.3~~$87.4 million in the first ~~half~~three quarters of 2018. The effective tax rate was ~~17.7%~~15.4% in the first ~~half~~three quarters of 2019, compared to ~~18.0%~~14.8% in the first ~~half~~three quarters of 2018.

~~The~~

~~the~~The Company is ~~unable~~evaluating transitional measures in Switzerland tax law that may affect the overall increase in deferred tax assets as well as the impact of tax reform to ~~estimate~~its ongoing effective tax rate, the ~~timing and the amount~~materiality of ~~the income tax benefit due to the dependency on the future enactment of Swiss cantonal tax rate.~~

which is not yet known.

Net Income

As a result of the above, net income for the ~~26-week~~39-week period ended ~~June 29,~~September 28, 2019 was ~~$363.8~~$591.7 million compared to ~~$319.7~~$503.9 million for the ~~26-week~~39-week period ended ~~June 30,~~September 29, 2018, an increase of ~~$44.1~~$87.8 million.

Liquidity and Capital Resources

As of ~~June 29,~~September 28, 2019, we had approximately ~~$2.4~~$2.5 billion of cash and 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, and fund strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our long-term projected capital expenditures, working capital and other cash requirements.

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 ~~half~~three quarters of 2019 and 2018 were approximately ~~2.2%~~2.0% and 1.8%, 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

26-Weeks Ended
June 29, June 30,
(In thousands) 2019 2018
Net cash provided by operating activities $ 275,218 $ 438,063

	39-Weeks Ended
	September 28,		September 29,
(In thousands)	2019		2018
Net cash provided by operating activities	$	464,170	$	701,782

The ~~$162.8~~$237.6 million decrease in cash provided by operating activities induring the first ~~half~~three quarters of 2019 compared to the first ~~half~~three quarters of 2018 was primarily due to the ~~net~~ increase in cash used in working capital of ~~$156.6~~$310.6 million (which included a decrease of ~~$42.5~~$98.0 million in net receipts of accounts receivable, a net increase of ~~$75.3~~$126.7 million in cash paid for inventory associated primarily with the Company’s effort to increase days of supply to support our increasingly diversified product lines, and a net increase of ~~$38.8~~$85.9 million in cash used in other activities primarily driven by payments associated with an amendment to a license agreement) and income taxes payable of ~~$43.8~~$34.5 million. These decreases were partially offset by the year over year increase in net income and other non-cash adjustments of ~~$37.6~~$107.5 million.

Investing Activities

26-Weeks Ended
June 29, June 30,
(In thousands) 2019 2018
Net cash used in investing activities $ (346,399 ) $ (185,894 )

	39-Weeks Ended
	September 28,			September 29,
(In thousands)	2019			2018
Net cash used in investing activities	$	(367,808	)	$	(238,815	)

The ~~$160.5~~$129.0 million increase in cash used in investing activities during the first ~~half~~three quarters of 2019 compared to the first ~~half~~three quarters of 2018 was primarily due to increased cash payments for acquisitions of ~~$266.6~~$246.1 million, partially offset by decreased net purchases of marketable securities of ~~$72.9~~$85.6 million and ~~decreased~~ cash payments for net purchases of property and equipment of ~~$31.6~~$30.4 million.

Financing Activities

26-Weeks Ended
June 29, June 30,
(In thousands) 2019 2018
Net cash used in financing activities $ (308,877 ) $ (188,844 )

	39-Weeks Ended
	September 28,			September 29,
(In thousands)	2019			2018
Net cash used in financing activities	$	(308,895	)	$	(288,534	)

The ~~$120.0~~$20.4 million increase in cash used in financing activities during the first ~~half~~three quarters of 2019 compared to the first ~~half~~three quarters of 2018 was primarily due to an increase in dividend payments of ~~$112.8~~$12.8 million ~~associated with the timing of dividend payments that resulted~~and $7.6 million increase in ~~three dividend payments in the first half of 2019 compared~~treasury stock net purchases related to ~~two dividend payments in the first half of 2018.~~

equity awards.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

General

Garmin’s discussion and analysis of its financial condition and results of operations are based upon Garmin’s 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 to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Garmin evaluates its estimates, including those related to bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, 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 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, 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 29, 2018. There were no material changes to the Company’s critical accounting policies and estimates in the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019, other than those discussed in Note 1, “Accounting Policies”.

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 29, 2018. There have been no material changes during the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures.

The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of ~~June 29,~~September 28, 2019, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of ~~June 29,~~September 28, 2019 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in internal control over financial reporting

. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended ~~June 29,~~September 28, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 29, 2018.

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 29, 2018. There have been no material changes during the 13-week and ~~26-week~~39-week periods ended ~~June 29,~~September 28, 2019 in the risks described in our Annual Report on Form 10-K. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Not applicable

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~Exhibit 101.INS~~		~~XBRL Instance Document~~

~~Exhibit 101.SCH~~		~~XBRL Taxonomy Extension Schema~~

~~Exhibit 101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase~~

~~Exhibit 101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase~~

~~Exhibit 101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase~~

Exhibit ~~101.DEF~~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)

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 30, 2019

~~Dated: July 31, 2019~~

INDEX TO EXHIBITS

Exhibit No.		Description

Exhibit 31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).

Exhibit 32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

~~Exhibit 101.INS~~		~~XBRL Instance Document~~

~~Exhibit 101.SCH~~		~~XBRL Taxonomy Extension Schema~~

~~Exhibit 101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase~~

~~Exhibit 101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase~~

~~Exhibit 101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase~~

Exhibit ~~101.DEF~~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)

	June 29,			December 29,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	820,181		$	1,201,732
Marketable securities		239,765			182,989
Accounts receivable, net		583,913			569,833
Inventories		648,140			561,840
Deferred costs		27,040			28,462
Prepaid expenses and other current assets		141,539			120,512
Total current assets		2,460,578			2,665,368

Property and equipment, net		702,108			663,527
Operating lease right-of-use assets		59,166			—

Restricted cash		73			73
Marketable securities		1,319,026			1,330,123
Deferred income taxes		162,739			176,959
Noncurrent deferred costs		27,018			29,473
Intangible assets, net		653,014			417,080
Other assets		141,061			100,255
Total assets	$	5,524,783		$	5,382,858

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	214,763		$	204,985
Salaries and benefits payable		106,331			113,087
Accrued warranty costs		39,330			38,276
Accrued sales program costs		74,302			90,388
Deferred revenue		94,980			96,372
Accrued royalty costs		14,578			24,646
Accrued advertising expense		28,444			31,657
Other accrued expenses		90,439			69,777
Income taxes payable		39,879			51,642
Dividend payable		324,655			200,483
Total current liabilities		1,027,701			921,313

Deferred income taxes		105,865			92,944
Noncurrent income taxes		121,997			127,211
Noncurrent deferred revenue		71,700			76,566
Noncurrent operating lease liabilities		46,281			—
Other liabilities		273			1,850

Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 190,102 shares outstanding at June 29, 2019; and 189,461 shares outstanding at December 29, 2018;		17,979			17,979
Additional paid-in capital		1,825,135			1,823,638
Treasury stock		(368,200	)		(397,692	)
Retained earnings		2,641,371			2,710,619
Accumulated other comprehensive income		34,681			8,430
Total stockholders’ equity		4,150,966			4,162,974
Total liabilities and stockholders’ equity	$	5,524,783		$	5,382,858

	13-Weeks Ended				26-Weeks Ended
	June 29,		June 30,		June 29,		June 30,
	2019		2018		2019		2018
Net sales	$	954,840	$	894,452	$	1,720,890	$	1,605,325

Cost of goods sold		379,475		371,182		693,827		655,520

Gross profit		575,365		523,270		1,027,063		949,805

Advertising expense		41,523		43,549		69,139		68,861
Selling, general and administrative expense		128,738		120,500		255,519		237,564
Research and development expense		148,883		141,713		294,801		283,670
Total operating expense		319,144		305,762		619,459		590,095

Operating income		256,221		217,508		407,604		359,710

Other income:
Interest income		13,735		10,995		27,439		21,222
Foreign currency gains		3,413		2,647		3,727		3,463
Other income		2,409		4,918		3,273		5,653
Total other income		19,557		18,560		34,439		30,338

Income before income taxes		275,778		236,068		442,043		390,048

Income tax provision		52,122		45,726		78,214		70,333

Net income	$	223,656	$	190,342	$	363,829	$	319,715

Net income per share:
Basic	$	1.18	$	1.01	$	1.92	$	1.70
Diluted	$	1.17	$	1.00	$	1.91	$	1.69

Weighted average common shares outstanding:
Basic		189,855		188,542		189,728		188,432
Diluted		190,714		189,461		190,657		189,377

	As of June 29, 2019
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	—		$	—	$	(110	)	$	17,148
Agency securities		—			—		(174	)		39,347
Mortgage-backed securities		( 5	)		5,662		(2,582	)		113,253
Corporate securities		(307	)		79,025		(5,819	)		440,815
Municipal securities		(0	)		886		(216	)		54,151
Other		(28	)		15,246		(677	)		80,643
Total	$	(340	)	$	100,819	$	(9,578	)	$	745,357

	13-Weeks Ended June 29, 2019
	Foreign Currency Translation Adjustment		Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	38,093	$	(19,755	)	$	18,338
Other comprehensive income before reclassification, net of income tax expense of $ 2,406		314		16,148			16,462
Amounts reclassified from accumulated other comprehensive income		—		(119	)		(119	)
Net current-period other comprehensive income		314		16,029			16,343
Ending Balance	$	38,407	$	(3,726	)	$	34,681

	26-Weeks Ended June 29, 2019
	Foreign Currency Translation Adjustment			Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	47,327		$	(38,897	)	$	8,430
Other comprehensive income before reclassification, net of income tax expense of $ 5,311		(8,920	)		35,248			26,328
Amounts reclassified from accumulated other comprehensive income		—			(77	)		(77	)
Net current-period other comprehensive income		(8,920	)		35,171			26,251
Ending Balance	$	38,407		$	(3,726	)	$	34,681

Fiscal Year	Lease payments
2019, excluding the 26-weeks ended June 29, 2019	$	9,022
2020		15,765
2021		12,339
2022		8,536
2023		7,808
Thereafter		15,418
Total	$	68,888
Less: imputed interest		(8,152	)
Present value of lease liabilities	$	60,736

	13-Weeks Ended
	June 29, 2019			June 30, 2018

Net sales		100	%		100	%
Cost of goods sold		40	%		41	%
Gross profit		60	%		59	%
Advertising expense		4	%		5	%
Selling, general and administrative expense		13	%		13	%
Research and development expense		16	%		16	%
Total operating expense		33	%		34	%
Operating income		27	%		24	%
Other income		2	%		2	%
Income before income taxes		29	%		26	%
Income tax provision		5	%		5	%
Net income		23	%		21	%

	13-Weeks Ended June 29, 2019					13-Weeks Ended June 30, 2018					Year over Year
	Net Sales		% of Total			Net Sales		% of Total			$ Change			% Change
Outdoor	$	210,404		22	%	$	201,640		23	%	$	8,764			4	%
Fitness		251,653		26	%		225,095		25	%		26,558			12	%
Marine		151,407		16	%		134,583		15	%		16,824			13	%
Auto		157,411		17	%		180,128		20	%		(22,717	)		(13	)%
Aviation		183,965		19	%		153,006		17	%		30,959			20	%
Total	$	954,840		100	%	$	894,452		100	%	$	60,388			7	%

	13-Weeks Ended		13-Weeks Ended
	June 29, 2019		June 30, 2018
Interest income	$	13,735	$	10,995
Foreign currency gains		3,413		2,647
Other		2,409		4,918
Total	$	19,557	$	18,560

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Operating Income		% of Revenue			Operating Income		% of Revenue			$ Change			% Change
Outdoor	$	364,455		21	%	$	345,899		22	%	$	18,556			5	%
Fitness		431,908		25	%		391,130		24	%		40,778			10	%
Marine		285,376		17	%		248,138		15	%		37,238			15	%
Auto		284,410		16	%		321,439		20	%		(37,029	)		(12	)%
Aviation		354,741		21	%		298,719		19	%		56,022			19	%
Total	$	1,720,890		100	%	$	1,605,325		100	%	$	115,565			7	%