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

Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YESþ ☑ NO¨ ☐

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

Large Accelerated Filerþ ☑ Accelerated Filer¨ ☐ Non-accelerated Filer¨~~(Do~~ ☐ (Do not check if a smaller reporting company) 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).

Number of shares outstanding of the registrant’s common shares as of October ~~30, 2017~~29, 2018

See accompanying notes.

Garmin Ltd. and Subsidiaries

~~Garmin Ltd. and Subsidiaries~~

Notes to Condensed Consolidated Financial Statements (Unaudited)

September ~~30, 2017~~29, 2018

(In thousands, except per share information)

~~Basis of Presentation~~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~~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 39-week periods ended September ~~30, 2017~~29, 2018 are not necessarily indicative of the results that may be expected for the year ending December ~~30, 2017.~~29, 2018.

The condensed consolidated balance sheet at December ~~31, 2016~~30, 2017 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 ~~31, 2016.~~30, 2017.

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 September ~~30, 2017~~29, 2018 and September ~~24, 2016~~30, 2017 both contain operating results for 13 weeks.

As previously announced and discussed below within the “Recently Adopted Accounting Standards” section of this footnote, effective beginning in the 2018 fiscal year, we adopted the requirements of Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the full retrospective method. All amounts and disclosures set forth in this Form 10-Q reflect these changes. Further, as a result of the adoption of certain other accounting standards described below, effective beginning in the 2018 fiscal year, certain amounts in prior periods have been reclassified to conform to the current period presentation.

Recently Adopted Accounting Standards

Revenue from Contracts with Customers

In ~~March~~May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes previous revenue recognition guidance. The FASB issued several updates amending or relating to ASU 2014-09 (collectively, the “new revenue standard”). The Company has adopted the new revenue standard effective beginning in the 2018 fiscal year using the full retrospective method, which requires the Company to restate each prior reporting period presented in future financial statement issuances. The impacts of the new revenue standard relate to our accounting for certain arrangements within the auto segment.

A portion of the Company’s auto segment contracts have historically been accounted for under Accounting Standards Codification (ASC) Topic 985-605 Software-Revenue Recognition (Topic 985-605). Under Topic 985-605, the Company deferred revenue and associated costs of all elements of multiple-element software arrangements if vendor-specific objective evidence of fair value (VSOE) could not be established for an undelivered element (e.g. map updates). In applying the new revenue standard to certain contracts that include both software licenses and map updates, we will recognize the portion of revenue and costs related to the software license at the time of delivery rather than ratably over the map update period.

Additionally, for certain multiple-element arrangements within the Company’s auto segment, the Company’s policy has been to allocate consideration to traffic services and recognize the revenue and associated cost of royalties ratably over the estimated life of the underlying product. Under the new revenue standard, we will recognize revenue and associated costs of royalties related to certain traffic services at the time of hardware and/or software delivery. Specifically, the new revenue standard emphasizes the timing of the Company’s performance, and upon delivery of the navigation device and/or software, the Company has fully performed its obligation with respect to the design and production of the product to receive and interpret the broadcast traffic signal for the benefit of the end user.

The changes in accounting policy described above collectively result in reductions to deferred costs (asset) and deferred revenue (liability) balances, and accelerate the recognition of revenue and deferred costs in the auto segment going forward.

Summarized financial information depicting the impact of the new revenue standard is presented below. The Company’s historical net cash flows provided by or used in operating, investing, and financing activities are not impacted by adoption of the new revenue standard.

	13-Weeks Ended September 30, 2017						39-Weeks Ended September 30, 2017
	As reported		Restated⁽¹⁾		Impact		As reported			Restated⁽¹⁾			Impact
Net sales	$	743,077	$	751,244	$	8,167	$	2,198,508		$	2,224,241		$	25,733
Gross profit		433,665		437,523		3,858		1,283,646			1,294,459			10,813
Operating income		169,790		173,648		3,858		489,485			500,298			10,813
Income tax provision (benefit)		38,643		38,840		197		(54,372	)		(53,840	)		532
Net income	$	147,413	$	151,074	$	3,661	$	556,175		$	566,456		$	10,281
Diluted net income per share	$	0.78	$	0.80	$	0.02	$	2.95		$	3.00		$	0.05

(1)

The Restated results presented above are restated under ASC Topic 606. Amounts related to the income tax effect of the new standard that were previously disclosed as the anticipated adoption impact in our press release attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on February 21, 2018 have been revised in this Note by immaterial amounts in connection with our adoption of ASC Topic 606.

	December 30, 2017							December 31, 2016

	As reported		Restated⁽²⁾		Impact			As reported			Restated⁽²⁾			Impact

Current assets:
Deferred costs	$	48,312	$	30,525	$	(17,787	)	$	47,395		$	34,665		$	(12,730	)
Total current assets		2,363,925		2,346,138		(17,787	)		2,263,016			2,250,286			(12,730	)
Deferred income taxes		199,343		195,981		(3,362	)		110,293			107,655			(2,638	)
Noncurrent deferred costs		73,851		33,029		(40,822	)		56,151			30,934			(25,217	)
Total assets	$	5,010,260	$	4,948,289	$	(61,971	)	$	4,525,133		$	4,484,549		$	(40,584	)
Current liabilities:
Deferred revenue		139,681		103,140		(36,541	)		146,564			118,496			(28,068	)
Total current liabilities		828,656		792,115		(36,541	)		782,735			754,667			(28,068	)
Deferred income taxes		75,215		76,612		1,397			61,220			62,617			1,397
Non-current deferred revenue		163,840		87,060		(76,780	)		140,407			91,238			(49,169	)
Retained earnings		2,368,874		2,418,444		49,570			2,056,702			2,092,221			35,519
Accumulated other comprehensive income		56,045		56,428		383			(36,761	)		(37,024	)		(263	)
Total stockholders’ equity		3,802,466		3,852,419		49,953			3,418,003			3,453,259			35,256
Total liabilities and stockholders’ equity	$	5,010,260	$	4,948,289	$	(61,971	)	$	4,525,133		$	4,484,549		$	(40,584	)

	52-Weeks Ended December 30, 2017								53-Weeks Ended December 31, 2016

	As reported			Restated⁽²⁾			Impact		As reported		Restated⁽²⁾		Impact
Net sales	$	3,087,004		$	3,121,560		$	34,556	$	3,018,665	$	3,045,797	$	27,132
Gross profit		1,783,164			1,797,941			14,777		1,679,570		1,688,525		8,955
Operating income		668,860			683,637			14,777		623,909		632,864		8,955
Income tax (benefit) provision		(12,661	)		(11,936	)		725		118,856		120,901		2,045
Net income	$	694,955		$	709,007		$	14,052	$	510,814	$	517,724	$	6,910
Diluted net income per share	$	3.68		$	3.76		$	0.08	$	2.70	$	2.73	$	0.03

(2)

The Restated results presented above are restated under ASC Topic 606. Amounts related to the income tax effect of the new standard that were previously disclosed as the anticipated adoption impact in Note 2, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements of our fiscal 2017 Annual Report on Form 10-K filed with the SEC on February 21, 2018 have been revised in this Note by immaterial amounts in connection with our adoption of ASC Topic 606.

Financial Instruments – Recognition, Measurement, Presentation, and Disclosure

In January 2016, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued Accounting Standards Update No. ~~2016-09, Compensation—Stock Compensation~~2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The Company has adopted the new standard effective beginning in the 2018 fiscal year. The adoption did not have a material impact on the Company’s financial position or results of operations.

Statement of Cash Flows

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic ~~718)~~230): ~~Improvements to Employee Share-Based Payment Accounting~~Classification of Certain Cash Receipts and Cash Payments (“ASU ~~2016-09”~~2016-15”), which ~~is intended~~adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard addresses eight specific cash flow issues with the objective of reducing diversity in practice. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (“ASU 2016-18”), which requires restricted cash and restricted cash equivalents to ~~simplify~~be included with cash and cash equivalents when reconciling changes in the ~~accounting for share-based payment awards.~~total amounts within the statement of cash flows. The Company has adopted the new standards effective beginning in the 2018 fiscal year. The adoption of ASU ~~2016-09~~2016-15 did not have a material impact to the Company’s statements of cash flows. The amendments of ASU 2016-18 were applied using a retrospective transition method, resulting in immaterial changes to the presentation of the Company’s statements of cash flows.

The total of cash and cash equivalents and restricted cash balances presented on ~~a prospective basis during~~ the ~~quarter ended April 1, 2017.~~ condensed consolidated balance sheet reconciles to the total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows.

Income Taxes

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (“ASU ~~2016-09~~2016-16”), which requires ~~excess tax benefits or deficiencies from stock-based compensation to be recognized in~~recognition of the income tax ~~provision. We previously recorded these amounts to additional paid-in capital. Additionally, under ASU 2016-09, excess tax benefits and deficiencies are not estimated~~consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company has adopted the new standard effective beginning in the 2018 fiscal year, which resulted in a reclassification of approximately $1,700 of certain prepaid tax balances in a cumulative effect to retained earnings as of the date of adoption.

Income Statement – Reporting Comprehensive Income

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which allows for stranded tax effects in accumulated other comprehensive income resulting from the U.S. Tax Cuts and Jobs Act to be reclassified to retained earnings. The Company has elected to early adopt the new standard effective ~~tax rate, rather, are recorded as discrete tax items~~beginning in the ~~period they occur. Excess~~2018 fiscal year, resulting in reclassification of approximately $452 from accumulated other comprehensive income into retained earnings. The tax ~~benefits~~effects that were reclassified only relate to amounts resulting from ~~stock-based compensation arrangements are classified as~~the U.S. Tax Cuts and Jobs Act.

Significant Accounting Policies

For a ~~cash flow from operations under ASU 2016-09, rather~~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 30, 2017. Other than ~~as a cash flow from financing activities. The most~~the policies discussed below, there were no material changes to the Company’s significant ~~impact of ASU 2016-09~~accounting policies during the 39-week period ended September ~~30, 2017 is~~29, 2018.

Revenue Recognition

The Company recognizes revenue upon the ~~recognition~~transfer of ~~income tax expense~~control of ~~$7,275 resulting from stock options and stock appreciation rights expiring unexercised. There were no material expirations during~~promised products or services to the ~~13-week period ended September 30, 2017. The impact~~customer in an amount that depicts the consideration the Company expects to be entitled to for the related products or services. For the large majority of the Company’s sales, transfer of control occurs once product has shipped and title and risk of loss have transferred to the customer. The Company offers certain tangible products with ongoing services promised over a period of time, typically the useful life of the related tangible product. When we have identified such services as both capable of being distinct and separately identifiable from the related tangible product, the associated revenue allocated to such services is recognized over time. The Company generally does not offer specified or unspecified upgrade rights to its customers in connection with software sales.

For products that include tangible hardware that contains software essential to the tangible product’s functionality and ongoing services identified as separately identifiable performance obligations, the Company allocates revenue to all performance obligations based on their relative standalone selling prices (“SSP”), with the amounts allocated to ongoing services deferred and recognized over a period of time. These ongoing services primarily consist of the Company’s contractual promises to provide personal navigation device (PND) users with lifetime map updates (LMU) and server-based traffic services. In addition, we provide map update services (map care) over a contractual period in certain hardware and software contracts with original equipment manufacturers (OEMs). The Company has determined that directly observable prices do not exist for LMU, map care, or server-based traffic, as stand-alone and unbundled unit sales do not occur on more than a limited basis. Therefore, the Company uses the expected cost plus a margin as the primary indicator to calculate relative SSP of the LMU, map care, and traffic performance obligations. The revenue and associated costs allocated to the LMU, map care, and/or the server-based traffic service are deferred and recognized ratably over the estimated life of the products of approximately 3 years for PNDs, or the estimated map care period in OEM contracts of 3-10 years as we believe our efforts as it relates to providing these services are spread evenly throughout the performance period. In addition to the products listed above, the Company has offered certain other products with ongoing performance obligations including mobile applications, incremental navigation and/or communication service subscriptions, aviation database subscriptions, and extended warranties that are individually immaterial.

The Company records revenue net of sales tax ~~expense~~and variable consideration such as trade discounts and customer returns. Payment is due typically within 90 days or less of shipment of product, or upon the grant of a given software license (as applicable). The Company records estimated reductions to revenue in the form of variable consideration for customer sales programs, returns and incentive offerings including rebates, price protection (product discounts offered to retailers to assist in clearing older products from their inventories in advance of new product releases), promotions and other volume-based incentives. The reductions to revenue are based on estimates and judgments using historical experience and expectation of future conditions. Changes in these estimates could negatively affect the Company’s operating results. These incentives are reviewed periodically and, with the exceptions of price protection and certain other promotions, typically accrued for on a percentage of sales basis.

Deferred Revenue and Costs

Deferred revenue consists primarily of the transaction price allocated to performance obligations that are recognized over a period of time basis as discussed in theRevenue Recognition portion of this footnote. Billings associated with such items are typically completed upon the transfer of control of promised products or services to the customer and recorded to accounts receivable until payment is received. Deferred costs primarily refer to the royalties incurred by the Company associated with the ~~expiration of stock option and stock appreciation rights on diluted earnings per share was $0.04 for~~aforementioned unsatisfied performance obligations, which are amortized over the ~~39-week~~same period ~~ended September 30, 2017.~~as the revenue is recognized. The Company ~~believes ASU 2016-09 may have~~typically pays the associated royalties either monthly or quarterly in arrears, on a ~~material effect on forthcoming periods. However,~~per item shipped or installed basis.

The Company applies a practical expedient, as permitted within ASC 340, to expense as incurred the ~~Company is unable~~incremental costs to ~~reasonably estimate~~obtain a contract when the ~~impact due to the dependency of these items on the underlying share price~~amortization period of the ~~Company.~~asset that would have otherwise been recognized is one year or less.

Shipping and Handling Costs

Shipping and handling activities are typically performed before the customer obtains control of the good, and the related costs are therefore expensed as incurred. Shipping and handling costs are included in cost of goods sold in the accompanying condensed consolidated financial statements.

Inventories

The components of inventories consist of the following:

September 30, December 31,
2017 2016

Raw materials $ 189,367 $ 162,882
Work-in-process 84,249 68,602
Finished goods 334,557 293,789
Inventory reserves (32,838 ) (40,452 )
Inventory, net of reserves $ 575,335 $ 484,821

	September 29,		December 30,
	2018		2017

Raw materials	$	203,472	$	179,659
Work-in-process		92,050		75,754
Finished goods		261,118		262,231
Inventories	$	556,640	$	517,644

Earnings Per Share

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

13-Weeks Ended
September 30, September 24,
2017 2016
Numerator:
Numerator for basic and diluted net income per share - net income $ 147,413 $ 125,054

Denominator:
Denominator for basic net income per share – weighted-average common shares 187,616 188,692

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units 874 546

Denominator for diluted net income per share – adjusted weighted-average common shares 188,490 189,238

Basic net income per share $ 0.79 $ 0.66

Diluted net income per share $ 0.78 $ 0.66

	13-Weeks Ended
	September 29,		September 30,
	2018		2017
Numerator:
Numerator for basic and diluted net income per share - net income	$	184,214	$	151,074

Denominator:
Denominator for basic net income per share – weighted-average common shares		188,799		187,616

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units		1,206		874

Denominator for diluted net income per share – adjusted weighted-average common shares		190,005		188,490

Basic net income per share	$	0.98	$	0.81

Diluted net income per share	$	0.97	$	0.80

	39-Weeks Ended
	September 29,		September 30,
	2018		2017
Numerator:
Numerator for basic and diluted net income per share - net income	$	503,930	$	566,456

Denominator:
Denominator for basic net income per share – weighted-average common shares		188,554		187,902

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units		1,032		769

Denominator for diluted net income per share – adjusted weighted-average common shares		189,586		188,671

Basic net income per share	$	2.67	$	3.01

Diluted net income per share	$	2.66	$	3.00

39-Weeks Ended
September 30, September 24,
2017 2016
Numerator:
Numerator for basic and diluted net income per share - net income $ 556,175 $ 374,209

Denominator:
Denominator for basic net income per share – weighted-average common shares 187,902 189,027

Effect of dilutive securities – stock options, stock appreciation rights and restricted stock units 769 349

Denominator for diluted net income per share – adjusted weighted-average common shares 188,671 189,376

Basic net income per share $ 2.96 $ 1.98

Diluted net income per share $ 2.95 $ 1.98

There were ~~1,051 and 3,170~~no anti-dilutive stock options, stock appreciation rights and restricted stock units (collectively “equity awards”) outstanding during the 13-week ~~periods~~period ended September 29, 2018 and 1,051 anti-dilutive equity awards outstanding during the 13-week period ended September 30, ~~2017 and September 24, 2016, respectively.~~2017.

There were ~~1,567 and 3,696~~no anti-dilutive equity awards outstanding during the 39-week ~~periods~~period ended September 29, 2018 and 1,567 anti-dilutive equity awards outstanding during the 39-week period ended September 30, ~~2017 and September 24, 2016, respectively.~~2017.

There were 212 and 262 net shares issued as a result of exercises and releases of equity awards for the 13-week periods ended September ~~30, 2017~~29, 2018 and September ~~24, 2016,~~30, 2017, respectively.

There were 390 and 161 ~~and 39~~net shares issued as a result of exercises and releases of equity awards for the 39-week periods ended September ~~30, 2017~~29, 2018 and September ~~24, 2016,~~30, 2017, respectively.

There were ~~248~~230 employee stock purchase plan (ESPP) shares issued from outstanding Treasury stock during the 39-week period ended September ~~30, 2017.~~29, 2018.

There were ~~285~~248 ESPP shares issued from outstanding Treasury stock during the 39-week period ended September ~~24, 2016.~~30, 2017.

Segment Information

The Company has identified five reportable segments – auto, aviation, marine, outdoor and fitness. ~~The Company’s Chief Operating Decision Maker (CODM) assesses segment performance and allocates resources to each segment individually.~~

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 September 30, 2017

Net sales $ 184,937 $ 167,147 $ 77,312 $ 189,053 $ 124,628 $ 743,077
Gross profit $ 118,175 $ 96,135 $ 44,574 $ 83,961 $ 90,820 $ 433,665
Operating income $ 67,810 $ 33,492 $ 18,420 $ 15,971 $ 34,097 $ 169,790

13-Weeks Ended September 24, 2016

Net sales $ 141,006 $ 189,161 $ 70,010 $ 214,637 $ 107,436 $ 722,250
Gross profit $ 88,497 $ 103,363 $ 39,891 $ 93,638 $ 80,591 $ 405,980
Operating income $ 49,271 $ 44,774 $ 10,332 $ 24,795 $ 30,444 $ 159,616

39-Weeks Ended September 30, 2017

Net sales $ 495,589 $ 485,999 $ 290,302 $ 555,059 $ 371,559 $ 2,198,508
Gross profit $ 319,457 $ 276,014 $ 166,690 $ 246,931 $ 274,554 $ 1,283,646
Operating income $ 176,544 $ 89,452 $ 60,860 $ 50,566 $ 112,063 $ 489,485

39-Weeks Ended September 24, 2016

Net sales $ 370,929 $ 544,434 $ 264,489 $ 655,963 $ 322,083 $ 2,157,898
Gross profit $ 232,652 $ 295,463 $ 148,554 $ 292,770 $ 239,349 $ 1,208,788
Operating income $ 125,721 $ 114,422 $ 49,172 $ 82,984 $ 91,794 $ 464,093

	Reportable Segments

	Outdoor		Fitness		Marine		Auto		Aviation		Total

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

13-Weeks Ended September 30, 2017

Net sales	$	184,937	$	167,147	$	77,312	$	197,220	$	124,628	$	751,244
Gross profit		118,175		96,135		44,574		87,819		90,820		437,523
Operating income		67,810		33,492		18,420		19,829		34,097		173,648

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

39-Weeks Ended September 30, 2017

Net sales	$	495,589	$	485,999	$	290,302	$	580,792	$	371,559	$	2,224,241
Gross profit		319,457		276,014		166,690		257,744		274,554		1,294,459
Operating income		176,544		89,452		60,860		61,379		112,063		500,298

Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis.

Net sales ~~and property and equipment, net~~to external customers by geographic ~~area are~~region were as follows ~~as of and~~ for the 13-week and 39-week periods ended September ~~30, 2017~~29, 2018 and September ~~24, 2016.~~30, 2017. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:

Americas APAC EMEA Total
September 30, 2017
Net sales to external customers $ 1,049,287 $ 315,096 $ 834,125 $ 2,198,508
Property and equipment, net $ 356,351 $ 160,360 $ 37,730 $ 554,441

September 24, 2016
Net sales to external customers $ 1,073,610 $ 274,083 $ 810,205 $ 2,157,898
Property and equipment, net $ 297,747 $ 117,301 $ 39,198 $ 454,246

	13-Weeks Ended				39-Weeks Ended
	September 29,		September 30,		September 29,		September 30,
	2018		2017		2018		2017
Americas	$	370,239	$	346,208	$	1,153,330	$	1,072,247
EMEA		307,087		291,703		862,116		831,687
APAC		132,685		113,333		399,890		320,307
Net sales to external customers	$	810,011	$	751,244	$	2,415,336	$	2,224,241

Net property and equipment by geographic region as of September 29, 2018 and September 30, 2017 are presented below.

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

September 30, 2017
Property and equipment, net	$	356,351	$	160,360	$	37,730	$	554,441

Warranty Reserves

The Company’s products sold are generally covered by a standard warranty for periods ranging from one to three years. The Company’s estimate of costs to service its warranty obligations are based on historical experience and expectation of future conditions and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

	13-Weeks Ended
	September 29,			September 30,
	2018			2017

Balance - beginning of period	$	38,429		$	37,012
Accrual for products sold during the period		13,558			16,903
Expenditures		(16,027	)		(18,246	)
Balance - end of period	$	35,960		$	35,669

13-Weeks Ended
September 30, September 24,
2017 2016

Balance - beginning of period $ 37,012 $ 34,670
Accrual for products sold during the period 16,903 15,859
Expenditures (18,246 ) (11,657 )
Balance - end of period $ 35,669 $ 38,872

	39-Weeks Ended						39-Weeks Ended
	September 30,			September 24,			September 29,			September 30,
	2017			2016			2018			2017

Balance - beginning of period	$	37,233		$	30,449		$	36,827		$	37,233
Accrual for products sold during the period		40,850			46,170			40,682			40,850
Expenditures		(42,414	)		(37,747	)		(41,549	)		(42,414	)
Balance - end of period	$	35,669		$	38,872		$	35,960		$	35,669

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 September ~~30, 2017~~29, 2018 was approximately ~~$363,000.~~$346,000. We cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements. 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.

~~Other than the matter discussed below, management~~Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended September ~~30, 2017.~~29, 2018. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

The Company settled or resolved certain matters during the 13-week and 39-week periods ended September 30, 2017 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.

~~In the Matter of Certain Marine Sonar Imaging Devices, Including Downscan and Sidescan Devices, Products Containing the Same, and Components Thereof~~

On June 9, 2014, Navico Inc. and Navico Holding AS (collectively “Navico”) filed a complaint with the United States International Trade Commission (“ITC”) alleging the Company infringed upon three specific Navico patents relating to downscan sonar. On December 1, 2015, the ITC issued a Final Determination concluding that there was infringement by Garmin. On August 30, 2016, Navico filed a request that the ITC initiate an enforcement proceeding for alleged violations by Garmin of the previous cease and desist orders issued by the ITC. On May 26, 2017, the Administrative Law Judge issued his initial enforcement determination concluding that Garmin’s sale of certain DownVü sonar products violated the ITC’s December 2015 orders and recommended a civil penalty of $37 million. On June 13, 2017, the US Court of Appeals for the Federal Circuit (“Federal Circuit”) reversed the ITC’s December 2015 Final Determination. Specifically, the Federal Circuit ruled that two of the three patents in suit are invalid and that Garmin does not infringe upon the third patent. The ITC stayed the issuance of a Final Determination in this enforcement proceeding pending the issuance by the Federal Circuit of its mandate, which occurred on October 31, 2017. The Company believes the claims in this complaint are without merit, believes it has valid defenses, believes there is a remote likelihood that the Company may have incurred a material loss with respect to this matter, and no loss accrual has therefore been recorded.

~~Navico Inc. And Navico Holding AS v. Garmin International, Inc. and Garmin USA, Inc. (U.S. District Court for the Northern District of Oklahoma)~~

On June 4, 2014, Navico filed suit in the United States District Court for the Northern District of Oklahoma alleging the Company infringed upon the same three specific Navico patents relating to downscan sonar that are the subject of their complaint filed with ITC discussed above. On January 15, 2016, the court issued an order staying this lawsuit pending the final determination of any appeal filed with the Federal Circuit concerning that ITC complaint. The Federal Circuit issued its mandate in this appeal on October 31, 2017, reversing the ITC’s December 2015 infringement ruling. The Company believes the claims in this lawsuit are without merit, believes it has valid defenses, believes there is a remote likelihood that the Company may have incurred a material loss with respect to this matter, and no loss accrual has therefore been recorded.

~~Navico Inc. And Navico Holding AS v. Garmin International, Inc. and Garmin USA, Inc. (U.S. District Court for the Eastern District of Texas)~~

On March 4, 2016, Navico filed suit in the United States District Court for the Eastern District of Texas, Marshall Division alleging the Company infringed upon two specific Navico patents relating to downscan sonar. On September 8, 2017, a jury returned a verdict finding that Garmin had willfully infringed upon those two patents and awarded damages of $38 million. The judge in this matter must now issue a final judgment which could result in damages of up to three times the original jury verdict (or up to $114 million). The final judgment could also include pre-judgment interest, post-judgment interest, and attorneys’ fees.

If the final judgment orders the Company to pay any amount of damages, the Company will appeal that decision to the Federal Circuit, based on grounds which the same court found in favor of the Company that similar Navico patents were not valid or were not infringed. The Company believes the claims in this lawsuit are without merit, is challenging the verdict, believes it has valid defenses, and will vigorously defend this matter. We believe the Federal Circuit will not uphold the validity of the asserted claims of these Navico patents, which are closely related to the claims of the patents that the Federal Circuit has already concluded are obvious and invalid in view of the prior art, and will therefore reverse the jury verdict. As the Company believes a loss in this lawsuit is not probable after any and all challenges and appeals, no loss accrual has been recorded.

In assessing the probability of a loss, we considered, among other factors, our experience and the experience of other entities in similar cases, how we intend to respond to the lawsuit, and the opinions of internal and external legal counsel that a loss is not probable, but is reasonably possible. In view of these factors, the existence of the jury verdict, the possibility of needing to appeal the final judgment and other uncertainties, the Company believes that it is reasonably possible that a loss could occur in a range from zero to up to $114 million, exclusive of pre-judgment interest, post-judgment interest, and attorneys’ fees.

Income Taxes

The Company recorded income tax expense of ~~$38,643~~$17,113 in the 13-week period ended September 29, 2018, compared to income tax expense of $38,840 in the 13-week period ended September 30, ~~2017, compared to income tax expense of $24,711 in the 13-week period ended September 24, 2016.~~2017. The effective tax rate was ~~20.8%~~8.5% in the third quarter of ~~2017,~~2018, compared to ~~16.5%~~20.5% in the third quarter of ~~2016.~~2017. The ~~430~~1,200 basis points ~~increase~~decrease to the third quarter of ~~2017~~2018 effective tax rate compared to the prior year quarter is primarily due to the reduction of the U.S. corporate tax rate and increased benefit from U.S. research and development tax credits.

The Company recorded income tax expense of $87,445 in the first three quarters of 2018, compared to an income tax benefit of $53,840 in the first three quarters of 2017, which included tax expense of $7,275 associated with the expiration of share-based awards and an income tax benefit of $168,755 primarily related to the revaluation of certain Switzerland deferred tax assets resulting from the Company’s election in ~~February~~the first quarter of 2017 to align certain Switzerland corporate tax positions with ~~evolving~~ international tax ~~initiatives, and shifts~~initiatives. The effective tax rate was 14.8% in projected income mix by jurisdiction, partially offset by the release of reserves related to uncertain tax positions due to the expiration of certain statutes of limitations during the third quarter of 2017.

~~The Company recorded an income tax benefit of $54,372 for~~ the first three quarters of ~~2017,~~2018, compared to ~~income tax expense of $86,904 for the first three quarters of 2016. The effective tax rate was (10.8%~~(10.5%) in the first three quarters of ~~2017, compared to 18.8% in~~2017. Excluding the ~~first three quarters of 2016. Excluding an~~ income tax benefit of $168,755 ~~due~~primarily related to the revaluation of Switzerland deferred tax assets, and the $7,275 tax expense due to the expiration of share-based awards, ~~(see Note 1 regarding the impacts of ASU 2016-09),~~ the effective tax rate for the first three quarters of ~~2017 increased 250~~2018 decreased 620 basis points compared to the effective tax rate ~~for~~in the first three quarters of ~~2016. This remaining 250 basis point increase in effective tax rate was~~2017 primarily due to the ~~Company’s election in February 2017 to align certain Switzerland~~reduction of the U.S. corporate tax ~~positions with evolving international~~rate and increased benefit from U.S. research and development tax ~~initiatives.~~credits.

On December 22, 2017, the Tax Cuts and Jobs Act was enacted into law in the United States. Due to the complexities of the new tax legislations, the SEC has issued Staff Accounting Bulletin No. 118 (“SAB 118”) which allows for the recognition of provisional amounts during a measurement period. The Company recorded a provisional re-measurement of its deferred tax assets and liabilities in the fourth quarter of 2017. The Company filed its U.S. federal income tax return during the third quarter of 2018 which did not result in an adjustment of its provisional re-measurement of its deferred tax assets and liabilities. Income tax expense recorded in the third quarter of 2018 includes the impact of the new tax legislation as currently interpreted by the Company. The Company will continue to assess the impact of the new tax legislation, including any state tax impact or any related future regulations and rules, and will record any additional impacts as identified during the measurement period, if necessary. The Company does not expect such potential adjustments in the future periods will materially impact the Company’s financial condition or result of operations.

Marketable Securities

The Financial Accounting Standards Board ~~("FASB"~~(“FASB”) ASC topic entitled Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:

Level 1

Unadjusted quoted prices in active markets for the identical asset or liability


Level 2	Observable inputs for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability


Level 3	Unobservable inputs for the asset or liability

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

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

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

Fair Value Measurements as
of September 30, 2017
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 19,859 $ - $ 19,859 $ -
Agency securities 50,975 - 50,975 -
Mortgage-backed securities 192,966 - 192,966 -
Corporate securities 866,665 - 866,665 -
Municipal securities 160,398 - 160,398 -
Other 173,159 - 173,159 -
Total $ 1,464,022 $ - $ 1,464,022 $ -

Fair Value Measurements as
of December 31, 2016
Total Level 1 Level 2 Level 3
U.S. Treasury securities $ 29,034 $ - $ 29,034 $ -
Agency securities 59,541 - 59,541 -
Mortgage-backed securities 230,823 - 230,823 -
Corporate securities 893,725 - 893,725 -
Municipal securities 176,168 - 176,168 -
Other 90,946 - 90,946 -
Total $ 1,480,237 $ - $ 1,480,237 $ -

	Fair Value Measurements as of September 29, 2018
	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	25,040	$	—	$	25,040	$	—
Agency securities		46,291		—		46,291		—
Mortgage-backed securities		140,318		—		140,318		—
Corporate securities		942,532		—		942,532		—
Municipal securities		168,588		—		168,588		—
Other		152,039		—		152,039		—
Total	$	1,474,808	$	—	$	1,474,808	$	—

	Fair Value Measurements as of December 30, 2017
	Total		Level 1		Level 2		Level 3
U.S. Treasury securities	$	19,337	$	—	$	19,337	$	—
Agency securities		43,361		—		43,361		—
Mortgage-backed securities		174,615		—		174,615		—
Corporate securities		816,793		—		816,793		—
Municipal securities		186,105		—		186,105		—
Other		181,509		—		181,509		—
Total	$	1,421,720	$	—	$	1,421,720	$	—

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

Available-For-Sale Securities as
of September 30, 2017

Amortized Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair Value
U.S. Treasury securities $ 19,986 $ 10 $ (137 ) $ 19,859
Agency securities 51,594 5 (624 ) 50,975
Mortgage-backed securities 197,525 23 (4,582 ) 192,966
Corporate securities 876,508 721 (10,564 ) 866,665
Municipal securities 161,165 329 (1,096 ) 160,398
Other 174,754 10 (1,605 ) 173,159
Total $ 1,481,532 $ 1,098 $ (18,608 ) $ 1,464,022

	Available-For-Sale Securities as of September 29, 2018

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	25,499	$	—	$	(459	)	$	25,040
Agency securities		47,653		—		(1,362	)		46,291
Mortgage-backed securities		148,837		3		(8,522	)		140,318
Corporate securities		974,227		47		(31,742	)		942,532
Municipal securities		172,157		3		(3,572	)		168,588
Other		155,200		0		(3,161	)		152,039
Total	$	1,523,573	$	53	$	(48,818	)	$	1,474,808

Available-For-Sale Securities as
of December 31, 2016

Amortized Cost Gross Unrealized
Gains Gross Unrealized
Losses Fair Value
U.S. Treasury securities $ 29,291 $ 31 $ (288 ) $ 29,034
Agency securities 60,513 19 (991 ) 59,541
Mortgage-backed securities 236,354 41 (5,572 ) 230,823
Corporate securities 914,028 252 (20,555 ) 893,725
Municipal securities 178,804 224 (2,859 ) 176,169
Other 90,934 20 (9 ) 90,945
Total $ 1,509,924 $ 587 $ (30,274 ) $ 1,480,237

	Available-For-Sale Securities as of December 30, 2017

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	19,591	$	—	$	(254	)	$	19,337
Agency securities		44,191		1		(831	)		43,361
Mortgage-backed securities		180,470		13		(5,868	)		174,615
Corporate securities		830,447		136		(13,790	)		816,793
Municipal securities		187,999		110		(2,004	)		186,105
Other		183,730		2		(2,223	)		181,509
Total	$	1,446,428	$	262	$	(24,970	)	$	1,421,720

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 ~~cost~~costs basis, which may be maturity.

The Company recognizes the credit component of other-than-temporary impairments of debt securities in ~~"Other Income"~~“Other Income” and the noncredit component in ~~"Other~~“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 ~~2016~~fiscal 2017 and the 39-week period ~~ending~~ended September ~~30, 2017,~~29, 2018, 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 atas of September ~~30, 2017~~29, 2018 were ~~$1,140,662~~$1,480,955 and ~~$1,122,054~~$1,432,137, respectively. Approximately ~~59%~~85% of securities in our portfolio were at an unrealized loss position atas of September ~~30, 2017.~~29, 2018. 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 statement 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 September ~~30, 2017~~29, 2018 and December ~~31, 2016.~~30, 2017.

As of September 30, 2017
Less than 12 Consecutive Months 12 Consecutive Months or Longer
Gross Unrealized
Losses Fair Value Gross Unrealized
Losses Fair Value
U.S. Treasury securities $ (49 ) $ 10,535 $ (88 ) $ 4,835
Agency securities (416 ) 29,139 (208 ) 16,441
Mortgage-backed securities (1,486 ) 73,508 (3,096 ) 117,656
Corporate securities (4,034 ) 432,176 (6,530 ) 238,952
Municipal securities (298 ) 54,675 (798 ) 31,085
Other (1,602 ) 111,332 (3 ) 1,720
Total $ (7,885 ) $ 711,365 $ (10,723 ) $ 410,689

	As of September 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	$	(90	)	$	11,405	$	(369	)	$	13,635
Agency securities		(48	)		7,700		(1,314	)		38,591
Mortgage-backed securities		(9	)		513		(8,513	)		139,339
Corporate securities		(9,256	)		477,194		(22,486	)		449,488
Municipal securities		(1,766	)		106,380		(1,806	)		60,281
Other		(830	)		37,869		(2,331	)		89,742
Total	$	(11,999	)	$	641,061	$	(36,819	)	$	791,076

As of December 31, 2016
Less than 12 Consecutive Months 12 Consecutive Months or Longer
Gross Unrealized
Losses Fair Value Gross Unrealized
Losses Fair Value
U.S. Treasury securities $ (288 ) $ 24,260 $ - $ -
Agency securities (991 ) 49,255 - -
Mortgage-backed securities (3,702 ) 159,665 (1,870 ) 64,645
Corporate securities (18,856 ) 765,712 (1,699 ) 40,910
Municipal securities (2,762 ) 130,994 (97 ) 6,326
Other (3 ) 4,058 (6 ) 6,919
Total $ (26,602 ) $ 1,133,944 $ (3,672 ) $ 118,800

	As of December 30, 2017
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	(111	)	$	12,966	$	(143	)	$	6,371
Agency securities		(168	)		16,097		(663	)		25,972
Mortgage-backed securities		(503	)		19,628		(5,365	)		153,835
Corporate securities		(4,562	)		439,174		(9,228	)		347,052
Municipal securities		(1,027	)		125,819		(977	)		38,167
Other		(2,219	)		136,147		(4	)		2,579
Total	$	(8,590	)	$	749,831	$	(16,380	)	$	573,976

The amortized cost and fair value of marketable securities at September ~~30, 2017,~~29, 2018, by ~~contractual~~ maturity, are shown below. ~~Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.~~

Amortized Cost Fair Value

Due in one year or less $ 253,879 $ 253,699
Due after one year through five years 1,012,722 1,002,997
Due after five years through ten years 186,767 179,714
Due after ten years 28,164 27,612
$ 1,481,532 $ 1,464,022

	Amortized Cost		Fair Value

Due in one year or less	$	174,578	$	173,697
Due after one year through five years		1,228,112		1,189,069
Due after five years through ten years		120,883		112,042
	$	1,523,573	$	1,474,808

~~Share Repurchase Plan~~

On February 13, 2015, the Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $300,000 of the common shares of Garmin Ltd. The repurchases may be made from time to time as market and business conditions warrant on the open market or in negotiated transactions in compliance with the SEC’s Rule 10b-18. The timing and amounts of any repurchases will be determined by the Company’s management depending on market conditions and other factors including price, regulatory requirements and capital availability. The program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. In December 2016, the Board of Directors authorized an extension through December 31, 2017 to purchase remaining common shares. As of September 30, 2017, the Company had repurchased 6,776 shares using cash of $299,169. There remains approximately $831 available to repurchase additional shares under this authorization.

~~10.~~

Accumulated Other Comprehensive Income

The following provides required disclosure of changes in accumulated other comprehensive income (AOCI) balances by component for the 13-week and 39-week periods ended September ~~30, 2017:~~29, 2018:

13-Weeks Ended September 30, 2017
Foreign Currency
Translation
Adjustment Net unrealized gains
(losses) on available-
for-sale securities Total
Balance - beginning of period $ 56,095 $ (15,948 ) $ 40,147
Other comprehensive income before reclassification 5,804 519 6,323
Amounts reclassified from accumulated other comprehensive income - 17 17
Net current-period other comprehensive income 5,804 536 6,340
Balance - end of period $ 61,899 $ (15,412 ) $ 46,487

	13-Weeks Ended September 29, 2018
	Foreign Currency Translation Adjustment			Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	52,924		$	(43,192	)	$	9,732
Other comprehensive income before reclassification, net of income tax benefit of $107		(3,940	)		(1,353	)		(5,293	)
Amounts reclassified from accumulated other comprehensive income		—			185			185
Net current-period other comprehensive income		(3,940	)		(1,168	)		(5,108	)
Reclassification of tax effects due to adoption of ASU 2018-02		—			—			—
Ending Balance	$	48,984		$	(44,360	)	$	4,624

39-Weeks Ended September 30, 2017
Foreign Currency
Translation
Adjustment Net unrealized gains
(losses) on available-
for-sale securities Total
Balance - beginning of period $ (9,411 ) $ (27,350 ) $ (36,761 )
Other comprehensive income before reclassification 71,310 11,378 82,688
Amounts reclassified from accumulated other comprehensive income - 560 560
Net current-period other comprehensive income 71,310 11,938 83,248
Balance - end of period $ 61,899 $ (15,412 ) $ 46,487

	39-Weeks Ended September 29, 2018
	Foreign Currency Translation Adjustment			Net unrealized gains (losses) on available-for-sale securities			Total
Beginning Balance	$	79,292		$	(22,864	)	$	56,428
Other comprehensive income before reclassification, net of income tax benefit of $3,014		(30,308	)		(21,490	)		(51,798	)
Amounts reclassified from accumulated other comprehensive income		—			446			446
Net current-period other comprehensive income		(30,308	)		(21,044	)		(51,352	)
Reclassification of tax effects due to adoption of ASU 2018-02		—			(452	)		(452	)
Ending Balance	$	48,984		$	(44,360	)	$	4,624

The following provides required disclosure of reporting reclassifications out of AOCI for the 13-week and 39-week periods ended September ~~30, 2017:~~29, 2018:

13-Weeks Ended September 30, 2017
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 $ (10 ) Other income (expense)
(7 ) Income tax benefit (provision)
$ (17 ) Net of tax

13-Weeks Ended September 29, 2018
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	$	(250	)	Other income (expense)

		65		Income tax benefit (provision)
	$	(185	)	Net of tax

39-Weeks Ended September 30, 2017
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 $ (594 ) Other income (expense)
34 Income tax benefit (provision)
$ (560 ) Net of tax

39-Weeks Ended September 29, 2018
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	$	(481	)	Other income (expense)

		35		Income tax benefit (provision)
	$	(446	)	Net of tax

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 – aviation, marine, outdoor, fitness, auto PND, and auto OEM. Note 4 also contains disaggregated revenue information of the aviation, marine, outdoor and fitness 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				39-Weeks Ended
	September 29,		September 30,		September 29,		September 30,
	2018		2017		2018		2017
Auto PND	64	%	70	%	66	%	69	%
Auto OEM	36	%	30	%	34	%	31	%

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:

	13-Weeks Ended				39-Weeks Ended
	September 29,		September 30,		September 29,		September 30,
	2018		2017		2018		2017
Point in time	$	761,216	$	708,854	$	2,286,740	$	2,098,468
Over time		48,795		42,390		128,596		125,773
Net sales	$	810,011	$	751,244	$	2,415,336	$	2,224,241

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 39-weeks ended September 29, 2018 are presented below:

	39-Weeks Ended
	September 29,
	2018
	Deferred Revenue⁽¹⁾			Deferred Costs⁽²⁾

Balance, beginning of period	$	190,200		$	63,554
Deferrals in period		113,634			27,445
Recognition of deferrals in period		(128,596	)		(33,032	)
Balance, end of period	$	175,238		$	57,967

⁽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 costs and Noncurrent deferred costs per the Condensed Consolidated Balance Sheets

Of the $128,596 of deferred revenue recognized in the 39-weeks ended September 29, 2018, $88,775 was deferred as of the beginning of the period.

Approximately two-thirds of the $175,238 of deferred revenue at the end of the period, September 29, 2018, is recognized ratably over a period of three years or less.

11.

Recently Issued Accounting Pronouncements Not Yet Adopted

~~Revenue from Contracts with Customers~~

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which supersedes previous revenue recognition guidance. The FASB has issued several standards amending or relating to ASU 2014-09 (collectively, the “new revenue standards”). The effective date of ASU 2014-09 is for fiscal years, and interim periods within those years, beginning on or after December 15, 2017. The Company does not intend to early adopt, and therefore will adopt in the Company’s fiscal year ending December 29, 2018. The Company plans to adopt the new revenue standards using the full retrospective method to restate each prior reporting period presented.

Our evaluation of the new revenue standards, as it relates to possible differences in the timing of revenue recognition for our contracts, is substantially complete. Based on our evaluation of the new revenue standards, our recognition will be consistent with our current accounting policies except for certain arrangements within the Company’s auto segment.

A portion of the Company’s auto segment contracts are currently accounted for under Accounting Standards Codification Topic 985-605 Software-Revenue Recognition (Topic 985-605). Under Topic 985-605, the Company defers all elements of multiple-element software arrangements if vendor-specific objective evidence of fair value (VSOE) cannot be established for an undelivered element (e.g. map updates). In applying the new revenue standards to certain contracts that include both software licenses and map updates, we will recognize the portion of revenue related to the software license at the time of delivery rather than ratably over the map update period.

Additionally, for certain multiple-element arrangements within the Company’s auto segment, the Company’s current policy is to allocate consideration to traffic services and recognize it ratably over the estimated life of the underlying product. Under the new revenue standards, we will recognize revenue related to certain traffic services at the time of hardware and/or software delivery. Specifically, the new revenue standards emphasize the timing of the Company’s performance, and upon delivery of the navigation device and/or software, the Company has performed its obligation with respect to the design and production of the product to receive and interpret the broadcast traffic signal for the benefit of the end user.

The changes in accounting policy described above will collectively result in reductions to deferred costs (asset) and deferred revenue (liability) balances and will accelerate the recognition of revenues and deferred costs in the auto segment going forward. The Company is currently finalizing its assessment of these impacts of the new revenue standards to the Consolidated Financial Statements. The new revenue standards require enhanced disclosures regarding contract assets and liabilities, and increased disaggregation of revenues, among other enhanced disclosure requirements. We are in the process of implementing changes to processes and internal controls for the new revenue standards.

~~Financial Instruments – Recognition, Measurement, Presentation, and Disclosure~~

In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the impact of adopting the new standard on its consolidated financial statements.

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. Lessor accounting is substantially unchanged compared to the current accounting guidance. ~~ASU 2016-02~~Additional footnote disclosures related to leases will also be required. The new lease standard is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ~~Early adoption is permitted.~~

The Company ~~is currently evaluating~~will adopt the new lease standard at the beginning of the 2019 fiscal year using the optional transition method. The Company plans on electing the package of transitional practical expedients upon adoption which, among other provisions, allows the Company to carry forward historical lease classification. The new lease standard will result in increases to the assets and liabilities on the Company’s consolidated balance sheets, as the majority of the Company’s leases are classified as operating leases. The Company continues to evaluate the full quantitative impact of adopting the new ~~standard on its consolidated financial statements.~~

~~Statement of Cash Flows~~

In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard addresses eight specific cash flow issues with the objective of reducing diversity in practice. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted.lease standard. The Company is ~~currently evaluating~~also in the ~~impact~~process of implementing changes to accounting policies, processes, systems, and internal controls in conjunction with adopting the new ~~standard on its consolidated financial statements.~~lease standard.

~~Income Taxes~~

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”), which requires recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. 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.

~~12.~~

~~Subsequent Events~~

On October 26, 2017, the Company acquired the shares of Navionics S.p.A., a privately held worldwide provider of electronic navigational charts and mobile applications for the marine industry. This acquisition was not material.

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 ~~31, 2016.~~30, 2017. This report has been filed with the Securities and Exchange Commission (the ~~"SEC"~~“SEC” or the ~~"Commission"~~“Commission”) in Washington, D.C. and can be obtained by contacting the ~~SEC's~~SEC’s public reference operations or obtaining it through the ~~SEC's~~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 ~~31, 2016.~~30, 2017.

The Company is a leading worldwide provider of navigation, communications and information devices, most of which are enabled by Global Positioning System, or GPS, technology. We operate in five ~~business~~reportable segments, the outdoor, fitness, marine, auto and aviation markets. The Company’s segments offer products through its network of independent dealers and distributors. However, the nature of products and types of customers for the five segments may vary significantly. As such, the segments are managed separately.

The Company adopted the new accounting standard for revenue recognition, as discussed in Note 1 – Accounting Policies of the Notes to Condensed Consolidated Financial Statements, effective beginning with the Company’s first quarter of 2018. Adoption of the new revenue recognition standard was applied using the full retrospective method, and information for prior periods within Results of Operations have been restated accordingly.

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
September 30, 2017 September 24, 2016

Net sales 100 % 100 %
Cost of goods sold 42 % 44 %
Gross profit 58 % 56 %
Advertising expense 4 % 5 %
Selling, general and administrative expense 14 % 13 %
Research and development expense 17 % 16 %
Total operating expense 36 % 34 %
Operating income 23 % 22 %
Other income (expense) 2 % (1 )%
Income before income taxes 25 % 21 %
Income tax (benefit) provision 5 % 3 %
Net income 20 % 17 %
13-Weeks Ended
September 29, 2018 September 30, 2017

Net sales 100 % 100 %
Cost of goods sold 41 % 42 %
Gross profit 59 % 58 %
Advertising expense 4 % 4 %
Selling, general and administrative expense 14 % 14 %
Research and development expense 17 % 17 %
Total operating expense 35 % 35 %
Operating income 24 % 23 %
Other income (expense) 1 % 2 %
Income before income taxes 25 % 25 %
Income tax provision 2 % 5 %
Net income 23 % 20 %

39-Weeks Ended
September 30, 2017 September 24, 2016

Net sales 100 % 100 %
Cost of goods sold 42 % 44 %
Gross profit 58 % 56 %
Advertising expense 5 % 5 %
Selling, general and administrative expense 14 % 14 %
Research and development expense 17 % 16 %
Total operating expense 36 % 35 %
Operating income 22 % 22 %
Other income (expense) 1 % 0 %
Income before income taxes 23 % 21 %
Income tax (benefit) provision (2 )% 4 %
Net income 25 % 17 %
39-Weeks Ended
September 29, 2018 September 30, 2017

Net sales 100 % 100 %
Cost of goods sold 41 % 42 %
Gross profit 59 % 58 %
Advertising expense 4 % 5 %
Selling, general and administrative expense 15 % 14 %
Research and development expense 17 % 17 %
Total operating expense 36 % 36 %
Operating income 23 % 22 %
Other income (expense) 1 % 1 %
Income before income taxes 24 % 23 %
Income tax provision (benefit) 4 % (2 %)
Net income 21 % 25 %

Allocation of certain research and development expenses, and selling, general, and administrative expenses are made to each segment on a percent of revenue basis. The segment table located in Note 4 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'~~segments’ amounts equals the amount in the condensed consolidated statements of income included in Item 1.

22

Comparison of ~~13-weeks~~13-Weeks ended September 29, 2018 and September 30, 2017 ~~and September 24, 2016~~
(Amounts included in the following discussion are stated in thousands unless otherwise indicated)

Net Sales

13-weeks ended September 30, 2017 13-weeks ended September 24, 2016 Year over Year 13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017 Year over Year
Net Sales % of Revenues Net Sales % of Revenues $ Change % Change Net Sales % of Revenue Net Sales % of Revenue $ Change % Change
Outdoor $ 184,937 25 % $ 141,006 19 % $ 43,931 31 % $ 209,415 26 % $ 184,937 25 % $ 24,478 13 %
Fitness 167,147 23 % 189,161 26 % (22,014 ) -12 % 190,185 24 % 167,147 22 % 23,038 14 %
Marine 77,312 10 % 70,010 10 % 7,302 10 % 98,770 12 % 77,312 10 % 21,458 28 %
Auto 189,053 25 % 214,637 30 % (25,584 ) -12 % 165,214 20 % 197,220 26 % (32,006 ) (16 %)
Aviation 124,628 17 % 107,436 15 % 17,192 16 % 146,427 18 % 124,628 17 % 21,799 17 %
Total $ 743,077 100 % $ 722,250 100 % $ 20,827 3 % $ 810,011 100 % $ 751,244 100 % $ 58,767 8 %

Net sales increased 3%8% for the 13-week period ended September ~~30, 2017~~29, 2018 when compared to the year-ago quarter. The outdoor, aviation, marine, and fitness segments collectively increased by 9%16%, contributing ~~75%~~80% of total revenue. ~~Auto~~Outdoor was the largest portion of our revenue mix at 26% in the third quarter of 2018 compared to 25% in the third quarter of ~~2017 compared to 30%~~2017. Auto revenue represented the largest portion of our revenue mix in the third quarter of ~~2016.~~2017 at 26% and declined to 20% in the third quarter of 2018.

Total unit sales ~~decreased~~in the third quarter of 2018 increased to 3,527 when compared to total unit sales of 3,492 in the third quarter of ~~2017 from 3,848 in the same period of 2016.~~2017.

Auto segment revenue decreased ~~12%~~16% from the year-ago quarter, primarily due to the ongoing PND market contraction. ~~Revenues in the~~Outdoor, fitness, marine, and aviation segment ~~decreased 12% from the year-ago quarter driven by the general decline of the basic activity tracker market~~revenue increased 13%, 14%, 28%, and the timing of product introductions. The marine increase of 10% is primarily due to strong chartplotter and fishfinder sales in the current quarter. Revenues in the outdoor segment increased 31% from the year-ago quarter primarily driven by significant growth in the wearable category. Aviation revenues increased 16%17%, respectively, when compared to the year-ago quarter. The current quarter marine segment increase was primarily driven by ~~both~~sales from recent acquisitions, in addition to sales growth across most product lines. The outdoor and fitness segment revenue increases were primarily driven by strong ~~aftermarket and OEM sales.~~sales in wearables. The aviation segment revenue increase was driven by increased sales across most product lines within the segment.

Cost of Goods Sold

13-weeks ended September 30, 2017 13-weeks ended September 24, 2016 Year over Year
Cost of Goods % of Revenues Cost of Goods % of Revenues $ Change % Change
Outdoor $ 66,762 36 % $ 52,509 37 % $ 14,253 27 %
Fitness 71,012 42 % 85,798 45 % (14,786 ) -17 %
Marine 32,738 42 % 30,119 43 % 2,619 9 %
Auto 105,092 56 % 120,999 56 % (15,907 ) -13 %
Aviation 33,808 27 % 26,845 25 % 6,963 26 %
Total $ 309,412 42 % $ 316,270 44 % $ (6,858 ) -2 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017 Year over Year
Cost of Goods % of Revenue Cost of Goods % of Revenue $ Change % Change
Outdoor $ 72,744 35 % $ 66,762 36 % $ 5,982 9 %
Fitness 86,744 46 % 71,012 42 % 15,732 22 %
Marine 40,262 41 % 32,738 42 % 7,524 23 %
Auto 94,289 57 % 109,401 55 % (15,112 ) (14 %)
Aviation 35,225 24 % 33,808 27 % 1,417 4 %
Total $ 329,264 41 % $ 313,721 42 % $ 15,543 5 %

~~Third quarter 2017 cost~~Cost of goods sold ~~was $6.9 million or 2% lower than~~increased 5% in absolute dollars compared to the prior year quarter. ~~This decrease~~The increase in revenue outpaced the increase in cost of goods sold, ~~dollars, combined with the increase in revenues discussed above,~~which resulted in a ~~220~~110 basis point decrease in cost of goods sold as a percent of ~~revenues~~revenue compared to the year-ago quarter.

In the auto segment, ~~the decline in~~ cost of goods sold continued to decline with revenue declines and the slight increase of cost of goods sold as a percent of revenue was ~~largely consistent with~~primarily due to product mix and promotional activity during the ~~segment revenue declines.~~third quarter of 2018. In the marine segment, the ~~increase in cost of goods sold was largely consistent with the segment revenue increases. In the outdoor and fitness segments, the decreases~~decrease in cost of goods sold as a percent of revenue primarily resulted from ~~a shift in product mix toward~~the favorable impact of higher margin ~~products. In the~~Navionics sales on product mix. The outdoor segment decrease in cost of goods sold as a percent of revenue was primarily due to product mix. The fitness segment increase in cost of goods sold as a percent of revenue was primarily driven by product mix. The aviation segment ~~the increase~~decrease in cost of goods as a ~~percentage~~percent of revenue ~~resulted~~was primarily ~~from slightly increased~~driven by a reduction in warranty costs compared to the year-ago quarter.

23

Gross Profit

13-weeks ended September 30, 2017 13-weeks ended September 24, 2016 Year over Year
Gross Profit % of Revenues Gross Profit % of Revenues $ Change % Change
Outdoor $ 118,175 64 % $ 88,497 63 % $ 29,678 34 %
Fitness 96,135 58 % 103,363 55 % (7,228 ) -7 %
Marine 44,574 58 % 39,891 57 % 4,683 12 %
Auto 83,961 44 % 93,638 44 % (9,677 ) -10 %
Aviation 90,820 73 % 80,591 75 % 10,229 13 %
Total $ 433,665 58 % $ 405,980 56 % $ 27,685 7 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017 Year over Year
Gross Profit % of Revenue Gross Profit % of Revenue $ Change % Change
Outdoor $ 136,671 65 % $ 118,175 64 % $ 18,496 16 %
Fitness 103,441 54 % 96,135 58 % 7,306 8 %
Marine 58,508 59 % 44,574 58 % 13,934 31 %
Auto 70,925 43 % 87,819 45 % (16,894 ) (19 %)
Aviation 111,202 76 % 90,820 73 % 20,382 22 %
Total $ 480,747 59 % $ 437,523 58 % $ 43,224 10 %

Gross profit dollars in the third quarter of ~~2017~~2018 increased 7%10% while gross margin increased ~~220~~110 basis points compared to the ~~third quarter of 2016.~~year-ago quarter. Gross margin ~~remained relatively flat across all segments, except for~~in the fitness and auto segments decreased compared to the year-ago quarter, while gross margin in the outdoor, marine, and aviation ~~which~~segments increased ~~and decreased, respectively,~~compared to the year-ago quarter, as a result of the reasons discussed above.

Advertising Expense

13-weeks ended September 30, 2017 13-weeks ended September 24, 2016
Advertising Advertising Year over Year
Expense % of Revenues Expense % of Revenues $ Change % Change
Outdoor $ 8,092 4 % $ 6,459 5 % $ 1,633 25 %
Fitness 14,089 8 % 14,616 8 % (527 ) -4 %
Marine 2,618 3 % 2,941 4 % (323 ) -11 %
Auto 6,340 3 % 6,992 3 % (652 ) -9 %
Aviation 1,310 1 % 1,948 2 % (638 ) -33 %
Total $ 32,449 4 % $ 32,956 5 % $ (507 ) -2 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017
Advertising Advertising Year over Year
Expense % of Revenue Expense % of Revenue $ Change % Change
Outdoor $ 9,455 5 % $ 8,092 4 % $ 1,363 17 %
Fitness 12,296 6 % 14,089 8 % (1,793 ) (13 %)
Marine 3,594 4 % 2,618 3 % 976 37 %
Auto 4,180 3 % 6,340 3 % (2,160 ) (34 %)
Aviation 1,615 1 % 1,310 1 % 305 23 %
Total $ 31,140 4 % $ 32,449 4 % $ (1,309 ) (4 %)

Advertising expense decreased 2%4% in absolute dollars and was relatively flat as a percent of ~~revenues~~revenue compared to the year-ago quarter. The ~~overall~~total absolute dollar decrease ~~in absolute dollars~~ was driven primarily by ~~decreases cooperative~~decreased media advertising in the auto and fitness segments, partially offset by ~~an increase~~increased media advertising in the outdoor ~~media.~~and marine segments.

Selling, General and Administrative Expense
13-weeks ended September 30, 2017 13-weeks ended September 24, 2016
Selling, General & Selling, General & Year over Year
Admin. Expenses % of Revenues Admin. Expenses % of Revenues $ Change % Change
Outdoor $ 27,574 15 % $ 20,074 14 % $ 7,500 37 %
Fitness 27,858 17 % 27,294 14 % 564 2 %
Marine 8,681 11 % 13,041 19 % (4,360 ) -33 %
Auto 30,231 16 % 30,875 14 % (644 ) -2 %
Aviation 7,450 6 % 5,675 5 % 1,775 31 %
Total $ 101,794 14 % $ 96,959 13 % $ 4,835 5 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017
Selling, General & Selling, General & Year over Year
Admin. Expenses % of Revenue Admin. Expenses % of Revenue $ Change % Change
Outdoor $ 31,240 15 % $ 27,574 15 % $ 3,666 13 %
Fitness 31,370 16 % 27,858 17 % 3,512 13 %
Marine 21,704 22 % 8,681 11 % 13,023 150 %
Auto 21,418 13 % 30,231 15 % (8,813 ) (29 %)
Aviation 8,937 6 % 7,450 6 % 1,487 20 %
Total $ 114,669 14 % $ 101,794 14 % $ 12,875 13 %

Selling, general and administrative expense increased 5%13% in absolute dollars and was relatively flat as a percent of ~~revenues~~revenue compared to the year-ago quarter. The ~~outdoor~~absolute dollar increase in the third quarter of 2018 was primarily attributable to personnel costs and ~~aviation segment increases were relatively flat~~expenses from recent acquisitions. The increase in absolute dollars and as a percent of ~~revenues. The increase as a percent of revenues~~revenue in the ~~fitness~~marine segment was primarily attributable to ~~information technology~~expenses associated with recent acquisitions and ~~selling-related costs.~~the reduced legal related costs in the year-ago quarter. The ~~auto segment increase~~decrease in absolute dollars and as a percent of ~~revenues, and~~revenue in the ~~marine~~auto segment ~~decrease as~~was primarily attributable to a ~~percent of revenues are primarily due to~~current quarter reduction in legal related ~~costs.~~costs compared to the year-ago quarter.

24

Research and Development Expense
13-weeks ended September 30, 2017 13-weeks ended September 24, 2016
Research & Research & Year over Year
Development % of Revenues Development % of Revenues $ Change % Change
Outdoor $ 14,699 8 % $ 12,693 9 % $ 2,006 16 %
Fitness 20,696 12 % 16,679 9 % 4,017 24 %
Marine 14,855 19 % 13,577 19 % 1,278 9 %
Auto 31,419 17 % 30,976 14 % 443 1 %
Aviation 47,963 38 % 42,524 40 % 5,439 13 %
Total $ 129,632 17 % $ 116,449 16 % $ 13,183 11 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017
Research & Research & Year over Year
Development % of Revenue Development % of Revenue $ Change % Change
Outdoor $ 17,004 8 % $ 14,699 8 % $ 2,305 16 %
Fitness 22,397 12 % 20,696 12 % 1,701 8 %
Marine 19,302 20 % 14,855 19 % 4,447 30 %
Auto 30,295 18 % 31,419 16 % (1,124 ) (4 %)
Aviation 49,981 34 % 47,963 38 % 2,018 4 %
Total $ 138,979 17 % $ 129,632 17 % $ 9,347 7 %
Research and development expense increased ~~11%~~$9.3 million in absolute dollars and was relatively flat as a percent of revenue compared to the year-ago quarter. This increase in absolute dollars was primarily due to higher engineering personnel costs related to ~~our~~ wearable and aviation product offerings and ~~aviation. In absolute dollars, research and development costs increased $13.2 million when compared with~~expenses resulting from recent acquisitions within the ~~year-ago quarter and increased 130 basis points as a percent of revenue.~~marine segment. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.

Operating Income
13-weeks ended September 30, 2017 13-weeks ended September 24, 2016 Year over Year
Operating Income % of Revenues Operating Income % of Revenues $ Change % Change
Outdoor $ 67,810 37 % $ 49,271 35 % $ 18,539 38 %
Fitness 33,492 20 % 44,774 24 % (11,282 ) -25 %
Marine 18,420 24 % 10,332 15 % 8,088 78 %
Auto 15,971 8 % 24,795 12 % (8,824 ) -36 %
Aviation 34,097 27 % 30,444 28 % 3,653 12 %
Total $ 169,790 23 % $ 159,616 22 % $ 10,174 6 %
13-Weeks ended September 29, 2018 13-Weeks ended September 30, 2017
Operating Operating Year over Year
Income % of Revenue Income % of Revenue $ Change % Change
Outdoor $ 78,972 38 % $ 67,810 37 % $ 11,162 16 %
Fitness 37,378 20 % 33,492 20 % 3,886 12 %
Marine 13,908 14 % 18,420 24 % (4,512 ) (24 %)
Auto 15,032 9 % 19,829 10 % (4,797 ) (24 %)
Aviation 50,669 35 % 34,097 27 % 16,572 49 %
Total $ 195,959 24 % $ 173,648 23 % $ 22,311 13 %

Operating income increased 6%13% in absolute dollars and increased 70110 basis points as a percent of revenue when compared to the ~~third quarter of 2016.~~year-ago quarter. The growth in operating income ~~on an~~in absolute ~~dollar~~dollars and ~~percent of revenue basis resulted from revenue growth and an increase in gross margin percent, partially offset by increased operating expenses~~ as a percent of revenue was primarily attributable to revenue growth and increased gross margins, as discussed above.
Other Income (Expense)

13-weeks ended 13-weeks ended
September 30, 2017 September 24, 2016
Interest income $ 9,207 $ 8,226
Foreign currency gains (losses) 8,579 (19,421 )
Other (1,520 ) 1,344
Total $ 16,266 $ (9,851 )
13-Weeks ended 13-Weeks ended
September 29, 2018 September 30, 2017
Interest income $ 11,089 $ 9,207
Foreign currency (losses) gains (6,868 ) 8,579
Other 1,147 (1,520 )
Total $ 5,368 $ 16,266

The average return on cash and investments, including interest and capital gains/losses, during the third quarter of ~~2017~~2018 was ~~1.6%~~1.8% compared to ~~1.5%~~1.6% during the same quarter of ~~2016.~~2017.  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.

25

The $6.9 million currency loss recognized in the third quarter of 2018 was primarily due to the strengthening of the U.S. Dollar against the Euro and British Pound Sterling within the 13-weeks ended September 29, 2018. During this period, the U.S. Dollar strengthened 0.7% against the Euro and 1.3% against the British Pound Sterling, resulting in losses of $2.7 million and $0.6 million, respectively, while the U.S. Dollar remained relatively flat against the Taiwan Dollar. The remaining net currency loss of $3.6 million was related to other currencies and timing of transactions.

The $8.6 million currency gain recognized in the third quarter of 2017 was primarily due to the weakening of the U.S. Dollar against the Euro and the British Pound Sterling, partially offset by the U.S. Dollar weakening against the Taiwan Dollar within the 13-weeks ended September 30, 2017. During this period, the U.S. Dollar weakened 3.4% against the Euro and 2.8% against the British Pound Sterling, resulting in gains of $8.0 million and $0.7 million, respectively, while the U.S. Dollar weakened 0.3% against the Taiwan Dollar, resulting in a loss of $1.6 million. The remaining net currency gain of $1.5 million was related to other currencies and timing of transactions.

The $19.4 million currency loss recognized in the third quarter of 2016 was primarily due to the weakening of the U.S. Dollar against the Taiwan Dollar within the 13-weeks ended September 24, 2016. During this period, the U.S. Dollar weakened 3.5% against the Taiwan Dollar, resulting in a loss of $20.9 million, while the U.S. Dollar weakened 1.0% against the Euro, resulting in a gain of $2.6 million. The remaining net currency loss of $1.1 million was related to other currencies and timing of transactions.
Income Tax ~~(Benefit)~~ Provision

The Company recorded income tax expense of ~~$38.6~~$17.1 million in the 13-week period ended September 29, 2018, compared to income tax expense of $38.8 million in the 13-week period ended September 30, ~~2017, compared to income tax expense of $24.7 million in the 13-week period ended September 24, 2016.~~2017. The effective tax rate was ~~20.8%~~8.5% in the third quarter of ~~2017,~~2018, compared to ~~16.5%~~20.5% in the third quarter of ~~2016.~~2017. The ~~430~~1,200 basis points ~~increase~~decrease to the third quarter of ~~2017~~2018 effective tax rate compared to the prior year quarter is primarily due to the ~~Company’s election in February 2017 to align certain Switzerland~~reduction of the U.S. corporate tax ~~positions with evolving international~~rate and increased benefit from U.S. research and development tax initiatives, and shifts in projected income mix by jurisdiction, partially offset by the release of reserves related to uncertain tax positions due to the expiration of certain statutes of limitations during the third quarter of 2017.credits.

Net Income

As a result of the above, net income for the 13-weeks ended September ~~30, 2017~~29, 2018 was ~~$147.4~~$184.2 million compared to ~~$125.1~~$151.1 million for the 13-week period ended September ~~24, 2016,~~30, 2017, an increase of ~~$22.4~~$33.1 million.

Comparison of 39-Weeks Ended September ~~30, 2017~~29, 2018 and 39-Weeks Ended September ~~24, 2016~~30, 2017

Net Sales
39-weeks ended September 30, 2017 39-weeks ended September 24, 2016 Year over Year
Net Sales % of Revenues Net Sales % of Revenues $ Change % Change
Outdoor $ 495,589 23 % $ 370,929 17 % $ 124,660 34 %
Fitness 485,999 22 % 544,434 26 % (58,435 ) -11 %
Marine 290,302 13 % 264,489 12 % 25,813 10 %
Auto 555,059 25 % 655,963 30 % (100,904 ) -15 %
Aviation 371,559 17 % 322,083 15 % 49,476 15 %
Total $ 2,198,508 100 % $ 2,157,898 100 % $ 40,610 2 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017 Year over Year
Net Sales % of Revenue Net Sales % of Revenue $ Change % Change
Outdoor $ 555,314 23 % $ 495,589 22 % $ 59,725 12 %
Fitness 581,315 24 % 485,999 22 % 95,316 20 %
Marine 346,908 14 % 290,302 13 % 56,606 19 %
Auto 486,653 20 % 580,792 26 % (94,139 ) (16 %)
Aviation 445,146 19 % 371,559 17 % 73,587 20 %
Total $ 2,415,336 100 % $ 2,224,241 100 % $ 191,095 9 %

Net sales increased 2%9% for the 39-week period ended September ~~30, 2017~~29, 2018 when compared to the year-ago period. ~~All~~The outdoor, aviation, marine, and fitness segments ~~had an increase in revenue except for auto and fitness. Auto~~collectively increased by 17%, contributing 80% of total revenue. Fitness was the largest portion of our revenue mix at ~~25%~~24% in the first three quarters of 2018 compared to 22% in the first three quarters of 2017. Auto revenue represented the largest portion of our revenue mix in the first three quarters of 2017 ~~compared~~at 26% and declined to ~~30%~~20% in the ~~same period~~first three quarters of ~~2016.~~2018.

Total unit sales in the first three quarters of 2018 decreased to 10,266 when compared to the total unit sales of 10,495 in the first three quarters of ~~2017 from 11,374~~2017. The decrease in units sold despite the ~~same period of 2016.~~increase in revenue was primarily attributable to segment mix.

Auto segment revenue decreased ~~15%~~16% from the year-ago period, primarily due to the ongoing PND market contraction. ~~Revenues in the~~Outdoor, fitness, marine, and aviation segment ~~decreased 11%~~revenue increased 12%, 20%, 19%, and 20%, respectively, from the year-ago ~~period~~period. The marine segment revenue increase was primarily driven by ~~the general decline of the basic activity tracker market and the timing of product introductions. Outdoor, marine, and~~sales from recent acquisitions. The aviation ~~revenues increased 34%, 10%, and 15%, respectively, when compared to the year-ago period. Growth in outdoor~~segment revenue increase was primarily driven by ~~the significant~~strong growth across all product lines. The outdoor and fitness segment revenue increases were primarily driven by growth in ~~the wearable category. Our marine segment growth was distributed broadly across most product categories. Aviation revenues increased primarily due to growth in aftermarket sales.~~wearables.

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Cost of Goods Sold
39-weeks ended September 30, 2017 39-weeks ended September 24, 2016 Year over Year
Cost of Goods % of Revenues Cost of Goods % of Revenues $ Change % Change
Outdoor $ 176,132 36 % $ 138,277 37 % $ 37,855 27 %
Fitness 209,985 43 % 248,971 46 % (38,986 ) -16 %
Marine 123,612 43 % 115,935 44 % 7,677 7 %
Auto 308,128 56 % 363,193 55 % (55,065 ) -15 %
Aviation 97,005 26 % 82,734 26 % 14,271 17 %
Total $ 914,862 42 % $ 949,110 44 % $ (34,248 ) -4 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017 Year over Year
Cost of Goods % of Revenue Cost of Goods % of Revenue $ Change % Change
Outdoor $ 196,485 35 % $ 176,132 36 % $ 20,353 12 %
Fitness 254,842 44 % 209,985 43 % 44,857 21 %
Marine 142,932 41 % 123,612 43 % 19,320 16 %
Auto 279,264 57 % 323,048 56 % (43,784 ) (14 %)
Aviation 111,260 25 % 97,005 26 % 14,255 15 %
Total $ 984,783 41 % $ 929,782 42 % $ 55,001 6 %

Cost of goods sold ~~decreased 4%~~increased 6% in absolute dollars for the ~~39-weeks~~39-week period ended September ~~30, 2017~~29, 2018 when compared to the year-ago period. ~~This decrease~~The increase in revenue outpaced the increase in cost of goods sold, ~~dollars, combined with the increase in revenues discussed above,~~which resulted in a ~~240~~100 basis point decrease in cost of goods sold as a percent of ~~revenues~~revenue compared to the year-ago ~~quarter.~~period.

In the auto segment, ~~the~~ cost of goods sold continued to decline with revenue declines, and the slight increase of cost of goods sold as a percent of revenue was ~~largely consistent with~~primarily due to the ~~segment revenue decline.~~write-down of certain product inventories in the first three quarters of 2018. In the ~~outdoor and fitness segments,~~marine segment, the ~~decreases~~decrease in cost of goods sold as a percent of ~~revenues~~revenue primarily resulted from ~~a shift in product mix toward~~the favorable impact of higher margin ~~products.~~Navionics sales on product mix. The ~~marine and aviation~~fitness segment ~~increases~~increase in cost of goods sold ~~were largely consistent with~~as a percent of revenue was primarily driven by product mix. In the outdoor segment, cost of goods sold as a percent of revenue ~~increases.~~was relatively flat compared to the year-ago period. In the aviation segment, the decrease in cost of goods sold as a percent of revenue was primarily driven by a reduction in warranty costs compared to the year-ago period.

Gross Profit

39-weeks ended September 30, 2017 39-weeks ended September 24, 2016 Year over Year
Gross Profit % of Revenues Gross Profit % of Revenues $ Change % Change
Outdoor $ 319,457 64 % $ 232,652 63 % $ 86,805 37 %
Fitness 276,014 57 % 295,463 54 % (19,449 ) -7 %
Marine 166,690 57 % 148,554 56 % 18,136 12 %
Auto 246,931 44 % 292,770 45 % (45,839 ) -16 %
Aviation 274,554 74 % 239,349 74 % 35,205 15 %
Total $ 1,283,646 58 % $ 1,208,788 56 % $ 74,858 6 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017 Year over Year
Gross Profit % of Revenue Gross Profit % of Revenue $ Change % Change
Outdoor $ 358,829 65 % $ 319,457 64 % $ 39,372 12 %
Fitness 326,473 56 % 276,014 57 % 50,459 18 %
Marine 203,976 59 % 166,690 57 % 37,286 22 %
Auto 207,389 43 % 257,744 44 % (50,355 ) (20 %)
Aviation 333,886 75 % 274,554 74 % 59,332 22 %
Total $ 1,430,553 59 % $ 1,294,459 58 % $ 136,094 11 %

Gross profit dollars in the ~~39-weeks~~39-week period ended September ~~30, 2017~~29, 2018 increased 6%11% while gross ~~profit~~ margin increased ~~240~~100 basis points when compared to the year-ago period. ~~Growth~~Gross margin declined in ~~sales~~the auto and fitness segments, while gross margins increased in the aviation and marine segments, as a result of ~~higher~~the reasons discussed above. Gross margin ~~segments contributed to~~remained relatively flat within the increase in gross profit dollars and gross margin percentage. Fitness gross margin increased to 57%, primarily due to product mix. All other segment gross margin rates are relatively consistent between fiscal periods.outdoor segment.
Advertising ~~Expenses~~Expense

39-weeks ended September 30, 2017 39-weeks ended September 24, 2016
Advertising Advertising Year over Year
Expense % of Revenues Expense % of Revenues $ Change % Change
Outdoor $ 26,671 5 % $ 18,319 5 % $ 8,352 46 %
Fitness 45,235 9 % 51,844 10 % (6,609 ) -13 %
Marine 12,620 4 % 12,267 5 % 353 3 %
Auto 17,236 3 % 21,790 3 % (4,554 ) -21 %
Aviation 4,221 1 % 5,221 2 % (1,000 ) -19 %
Total $ 105,983 5 % $ 109,441 5 % $ (3,458 ) -3 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017
Advertising Advertising Year over Year
Expense % of Revenue Expense % of Revenue $ Change % Change
Outdoor $ 25,955 5 % $ 26,671 5 % $ (716 ) (3 %)
Fitness 40,515 7 % 45,235 9 % (4,720 ) (10 %)
Marine 14,022 4 % 12,620 4 % 1,402 11 %
Auto 14,100 3 % 17,236 3 % (3,136 ) (18 %)
Aviation 5,408 1 % 4,221 1 % 1,187 28 %
Total $ 100,000 4 % $ 105,983 5 % $ (5,983 ) (6 %)

Advertising expense decreased 3%6% in absolute dollars ~~and was relatively flat as a percent of revenues~~when compared to the year-ago period. The overall decrease in absolute dollars was driven primarily by decreased media advertising spend in the outdoor, fitness, and auto ~~driven primarily by decreases in cooperative advertising and media spending. This was~~segments, partially offset by ~~an increase in outdoor media.~~increased cooperative advertising within the aviation segment and expenses resulting from prior year acquisitions within the marine segment.
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Selling, General and Administrative ~~Expenses~~Expense

39-weeks ended September 30, 2017 39-weeks ended September 24, 2016
Selling, General & Selling, General & Year over Year
Admin. Expenses % of Revenues Admin. Expenses % of Revenues $ Change % Change
Outdoor $ 74,182 15 % $ 54,321 15 % $ 19,861 37 %
Fitness 81,537 17 % 82,104 15 % (567 ) -1 %
Marine 48,798 17 % 46,579 18 % 2,219 5 %
Auto 83,620 15 % 94,665 14 % (11,045 ) -12 %
Aviation 20,958 6 % 18,577 6 % 2,381 13 %
Total $ 309,095 14 % $ 296,246 14 % $ 12,849 4 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017
Selling, General & Selling, General & Year over Year
Admin. Expenses % of Revenue Admin. Expenses % of Revenue $ Change % Change
Outdoor $ 85,887 15 % $ 74,182 15 % $ 11,705 16 %
Fitness 95,462 16 % 81,537 17 % 13,925 17 %
Marine 75,841 22 % 48,798 17 % 27,043 55 %
Auto 68,465 14 % 83,620 14 % (15,155 ) (18 %)
Aviation 26,579 6 % 20,958 6 % 5,621 27 %
Total $ 352,234 15 % $ 309,095 14 % $ 43,139 14 %

Selling, general and administrative expense increased 4%14% in absolute dollars and ~~was relatively flat~~increased 70 basis points as a percent of ~~revenues~~revenue when compared to the year-ago period. The absolute dollar increase was primarily attributable to ~~legal costs~~expenses from recent acquisitions within the marine segment and ~~information technology~~personnel costs. ~~Fitness increased~~All other segments were relatively flat as a percent of revenues primarily due to increased information technology and selling-related costs. Variances by segment are primarily due to the allocation of certain selling, general and administrative expenses based on percent of total revenues.revenue.

Research and Development Expense

39-weeks ended September 30, 2017 39-weeks ended September 24, 2016
Research & Research & Year over Year
Development % of Revenues Development % of Revenues $ Change % Change
Outdoor $ 42,060 8 % $ 34,291 9 % $ 7,769 23 %
Fitness 59,790 12 % 47,093 9 % 12,697 27 %
Marine 44,412 15 % 40,536 15 % 3,876 10 %
Auto 95,509 17 % 93,331 14 % 2,178 2 %
Aviation 137,312 37 % 123,757 38 % 13,555 11 %
Total $ 379,083 17 % $ 339,008 16 % $ 40,075 12 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017
Research & Research & Year over Year
Development % of Revenue Development % of Revenue $ Change % Change
Outdoor $ 52,276 9 % $ 42,060 8 % $ 10,216 24 %
Fitness 67,197 12 % 59,790 12 % 7,407 12 %
Marine 59,307 17 % 44,412 15 % 14,895 34 %
Auto 93,711 19 % 95,509 16 % (1,798 ) (2 %)
Aviation 150,158 34 % 137,312 37 % 12,846 9 %
Total $ 422,649 17 % $ 379,083 17 % $ 43,566 11 %

~~Research~~In absolute dollars, research and development expense increased ~~12%~~$43.6 million when compared with the year-ago period and was relatively flat as a percent of revenue. 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 ~~aviation. In absolute dollars, research and development costs increased $40.1 million when compared with~~expenses resulting from prior year acquisitions within the ~~year-ago period, and increased 150 basis points as a percent of revenue.~~marine segment. Our research and development spending is focused on product development, improving existing software capabilities, and exploring new categories.
Operating Income

39-weeks ended September 30, 2017 39-weeks ended September 24, 2016 Year over Year
Operating Income % of Revenues Operating Income % of Revenues $ Change % Change
Outdoor $ 176,544 36 % $ 125,721 34 % $ 50,823 40 %
Fitness 89,452 18 % 114,422 21 % (24,970 ) -22 %
Marine 60,860 21 % 49,172 19 % 11,688 24 %
Auto 50,566 9 % 82,984 13 % (32,418 ) -39 %
Aviation 112,063 30 % 91,794 29 % 20,269 22 %
Total $ 489,485 22 % $ 464,093 22 % $ 25,392 5 %
39-Weeks ended September 29, 2018 39-Weeks ended September 30, 2017
Operating Operating Year over Year
Income % of Revenue Income % of Revenue $ Change % Change
Outdoor $ 194,711 35 % $ 176,544 36 % $ 18,167 10 %
Fitness 123,299 21 % 89,452 18 % 33,847 38 %
Marine 54,806 16 % 60,860 21 % (6,054 ) (10 %)
Auto 31,113 6 % 61,379 11 % (30,266 ) (49 %)
Aviation 151,741 34 % 112,063 30 % 39,678 35 %
Total $ 555,670 23 % $ 500,298 22 % $ 55,372 11 %
Operating income increased 5%11% in absolute dollars and increased 8050 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 ~~basis resulted from~~was the result of strong revenue growth and ~~an increase in~~increased gross ~~margin percent,~~margins, partially offset by slightly increased operating expenses as a percent of revenue, as discussed above.
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Other Income (Expense)

39-weeks ended 39-weeks ended
September 30, 2017 September 24, 2016
Interest income $ 26,931 $ 24,109
Foreign currency gains (losses) (13,808 ) (30,003 )
Other (805 ) 2,914
Total $ 12,318 $ (2,980 )
39-Weeks ended 39-Weeks ended
September 29, 2018 September 30, 2017
Interest income $ 32,310 $ 26,931
Foreign currency gains (losses) (3,405 ) (13,808 )
Other 6,800 (805 )
Total $ 35,705 $ 12,318

The average ~~returns~~return on cash and investments, including interest and capital gains/losses, during the ~~39-weeks~~39-week period ended September 29, 2018 was 1.8% compared to 1.5% during the same 39-week period ended September 30, ~~2017 and the 39-weeks ended September 24, 2016 were 1.5% and 1.4%, respectively.~~2017. Interest income increased primarily due to slightly higher yields on fixed-income securities.
The $3.4 million currency loss recognized in the first three quarters of 2018 was primarily due to the strengthening of the U.S. Dollar against most other currencies, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar within the 39-weeks ended September 29, 2018. During this period, the U.S. Dollar strengthened 2.7% against the Taiwan Dollar, resulting in a gain of $13.6 million. This was more than offset by the U.S. Dollar strengthening 3.2% against the Euro and 3.6% against the British Pound Sterling, resulting in losses of $7.7 million and $0.6 million, respectively, and additional net currency losses of $8.7 million related to other currencies and timing of transactions.

The $13.8 million currency loss recognized in the first three quarters of 2017 was primarily due to the weakening of the U.S. Dollar against the Taiwan Dollar, partially offset by the U.S. Dollar weakening against the Euro and the British Pound Sterling within the 39-weeks ended September 30, 2017. During this period, the U.S. Dollar weakened 7.1% against the Taiwan Dollar, resulting in a loss of $43.1 million, while the U.S. Dollar weakened 12.3% against the Euro and 8.6% against the British Pound Sterling, resulting in gains of $22.2 million and $4.2 million, respectively. The remaining net currency gain of $2.9 million was related to other currencies and timing of transactions.

Income Tax Provision
The ~~$30.0~~Company recorded income tax expense of $87.4 million ~~currency loss recognized~~ in the first three quarters of ~~2016 was primarily due~~2018, compared to the weakening of the U.S. Dollar against the Taiwan Dollar within the 39-weeks ended September 24, 2016. During this period, the U.S. Dollar weakened 5.0% against the Taiwan Dollar, resulting in a loss of $32.1 million, while the U.S. Dollar weakened 2.3% against the Euro, resulting in a gain of $3.3 million. The remaining net currency loss of $1.2 million was related to other currencies and timing of transactions.
~~Income Tax Provision~~
~~The Company recorded~~ an income tax benefit of ~~$54.4~~$53.8 million in the first three quarters of 2017, compared to income tax expense of $86.9 million in the first three quarters of 2016. The effective tax rate was (10.8%) for the first three quarters of 2017, compared to 18.8% for the first three quarters of 2016. In the first three quarters of 2017, a $168.8 million income tax benefit was recognized due to revaluation of deferred tax assets. The Company also recognizedwhich included income tax expense of $7.3 million associated with the expiration of share-based awards and an income tax benefit of $168.8 million primarily related to the revaluation of certain Switzerland deferred tax assets resulting from the Company’s election in the first quarter of 2017 to align certain Switzerland corporate tax positions with international tax initiatives. The effective tax rate was 14.8% in the first three quarters of 2018, compared to (10.5%) in the first three quarters of 2017. ~~Prior~~Excluding the income tax benefit of $168.8 million primarily related to the ~~adoption~~revaluation of ~~ASU 2016-09 in fiscal 2017,~~Switzerland deferred tax assets, and the $7.3 million tax ~~effect~~expense due to the expiration of ~~such expirations would have been recorded to additional paid-in capital, rather than as a discrete tax item. Excluding the effect of these discrete tax items,~~share-based awards, the effective tax rate for the first three quarters of ~~2017 increased 250~~2018 decreased 620 basis points compared to the effective tax rate in the first three quarters of ~~2016. This remaining 250 basis point increase in effective tax rate was~~2017 primarily due to the ~~Company’s election in February 2017 to align certain Switzerland~~reduction of the U.S. corporate tax ~~positions with evolving international~~rate and increased benefit from U.S. research and development tax ~~initiatives.~~credits.
Net Income

As a result of the ~~various factors noted~~ above, net income ~~increased 49%~~for the 39-week period ended September 29, 2018 was $503.9 million compared to ~~$556.2~~$566.5 million for the ~~39-weeks~~39-week period ended September 30, 2017, ~~compared to $374.2 million for the 39-weeks ended September 24, 2016.~~a decrease of $62.5 million.
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Liquidity and Capital Resources

~~Operating Activities~~As of September 29, 2018, we had $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, fund strategic acquisitions, and fund share repurchases. 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.

39-Weeks Ended
September 30, September 24,
(In thousands) 2017 2016
Net cash provided by operating activities $ 462,577 $ 492,366
~~The $29.8 million decrease in cash provided by operating activities in the first three quarters of 2017 compared to the first three quarters of 2016 was primarily due to the following:~~
· the impact of deferred income taxes providing $137.0 million less cash, primarily related to the revaluation of certain Switzerland deferred tax assets as discussed in the Results of Operations section above, partially offset by the utilization of certain deferred tax assets
· inventories and related provisions for obsolete and slow moving inventories providing $50.1 million less cash primarily due to higher raw materials and work-in-process balances in anticipation of longer lead times for certain raw material components, new product introductions, and continued strong demand for certain key product categories
· other current and noncurrent liabilities providing $39.3 million less cash primarily due to timing of payments for salaries and benefits payable, accrued sales program costs, and accrued advertising expenses
· ~~the impact of income taxes payable providing $15.4 million less cash due to the timing of disbursements and~~
· ~~other current and noncurrent assets providing $13.0 million less cash primarily related to the timing of prepayments for indirect taxes and equipment~~
~~Partially offset by:~~
· ~~net income increasing $182.0 million as discussed in the Results of Operations section above~~
· ~~deferred revenue providing a $19.4 million larger working capital benefit~~
· ~~accounts payable providing $16.2 million more cash primarily due to the timing of disbursements and~~
· ~~accounts receivable providing $8.6 million more cash primarily due to the timing of collections~~
~~Investing Activities~~
39-Weeks Ended
September 30, September 24,
(In thousands) 2017 2016
Net cash used in investing activities $ (89,086 ) $ (75,934 )
~~The $13.2 million increase in cash used in investing activities in the first three quarters of 2017 compared to the first three quarters of 2016 was primarily due to the following:~~
· ~~increased purchases of property and equipment of $43.1 million and~~
· ~~decreased net redemptions of marketable securities of $15.7 million~~
~~Partially offset by:~~
· ~~decreased cash payments for acquisitions of $49.7 million~~

It is management’s goal to invest the on-hand cash in accordance with the investment policy, which has been approved by the Board of Directors of each applicable Garmin entity holding the cash. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest rate returns on cash and investments during the first three quarters of ~~2017~~2018 and ~~2016~~2017 were approximately ~~1.5%~~1.8% and ~~1.4%~~1.5%, respectively.
30
~~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. See ~~Footnote~~Note 8 for additional information regarding marketable securities.
~~Financing~~Operating Activities

39-Weeks Ended
September 30, September 24,
(In thousands) 2017 2016
Net cash used in financing activities $ (355,112 ) $ (344,161 )
39-Weeks Ended
September 29, September 30,
(In thousands) 2018 2017
Net cash provided by operating activities $ 701,782 $ 462,577

The ~~$11.0~~$239.2 million increase in cash ~~used in financing~~provided by operating activities in the first three quarters of ~~2017~~2018 compared to the first three quarters of ~~2016~~2017 was primarily due to the ~~following:~~
· ~~increased purchases of treasury stock of $9.3 million under our share repurchase authorization and~~
· ~~increased purchases of treasury stock of $3.4 million related to equity awards~~
~~Our declared dividend has increased from $0.45 per share~~increase in cash provided by working capital of $107.1 million (which included an increase of $27.7 million in net receipts of accounts receivable, a decrease of $18.7 million in cash paid for inventory, and an increase of $57.1 million in accounts payable) and income taxes payable of $27.8 million. Additionally, the ~~eight calendar quarters beginning~~year over year decrease in ~~June 2012~~net income of $62.5 million was offset by other non-cash adjustments to ~~$0.48 per share for~~net income of $166.9 million, including an income tax benefit of $168.8 million recognized in the ~~four calendar quarters beginning in June 2014~~first quarter of 2017 related to ~~$0.51 per share for~~ the ~~twelve quarters beginning in June 2015.~~revaluation of certain Switzerland deferred tax assets.

WeInvesting Activities
39-Weeks Ended
September 29, September 30,
(In thousands) 2018 2017
Net cash used in investing activities $ (238,815 ) $ (89,086 )
The $149.7 million increase in cash used in investing activities in the first three quarters of 2018 compared to the first three quarters of 2017 was primarily ~~use~~due to increased net purchases of marketable securities of $102.4 million and higher cash ~~flow from operations to fund our capital~~ expenditures ~~to support our working capital requirements, to pay dividends,~~for purchases of property and ~~to fund share repurchases. We expect that future cash requirements will principally be for capital expenditures, working capital, payment~~equipment of dividends declared, share repurchases and the funding of strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our long-term projected capital expenditures, working capital and other cash requirements.$36.6 million.
Financing Activities
39-Weeks Ended
September 29, September 30,
(In thousands) 2018 2017
Net cash used in financing activities $ (288,534 ) $ (355,112 )
The $66.6 million decrease in cash used in financing activities during the first three quarters of 2018 compared to the first three quarters of 2017 was primarily due to prior year treasury stock purchases of $74.5 million under our share repurchase authorization, which expired on December 31, 2017.

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, ~~revenues~~revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Garmin evaluates its estimates, including those related to ~~customer sales programs and incentives, product returns,~~ bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, contingencies, customer sales programs and ~~contingencies~~incentives, product returns, relative standalone selling prices, and ~~litigation.~~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 ~~31, 2016.~~30, 2017. There were no material changes to the Company’s critical accounting policies and estimates ~~other than the following accounting policy which became a critical accounting policy, during~~in the 13-week and 39-week periods ended September ~~30, 2017.~~
31
~~Legal and Other 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~~29, 2018, other ~~intellectual property claims. We evaluate, on a quarterly and annual basis, developments~~than those discussed 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.Note 1, “Accounting Policies”.
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. 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.

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 ~~31, 2016.~~30, 2017. There have been no material changes during the 13-week and 39-week periods ended September ~~30, 2017~~29, 2018 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a)Evaluation of disclosure controls and procedures.The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of September ~~30, 2017,~~29, 2018, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of September ~~30, 2017~~29, 2018 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"~~(“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~~Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
32

(b)Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended September ~~30, 2017~~29, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

33

Part II - Other Information

Item 1.   Legal Proceedings

The following information supplements and amends the discussion set forth under Part I, Item 3 ~~"Legal Proceedings"~~“Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December ~~31, 2016~~30, 2017 and the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended ~~July 1, 2017.~~June 30, 2018.

~~In the Matter of Certain Marine Sonar Imaging Devices, Including Downscan and Sidescan Devices, Products Containing the Same, and Components Thereof~~PulseOn Oy v. Garmin (Europe) Ltd.

On ~~October 24, 2017,~~February 21, 2018, PulseOn Oy filed an application with the ~~U.S.~~ Court of ~~Appeals for~~Appeal in England seeking leave to appeal the ~~Federal Circuit (the “Federal Circuit”) denied Navico’s combined petition for panel rehearing and rehearing en banc. On October 31, 2017,~~judgment of the ~~Federal Circuit~~Patent Court issued ~~its mandate confirming their June 2017 decisions~~on January 18, 2018, holding that ~~all asserted claims~~no accused Garmin products infringed either of the ~~‘840 patent and~~Registered Community Designs asserted by PulseOn Oy. The hearing before the ~~‘550 patent are invalid in view~~Court of ~~the prior art and confirming that Garmin does not infringe the ‘499 patent.~~Appeal is scheduled to take place on January 30, 2019. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this action.
~~Navico Inc. And Navico Holding AS v. Garmin International, Inc .and Garmin USA, Inc. (U.S: District Court for the Eastern District of Texas)~~
A jury trial took place on September 5-8, 2017. On September 7, 2017, during the trial, the court granted Garmin’s motion for judgment as a matter of law dismissing Navico’s claim for false advertising. On September 8, 2017, the jury returned a verdict finding that Navico had proven infringement of the ‘022 and ‘168 patents, Garmin’s infringement was willful, and Navico should be awarded damages of $38 million. On October 10, 2017, Navico filed post-trial motions. On October 20, 2017, Garmin filed a motion for judgment as a matter of law and/or a motion for a new trial On October 23, 2017, Garmin filed its responses to Navico’s post-trial motions. All post-trial motions are scheduled for oral argument on November 28, 2017. Although there can be no assurance that an unfavorable outcome of this litigation would not have a material adverse effect on our operating results, liquidity or financial position, Garmin believes that the claims in this lawsuit are without merit and intends to vigorously defend this lawsuit.
~~Visteon Global Technologies, Inc. and Visteon Technologies LLC v. Garmin International, Inc.~~
~~On October 27, 2017 the parties entered into a settlement agreement pursuant to which this lawsuit will be dismissed.~~

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.

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 ~~31, 2016. There have been no material changes during the 13-week and 39-week periods ended September~~ 30, 2017, inas amended and supplemented by the ~~risks described in our Annual Report on Form 10-K.~~risk factors set forth below. 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.

34
The following is an amended and restated version of a Risk Factor included in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 30, 2017:

Changes to trade regulations, including trade restrictions, sanctions, or tariffs, could significantly harm our results of operations.
A significant portion of our global and U.S. sales are comprised of goods assembled and manufactured in our facilities in Taiwan and the People’s Republic of China, and components for a number of our goods are sourced from suppliers in the People’s Republic of China. The imposition of additional U.S. or foreign governmental controls, regulations that create new or enhanced restrictions on free trade, trade sanctions, or tariffs, particularly those applicable to goods imported from Taiwan or the People’s Republic of China, could have substantial adverse effects on our business, results of operations, and financial condition.

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

Items (a) and (b) are not applicable.

(c) Issuer Purchases of Equity Securities

The Board of Directors approved a share repurchase program on February 13, 2015, authorizing the Company to purchase up to $300 million of its common shares as market and business conditions warrant. In December 2016, the Board of Directors authorized an extension through December 31, 2017 to purchase remaining common shares. The ~~following table lists the Company’s~~ share ~~purchases~~repurchase authorization expired on December 31, 2017 with no additional shares having been repurchased during the ~~third quarter of 2017:~~39-weeks ended September 29, 2018.

Period Total # of
Shares Purchased Average Price
Paid Per Share Maximum Number of Shares (or
Approx. Dollar Value of Shares in
thousands) That May Yet be
Purchased Under the Plan
July 2, 2017 - July 29, 2017 0 $ 0.00 $ 11,397
July 30, 2017 - August 26, 2017 125,201 $ 51.65 $ 4,930
August 27, 2017 - September 30, 2017 79,270 $ 51.71 $ 831
Total 204,471 $ 51.68 $ 831
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
35

Exhibit 101.INS XBRL Instance Document

Exhibit 101.SCH XBRL Taxonomy Extension Schema

Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE
XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase
36

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: ~~November 1, 2017~~
October 31, 2018
37

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 XBRL Taxonomy Extension Definition Linkbase
38

	(Unaudited)
	September 30,			December 31,			September 29,			December 30,
	2017			2016			2018			2017
Assets
Current assets:
Cash and cash equivalents	$	891,279		$	846,883		$	1,056,397		$	891,488
Marketable securities		253,699			266,952			173,697			161,687
Accounts receivable, net		457,391			527,062			467,784			590,882
Inventories, net		575,335			484,821
Inventories								556,640			517,644
Deferred costs		47,483			47,395			28,235			30,525
Prepaid expenses and other current assets		107,287			89,903			117,866			153,912
Total current assets		2,332,474			2,263,016			2,400,619			2,346,138

Property and equipment, net		554,441			482,878			650,805			595,684

Restricted cash								145			271
Marketable securities		1,210,323			1,213,285			1,301,111			1,260,033
Restricted cash		117			113
Deferred income taxes		262,473			110,293			186,445			195,981
Noncurrent deferred costs		69,286			56,151			29,732			33,029
Intangible assets, net		313,269			305,002			424,776			409,801
Other assets		93,008			94,395			102,334			107,352
Total assets	$	4,835,391		$	4,525,133		$	5,095,967		$	4,948,289

Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	158,591		$	172,404		$	197,069		$	169,640
Salaries and benefits payable		89,124			88,818			101,190			102,802
Accrued warranty costs		35,669			37,233			35,960			36,827
Accrued sales program costs		53,826			80,953			59,708			93,250
Deferred revenue		138,570			146,564			97,604			103,140
Accrued royalty costs		37,895			36,523			27,213			32,204
Accrued advertising expense		20,099			37,440			24,213			30,987
Other accrued expenses		105,783			70,469			67,426			93,652
Income taxes payable		15,250			16,163			43,519			33,638
Dividend payable		191,238			96,168			200,124			95,975
Total current liabilities		846,045			782,735			854,026			792,115

Deferred income taxes		68,204			61,220			82,846			76,612
Noncurrent income taxes		123,905			121,174			126,893			138,295
Noncurrent deferred revenue		155,814			140,407			77,634			87,060
Other liabilities		1,738			1,594			1,860			1,788

Stockholders' equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 187,500 shares outstanding at September 30, 2017 and 188,565 shares outstanding at December 31, 2016		17,979			17,979
Stockholders’ equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 188,809 shares outstanding at September 29, 2018; and 188,189 shares outstanding at December 30, 2017;								17,979			17,979
Additional paid-in capital		1,851,529			1,836,047			1,842,551			1,828,386
Treasury stock		(506,799	)		(455,964	)		(433,274	)		(468,818	)
Retained earnings		2,230,489			2,056,702			2,520,828			2,418,444
Accumulated other comprehensive income (loss)		46,487			(36,761	)
Total stockholders' equity		3,639,685			3,418,003
Total liabilities and stockholders' equity	$	4,835,391		$	4,525,133
Accumulated other comprehensive income								4,624			56,428
Total stockholders’ equity								3,952,708			3,852,419
Total liabilities and stockholders’ equity							$	5,095,967		$	4,948,289

	39-Weeks Ended
	September 30,			September 24,
	2017			2016
Operating activities:
Net income	$	556,175		$	374,209
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		44,011			40,327
Amortization		19,688			22,215
(Gain) loss on sale or disposal of property and equipment		(184	)		155
Provision for doubtful accounts		551			2,559
Deferred income taxes		(143,846	)		(6,821	)
Unrealized foreign currency loss		17,504			19,536
Provision for obsolete and slow moving inventories		16,504			20,943
Stock compensation expense		32,441			29,211
Realized loss (gain) on marketable securities		594			(1,068	)
Changes in operating assets and liabilities:
Accounts receivable		84,982			76,372
Inventories		(86,631	)		(41,002	)
Other current and non-current assets		(9,635	)		3,400
Accounts payable		(24,526	)		(40,694	)
Other current and non-current liabilities		(37,403	)		1,942
Deferred revenue		5,726			(13,660	)
Deferred costs		(12,650	)		(9,906	)
Income taxes payable		(724	)		14,648
Net cash provided by operating activities		462,577			492,366

Investing activities:
Purchases of property and equipment		(85,211	)		(42,157	)
Proceeds from sale of property and equipment		264			15
Purchase of intangible assets		(9,069	)		(4,706	)
Purchase of marketable securities		(438,046	)		(739,676	)
Redemption of marketable securities		455,376			772,733
Change in restricted cash		-			(6	)
Acquisitions, net of cash acquired		(12,400	)		(62,137	)
Net cash used in investing activities		(89,086	)		(75,934	)

Financing activities:
Dividends paid		(287,318	)		(289,331	)
Purchase of treasury stock under share repurchase plan		(74,523	)		(65,221	)
Purchase of treasury stock related to equity awards		(3,587	)		(184	)
Proceeds from issuance of treasury stock related to equity awards		10,316			10,210
Tax benefit from issuance of equity awards		-			365
Net cash used in financing activities		(355,112	)		(344,161	)

Effect of exchange rate changes on cash and cash equivalents		26,017			7,218

Net increase in cash and cash equivalents		44,396			79,489
Cash and cash equivalents at beginning of period		846,883			833,070
Cash and cash equivalents at end of period	$	891,279		$	912,559

	39-Weeks Ended
	September 29,			September 30,
	2018			2017
Operating activities:
Net income	$	503,930		$	566,456
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		47,902			44,011
Amortization		23,574			19,688
Gain on sale or disposal of property and equipment		(491	)		(184	)
Provision for doubtful accounts		1,265			551
Provision for obsolete and slow moving inventories		17,719			16,504
Unrealized foreign currency loss		4,158			17,786
Deferred income taxes		20,177			(143,314	)
Stock compensation expense		42,094			32,441
Realized losses on marketable securities		481			594
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		111,955			84,982
Inventories		(69,139	)		(86,631	)
Other current and non-current assets		5,102			(9,635	)
Accounts payable		32,601			(24,526	)
Other current and non-current liabilities		(57,245	)		(37,403	)
Deferred revenue		(14,923	)		(21,478	)
Deferred costs		5,581			3,459
Income taxes payable		27,041			(724	)
Net cash provided by operating activities		701,782			462,577

Investing activities:
Purchases of property and equipment		(122,846	)		(85,211	)
Proceeds from sale of property and equipment		1,296			264
Purchase of intangible assets		(2,982	)		(9,069	)
Purchase of marketable securities		(314,179	)		(438,046	)
Redemption of marketable securities		229,066			455,376
Acquisitions, net of cash acquired		(29,170	)		(12,400	)
Net cash used in investing activities		(238,815	)		(89,086	)

Financing activities:
Dividends		(296,149	)		(287,318	)
Proceeds from issuance of treasury stock related to equity awards		14,524			10,316
Purchase of treasury stock related to equity awards		(6,909	)		(3,587	)
Purchase of treasury stock under share repurchase plan		—			(74,523	)
Net cash used in financing activities		(288,534	)		(355,112	)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(9,650	)		26,021

Net increase in cash, cash equivalents, and restricted cash		164,783			44,400
Cash, cash equivalents, and restricted cash at beginning of period		891,759			846,996
Cash, cash equivalents, and restricted cash at end of period	$	1,056,542		$	891,396

		~~Page~~

Part I - Financial Information		Page

Item 1.	Condensed Consolidated Financial Statements	3

	Condensed Consolidated Balance Sheets at September 29, 2018 and December 30, 2017 (Unaudited) ~~and December 31, 2016~~	3

	Condensed Consolidated Statements of Income for the ~~13-weeks~~13-Weeks and ~~39-weeks~~39-Weeks ended September 29, 2018 and September 30, 2017 ~~and September 24, 2016~~ (Unaudited)	4

	Condensed Consolidated Statements of Comprehensive Income for the ~~13-weeks~~13-Weeks and ~~39-weeks~~39-Weeks ended September 29, 2018 and September 30, 2017 ~~and September 24, 2016~~ (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the ~~39-weeks~~39-Weeks ended September 29, 2018 and September 30, 2017 ~~and September 24, 2016~~ (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	2122

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32

Item 4.	Controls and Procedures	32

Part II - Other Information

Item 1.	Legal Proceedings	3433

Item 1A.	Risk Factors	3433

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3534

Item 3.	Defaults Upon Senior Securities	3534

Item 4.	Mine Safety Disclosures	3534

Item 5.	Other Information	3534

Item 6.	Exhibits	3534

Signature Page		3735

Index to Exhibits		3836

	Available-For-Sale Securities as of September 30, 2017

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	19,986	$	10	$	(137	)	$	19,859
Agency securities		51,594		5		(624	)		50,975
Mortgage-backed securities		197,525		23		(4,582	)		192,966
Corporate securities		876,508		721		(10,564	)		866,665
Municipal securities		161,165		329		(1,096	)		160,398
Other		174,754		10		(1,605	)		173,159
Total	$	1,481,532	$	1,098	$	(18,608	)	$	1,464,022

	As of September 30, 2017
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	(49	)	$	10,535	$	(88	)	$	4,835
Agency securities		(416	)		29,139		(208	)		16,441
Mortgage-backed securities		(1,486	)		73,508		(3,096	)		117,656
Corporate securities		(4,034	)		432,176		(6,530	)		238,952
Municipal securities		(298	)		54,675		(798	)		31,085
Other		(1,602	)		111,332		(3	)		1,720
Total	$	(7,885	)	$	711,365	$	(10,723	)	$	410,689

	As of December 31, 2016
	Less than 12 Consecutive Months					12 Consecutive Months or Longer
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	(288	)	$	24,260	$	-		$	-
Agency securities		(991	)		49,255		-			-
Mortgage-backed securities		(3,702	)		159,665		(1,870	)		64,645
Corporate securities		(18,856	)		765,712		(1,699	)		40,910
Municipal securities		(2,762	)		130,994		(97	)		6,326
Other		(3	)		4,058		(6	)		6,919
Total	$	(26,602	)	$	1,133,944	$	(3,672	)	$	118,800

	13-Weeks Ended September 30, 2017
	Foreign Currency Translation Adjustment		Net unrealized gains (losses) on available- for-sale securities			Total
Balance - beginning of period	$	56,095	$	(15,948	)	$	40,147
Other comprehensive income before reclassification		5,804		519			6,323
Amounts reclassified from accumulated other comprehensive income		-		17			17
Net current-period other comprehensive income		5,804		536			6,340
Balance - end of period	$	61,899	$	(15,412	)	$	46,487

13-Weeks Ended September 30, 2017
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	$	(10	)	Other income (expense)
		(7	)	Income tax benefit (provision)
	$	(17	)	Net of tax

	13-Weeks Ended
	September 30, 2017			September 24, 2016

Net sales		100	%		100	%
Cost of goods sold		42	%		44	%
Gross profit		58	%		56	%
Advertising expense		4	%		5	%
Selling, general and administrative expense		14	%		13	%
Research and development expense		17	%		16	%
Total operating expense		36	%		34	%
Operating income		23	%		22	%
Other income (expense)		2	%		(1	)%
Income before income taxes		25	%		21	%
Income tax (benefit) provision		5	%		3	%
Net income		20	%		17	%


	13-weeks ended September 30, 2017					13-weeks ended September 24, 2016					Year over Year						13-Weeks ended September 29, 2018					13-Weeks ended September 30, 2017					Year over Year
	Net Sales		% of Revenues			Net Sales		% of Revenues			$ Change			% Change			Net Sales		% of Revenue			Net Sales		% of Revenue			$ Change			% Change
Outdoor	$	184,937		25	%	$	141,006		19	%	$	43,931			31	%	$	209,415		26	%	$	184,937		25	%	$	24,478			13	%
Fitness		167,147		23	%		189,161		26	%		(22,014	)		-12	%		190,185		24	%		167,147		22	%		23,038			14	%
Marine		77,312		10	%		70,010		10	%		7,302			10	%		98,770		12	%		77,312		10	%		21,458			28	%
Auto		189,053		25	%		214,637		30	%		(25,584	)		-12	%		165,214		20	%		197,220		26	%		(32,006	)		(16	%)
Aviation		124,628		17	%		107,436		15	%		17,192			16	%		146,427		18	%		124,628		17	%		21,799			17	%
Total	$	743,077		100	%	$	722,250		100	%	$	20,827			3	%	$	810,011		100	%	$	751,244		100	%	$	58,767			8	%

	13-weeks ended September 30, 2017					13-weeks ended September 24, 2016
	Advertising					Advertising					Year over Year
	Expense		% of Revenues			Expense		% of Revenues			$ Change			% Change
Outdoor	$	8,092		4	%	$	6,459		5	%	$	1,633			25	%
Fitness		14,089		8	%		14,616		8	%		(527	)		-4	%
Marine		2,618		3	%		2,941		4	%		(323	)		-11	%
Auto		6,340		3	%		6,992		3	%		(652	)		-9	%
Aviation		1,310		1	%		1,948		2	%		(638	)		-33	%
Total	$	32,449		4	%	$	32,956		5	%	$	(507	)		-2	%

	13-weeks ended September 30, 2017					13-weeks ended September 24, 2016
	Selling, General &					Selling, General &					Year over Year
	Admin. Expenses		% of Revenues			Admin. Expenses		% of Revenues			$ Change			% Change
Outdoor	$	27,574		15	%	$	20,074		14	%	$	7,500			37	%
Fitness		27,858		17	%		27,294		14	%		564			2	%
Marine		8,681		11	%		13,041		19	%		(4,360	)		-33	%
Auto		30,231		16	%		30,875		14	%		(644	)		-2	%
Aviation		7,450		6	%		5,675		5	%		1,775			31	%
Total	$	101,794		14	%	$	96,959		13	%	$	4,835			5	%

	13-weeks ended September 30, 2017					13-weeks ended September 24, 2016
	Research &					Research &					Year over Year
	Development		% of Revenues			Development		% of Revenues			$ Change		% Change
Outdoor	$	14,699		8	%	$	12,693		9	%	$	2,006		16	%
Fitness		20,696		12	%		16,679		9	%		4,017		24	%
Marine		14,855		19	%		13,577		19	%		1,278		9	%
Auto		31,419		17	%		30,976		14	%		443		1	%
Aviation		47,963		38	%		42,524		40	%		5,439		13	%
Total	$	129,632		17	%	$	116,449		16	%	$	13,183		11	%

	13-Weeks ended September 29, 2018					13-Weeks ended September 30, 2017
	Operating					Operating					Year over Year
	Income		% of Revenue			Income		% of Revenue			$ Change			% Change
Outdoor	$	78,972		38	%	$	67,810		37	%	$	11,162			16	%
Fitness		37,378		20	%		33,492		20	%		3,886			12	%
Marine		13,908		14	%		18,420		24	%		(4,512	)		(24	%)
Auto		15,032		9	%		19,829		10	%		(4,797	)		(24	%)
Aviation		50,669		35	%		34,097		27	%		16,572			49	%
Total	$	195,959		24	%	$	173,648		23	%	$	22,311			13	%

	39-weeks ended September 30, 2017					39-weeks ended September 24, 2016					Year over Year
	Net Sales		% of Revenues			Net Sales		% of Revenues			$ Change			% Change
Outdoor	$	495,589		23	%	$	370,929		17	%	$	124,660			34	%
Fitness		485,999		22	%		544,434		26	%		(58,435	)		-11	%
Marine		290,302		13	%		264,489		12	%		25,813			10	%
Auto		555,059		25	%		655,963		30	%		(100,904	)		-15	%
Aviation		371,559		17	%		322,083		15	%		49,476			15	%
Total	$	2,198,508		100	%	$	2,157,898		100	%	$	40,610			2	%

Period	Total # of Shares Purchased		Average Price Paid Per Share		Maximum Number of Shares (or Approx. Dollar Value of Shares in thousands) That May Yet be Purchased Under the Plan
July 2, 2017 - July 29, 2017		0	$	0.00	$	11,397
July 30, 2017 - August 26, 2017		125,201	$	51.65	$	4,930
August 27, 2017 - September 30, 2017		79,270	$	51.71	$	831
Total		204,471	$	51.68	$	831

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

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

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

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

Exhibit 101.INS		XBRL Instance Document

Exhibit 101.SCH		XBRL Taxonomy Extension Schema

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase

	GARMIN LTD.

	By	/s/ Douglas G. Boessen
		Douglas G. Boessen
		Chief Financial Officer
		(Principal Financial Officer and
		Principal Accounting Officer)

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