Q3 P1Y--12-25 CH 0001121788 false 0001121788 us-gaap:TreasuryStockMember 2020-09-26 0001121788 us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2021-09-25 0001121788 us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2021-09-25 0001121788 grmn:FitnessSegmentMember 2020-06-28 2020-09-26 0001121788 grmn:AutoSegmentMember grmn:ConsumerAutoSubsegmentMember 2021-06-27 2021-09-25 0001121788 us-gaap:CommonStockMember 2021-09-25 0001121788 us-gaap:CommonStockMember 2020-09-26 0001121788 us-gaap:TransferredAtPointInTimeMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-27 2021-09-25 0001121788 2020-06-27 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2020-09-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-12-26 0001121788 us-gaap:CommonStockMember 2020-06-27 0001121788 grmn:MarineSegmentMember 2019-12-29 2020-09-26 0001121788 us-gaap:TreasuryStockMember 2020-06-27 0001121788 grmn:OutdoorSegmentMember 2021-06-27 2021-09-25 0001121788 us-gaap:MunicipalBondsMember 2020-12-26 0001121788 grmn:OutdoorSegmentMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-29 2020-09-26 0001121788 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-12-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2019-12-28 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-27 0001121788 us-gaap:AdditionalPaidInCapitalMember 2020-12-26 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-26 0001121788 grmn:AviationSegmentMember 2019-12-29 2020-09-26 0001121788 grmn:AviationSegmentMember 2021-06-27 2021-09-25 0001121788 srt:AmericasMember 2021-09-25 0001121788 grmn:OutdoorSegmentMember 2019-12-29 2020-09-26 0001121788 us-gaap:CorporateDebtSecuritiesMember 2020-12-26 0001121788 us-gaap:AccumulatedTranslationAdjustmentMember 2020-12-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2021-06-26 0001121788 2021-10-22 0001121788 2021-06-27 2021-09-25 0001121788 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-06-27 2021-09-25 0001121788 grmn:AutoSegmentMember 2021-06-27 2021-09-25 0001121788 srt:AmericasMember 2020-06-28 2020-09-26 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-27 2021-09-25 0001121788 us-gaap:TreasuryStockMember 2019-12-28 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:OtherDebtSecuritiesMember 2020-12-26 0001121788 us-gaap:EMEAMember 2021-06-27 2021-09-25 0001121788 2020-12-26 0001121788 srt:AsiaPacificMember 2021-09-25 0001121788 srt:AmericasMember 2021-06-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2021-06-27 2021-09-25 0001121788 us-gaap:TransferredOverTimeMember 2019-12-29 2020-09-26 0001121788 srt:AsiaPacificMember 2020-09-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2020-06-28 2020-09-26 0001121788 us-gaap:TransferredOverTimeMember 2021-06-27 2021-09-25 0001121788 srt:AsiaPacificMember 2020-12-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2019-12-29 2020-09-26 0001121788 2021-06-26 0001121788 us-gaap:AccumulatedTranslationAdjustmentMember 2021-09-25 0001121788 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedTranslationAdjustmentMember 2021-06-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2020-06-28 2020-09-26 0001121788 us-gaap:TransferredAtPointInTimeMember 2021-06-27 2021-09-25 0001121788 srt:MinimumMember grmn:CertainAviationMarineAndAutoOEMProductsMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-28 0001121788 2019-12-29 2020-09-26 0001121788 grmn:FitnessSegmentMember 2020-12-27 2021-09-25 0001121788 srt:AsiaPacificMember 2019-12-29 2020-09-26 0001121788 us-gaap:TreasuryStockMember 2020-12-26 0001121788 us-gaap:USGovernmentAgenciesDebtSecuritiesMember us-gaap:FairValueInputsLevel2Member 2020-12-26 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:OtherDebtSecuritiesMember 2021-09-25 0001121788 grmn:OutdoorSegmentMember 2020-06-28 2020-09-26 0001121788 grmn:AutoSegmentMember grmn:ConsumerAutoSubsegmentMember 2019-12-29 2020-09-26 0001121788 srt:AmericasMember 2019-12-29 2020-09-26 0001121788 us-gaap:TreasuryStockMember 2019-12-29 2020-09-26 0001121788 grmn:AutoOemSubsegmentMember grmn:AutoSegmentMember 2019-12-29 2020-09-26 0001121788 us-gaap:TransferredOverTimeMember 2020-12-27 2021-09-25 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2020-12-26 0001121788 us-gaap:TreasuryStockMember 2020-06-28 2020-09-26 0001121788 srt:AmericasMember 2020-09-26 0001121788 grmn:FitnessSegmentMember 2019-12-29 2020-09-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2019-12-29 2020-09-26 0001121788 us-gaap:EMEAMember 2021-09-25 0001121788 us-gaap:EMEAMember 2020-12-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2020-12-26 0001121788 srt:AsiaPacificMember 2021-06-27 2021-09-25 0001121788 grmn:AviationSegmentMember 2020-06-28 2020-09-26 0001121788 grmn:AutoSegmentMember grmn:ConsumerAutoSubsegmentMember 2020-06-28 2020-09-26 0001121788 us-gaap:OtherDebtSecuritiesMember 2020-12-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2020-06-27 0001121788 grmn:AutoOemSubsegmentMember grmn:AutoSegmentMember 2020-12-27 2021-09-25 0001121788 us-gaap:TransferredAtPointInTimeMember 2020-06-28 2020-09-26 0001121788 2021-09-25 0001121788 us-gaap:AccumulatedTranslationAdjustmentMember 2020-12-27 2021-09-25 0001121788 grmn:AutoOemSubsegmentMember grmn:AutoSegmentMember 2020-06-28 2020-09-26 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesMember 2020-12-26 0001121788 grmn:MarineSegmentMember 2020-06-28 2020-09-26 0001121788 us-gaap:TreasuryStockMember 2021-06-26 0001121788 us-gaap:AccumulatedTranslationAdjustmentMember 2021-06-26 0001121788 us-gaap:TransferredAtPointInTimeMember 2019-12-29 2020-09-26 0001121788 grmn:AviationSegmentMember 2020-12-27 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2021-06-26 0001121788 us-gaap:MunicipalBondsMember 2021-09-25 0001121788 us-gaap:TreasuryStockMember 2021-06-27 2021-09-25 0001121788 us-gaap:EMEAMember 2019-12-29 2020-09-26 0001121788 us-gaap:TreasuryStockMember 2020-12-27 2021-09-25 0001121788 us-gaap:TreasuryStockMember 2021-09-25 0001121788 srt:AsiaPacificMember 2020-06-28 2020-09-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2019-12-28 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:MortgageBackedSecuritiesMember 2021-09-25 0001121788 grmn:AutoSegmentMember grmn:ConsumerAutoSubsegmentMember 2020-12-27 2021-09-25 0001121788 2019-12-28 0001121788 2020-06-28 2020-09-26 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-25 0001121788 us-gaap:RetainedEarningsMember 2021-09-25 0001121788 us-gaap:AdditionalPaidInCapitalMember 2021-09-25 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-26 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:CorporateDebtSecuritiesMember 2021-09-25 0001121788 us-gaap:MortgageBackedSecuritiesMember 2021-09-25 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2020-12-26 0001121788 2020-09-26 0001121788 srt:MinimumMember grmn:StandardWarrantyOnProductsMember 2020-12-27 2021-09-25 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:USGovernmentAgenciesDebtSecuritiesMember 2021-09-25 0001121788 us-gaap:AdditionalPaidInCapitalMember 2021-06-27 2021-09-25 0001121788 grmn:MarineSegmentMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-09-25 0001121788 us-gaap:CommonStockMember 2021-06-26 0001121788 grmn:AutoSegmentMember 2019-12-29 2020-09-26 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-28 2020-09-26 0001121788 us-gaap:EMEAMember 2020-09-26 0001121788 us-gaap:TransferredOverTimeMember 2020-06-28 2020-09-26 0001121788 srt:AmericasMember 2020-12-27 2021-09-25 0001121788 us-gaap:EMEAMember 2020-06-28 2020-09-26 0001121788 us-gaap:RetainedEarningsMember 2020-06-27 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:USTreasurySecuritiesMember 2020-12-26 0001121788 us-gaap:MortgageBackedSecuritiesMember 2020-12-26 0001121788 us-gaap:AdditionalPaidInCapitalMember 2020-09-26 0001121788 srt:MaximumMember grmn:StandardWarrantyOnProductsMember 2020-12-27 2021-09-25 0001121788 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2021-06-26 0001121788 us-gaap:RetainedEarningsMember 2020-12-27 2021-09-25 0001121788 us-gaap:CommonStockMember 2019-12-28 0001121788 us-gaap:CorporateDebtSecuritiesMember 2021-09-25 0001121788 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-26 0001121788 us-gaap:CommonStockMember 2020-12-26 0001121788 us-gaap:FairValueInputsLevel2Member us-gaap:MunicipalBondsMember 2021-09-25 0001121788 grmn:MarineSegmentMember 2021-06-27 2021-09-25 0001121788 grmn:AutoSegmentMember 2020-06-28 2020-09-26 0001121788 grmn:AutoSegmentMember 2020-12-27 2021-09-25 0001121788 us-gaap:OtherDebtSecuritiesMember 2021-09-25 0001121788 grmn:AutoOemSubsegmentMember grmn:AutoSegmentMember 2021-06-27 2021-09-25 0001121788 grmn:FitnessSegmentMember 2021-06-27 2021-09-25 xbrli:pure iso4217:USD xbrli:shares xbrli:shares grmn:Segment iso4217:CHF xbrli:shares iso4217:USD

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 25, 2021

or

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

For the transition period from to

Commission file number 0-31983

GARMIN LTD.

(Exact name of Company as specified in its charter)

Switzerland |  | 98-0229227
(State or other jurisdiction |  | (I.R.S. Employer
of incorporation or organization) |  | identification no.)
Mühlentalstrasse 2 |  |
8200 Schaffhausen |  |
Switzerland |  | N/A
(Address of principal executive offices) |  | (Zip Code)

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

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

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

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

Yes ☑ NO ☐

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

Yes ☑ NO ☐

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

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

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

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

YES ☐ NO ☑

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

Registered Shares, CHF 0.10 par valu e: 192,322,049 (e xcluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended September 25, 2021

Table of Contents

|  |  |  | Page
Part I - Financial Information |  | 1
Item 1. |  | Condensed Consolidated Financial Statements |  | 1
|  | Condensed Consolidated Balance Sheets at September 25, 2021 and December 26, 2020 (Unaudited) |  | 1
|  | Condensed Consolidated Statements of Income for the 13-Weeks and 39-Weeks ended September 25, 2021 and September 26, 2020 (Unaudited) |  | 2
|  | Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 39-Weeks ended September 25, 2021 and September 26, 2020 (Unaudited) |  | 3
|  | Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 39-Weeks ended September 25, 2021 and September 26, 2020 (Unaudited) |  | 4
|  | Condensed Consolidated Statements of Cash Flows for the 39-Weeks ended September 25, 2021 and September 26, 2020 (Unaudited) |  | 6
|  | Notes to Condensed Consolidated Financial Statements (Unaudited) |  | 7
Item 2. |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 15
Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk |  | 25
Item 4. |  | Controls and Procedures |  | 25
Part II - Other Information |  | 26
Item 1. |  | Legal Proceedings |  | 26
Item 1A. |  | Risk Factors |  | 26
Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds |  | 27
Item 3. |  | Defaults Upon Senior Securities |  | 27
Item 4. |  | Mine Safety Disclosures |  | 27
Item 5. |  | Other Information |  | 27
Item 6. |  | Exhibits |  | 28
Signature Page |  | 29

i

Pa rt I - Financial Information

Item I - Condensed Consolidated Financial Statements

Garmin Ltd. and Subsidiaries

Condensed Consolidated Ba lance Sheets (Unaudited)

(In thousands, except per share information)

|  | September 25, 2021 |  |  | December 26, 2020 |
Assets |  |  |  |  |  |
Current assets: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 1,639,056 |  |  | $ | 1,458,442 |
Marketable securities |  |  | 345,214 |  |  |  | 387,642 |
Accounts receivable, net |  |  | 639,345 |  |  |  | 849,469 |
Inventories |  |  | 1,113,503 |  |  |  | 762,084 |
Deferred costs |  |  | 16,046 |  |  |  | 20,145 |
Prepaid expenses and other current assets |  |  | 255,802 |  |  |  | 191,569 |
Total current assets |  |  | 4,008,966 |  |  |  | 3,669,351 |
Property and equipment, net |  |  | 974,981 |  |  |  | 855,539 |
Operating lease right-of-use assets |  |  | 89,934 |  |  |  | 94,626 |
Marketable securities |  |  | 1,253,589 |  |  |  | 1,131,175 |
Deferred income taxes |  |  | 251,983 |  |  |  | 245,455 |
Noncurrent deferred costs |  |  | 13,035 |  |  |  | 16,510 |
Intangible assets, net |  |  | 809,163 |  |  |  | 828,566 |
Other assets |  |  | 169,838 |  |  |  | 190,151 |
Total assets |  | $ | 7,571,489 |  |  | $ | 7,031,373 |
Liabilities and Stockholders’ Equity |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |
Accounts payable |  | $ | 318,604 |  |  | $ | 258,885 |
Salaries and benefits payable |  |  | 173,566 |  |  |  | 181,937 |
Accrued warranty costs |  |  | 42,849 |  |  |  | 42,643 |
Accrued sales program costs |  |  | 78,251 |  |  |  | 109,891 |
Deferred revenue |  |  | 87,770 |  |  |  | 86,865 |
Accrued advertising expense |  |  | 30,044 |  |  |  | 31,950 |
Other accrued expenses |  |  | 146,426 |  |  |  | 149,817 |
Income taxes payable |  |  | 109,862 |  |  |  | 68,585 |
Dividend payable |  |  | 386,567 |  |  |  | 233,644 |
Total current liabilities |  |  | 1,373,939 |  |  |  | 1,164,217 |
Deferred income taxes |  |  | 127,733 |  |  |  | 116,844 |
Noncurrent income taxes |  |  | 78,176 |  |  |  | 92,810 |
Noncurrent deferred revenue |  |  | 42,022 |  |  |  | 49,934 |
Noncurrent operating lease liabilities |  |  | 71,527 |  |  |  | 75,958 |
Other liabilities |  |  | 23,354 |  |  |  | 15,494 |
Stockholders’ equity: |  |  |  |  |  |
Shares, CHF 0.10 par value, 198,077 shares authorized and issued; 192,322 shares outstanding at September 25, 2021 and 191,571 shares outstanding at December 26, 2020 |  |  | 17,979 |  |  |  | 17,979 |
Additional paid-in capital |  |  | 1,950,464 |  |  |  | 1,880,354 |
Treasury stock |  |  | (303,373 | ) |  |  | (320,016 | )
Retained earnings |  |  | 4,034,912 |  |  |  | 3,754,372 |
Accumulated other comprehensive income |  |  | 154,756 |  |  |  | 183,427 |
Total stockholders’ equity |  |  | 5,854,738 |  |  |  | 5,516,116 |
Total liabilities and stockholders’ equity |  | $ | 7,571,489 |  |  | $ | 7,031,373 |

See accompanying notes.

1

Garmin Ltd. and Subsidiaries

Condensed Consolidated State ments of Income (Unaudited)

(In thousands, except per share information)

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Net sales |  | $ | 1,191,973 |  |  | $ | 1,109,194 |  |  | $ | 3,591,206 |  |  | $ | 2,835,168 |
Cost of goods sold |  |  | 496,026 |  |  |  | 441,211 |  |  |  | 1,472,852 |  |  |  | 1,144,816 |
Gross profit |  |  | 695,947 |  |  |  | 667,983 |  |  |  | 2,118,354 |  |  |  | 1,690,352 |
Advertising expense |  |  | 36,705 |  |  |  | 33,866 |  |  |  | 110,705 |  |  |  | 90,031 |
Selling, general and administrative expenses |  |  | 162,515 |  |  |  | 142,134 |  |  |  | 485,896 |  |  |  | 411,335 |
Research and development expense |  |  | 214,057 |  |  |  | 174,882 |  |  |  | 618,253 |  |  |  | 506,013 |
Total operating expense |  |  | 413,277 |  |  |  | 350,882 |  |  |  | 1,214,854 |  |  |  | 1,007,379 |
Operating income |  |  | 282,670 |  |  |  | 317,101 |  |  |  | 903,500 |  |  |  | 682,973 |
Other income (expense): |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  |  | 6,897 |  |  |  | 7,777 |  |  |  | 21,568 |  |  |  | 30,258 |
Foreign currency (losses) gains |  |  | (15,014 | ) |  |  | 10,113 |  |  |  | (30,621 | ) |  |  | (9,802 | )
Other income |  |  | 833 |  |  |  | 1,726 |  |  |  | 3,511 |  |  |  | 8,515 |
Total other income (expense) |  |  | (7,284 | ) |  |  | 19,616 |  |  |  | (5,542 | ) |  |  | 28,971 |
Income before income taxes |  |  | 275,386 |  |  |  | 336,717 |  |  |  | 897,958 |  |  |  | 711,944 |
Income tax provision |  |  | 16,347 |  |  |  | 23,300 |  |  |  | 101,894 |  |  |  | 53,168 |
Net income |  | $ | 259,039 |  |  | $ | 313,417 |  |  | $ | 796,064 |  |  | $ | 658,776 |
Net income per share: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  | $ | 1.35 |  |  | $ | 1.64 |  |  | $ | 4.14 |  |  | $ | 3.45 |
Diluted |  | $ | 1.34 |  |  | $ | 1.63 |  |  | $ | 4.13 |  |  | $ | 3.44 |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 192,322 |  |  |  | 191,234 |  |  |  | 192,123 |  |  |  | 191,021 |
Diluted |  |  | 193,185 |  |  |  | 191,998 |  |  |  | 192,955 |  |  |  | 191,760 |

See accompanying notes.

2

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements o f Comprehensive Income (Unaudited)

(In thousands)

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Net income |  | $ | 259,039 |  |  | $ | 313,417 |  |  | $ | 796,064 |  |  | $ | 658,776 |
Foreign currency translation adjustment |  |  | (8,702 | ) |  |  | 26,721 |  |  |  | (16,313 | ) |  |  | 45,358 |
Change in fair value of available-for-sale marketable securities, net of deferred taxes |  |  | (3,169 | ) |  |  | 2,528 |  |  |  | (12,358 | ) |  |  | 17,746 |
Comprehensive income |  | $ | 247,168 |  |  | $ | 342,666 |  |  | $ | 767,393 |  |  | $ | 721,880 |

See accompanying notes.

3

Garmin Ltd. and Subsidiaries

Condensed Consolidated Stateme nts of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended September 25, 2021 and September 26, 2020

(In thousands, except per share information)

|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Treasury Stock |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total |
Balance at June 27, 2020 |  | $ | 17,979 |  |  | $ | 1,851,695 |  |  | $ | (326,310 | ) |  | $ | 3,107,768 |  |  | $ | 89,729 |  |  | $ | 4,740,861 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 313,417 |  |  |  | — |  |  |  | 313,417 |
Translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 26,721 |  |  |  | 26,721 |
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $31 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,528 |  |  |  | 2,528 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 342,666 |
Dividends declared |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (26 | ) |  |  | — |  |  |  | (26 | )
Issuance of treasury stock related to equity awards |  |  | — |  |  |  | (1,207 | ) |  |  | 1,207 |  |  |  | — |  |  |  | — |  |  |  | — |
Stock compensation |  |  | — |  |  |  | 22,031 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 22,031 |
Purchase of treasury stock related to equity awards |  |  | — |  |  |  | — |  |  |  | (1,191 | ) |  |  | — |  |  |  | — |  |  |  | (1,191 | )
Balance at September 26, 2020 |  | $ | 17,979 |  |  | $ | 1,872,519 |  |  | $ | (326,294 | ) |  | $ | 3,421,159 |  |  | $ | 118,978 |  |  | $ | 5,104,341 |
|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Treasury Stock |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total |
Balance at June 26, 2021 |  | $ | 17,979 |  |  | $ | 1,927,137 |  |  | $ | (303,369 | ) |  | $ | 3,775,874 |  |  | $ | 166,627 |  |  | $ | 5,584,248 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 259,039 |  |  |  | — |  |  |  | 259,039 |
Translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (8,702 | ) |  |  | (8,702 | )
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $609 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3,169 | ) |  |  | (3,169 | )
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 247,168 |
Dividends declared |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | (1 | )
Issuance of treasury stock related to equity awards |  |  | — |  |  |  | (28 | ) |  |  | 28 |  |  |  | — |  |  |  | — |  |  |  | — |
Stock compensation |  |  | — |  |  |  | 23,355 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23,355 |
Purchase of treasury stock related to equity awards |  |  | — |  |  |  | — |  |  |  | (32 | ) |  |  | — |  |  |  | — |  |  |  | (32 | )
Balance at September 25, 2021 |  | $ | 17,979 |  |  | $ | 1,950,464 |  |  | $ | (303,373 | ) |  | $ | 4,034,912 |  |  | $ | 154,756 |  |  | $ | 5,854,738 |

See accompanying notes.

4

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

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

(In thousands, except per share information)

|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Treasury Stock |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total |
Balance at December 28, 2019 |  | $ | 17,979 |  |  | $ | 1,835,622 |  |  | $ | (345,040 | ) |  | $ | 3,229,061 |  |  | $ | 55,874 |  |  | $ | 4,793,496 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 658,776 |  |  |  | — |  |  |  | 658,776 |
Translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 45,358 |  |  |  | 45,358 |
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,903 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 17,746 |  |  |  | 17,746 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 721,880 |
Dividends declared ($2.44 per share) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (466,678 | ) |  |  | — |  |  |  | (466,678 | )
Issuance of treasury stock related to equity awards |  |  | — |  |  |  | (16,618 | ) |  |  | 31,820 |  |  |  | — |  |  |  | — |  |  |  | 15,202 |
Stock compensation |  |  | — |  |  |  | 53,515 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 53,515 |
Purchase of treasury stock related to equity awards |  |  | — |  |  |  | — |  |  |  | (13,074 | ) |  |  | — |  |  |  | — |  |  |  | (13,074 | )
Balance at September 26, 2020 |  | $ | 17,979 |  |  | $ | 1,872,519 |  |  | $ | (326,294 | ) |  | $ | 3,421,159 |  |  | $ | 118,978 |  |  | $ | 5,104,341 |
|  | Common Stock |  |  | Additional Paid-In Capital |  |  | Treasury Stock |  |  | Retained Earnings |  |  | Accumulated Other Comprehensive Income (Loss) |  |  | Total |
Balance at December 26, 2020 |  | $ | 17,979 |  |  | $ | 1,880,354 |  |  | $ | (320,016 | ) |  | $ | 3,754,372 |  |  | $ | 183,427 |  |  | $ | 5,516,116 |
Net income |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 796,064 |  |  |  | — |  |  |  | 796,064 |
Translation adjustment |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (16,313 | ) |  |  | (16,313 | )
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $2,918 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (12,358 | ) |  |  | (12,358 | )
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 767,393 |
Dividends declared ($2.68 per share) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (515,524 | ) |  |  | — |  |  |  | (515,524 | )
Issuance of treasury stock related to equity awards |  |  | — |  |  |  | 1,454 |  |  |  | 34,279 |  |  |  | — |  |  |  | — |  |  |  | 35,733 |
Stock compensation |  |  | — |  |  |  | 68,656 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 68,656 |
Purchase of treasury stock related to equity awards |  |  | — |  |  |  | — |  |  |  | (17,636 | ) |  |  | — |  |  |  | — |  |  |  | (17,636 | )
Balance at September 25, 2021 |  | $ | 17,979 |  |  | $ | 1,950,464 |  |  | $ | (303,373 | ) |  | $ | 4,034,912 |  |  | $ | 154,756 |  |  | $ | 5,854,738 |

See accompanying notes.

5

Garmin Ltd. and Subsidiaries

Condensed Consolidated Stateme nts of Cash Flows (Unaudited)

(In thousands)

|  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |
Operating Activities: |  |  |  |  |  |
Net income |  | $ | 796,064 |  |  | $ | 658,776 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Depreciation |  |  | 75,272 |  |  |  | 57,141 |
Amortization |  |  | 38,485 |  |  |  | 32,969 |
Loss (gain) on sale or disposal of property and equipment |  |  | 246 |  |  |  | (1,815 | )
Unrealized foreign currency losses |  |  | 24,390 |  |  |  | 4,384 |
Deferred income taxes |  |  | 8,358 |  |  |  | 14,353 |
Stock compensation expense |  |  | 68,656 |  |  |  | 53,515 |
Realized gain on marketable securities |  |  | (513 | ) |  |  | (1,316 | )
Changes in operating assets and liabilities, net of acquisitions: |  |  |  |  |  |
Accounts receivable, net of allowance for doubtful accounts |  |  | 197,024 |  |  |  | 59,474 |
Inventories |  |  | (357,387 | ) |  |  | (56,063 | )
Other current and non-current assets |  |  | (31,398 | ) |  |  | (27,019 | )
Accounts payable |  |  | 57,602 |  |  |  | (11,939 | )
Other current and non-current liabilities |  |  | (39,941 | ) |  |  | (18,299 | )
Deferred revenue |  |  | (6,914 | ) |  |  | (21,148 | )
Deferred costs |  |  | 7,547 |  |  |  | 9,855 |
Income taxes payable |  |  | 5,974 |  |  |  | (53,419 | )
Net cash provided by operating activities |  |  | 843,465 |  |  |  | 699,449 |
Investing activities: |  |  |  |  |  |
Purchases of property and equipment |  |  | (187,960 | ) |  |  | (137,072 | )
Proceeds from sale of property and equipment |  |  | 26 |  |  |  | 1,965 |
Purchase of intangible assets |  |  | (1,408 | ) |  |  | (1,643 | )
Purchase of marketable securities |  |  | (1,081,789 | ) |  |  | (702,487 | )
Redemption of marketable securities |  |  | 975,318 |  |  |  | 808,554 |
Acquisitions, net of cash acquired |  |  | (15,893 | ) |  |  | (148,648 | )
Net cash used in investing activities |  |  | (311,706 | ) |  |  | (179,331 | )
Financing activities: |  |  |  |  |  |
Dividends |  |  | (362,602 | ) |  |  | (333,975 | )
Proceeds from issuance of treasury stock related to equity awards |  |  | 35,733 |  |  |  | 15,202 |
Purchase of treasury stock related to equity awards |  |  | (17,636 | ) |  |  | (13,074 | )
Net cash used in financing activities |  |  | (344,505 | ) |  |  | (331,847 | )
Effect of exchange rate changes on cash and cash equivalents |  |  | (6,172 | ) |  |  | 7,900 |
Net increase in cash, cash equivalents, and restricted cash |  |  | 181,082 |  |  |  | 196,171 |
Cash, cash equivalents, and restricted cash at beginning of period |  |  | 1,458,748 |  |  |  | 1,027,638 |
Cash, cash equivalents, and restricted cash at end of period |  | $ | 1,639,830 |  |  | $ | 1,223,809 |

See accompanying notes.

6

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 25, 2021

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

The Condensed Consolidated Balance Sheet at December 26, 2020 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended September 25, 2021 and September 26, 2020 both contain operating results for 13 weeks.

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 26, 2020. There were no material changes to the Company’s significant accounting policies during the 39-week period ended September 25, 2021.

Recently Issued Accounting Standards and Pronouncements

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

2. Inventories

The components of inventories consist of the following:

|  | September 25, 2021 |  |  | December 26, 2020 |
Raw materials |  | $ | 463,314 |  |  | $ | 282,287 |
Work-in-process |  |  | 173,117 |  |  |  | 147,821 |
Finished goods |  |  | 477,072 |  |  |  | 331,976 |
Inventories |  | $ | 1,113,503 |  |  | $ | 762,084 |

7

3. Earnings Per Share

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

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Numerator: |  |  |  |  |  |  |  |  |  |  |  |
Numerator for basic and diluted net income per share – net income |  | $ | 259,039 |  |  | $ | 313,417 |  |  | $ | 796,064 |  |  | $ | 658,776 |
Denominator: |  |  |  |  |  |  |  |  |  |  |  |
Denominator for basic net income per share – weighted-average common shares |  |  | 192,322 |  |  |  | 191,234 |  |  |  | 192,123 |  |  |  | 191,021 |
Effect of dilutive equity awards |  |  | 863 |  |  |  | 764 |  |  |  | 832 |  |  |  | 739 |
Denominator for diluted net income per share – adjusted weighted-average common shares |  |  | 193,185 |  |  |  | 191,998 |  |  |  | 192,955 |  |  |  | 191,760 |
Basic net income per share |  | $ | 1.35 |  |  | $ | 1.64 |  |  | $ | 4.14 |  |  | $ | 3.45 |
Diluted net income per share |  | $ | 1.34 |  |  | $ | 1.63 |  |  | $ | 4.13 |  |  | $ | 3.44 |
Shares excluded from diluted net income per share calculation: |  |  |  |  |  |  |  |  |  |  |  |
Anti-dilutive equity awards |  |  | 311 |  |  |  | 409 |  |  |  | 313 |  |  |  | 410 |

4. Segment Information

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

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, combined with other measures, to assess segment performance and allocate resources. Operating income represents net sales less costs of goods sold and operating expenses. Net sales are directly attributed to each segment. Most costs of goods sold and the majority of operating expenses are also directly attributed to each segment, while certain other costs of goods sold and operating expenses are allocated to the segments in a manner appropriate to the specific facts and circumstances of the expenses being allocated.

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

8

|  |  |  |  |  |  |  |  |  |  |  |  |  | Auto |  |  |  |
|  | Fitness |  |  | Outdoor |  |  | Aviation |  |  | Marine |  |  | Total Auto |  |  | Consumer Auto |  |  | Auto OEM |  |  | Total |
13-Weeks Ended September 25, 2021 |
Net sales |  | $ | 342,316 |  |  | $ | 323,856 |  |  | $ | 180,165 |  |  | $ | 207,534 |  |  | $ | 138,102 |  |  | $ | 82,914 |  |  | $ | 55,188 |  |  | $ | 1,191,973 |
Gross profit |  |  | 183,028 |  |  |  | 210,522 |  |  |  | 131,260 |  |  |  | 116,152 |  |  |  | 54,985 |  |  |  | 39,342 |  |  |  | 15,643 |  |  |  | 695,947 |
Operating income (loss) |  |  | 77,788 |  |  |  | 123,946 |  |  |  | 51,296 |  |  |  | 53,726 |  |  |  | (24,086 | ) |  |  | 11,305 |  |  |  | (35,391 | ) |  |  | 282,670 |
13-Weeks Ended September 26, 2020 |
Net sales |  | $ | 328,446 |  |  | $ | 334,844 |  |  | $ | 151,112 |  |  | $ | 165,437 |  |  | $ | 129,355 |  |  | $ | 82,659 |  |  | $ | 46,696 |  |  | $ | 1,109,194 |
Gross profit |  |  | 177,794 |  |  |  | 223,704 |  |  |  | 107,927 |  |  |  | 100,423 |  |  |  | 58,135 |  |  |  | 43,319 |  |  |  | 14,816 |  |  |  | 667,983 |
Operating income (loss) |  |  | 87,083 |  |  |  | 147,477 |  |  |  | 28,597 |  |  |  | 50,482 |  |  |  | 3,462 |  |  |  | 18,178 |  |  |  | (14,716 | ) |  |  | 317,101 |
39-Weeks Ended September 25, 2021 |
Net sales |  | $ | 1,063,642 |  |  | $ | 903,715 |  |  | $ | 534,886 |  |  | $ | 678,698 |  |  | $ | 410,265 |  |  | $ | 231,587 |  |  | $ | 178,678 |  |  | $ | 3,591,206 |
Gross profit |  |  | 581,765 |  |  |  | 590,355 |  |  |  | 389,376 |  |  |  | 390,141 |  |  |  | 166,717 |  |  |  | 113,567 |  |  |  | 53,150 |  |  |  | 2,118,354 |
Operating income (loss) |  |  | 268,489 |  |  |  | 339,031 |  |  |  | 146,974 |  |  |  | 205,042 |  |  |  | (56,036 | ) |  |  | 35,388 |  |  |  | (91,424 | ) |  |  | 903,500 |
39-Weeks Ended September 26, 2020 |
Net sales |  | $ | 846,688 |  |  | $ | 716,146 |  |  | $ | 465,850 |  |  | $ | 486,269 |  |  | $ | 320,215 |  |  | $ | 196,942 |  |  | $ | 123,273 |  |  | $ | 2,835,168 |
Gross profit |  |  | 446,936 |  |  |  | 469,150 |  |  |  | 338,770 |  |  |  | 288,103 |  |  |  | 147,393 |  |  |  | 98,348 |  |  |  | 49,045 |  |  |  | 1,690,352 |
Operating income (loss) |  |  | 190,075 |  |  |  | 262,057 |  |  |  | 103,483 |  |  |  | 134,195 |  |  |  | (6,837 | ) |  |  | 25,628 |  |  |  | (32,465 | ) |  |  | 682,973 |

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

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Americas |  | $ | 573,331 |  |  | $ | 521,869 |  |  | $ | 1,723,415 |  |  | $ | 1,372,360 |
EMEA |  |  | 442,622 |  |  |  | 407,859 |  |  |  | 1,330,855 |  |  |  | 1,042,928 |
APAC |  |  | 176,020 |  |  |  | 179,466 |  |  |  | 536,936 |  |  |  | 419,880 |
Net sales to external customers |  | $ | 1,191,973 |  |  | $ | 1,109,194 |  |  | $ | 3,591,206 |  |  | $ | 2,835,168 |

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

|  | Americas |  |  | APAC |  |  | EMEA |  |  | Total |
September 25, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  | $ | 511,182 |  |  | $ | 344,263 |  |  | $ | 119,536 |  |  | $ | 974,981 |
September 26, 2020 |  |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net |  | $ | 465,575 |  |  | $ | 255,656 |  |  | $ | 92,330 |  |  | $ | 813,561 |

5. Warranty Reserves

The Company’s standard warranty obligation to its end-users provides for a period of one to two years from the date of shipment, while certain auto, aviation, and marine OEM products have a warranty period of two years or more from the date of installation. The Company’s estimates of costs to service its warranty obligations are based on historical experience and management’s expectations and judgments of future conditions, and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

9

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Balance - beginning of period |  | $ | 44,575 |  |  | $ | 39,293 |  |  | $ | 42,643 |  |  | $ | 39,758 |
Accrual for products sold (1) |  |  | 13,272 |  |  |  | 15,613 |  |  |  | 47,717 |  |  |  | 47,140 |
Expenditures |  |  | (14,998 | ) |  |  | (14,904 | ) |  |  | (47,511 | ) |  |  | (46,896 | )
Balance - end of period |  | $ | 42,849 |  |  | $ | 40,002 |  |  | $ | 42,849 |  |  | $ | 40,002 |

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

6. Commitments and Contingencies

Commitments

The Company is party to certain commitments, which include purchases of inventory, capital expenditures, advertising, and other services in connection with conducting our business. The aggregate amount of purchase orders and other commitments open as of September 25, 2021 was approximately $1,424,000. We cannot determine the aggregate amount of such purchase orders that represent contractual obligations because purchase orders may represent authorizations to purchase rather than binding agreements.

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

Contingencies

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

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

10

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended September 25, 2021. 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 25, 2021 that did not individually or in the aggregate have a material impact on the Company’s business or its consolidated financial position, results of operations or cash flows.

7. Income Taxes

The Company recorded income tax expense of $16,347 in the 13-week period ended September 25, 2021, compared to income tax expense of $23,300 in the 13-week period ended September 26, 2020. The effective tax rate was 5.9% in the third quarter of 2021, compared to 6.9% in the third quarter of 2020. The decrease was primarily due to the impact of return-to-provision adjustments associated with filing the U.S. tax return during the 13-week period ended September 25, 2021 compared to the year-ago quarter.

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

8. Marketable Securities

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

| Level 1 | Unadjusted quoted prices in active markets for the identical asset or liability

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

| Level 3 | Unobservable inputs for the asset or liability

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

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

11

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

|  | Available-For-Sale Securities as of September 25, 2021 |
|  | Fair Value Level |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities |  | Level 2 |  | $ | 400 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 401 |
Agency securities |  | Level 2 |  |  | 7,975 |  |  |  | — |  |  |  | (43 | ) |  |  | 7,932 |
Mortgage-backed securities |  | Level 2 |  |  | 159,299 |  |  |  | 707 |  |  |  | (625 | ) |  |  | 159,381 |
Corporate securities |  | Level 2 |  |  | 1,051,416 |  |  |  | 16,021 |  |  |  | (5,606 | ) |  |  | 1,061,831 |
Municipal securities |  | Level 2 |  |  | 335,507 |  |  |  | 2,748 |  |  |  | (1,845 | ) |  |  | 336,410 |
Other |  | Level 2 |  |  | 33,436 |  |  |  | 56 |  |  |  | (644 | ) |  |  | 32,848 |
Total |  |  |  | $ | 1,588,033 |  |  | $ | 19,533 |  |  | $ | (8,763 | ) |  | $ | 1,598,803 |

|  | Available-For-Sale Securities as of December 26, 2020 |
|  | Fair Value Level |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities |  | Level 2 |  | $ | 400 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 406 |
Agency securities |  | Level 2 |  |  | 5,954 |  |  |  | 56 |  |  |  | — |  |  |  | 6,010 |
Mortgage-backed securities |  | Level 2 |  |  | 239,445 |  |  |  | 1,051 |  |  |  | (1,923 | ) |  |  | 238,573 |
Corporate securities |  | Level 2 |  |  | 984,696 |  |  |  | 25,962 |  |  |  | (1,637 | ) |  |  | 1,009,021 |
Municipal securities |  | Level 2 |  |  | 214,515 |  |  |  | 3,644 |  |  |  | (223 | ) |  |  | 217,936 |
Other |  | Level 2 |  |  | 47,760 |  |  |  | 167 |  |  |  | (1,056 | ) |  |  | 46,871 |
Total |  |  |  | $ | 1,492,770 |  |  | $ | 30,886 |  |  | $ | (4,839 | ) |  | $ | 1,518,817 |

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

Accrued interest receivable, which totaled $9,671 as of September 25, 2021, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within Prepaid expenses and other current assets on the Company’s Condensed Consolidated Balance Sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. No accrued interest was written off during the 39-week period ended September 25, 2021.

The Company recognizes impairments relating to credit losses of available-for-sale securities through an allowance for credit losses and Other income on the Company’s Condensed Consolidated Statements of Income. Impairment not relating to credit losses is recorded in Other comprehensive income on the Company’s Condensed Consolidated Balance Sheets. The cost of securities sold is based on the specific identification method. Approximately 37% of securities in the Company’s portfolio were at an unrealized loss position as of September 25, 2021.

The following tables display additional information regarding gross unrealized losses and fair value by major security type for available-for-sale securities in an unrealized loss position as of September 25, 2021 and December 26, 2020.

|  | As of September 25, 2021 |
|  | Less than 12 Consecutive Months |  |  | 12 Consecutive Months or Longer |  |  | Total |
|  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Agency securities |  |  | (43 | ) |  |  | 6,957 |  |  |  | — |  |  |  | — |  |  |  | (43 | ) |  |  | 6,957 |
Mortgage-backed securities |  |  | (103 | ) |  |  | 14,116 |  |  |  | (522 | ) |  |  | 8,289 |  |  |  | (625 | ) |  |  | 22,405 |
Corporate securities |  |  | (4,400 | ) |  |  | 377,924 |  |  |  | (1,206 | ) |  |  | 66,783 |  |  |  | (5,606 | ) |  |  | 444,707 |
Municipal securities |  |  | (1,746 | ) |  |  | 176,509 |  |  |  | (99 | ) |  |  | 15,287 |  |  |  | (1,845 | ) |  |  | 191,796 |
Other |  |  | (341 | ) |  |  | 15,259 |  |  |  | (303 | ) |  |  | 7,553 |  |  |  | (644 | ) |  |  | 22,812 |
Total |  | $ | (6,633 | ) |  | $ | 590,765 |  |  | $ | (2,130 | ) |  | $ | 97,912 |  |  | $ | (8,763 | ) |  | $ | 688,677 |

12

|  | As of December 26, 2020 |
|  | Less than 12 Consecutive Months |  |  | 12 Consecutive Months or Longer |  |  | Total |
|  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |
U.S. Treasury securities |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Agency securities |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Mortgage-backed securities |  |  | (1,849 | ) |  |  | 85,688 |  |  |  | (74 | ) |  |  | 2,122 |  |  |  | (1,923 | ) |  |  | 87,810 |
Corporate securities |  |  | (1,065 | ) |  |  | 199,187 |  |  |  | (572 | ) |  |  | 8,625 |  |  |  | (1,637 | ) |  |  | 207,812 |
Municipal securities |  |  | (223 | ) |  |  | 50,403 |  |  |  | — |  |  |  | — |  |  |  | (223 | ) |  |  | 50,403 |
Other |  |  | (726 | ) |  |  | 22,600 |  |  |  | (330 | ) |  |  | 3,426 |  |  |  | (1,056 | ) |  |  | 26,026 |
Total |  | $ | (3,863 | ) |  | $ | 357,878 |  |  | $ | (976 | ) |  | $ | 14,173 |  |  | $ | (4,839 | ) |  | $ | 372,051 |

As of September 25, 2021 and December 26, 2020, the Company had no t recognized an allowance for credit losses on any securities in an unrealized loss position.

The Company has no t recorded an allowance for credit losses and charge to Other income for the unrealized losses on agency, mortgage-backed, corporate, municipal, and other securities presented above because we do not consider the declines in fair value to have resulted from credit losses. We have not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. The Company does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity.

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

|  | Amortized Cost |  |  | Fair Value |
Due in one year or less |  | $ | 342,809 |  |  | $ | 345,214 |
Due after one year through five years |  |  | 1,174,790 |  |  |  | 1,183,662 |
Due after five years through ten years |  |  | 67,278 |  |  |  | 67,038 |
Due after ten years |  |  | 3,156 |  |  |  | 2,889 |
|  | $ | 1,588,033 |  |  | $ | 1,598,803 |

9. Accumulated Other Comprehensive Income

The following provides required disclosure of changes in accumulated other comprehensive income (AOCI) balances by component for the 13-week and 39-week periods ended September 25, 2021:

|  | 13-Weeks Ended September 25, 2021 |
|  | Foreign currency translation adjustment |  |  | Net gains (losses) on available-for-sale securities |  |  | Total |
Balance - beginning of period |  | $ | 155,342 |  |  | $ | 11,285 |  |  | $ | 166,627 |
Other comprehensive income before reclassification, net of income tax benefit of $588 |  |  | (8,702 | ) |  |  | (3,051 | ) |  |  | (11,753 | )
Amounts reclassified from Accumulated other comprehensive income to Other income, net of income tax expense of $21 included in Income tax provision |  |  | — |  |  |  | (118 | ) |  |  | (118 | )
Net current-period other comprehensive income |  |  | (8,702 | ) |  |  | (3,169 | ) |  |  | (11,871 | )
Balance - end of period |  | $ | 146,640 |  |  | $ | 8,116 |  |  | $ | 154,756 |

13

|  | 39-Weeks Ended September 25, 2021 |
|  | Foreign currency translation adjustment |  |  | Net gains (losses) on available-for-sale securities |  |  | Total |
Balance - beginning of period |  | $ | 162,953 |  |  | $ | 20,474 |  |  | $ | 183,427 |
Other comprehensive income before reclassification, net of income tax benefit of $2,864 |  |  | (16,313 | ) |  |  | (11,900 | ) |  |  | (28,213 | )
Amounts reclassified from Accumulated other comprehensive income to Other income, net of income tax expense of $54 included in Income tax provision |  |  | — |  |  |  | (458 | ) |  |  | (458 | )
Net current-period other comprehensive income |  |  | (16,313 | ) |  |  | (12,358 | ) |  |  | (28,671 | )
Balance - end of period |  | $ | 146,640 |  |  | $ | 8,116 |  |  | $ | 154,756 |

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. Note 4 also contains disaggregated revenue information of the six major product categories identified by the Company – fitness, outdoor, aviation, marine, consumer auto, and auto OEM.

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

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Point in time |  | $ | 1,132,339 |  |  | $ | 1,060,718 |  |  | $ | 3,429,686 |  |  | $ | 2,696,593 |
Over time |  |  | 59,634 |  |  |  | 48,476 |  |  |  | 161,520 |  |  |  | 138,575 |
Net sales |  | $ | 1,191,973 |  |  | $ | 1,109,194 |  |  | $ | 3,591,206 |  |  | $ | 2,835,168 |

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-week period ended September 25, 2021 are presented below:

|  | 39-Weeks Ended |
|  | September 25, 2021 |
|  | Deferred Revenue (1) |  |  | Deferred Costs (2) |
Balance, beginning of period |  | $ | 136,799 |  |  | $ | 36,655 |
Deferrals in period |  |  | 154,513 |  |  |  | 11,488 |
Recognition of deferrals in period |  |  | (161,520 | ) |  |  | (19,062 | )
Balance, end of period |  | $ | 129,792 |  |  | $ | 29,081 |

(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 $161,520 of deferred revenue recognized in the 39-week period ended September 25, 2021, $68,121 was deferred as of the beginning of the period. Approximately two-thirds of the $129,792 of deferred revenue at the end of the period, September 25, 2021, is recognized ratably over a period of three years or less.

14

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

The discussion set forth below, as well as other portions of this Quarterly Report, contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of the Company’s assumptions prove incorrect or should unanticipated circumstances arise, actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Part II, Item 1A of this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020. This report has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) in Washington, D.C. and can be obtained by contacting the SEC’s public reference operations or obtaining it through the SEC’s website at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020.

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

Company Overview

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

Business Environment Update

The COVID-19 pandemic has created disruption and uncertainty in the global economy and has affected our business, suppliers, and customers. The pandemic had an unfavorable impact on net sales and profitability of our aviation and auto segments during 2020, however, both segments have trended positively during 2021. We believe net sales and profitability of our fitness, outdoor, and marine segments have benefited from a shift in consumer behavior and demand toward the products these segments offer, which has continued during 2021.

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

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

Results of Operations

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

15

|  | 13-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |  |  | September 25, 2021 |  |  | September 26, 2020 |
Net sales |  |  | 100 | % |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
Cost of goods sold |  |  | 42 | % |  |  | 40 | % |  |  | 41 | % |  |  | 40 | %
Gross profit |  |  | 58 | % |  |  | 60 | % |  |  | 59 | % |  |  | 60 | %
Advertising |  |  | 3 | % |  |  | 3 | % |  |  | 3 | % |  |  | 3 | %
Selling, general and administrative |  |  | 14 | % |  |  | 13 | % |  |  | 14 | % |  |  | 15 | %
Research and development |  |  | 18 | % |  |  | 16 | % |  |  | 17 | % |  |  | 18 | %
Total operating expenses |  |  | 35 | % |  |  | 32 | % |  |  | 34 | % |  |  | 36 | %
Operating income |  |  | 24 | % |  |  | 29 | % |  |  | 25 | % |  |  | 24 | %
Other income (expense) |  |  | (1 | )% |  |  | 2 | % |  |  | (0 | )% |  |  | 1 | %
Income before income taxes |  |  | 23 | % |  |  | 30 | % |  |  | 25 | % |  |  | 25 | %
Income tax provision |  |  | 1 | % |  |  | 2 | % |  |  | 3 | % |  |  | 2 | %
Net income |  |  | 22 | % |  |  | 28 | % |  |  | 22 | % |  |  | 23 | %

The segment table located in Note 4 to the Condensed Consolidated Financial Statements sets forth the Company’s results of operations including net sales, gross profit, and operating income for each of the Company’s five reported segments during the periods shown, as well as supplemental information for the consumer auto and auto OEM operating segments that management believes is useful. For each line item in the table, the total of the fitness, outdoor, aviation, marine, and auto segments’ amounts equals the amount in the Condensed Consolidated Statements of Income included in Item 1.

Comparison of 13-Weeks ended September 25, 2021 and September 26, 2020

Net Sales

Net Sales |  | 13-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 13-Weeks Ended September 26, 2020 |
Fitness |  | $ | 342,316 |  |  |  | 4 | % |  | $ | 328,446 |
Percentage of Total Net Sales |  |  | 29 | % |  |  |  |  |  | 29 | %
Outdoor |  |  | 323,856 |  |  |  | (3 | %) |  |  | 334,844 |
Percentage of Total Net Sales |  |  | 27 | % |  |  |  |  |  | 30 | %
Aviation |  |  | 180,165 |  |  |  | 19 | % |  |  | 151,112 |
Percentage of Total Net Sales |  |  | 15 | % |  |  |  |  |  | 14 | %
Marine |  |  | 207,534 |  |  |  | 25 | % |  |  | 165,437 |
Percentage of Total Net Sales |  |  | 17 | % |  |  |  |  |  | 15 | %
Auto |  |  | 138,102 |  |  |  | 7 | % |  |  | 129,355 |
Percentage of Total Net Sales |  |  | 12 | % |  |  |  |  |  | 12 | %
Consumer Auto |  |  | 82,914 |  |  |  | — | % |  |  | 82,659 |
Percentage of Total Net Sales |  |  | 7 | % |  |  |  |  |  | 8 | %
Auto OEM |  |  | 55,188 |  |  |  | 18 | % |  |  | 46,696 |
Percentage of Total Net Sales |  |  | 5 | % |  |  |  |  |  | 4 | %
Total |  | $ | 1,191,973 |  |  |  | 7 | % |  | $ | 1,109,194 |

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

The increase in fitness revenue was driven by sales growth in cycling and advanced wearables products. The increase in aviation revenue was driven by contributions from both OEM and aftermarket product categories. Marine revenue increased due to growth across multiple product categories, led by strong demand for our chartplotters. Auto revenue increased due to sales growth in auto OEM programs, while consumer auto revenue was relatively flat. Outdoor revenue decreased primarily due to the timing of product introductions in the prior year.

16

Gross Profit

Gross Profit |  | 13-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 13-Weeks Ended September 26, 2020 |
Fitness |  | $ | 183,028 |  |  |  | 3 | % |  | $ | 177,794 |
Percentage of Segment Net Sales |  |  | 53 | % |  |  |  |  |  | 54 | %
Outdoor |  |  | 210,522 |  |  |  | (6 | %) |  |  | 223,704 |
Percentage of Segment Net Sales |  |  | 65 | % |  |  |  |  |  | 67 | %
Aviation |  |  | 131,260 |  |  |  | 22 | % |  |  | 107,927 |
Percentage of Segment Net Sales |  |  | 73 | % |  |  |  |  |  | 71 | %
Marine |  |  | 116,152 |  |  |  | 16 | % |  |  | 100,423 |
Percentage of Segment Net Sales |  |  | 56 | % |  |  |  |  |  | 61 | %
Auto |  |  | 54,985 |  |  |  | (5 | %) |  |  | 58,135 |
Percentage of Segment Net Sales |  |  | 40 | % |  |  |  |  |  | 45 | %
Consumer Auto |  |  | 39,342 |  |  |  | (9 | %) |  |  | 43,319 |
Percentage of Segment Net Sales |  |  | 47 | % |  |  |  |  |  | 52 | %
Auto OEM |  |  | 15,643 |  |  |  | 6 | % |  |  | 14,816 |
Percentage of Segment Net Sales |  |  | 28 | % |  |  |  |  |  | 32 | %
Total |  | $ | 695,947 |  |  |  | 4 | % |  | $ | 667,983 |
Percentage of Total Net Sales |  |  | 58 | % |  |  |  |  |  | 60 | %

Gross profit dollars in the third quarter of 2021 increased 4%, primarily due to the increase in net sales compared to the year-ago quarter, as described above. Consolidated gross margin decreased 180 basis points when compared to the year-ago quarter, primarily due to higher freight costs.

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

Advertising Expense

Advertising |  | 13-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 13-Weeks Ended September 26, 2020 |
Fitness |  | $ | 15,109 |  |  |  | 12 | % |  | $ | 13,444 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Outdoor |  |  | 11,543 |  |  |  | (8 | %) |  |  | 12,607 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Aviation |  |  | 724 |  |  |  | 42 | % |  |  | 511 |
Percentage of Segment Net Sales |  |  | 0 | % |  |  |  |  |  | 0 | %
Marine |  |  | 5,787 |  |  |  | 40 | % |  |  | 4,121 |
Percentage of Segment Net Sales |  |  | 3 | % |  |  |  |  |  | 2 | %
Auto |  |  | 3,542 |  |  |  | 11 | % |  |  | 3,183 |
Percentage of Segment Net Sales |  |  | 3 | % |  |  |  |  |  | 2 | %
Consumer Auto |  |  | 3,489 |  |  |  | 10 | % |  |  | 3,178 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Auto OEM |  |  | 53 |  |  |  | 960 | % |  |  | 5 |
Percentage of Segment Net Sales |  |  | 0 | % |  |  |  |  |  | 0 | %
Total |  | $ | 36,705 |  |  |  | 8 | % |  | $ | 33,866 |
Percentage of Total Net Sales |  |  | 3 | % |  |  |  |  |  | 3 | %

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

17

Selling, General and Administrative Expense

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

Selling, general and administrative expense increased 14% in absolute dollars and was relatively flat as a percent of revenue compared to the year-ago quarter. The absolute dollar increase in the third quarter of 2021 was primarily attributable to increased personnel related expenses and information technology costs.

Research and Development Expense

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

Research and development expense as a percent of revenue increased 220 basis points when compared to the year-ago quarter and increased 22% in absolute dollars. The fitness, outdoor, and marine increases in absolute dollars and as a percent of revenue were primarily due to higher engineering personnel costs. The auto increase in absolute dollars and as a percent of revenue was primarily attributable to higher engineering personnel costs related to investments in certain auto OEM programs and a lower proportion of such costs being contractually reimbursable. The aviation decrease as a percent of revenue was primarily due to the increase in sales, as described above, and greater leverage of expenses.

18

Operating Income

Operating Income (Loss) |  | 13-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 13-Weeks Ended September 26, 2020 |
Fitness |  | $ | 77,788 |  |  |  | (11 | %) |  | $ | 87,083 |
Percentage of Segment Net Sales |  |  | 23 | % |  |  |  |  |  | 27 | %
Outdoor |  |  | 123,946 |  |  |  | (16 | %) |  |  | 147,477 |
Percentage of Segment Net Sales |  |  | 38 | % |  |  |  |  |  | 44 | %
Aviation |  |  | 51,296 |  |  |  | 79 | % |  |  | 28,597 |
Percentage of Segment Net Sales |  |  | 28 | % |  |  |  |  |  | 19 | %
Marine |  |  | 53,726 |  |  |  | 6 | % |  |  | 50,482 |
Percentage of Segment Net Sales |  |  | 26 | % |  |  |  |  |  | 31 | %
Auto |  |  | (24,086 | ) |  |  | (796 | %) |  |  | 3,462 |
Percentage of Segment Net Sales |  |  | (17 | %) |  |  |  |  |  | 3 | %
Consumer Auto |  |  | 11,305 |  |  |  | (38 | %) |  |  | 18,178 |
Percentage of Segment Net Sales |  |  | 14 | % |  |  |  |  |  | 22 | %
Auto OEM |  |  | (35,391 | ) |  |  | 140 | % |  |  | (14,716 | )
Percentage of Segment Net Sales |  |  | (64 | %) |  |  |  |  |  | (32 | %)
Total |  | $ | 282,670 |  |  |  | (11 | %) |  | $ | 317,101 |
Percentage of Total Net Sales |  |  | 24 | % |  |  |  |  |  | 29 | %

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

Other Income (Expense)

Other Income (Expense) |  | 13-Weeks Ended September 25, 2021 |  |  | 13-Weeks Ended September 26, 2020 |
Interest income |  | $ | 6,897 |  |  | $ | 7,777 |
Foreign currency (losses) gains |  |  | (15,014 | ) |  |  | 10,113 |
Other income |  |  | 833 |  |  |  | 1,726 |
Total |  | $ | (7,284 | ) |  | $ | 19,616 |

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

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

The $15.0 million currency loss recognized in the third quarter of 2021 was primarily due to the U.S. Dollar strengthening against the Euro, Polish Zloty, Australian Dollar, and British Pound Sterling and weakening against the Taiwan Dollar within the 13-week period ended September 25, 2021. During this period, the U.S. Dollar strengthened 1.8% against the Euro, 3.6% against the Polish Zloty, 3.8% against the Australian Dollar, and 1.4% against the British Pound Sterling, resulting in losses of $4.1 million, $3.0 million, $1.4 million, and $0.9 million, respectively, while the U.S. Dollar weakened 0.6% against the Taiwan Dollar, resulting in a loss of $2.7 million. The remaining net currency loss of $2.9 million was related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.

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

19

Income Tax Provision

The Company recorded income tax expense of $16.3 million in the 13-week period ended September 25, 2021, compared to income tax expense of $23.3 million in the 13-week period ended September 26, 2020. The effective tax rate was 5.9% in the third quarter of 2021, compared to 6.9% in the third quarter of 2020. The decrease was primarily due to the impact of return-to-provision adjustments associated with filing the U.S. tax return during the 13-week period ended September 25, 2021 compared to the year-ago quarter.

Net Income

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

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

Net Sales

Net Sales |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 1,063,642 |  |  |  | 26 | % |  | $ | 846,688 |
Percentage of Total Net Sales |  |  | 30 | % |  |  |  |  |  | 30 | %
Outdoor |  |  | 903,715 |  |  |  | 26 | % |  |  | 716,146 |
Percentage of Total Net Sales |  |  | 25 | % |  |  |  |  |  | 25 | %
Aviation |  |  | 534,886 |  |  |  | 15 | % |  |  | 465,850 |
Percentage of Total Net Sales |  |  | 15 | % |  |  |  |  |  | 17 | %
Marine |  |  | 678,698 |  |  |  | 40 | % |  |  | 486,269 |
Percentage of Total Net Sales |  |  | 19 | % |  |  |  |  |  | 17 | %
Auto |  |  | 410,265 |  |  |  | 28 | % |  |  | 320,215 |
Percentage of Total Net Sales |  |  | 11 | % |  |  |  |  |  | 11 | %
Consumer Auto |  |  | 231,587 |  |  |  | 18 | % |  |  | 196,942 |
Percentage of Total Net Sales |  |  | 6 | % |  |  |  |  |  | 7 | %
Auto OEM |  |  | 178,678 |  |  |  | 45 | % |  |  | 123,273 |
Percentage of Total Net Sales |  |  | 5 | % |  |  |  |  |  | 4 | %
Total |  | $ | 3,591,206 |  |  |  | 27 | % |  | $ | 2,835,168 |

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

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

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

20

Gross Profit

Gross Profit |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 581,765 |  |  |  | 30 | % |  | $ | 446,936 |
Percentage of Segment Net Sales |  |  | 55 | % |  |  |  |  |  | 53 | %
Outdoor |  |  | 590,355 |  |  |  | 26 | % |  |  | 469,150 |
Percentage of Segment Net Sales |  |  | 65 | % |  |  |  |  |  | 66 | %
Aviation |  |  | 389,376 |  |  |  | 15 | % |  |  | 338,770 |
Percentage of Segment Net Sales |  |  | 73 | % |  |  |  |  |  | 73 | %
Marine |  |  | 390,141 |  |  |  | 35 | % |  |  | 288,103 |
Percentage of Segment Net Sales |  |  | 57 | % |  |  |  |  |  | 59 | %
Auto |  |  | 166,717 |  |  |  | 13 | % |  |  | 147,393 |
Percentage of Segment Net Sales |  |  | 41 | % |  |  |  |  |  | 46 | %
Consumer Auto |  |  | 113,567 |  |  |  | 15 | % |  |  | 98,348 |
Percentage of Segment Net Sales |  |  | 49 | % |  |  |  |  |  | 50 | %
Auto OEM |  |  | 53,150 |  |  |  | 8 | % |  |  | 49,045 |
Percentage of Segment Net Sales |  |  | 30 | % |  |  |  |  |  | 40 | %
Total |  | $ | 2,118,354 |  |  |  | 25 | % |  | $ | 1,690,352 |
Percentage of Total Net Sales |  |  | 59 | % |  |  |  |  |  | 60 | %

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

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

Advertising Expense

Advertising |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 47,808 |  |  |  | 30 | % |  | $ | 36,802 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Outdoor |  |  | 32,684 |  |  |  | 17 | % |  |  | 28,006 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Aviation |  |  | 2,807 |  |  |  | 21 | % |  |  | 2,313 |
Percentage of Segment Net Sales |  |  | 1 | % |  |  |  |  |  | 0 | %
Marine |  |  | 18,547 |  |  |  | 18 | % |  |  | 15,733 |
Percentage of Segment Net Sales |  |  | 3 | % |  |  |  |  |  | 3 | %
Auto |  |  | 8,859 |  |  |  | 23 | % |  |  | 7,177 |
Percentage of Segment Net Sales |  |  | 2 | % |  |  |  |  |  | 2 | %
Consumer Auto |  |  | 8,795 |  |  |  | 26 | % |  |  | 6,988 |
Percentage of Segment Net Sales |  |  | 4 | % |  |  |  |  |  | 4 | %
Auto OEM |  |  | 64 |  |  |  | (66 | %) |  |  | 189 |
Percentage of Segment Net Sales |  |  | 0 | % |  |  |  |  |  | 0 | %
Total |  | $ | 110,705 |  |  |  | 23 | % |  | $ | 90,031 |
Percentage of Total Net Sales |  |  | 3 | % |  |  |  |  |  | 3 | %

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

21

Selling, General and Administrative Expense

Selling, General & Admin. Expenses |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 159,947 |  |  |  | 22 | % |  | $ | 131,540 |
Percentage of Segment Net Sales |  |  | 15 | % |  |  |  |  |  | 16 | %
Outdoor |  |  | 125,378 |  |  |  | 23 | % |  |  | 102,232 |
Percentage of Segment Net Sales |  |  | 14 | % |  |  |  |  |  | 14 | %
Aviation |  |  | 57,165 |  |  |  | -1 | % |  |  | 57,871 |
Percentage of Segment Net Sales |  |  | 11 | % |  |  |  |  |  | 12 | %
Marine |  |  | 83,036 |  |  |  | 18 | % |  |  | 70,437 |
Percentage of Segment Net Sales |  |  | 12 | % |  |  |  |  |  | 14 | %
Auto |  |  | 60,370 |  |  |  | 23 | % |  |  | 49,255 |
Percentage of Segment Net Sales |  |  | 15 | % |  |  |  |  |  | 15 | %
Consumer Auto |  |  | 29,231 |  |  |  | (4 | %) |  |  | 30,334 |
Percentage of Segment Net Sales |  |  | 13 | % |  |  |  |  |  | 15 | %
Auto OEM |  |  | 31,139 |  |  |  | 65 | % |  |  | 18,921 |
Percentage of Segment Net Sales |  |  | 17 | % |  |  |  |  |  | 15 | %
Total |  | $ | 485,896 |  |  |  | 18 | % |  | $ | 411,335 |
Percentage of Total Net Sales |  |  | 14 | % |  |  |  |  |  | 15 | %

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

Research and Development Expense

Research & Development |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 105,521 |  |  |  | 19 | % |  | $ | 88,519 |
Percentage of Segment Net Sales |  |  | 10 | % |  |  |  |  |  | 10 | %
Outdoor |  |  | 93,262 |  |  |  | 21 | % |  |  | 76,855 |
Percentage of Segment Net Sales |  |  | 10 | % |  |  |  |  |  | 11 | %
Aviation |  |  | 182,430 |  |  |  | 4 | % |  |  | 175,103 |
Percentage of Segment Net Sales |  |  | 34 | % |  |  |  |  |  | 38 | %
Marine |  |  | 83,516 |  |  |  | 23 | % |  |  | 67,738 |
Percentage of Segment Net Sales |  |  | 12 | % |  |  |  |  |  | 14 | %
Auto |  |  | 153,524 |  |  |  | 57 | % |  |  | 97,798 |
Percentage of Segment Net Sales |  |  | 37 | % |  |  |  |  |  | 31 | %
Consumer Auto |  |  | 40,153 |  |  |  | 13 | % |  |  | 35,398 |
Percentage of Segment Net Sales |  |  | 17 | % |  |  |  |  |  | 18 | %
Auto OEM |  |  | 113,371 |  |  |  | 82 | % |  |  | 62,400 |
Percentage of Segment Net Sales |  |  | 63 | % |  |  |  |  |  | 51 | %
Total |  | $ | 618,253 |  |  |  | 22 | % |  | $ | 506,013 |
Percentage of Total Net Sales |  |  | 17 | % |  |  |  |  |  | 18 | %

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

22

Operating Income

Operating Income |  | 39-Weeks Ended September 25, 2021 |  |  | Year-over-Year Change |  |  | 39-Weeks Ended September 26, 2020 |
Fitness |  | $ | 268,489 |  |  |  | 41 | % |  | $ | 190,075 |
Percentage of Segment Net Sales |  |  | 25 | % |  |  |  |  |  | 22 | %
Outdoor |  |  | 339,031 |  |  |  | 29 | % |  |  | 262,057 |
Percentage of Segment Net Sales |  |  | 38 | % |  |  |  |  |  | 37 | %
Aviation |  |  | 146,974 |  |  |  | 42 | % |  |  | 103,483 |
Percentage of Segment Net Sales |  |  | 27 | % |  |  |  |  |  | 22 | %
Marine |  |  | 205,042 |  |  |  | 53 | % |  |  | 134,195 |
Percentage of Segment Net Sales |  |  | 30 | % |  |  |  |  |  | 28 | %
Auto |  |  | (56,036 | ) |  |  | 720 | % |  |  | (6,837 | )
Percentage of Segment Net Sales |  |  | (14 | %) |  |  |  |  |  | (2 | %)
Consumer Auto |  |  | 35,388 |  |  |  | 38 | % |  |  | 25,628 |
Percentage of Segment Net Sales |  |  | 15 | % |  |  |  |  |  | 13 | %
Auto OEM |  |  | (91,424 | ) |  |  | 182 | % |  |  | (32,465 | )
Percentage of Segment Net Sales |  |  | (51 | %) |  |  |  |  |  | (26 | %)
Total |  | $ | 903,500 |  |  |  | 32 | % |  | $ | 682,973 |
Percentage of Total Net Sales |  |  | 25 | % |  |  |  |  |  | 24 | %

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

Other Income (Expense)

Other Income (Expense) |  | 39-Weeks Ended September 25, 2021 |  |  | 39-Weeks Ended September 26, 2020 |
Interest income |  | $ | 21,568 |  |  | $ | 30,258 |
Foreign currency losses |  |  | (30,621 | ) |  |  | (9,802 | )
Other Income |  |  | 3,511 |  |  |  | 8,515 |
Total |  | $ | (5,542 | ) |  | $ | 28,971 |

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

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

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

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

23

Income Tax Provision

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

Net Income

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

Liquidity and Capital Resources

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

It is management’s goal to invest the on-hand cash in accordance with the investment policy, which has been approved by the Company’s Board of Directors. The investment policy’s primary purpose is to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest rate returns on cash and investments during the first three quarters of 2021 and 2020 were approximately 0.9% and 1.5%, 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

|  | 39-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |
Net cash provided by operating activities |  | $ | 843,465 |  |  | $ | 699,449 |

The $144.0 million increase in cash provided by operating activities during the first three quarters of 2021 compared to the first three quarters of 2020 was due to an increase in net income of $137.3 million and an increase in other non-cash adjustments to net income of $55.6 million. These increases were partially offset by an increase in cash used in working capital of $48.9 million (which included an increase of $301.3 million in cash paid for inventory and an increase of $14.1 million in net cash used in other activities, partially offset by an increase of $137.6 million in net receipts of accounts receivable, a decrease of $69.5 million net cash used in accounts payable, and a decrease of $59.4 million in net cash used for income taxes).

Investing Activities

|  | 39-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |
Net cash used in investing activities |  | $ | (311,706 | ) |  | $ | (179,331 | )

The $132.4 million increase in cash used in investing activities during the first three quarters of 2021 compared to the first three quarters of 2020 was primarily due to an increase in net purchases of marketable securities of $212.5 million and an increase in net purchases of property and equipment of $52.8 million, partially offset by a decrease in cash payments for acquisitions of $132.8 million.

Financing Activities

|  | 39-Weeks Ended |  |  | 39-Weeks Ended |
|  | September 25, 2021 |  |  | September 26, 2020 |
Net cash used in financing activities |  | $ | (344,505 | ) |  | $ | (331,847 | )

24

The $12.7 million increase in cash used in financing activities during the first three quarters of 2021 compared to the first three quarters of 2020 was due to an increase in dividend payments of $28.6 million and an increase in purchases of treasury stock related to equity awards of $4.6 million, partially offset by an increase in proceeds from the issuance of treasury stock of $20.5 million.

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 Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The presentation of these financial statements requires Garmin 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 26, 2020. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 39-week periods ended September 25, 2021.

Item 3. Quantitative and Qualitat ive Disclosures About Market Risk

There are numerous market risks that can affect our future business, financial condition and results of operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 26, 2020. There have been no material changes during the 13-week and 39-week periods ended September 25, 2021 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of September 25, 2021, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of September 25, 2021 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended September 25, 2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

25

Part II - Othe r Information

Item 1. Legal Proceedings

In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions, and complaints, including matters involving patent infringement, other intellectual property, product liability, customer claims and various other risks. It is not possible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in any of these legal matters, or if not, what the impact might be. However, the Company’s management does not expect that the results in any of these legal proceedings will have a material adverse effect on the Company’s results of operations, financial position or cash flows. For additional information, see Note 6 – Commitments and Contingencies in the above Condensed Consolidated Financial Statements and Part I, Item 3, “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020.

Item 1A. Ri sk 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 26, 2020, as supplemented by the risk factor set forth below. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties, including those not currently known to us or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition and/or operating results.

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

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

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

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

26

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

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

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

Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds

Not applicable

Item 3. Defaults Upo n Senior Securities

None

Item 4. Mine Saf ety Disclosures

Not applicable

Item 5. Other Information

Not applicable

27

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 – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH |  | Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase
Exhibit 101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase
Exhibit 101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

28

SIGNA TURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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

Dated: October 27, 2021

29