GARMIN LTD - 1121788

26-Weeks Ended June 29, 2019

Details About Accumulated Other Comprehensive Income Components

Amount Reclassified from Accumulated Other Comprehensive Income

Affected Line Item in the Statement Where Net Income is Presented

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

Other income (expense)

Income tax benefit (provision)

Net of tax

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

☒

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

For the quarterly period ended June 29, 2019

☐

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

For the transition period from _____ to _____

Commission file number 0-31983

GARMIN LTD.

(Exact name of Company as specified in its charter)

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

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

Company’s telephone number, including area code: +

41 52 630 1600

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Shares, CHF 0.10 Per Share Par Value		GRMN		The Nasdaq Stock Market, LLC

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

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

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

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

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

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

YES ☐ NO ☒

Number of shares outstanding of the registrant’s common shares as of July 29, 2019

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

Garmin Ltd.

Form 10-Q

Quarter Ended June 29, 2019

Table of Contents

Part I - Financial Information		Page

Item 1.	Condensed Consolidated Financial Statements	1

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

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

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

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

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

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

Part II - Other Information

Item 1.	Legal Proceedings	31

Item 1A.	Risk Factors	31

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

Item 3.	Defaults Upon Senior Securities	31

Item 4.	Mine Safety Disclosures	31

Item 5.	Other Information	31

Item 6.	Exhibits	31

Signature Page		32

Index to Exhibits		33

Part I - Financial Information

Item I - Condensed Consolidated Financial Statements

Garmin Ltd. And Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands, except per share information)

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

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

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

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

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

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

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

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

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

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

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

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

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

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

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

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

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

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

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

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

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

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

(In thousands, except per share information)

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at March 31, 2018	$	17,979	$	1,818,532		$	(450,160	)	$	2,546,400		$	64,442		$	3,997,193
Net income		—		—			—			190,342			—			190,342
Translation adjustment		—		—			—			—			(49,868	)		(49,868	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 492		—		—			—			—			(4,842	)		(4,842	)
Comprehensive income																135,632
Dividends declared ($ 2.12 per share)		—		—			—			(400,128	)		—			(400,128	)
Issuance of treasury stock related to equity awards		—		(4,324	)		16,539			—			—			12,215
Stock compensation		—		14,307			—			—			—			14,307
Purchase of treasury stock related to equity awards		—		—			(338	)		—			—			(338	)
Balance at June 30, 2018	$	17,979	$	1,828,515		$	(433,959	)	$	2,336,614		$	9,732		$	3,758,881

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)		Total
Balance at March 30, 2019	$	17,979	$	1,810,196		$	(381,815	)	$	2,850,588		$	18,338	$	4,315,286
Net income		—		—			—			223,656			—		223,656
Translation adjustment		—		—			—			—			314		314
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 2,406		—		—			—			—			16,029		16,029
Comprehensive income															239,999
Dividends declared ($ 2.28 per share)		—		—			—			(432,873	)		—		(432,873	)
Issuance of treasury stock related to equity awards		—		(893	)		13,875			—			—		12,982
Stock compensation		—		15,832			—			—			—		15,832
Purchase of treasury stock related to equity awards		—		—			(260	)		—			—		(260	)
Balance at June 29, 2019	$	17,979	$	1,825,135		$	(368,200	)	$	2,641,371		$	34,681	$	4,150,966

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 26-Weeks Ended June 29, 2019 and June 30, 2018

(In thousands, except per share information)

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at December 30, 2017	$	17,979	$	1,828,386		$	(468,818	)	$	2,418,444		$	56,428		$	3,852,419
Net income		—		—			—			319,715			—			319,715
Translation adjustment		—		—			—			—			(26,368	)		(26,368	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 2,907		—		—			—			—			(19,876	)		(19,876	)
Comprehensive income																273,471
Dividends declared ($ 2.12 per share)		—		—			—			(400,297	)		—			(400,297	)
Issuance of treasury stock related to equity awards		—		(27,617	)		41,759			—			—			14,142
Stock compensation		—		27,746			—			—			—			27,746
Purchase of treasury stock related to equity awards		—		—			(6,900	)		—			—			(6,900	)
Reclassification under ASU 2016-06		—		—			—			(1,700	)		—			(1,700	)
Reclassification under ASU 2018-02		—		—			—			452			(452	)		—
Balance at June 30, 2018	$	17,979	$	1,828,515		$	(433,959	)	$	2,336,614		$	9,732		$	3,758,881

												Accumulated
			Additional									Other
	Common		Paid-In			Treasury			Retained			Comprehensive
	Stock		Capital			Stock			Earnings			Income (Loss)			Total
Balance at December 29, 2018	$	17,979	$	1,823,638		$	(397,692	)	$	2,710,619		$	8,430		$	4,162,974
Net income		—		—			—			363,829			—			363,829
Translation adjustment		—		—			—			—			(8,920	)		(8,920	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $ 5,311		—		—			—			—			35,171			35,171
Comprehensive income																390,080
Dividends declared ($ 2.28 per share)		—		—			—			(433,077	)		—			(433,077	)
Issuance of treasury stock related to equity awards		—		(29,464	)		42,446			—			—			12,982
Stock compensation		—		30,961			—			—			—			30,961
Purchase of treasury stock related to equity awards		—		—			(12,954	)		—			—			(12,954	)
Balance at June 29, 2019	$	17,979	$	1,825,135		$	(368,200	)	$	2,641,371		$	34,681		$	4,150,966

See accompanying notes.

Garmin Ltd. And Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

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

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

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

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

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

See accompanying notes.

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 29, 2019

(In thousands, except per share information)

1. Accounting Policies

Basis of Presentation

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

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

The Company’s fiscal year is based on a 52-53 week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended June 29, 2019 and June 30, 2018 both contain operating results for 13 weeks.

Recently Adopted Accounting Standards

Leases

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

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

Significant Accounting Policies

For a description of the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018. Other than the policy discussed below, there were no material changes to the Company’s significant accounting policies during the 26-week period ended June 29, 2019.

Preproduction Costs Related to Long-Term Supply Arrangements

Preproduction design and development costs related to long-term supply arrangements are expensed as incurred, and classified as Research and development, unless the customer has provided a contractual guarantee for reimbursement of such costs. Contractually reimbursable costs are capitalized as incurred in the Condensed Consolidated Balance Sheets within Prepaid expenses and other current assets if reimbursement is expected to be received within one year, or within Other assets if expected to be received beyond one year. Such capitalized costs were approximately $11 million as of June 29, 2019, and there were no such capitalized costs as of December 29, 2018.

2. Inventories

The components of inventories consist of the following:

	June 29,		December 29,
	2019		2018

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

3. Earnings Per Share

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

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

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

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

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

Basic net income per share	$	1.18	$	1.01

Diluted net income per share	$	1.17	$	1.00

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

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

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

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

Basic net income per share	$	1.92	$	1.70

Diluted net income per share	$	1.91	$	1.69

There were 400 anti-dilutive stock options, stock appreciation rights and restricted stock units (collectively “equity awards”) outstanding during the 13-week and 26-week periods ended June 29, 2019 and no anti-dilutive equity awards outstanding during the 13-week and 26-week periods ended June 30, 2018.

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

There were 396 and 378 net shares issued as a result of exercises and releases of equity awards for the 26-week periods ended June 29, 2019 and June 30, 2018, respectively.

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

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

4. Segment Information

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

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

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

	Reportable Segments
	Outdoor		Fitness		Marine		Auto		Aviation		Total

13-Weeks Ended June 29, 2019

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

13-Weeks Ended June 30, 2018

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

26-Weeks Ended June 29, 2019

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

26-Weeks Ended June 30, 2018

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

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

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

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

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

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

5. 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 management’s expectations and judgments of future conditions, and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

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

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

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

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

⁽¹⁾

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

6. Commitments and Contingencies

Commitments

The Company is party to certain commitments, which include purchases of raw materials, advertising expenditures, and other indirect purchases in connection with conducting our business. The aggregate amount of purchase orders and other commitments open as of June 29, 2019 was approximately $463,200. We cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements. Our purchase orders are based on our current needs and are typically fulfilled within short periods of time.

Contingencies

In the normal course of business, the Company and its subsidiaries are parties to various legal claims, investigations and complaints, including matters alleging patent infringement and other intellectual property claims. The Company evaluates, on a quarterly and annual basis, developments in legal proceedings, investigations, claims, and other loss contingencies that could affect any required accrual or disclosure or estimate of reasonably possible loss or range of loss. An estimated loss from a loss contingency is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If a range of loss is estimated, and some amount within that range appears to be a better estimate than any other amount within that range, then that amount is accrued. If no amount within the range can be identified as a better estimate than any other amount, the Company accrues the minimum amount in the range.

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

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended June 29, 2019. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

The Company settled or resolved certain matters during the 13-week and 26-week periods ended June 29, 2019 that did not individually or in the aggregate have a material impact on the Company’s business or its consolidated financial position, results of operations or cash flows.

7. Income Taxes

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

The Company recorded income tax expense of $78,214 in the first half of 2019, compared to income tax expense of $70,333 in the first half of 2018. The effective tax rate was 17.7% in the first half of 2019, compared to 18.0% in the first half of 2018.

8. Marketable Securities

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

Level 1

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

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

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

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

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

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

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

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

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

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

The following tables display additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of June 29, 2019 and December 29, 2018.

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

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

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

	Amortized Cost		Fair Value

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

9. Accumulated Other Comprehensive Income

The following provides required disclosure of changes in accumulated other comprehensive income (AOCI) balances by component for the 13-week and 26-week periods ended June 29, 2019:

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

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

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

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

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

10. Revenue

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

Disaggregated revenue by geographic region (Americas, APAC, and EMEA) is presented in Note 4 – Segment Information. The Company has identified six major product categories – auto PND, auto OEM, aviation, fitness, marine, and outdoor. Note 4 contains disaggregated revenue information of the aviation, fitness, marine, and outdoor major product categories. Auto segment revenue presented in Note 4 is comprised of the auto PND and auto OEM major product categories, as depicted below.

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

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

Transaction price and costs associated with the Company’s unsatisfied performance obligations are reflected as deferred revenue and deferred costs, respectively, on the Company’s Condensed Consolidated Balance Sheets. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the 26-week period ending June 29, 2019 are presented below:

	26-Weeks Ended
	June 29,
	2019
	Deferred Revenue⁽¹⁾			Deferred Costs⁽²⁾

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

⁽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 $85,615 of deferred revenue recognized in the 26-weeks ended June 29, 2019, $56,686 was deferred as of the beginning of the period.

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

11. Leases

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

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

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

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

⁽¹⁾

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

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

	June 29,
	2019

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

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

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

The following table represents the maturity of lease liabilities.

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

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

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

⁽²⁾

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

12. Recently Issued Accounting Pronouncements Not Yet Adopted

Financial Instruments – Credit Losses

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

Receivables – Nonrefundable Fees and Other Costs

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

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

Overview

The discussion set forth below, as well as other portions of this Quarterly Report, contains statements concerning potential future events. Such forward-looking statements are based upon assumptions by management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of the Company’s assumptions prove incorrect or should unanticipated circumstances arise, actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018. This report has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) in Washington, D.C. and can be obtained by contacting the SEC’s public reference operations or obtaining it through the SEC’s website at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 29, 2018.

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

Results of Operations

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

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

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

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

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

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

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

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

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

Net Sales

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

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

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

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

Gross Profit

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

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

The marine segment gross margin increase of 200 basis points was primarily attributable to product mix. The auto segment gross margin increase of 570 basis points was primarily attributable to lower license expense and product mix. A portion of license expense favorability in the auto segment is expected to continue for the remainder of the year. The fitness segment gross margin decrease was primarily attributable to lower average selling prices and product mix.

Advertising Expense

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

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

Selling, General and Administrative Expense

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

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

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

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

Research and Development Expense

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

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

Operating Income

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

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

Other Income (Expense)

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

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

Foreign currency gains and losses for the Company are typically driven by movements in the Taiwan Dollar, Euro, and British Pound Sterling in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of Garmin Corporation, the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., and the Euro is the functional currency of most of our other European subsidiaries, although some transactions and balances are denominated in British Pounds. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by the significant cash and marketable securities, receivables and payables held in a currency other than the functional currency at a given legal entity. Due to the relative size of the entities using a functional currency other than the Taiwan Dollar, Euro, and British Pound Sterling, currency fluctuations related to these entities are not expected to have a material impact on the Company’s financial statements.

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

The $2.6 million currency gain recognized in the second quarter of 2018 was primarily due to the strengthening of the U.S. Dollar against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Euro and British Pound Sterling within the 13-weeks ended June 30, 2018. During this period, the U.S. Dollar strengthened 4.7% against the Taiwan Dollar, resulting in a gain of $26.7 million, while the U.S. Dollar strengthened 5.2% against the Euro and 5.8% against the British Pound Sterling, resulting in losses of $14.0 million and $1.9 million, respectively. The remaining net currency loss of $8.2 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $52.1 million in the 13-week period ended June 29, 2019, compared to income tax expense of $45.7 million in the 13-week period ended June 30, 2018. The effective tax rate was 18.9% in the second quarter of 2019, compared to 19.4% in the second quarter of 2018.

The Company expects to record an income tax benefit due to the revaluation of certain Switzerland deferred tax assets resulting from Swiss tax reform. However, the Company is unable to estimate the timing and the amount of the income tax benefit due to the dependency on the future enactment of Swiss cantonal tax rate.

Net Income

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

Comparison of 26-Weeks Ended June 29, 2019 and 26-Weeks Ended June 30, 2018

Net Sales

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

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

Total unit sales in the first half of 2019 increased to 7,019 when compared to the total unit sales of 6,739 in the first half of 2018.

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

Gross Profit

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Gross Profit		% of Revenue			Gross Profit		% of Revenue			$ Change			% Change
Outdoor	$	232,996		64	%	$	222,158		64	%	$	10,838			5	%
Fitness		225,970		52	%		223,032		57	%		2,938			1	%
Marine		169,739		59	%		145,468		59	%		24,271			17	%
Auto		132,198		46	%		136,463		42	%		(4,265	)		(3	)%
Aviation		266,160		75	%		222,684		75	%		43,476			20	%
Total	$	1,027,063		60	%	$	949,805		59	%	$	77,258			8	%

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

Advertising Expense

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Advertising Expense		% of Revenue			Advertising Expense		% of Revenue			$ Change			% Change
Outdoor	$	19,136		5	%	$	16,500		5	%	$	2,636			16	%
Fitness		27,917		6	%		28,219		7	%		(302	)		(1	)%
Marine		11,916		4	%		10,428		4	%		1,488			14	%
Auto		7,305		3	%		9,921		3	%		(2,616	)		(26	)%
Aviation		2,865		1	%		3,793		1	%		(928			(24	)%
Total	$	69,139		4	%	$	68,861		4	%	$	278			0	%

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

Selling, General and Administrative Expense

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Selling, General & Admin. Expenses		% of Revenue			Selling, General & Admin. Expenses		% of Revenue			$ Change			% Change
Outdoor	$	58,711		16	%	$	54,647		16	%	$	4,064			7	%
Fitness		77,538		18	%		64,092		16	%		13,446			21	%
Marine		49,291		17	%		54,136		22	%		(4,845	)		(9	)%
Auto		38,668		14	%		47,046		15	%		(8,378	)		(18	)%
Aviation		31,311		9	%		17,643		6	%		13,668			77	%
Total	$	255,519		15	%	$	237,564		15	%	$	17,955			8	%

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

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

Research and Development Expense

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Research & Development		% of Revenue			Research & Development		% of Revenue			$ Change			% Change
Outdoor	$	41,859		11	%	$	35,272		10	%	$	6,587			19	%
Fitness		51,978		12	%		44,799		11	%		7,179			16	%
Marine		40,327		14	%		40,005		16	%		322			1	%
Auto		53,104		19	%		63,417		20	%		(10,313	)		(16	)%
Aviation		107,533		30	%		100,177		34	%		7,356			7	%
Total	$	294,801		17	%	$	283,670		18	%	$	11,131			4	%

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

Operating Income

	26-Weeks Ended June 29, 2019					26-Weeks Ended June 30, 2018					Year over Year
	Operating Income		% of Revenue			Operating Income		% of Revenue			$ Change			% Change
Outdoor	$	113,290		31	%	$	115,739		33	%	$	(2,449	)		(2	)%
Fitness		68,537		16	%		85,922		22	%		(17,385	)		(20	)%
Marine		68,205		24	%		40,899		16	%		27,306			67	%
Auto		33,121		12	%		16,079		5	%		17,042			106	%
Aviation		124,451		35	%		101,071		34	%		23,380			23	%
Total	$	407,604		24	%	$	359,710		22	%	$	47,894			13	%

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

Other Income (Expense)

	26-Weeks Ended		26-Weeks Ended
	June 29, 2019		June 30, 2018
Interest income	$	27,439	$	21,222
Foreign currency gains		3,727		3,463
Other		3,273		5,653
Total	$	34,439	$	30,338

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

The $3.7 million currency gain recognized in the first half of 2019 was primarily due to the strengthening of the U.S. Dollar against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Euro within the 26-weeks ended June 29, 2019. During this period, the U.S. Dollar strengthened 1.2% against the Taiwan Dollar, resulting in a gain of $7.4 million while the U.S. Dollar strengthened 0.6% against the Euro, resulting in a loss of $4.1 million. The U.S. Dollar remained relatively flat against the British Pound Sterling. The remaining net currency gain of $0.4 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

The $3.5 million currency gain recognized in the first half of 2018 was primarily due to the strengthening of the U.S. Dollar against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Euro and British Pound Sterling within the 26-weeks ended June 30, 2018. During this period, the U.S. Dollar strengthened 2.7% against the Taiwan Dollar, resulting in a gain of $13.9 million, while the U.S. Dollar strengthened 2.6% against the Euro and 2.3% against the British Pound Sterling, resulting in losses of $5.1 million and $0.1 million, respectively. The remaining net currency loss of $5.2 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $78.2 million in the first half of 2019, compared to income tax expense of $70.3 million in the first half of 2018. The effective tax rate was 17.7% in the first half of 2019, compared to 18.0% in the first half of 2018.

The Company expects to record an income tax benefit due to the revaluation of certain Switzerland deferred tax assets resulting from Swiss tax reform. However,

the Company is unable to estimate the timing and the amount of the income tax benefit due to the dependency on the future enactment of Swiss cantonal tax rate.

Net Income

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

Liquidity and Capital Resources

As of June 29, 2019, we had approximately $2.4 billion of cash and cash equivalents and marketable securities. We primarily use cash flow from operations, and expect that future cash requirements may be used, to fund our capital expenditures, support our working capital requirements, pay dividends, and fund strategic acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our long-term projected capital expenditures, working capital and other cash requirements.

It is management’s goal to invest the on-hand cash in accordance with the investment policy, which has been approved by the Company’s Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest rate returns on cash and investments during the first half of 2019 and 2018 were approximately 2.2% and 1.8%, respectively. The fair value of our securities varies from period to period due to changes in interest rates, in the performance of the underlying collateral and in the credit performance of the underlying issuer, among other factors. See Note 8 for additional information regarding marketable securities.

Operating Activities

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

The $162.8 million decrease in cash provided by operating activities in the first half of 2019 compared to the first half of 2018 was primarily due to the net increase in cash used in working capital of $156.6 million (which included a decrease of $42.5 million in net receipts of accounts receivable, a net increase of $75.3 million in cash paid for inventory, and a net increase of $38.8 million in cash used in other activities primarily driven by payments associated with an amendment to a license agreement) and income taxes payable of $43.8 million. These decreases were partially offset by the year over year increase in net income and other non-cash adjustments of $37.6 million.

Investing Activities

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

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

Financing Activities

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

The $120.0 million increase in cash used in financing activities during the first half of 2019 compared to the first half of 2018 was primarily due to an increase in dividend payments of $112.8 million associated with the timing of dividend payments that resulted in three dividend payments in the first half of 2019 compared to two dividend payments in the first half of 2018.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Estimates

General

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

For a description of the significant accounting policies and methods used in the preparation of the Company’s Condensed Consolidated Financial Statements, refer to Note 2, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018. There were no material changes to the Company’s critical accounting policies and estimates in the 13-week and 26-week periods ended June 29, 2019, other than those discussed in Note 1, “Accounting Policies”.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There are numerous market risks that can affect our future business, financial condition and results of operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2018. There have been no material changes during the 13-week and 26-week periods ended June 29, 2019 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures.

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

(b)

Changes in internal control over financial reporting

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

Part II - Other Information

Item 1. Legal Proceedings

In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions, and complaints, including matters involving patent infringement, other intellectual property, product liability, customer claims and various other risks. It is not possible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in any of these legal matters, or if not, what the impact might be. However, the Company’s management does not expect that the results in any of these legal proceedings will have a material adverse effect on the Company’s results of operations, financial position or cash flows. For additional information, see Note 6 – Commitments and Contingencies in the above Condensed Consolidated Financial Statements and Part I, “Item 3. Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018.

Item 1A. Risk Factors

There are many risks and uncertainties that can affect our future business, financial performance or share price. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2018. There have been no material changes during the 13-week and 26-week periods ended June 29, 2019 in the risks described in our Annual Report on Form 10-K. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

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

Not applicable

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

Not applicable

Item 6. Exhibits

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

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

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

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

Exhibit 101.INS		XBRL Instance Document

Exhibit 101.SCH		XBRL Taxonomy Extension Schema

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase

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: July 31, 2019

INDEX TO EXHIBITS

Exhibit No.		Description

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

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

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

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

Exhibit 101.INS		XBRL Instance Document

Exhibit 101.SCH		XBRL Taxonomy Extension Schema

Exhibit 101.CAL		XBRL Taxonomy Extension Calculation Linkbase

Exhibit 101.LAB		XBRL Taxonomy Extension Label Linkbase

Exhibit 101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Exhibit 101.DEF		XBRL Taxonomy Extension Definition Linkbase