2019 ANNUAL REPORT
LETTER FROM THE CEO
DEAR SHAREHOLDER,
In 2019 Garmin celebrated its 30th anniversary. Major milestones such as this are an opportunity to
reflect on where we are, how we got here and where we are going.
Garmin has grown from a start-up company with a single product to a global, multimarket active
lifestyle brand. The breadth and depth of our product lines, the diversity of our market segments and
the strength of our vertically integrated business model are unique qualities that set Garmin apart
and have contributed to our long-term success. I would like to thank our associates, customers,
suppliers and investors for trusting in a small company with big aspirations to create superior
products that make a difference in our customers’ lives.
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previous records. Our success was driven by an exciting lineup of products, which led to operating
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of Directors is proposing a dividend of $2.44 per share, an increase of 7%, which is one of several
items we are asking shareholders to approve at our 2020 annual meeting.
Throughout the year, we launched new, innovative products and entered new product categories such
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adventure watch, featuring passive solar charging technology. We unveiled Autoland, representing
game-changing new safety technology for the general aviation market. Our inReach products
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changing potential tragedies into happy reunions for thousands of customers.
We also received broad recognition as a good corporate citizen. Forbes ranked Garmin No. 5 on its
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row by Aviation International News.
I am proud of our accomplishments in 2019 and look forward to a new decade with all its challenges
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I want to thank you, our shareholders, for your interest in Garmin, and we look forward to a successful
future together.
CLIFF PEMBLE PRESIDENT AND CEO
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FINANCIAL REVIEW
FINANCIAL REVIEW
The selected financial data below and elsewhere in this Annual Report should be read
The selected financial data below and elsewhere in this Annual Report should be read
in conjunction with the Consolidated Financial Statements and notes thereto included in
in conjunction with the Consolidated Financial Statements and notes thereto included in
our Annual Report on Form 10-K, which is included with this Annual Report.
our Annual Report on Form 10-K, which is included with this Annual Report.
$2,820
$2,820
$3,046
$3,046
$3,122
$3,122
$3,347
$3,347
$3,758
$3,758
$550
$550
$633
$633
$684
$684
$778
$778
$946
$946
2015
2015
2016
2016
2017
2017
2018
2018
2019
2019
REVENUE
REVENUE
OPERATING INCOME
OPERATING INCOME
(IN MILLIONS)
(IN MILLIONS)
CONSOLIDATED STATEMENTS
CONSOLIDATED STATEMENTS
OF INCOME DATA:
OF INCOME DATA:
2015
2015
2016
2016
YEARS ENDED1
YEARS ENDED1
2017
2017
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2018
2018
2019
2019
REVENUE
REVENUE
GROSS PROFIT
GROSS PROFIT
OPERATING INCOME
OPERATING INCOME
NET INCOME2
NET INCOME2
NET INCOME PER SHARE:
NET INCOME PER SHARE:
DILUTED
DILUTED
WEIGHTED AVERAGE COMMON
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
SHARES OUTSTANDING:
DILUTED
DILUTED
DIVIDENDS DECLARED PER SHARE3
DIVIDENDS DECLARED PER SHARE3
$ 2,820,270
$ 2,820,270
1,538,704
1,538,704
549,581
549,581
456,227
456,227
$ 3,045,797
$ 3,045,797
1,688,525
1,688,525
632,864
632,864
517,724
517,724
$ 3,121,560
$ 3,121,560
1,797,941
1,797,941
683,637
683,637
709,007
709,007
$ 3,347,444
$ 3,347,444
1,979,719
1,979,719
778,343
778,343
694,080
694,080
$ 3,757,505
$ 3,757,505
2,233,976
2,233,976
945,586
945,586
952,486
952,486
$ 2.39
$2.39
$ 2.73
$ 2.73
$ 3.76
$ 3.76
$ 3.66
$ 3.66
$ 4.99
$ 4.99
191,107
191,107
$ 2.04
$ 2.04
189,343
189,343
$ 2.04
$ 2.04
188,732
188,732
189,734
189,734
190,899
190,899
$ 2.04
$ 2.04
$ 2.12
$ 2.12
$ 2.28
$ 2.28
BALANCE SHEET DATA (AT END OF PERIOD):
BALANCE SHEET DATA (AT END OF PERIOD):
CASH, CASH EQUIVALENTS
CASH, CASH EQUIVALENTS
AND MARKETABLE SECURITIES
AND MARKETABLE SECURITIES
TOTAL ASSETS
TOTAL ASSETS
TOTAL DEBT
TOTAL DEBT
TOTAL STOCKHOLDERS' EQUITY
TOTAL STOCKHOLDERS' EQUITY
$ 2,391,618
$ 2,391,618
$ 2,327,120
$ 2,327,120
$ 2,313,208
$ 2,313,208
$ 2,714,844
$ 2,714,844
$ 2,609,505
$ 2,609,505
4,478,529
4,478,529
-
-
3,373,734
3,373,734
4,484,549
4,484,549
-
-
3,453,259
3,453,259
4,948,289
4,948,289
-
-
3,852,419
3,852,419
5,382,858
5,382,858
-
-
4,162,974
4,162,974
6,166,799
6,166,799
-
-
4,793,496
4,793,496
1 OUR FISCAL YEAR-END IS THE LAST SATURDAY OF THE CALENDAR YEAR AND DOES NOT ALWAYS FALL ON DEC. 31.
1 OUR FISCAL YEAR-END IS THE L AST SATURDAY OF THE CALENDAR YEAR AND DOES NOT ALWAYS FALL ON DEC. 31.
ALL YEARS PRESENTED CONTAIN 52 WEEKS EXCLUDING FISCAL 2016, WHICH INCLUDES 53 WEEKS.
ALL YEARS PRESENTED CONTAIN 52 WEEKS EXCLUDING FISCAL 2016, WHICH INCLUDES 53 WEEKS.
2 THE FOLLOWING SIGNIFICANT ITEMS ARE INCLUDED IN THE NET INCOME LINE THAT MAY AFFECT COMPARABILIT Y:
2 THE FOLLOWING SIGNIFICANT ITEMS ARE INCLUDED IN THE NET INCOME LINE THAT MAY AFFECT COMPARABILITY:
-IN 2019 A $118.0 MILLION INCOME TA X BENEFIT WAS RECOGNIZED RESULTING FROM THE REVALUATION AND STEP-UP OF CERTAIN
-IN 2019 A $118.0 MILLION INCOME TAX BENEFIT WAS RECOGNIZED RESULTING FROM THE REVALUATION AND STEP-UP OF CERTAIN
SWITZERL AND TA X ASSETS AS A RESULT OF THE ENACTMENT OF SWITZERL AND FEDERAL AND SCHAFFHAUSEN CANTONAL TA X REFORM AND
SWITZERLAND TAX ASSETS AS A RESULT OF THE ENACTMENT OF SWITZERLAND FEDERAL AND SCHAFFHAUSEN CANTONAL TAX REFORM AND
RELATED TRANSITIONAL MEASURES.
REL ATED TRANSITIONAL MEASURES.
-IN 2017 A $180.0 MILLION INCOME TAX BENEFIT WAS RECOGNIZED, PRIMARILY RELATED TO THE REVALUATION OF CERTAIN SWITZERLAND
-IN 2017 A $180.0 MILLION INCOME TA X BENEFIT WAS RECOGNIZED, PRIMARILY REL ATED TO THE REVALUATION OF CERTAIN SWITZERL AND
DEFERRED TAX ASSETS RESULTING FROM THE COMPANY'S ELECTION TO ALIGN SWITZERLAND CORPORATE TAX POSITIONS WITH GLOBAL TAX
DEFERRED TA X ASSETS RESULTING FROM THE COMPANY'S ELECTION TO ALIGN SWITZERL AND CORPORATE TA X POSITIONS WITH GLOBAL TA X
INITIATIVES, PARTIALLY OFFSET BY $22.6 MILLION OF INCOME TA X EXPENSE DUE TO THE EXPIRATION OF CERTAIN SHARE-BASED AWARDS.
INITIATIVES, PARTIALLY OFFSET BY $22.6 MILLION OF INCOME TAX EXPENSE DUE TO THE EXPIRATION OF CERTAIN SHARE-BASED AWARDS.
3 DIVIDENDS DECL ARED PER SHARE REFERS TO THE CASH DIVIDEND PER SHARE THAT HAS BEEN APPROVED BY SHAREHOLDERS IN THE GIVEN FISCAL YEAR.
3 DIVIDENDS DECLARED PER SHARE REFERS TO THE CASH DIVIDEND PER SHARE THAT HAS BEEN APPROVED BY SHAREHOLDERS IN THE GIVEN FISCAL YEAR.
SEE NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, DIVIDENDS IN THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
SEE NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, DIVIDENDS IN THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR
ADDITIONAL DETAIL.
ADDITIONAL DETAIL.
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REVENUE & OPERATING INCOME
BY SEGMENT
2019 REVENUE
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2019 OPERATING INCOME
(cid:51)(cid:40)(cid:53)(cid:38)(cid:40)(cid:49)(cid:55)(cid:3)(cid:50)(cid:41)(cid:3)(cid:55)(cid:50)(cid:55)(cid:36)(cid:47)
28
24
13
20
15
20
12
6
27
35
(cid:41)(cid:44)(cid:55)(cid:49)(cid:40)(cid:54)(cid:54)
OUTDOOR
(cid:36)(cid:57)(cid:44)(cid:36)(cid:55)(cid:44)(cid:50)(cid:49)
AUTO
(cid:48)(cid:36)(cid:53)(cid:44)(cid:49)(cid:40)
FITNESS
$1,048
$858
$762
OUTDOOR
$918
$810
$699
$147
$182
$192
$250
$291
$334
2017
2018
2019
2017
2018
2019
AVIATION
AUTO
MARINE
$735
$785
$603
$501
$154
$205
$253
2017
2018
2019
$634
$548
$83
2017
$38
2018
$57
2019
(cid:53)(cid:40)(cid:57)(cid:40)(cid:49)(cid:56)(cid:40)
(cid:50)(cid:51)(cid:40)(cid:53)(cid:36)(cid:55)(cid:44)(cid:49)(cid:42)(cid:3)(cid:44)(cid:49)(cid:38)(cid:50)(cid:48)(cid:40)
(IN MILLIONS)
$442
$509
$374
$50
$63
$110
2017
2018
2019
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4/1/20 3:14 PM
2019
10-K
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(cid:3)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[(cid:1409)(cid:1409)] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 28, 2019
or
[(cid:1407)(cid:1407)]
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 registrant as specified in its charter)
Switzerland
(State or other jurisdiction
of incorporation or organization)
Mühlentalstrasse 2
8200 Schaffhausen
Switzerland
(Address of principal executive offices)
98-0229227
(I.R.S. Employer Identification No.)
N/A
(Zip Code)
Registrant’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
(Title of each class)
GRMN
(Trading Symbol)
The Nasdaq Stock Market, LLC
(Name of each exchange on which registered)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [(cid:1408)(cid:1408)] NO [(cid:1407)]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES [(cid:1407)] NO [(cid:1408)(cid:1408)]
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES [(cid:1408)(cid:1408)] NO [(cid:1407)]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations
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 [(cid:1408)(cid:1408)] NO [(cid:1407)]
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(cid:3)
Non-accelerated Filer(cid:3)
Emerging growth company
[(cid:1408)(cid:1408)](cid:3)
[(cid:1407)](cid:3)
[(cid:1407)](cid:3)
Accelerated Filer(cid:3)
Smaller reporting company(cid:3)
[(cid:1407)](cid:3)
[(cid:1407)](cid:3)
(cid:3)
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.(cid:1407)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [(cid:1407)] NO [(cid:1408)(cid:1408)]
Aggregate market value of the common shares held by non-affiliates of the registrant as of June 29, 2019 (based on the closing price of the registrant's common
shares on the Nasdaq Stock Market for June 28, 2019) was approximately $11,181,000,000.
Number of shares outstanding of the registrant’s common shares as of February 14, 2020:
Documents incorporated by reference:
Portions of the following document are incorporated herein by reference into Part III of the Form 10-K as indicated:
Registered Shares, CHF 0.10 par value – 190,687,357 (excluding treasury shares)
Document
Part of Form 10-K into
which Incorporated
Company's Definitive Proxy Statement for the 2020 Annual Meeting of Shareholders which will be filed no later than 120 days
after December 28, 2019.
Part III
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Garmin Ltd.
2019 Form 10-K Annual Report
Table of Contents
Cautionary Statement With Respect To Forward-Looking Comments
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3.
Item 4. Mine Safety Disclosures
Information about our Executive Officers(cid:3)
Legal Proceedings
Part I
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
Signatures
Statutory Financial Statements
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4
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30
30
31
31
31
33
35
37
47
49
88
88
90
91
91
92
92
92
93
98
100
S-1
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CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING COMMENTS
The discussions set forth in this Annual Report on Form 10-K contain statements concerning potential future
events. Such forward-looking statements are based upon assumptions by the Company’s management, as of the
date of this Annual Report, including assumptions about risks and uncertainties faced by the Company. In addition,
management may make forward-looking statements orally or in other writings, including, but not limited to, in press
releases, in the annual report to shareholders and in the Company’s other filings with the Securities and Exchange
Commission. 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. Forward-looking statements include any
discussion of the trends and other factors that drive our business and future results in “Item 7. Management’s
Discussion and Analysis of Financial Conditions and Results of Operations.” Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of their date. If any of management’s
assumptions prove incorrect or should unanticipated circumstances arise, the Company’s 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 under Item 1A “Risk
Factors.” Readers are strongly encouraged to consider those factors when evaluating any forward-looking
statements concerning the Company. Except as may be required by law, the Company does not undertake to
update any forward-looking statements in this Annual Report to reflect future events or developments.
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Item 1.
Business
Part I
This discussion of the business of Garmin Ltd. ("Garmin" or the "Company") should be read in conjunction
with, and is qualified by reference to, “Management's Discussion and Analysis of Financial Condition and Results
of Operations” under Item 7 herein and the information set forth in response to Item 101 of Regulation S-K in such
Item 7 is incorporated herein by reference in partial response to this Item 1. Garmin has identified five reportable
segments for external reporting purposes: auto, aviation, fitness, marine, and outdoor. There are two operating
segments (auto PND and auto OEM) that are not reported separately but are aggregated within the auto reportable
segment. The Company’s Chief Executive Officer, who has been identified as the Chief Operating Decision Maker
(CODM), allocates resources and assesses performance of each operating segment individually.
Garmin was incorporated in Switzerland on February 9, 2010 as successor to Garmin Ltd., a Cayman
Islands company (“Garmin Cayman”). Garmin Cayman was incorporated on July 24, 2000 as a holding company
for Garmin Corporation, a Taiwan corporation, in order to facilitate a public offering of Garmin Cayman shares in
the United States. On June 27, 2010, Garmin became the ultimate parent holding company of the Garmin group of
companies pursuant to a share exchange transaction effected for the purpose of changing the place of incorporation
of the ultimate parent holding company of the Garmin group from the Cayman Islands to Switzerland (the
“Redomestication”). Pursuant to the Redomestication, all issued and outstanding Garmin Cayman common
shares were transferred to Garmin and each common share, par value U.S. $0.005 per share, of Garmin Cayman
was exchanged for one registered share, par value 10 Swiss francs (CHF) per share, of Garmin. At the Company’s
Annual General Meeting on June 10, 2016, the Company’s shareholders approved the cancellation of 10,000,000
registered shares of the Company held by the Company (the “Formation Shares”) and the reduction in par value of
each share of the Company from CHF 10 to CHF 0.10 and the amendment of the Company’s Articles of Association
to effect a corresponding share capital reduction. This share cancellation has reduced authorized shares from
208,077,418 shares to 198,077,418 shares, with an incremental 99,038,709 conditional shares that may be issued
through the exercise of option rights, which are granted to Garmin employees or members of its Board of Directors.
Garmin owns, directly or indirectly, all of the operating companies in the Garmin group.
Garmin’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy
statement and Forms 3, 4 and 5 filed by Garmin’s directors and executive officers and all amendments to those
reports will be made available free of charge through the Investor Relations section of Garmin’s website
(http://www.garmin.com) as soon as reasonably practicable after such material is electronically filed with, or
furnished to, the Securities and Exchange Commission (the “SEC”). The SEC maintains a website
(http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC.
The reference to Garmin’s website address does not constitute incorporation by reference of the information
contained on this website, and such information should not be considered part of this report on Form 10-K.
Company Overview
For more than 30 years, Garmin Ltd. and subsidiaries (together, the “Company”) has pioneered new wireless
devices and applications that are designed for people who live an active lifestyle, many of which feature Global
Positioning System (GPS) navigation. Garmin serves five primary business units, including auto, aviation, fitness,
marine, and outdoor. We believe it is through these business units that Garmin is able to achieve synergies in raw
material purchases, manufacturing, distribution, research and development, and marketing efforts making for a
stronger, more effective company. Garmin designs, develops, manufactures, markets, and distributes a diverse family
of hand-held, wearable, portable, and fixed-mount GPS-enabled products and other navigation, communications,
sensor-based and information products. Since the inception of its business, Garmin has delivered over 220 million
products, which included more than 15 million products delivered during fiscal 2019.
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Products
Garmin offers a broad range of solutions across its reportable segments as outlined below. In general,
Garmin believes that its products are known for their value, high performance, ease of use, innovation, and
ergonomics.
Many of the Company’s products utilize Global Positioning System (GPS) and other global navigation
satellite systems (GNSS) receivers as a product feature that can be utilized in a variety of applications, including
navigation, global positioning and tracking. GPS is a United States owned satellite network constellation that
supports global positioning and navigation, providing precise geographic location and related data to both
commercial and government GPS receivers. Commercial access to GPS is provided free of charge.
In addition to GPS, other global navigation satellite systems (GNSS) utilized by Garmin products include
Japan’s MTSAT-based Satellite Augmentation System (MSAS), the European Geostationary Navigation Overlay
Service (EGNOS) aviation Safety of Life (SoL) service, the Russian Global Navigation Satellite System (GLONASS),
the European Union Galileo system, and the Chinese BeiDou Navigation Satellite System (BDS).
Some of Garmin’s products utilize a combination of global navigation satellite systems to improve
navigational fix, which results in improved accuracy.
On a subscription basis, certain Garmin products offer access to the Iridium satellite network, a
synchronized constellation of 66 low Earth orbit (LEO) satellites offering global data communication coverage.
Iridium’s use of a LEO constellation network with 66 satellites gives it the ability to span the entire globe, offering
100 percent coverage worldwide to enable satellite-based communication.
Fitness
Garmin offers a broad range of products designed for use in fitness and lifestyle activities. Garmin
currently offers the following product categories within the Fitness segment to consumers around the world:
(cid:120) Running and Multi-sport Watches: Garmin running and multi-sport watches are offered under the
Forerunner® product series. The Forerunner series offers GPS-enabled watches with features unique
to each model. Depending on model, features include wrist-based heart rate monitoring, wrist-based
pulse oximeter, music storage capabilities, and Garmin Pay™ contactless payment.
(cid:120) Cycling Products: Garmin cycling products include cycling computers, power meters, and safety and
awareness equipment. Additionally, Garmin offers Tacx® indoor training equipment, including smart
and basic trainers.
(cid:120) Activity Tracking and Smartwatch Devices: Garmin offers a wide range of activity tracking device and
smartwatch devices. The Garmin product offerings include basic activity trackers, activity tracking
fitness bands, GPS-enabled smartwatches, and fashion-forward hybrid smartwatches with analog style
displays. The activity tracking and smartwatch devices offered by Garmin are the vívomove® series,
vívoactive® series, vívosmart® series, vívofit® series, vívosport® series, and the Venu™. Each series
of activity tracking and smartwatch devices offered has unique features, all to enhance and promote
healthy and active lifestyles. Features of the activity tracking and smartwatch devices, depending on
the series and model, include Garmin Pay, music storage capabilities, and 24/7 health monitoring.
(cid:120) Garmin Connect and Garmin Connect Mobile: Garmin Connect™ and Garmin Connect™ Mobile are
web and mobile platforms where users can track and analyze their fitness, activities and workouts, and
wellness data. In addition, users can share their accomplishments, create training groups and group
challenges, and get feedback and encouragement from the Connect community.
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(cid:120) Connect IQ: The Connect IQ™ application development platform enables third-parties to create a
variety of experiences that run on a wide assortment of Garmin devices. Connect IQ provides
developers with an easy-to-use software development kit (SDK) to facilitate development efforts in
creating watch faces, applications, widgets, and data fields. These third-party applications are available
for download by Garmin users via their mobile phone or computer and run on their compatible Garmin
wearable, bike computer, golf device, or outdoor handheld.
Outdoor
Garmin offers a broad range of products designed for use in outdoor activities. Garmin currently offers the
following product categories within the Outdoor segment to consumers around the world:
(cid:120) Outdoor Handhelds: Garmin offers outdoor handhelds under the Oregon®, Rino®, Montana®, eTrex®,
GPSMAP®, Foretrex® and inReach® product lines. Handhelds range from basic waypoints navigation
capabilities to advanced color touchscreen devices offering barometric altimeter, 3-axis compass,
camera, preloaded maps, wi-fi and smartphone connectivity, two-way satellite communication and
other features. Each series of products is designed to serve various price points. Handhelds with
inReach include global satellite technology which, when combined with an active subscription, offers
2-way text messaging, S.O.S. capabilities and weather forecasts while anywhere in the world.
(cid:120)
Adventure Watches: Garmin adventure watches include the (cid:73)(cid:413)(cid:81)(cid:76)(cid:91)(cid:138)(cid:3)(cid:86)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:86)(cid:87)(cid:76)(cid:81)(cid:70)(cid:87)® series, tactix®
(cid:86)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:39)(cid:72)(cid:86)(cid:70)(cid:72)(cid:81)(cid:87)(cid:140)(cid:3) (cid:48)(cid:78)(cid:20)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:48)(cid:36)(cid:53)(cid:52)® collection. The fenix series offers premium multisport
smartwatches with features such as wrist-based heart rate monitoring, wrist-based pulse oximeter,
music storage capabilities, preloaded full-color topographical maps, Garmin Pay™, and solar charging,
depending on model. The Instinct series offers a rugged and reliable outdoor GPS smartwatch with
built-in sports apps, heart rate sensor, smart connectivity and wellness data. The tactix series provides
preloaded full-color topographical maps and tactical features inspired by military, law enforcement, and
police special operations. The Descent Mk1 is a watch style dive computer that offers divers GPS
navigation, multiple dive modes, and support for up to six gasses, The MARQ series is a collection of
six luxury smart tool watches with premium materials and features unique to each watch.
(cid:120) Golf Devices: Garmin golf devices are offered under the Approach® product line. The Approach series
includes handhelds, wearables, club sensors, and laser ranging devices. Over 41,000 preloaded
worldwide golf courses are available to be utilized on certain Garmin golf devices. Handheld and
wearable golf devices provide yardage distances to the front, back, and middle of the green.
(cid:120) Dog Tracking and Training Devices: Garmin offers dog tracking and training devices under the Astro®,
(cid:36)(cid:79)(cid:83)(cid:75)(cid:68)(cid:138)(cid:15)(cid:3)(cid:36)(cid:87)(cid:72)(cid:80)(cid:82)(cid:86)(cid:140)(cid:15)(cid:3)(cid:51)(cid:53)(cid:50)(cid:15)(cid:3)(cid:54)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:51)(cid:53)(cid:50)(cid:140)(cid:15)(cid:3)(cid:37)(cid:68)(cid:85)(cid:78)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:85)(cid:140)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:39)(cid:72)(cid:79)(cid:87)(cid:68)(cid:138)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:17)(cid:3)
Aviation
The Garmin aviation segment is a leading provider of solutions to aircraft manufacturers, existing aircraft
owners and operators, as well as government/defense customers and serves a range of aircraft including business
aviation, general aviation, experimental/light sport, helicopters, optionally piloted vehicles (OPV), unmanned aerial
(cid:89)(cid:72)(cid:75)(cid:76)(cid:70)(cid:79)(cid:72)(cid:86)(cid:3) (cid:11)(cid:56)(cid:36)(cid:57)(cid:12)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:80)(cid:82)(cid:85)(cid:72)(cid:17)(cid:3) (cid:42)(cid:68)(cid:85)(cid:80)(cid:76)(cid:81)(cid:182)(cid:86)(cid:3) (cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3) (cid:68)(cid:88)(cid:87)(cid:82)(cid:81)(cid:82)(cid:80)(cid:82)(cid:88)(cid:86)(cid:3) (cid:73)(cid:79)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3) (cid:86)(cid:82)(cid:79)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:73)(cid:79)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3) (cid:71)(cid:76)(cid:86)(cid:83)(cid:79)(cid:68)(cid:92)(cid:86)(cid:15)(cid:3) (cid:81)(cid:68)(cid:89)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)
communication, flight control, hazard avoidance, weather radar, radar altimeter, datalink weather receivers and
services, engine information systems, traffic collision avoidance systems, terrain awareness and warning systems
(TAWS), controller-pilot data link (CPDLC), an expansive suite of automatic dependent surveillance broadcast
(ADS-B) solutions, in-cockpit and cloud connectivity, wearables, portables, apps, training, simulation, flight
planning/filing, premium trip services, aviation data services as well as other solutions that are known for innovation,
reliability, and value. The list below includes a sampling of some of the aviation capabilities currently offered by
Garmin around the world:
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Integrated Flight Decks/Flight Displays: Garmin offers a range of integrated glass flight decks from the
G1000® NXi for the general aviation and business aviation markets to the G5000® for business aviation,
defense and commercial applications. Integrated capabilities include navigation, communication, flight
instruments, weather, terrain, traffic, ADS-B, engine information on large high-resolution color displays,
and automatic flight control systems. Head-up display technology virtually mirrors the primary flight
display instruments allowing for increased aircraft capability in adverse weather conditions. Additional
features include: Garmin’s 3-D synthetic vision technology (SVT™), weather, Garmin’s electronic
stability and protection system (ESP™), electronic flight charts, touchscreen and voice controls,
CPDLC, audio and visual feedback, and animation to help pilots know exactly how the system is
responding to their input.
Garmin offers similar integrated glass flight decks for the helicopter market with the G1000H® NXi,
G3000H™, and G5000H™. Basic and advanced capabilities are similar to those offered to the fixed-
wing aircraft market. The helicopter offerings have been optimized for rotorcraft and offer features like
helicopter synthetic vision technology (HSVT™), helicopter terrain awareness and warning system with
voice call outs, radar altimeter display, helicopter-specific databases that include additional heliports
and low-altitude obstacles, WireAware™ wire-strike avoidance technology, as well as high resolution
terrain, tailored ADS-B traffic alerting, and the ability to display video from a forward looking infrared
(FLIR) camera or other video sources.
Garmin also offers all-glass integrated flight decks to the retrofit market through G950® NXi, G1000®
NXi, G3000® and G5000®. Additionally, Garmin offers electronic flight display solutions that provide
essential information such as aircraft altitude, attitude and heading while also displaying data from other
avionics such as weather, traffic and much more. These solutions include G3X Touch™, G500H TXi,
G500 TXi, G600 TXi and G700 TXi.
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Electronic Flight Instruments: To help aircraft owners with aging aircraft systems while provide modern
flight display capability and preserve the integrity of their original aircraft panel, Garmin offers the G5
and GI 275 electronic flight instruments. These instruments are designed to replace existing mechanical
attitude indicator, attitude directional indicator (ADI), course deviation indicator (CDI), horizontal
situation indicator (HSI), engine indication system (EIS), and it can serve as a standby to a number of
flight displays.
(cid:120)
Panel-mount aviation products:
GPS/Navigation/Communication Solutions: Garmin serves the market with the GTN™ Xi series, a
premium touchscreen GPS, VHF navigation and communication, and multi-function display (MFD).
In addition to these core functions, this series of products combines a wealth of information for the
pilot into a single display including flight planning, datalink weather, weather radar, traffic, terrain
awareness and warning system (TAWS/HTAWS), charts, airport information, airspace boundaries,
and much more. Additional capabilities provide advanced ADS-B “In” traffic display, including
TerminalTraffic™ and patented TargetTrend™ technology as well as the ability to control the
display with voice commands. Advanced GTN Xi integration capabilities provide the option to install
and control a remotely located transponder and audio processor for an even more streamlined
installation and single interface. The GTN Xi series also provides wireless cockpit connectivity
(when properly equipped) with mobile device apps (such as Garmin Pilot™) or portable aviation
navigators (such as aera® 660). Wireless cockpit connectivity features can include voice call
control, text messaging, automatic wireless database updating via Database Concierge, wireless
flight plan transfer, SiriusXM radio control, sharing of weather, traffic, position information and more.
In 2019, Garmin introduced the GPS 175, GNC 355, and GNX 375, adding to the range of GPS
navigators offered. The GPS 175 is a GPS navigator with a color touchscreen display and
WAAS/LPV approach capabilities. The GNC 355 adds a built-in Comm radio to the color
touchscreen GPS navigator with WAAS/LPV approach capabilities. The GNX 375 features ADS-B
Out, as well as dual-link ADS-B In via a built-in transponder to the color touchscreen GPS navigator.
Garmin also offers more traditional VHF navigation and VHF communication transceivers with the
GNC® and GTR™ series.
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Traffic Solutions: Garmin offers a comprehensive line of traffic alert and collision avoidance
systems (TCAS) and traffic advisory systems (TAS) for all markets served. Advanced TCAS II
systems actively identify potential aircraft threats, coordinate and instruct the pilot with a resolution
advisory (RA) via a spoken command. The GTS™ series also offers TCAS I and TAS that combine
active and passive surveillance data to pinpoint specific traffic threats. The systems use our
patented CLEAR CAS™ technology to correlate passive automatic dependent surveillance
broadcast (ADS-B) targets with active surveillance targets for a more comprehensive display to the
pilot. These systems can also provide audible alerts in a spoken ATC-like format that is easily
understood by the pilot and allows them to keep their eyes outside of the aircraft.
Audio Solutions: The GMA™ series of audio panels ranging from offerings with basic capabilities
for the recreational pilot to advanced capabilities including voice control of audio panel and GTN™
Xi series functions, Bluetooth connectivity for wireless music input, phone calls, advanced audio
effects, 3D spatial audio processing, digital voice recorder, advanced auto squelch, ambient noise
based volume adjustment and independent pilot/co-pilot communications capabilities. When
connected to a Garmin GTN Xi series navigator, advanced voice control functions are available,
and include the ability to change page views, load destination frequencies and much more.
Transponder and ADS-B Solutions: Garmin offers solutions for all aviation markets we serve that
meet and exceed both FAA and EASA’s ADS-B requirements. For business aviation aircraft,
Garmin pairs the GTX™ 3000 transponder and GDL® 88 datalink for both ADS-B out and in while
mitigating the need to modify the existing aircraft panel. The GTX 345 and GTX 335 are also
available as an option for some business aviation aircraft.
Business aviation, general aviation, helicopters and experimental/light sport aircraft can utilize our
popular GTX 345 series of all-in-one ADS-B transponders that offer options with and without GPS
built-in (if the aircraft is not already equipped with the required GPS source) as well as ADS-B “In”.
ADS-B “In” information can be displayed on most Garmin multi-function displays and integrated
flight decks as well as select third party displays. Additionally, the GTX 345 can wirelessly transmit
this data to a portable device such as a tablet using the Garmin Pilot™ app or compatible Garmin
aviation portable. ADS-B “In” offers pilots basic weather information including weather radar
imagery, as well as traffic information that can be enhanced with our TerminalTraffic™ and
patented TargetTrend™ technology. A diversity antenna option is available that adds a second
antenna on top of the aircraft for better overall system performance and/or to support applications
that require sending position information to satellites.
Garmin also offers a range of FAA certified UAT-based ADS-B products within the GDL® series,
including both ADS-B “Out” and ADS-B “In/Out” solutions with options for built-in GPS.
Many of the ADS-B “In” capable products provide traffic correlation with both Garmin and other
compatible third-party traffic systems (such as TCAS) to provide a single, correlated display of
traffic to the pilot.
Weather Solutions: Weather capabilities are delivered within our GDL®, GSR™, GSX™, GTX™
and GWX™ series. Garmin solutions include offering SiriusXM satellite data link weather
information (subscription required) to an aircraft via various panel-mount Garmin displays and/or
portable devices. With our GSR 56 datalink, on-demand global weather information, text/voice
communications and position tracking through the Iridium satellite network (subscription required)
is available. The GWX and GSX series offer solid state, real-time, airborne doppler-capable
weather radar solutions. Doppler-enhanced features include ground-clutter suppression and
turbulence detection. Advanced capabilities also include lightning and hail prediction, volumetric
autoscanning and predictive windshear technology.
Flight Control Solutions: Garmin offers both standalone and integrated flight control solutions. Our
G1000® NXi, G2000®, G3000® and G5000® platforms are integrated with our GFC™ 700 digital
autopilot and optionally with our autothrottle solution. For aircraft not equipped with a Garmin
integrated flight deck, we offer the GFC 600 and GFC 500 digital autopilots. The GFC 600 and GFC
500 uniquely integrate with our other retrofit avionics to allow display of the autopilot modes, flight
director (FD) command cues and more. The unique design of our autopilots delivers superior in-
flight characteristics, self-monitoring capabilities and minimal maintenance needs when compared
to older generation autopilot systems.
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Autonomi™ Safety Solutions: Garmin offers autonomously activated safety solutions, when
appropriately equipped, to help aid the safety of the pilot and passengers. Electronic Stability and
Protection (ESP™) is a safeguard that assists pilots to maintain safe, stable flight by monitoring the
aircraft’s flight condition to help prevent loss of control. Emergency Descent Mode (EDM) helps pilots
and passengers in the event a pressurized cabin becomes depressurized by descending to a lower
altitude. Garmin Autoland takes complete control of the flight to land the airplane in an emergency
where the pilot is unable to fly. Autoland is engaged automatically or by pressing a button. It
automatically searches for the nearest airport while considering weather, terrain, fuel and more. It keeps
the passengers informed while communicating with ATC. It automatically engages aircraft controls like
flaps, throttles, brakes to land the aircraft without any intervention from the pilot.
Portable and Wearable Solutions: Garmin offers a variety of portable aviation solutions, including our
aera® series portable navigators, D2™ series pilot watches, inReach® global communicators and
GDL® series remote ADS-B/SiriusXM receivers. The aera series offers aviators a touchscreen
navigation device compatible with a complement of aviation databases including navigation, SafeTaxi®,
FliteCharts®, airport directory and terrain/obstacles for heightened situational awareness. Advanced
features can include: 3D Vision virtual perspective view of surrounding terrain, a digital document
viewer, a scratch pad, geo-referenced sectional and approach charts, wireless database updating, and
SiriusXM radio and weather display (subscription required). Complementing the portable display
products and the Garmin Pilot™ mobile application is the GDL 52 series, which can provide a remote
source of GPS, ADS-B “In” information for traffic and weather, SiriusXM weather and audio as well as
backup attitude reference.
The Garmin wearable aviation solutions include our D2 series pilot watches, which offer a built-in
worldwide aviation navigation database and more alongside multisport and smartwatch features.
Designed specifically for aviators, the current D2 series can display weather information (METARS and
TAFs) as well as weather radar from an internet connected smartphone. Other flight information
capabilities include a moving map overlaid with the aircraft’s position, HSI navigation, Zulu/UTC time
and more. With a built-in baro-adjustable altimeter, vibrating alerts based on altitude can be activated
to remind a pilot to activate supplemental oxygen or perform other time critical tasks. The D2 Delta
series watches also include multisport features with wrist-based heart rate monitoring, smartwatch
capabilities, music storage capabilities, and a wrist-based pulse oximeter sensor available on the D2
Delta PX.
inReach satellite communications and services provide the ability to stay in touch globally. Send and
receive messages, navigate your route, track and share your journey and, if necessary, trigger an SOS
to get emergency help from a 24/7 global monitoring center via the 100% global Iridium® satellite
network. Offering additional value for pilots, inReach is integrated with FlightService’s Surveillance
Enhanced Search and Rescue (SE-SAR) and Adverse Condition Alerting Service (ACAS) programs.
These programs allow FlightService to track your position reports and respond quickly in an emergency
situation as well as provide any adverse weather conditions that may develop on the planned route of
flight.
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Services:
Mobile Applications: Garmin Pilot™ is a premium, global app for iOS or Android mobile devices
used for flight planning, filing a flight plan, in flight navigation, and automatic flight logging. It offers
a comprehensive and simplified experience to access a wealth of information during any particular
phase of the flight including weight and balance, performance, and trip calculations, checklists,
airport information, weather, traffic, 3D Vision virtual perspective view of surrounding terrain, a
digital document viewer, a scratch pad, geo-referenced sectional and approach charts, wireless
database updating, ADS-B weather and traffic as well as SiriusXM radio and weather (subscription
required). It incorporates global or regional navigation databases and charting options from Garmin
as well as optional Jeppesen data and charts. While internet connected, the app provides access
to comprehensive global weather information, as available per region, that generally includes
weather
(TAFs/MOS), weather alerts
(AIRMETS/SIGMETS), pilot reports, satellite imagery (visible and IR), winds and temperature aloft,
lightning data, and notices to airmen (NOTAM). Garmin Pilot is the cornerstone of Garmin’s
connected cockpit, for example when connected wirelessly with G1000® NXi, a host of benefits
become available including automated database updates for the avionics, flight plan transfer,
weather and traffic streaming, real-time engine information and much more. Garmin Pilot™ is also
wirelessly compatible with select aera® series portables, D2™ aviator watches, G3X Touch™ flight
displays, GTX™ series transponders, inReach® communicators and much more.
radar, weather
(METARS),
forecasts
report
Additionally, the FltPlan® Go app offers pilots a free, advertisement supported, alternative to
Garmin Pilot and is available for iOS, Android, and Mac. The FltTrack™ app, available for iOS and
Android, allows users to view flights by aircraft registration on high-resolution, full-screen maps with
weather radar. Flight details include both filed and actual departure times and filed/amended routes.
Web Services: Pilots and operators can utilize a variety of Garmin web applications before, during
and after flights. FltPlan.com is the core of these applications and is trusted by pilots and flight
departments to plan and file more flight plans than any other provider. It is renowned for fuel burn
accuracy, reliable flight times, accurate routing and features performance profiles for more than
320 aircraft models from experimental aircraft to inter-continental business jets.
FltPlan.com offers a suite of comprehensive trip services designed to help support pilots and flight
departments. Services include Pre-departure clearances, runway analysis, eAPIS, international
handling, privacy services with DOT COM call signs, flight tracking, fleet management and flight
logistics/scheduling.
For flight scheduling, FltLogic.com offers a comprehensive suite of features from trip requests and
approvals to flight planning and post-flight reporting to meet complex and changing operational
needs. FltPlan® Manager is an integrated, web-based fleet tracking program designed specifically
for charter operations, large flight departments, and fractional operations. It offers operators better
insight and control of their fleet from a single administrative account. FltSafety.com is a safety
management system website that assists pilots and flight departments in managing potential
hazards and risks and ensuring overall safety within flight operations.
Aviation Databases: Garmin offers a wide selection of databases, extended warranties and
subscription services to complement our products. Our database offerings include Navigation Data,
Obstacles, SafeTaxi® enhanced airport diagrams, Terrain, Basemap and more. Some of these
databases are required by government regulations to be updated regularly for legal flight, and
Garmin offers single updates as well as annual subscriptions for owners and operators to update
all of an aircraft's qualifying avionics systems at a single price. With a database subscription and
compatible avionics, owners and operators can conveniently and wirelessly transfer the latest
database updates to their avionics via a mobile device running our Garmin Pilot™ application.
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Extended Warranties: Garmin’s aviation product support team has been honored with top awards
from two of the leading independent avionics support surveys for 16 consecutive years. To further
our full product support beyond the standard product warranties, we also offer fixed price extended
warranties for integrated flight decks and custom plans tailored to the owner or operator’s needs,
allowing them peace of mind and predictable maintenance costs. These further our standard
warranty periods with world-class factory technical service, 24/7 aircraft-on-ground (AOG)
emergency service and more.
Datalink Communications: Garmin’s comprehensive satellite datalink network subscriptions
provide owners and operators with compatible avionics, a global weather, voice calling, text
messaging and position reporting solution. Global weather includes radar imagery, cloud cover,
METARs, TAFs and much more for any point on the globe where the data is available (weather
products vary by region).
Garmin designs and develops products for use in the auto market that are offered to customers around
the world.
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Personal Navigation Devices (PND): Garmin offers personal navigation devices under the Garmin
(cid:39)(cid:85)(cid:76)(cid:89)(cid:72)(cid:140)(cid:15)(cid:3)(cid:93)(cid:460)(cid:80)(cid:82)(cid:138)(cid:15)(cid:3)(cid:71)(cid:413)(cid:93)(cid:79)(cid:140)(cid:15)(cid:3)(cid:53)(cid:57)(cid:15)(cid:3)(cid:50)(cid:89)(cid:72)(cid:85)(cid:79)(cid:68)(cid:81)(cid:71)(cid:72)(cid:85)™(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:68)(cid:85)(cid:80)(cid:76)(cid:81)(cid:3)(cid:73)(cid:79)(cid:72)(cid:72)(cid:87)(cid:140)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3)(cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3)(cid:93)(cid:460)(cid:80)(cid:82)(cid:3)(cid:86)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:86)(cid:3)
motorcycle-(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:73)(cid:72)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:53)(cid:57)(cid:3)(cid:86)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3) (cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:86)(cid:3)(cid:73)(cid:72)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:53)(cid:57)(cid:3)(cid:72)(cid:81)(cid:87)(cid:75)(cid:88)(cid:86)(cid:76)(cid:68)(cid:86)(cid:87)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3)(cid:71)(cid:413)(cid:93)(cid:79)(cid:3)
series offers over-the-road trucking features while the Garmin fleet series delivers an integrated
tracking and dispatch fleet system. The Overlander is a rugged, all-terrain navigator with a 7-inch color
touchscreen and topography maps for off-road guidance in North and South America.
Garmin PNDs feature large screens, Amazon Alexa integration, integrated traffic receivers for traffic
avoidance, map updates, spoken street names, voice activated navigation, speed limit indication, lane
assist with PhotoReal junction views (thousands of high-quality photos of actual upcoming junctions),
Bluetooth hands-free capability, DashCams, driver awareness alerts, and backup cameras.
(cid:120) Original Equipment Manufacturer (OEM) Solutions: Garmin has cultivated key relationships with many
automobile manufacturers to be the provider of a variety of auto OEM solutions. These range from
complete embedded infotainment systems that provide a broad range of functionality, to integrated
camera solutions, embedded navigation solutions, and precise positioning technology solutions.
These support not only the infotainment system in the vehicle, but also key advanced driver-assistance
systems (ADAS) functionality as well.
(cid:120) Cameras: Garmin offers GPS-enabled DashCams that provide high-quality video recording, provide
forward collision and lane departure warnings, and automatically saves video footage with G-sensor
incident detection. DashCams are offered as compact, discreet standalone cameras that can be
mounted to a car windshield or built-in to certain PNDs. Garmin also offers wireless backup cameras
that can be utilized with compatible PNDs to display camera footage behind the vehicle when the
vehicle is in reverse.
Marine
Garmin is a leading manufacturer of recreational marine electronics and offers a broad range of products.
Garmin currently offers the following product categories within the Marine segment to consumers around the world:
(cid:120) Chartplotters and Multi-Function Displays (MFDs): Garmin offers numerous chartplotters/MFDs under
the GPSMAP® and ECHOMAP™ product lines. The offerings range from 4-inch portable and fix-
mounted products to 24-inch fully-integrated Glass Helm offerings and include wireless connectivity to
the ActiveCaptain® mobile app.
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(cid:120) Cartography: Garmin is a premier supplier of cartography for the recreational marine market. Including
the Garmin-owned Navionics® branded charting products, Garmin is the worldwide leader in
recreational marine content for most major chartplotters and MFDs on the market. Cartography
product options range from worldwide basemaps to highly detailed BlueChart® g3, BlueChart® g3
Vision, LakeVü g3 and LakeVü g3 Ultra charts, Navionics+, Platinum+ and Hotmaps Platinum products
with coverage in many parts of the world, offering auto-guidance (Garmin US-patented), Navionics
Dock to dock autorouting, 3-D chart views and aerial reference photos.
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Fishfinders: Garmin offers an advanced line of fishfinders, the Striker™ series, which incorporate GPS
technology enabling Quickdraw™ Contours, and wireless features through the ActiveCaptain mobile
app. These fishfinders are available in screen sizes from 4 to 9 inches and are paired with latest
technology sonar transducers offered by Garmin to provide the clearest sonar pictures on the water.
SONAR: Garmin also offers the Panoptix™ all seeing sonar smart transducer line. Panoptix provides
detailed real-time, high-resolution images that can be seen in downward, 3D, and forward-looking views
for locating the fish and seeing what is coming before you get there. Garmin also offers CHIRP “black-
box” sounders and “smart transducers” which interface with Garmin MFDs to enhance their utility by
providing the deep-water sounders and fish finder functions in a remote mounted package. The black
boxes provide CHIRP traditional, Ultra High-Definition ClearVü, and Ultra High-Definition SideVü sonar,
similar to our integrated sonar plotters, but can be mounted in a more convenient location away from
the helm.
Autopilot Systems: Garmin offers full-featured marine autopilot systems designed for sailboats and
powerboats. The systems incorporate such features as Garmin’s patented Shadow Drive™
technology, which automatically disengages the autopilot if the helm is turned, remote steering and
speed control, and integration with the Volvo Penta IPS steering and propulsion system. Garmin has
also introduced steer-by-wire autopilot capabilities for various steering systems.
(cid:120) RADAR: Garmin offers high-tech solid state Fantom™ radar with MotionScope™ Doppler technology,
lowering system power consumption while greatly improving situational awareness of the captain.
MotionScope can instantly show if a target is closing in or safely going the other direction. Fantom
radars are available in both radomes and open array radar products with compatibility to any network-
compatible Garmin chartplotter. Garmin also offers a full line of magnetron radars up to 25kW of
transmit power.
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Instruments: Garmin offers NMEA 2000 and NMEA 0183 compliant instrument displays that show data
from multiple remote sensors on one screen. Garmin instrument displays are offered under the GNX
series and GMI series.
VHF Communication Radios: Garmin offers marine VHF radios and AIS transceivers with the latest
feature sets including integrated GPS receivers for the communication needs of all types of mariners.
Garmin radios are NMEA 2000 compatible. Mid-range and premium radios offered are designed for
larger vessels and include NMEA 0183, offer multi-station support, and monitor all AIS channels.
(cid:120) Handhelds and Wearable Devices: Garmin offers floating marine GPS handhelds under the GPSMAP
handheld series. These marine GPS handhelds feature a 3-axis tilt-compensated electronic compass,
wireless data transfer between compatible units and preloaded cartography. Some handhelds contain
built-in InReach® satellatie communication and support ConnectIQ™ applications. Garmin also offers
the quatix® series wearable, GPS-enabled smartwatches designed for mariners, which include marine
features for navigation, sailing, stereo control, and even some autopilot functions.
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Sailing: Garmin has integrated many basic and advanced sailing features into our MFD and instrument
systems. These SailAssist™ features include enhanced wind rose with true and apparent wind data,
pre-race guidance, synchronized race timer, virtual starting line, time to burn and lay line data fields.
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Entertainment: Garmin’s entertainment brand, Fusion®, consists of marine audio head units, speakers
and amplifiers. These products are designed specifically for the marine or RV environments and support
many connectivity options for integrating with MFDs, smartphones, and Garmin wearables.
(cid:120) Digital Switching: Garmin offers a digital switching product line under the EmpirBus™ brand. The
Garmin EmpirBus products provide power distribution and control solutions for marine and RV
applications which enable advanced logic controls and smart electrical systems to enhance features in
a boat or RV. The system features customizable graphics and user interface for the ultimate user
experience. Control for EmpirBus products is integrated into Garmin’s marine multi-function displays
and RV OEM products.
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Trolling Motors: Garmin offers the Force™ Trolling Motor, a powerful, efficient scissor-lift style trolling
motor with built-in CHIRP and Ultra High-Definition ClearVü and SideVü sonar. The Force product line
also connects wirelessly to Garmin chartplotters/MFDs to provide navigation, autopilot, and anchor lock
integration.
Sales and Marketing
Garmin’s non-aviation products are sold in approximately 100 countries through a large worldwide network
of independent retailers, online retailers, specialty dealers, dealers and distributors as well as through original
equipment manufacturers (OEMs), who meet our sales and customer service qualifications. Garmin’s retrofit
avionics and portable aviation products are sold through a large group of approved independent Sales and Service
Centers around the world and, in the case of portable aviation products, also through select catalogs and pilot shops.
No single customer’s purchases represented 10% or more of Garmin’s consolidated net sales in the years ended
December 28, 2019, December 29, 2018, and December 30, 2017. Marketing support is provided geographically
from Garmin’s offices around the world. Garmin’s distribution strategy is intended to increase Garmin’s global
penetration and presence while maintaining high quality standards to ensure end-user satisfaction.
Competition
We operate in highly competitive markets though competitive conditions do vary among our diverse
products and geographies. Garmin believes the principal competitive factors impacting the market for its products
are design,
time-to-market and
availability. Garmin believes that it generally competes favorably in each of these areas and as such, is generally
a significant competitor in each of our major markets.
reliability, customer service, brand, price,
functionality, quality and
Garmin believes that its principal competitor for portable automotive products is TomTom N.V. Garmin
believes that its principal competitors for infotainment solutions are Alpine Electronics, Harman International
Industries, the Mitsubishi Group, and Panasonic Corporation. Garmin believes that its principal competitors for
outdoor product lines are Casio, Dogtra, Samsung, Shearwater Research, SportDOG Brand, Suunto, TAG Heuer,
Tissot, and Vista Outdoor. Garmin believes that its principal competitors for fitness products are Apple, Bryton, Fitbit,
Huami, Huawei, Polar Electro Oy, Samsung, Sigma Sports, Suunto, and Wahoo Fitness. For marine products,
Garmin believes that its principal competitors are Flir Systems, Furuno, the Humminbird division of Johnson
Outdoors, and Navico. For Garmin’s aviation product lines, Garmin considers its principal competitors to be Aspen
Avionics, Avidyne Corporation, CMC Electronics, Collins Aerospace, Dynon Avionics, Genesys Aerosystems,
Honeywell Aerospace & Defense, Innovative Solutions and Support Inc., L-3 Avionics Systems, Safran SA, Thales,
and Universal Avionics Systems Corporation.
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Research and Development
Garmin’s product innovations are driven by its strong emphasis on research and development and the close
partnership between Garmin’s engineering and manufacturing teams. Garmin’s products are created by its
engineering and development staff, which numbered approximately 4,500 people worldwide as of December 28,
2019. Garmin’s manufacturing staff, which numbered approximately 4,900 people worldwide as of December 28,
2019, includes manufacturing process engineers who work closely with Garmin’s design engineers to ensure
manufacturability and manufacturing cost control for its products. Garmin’s development staff includes industrial
designers, as well as software engineers, electrical engineers, mechanical engineers, and cartographic engineers.
Garmin believes the industrial design of its products has played an important role in Garmin’s success. Once a
development project is initiated and approved, a multi-disciplinary team is created to design the product and
transition it into manufacturing.
Manufacturing and Operations
Garmin believes one of its core competencies and strengths is its vertically integrated manufacturing
capabilities at its Taiwan facilities in Xizhi, Jhongli and LinKou, its China facility in Yangzhou, its Netherlands facility
in Wassenaar, and at its U.S. facilities in Olathe, Kansas and Salem, Oregon. Garmin believes that its ownership
and operation of its own manufacturing facilities and distribution networks provides significant capability and
flexibility to address the breadth and depth of resources necessary to serve its diverse products and markets.
Specifically, Garmin believes that its vertical integration of its manufacturing capabilities provides
advantages to product cost, quality, and time to market.
Cost: Garmin’s manufacturing resources rapidly and iteratively prototype designs, concepts, products and
processes, achieving higher efficiency, resulting in lower cost. Garmin’s vertical integration approach enables
leveraging of manufacturing resources across high, mid and low volume products. Sharing of these resources
across product lines favorably affects Garmin’s costs to produce its range of products, with lower volume products
realizing the economies of scale of higher volume products. The ownership and integration of its resources allows
Garmin to optimize the design for manufacturing of its products, yielding improved cost.
Quality: Garmin’s automation and sophisticated production processes provide in-service robustness and
consistent reliability standards that enable Garmin to maintain strict process and quality control of the products
manufactured, thereby improving the overall quality of our products. Additionally, the immediate feedback
throughout the manufacturing processes is provided to the development teams, providing integrated continuous
improvement throughout design and supply chain.
Time to Market: Garmin uses multi-disciplinary teams of design engineers, process engineers, and supply
chain specialists to develop products, allowing them to quickly move from concept to manufacturing. This
integrated ownership provides inherent flexibility to enable faster time to market.
Garmin’s design, manufacturing, distribution, and servicing processes in its U.S., Taiwan, China and U.K.
facilities are certified to ISO 9001, an international quality standard developed by the International Organization for
Standardization. Garmin’s automotive operations in Taiwan, China, U.K., and Olathe have achieved IATF 16949
certification, a quality standard for automotive suppliers. Garmin’s Olathe and Salem aviation operations have
achieved certification to AS9100, the quality standard for the aviation industry.
Garmin International, Inc., Garmin (Europe) Ltd., and Garmin Corporation have also achieved certification
of their environmental management systems to the ISO 14001 standard, recognizing Garmin’s systems and
processes which minimize or prevent harmful effects on the environment and continually strive to improve its
environmental performance.
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Materials
Although most components essential to Garmin’s business are generally available from multiple sources,
certain key components are currently obtained by the Company from single or limited sources, which subjects
Garmin to supply and pricing risks. Many of these and other key components that are available from multiple
sources, including, but not limited to, NAND flash memory, dynamic random access memory (DRAM), GPS chipsets
and certain LCDs, are subject, at times, to industry-wide shortages and commodity pricing fluctuations.
Garmin and other participants in the personal computer, tablet, mobile communication, aviation electronics,
and consumer electronics industries also compete for various components with other industries that have
experienced increased demand for their products. In addition, Garmin uses some custom components that are not
common to the rest of the personal computer, tablet, mobile communication, and consumer electronics industries.
New products introduced by the Company often utilize custom components available from only one source until
Garmin has evaluated whether there is a need for, and subsequently qualifies, additional suppliers. When a
component or product uses new technologies, initial capacity constraints may exist until the suppliers’ yields have
matured or manufacturing capacity has increased. Garmin makes efforts to manage risks in these areas through
the use of supply agreements and safety stock for strategically important components.
Seasonality
Our net sales are subject to seasonal fluctuation. Sales of our consumer products are generally higher in
the fourth quarter due to increased demand during the holiday buying season, and, to a lesser extent, the second
quarter due to increased demand during the spring and summer season. Sales of consumer products are also
influenced by the timing of the release of new products. Our auto OEM and aviation products do not experience
much seasonal variation, but are more influenced by the timing of auto program manufacturing, aircraft certifications,
regulatory mandates, and the release of new products when the initial demand is typically the strongest.
Backlog
There is a relatively short cycle between order and shipment. Therefore, we believe that backlog
information is not material to the understanding of our business. We typically ship most orders within 72 hours of
receipt.
Intellectual Property
Our success and ability to compete is dependent in part on our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to
establish and protect our proprietary rights. In addition, Garmin often relies on licenses of intellectual property for
use in its business. For example, Garmin obtains licenses from various sources for digital cartography technology
for use in our products.
As of January 10, 2020, Garmin has been issued over 1,350 patents throughout the world and holds more
than 900 trademark registrations. The duration of patents varies in accordance with the provisions of applicable
local law. We believe that our continued success depends on the intellectual skills of our employees and their
ability to continue to innovate. Garmin will continue to file and prosecute patent applications when appropriate to
attempt to protect Garmin’s rights in its proprietary technologies.
There is no assurance that our current patents, or patents which we may later acquire, may successfully
withstand any challenge, in whole or in part. It is also possible that any patent issued to us may not provide us with
any competitive advantages, or that the patents of others will preclude us from manufacturing and marketing certain
products. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of
our products or to obtain and use information that we regard as proprietary. Litigation may be necessary in the
future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of
the proprietary rights of others or to defend against claims of infringement or invalidity.
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Regulations
The telecommunications industry is highly regulated, and the regulatory environment in which Garmin
operates is subject to change. In accordance with the United States’ Federal Communications Commission (FCC)
rules and regulations, wireless transceiver products are required to be certified by the FCC and comparable
authorities in foreign countries where they are sold. Garmin’s products sold in Europe are required to comply with
relevant directives of the European Commission. A delay in receiving required certifications for new products, or
enhancements to Garmin’s products, or losing certification for Garmin’s existing products could adversely affect our
business. In addition, aviation products that are intended for installation in “type certificated aircraft” are required
to be certified by the FAA, its European counterpart, the European Aviation Safety Agency, and other comparable
organizations before they can be used in an aircraft.
Because Garmin Corporation, one of the Company’s principal subsidiaries, is located in Taiwan, foreign
exchange control laws and regulations of Taiwan with respect to remittances into and out of Taiwan may have an
impact on Garmin’s operations. The Taiwan Foreign Exchange Control Statute, and regulations thereunder,
provides that all foreign exchange transactions must be executed by banks designated to handle such business by
the Ministry of Finance of Taiwan and by the Central Bank of the Republic of China (Taiwan), also referred to as
the CBC. Current regulations favor trade-related foreign exchange transactions. Consequently, foreign currency
earned from exports of merchandise and services may now be retained and used freely by exporters, while all
foreign currency needed for the import of merchandise and services may be purchased freely from the designated
foreign exchange banks. Aside from trade-related foreign exchange transactions, Taiwan companies and
residents may, without foreign exchange approval, remit outside and into Taiwan foreign currencies of up to $50
million and $5 million respectively, or their equivalent, each calendar year. Currency conversions within the limits
are processed by the designated banks and do not have to be reviewed and approved by the CBC. The above
limits apply to remittances involving a conversion between Taiwan Dollars and U.S. Dollars or other foreign
currencies. The CBC typically approves foreign exchange in excess of the limits if a party applies with the CBC
for review and presents legitimate business reasons justifying the currency conversion. A requirement is also
imposed on all enterprises to register all medium and long-term foreign debt with the CBC.
Environmental Matters
Garmin’s operations are subject to various environmental laws, including laws addressing air and water
pollution and management of hazardous substances and wastes. Substantial noncompliance with applicable
environmental laws could have a material adverse effect on our business. Capital expenditures for environmental
controls are included in our normal capital budget. Historically, capital expenditures associated with environmental
controls have not been material and compliance with environmental laws has not had a material impact on the
Company’s competitive position.
Many of Garmin's products are subject to laws relating to the chemical and material composition of our
products and their energy efficiency. Garmin is also subject to laws requiring manufacturers to be financially
responsible for collection, recovery and recycling of wastes from certain electronic products. Compliance with
current environmental laws does not have a material impact on our business, but the impact of future enactment of
environmental laws cannot yet be fully determined and could be substantial.
Garmin has implemented multiple Environmental Management System (EMS) policies in accordance with
the International Organization for Standardization (ISO) 14001 standard for Environmental Health and Safety
Management. Garmin’s EMS policies set forth practices, standards, and procedures to ensure compliance with
applicable environmental laws and regulations at Garmin’s Kansas headquarters facility, Garmin’s European
headquarters facility, and Garmin’s Taiwan and China manufacturing facilities.
Garmin continues to strive to reduce our carbon footprint by increasing our environmental sustainability
efforts. Our manufacturing locations have implemented increased recycling processes that keep all obsolete
Garmin manufactured material from entering the waste stream. Additionally, our newly completed facility in Olathe,
Kansas has been constructed with energy efficient considerations, including reduced water consumption, LED
lighting, and reflective roofing to deflect solar radiation.
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Employees
As of December 28, 2019, the Company had approximately 15,000 full and part-time employees worldwide,
of whom approximately 5,700 were in Americas region, 7,300 were in APAC, and 2,000 were in EMEA. Except
for some of Garmin’s employees in Sweden, none of Garmin’s employees are represented by a labor union and
none of Garmin's North American or Taiwan employees are covered by a collective bargaining agreement. Garmin
considers its employee relations to be positive.
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Item 1A. Risk Factors
The risks described below are not the only ones facing our company. Additional risks and uncertainties
not presently known to us or that we currently believe to be immaterial may also impair our business operations. If
any of the following risks occur, our business, financial condition or operating results could be materially adversely
affected.
Risks Related to the Company
If we are not successful in the continued development, timely manufacture, and introduction of new
products or product categories, demand for our products could decrease to the extent that lost sales and
profits from declining segments or product categories are not entirely offset.
We expect that a significant portion of our future revenue will continue to be derived from sales of newly
introduced products. This is particularly important to replace sales and profits lost in declining segments or product
categories. The market for our products is characterized by rapidly changing technology, evolving industry
standards and changes in customer needs. If we fail to introduce new products, or to modify or improve our existing
products, in response to changes in technology, industry standards or customer needs, our products could rapidly
become less competitive or obsolete. We must continue to make significant investments in research and
development in order to continue to develop new products, enhance existing products and achieve market
acceptance for such products. However, there can be no assurance that development stage products will be
successfully completed or, if developed, will achieve significant customer acceptance.
If we are unable to successfully develop and introduce competitive new products, and enhance our existing
products, our future results of operations would be adversely affected. Our pursuit of necessary technology may
require substantial time and expense. We may need to license new technologies to respond to technological
change. These licenses may not be available to us on terms that we can accept or may materially change the gross
profits that we are able to obtain on our products. We may not succeed in adapting our products to new technologies
as they emerge. Development and manufacturing schedules for technology products are difficult to predict, and
there can be no assurance that we will achieve timely initial customer shipments of new products. The timely
availability of these products in volume and their acceptance by customers are important to our future success. Any
future challenges related to new products, whether due to product development delays, manufacturing delays, lack
of market acceptance, delays in regulatory approval, or otherwise, could have a material adverse effect on our
results of operations.
If we are unable to compete effectively with existing or new competitors, our resulting loss of competitive
position could result in price reductions, fewer customer orders, reduced margins and loss of market share.
The markets for many of our products are highly competitive, and we expect competition to increase in the
future. Some of our competitors have significantly greater financial, technical and marketing resources than we do.
These competitors may be able to respond more rapidly to new or emerging technologies or changes in customer
requirements. They may also be able to devote greater resources to the development, promotion and sale of their
products or secure better product positioning with retailers. Increased competition could result in price reductions,
fewer customer orders, reduced margins and loss of market share. Our failure to compete successfully against
current or future competitors could seriously harm our business, financial condition and results of operations.
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Maturation or contraction of the market for wearable devices or categories of devices could adversely affect
our revenue and profits.
We have experienced growth in sales and profits in our outdoor and fitness segments, which in recent years
have benefited from increased sales of wearable devices. If the overall wearable device market declines, or
categories of devices within the wearable device market decline significantly, our business, financial condition or
operating results could be materially adversely affected.
Our annual and quarterly financial statements will reflect fluctuations in foreign currency translation.
The operation of our subsidiaries in global markets results in exposure to movements in currency exchange
rates. We have experienced significant foreign currency gains and losses due to the strengthening and weakening
of the U.S. Dollar relative to certain other currencies. The potential of volatile foreign exchange rate fluctuations in
the future could have a significant effect on our results of operations. We have not historically used financial
instruments to hedge our foreign currency exchange rate risks.
The currencies that typically create a majority of our exchange rate exposure are the Taiwan Dollar, Euro,
and British Pound Sterling. The Taiwan Dollar is the functional currency of Garmin Corporation, the U.S. Dollar is
the functional currency of Garmin (Europe) Ltd., and the Euro is the functional currency of most of our other
European subsidiaries, although some transactions and balances are denominated in British Pounds. Other legal
entities primarily use the local currency as the functional currency. Due to the relative size of entities using a
functional currency other than the Taiwan Dollar, Euro, and British Pound Sterling, fluctuations of other currencies
are not expected to have a material impact on our financial statements.
We translate income and expense activity at the approximate rate of exchange at the transaction date, and
all assets and liabilities at the rate of exchange in effect at the balance sheet date. Income and expense activity
in a currency other than the U.S. Dollar can be impacted by exchange rate variations over time. The majority of
our consolidated foreign currency gain or loss is typically driven by exchange rate impacts on the significant cash,
receivables, and payables held in a currency other than the functional currency at a given legal entity. Such gain
or loss will create variations in our earnings per share. However, because there is minimal cash impact caused by
such exchange rate variations, management will continue to focus on our operating performance before the impact
of foreign currency gains and losses.
Changes in applicable tax laws or resolutions of tax disputes could result in adverse tax consequences to
the Company.
Our tax positions could be adversely impacted by changes to tax laws, tax treaties, or tax regulations or the
interpretation or enforcement thereof by any tax authority in which we file income tax returns, particularly in the US,
Switzerland, Taiwan, and UK. We cannot predict the outcome of any specific legislative proposals.
Global taxing standards continue to evolve as a result of the Organization for Economic Co-Operation and
Development (OECD) recommendations aimed at preventing perceived base erosion and profit shifting (BEPS) by
multinational corporations. While these recommendations do not change tax law, the countries where we operate
may implement legislation or take unilateral actions which may result in adverse effects to our income tax provision
and financial statements. Partially to respond to recent and continuing changes to global tax standards, we initiated
an intercompany transaction which migrates ownership of certain consumer products intellectual property from
Switzerland to the United States, which is the primary location of research, development and executive
management. Due to the subjectivity inherent in transfer pricing associated with this intercompany transaction, we
are pursuing an advanced pricing agreement with relevant jurisdictions to provide certainty regarding the pricing.
However, we are unable to predict the outcome of the final advanced pricing agreement and related negotiations,
which could materially and/or adversely impact our income tax provision, net income or cash flows for periods during
negotiation and upon finalization.
Significant judgment is required in determining our worldwide provision for income taxes. In the ordinary
course of our business, there are many transactions and calculations where the ultimate tax determination is
uncertain, most notably in the area of transfer pricing. We are regularly under audit by tax authorities. Although we
believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be
materially different from our historical income tax provisions and accruals. The results of an audit or litigation could
have a material effect on our income tax provision, net income, or cash flows in the period or periods for which that
determination is made.
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Changes to trade regulations, including trade restrictions, sanctions, or tariffs, could significantly harm
our results of operations.
We manufacture goods in the People’s Republic of China and import certain materials from the People’s
Republic of China that are used to manufacture goods in the United States. The imposition of additional
governmental controls or regulations that create new or enhanced restrictions on free trade, trade sanctions, or
tariffs, particularly those applicable to materials or goods from the People’s Republic of China, could have a
substantial adverse effect on our business, results of operations, and financial condition.
Economic, regulatory, and political conditions and uncertainty could adversely affect our revenue and
profits.
Our revenue and profits depend significantly on general economic conditions and the demand for products
in the markets in which we compete. We have global operations which make up a significant portion of our total
revenue, which can present challenges depending on economic and geopolitical conditions on both a global and
regional scale. Economic weakness or constrained consumer and business spending has resulted in periods of
decreased revenue in the past, and could in the future result in decreased revenue and problems with our ability to
manage inventory levels and collect customer receivables. In addition, financial difficulties experienced by our
retailers and OEM customers have resulted, and could result in the future, in significant bad debt write-offs and
additions to reserves in our receivables and could have an adverse effect on our results of operations.
We may experience unique economic and political risks associated with companies that operate in Taiwan.
Our principal manufacturing facilities, where we manufacture most of our consumer products, are located
in Taiwan. Relations between Taiwan and the People’s Republic of China, also referred to as the PRC, and other
factors affecting the political or economic conditions of Taiwan in the future, could materially affect our business,
financial condition and results of operations and the market price and the liquidity of our shares.
The PRC asserts sovereignty over all of China, including Taiwan, certain other islands, and all of mainland
China. The PRC government does not recognize the legitimacy of the Taiwan government. Although significant
economic and cultural relations have been established during recent years between Taiwan and the PRC, the PRC
government has indicated that it may use military force to gain control over Taiwan in certain circumstances, such
as the declaration of independence by Taiwan. The United States' relations with Taiwan are governed by the 1979
Taiwan Relations Act, which signifies when the U.S. switched diplomatic recognition from Taiwan to the PRC,
referred to as the "one-China" policy. Deviations from the "one-China" policy could lead to adverse changes in
China-U.S. and China-Taiwan relations and could adversely affect our operations in Taiwan in the future.
If we do not correctly anticipate demand for our products, we may not be able to secure sufficient quantities
or cost-effective production of our products or we could have costly excess production or inventories.
We have generally been able to increase or decrease production to meet fluctuations in demand. However,
the demand for our products depends on many factors and may be difficult to forecast. We expect that it will
become more difficult to forecast demand as we introduce and support a diverse product portfolio, as competition
in the market for our products intensifies and as the markets for some of our products mature. Significant
unanticipated fluctuations in demand could cause the following problems in our operations:
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If demand increases beyond what we forecast, we would have to rapidly increase production. We
would depend on suppliers to provide additional volumes of components and those suppliers might
not be able to increase production rapidly enough to meet unexpected demand.
Rapid increases in production levels to meet unanticipated demand could result in higher costs for
manufacturing and supply of components and other expenses. These higher costs could lower our
profit margins. Further, if production is increased rapidly, manufacturing quality could decline, which
may also lower our margins and reduce customer satisfaction.
If forecasted demand does not develop, we could have excess inventories of finished products and
components, which would use cash and could lead to write-offs of some or all of the excess inventories.
Lower than forecasted demand could also result in excess manufacturing capacity or reduced
manufacturing efficiencies at our facilities, which could result in lower margins.
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We depend on third party suppliers and licensors, some of which are sole source, for specific components
and map data used in our products. Our production and business would be seriously harmed if these
suppliers are not able to meet our demand and alternative sources are not available, or if the costs of
components rise.
We are dependent on third party suppliers for various components used in our current products. Some of
the components that we procure from third party suppliers include semiconductors and electroluminescent panels,
liquid crystal displays, memory chips, batteries and microprocessors. The cost, quality and availability of
components are essential to the successful production and sale of our products. Some components we use are
from sole source suppliers. Certain application-specific integrated circuits incorporating our proprietary designs are
manufactured for us by sole source suppliers. Alternative sources may not be currently available for these sole
source components.
In the past, we have experienced shortages of certain components. In addition, if there are shortages in
supply of components, the costs of such components may rise. If suppliers are unable to meet our demand for
components on a timely basis and if we are unable to obtain an alternative source, or if the price of the alternative
source is prohibitive, our ability to maintain timely and cost-effective production of our products would be seriously
harmed.
We are also dependent on third party licensors for digital mapping data used in our products. There are
only a limited number of suppliers of mapping data for some of our products and geographical regions. If we are
unable to continue licensing such mapping data from our suppliers and are unable to obtain an alternative source,
or if our relationships with our suppliers change detrimentally, our ability to supply mapping data for use in our
products would be seriously harmed.
The effects of the United Kingdom’s withdrawal from the European Union (“Brexit”), including trade
agreements, are not yet known and the uncertainty creates challenges and risks which could have a
material effect on our business and results of operations.
The United Kingdom (UK) formally left the European Union (EU) on January 31, 2020. A transition period
through December 31, 2020 has been established to allow the UK and EU to negotiate the terms of the UK’s
withdrawal. However, there is continued uncertainty surrounding the future relationship between the UK and EU,
including trade agreements between the UK and EU. Additionally, long-term risks of Brexit include economic
recessions in the UK or other European markets and currency instability for both the British Pound Sterling and the
Euro.
We have operations in the UK, including offices and a distribution facility, and several EU member states,
and therefore Brexit will impact our operations. We have certain measures in place to reduce the impact to our
business operations; however, risks such as slow or inefficient border clearance, prolonged economic recession,
and currency fluctuations could have material adverse effects on our business operations, results of operations,
and financial condition. As noted in our other risk factors, currency volatility of the British Sterling Pound and Euro
could have significant effects on our results of operations. Depending on finalization of a trade agreement between
the UK and the EU during the transition period, the impacts of Brexit may have a lesser impact to our financial
condition and business operations. Given the number of different outcomes still possible, the impacts of Brexit are
difficult to determine until specific terms of the withdrawal are reached.
Our intellectual property rights are important to our operations, and we could suffer loss if they infringe
upon others’ rights or are infringed upon by others.
We rely on a combination of patents, copyrights, trademarks and trade secrets, confidentiality provisions
and licensing arrangements to establish and protect our proprietary rights. To this end, we hold rights to a number
of patents and registered trademarks and regularly file applications to attempt to protect our rights in new technology
and trademarks. However, there is no guarantee that our patent applications will become issued patents, or that
our trademark applications will become registered trademarks. In addition, effective copyright, patent and trade
secret protection may be unavailable, limited or not applied for in certain countries. Moreover, even if approved,
our patents or trademarks may thereafter be successfully challenged by others or otherwise become invalidated for
a variety of reasons. Thus, any patents or trademarks we currently have or may later acquire may not provide us
a significant competitive advantage.
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The value of our products relies substantially on our technical innovation in fields in which there are many
patent filings. Third parties may claim that we or our customers (some of whom are indemnified by us) are infringing
their intellectual property rights. For example, individuals and groups may purchase intellectual property assets for
the purpose of asserting claims of infringement and attempting to extract settlements from us or our customers.
The number of these claims has increased in recent years and may continue to increase in the future. Such claims
could have a material adverse effect on our business and financial condition. From time to time we receive letters
alleging infringement of patents, trademarks or other intellectual property rights and we have been, and currently
are, a defendant in lawsuits alleging patent infringement. Litigation concerning patents or other intellectual
property is costly and time consuming. We may seek licenses from such parties, but they could refuse to grant us
a license or demand commercially unreasonable terms. Such infringement claims could also cause us to incur
substantial liabilities and to suspend or permanently cease the use of critical technologies or processes or the
production or sale of major products.
We may become subject to significant product liability costs.
If our products malfunction or contain errors or defects, we could be subject to significant liability for
personal injury and property damage and, under certain circumstances, could be subject to a judgment for punitive
damages. We maintain insurance against accident-related risks involving our products. However, there can be
no assurance that such insurance would be sufficient to cover the cost of damages to others or that such insurance
will continue to be available at commercially reasonable rates. In addition, insurance coverage may not cover
awards of punitive damages and may not cover the cost of associated legal fees and defense costs, which could
result in lower margins. If we are unable to maintain sufficient insurance to cover product liability costs or if our
insurance coverage does not cover the award, this could have a material adverse impact on our business, financial
condition and results of operations.
We have claims and lawsuits against us that may result in adverse outcomes.
We are subject to a variety of claims and lawsuits. Adverse outcomes in some or all of these claims may
result in significant monetary damages or injunctive relief that could adversely affect our ability to conduct our
business. Litigation and other claims are subject to inherent uncertainties and the outcomes can be difficult to predict.
Management may not adequately reserve for a contingent liability, or we may suffer unforeseen liabilities, which
could then impact the results of a financial period. A material adverse impact on our consolidated financial
statements could occur for the period in which the effect of an unfavorable final outcome becomes probable and
reasonably estimable which, if not expected, could harm our results of operations and financial condition.
Continued declines in auto PND revenue and significant investments in auto OEM could negatively impact
total Company profits and shareholder value.
We experienced substantial growth through 2008 in our auto segment as PNDs became mass-market
consumer electronics in both Europe and North America. This auto PND market is declining as competing
technologies emerged and market saturation occurred. Navigation technologies have been incorporated into and
become more prevalent in competing devices such as mobile handsets, tablets, and new automobiles through
factory-installed systems. The acceptance by consumers of these alternative solutions has negatively impacted
sales and profits in the auto segment. There is no assurance that the decline in sales will end, and thus no
assurance that we can continue to generate profits from the auto segment.
We have recently been awarded several tier-one and tier-two auto OEM supplier contracts. To fulfill the
associated program commitments, we are investing significantly in facilities, research and development, and other
operating expenses and we will continue to do so in the coming years. Gross margins associated with these auto
OEM programs are expected to be lower than the gross margins realized in the auto segment and the Company as
a whole in recent periods. If we are not successful in winning additional contract awards or substantially leveraging
our investments, periods of lower operating income or operating losses in the auto segment could negatively impact
total Company profits and shareholder value.
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Our products may contain undetected security vulnerabilities, which could result in damage to our
reputation, lost revenue, diverted development resources and increased warranty claims, and litigation.
Undiscovered vulnerabilities in our products could expose them to hackers or other unscrupulous third
parties who develop and deploy viruses and other malicious software programs that could attack our products.
Actual or perceived security vulnerabilities in our products could harm our reputation and lead some customers to
return products, to reduce or delay future purchases, or use competitive products.
We collect, store, process, and use personal information and other customer data, which subjects us to
governmental regulation and other legal obligations related to privacy, information security, and data
protection, and our actual or perceived failure to comply with such regulations and obligations could harm
our business.
We collect, store, process, and use personal information and other user data. Our users’ personal
information may include, among other information, names, addresses, phone numbers, email addresses, payment
account information, height, weight, age, gender, heart rates, sleeping patterns, GPS-based location, and activity
patterns. Due to the volume and types of the personal information and data we manage and the nature of our
products and applications, the security features of our platform and information systems are critical. If our security
measures or applications are breached, are disrupted or fail, unauthorized persons may be able to obtain access
to user data. If we or our third-party service providers, business partners, or third-party apps with which our users
choose to share their Garmin data were to experience a breach, disruption or failure of systems compromising our
users’ data or the media suggested that our security measures or those of our third-party service providers were
insufficient, our brand and reputation could be adversely affected, use of our products and services could decrease,
and we could be exposed to a risk of loss, litigation, and regulatory proceedings. Depending on the nature of the
information compromised, in the event of a data breach, disruption or other unauthorized access to our user data,
we may also have obligations to notify users about the incident and we may need to provide some form of remedy
for the individuals affected by the incident.
A growing number of legislative and regulatory bodies have adopted consumer notification requirements in
the event of unauthorized access to or acquisition of certain types of personal data. Such breach notification laws
continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could
cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises
user data. Our users may also accidentally disclose or lose control of their passwords, creating the perception that
our systems or those of our third-party service providers are not secure against third-party access. Additionally, if
third parties we work with, such as vendors, business partners, service providers, or developers, violate applicable
laws, agreements, or our policies, such violations may also put our users’ information at risk and could in turn have
an adverse effect on our business. While we maintain insurance coverage that, subject to policy terms and
conditions and a significant self-insured retention, is designed to address certain aspects of cyber risks, such
insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the continually
evolving area of cyber risk.
Regulatory authorities and legislative bodies around the world, including in the United States, have enacted
or are considering a number of legislative and regulatory proposals concerning data protection. In May 2018, the
General Data Protection Regulation (GDPR) went into effect in the EU. On January 1, 2020, the California
Consumer Privacy Act (CCPA) went into effect, and other States in the United States are considering adopting data
privacy laws. Noncompliance with GDPR. CCPA, or other data protection laws in other States in the United States
or in other countries, could result in significant fines and penalties. In addition, the interpretation and application of
consumer and data protection laws in the U.S., Europe, Asia, Latin America, and elsewhere are sometimes
uncertain and in flux. It is possible that these laws may be interpreted and applied in a manner that is inconsistent
with our interpretation and data practices. If so, in addition to the possibility of fines, this could result in an order
requiring that we change our data practices, which could have an adverse effect on our business and results of
operations. Complying with these various laws could cause us to incur substantial costs or require us to change our
business practices in a manner adverse to our business.
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We rely on information technology systems for our business operations. Failures or disruptions, including
security breaches or cyber attacks, to our information technology systems may harm our reputation and
adversely affect our business and result of operations.
Our information technology systems allow for our daily business operations to operate efficiently and
effectively. These systems assist in our business processes, including, but not limited to, communications, financial
management, supply chain management, order processing, shipping and billing, and providing services and support
to our customers. Additionally, we electronically maintain sensitive data, including intellectual property, our
proprietary business information and that of our customers and suppliers, and some personally identifiable
information of our customers and employees, in our facilities and on our networks. The secure processing,
maintenance and transmission of this information is important to our operations. A disruption to any of these
processes can adversely affect our business and results of operations. Furthermore, a breach of our security
systems and procedures or those of our vendors could result in significant data losses or theft of our intellectual
property as well as our customers' or our employees' intellectual property, proprietary business information or
personally identifiable information. A cybersecurity breach could negatively affect our competitive position and
operating results as a result of theft of our intellectual property and could negatively affect our reputation as a trusted
product and service provider by adversely affecting the market's perception of the security or reliability of our
products or services.
We have technology and processes in place to detect and respond to data security incidents. However,
because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems
change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these
techniques or implement adequate preventive measures. In addition, hardware, software or applications we develop
or procure from third parties may contain defects in design or manufacture or other problems that could
unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our
systems or facilities through fraud, trickery or other forms of deceiving our customers and employees. Accordingly,
we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative
measures, or if such measures are implemented, and even with appropriate training conducted in support of such
measures, human errors may still occur. It is virtually impossible for us to entirely mitigate this risk. A party, whether
internal or external, who is able to circumvent our security measures could misappropriate information.
Actual or anticipated attacks and risks may cause us to incur increasing costs, including costs to deploy
additional personnel and protection technologies, to conduct additional employee training, and to engage third party
security experts and consultants. Our technology errors and omissions insurance may not protect against all of the
costs, liabilities, and other adverse effects arising from a security breach or system failure. If we fail to reasonably
maintain the security of confidential information, we may suffer significant reputational and financial losses and our
results of operations, cash flows, financial condition, and liquidity may be adversely affected. In addition, a system
breach could result in other negative consequences, including disruption of internal operations, and may subject us
to private litigation, government investigations, enforcement actions, and cause us to incur potentially significant
liability, damages, or remediation costs.
Gross margins for our products may fluctuate or erode.
Gross margins in some of our segments are volatile and could decline in the future due to competitive price
reductions that are not fully offset by material cost reductions. In addition, our overall gross margin may fluctuate
from period to period due to a number of factors, including product mix, competition and unit volumes. In particular,
the average selling prices of a specific product tend to decrease over that product’s life. To offset such decreases,
we intend to rely primarily on component cost reduction, obtaining yield improvements and corresponding cost
reductions in the manufacturing of existing products and on introducing new products that incorporate advanced
features and therefore can be sold at higher average selling prices. However, there can be no assurance that we
will be able to obtain any such yield improvements or cost reductions or introduce any such new products in the
future. To the extent that such cost reductions and new product introductions do not occur in a timely manner or
our products do not achieve market acceptance, our business, financial condition and results of operations could
be materially adversely affected.
Changes in our United States federal income tax classification, or that of our subsidiaries, could result in
adverse tax consequences to our 10% or greater U.S. shareholders.
The Tax Cuts and Jobs Act (the “2017 Act”) signed on December 22, 2017 may have changed the
consequences to U.S. shareholders that own, or are considered to own, as a result of the attribution rules, ten
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percent or more of the voting power or value of the stock of a non-U.S. corporation (a 10% U.S. shareholder) under
the U.S. federal income tax law applicable to owners of U.S. controlled foreign corporations (“CFCs”).
Prior to the 2017 Act, the Company did not believe we, or any of our non-U.S. subsidiaries, were considered
a CFC, which is a determination made daily based on whether the 10% U.S. shareholders together own, or are
considered to own as a result of the attribution rules, more than fifty percent of the voting power or value of a non-
U.S. corporation. The 2017 Act repealed Internal Revenue Code Section 958(b)(4), which, unless clarified in future
regulations or other guidance, may result in classification of certain of the Company’s foreign subsidiaries as CFCs
with respect to any single 10% U.S. shareholder. This may be the result without regard to whether 10% U.S.
shareholders together own, directly or indirectly, more than fifty percent of the voting power or value of the Company
as was the case under prior rules. The repeal is effective as of the last taxable year of CFCs beginning before
January 1, 2018 and for the taxable year of 10% U.S. shareholders in which the CFCs' taxable year ends.
Additional tax consequences to 10% U.S. shareholders of a CFC may result from other provisions of the
2017 Act. For example, the 2017 Act amended Section 965 to require 10% U.S. shareholders to include in income
their pro-rata share of certain earnings and profits (E&P) of CFCs. This Section 965 inclusion is accompanied by
a partial dividends-received deduction. The 2017 Act also added Section 951A which requires a 10% U.S.
shareholder of a CFC to include in income its pro-rata share of the global intangible low-taxed income (GILTI) of
the CFC. Finally, the 2017 Act eliminated the requirement in Section 951(a) necessitating that a foreign corporation
be considered a CFC for an uninterrupted period of at least 30 days in order for a 10% U.S. shareholder to have a
current income inclusion.
From time to time, the Company may elect to employ antidilutive measures such as a stock buyback
program. These measures could inadvertently create additional 10% U.S. shareholders and thus trigger adverse
tax consequences for those shareholders as described above. We urge shareholders to consult their individual
tax advisers for advice regarding the 2017 Act revisions to the U.S. federal income tax law applicable to owners of
CFCs given the current uncertainty regarding their scope of applicability.
Some of our products are subject to governmental regulation or certification. Failure to obtain required
certifications of our products on a timely basis, either due to government shutdown or other delays in the
certification process, could harm our business.
Federal Aviation Administration (FAA) certification is required for all of our aviation products that are
intended for installation in type-certificated aircraft. To the extent required, certification is an expensive and time-
consuming process that requires significant focus and resources. An inability to obtain, or excessive delay in
obtaining, such certifications could have an adverse effect on our ability to introduce new products and, for certain
aviation OEM products, our customers’ ability to sell airplanes. Delays in our obtaining certification for our aviation
products have resulted, and may in the future result in our being required to pay compensation to our customers.
Additionally, failure of the United States Congress to appropriate funds for FAA operations that results in a shut
down of FAA operations or furloughing of FAA employees, due to partial or complete government shutdowns or
otherwise, could result in delays in the required FAA certification of our avionics products and in the production,
sale and registration of aircraft that use our avionics products. Therefore, such inabilities or delays could have a
material adverse effect on our business and financial results.
In addition, we cannot assure that our certified
products will not be decertified. Any such decertification could have an adverse effect on our operating results.
In addition, in accordance with FCC rules and regulations, wireless transceiver products are required to be
certified by the FCC in the United States and comparable authorities in foreign countries where they are sold.
Garmin’s products sold in Europe are required to comply with relevant directives of the European Commission. A
delay in receiving required certifications for new products, or enhancements to Garmin’s products, or losing
certification for Garmin’s existing products could adversely affect our business.
Our business may suffer if we are not able to hire and retain sufficient qualified personnel or if we lose our
key personnel.
Our future success depends partly on the continued contribution of our key executive, engineering, sales,
marketing, manufacturing and administrative personnel. We currently do not have employment agreements with
any of our key executive officers. Swiss law prohibits us from paying severance payments to our senior executive
officers, which may impair our ability to recruit for these positions. We do not have key person life insurance on
any of our key executive officers and do not currently intend to obtain such insurance. The loss of the services of
any of our senior level management, or other key employees, could harm our business. Recruiting and retaining
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the skilled personnel we require to maintain and grow our market position may be difficult. For example, in some
recent years there has been a nationwide shortage of qualified engineers in the United States who are necessary
for us to design and develop new products, and therefore, it has sometimes been challenging to recruit such
personnel. If we fail to hire and retain qualified employees, we may not be able to maintain and expand our
business.
Our quarterly operating results are subject to fluctuations and seasonality.
Our operating results are difficult to predict. Our future quarterly operating results may fluctuate significantly.
If such operating results decline, the price of our stock could decline. As we have expanded our operations, our
operating expenses, particularly our research and development costs, have increased as a percentage of our sales
in some periods. If revenues decrease and we continue to increase research and development costs, our
operating results would be negatively affected.
Historically, our revenues have been lower in the first quarter of each fiscal year as many of our devices
are highly consumer-oriented, and consumer buying is traditionally lower in this quarter. Sales of certain of our
auto, fitness, marine, and outdoor products tend to be higher in our second fiscal quarter due to increased consumer
spending for such products in the spring season and travel season. Sales of many of our consumer products also
have been higher in our fourth fiscal quarter due to increased consumer spending patterns on electronic devices
during the holiday season.
We rely on independent dealers and distributors to sell our products, and disruption to these channels
would harm our business.
Because we sell many of our products to independent dealers and distributors, we are subject to many
risks, including risks related to their inventory levels and support for our products. In particular, our dealers and
distributors maintain significant levels of our products in their inventories. If dealers and distributors attempt to
reduce their levels of inventory or if they do not maintain sufficient levels to meet customer demand, our sales could
be negatively impacted.
Many of our dealers and distributors also sell products offered by our competitors. If our competitors offer
our dealers and distributors more favorable terms, those dealers and distributors may de-emphasize or decline to
carry our products. In the future, we may not be able to retain or attract a sufficient number of qualified dealers and
distributors. If we are unable to maintain successful relationships with dealers and distributors or to expand our
distribution channels, our business will suffer.
We may pursue strategic acquisitions, investments, strategic partnerships or other ventures, and our
business could be materially harmed if we fail to successfully identify, evaluate, complete, and integrate
such transactions.
We intend to evaluate acquisition opportunities and opportunities to make investments in complementary
businesses, technologies, services or products, or to enter into strategic partnerships with parties who can provide
access to those assets, additional product or services offerings, additional distribution or marketing synergies or
additional industry expertise. We may not be able to identify suitable acquisition, investment or strategic
partnership candidates, or if we do identify suitable candidates in the future, we may not be able to complete those
transactions on commercially favorable terms, or at all.
Any past or future acquisition could also result in difficulties assimilating acquired employees, operations,
and products and diversion of capital and management’s attention away from other business issues and
opportunities. Integration of acquired companies may result in problems related to integration of technology and
inexperienced management teams. Due diligence performed prior to closing acquisitions may not uncover certain
risks or liabilities that could materially impact our business and financial results. In addition, the key personnel of
the acquired company may decide not to work for us. We may not successfully integrate internal controls,
compliance under the Sarbanes-Oxley Act of 2002, the GDPR and other corporate governance and regulatory
matters, operations, personnel or products related to acquisitions we may make in the future. If we fail to
successfully integrate such transactions, our business could be materially harmed.
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Many of our products rely on the Global Positioning System and other Global Satellite Navigation Systems
(GNSS).
The Global Positioning System (GPS) is a satellite-based navigation and positioning system consisting of
a constellation of orbiting satellites. The satellites and their ground control and monitoring stations are maintained
and operated by the United States Department of Defense. The Department of Defense does not currently charge
users for access to the satellite signals. These satellites and their ground support systems are complex electronic
systems subject to electronic and mechanical failures and possible sabotage. The satellites were originally designed
to have lives of 7.5 years and are subject to damage by the hostile space environment in which they operate.
However, of the current deployment of satellites in place, some have been operating for more than 20 years.
To repair damaged or malfunctioning satellites is currently not economically feasible. If a significant number
of satellites were to become inoperable, there could be a substantial delay before they are replaced with new
satellites. A reduction in the number of operating satellites may impair the current utility of GPS and the growth of
current and additional market opportunities. GPS satellites and ground control segments are being modernized.
GPS modernization software updates can cause problems. We depend on public access to open technical
specifications in advance of GPS updates.
GPS is operated by the U.S. Government, which is committed to maintenance and improvement of GPS;
however, if the policy were to change, and GPS were no longer supported by the U.S. Government, or if user fees
were imposed, it could have a material adverse effect on our business, results of operations, and financial condition.
Some of our products also use signals from Satellite Based Augmentation Systems (SBAS) that augment
GPS, such as the U.S. Wide Area Augmentation System (WAAS), Japanese MTSAT-based Satellite Augmentation
System (MSAS), and European Geostationary Navigation Overlay Service (EGNOS). Any curtailment of SBAS
operating capability could result in decreased user capability for many of our aviation products, thereby impacting
our markets.
Some of our products also use satellite signals from the Russian GLONASS System. Other countries,
including China and India, are in the process of creating their own GNSS systems, and we either have developed
or will develop products which use GNSS signals from these systems. The European community is developing an
independent radio navigation satellite system, known as Galileo. National or European authorities may provide
preferential access to signals to companies associated with their markets, including our competitors, which could
harm our competitive position. Use of non-US GNSS signals may also be subject to FCC waiver requirements and
to restrictions based upon international trade or geopolitical considerations. If we are unable to develop timely and
competitive commercial products using these systems, or obtain timely and equal access to service signals, it could
result in lost revenue.
Any of the foregoing factors could affect the willingness of buyers of our products to select Global
Positioning System-based products instead of products based on competing technologies.
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Our business is subject to disruptions and uncertainties caused by geopolitical instability, war or terrorism.
Acts of war or acts of terrorism, especially any directed at the GPS signals, could have a material adverse
impact on our business, operating results, and financial condition. The threat of terrorism and war and heightened
security and military response to this threat, or any future acts of terrorism, may cause a redeployment of the
satellites used in GPS or interruptions of the system. To the extent that such interruptions have an effect on sales
of our products, this could have a material adverse effect on our business, results of operations, and financial
condition.
A shut down of airspace or imposition of restrictions on general aviation would harm our business. The
shutdown of airspace could cause reduced sales of our general aviation products and delays in the shipment of our
products manufactured in our Taiwan manufacturing facilities to our global distribution facilities, thereby adversely
affecting our ability to supply new and existing products to our dealers and distributors.
Any reallocation or repurposing of radio frequency spectrum could cause harmful interference with the
reception of Global Positioning System signals. This interference could harm our business.
Our Global Positioning System technology is dependent on the use of the Standard Positioning Service
(SPS) provided by the U.S. Government’s GPS satellites. GPS operates in radio frequency bands that are globally
allocated for radio navigation satellite services. International allocations of radio frequency are made by the
International Telecommunications Union (ITU), a specialized technical agency of the United Nations. These
allocations are further governed by radio regulations that have treaty status and which may be subject to
modification every two to three years by the World Radio Communication Conference. Each country also has
regulatory authority on how each band is used.
In the United States, the FCC and the National
Telecommunications and Information Administration (NTIA) share responsibility for radio frequency allocations and
spectrum usage regulations.
Any ITU or national reallocation of radio frequency spectrum, including frequency band segmentation or
sharing of spectrum, or other modifications of the permitted uses of relevant frequency bands, may materially and
adversely affect the utility and reliability of our products and have significant negative impacts on our business and
our customers.
Natural disasters, catastrophic events, or climate change could affect our financial results.
Natural disasters and extreme weather events, such as tsunamis or earthquakes, and medical epidemics
or pandemics, such as COVID-19 (coronavirus disease), could occur in a region where we have a manufacturing
or warehousing facility which would cause disruptions in our business operations or loss of inventory. These events
could also have an impact on our suppliers and affect our supply chain. If our backup and recovery plans are not
sufficient to minimize business disruption and if our insurance is not sufficient to recover the costs associated with
these types of events, our financial results could be adversely affected.
Climate change can also pose a risk to our business due to evolving regulatory and legislative measures
surrounding climate change. The U.S. Environmental Protection Agency has begun to regulate greenhouse gas
emissions under the authority granted to it under the Clean Air Act. At the federal legislative level, U.S. Congress
could pass legislation to adopt some form of federal mandatory greenhouse gas emission reduction, such as a
nationwide cap-and-trade program. It is also possible that the U.S. Congress may pass alternative climate change
bills that do not mandate a nationwide cap-and-trade program and instead focus on promoting renewable energy
and energy efficiency. Such measures could influence mobility and transportation trends, which could decrease the
demand for certain of our products.
Because it is uncertain what laws and regulations will be enacted, we cannot predict the potential impact
of such laws and regulations on our future consolidated financial condition, results of operations or cash flows.
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Risks Relating to Our Shares
The volatility of our stock price could adversely affect investment in our common shares.
The market price of our shares has been, and may continue to be, highly volatile. During 2019, the closing
price of our shares ranged from a low of $61.39 to a high of $98.68. A variety of factors could cause the price of our
shares to fluctuate, perhaps substantially, including:
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new products or product enhancements by us or our competitors;
general conditions in the worldwide economy, including fluctuations in interest rates and global
currency exchange rates;
announcements of technological innovations;
product obsolescence and our ability to manage product transitions;
developments in our relationships with our customers and suppliers;
the availability, pricing and timeliness of delivery of components, such as flash memory and liquid
crystal displays, used in our products;
quarterly fluctuations in our actual or anticipated operating results;
changes in applicable tax laws and tax rates;
developments in patents or other intellectual property rights and litigation;
announcements and rumors of developments related to our business, our competitors, our suppliers
or the markets in which we compete;
research reports or opinions issued by securities analysts or brokerage houses related to Garmin, our
competitors, our suppliers or our customers;
any significant acts of terrorism against the United States, Taiwan or significant markets where we
sell our products; and
other factors as discussed in the previously listed risks.
In addition, in recent years the stock market in general and the markets for shares of technology companies
in particular, have experienced extreme price fluctuations which have often been unrelated to the operating
performance of affected companies. Any such fluctuations in the future could adversely affect the market price of
our common shares.
Our officers and directors exert substantial influence over us.
As of January 16, 2020, members of our Board of Directors, and our executive officers, together with their
respective immediate family members and entities that may be deemed affiliates of or related to such persons or
entities, beneficially owned approximately 22% of our outstanding shares. Accordingly, these shareholders may be
able to determine the outcome of corporate actions requiring shareholder approval, such as mergers and
acquisitions and shareholder proposals. This level of ownership may have a significant effect in delaying, deferring,
or preventing a change in control of Garmin and may adversely affect the voting and other rights of other holders
of our common shares.
The rights of our shareholders are governed by Swiss law.
The rights of our shareholders are governed by Swiss law and Garmin Ltd.’s articles of association. The
rights of shareholders under Swiss law differ from the rights of shareholders of companies incorporated in other
jurisdictions. For example, Swiss law allows our shareholders acting at a shareholders’ meeting to authorize share
capital that can be issued by the board of directors without approval of a shareholders’ meeting, but this
authorization is limited to 50% of the existing registered share capital and must be renewed at a shareholders’
meeting at least every two years for it to continue to be available. Additionally, subject to specified exceptions,
including the exceptions described in our articles of association, Swiss law grants preemptive rights to existing
shareholders to subscribe for new issuances of shares and other securities. Swiss law also does not provide as
much flexibility in the various terms that can attach to different classes of shares as the laws of some other
jurisdictions. Swiss law also reserves for approval by shareholders certain corporate actions over which a board of
directors would have authority in some other jurisdictions. For example, Swiss law provides that dividends and other
distributions must be approved by shareholders at the general meeting of shareholders. These Swiss law
requirements relating to our capital management may limit our flexibility, and situations may arise where greater
flexibility would have provided substantial benefits to our shareholders.
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We have limited capital reserves from which to make distributions or repurchase shares without subjecting
our shareholders to Switzerland withholding tax.
As of December 28, 2019, we had CHF 5,650 million of unappropriated capital contribution reserves
available from which the Company may make dividend payments or utilize to repurchase shares for which no
withholding tax applies. At the time this reserve balance has been returned to shareholders through dividends or
share repurchases, a Swiss federal withholding tax of 35% will generally be applicable to any dividends paid to
shareholders. The withholding tax must be withheld from the gross distribution and paid to the Swiss federal Tax
Administration. A holder that qualifies for benefits under a double tax treaty may be able to recover partial
withholding tax. For example, a U.S holder that qualifies for benefits under the Convention between the United
States of America and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on
Income may apply for a refund of the tax withheld in excess of the 15% treaty rate (or in excess of the 5% reduced
treaty rate for qualifying corporate shareholders with at least 10% participation in our voting stock, or for a full refund
in case of qualified pension funds).
After we have exhausted our remaining capital contribution reserves by appropriating them for dividends or
share repurchases, any dividends paid by the Company will generally be subject to a Swiss federal withholding tax
at 35%. However, there can be no assurance that our shareholders will approve a dividend out of capital
contribution reserves, or that Swiss withholding rules will not be changed in the future or that a change in Swiss law
will not adversely affect us or our shareholders, in particular as a result of distributions out of capital contribution
reserves becoming subject to additional corporate law or other restrictions. If we are unable to pay a dividend out
of capital contribution reserves, we may not be able to make distributions without subjecting our shareholders to
Swiss withholding taxes.
Under current Swiss tax law, repurchases of shares for the purposes of capital reduction are treated as a
partial liquidation subject to 35% Swiss withholding tax on the difference between the par value and the repurchase
price. However, the portion of the repurchase price that is attributed to capital contribution reserves of the shares
repurchased will not be subject to the Swiss withholding tax. Therefore, repurchase of our own shares further limits
the amount of capital reserves available for distributions to shareholders free of Swiss withholding taxes. No partial
liquidation treatment applies and no withholding tax is triggered if the shares are not repurchased for cancellation
but held by us as treasury shares to the extent sufficient capital reserves are available. However, should we not
resell such treasury shares within six years and there is not sufficient capital contribution reserves, the withholding
tax becomes due at the end of the six-year period.
There is uncertainty as to our shareholders’ ability to enforce certain foreign civil liabilities in Switzerland
and Taiwan.
We are a Swiss company and a substantial portion of our assets are located outside the United States,
particularly in Taiwan. As a result, it may be difficult to effect service of process within the United States upon us.
In addition, there is uncertainty as to whether the courts of Switzerland or Taiwan would recognize or enforce
judgments of United States courts obtained against us predicated upon the civil liability provisions of the securities
laws of the United States or any state thereof, or be competent to hear original actions brought in Switzerland or
Taiwan against us predicated upon the securities laws of the United States or any state thereof.
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We have certain limitations on our ability to repurchase and hold our own shares.
Under Swiss law we have certain limitations on our ability to repurchase and hold our own shares. We and
our subsidiaries may only repurchase and hold our own shares to the extent that sufficient freely distributable
reserves (including contributed surplus as determined for Swiss tax and statutory purposes) are available. The
aggregate par value of our registered shares held by us and our subsidiaries may not exceed 10% of our registered
share capital. We may repurchase our registered shares beyond the statutory limit of 10%, however, if our
shareholders have adopted a resolution at a general meeting of shareholders authorizing the board of directors to
repurchase registered shares in an amount in excess of 10% and the repurchased shares are dedicated for
cancellation. Any restriction on our ability to repurchase our shares could make our stock less attractive to investors.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Properties
Garmin and its subsidiaries own a majority of their principal properties and lease certain other properties.
Depending on location, the properties could be used for manufacturing, warehousing, research and development,
office space, or a combination of activities. Garmin’s principal properties are described below:
Garmin International, Inc. and Garmin USA, Inc. own and occupy facilities of approximately 1,990,000
square feet on approximately 107 acres in Olathe, Kansas, where the majority of product design and development
work is conducted, the majority of aviation panel-mount products are manufactured, and products are warehoused,
distributed, and supported for North, Central and South America. The 1,990,000 square feet includes a newly
constructed 775,000 square foot manufacturing and distribution center. The previous manufacturing and distribution
space is currently being renovated into a research and development facility and supporting office space. In
connection with the bond financings for the facility in Olathe and the expansions of that facility, the City of Olathe
holds the legal title to the Olathe facilities, which are leased to Garmin’s subsidiaries by the City. Upon the payment
in full of the outstanding bonds, the City of Olathe is obligated to transfer title to Garmin’s subsidiaries for the
aggregate sum of $200. Garmin International, Inc. has purchased all the outstanding bonds and expects to
continue to hold the bonds until maturity in order to benefit from property tax abatement.
Garmin International, Inc. leases 148,000 square feet of land at New Century Airport in Gardner, Kansas
under a ground lease and occupies two aircraft hangars on this land, one of which is owned (47,000 square feet)
and the other leased (53,000 square feet). Both properties serve as flight test and certification facilities that are
used in development and certification of aviation products.
Garmin AT, Inc. leases approximately 18 acres of land in Salem, Oregon under a ground lease. This
ground lease expires in 2030, but Garmin AT, Inc. has the option to extend the ground lease until 2050. Garmin
AT, Inc. owns and occupies a 115,000 square foot facility for office, development and manufacturing use and a
33,000 square foot aircraft hangar that serves as a flight test and certification facility on this land. Garmin AT, Inc.
also owns and occupies an additional 66,000 square foot facility on the same property for Garmin’s West Coast
customer support call center and for research and development activities.
Garmin Corporation owns and occupies 247,000 and 185,000 square foot facilities in Xizhi Dist., New Taipei
City, Taiwan, a 224,000 square foot facility in Jhongli, Tao-Yang County, Taiwan, and a 576,000 square foot facility
in LinKou, Tao-Yang County, Taiwan. Garmin China YangZhou Co., Ltd. leases a 204,000 square foot
manufacturing facility in Yangzhou, Jiangsu, People’s Republic of China. These facilities are used for the
manufacturing and warehousing of most of Garmin’s auto, fitness, marine, and outdoor products, as well as portable
aviation products. These facilities are also used for some research and development activities and the marketing
and support of products for Asia Pacific countries.
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Garmin (Europe) Ltd. owns and occupies a 155,000 square foot building located in Totton, Southampton,
England, used as offices and a distribution facility.
Garmin also owns and leases other properties, both internationally and domestically, not described above,
that are used for office space, retail, and warehousing.
Item 3.
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.
The Company settled or resolved certain matters during the fiscal year ended December 28, 2019 that did
not individually or in the aggregate have a material impact on the Company’s financial condition or results of
operations.
Item 4.
Mine Safety Disclosure
None.
Information about our Executive Officers
Pursuant to General Instruction G(3) of Form 10-K and instruction 3 to paragraph (b) of Item 401 of
Regulation S-K, the following list is included as an unnumbered Item in Part I of this Annual Report on Form 10-K
in lieu of being included in the Company’s Definitive Proxy Statement in connection with its annual meeting of
shareholders scheduled for June 5, 2020.
Dr. Min H. Kao, age 71, has served as Executive Chairman of Garmin Ltd. since January 2013 and was
previously Chairman of Garmin Ltd. from August 2004 to December 2012 and Co-Chairman of Garmin Ltd. from
August 2000 to August 2004. He served as Chief Executive Officer of Garmin Ltd. from August 2002 to December
2012 and previously served as Co-Chief Executive Officer from August 2000 to August 2002. Dr. Kao served as
a director and officer of various subsidiaries of the Company from August 1990 until January 2013. Dr. Kao holds
Ph.D. and MS degrees in Electrical Engineering from the University of Tennessee and a BS degree in Electrical
Engineering from National Taiwan University.
Clifton A. Pemble, age 54, has served as a director of Garmin Ltd. since August 2004. He has served as
President and Chief Executive Officer of Garmin Ltd. since January 2013. Previously, he served as President and
Chief Operating Officer of Garmin Ltd. from October 2007 to December 2012. Previously, he was Vice President,
Engineering of Garmin International, Inc. from 2005 to October 2007, Director of Engineering of Garmin International,
Inc. from 2003 to 2005, Software Engineering Manager of Garmin International, Inc. from 1995 to 2002, and a
Software Engineer with Garmin International, Inc. from 1989 to 1995. Mr. Pemble has served as a director and
officer of various Garmin subsidiaries since August 2003. Mr. Pemble holds BA degrees in Mathematics and
Computer Science from MidAmerica Nazarene University.
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Douglas G. Boessen, age 57, has served as Chief Financial Officer and Treasurer of Garmin Ltd. since
July 2014. He previously served as Chief Financial Officer of EiKO Global, LLC from September 2013 to May
2014, as well as Collective Brands, Inc. from November 1997 to November 2012. Mr. Boessen has served as a
director and officer of various Garmin subsidiaries since July 2014. Mr. Boessen is a certified public accountant and
holds a BS degree in Business from the University of Central Missouri and is a graduate of the executive
development program at Northwestern University’s Kellogg Graduate School of Management.
Andrew R. Etkind, age 64, has served as Vice President, General Counsel and Secretary of Garmin Ltd.
since June 2009. He was previously General Counsel and Secretary of Garmin Ltd. from August 2000 to June 2009.
He has been Vice President and General Counsel of Garmin International, Inc. since July 2007, General Counsel
since February 1998, and Secretary since October 1998. Mr. Etkind has served as a director and officer of various
Garmin subsidiaries since December 2001. Mr. Etkind holds BA, MA and LLM degrees from Cambridge University,
England and a JD degree from the University of Michigan Law School.
All executive officers are elected by and serve at the discretion of the Company’s Board of Directors. None
of the executive officers have an employment agreement with the Company. There are no arrangements or
understandings between the executive officers and any other person pursuant to which he or she was or is to be
selected as an officer. There is no family relationship among any of the executive officers.
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PART II
Item 5.
Market for the Company’s Common Shares, Related Shareholder Matters and Issuer Purchases
of Equity Securities
Garmin’s shares have traded on The Nasdaq Stock Market, LLC under the symbol “GRMN” since its initial
public offering on December 8, 2000 (the “IPO”). As of February 14, 2020, there were 199 shareholders of record.
The Board of Directors approved a share repurchase program on February 13, 2015, authorizing the
Company to repurchase up to $300 million of the Company’s shares as market and business conditions warrant.
The share repurchase authorization expired on December 31, 2017. The Company made no repurchases of shares
during the years ended December 29, 2018 and December 28, 2019. See Note 11 in the Notes to the Consolidated
Financial Statements for additional information regarding the share repurchase plan.
We refer you to Item 12 of this report under the caption “Equity Compensation Plan Information” for certain
equity plan information required to be disclosed by Item 201(d) of Regulation S-K.
Stock Performance Graph
This performance graph shall not be deemed ‘‘filed’’ with the SEC or subject to Section 18 of the Securities
Exchange Act of 1934, nor shall it be deemed incorporated by reference in any of our filings under the
Securities Act of 1933, as amended.
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The graph below matches Garmin Ltd.'s cumulative 5-Year total shareholder return on common stock with
the cumulative total returns of the Nasdaq Composite index and the Nasdaq 100 index. The graph tracks the
performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends)
from December 31, 2014 (“12/14”) to December 31, 2019 (“12/19”).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Garmin Ltd., the NASDAQ Composite Index
and the NASDAQ 100 Index
$250
$200
$150
$100
$50
$0
12/14
12/15
12/16
12/17
12/18
12/19
Garmin Ltd.
NASDAQ Composite
NASDAQ 100
*$100 invested on 12/31/14 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.
Garmin Ltd.
NASDAQ Composite
NASDAQ 100
12/14
100.00
100.00
100.00
12/15
73.93
106.96
109.75
12/16
100.99
116.45
117.73
12/17
128.85
150.96
156.58
12/18
141.51
146.67
156.63
12/19
223.77
200.49
218.44
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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Item 6.
Selected Financial Data
The following table sets forth selected consolidated financial data of the Company. The selected
consolidated balance sheet data as of December 28, 2019 and December 29, 2018 and the selected consolidated
statements of income data for the years ended December 28, 2019, December 29, 2018, and December 30, 2017
were derived from the Company’s audited Consolidated Financial Statements and the related notes thereto which
are included in Item 8 of this annual report on Form 10-K. The selected consolidated balance sheet data as of
December 30, 2017, December 31, 2016, and December 26, 2015 and the selected consolidated statements of
income data for the years ended December 31, 2016 and December 26, 2015 were derived from the Company’s
audited Consolidated Financial Statements, not included herein.
The information set forth below is not necessarily indicative of the results of future operations and should
be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations"
and the Consolidated Financial Statements and notes to those statements included in Items 7 and 8 in Part II of
this Form 10-K.
The Company adopted the new accounting standard for revenue recognition, as discussed in Note 2 –
Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements, effective beginning
with the Company’s first quarter of 2018. Adoption of the new revenue recognition standard was applied using the
full retrospective method, and information for prior periods within Items 6 and 7 in Part II of this Form 10-K have
been restated accordingly.
In the table presented below, the selected consolidated statements of income and selected balance sheet
data for the years ended December 30, 2017 and December 31, 2016 and the selected balance sheet data for the
year ended December 26, 2015 have been restated in accordance with the Company’s adoption of the new revenue
recognition standard.
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(cid:3)
Years ended (1)
Dec.(cid:3)28,(cid:3)2019 Dec.(cid:3)29,(cid:3)2018 Dec.(cid:3)30,(cid:3)2017 Dec.(cid:3)31,(cid:3)2016 Dec.(cid:3)26,(cid:3)2015
(in thousands, except per share data)
Consolidated Statements of Income Data:
3,757,505
2,233,976
945,586
952,486
Net sales
Gross profit
Operating income
Net income (2)
$
$
$
3,347,444
1,979,719
778,343
694,080
$
3,121,560
1,797,941
683,637
709,007
$
3,045,797
1,688,525
632,864
517,724
2,820,270
1,538,704
549,581
456,227
Net income per share:
Diluted
Weighted average
common shares
outstanding:
Diluted
Dividends declared per
share (3)
$
4.99
$
3.66
$
3.76
$
2.73
$
2.39
190,899
189,734
188,732
189,343
191,107
$
2.28
$
2.12
$
2.04
$
2.04
$
2.04
Balance Sheet Data (at end of Period):
Cash, cash equivalents,
and marketable securities $
Total assets
Total debt
Total stockholders(cid:859) equity
$
2,609,505
6,166,799
(cid:886)
4,793,496
2,714,844
5,382,858
(cid:886)
4,162,974
$
$
2,313,208
4,948,289
(cid:886)
3,852,419
$
2,327,120
4,484,549
(cid:886)
3,453,259
2,391,618
4,478,529
(cid:886)
3,373,734
(1) Our fiscal year-end is the last Saturday of the calendar year and does not always fall on December 31. All
years presented contain 52 weeks excluding fiscal 2016 which includes 53 weeks.
(2) The following significant items are included in the Net income line that may affect comparability:
In 2019, a $118.0 million income tax benefit was recognized resulting from the revaluation and step-up of
certain Switzerland tax assets as a result of the enactment of Switzerland federal and Schaffhausen cantonal tax
reform and related transitional measures;(cid:3)
In 2017, a $180.0 million income tax benefit was recognized, primarily related to the revaluation of certain
Switzerland deferred tax assets resulting from the Company's election to align Switzerland corporate tax
positions with global tax initiatives, partially offset by $22.6 million of income tax expense due to the expiration of
certain share-based awards.(cid:3)
(3) Dividends declared per share refers to the cash dividend per share that has been approved by shareholders
in the given fiscal year. See Note 2 - Summary of Significant Accounting Policies, Dividends for additional detail.
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Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations focuses on and is
intended to clarify the results of our operations, certain changes in our financial position, liquidity, capital structure
and business developments for the periods covered by the Consolidated Financial Statements included in this Form
10-K. This discussion should be read in conjunction with, and is qualified by reference to, the other related
information including, but not limited to, the audited Consolidated Financial Statements (including the notes thereto),
the description of our business, all as set forth in this Form 10-K, as well as the risk factors discussed above in Item
1A.
This section provides discussion and a year-to-year comparison for the fiscal years ended December 28,
2019 and December 29, 2018. Discussion regarding our results of operations for the fiscal year ended December
30, 2017 and a year-to-year comparison between the fiscal years ended December 29, 2018 and December
30, 2017 can be found in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2018.
As previously noted, the discussion set forth below, as well as other portions of this Form 10-K, contain
statements concerning potential future events. 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 our
assumptions on which the statements are based prove incorrect or should unanticipated circumstances arise, our
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 discussed
above in Item 1A. Readers are strongly encouraged to consider those factors when evaluating any such forward-
looking statement. Except as may be required by law, we do not undertake to update any forward-looking
statements in this Form 10-K.
Garmin’s fiscal year is a 52-53 week period ending on the last Saturday of the calendar year. Fiscal years
2019, 2018 and 2017 contained 52 weeks. Unless otherwise stated, all years and dates refer to the Company’s
fiscal year and fiscal periods. Unless the context otherwise requires, references in this document to "we," "us,"
"our" and similar terms refer to Garmin Ltd. and its subsidiaries.
Unless otherwise indicated, dollar amounts set forth in the tables are in thousands, except per share data.
Overview
We are a leading worldwide provider of navigation, communications and information devices, most of which
are enabled by Global Positioning System, or GPS, technology. We operate in five reportable segments, which
serve the auto, aviation, fitness, marine, and outdoor markets. Our auto reportable segment is comprised of two
operating segments; auto PND and auto OEM. Each operating segment offers products through our network of
subsidiary distributors and independent dealers and distributors, as well as through OEMs. Each of the operating
segments is managed separately.
Since our first products were delivered in 1991, we have generated positive income from operations each
year and have funded our growth from these profits.
Critical Accounting Policies and Estimates
General
Our discussion and analysis of financial condition and results of operations are based upon the Company’s
Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The presentation of these financial statements requires management to make
estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those
related to customer sales programs and incentives, product returns, bad debts, inventories, investments, intangible
assets, income taxes, warranty obligations, and contingencies and litigation. We base our estimates on historical
experience and 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.
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Goodwill
We allocate goodwill to reporting units in proportion to the expected benefit from each business combination.
Each of the Company’s operating segments (auto PND, auto OEM, aviation, fitness, marine, and outdoor)
represents a distinct reporting unit. Goodwill is tested for impairment at the reporting unit level on an annual basis
and between annual tests if an event occurs or circumstances change that would more likely than not reduce the
fair value of a reporting unit below its carrying value. These events or circumstances could include a significant
change in the operating performance indicators, competition, or expectations about future market or economic
conditions.
Application of the goodwill impairment test requires significant judgment, including the identification of
reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and
determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the
use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate,
projected future revenues, projected future operating margins, and terminal growth rates. The estimates used to
calculate the fair value of a reporting unit change from year to year based on operating results, market conditions,
and other factors. Changes in these estimates and assumptions could materially affect the determination of fair
value and goodwill impairment for each reporting unit.
Unrecognized Income Tax Benefits
We recognize liabilities associated with uncertain income tax positions, including those related to transfer
pricing, based on our estimate of whether, and the extent to which, additional taxes will be due. We recognize the
tax benefits from an uncertain tax position only if payment of these amounts ultimately proves to be not required or
it is more likely than not that the tax position will be sustained upon examination by the taxing authorities, based on
the technical merits of the position. The tax benefits recognized in the financial statements from such positions are
measured based on the largest amount of benefit that is more likely than not to be realized upon ultimate settlement.
Assessing uncertain tax positions requires significant judgment, including the evaluation of unique facts
and circumstances and the interpretation of laws and regulations, especially the assessment of pricing analyses
that may produce various ranges of outcomes. Variations in the actual outcome of these future tax consequences
could materially impact our consolidated financial statements.
Other
For further information on the Company’s critical accounting policies, refer to the discussion in the Notes to
the Consolidated Financial Statements as indicated in the table below:
Intangible Assets
Income Taxes
Revenue Recognition
Product Warranty
Legal and Other Contingencies
Note 2 - Summary of Significant Accounting Policies
Note 2 - Summary of Significant Accounting Policies & Note 6 - Income
Taxes
Note 2 - Summary of Significant Accounting Policies & Note 13 - Revenue
Note 2 - Summary of Significant Accounting Policies
Note 2 - Summary of Significant Accounting Policies & Note 4 -
Commitments and Contingencies
Accounting Terms and Characteristics
Net Sales
Our net sales are primarily generated through sales to our retail partners, dealer and distributor network
and to original equipment manufacturers (OEMs). Refer to the Revenue Recognition discussion in Note 2 to the
Consolidated Financial Statements. We aim to achieve a quick turnaround on orders we receive, and we typically
ship most orders within 72 hours. Therefore, we believe that backlog information is not material to the
understanding of our business.
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Net sales are subject to seasonal fluctuation. Typically, sales of our consumer products are highest in the
fourth quarter due to increased demand during the holiday buying season, and in the second quarter, due to
increased demand during the spring and summer season. Our auto OEM and aviation products do not experience
much seasonal variation, but are more influenced by the timing of auto program manufacturing, aircraft certifications,
regulatory mandates, and the release of new products when the initial demand is typically the strongest.
Cost of Sales/Gross Profit
Raw material costs are our most significant component of cost of goods sold. Our existing practice of
performing the design and manufacture of our products in-house has enabled us to source components from
different suppliers and, where possible, to redesign our products to leverage lower cost components. We believe
that our flexible production model allows our Xizhi, Jhongli, and LinKou manufacturing plants in Taiwan; Yangzhou
manufacturing plant in China; our Wassenaar manufacturing plant in the Netherlands; and our Olathe, Kansas, and
Salem, Oregon manufacturing plants in the U.S. to experience relatively low costs of manufacturing. In general,
products manufactured in Taiwan have been our highest volume products. Our manufacturing labor costs
historically have been lower in Taiwan and China than in Olathe and Salem.
Sales price variability has had and can be expected to have an effect on our gross profit. Our gross profit
is dependent on segment mix, and to a lesser extent, product mix within each segment.
Advertising Expense
Our advertising expenses consist primarily of costs for media advertising, cooperative advertising with our
retail partners, point of sale displays, and sponsorships.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses consist primarily of:
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
salaries for sales, marketing and product support personnel;
salaries and related costs for executives and administrative personnel;
marketing, and other brand building costs;
finance and legal costs;
human resource costs;
information systems and infrastructure costs;
travel and related costs; and
occupancy and other overhead costs.
Research and Development
The majority of our research and development costs represent salaries for our engineers and costs of test
equipment and components used in product and prototype development.
We are committed to increasing the level of innovative design and development of new products as we
strive for expanded ability to serve our existing consumer and aviation markets as well as new markets for active
lifestyle products.
Income Taxes
We have experienced a relatively low effective income tax rate due to the proportion of our income
generated by entities in tax jurisdictions with low statutory rates.
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(cid:3)
Results of Operations
The following table sets forth our results of operations as a percentage of net sales during the periods
shown (the table may not foot due to rounding):
52-Weeks(cid:3)Ended
December(cid:3)28, 2019
52-Weeks(cid:3)Ended
December(cid:3)29, 2018
52-Weeks(cid:3)Ended
December(cid:3)30, 2017
Net sales
Cost of goods sold
Gross profit
Operating expenses:
Advertising
Selling, general and administrative
Research and development
Total operating expenses
Operating income
Other income (expense), net
Income before income taxes
Provision (benefit) for income taxes
Net income
100%
41%
59%
4%
14%
16%
34%
25%
1%
26%
1%
25%
100%
41%
59%
5%
14%
17%
36%
23%
1%
25%
4%
21%
100%
42%
58%
5%
14%
16%
36%
22%
0%
22%
(0)%
23%
The following table sets forth our results of operations through operating income for each of our five
segments during the period shown. The Company’s 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. For each line item in the table,
the total of the segments’ amounts equals the amount in the consolidated statements of income data included in
Item 6.
As indicated in Note 8 to the Consolidated Financial Statements, the methodology used to allocate certain
selling, general, and administrative expenses was refined at the beginning of the 2019 fiscal year. The amounts
presented below for the 52-weeks ended December 29, 2018 and December 30, 2017 are presented here as they
were originally reported. For comparative purposes, we estimate operating income for the 52-weeks ended
December 29, 2018 would have been approximately $18 million less for the aviation segment, approximately $11
million more for the marine segment, approximately $7 million more for the outdoor segment, and not significantly
different for the auto and fitness segments. We estimate operating income for the 52-weeks ended December 30,
2017 would have been approximately $14 million less for the aviation segment, approximately $8 million less for
the fitness segment, approximately $8 million more for the marine segment, and approximately $7 million more for
each of the outdoor and auto segments.
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(cid:3)
52-weeks ended December 28, 2019
Net sales
Cost of goods sold
Gross profit
Fitness
$1,047,527
514,923
532,604
Outdoor
$ 917,567
319,124
598,443
Auto
Aviation
$ 735,458 $ 548,103 $ 508,850
291,508
205,901
256,595
302,949
192,073
543,385
Marine
Advertising expense
Selling, general and administrative expenses
Research and development expense
Total operating expenses
71,772
159,793
109,181
340,746
52,171
124,650
87,581
264,402
5,667
65,663
219,112
290,442
14,435
78,110
107,182
199,727
20,411
90,352
82,310
193,073
Operating income
$ 191,858
$ 334,041
$ 252,943 $ 56,868 $ 109,876
52-weeks ended December 29, 2018
Net sales
Cost of goods sold
Gross profit
Fitness
$ 858,329
386,565
471,764
Outdoor
$ 809,883
281,629
528,254
Auto
Aviation
$ 603,459 $ 634,213 $ 441,560
363,420
182,804
270,793
258,756
153,307
450,152
Marine
Advertising expense
Selling, general and administrative expenses
Research and development expense
Total operating expenses
64,707
135,096
90,216
290,019
46,041
120,588
71,115
237,744
7,207
36,139
202,060
245,406
19,155
88,672
124,968
232,795
18,284
97,682
79,446
195,412
Operating income
$ 181,745
$ 290,510
$ 204,746 $ 37,998 $
63,344
52-weeks ended December 30, 2017
Net sales
Cost of goods sold
Gross profit
Fitness
$ 762,194
339,558
422,636
Outdoor
$ 698,867
250,457
448,410
Auto
Aviation
$ 501,359 $ 785,139 $ 374,001
442,441
161,409
342,698
212,592
129,754
371,605
Marine
Advertising expense
Selling, general and administrative expenses
Research and development expense
Total operating expenses
75,660
119,537
80,674
275,871
41,113
98,914
58,516
198,543
6,180
27,766
183,726
217,672
25,639
107,995
126,320
259,954
16,101
83,765
62,398
162,264
Operating income
$ 146,765
$ 249,867
$ 153,933 $ 82,744 $
50,328
Net Sales
Net Sales
Fitness
Percentage of Total Net Sales
Outdoor
Percentage of Total Net Sales
Aviation
Percentage of Total Net Sales
Auto
Percentage of Total Net Sales
Marine
Percentage of Total Net Sales
Total
52-Weeks Ended
December 28, 2019
Year-
over-
Year
Change
52-Weeks Ended
December 29, 2018
Year-
over-
Year
Change
$
1,047,527
22% $
858,329
13% $
28%
917,567
24%
735,458
20%
13%
22%
26%
809,883
24%
603,459
18%
16%
20%
548,103
(14%)
634,213
(19%)
15%
19%
508,850
15%
441,560
18%
13%
13%
52-Weeks Ended
December 30, 2017
762,194
24 %
698,867
22 %
501,359
16 %
785,139
25 %
374,001
12 %
$
3,757,505
12% $
3,347,444
7% $
3,121,560
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Net sales increased 12% in 2019 when compared to the year-ago period. All segments had an increase in
revenue except for auto. Fitness revenue represented the largest portion of our revenue mix in 2019 at 28%
compared to 26% in 2018.
Total unit sales increased 5% to 15.6 million units in 2019 from 14.9 million units in 2018.
Fitness, outdoor, aviation, and marine revenues increased 22%, 13%, 22%, and 15%, respectively when
compared to the year-ago period. The fitness segment revenue increase was primarily driven by strong sales in
wearables and sales from Tacx, a newly acquired group of subsidiaries that designs and manufactures indoor bike
trainers. The outdoor segment revenue increase was driven by sales growth in multiple product categories, primarily
led by adventure watches. Aviation segment revenue increases were driven by sales growth in both aftermarket
and OEM categories. Marine segment revenue increases were driven by sales growth across multiple product
categories, primarily chartplotters and SONAR products. Auto segment revenue decreased 14% from the year-ago
period, due to the ongoing auto PND market contraction and lower auto OEM program sales.
Gross Profit
Gross Profit
Fitness
Percentage of Segment Net Sales
Outdoor
Percentage of Segment Net Sales
Aviation
Percentage of Segment Net Sales
Auto
Percentage of Segment Net Sales
Marine
Percentage of Segment Net Sales
Total
Percentage of Total Net Sales
52-Weeks Ended
December 28, 2019
Year-
over-
Year
Change
52-Weeks Ended
December 29, 2018
Year-
over-
Year
Change
$
532,604
13 % $
471,764
12% $
51%
598,443
65%
543,385
74%
256,595
47%
302,949
60%
13 %
21 %
(5 %)
17 %
55%
528,254
65%
450,152
75%
18%
21%
270,793
(21%)
43%
258,756
22%
59%
$
2,233,976
13 % $
1,979,719
10% $
59 %
59 %
52-Weeks Ended
December 30, 2017
422,636
55 %
448,410
64 %
371,605
74 %
342,698
44 %
212,592
57 %
1,797,941
58 %
Gross profit dollars in fiscal year 2019 increased 13% while gross margin was slightly higher compared to
fiscal year 2018. Gross margin increased 410 basis points in the auto segment when compared to the prior year,
primarily attributable to lower license expense. Gross margin remained relatively flat within the outdoor, marine,
and aviation segments. Gross margin decreased in the fitness segment primarily due to lower average selling prices
and product mix.
Advertising Expenses
Advertising
Fitness
Percentage of Segment Net Sales
Outdoor
Percentage of Segment Net Sales
Aviation
Percentage of Segment Net Sales
Auto
Percentage of Segment Net Sales
Marine
Percentage of Segment Net Sales
Total
Percentage of Total Net Sales
$
$
52-Weeks Ended
December 28, 2019
71,772
7%
52,171
6%
5,667
1%
14,435
3%
20,411
4%
164,456
4%
Year-
over-
Year
Change
11% $
13%
(21%)
(25%)
12%
52-Weeks Ended
December 29, 2018
64,707
8%
46,041
6%
7,207
1%
19,155
3%
18,284
4%
Year-
over-
Year
Change
(14%) $
12%
17%
(25%)
14%
6% $
155,394
(6%) $
5%
52-Weeks Ended
December 30, 2017
75,660
10%
41,113
6%
6,180
1%
25,639
3%
16,101
4%
164,693
5%
Advertising expense increased 6% in absolute dollars and was relatively flat as a percent of revenue in
fiscal year 2019 compared to fiscal year 2018. The overall increase in absolute dollars was primarily attributable to
increased cooperative advertising in the outdoor, fitness, and marine segments and increased media advertising in
the outdoor and fitness segments. These increases were partially offset by decreased cooperative advertising
expense in the auto and aviation segments. All segments were relatively flat as a percent of revenue compared to
the prior year.
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Selling, General and Administrative Expenses
Selling, General & Admin. Expenses
Fitness
$
Percentage of Segment Net Sales
Outdoor
Percentage of Segment Net Sales
Aviation
Percentage of Segment Net Sales
Auto
Percentage of Segment Net Sales
Marine
Percentage of Segment Net Sales
Total
Percentage of Total Net Sales
$
52-Weeks Ended
December 28, 2019
Year-
over-
Year
Change
52-Weeks Ended
December 29, 2018
Year-
over-
Year
Change
159,793
18% $
135,096
13% $
15%
124,650
14%
65,663
9%
78,110
14%
90,352
18%
518,568
14 %
3%
82%
(12%)
(8%)
8% $
16%
120,588
15%
36,139
6%
88,672
14%
97,682
22%
478,177
14 %
22%
30%
(18%)
17%
9% $
52-Weeks Ended
December 30, 2017
119,537
16%
98,914
14%
27,766
6%
107,995
14%
83,765
22%
437,977
14 %
Selling, general and administrative expense increased 8% in absolute dollars and was relatively flat as a
percent of revenue when compared to the prior year. The absolute dollar increase was primarily attributable to
personnel costs, legal related costs, and expenses from recent acquisitions.
As noted above and in Note 8 to the Consolidated Financial Statements, the Company refined its
methodology to allocate certain selling, general and administrative expenses at the beginning of the 2019 fiscal
year. The prior year amounts are presented here as originally reported. For comparative purposes, we estimate
selling, general and administrative expenses for fiscal year 2018 would have been approximately $18 million more
for the aviation segment, approximately $11 million less for the marine segment, approximately $7 million less for
the outdoor segment, and not significantly different for the fitness and auto segments. We estimate the selling,
general and administrative expense for fiscal 2017 would have been approximately $14 million more for the aviation
segment, approximately $8 million more for the fitness segment, approximately $8 million less for the marine
segment, and approximately $7 million less for each of the outdoor and auto segments.
In addition to the change in methodology of allocating certain selling, general and administrative expenses
noted above, marine decreased in fiscal 2019, as a percent of revenue, from the previous year due to greater
leverage of operating costs.
Research and Development Expense
Research & Development
Fitness
Percentage of Segment Net Sales
Outdoor
Percentage of Segment Net Sales
Aviation
Percentage of Segment Net Sales
Auto
Percentage of Segment Net Sales
Marine
Percentage of Segment Net Sales
Total
Percentage of Total Net Sales
52-Weeks Ended
December 28, 2019
109,181
10%
87,581
10%
219,112
30%
Year-
over-
Year
Change
21% $
23%
8%
107,182
(14%)
20%
82,310
16%
605,366
16 %
4%
7% $
$
$
52-Weeks Ended
December 29, 2018
90,216
11%
71,115
9%
202,060
33%
124,968
20%
79,446
18%
567,805
17 %
Year-
over-
Year
Change
12% $
22%
10%
(1%)
27%
11% $
52-Weeks Ended
December 30, 2017
80,674
11%
58,516
8%
183,726
37%
126,320
16%
62,398
17%
511,634
16 %
Research and development expense increased 7% in absolute dollars when compared to the year-ago
period and was relatively flat as a percent of revenue. The absolute dollar increase was primarily due to engineering
personnel costs related to our wearable and aviation product offerings and expenses resulting from recent
acquisitions, partially offset by the capitalization of certain contractually reimbursable preproduction design and
development personnel costs within the auto segment. Our research and development spending is focused on
product development, improving existing software capabilities, and exploring new categories.
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Operating Income
Operating Income
Fitness
Percentage of Segment Net Sales
Outdoor
Percentage of Segment Net Sales
Aviation
Percentage of Segment Net Sales
Auto
Percentage of Segment Net Sales
Marine
Percentage of Segment Net Sales
Total
Percentage of Total Net Sales
$
$
52-Weeks Ended
December 28, 2019
191,858
18%
334,041
36%
252,943
34%
56,868
10%
109,876
22%
945,586
25 %
Year-
over-
Year
Change
6% $
15%
24%
50%
73%
21% $
52-Weeks Ended
December 29, 2018
181,745
21%
290,510
36%
204,746
34%
37,998
6%
63,344
14%
778,343
23 %
Year-
over-
Year
Change
24% $
16%
33%
-54%
26%
14% $
52-Weeks Ended
December 30, 2017
146,765
19%
249,867
36%
153,933
31%
82,744
11%
50,328
13%
683,637
22 %
Total operating income increased 21% in absolute dollars and increased 190 basis points as a percent of
revenue when compared to fiscal year 2018. The growth in total operating income on an absolute dollar basis and
as a percent of revenue was the result of revenue growth, slightly higher gross margin, and greater leverage of
operating expenses, as discussed above.
Other Income (Expense)
Other Income (Expense)
Interest income
Foreign currency (losses)
Other income (expense)
Total
52-Weeks Ended
December 28, 2019
52-Weeks Ended
December 29, 2018
52-Weeks Ended
December 30, 2017
$
$
52,817
(16,799)
5,618
41,636
$
$
47,147
(7,616)
5,373
44,904
$
$
36,925
(22,579)
(912)
13,434
The average returns on cash and investments, including interest and capital gain/loss returns during the
52-weeks ended December 28, 2019 and December 29, 2018 were 2.0% and 1.8%, respectively. Interest income
increased primarily due to slightly higher yields on fixed-income securities.
Foreign currency gains and losses for the Company are typically driven by movements in the Taiwan Dollar,
Euro, and British Pound Sterling in relation to the U.S. Dollar. The Taiwan Dollar is the functional currency of
Garmin Corporation, the U.S. Dollar is the functional currency of Garmin (Europe) Ltd., and the Euro is the functional
currency of most of our other European subsidiaries, although some transactions and balances are denominated
in British Pounds. The majority of the Company’s consolidated foreign currency gain or loss is typically driven by
the significant cash and marketable securities, receivables, and payables held in a currency other than the functional
currency at a given legal entity. Due to the relative size of the entities using a functional currency other than the
Taiwan Dollar, Euro, and British Pound Sterling, currency fluctuations related to these entities are not expected to
have a material impact on the Company’s financial statements.
The $16.8 million currency loss recognized in fiscal 2019 was primarily due to the U.S. Dollar strengthening
against the Euro and weakening against the Taiwan Dollar, partially offset by the U.S. Dollar weakening against the
British Pound Sterling. During fiscal 2019, the U.S. Dollar strengthened 2.3% against the Euro and weakened 1.5%
against the Taiwan Dollar, resulting in losses of $9.3 million and $7.1 million, respectively, while the U.S. Dollar
weakened 2.9% against the British Pound Sterling, resulting in a gain of $2.8 million. The remaining net currency
loss of $3.2 million was related to the timing of transactions and impacts of other currencies, each of which was
individually immaterial.
The $7.6 million currency loss recognized in fiscal 2018 was primarily due to the strengthening of the U.S.
Dollar against the Euro and the British Pound Sterling, offset by the U.S. Dollar strengthening against the Taiwan
Dollar. During fiscal 2018, the U.S. Dollar strengthened 4.7% against the Euro and 6.0% against the British Pound
Sterling, resulting in losses of $10.0 million and $1.7 million, respectively, while the U.S. Dollar strengthened 3.0%
against the Taiwan Dollar, resulting in a gain of $15.1 million. The remaining net currency loss of $11.0 million was
related to the timing of transactions and impacts of other currencies, each of which was individually immaterial.
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Income Tax Provision
Income tax expense for the fiscal year ended December 28, 2019 was $34.7 million compared to income
tax expense of $129.2 million for the fiscal year ended December 29, 2018, representing a net decrease of $94.5
million. Contributing to the decrease in income tax expense was an income tax benefit of $118.0 million associated
with the revaluation and step-up of certain Switzerland tax assets as a result of the October 2019 enactment of
Switzerland federal and Schaffhausen cantonal tax reform and related transitional measures.
In connection with
these transitional measures included in Switzerland tax reform, a reduced income tax rate will be utilized on certain
Switzerland taxable income for up to five years.
In February 2020, the Company initiated a transaction between wholly-owned subsidiaries to migrate
ownership of certain intellectual property from Switzerland to the United States, the primary location of research,
development, and executive management. The migration, which includes a multi-year intercompany license of
intellectual property, is expected to result in a favorable shift of income mix by jurisdiction and a reduction in expense
related to uncertain tax positions. During the term of the license agreement, this transaction is expected to
decrease the Company’s effective income tax rate as compared to the fiscal year 2019 effective income tax rate
excluding the $118.0 million income tax benefit associated with the revaluation and step-up of certain Switzerland
tax assets, as described above. The Company plans to pursue an Advance Pricing Agreement between relevant
jurisdictions related to this transaction. At the end of the license agreement, a higher percentage of income will be
recognized in the United States.
Net Income
As a result of the various factors noted above, income before taxes increased 20% to $987.2 million from
$823.2 million in the prior year, while net income increased 37% to $952.5 million from $694.1 million in the prior
year.
Liquidity and Capital Resources
As of December 28, 2019, we had approximately $2.6 billion of cash and cash equivalents and marketable
securities. We primarily use cash flow from operations, and expect that future cash requirements may be used, to
fund our capital expenditures, support our working capital requirements, pay dividends, and fund strategic
acquisitions. We believe that our existing cash balances and cash flow from operations will be sufficient to meet our
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 income returns on cash and investments during fiscal 2019, 2018, and 2017 were
approximately 2.0%, 1.9%, and 1.6%, 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 3 of the Notes to Consolidated Financial Statements for additional
information regarding marketable securities.
Operating Activities
Net cash provided by operating activities
52-Weeks(cid:3)Ended
December 28, 2019
698,549
$
52-Weeks(cid:3)Ended
December 29, 2018
919,520
$
52-Weeks(cid:3)Ended
December 30, 2017
660,842
$
The $221.0 million decrease in cash provided by operating activities in fiscal year 2019 compared to fiscal
year 2018 was primarily due to a decrease of cash provided by working capital of $303.1 million (which included a
decrease of $130.7 million in net collections of accounts receivable associated primarily with strong fourth quarter
sales, a net increase of $112.4 million in cash paid for inventory associated primarily with the Company’s strategy
to increase days of supply to support our increasingly diversified product lines, and a net increase of $60.0 million
in cash used in other activities primarily driven by payments associated with an amendment to a license agreement)
and income taxes payable of $69.4 million. The decrease was partially offset by an increase in net income of
$258.4 million, reduced by other non-cash adjustments to net income of $106.9 million, which included an income
tax benefit of $118.0 million associated with the revaluation and step-up of certain Switzerland tax assets.
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(cid:3)
Investing Activities
Net cash used in investing activities
52-Weeks(cid:3)Ended
December 28, 2019
$
(450,746) $
52-Weeks(cid:3)Ended
December 29, 2018
52-Weeks(cid:3)Ended
December 30, 2017
(307,503) $
(194,383)
The $143.2 million increase in cash used in investing activities in fiscal year 2019 compared to fiscal year
2018 was primarily due to increased net cash paid for acquisitions of $271.1 million, partially offset by a decrease
in net purchases of marketable securities of $89.0 million and decreased cash payments for net purchases of
property and equipment of $36.7 million.
Financing Activities
Net cash used in financing activities
52-Weeks(cid:3)Ended
December 28, 2019
$
(416,028) $
52-Weeks(cid:3)Ended
December 29, 2018
52-Weeks(cid:3)Ended
December 30, 2017
(286,161) $
(448,412)
The $129.9 million increase in cash used in financing activities in fiscal year 2019 compared to fiscal year
2018 was primarily due to an increase in dividend payments of $121.1 million associated with the timing of dividend
payments that resulted in one more dividend payment in 2019 compared to 2018.
Our declared dividend has increased from $0.51 per share for the twelve calendar quarters beginning in
June 2016 to $0.57 per share for the four calendar quarters beginning June 2019.
Contractual Obligations and Commercial Commitments
As of December 28, 2019, operating leases comprise the substance of the Company’s commercial
commitments with long-term scheduled payments, as summarized below:
Contractual Obligations
Operating Leases
Less(cid:3)than
1(cid:3)year(cid:3)
Payments due by period
1-3
years(cid:3)
3-5
years(cid:3)
More(cid:3)than
5(cid:3)years(cid:3)
Total
$
97,319
$
18,487
$
30,240
$
22,018
$
26,574
The Company is party to certain other commitments, which include purchases of raw materials, capital
expenditures, advertising, and other indirect purchases in connection with conducting our business. The aggregate
amount of purchase orders and other commitments open as of December 28, 2019 was approximately $586.3
million. We cannot determine the aggregate amount of such purchase orders that represent contractual obligations
because purchase orders may represent authorizations to purchase rather than binding agreements. Our
purchase orders are generally based on our current needs and are typically fulfilled within short periods of time.
We may be required to make significant cash outlays related to unrecognized tax benefits. However, due
to the uncertainty of the timing of future cash flows associated with our unrecognized tax benefits, we are unable to
make reasonably reliable estimates of the period of cash settlement, if any, with the respective taxing authorities.
Accordingly, unrecognized tax benefits of $101.3 million as of December 28, 2019, have been excluded from the
contractual obligations table above. For further information related to unrecognized tax benefits, see Note 2 –
Summary of Significant Accounting Policies, Income Taxes and Note 6 – Income Taxes to the Consolidated
Financial Statements included in this Report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Sensitivity
We have market risk primarily in connection with the pricing of our products and services and the purchase
of raw materials. Product pricing and raw materials costs are both significantly influenced by semiconductor market
conditions. Historically, during cyclical industry downturns, we have been able to offset pricing declines for our
products through a combination of improved product mix and success in obtaining price reductions in raw materials
costs.
Inflation
We do not believe that inflation has had a material effect on our business, financial condition or results of
operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully
offset such higher costs through price increases. Our inability or failure to do so could adversely affect our business,
financial condition and results of operations.
Foreign Currency Exchange Rate Risk
The operation of Garmin’s subsidiaries in international markets results in exposure to movements in
currency exchange rates. We have experienced significant foreign currency gains and losses due to the
strengthening and weakening of the U.S. dollar. The potential of volatile foreign exchange rate fluctuations in the
future could have a significant effect on our results of operations. The Company has not historically used financial
instruments to hedge its foreign currency exchange rate risks.
The currencies that create a majority of the Company’s exchange rate exposure are the Taiwan Dollar,
Euro, and British Pound Sterling. Garmin Corporation, headquartered in Taiwan, uses the local currency as the
functional currency. The Company translates all assets and liabilities at the rate of exchange in effect at the balance
sheet date and income and expense activity at the approximate rate of exchange at the transaction date. In order
to minimize the effect of the currency exchange fluctuations on our net assets, we have elected to retain most of
our Taiwan subsidiary’s cash and investments in accounts denominated in U.S. Dollars.
Most European subsidiaries use the Euro as the functional currency. However, the functional currency of
our largest European subsidiary, Garmin (Europe) Ltd., is the U.S. Dollar, and as some transactions have occurred
and balances reside in British Pounds Sterling or Euros, foreign currency gains or losses have been realized
historically related to the movements of those currencies relative to the U.S. Dollar. Gains and losses may become
more material in the future as our European presence grows.
During fiscal year 2019, the Company incurred a net foreign currency loss of $16.8 million. The U.S. Dollar
strengthening against the Euro and weakening against the Taiwan Dollar was partially offset by the U.S. Dollar
weakening against the British Pound Sterling. During fiscal 2019, the U.S. Dollar strengthened 2.3% against the
Euro and weakened 1.5% against the Taiwan Dollar, resulting in losses of $9.3 million and $7.1 million, respectively,
while the U.S. Dollar weakened 2.9% against the British Pound Sterling, resulting in a gain of $2.8 million. The
remaining net currency loss of $3.2 million was related to the timing of transactions and impacts of other currencies,
each of which was individually immaterial. These and other currency moves during fiscal year 2019 also resulted
in a currency translation adjustment of $8.0 million within Accumulated other comprehensive income on the
Company’s Consolidated Balance Sheets.
We assessed the Company’s exposure to movements in currency exchange rates by performing a
sensitivity analysis of adverse changes in exchange rates and the corresponding impact to our results of operations.
Based on monetary assets and liabilities denominated in currencies other than respective functional currencies as
of December 28, 2019 and December 29, 2018, hypothetical and reasonably possible adverse changes of 10% for
the Taiwan Dollar, Euro, and British Pound Sterling would have resulted in an adverse impact on Income before
income taxes on the Company’s Consolidated Statements of Income of approximately $90 and $109 million at
December 28, 2019 and December 29, 2018, respectively.
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Interest Rate Risk
We have no outstanding long-term debt as of December 29, 2018. We, therefore, have no meaningful
debt-related interest rate risk.
We are exposed to interest rate risk in connection with our investments in marketable securities. As
interest rates change, the unrealized gains and losses associated with those securities will fluctuate accordingly.
The Company’s investment policy targets low risk investments with the objective of minimizing the potential
risk of principal loss. The Company does not intend to sell securities in an unrealized loss position and it is not more
likely than not that the Company will be required to sell such investments before recovery of their amortized costs
bases, which may be maturity. During 2019 and 2018, the Company did not record any material impairment charges
on its outstanding securities.
We assessed the Company’s exposure to interest rate risk by performing a sensitivity analysis of a parallel
shift in the yield curve and the corresponding impact to the Company’s portfolio of marketable securities. Based
on balance sheet positions as of December 28, 2019 and December 29, 2018, the hypothetical and reasonably
possible 100 basis point increases in interest rates across all securities would have resulted in declines in portfolio
fair market value of approximately $35 million and $38 million at December 28, 2019 and December 29, 2018,
respectively. Such losses would only be realized if the Company sold the investments prior to maturity.
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Item 8. Financial Statements and Supplementary Data
CONSOLIDATED FINANCIAL STATEMENTS
Garmin Ltd. and Subsidiaries
Years Ended December 28, 2019, December 29, 2018, and December 30, 2017
Contents
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
Consolidated Balance Sheets at December 28, 2019 and December 29, 2018
Consolidated Statements of Income for the Years Ended December 28, 2019, December 29, 2018, a(cid:374)(cid:282)(cid:3)
December 30, 2017
Consolidated Statements of Comprehensive Income for the Years Ended December 28, 2019, December
29, 2018 and December 30, 2017
Consolidated Statements of Stockholders’ Equity for the Years Ended December 28, 2019, December 29,
2018, and December 30, 2017
Consolidated Statements of Cash Flows for the Years Ended December 28, 2019, December 29, 2018, and
December 30, 2017
Notes to Consolidated Financial Statements
50
53
54
55
56
57
59
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Garmin Ltd. and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Garmin Ltd. and Subsidiaries (the Company)
as of December 28, 2019 and December 29, 2018, the related consolidated statements of income, comprehensive
income, stockholders’ equity and cash flows for each of the three years in the period ended December 28, 2019,
and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as
the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 28, 2019 and December 29, 2018, and the
results of its operations and its cash flows for each of the three years in the period ended December 28, 2019, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 28, 2019, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) and our report dated February 19, 2020, expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which
they relate.
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Valuation of Goodwill
Description of the Matter
The Company assigns goodwill acquired in business combinations to its reporting units as of each acquisition date.
At December 28, 2019, the Company’s goodwill balance related to the auto personal navigation device (“auto PND”)
reporting unit was approximately $80 million. As discussed in Note 2 of the consolidated financial statements,
goodwill is tested for impairment at least annually at the reporting unit level. The auto PND market has declined in
recent years as competing technologies have emerged and market saturation has occurred. This has resulted in
periods of lower revenues and profits for the Company’s auto PND reporting unit. Considering these qualitative
factors, management performed a step one quantitative impairment test of the auto PND reporting unit in the fourth
quarter of 2019. Considering the uncertainty of future operating results and/or market conditions deteriorating
faster or more drastically than the forecasts utilized in management’s estimation of fair value, the Company
disclosed some or all of the approximately $80 million of goodwill associated with the auto PND reporting unit is at
risk of future impairment.
Auditing management’s annual goodwill impairment test for the auto PND reporting unit was complex and highly
judgmental due to the significant estimation required in determining the fair value of the reporting unit. In particular,
the fair value estimate was sensitive to significant assumptions such as the discount rate, projected future revenues,
projected future operating margins, and terminal growth rates which are affected by expectations about future
market or economic conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the
Company’s auto PND goodwill impairment review process. For example, we tested controls over management's
review of the significant assumptions (e.g., discount rate, projected revenue growth rates, projected operating
margins, terminal growth rates) used to develop the prospective financial information (PFI) for the quantitative
analysis. We also tested management's controls to validate that the data used in the valuation was complete and
accurate.
To test the estimated fair value of the Company’s auto PND reporting unit, we performed audit procedures that
included, among others, assessing the methodology and testing the significant assumptions discussed above and
the underlying data used by the Company in its analysis. We included valuation specialists on our team to review
the Company’s model, method, and the more sensitive assumptions such as the discount rate and terminal growth
assumptions. We compared the significant assumptions used by management to current industry and economic
trends, changes to the Company’s business model, forecasts used in the Company’s annual operating plans and
other relevant factors. We assessed the historical accuracy of management’s forecast estimates and performed
sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the auto PND reporting
unit that would result from changes in the assumptions. We reconciled the fair value of the reporting unit to its
carrying amount, testing the Company’s determination of the assets and liabilities used within the reporting unit that
are the basis for the carrying amount. In addition, we tested management’s reconciliation of the fair value of the
reporting units to the market capitalization of the Company.
Measurement of Reserve for Unrecognized Income Tax Benefits
Description of the Matter
The Company accounts for uncertainty in income taxes in accordance with the FASB ASC 740 topic, Income Taxes.
The Company operates in a multinational tax environment and is subject to tax laws, regulations and guidelines for
intercompany transactions that have transfer pricing subjectivity. For those uncertain tax positions that qualify for
recognition, the Company uses significant judgment to measure the largest amount of benefit that is more likely
than not to be realized upon ultimate settlement. As discussed in Note 6 to the consolidated financial statements,
the Company’s balance of gross unrecognized income tax benefits was $101 million at December 28, 2019,
primarily related to transfer pricing positions.
51
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(cid:3)
Auditing management’s measurement of these material tax positions is complex and involved especially subjective
and complex judgements. The assessment process involves both significant judgment and estimation because the
pricing of the intercompany transactions is based on pricing analyses that may produce a number of different
outcomes or ranges of outcomes (e.g., the price that would be charged in an arm’s-length transaction). Each
transfer pricing tax position carries unique facts and circumstances that must be evaluated, and ultimate resolution
will be dependent on uncontrollable factors, such as the interpretation of laws and regulations; new case law; the
willingness of the income tax authority to settle the issue, including the timing thereof; and other factors.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls that address
the risks of material misstatement relating to the measurement and valuation of the uncertain tax position reserves
related to transfer pricing from intercompany transactions. For example, we tested controls over management’s
review of inputs and calculations of these uncertain tax positions, which included management’s evaluation of the
ranges of outcomes and pricing conclusions reached within the transfer pricing studies.
Our audit procedures included, among others, involving our tax professionals to test the Company’s measurement
of tax positions related to transfer pricing used in intercompany transactions to assess the appropriateness of the
ranges of outcomes utilized and the pricing conclusions reached within the transfer pricing studies conducted by
the Company. For example, we compared the transfer pricing methodology utilized by management to alternative
methodologies and industry benchmarks. We also verified our understanding of the relevant facts by reading the
Company’s correspondence with the relevant tax authorities and any third-party advice obtained by the Company.
In addition, we used our knowledge of international and local income tax laws, as well as historical settlement
activity from income tax authorities, to evaluate the appropriateness of the Company’s measurement of uncertain
tax positions related to transfer pricing used in these intercompany transactions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1990.
Kansas City, Missouri
February 19, 2020
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(cid:3)
(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share information)
December 28,
2019(cid:3)
December 29,
2018(cid:3)
$
1,027,567
376,463
$
Assets
Current assets:
Cash and cash equivalents
Marketable securities (Note 3)(cid:3)
Accounts receivable, less allowance for doubtful accounts of $6,754 in 2019 and
$5,487 in 2018(cid:3)
Inventories
Deferred costs
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Land and improvements
Building and improvements
Office furniture and equipment
Manufacturing equipment
Engineering equipment
Vehicles
Accumulated depreciation
Operating lease right-of-use assets (Note 14)(cid:3)
Restricted cash (Note 4)(cid:3)
Marketable securities (Note 3)(cid:3)
Deferred income taxes (Note 6)(cid:3)
Noncurrent deferred costs
Intangible assets, net
Other assets
Total assets
Liabilities and Stockholders(cid:859) Equity
Current liabilities:
Accounts payable
Salaries and benefits payable
Accrued warranty costs
Accrued sales program costs
Deferred revenue
Accrued royalty costs
Accrued advertising expense
Other accrued expenses
Income taxes payable
Dividend payable
Total current liabilities
Deferred income taxes (Note 6)(cid:3)
Noncurrent income taxes
Noncurrent deferred revenue
Noncurrent operating lease liabilities
Other liabilities
Stockholders(cid:859) equity:
Shares, CHF 0.10 par value, 198,077 shares authorized and issued, 190,686(cid:3)
shares outstanding at December 28, 2019; and 189,461 shares outstanding(cid:3)
at December 29, 2018; (Notes 9, 10, and 11):(cid:3)
Additional paid-in capital
Treasury stock
Retained earnings
Accumulated other comprehensive income
Total stockholders(cid:859) equity
Total liabilities and stockholders(cid:859) equity
See accompanying notes.
53
706,763
752,908
25,105
169,044
3,057,850
132,951
576,703
306,694
192,741
170,021
26,887
1,405,997
(677,076 )
728,921
63,589
71
1,205,475
268,518
23,493
659,629
159,253
6,166,799
240,831
128,426
39,758
112,578
94,562
15,401
35,142
95,060
56,913
217,262
1,035,933
114,754
105,771
67,329
49,238
278
$
$
1,201,732
182,989
569,833
561,840
28,462
120,512
2,665,368
131,689
539,177
264,818
162,077
154,742
20,991
1,273,494
(609,967 )
663,527
(cid:886)
73
1,330,123
176,959
29,473
417,080
100,255
5,382,858
204,985
113,087
38,276
90,388
96,372
24,646
31,657
69,777
51,642
200,483
921,313
92,944
127,211
76,566
(cid:886)
1,850
17,979
1,835,622
(345,040 )
3,229,061
55,874
4,793,496
6,166,799
$
17,979
1,823,638
(397,692 )
2,710,619
8,430
4,162,974
5,382,858
$
$
$
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3/27/20 11:14 PM
(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Statements of Income
(In thousands, except per share information)
Net sales
Cost of goods sold
Gross profit
Advertising expense
Selling, general and administrative expenses
Research and development expense
Operating income
Other income (expense):
Interest income
Foreign currency losses
Other income (expense)
Income before income taxes
Income tax provision (benefit): (Note 6)
Current
Deferred
Net income
Basic net income per share (Note 10)
Diluted net income per share (Note 10)
See accompanying notes.
December(cid:3)28,
2019(cid:3)
3,757,505 $
1,523,529
2,233,976
Fiscal Year Ended
December(cid:3)29,
2018(cid:3)
3,347,444 $
1,367,725
1,979,719
$
December(cid:3)30,
2017(cid:3)
3,121,560
1,323,619
1,797,941
164,456
518,568
605,366
1,288,390
945,586
52,817
(16,799)
5,618
41,636
987,222
155,394
478,177
567,805
1,201,376
778,343
47,147
(7,616)
5,373
44,904
823,247
123,073
(88,337)
34,736
952,486 $
93,424
35,743
129,167
694,080 $
164,693
437,977
511,634
1,114,304
683,637
36,925
(22,579)
(912)
13,434
697,071
79,234
(91,170)
(11,936)
709,007
5.01 $
4.99 $
3.68 $
3.66 $
3.77
3.76
$
$
$
54
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(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
December(cid:3)28,
2019(cid:3)
Fiscal Year Ended
December(cid:3)29,
2018(cid:3)
December(cid:3)30,
2017(cid:3)
Net income
Foreign currency translation adjustment
Change in fair value of available-for-sale marketable
securities, net of deferred taxes(cid:3)
Comprehensive income
(cid:3) (cid:3)
See accompanying notes.
$
$
(cid:3) (cid:3) (cid:3)(cid:3) (cid:3)
(cid:3) (cid:3) (cid:3)(cid:3) (cid:3)
952,486 $
7,962
694,080 $
(31,965 )
39,482
999,930 $
(15,581 )
646,534 $
709,007
88,965
4,486
802,458
(cid:3)(cid:3) (cid:3) (cid:3)(cid:3) (cid:3)
(cid:3)(cid:3) (cid:3) (cid:3)(cid:3) (cid:3)
(cid:3) (cid:3)(cid:3) (cid:3)(cid:3) (cid:3)
(cid:3) (cid:3)(cid:3) (cid:3)(cid:3) (cid:3)
(cid:3)
(cid:3)(cid:3)
55
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(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Statements of Stockholders' Equity
(In thousands)
Common
Stock(cid:3)
Additional
Paid-In(cid:3)
Capital(cid:3)
Treasury
Stock(cid:3)
Retained
Earnings(cid:3)
Accumulated
Other(cid:3)
Comprehensive(cid:3)
Income (Loss)(cid:3)
Total
Balance at December 31, 2016
$ 17,979 $1,836,047 $ (455,964) $2,092,220 $
Net income
Translation adjustment
Adjustment related to unrealized gains
(losses) on available-for-sale securities net of
income tax effects of $493
Comprehensive income
Dividends declared ($2.04 per share)
Issuance of treasury stock related to equity
awards
Stock compensation
Purchase of treasury stock related to equity
awards
Purchase of treasury stock under share
repurchase plan
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(52,581 )
44,735
74,442
(cid:886)
185
(12,773)
(cid:886)
(74,523)
Balance at December 30, 2017
$ 17,979 $1,828,386 $ (468,818) $2,418,444 $
709,007
(cid:886)
(37,023 ) $3,453,259
709,007
88,965
(cid:886)
88,965
(cid:886)
4,486
(382,783)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
694,080
(cid:886)
(400,657)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(61,139 )
56,391
87,781
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(16,655)
(cid:886)
(cid:886)
(cid:886)
(1,700)
452
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
952,486
(cid:886)
(434,044)
(51,416 )
63,400
78,538
(cid:886)
(cid:886)
(25,886)
(cid:886)
(cid:886)
(cid:886)
4,486
802,458
(382,783 )
21,861
44,735
(12,588 )
(15,581 )
646,534
(400,657 )
26,642
56,391
(cid:886)
(74,523 )
56,428 $3,852,419
694,080
(31,965 )
(cid:886)
(31,965 )
(cid:886)
(15,581 )
(cid:886)
39,482
(16,655 )
(cid:886)
(1,700 )
(cid:886)
(452 )
(cid:886)
8,430 $4,162,974
952,486
7,962
(cid:886)
7,962
39,482
999,930
(434,044 )
27,122
63,400
(cid:886)
(25,886 )
55,874 $4,793,496
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
Net income
Translation adjustment
Adjustment related to unrealized gains
(losses) on available-for-sale securities net of
income tax effects of $2,174
Comprehensive income
Dividends declared ($2.12 per share)
Issuance of treasury stock related to equity
awards
Stock compensation
Purchase of treasury stock related to equity
awards
Reclassification under ASU 2016-16
Reclassification under ASU 2018-02
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
Net income
Translation adjustment
Adjustment related to unrealized gains
(losses) on available-for-sale securities net of
income tax effects of $5,982
Comprehensive income
Dividends declared ($2.28 per share)
Issuance of treasury stock related to equity
awards
Stock compensation
Purchase of treasury stock related to equity
awards
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
(cid:886)
Balance at December 29, 2018
$ 17,979 $1,823,638 $ (397,692) $2,710,619 $
Balance at December 28, 2019
$ 17,979 $1,835,622 $ (345,040) $3,229,061 $
See accompanying notes.
56
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(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:(cid:3)
Depreciation
Amortization
Gain on sale of property and equipment
Unrealized foreign currency losses
Deferred income taxes
Stock compensation expense
Realized (gains) losses on marketable securities
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts
Inventories
Other current and non-current assets
Accounts payable
Other current and non-current liabilities
Deferred revenue
Deferred costs
Income taxes payable
Net cash provided by operating activities
Investing activities:
Purchases of property and equipment
Proceeds from sale of property and equipment
Purchase of intangible assets
Purchase of marketable securities
Redemption of marketable securities
Acquisitions, net of cash acquired
Net cash used in investing activities
Financing activities:
Dividends
Proceeds from issuance of treasury stock related to equity awards
Purchase of treasury stock related to equity awards
Purchase of treasury stock under share repurchase plan
Net cash used in financing activities
December(cid:3)28,
2019(cid:3)
Fiscal Year Ended
December(cid:3)29,
2018(cid:3)
December(cid:3)30,
2017(cid:3)
$
952,486 $
694,080 $
709,007
71,921
34,254
(233)
18,663
(88,358)
63,400
(799)
(123,401)
(170,169)
(86,073)
26,192
36,660
(11,032)
9,335
(34,297)
698,549
(118,031)
529
(2,377)
(789,352)
758,774
(300,289)
(450,746)
(417,264)
27,122
(25,886)
(cid:886)
(416,028)
64,798
31,396
(479)
13,790
38,978
56,391
827
7,290
(57,737)
7,358
40,628
(1,323)
(17,208)
5,611
35,120
919,520
(155,755)
1,600
(4,600)
(403,181)
283,603
(29,170)
(307,503)
(296,148)
26,642
(16,655)
(cid:886)
(286,161)
59,895
26,357
(230)
21,681
(90,000)
44,735
991
(39,067)
(7,504)
(21,608)
(17,240)
5,627
(20,754)
2,395
(13,443)
660,842
(139,696)
361
(12,232)
(587,656)
635,311
(90,471)
(194,383)
(382,976)
21,860
(12,773)
(74,523)
(448,412)
Effect of exchange rate changes on cash and cash equivalents
(5,942)
(15,810)
26,716
Net (decrease) increase in cash, cash equivalents, and restricted
cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
(174,167)
1,201,805
1,027,638 $
310,046
891,759
1,201,805 $
$
44,763
846,996
891,759
See accompanying notes.
57
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(cid:3)
Garmin Ltd. And Subsidiaries
Consolidated Statements of Cash Flows (continued)
(In thousands)
December(cid:3)28,
2019(cid:3)
Fiscal Year Ended
December(cid:3)29,
2018(cid:3)
December(cid:3)30,
2017(cid:3)
Supplemental disclosures of cash flow information
Cash paid during the year for income taxes
Cash received during the year from income tax refunds
Supplemental disclosure of non-cash investing and
financing activities
Increase (decrease) in accrued capital expenditures related to
purchases of property and equipment
Change in marketable securities related to unrealized
appreciation (depreciation)
Fair value of assets acquired
Liabilities assumed
Less: cash acquired
Cash paid for acquisitions, net of cash acquired
See accompanying notes.
$
$
$
$
$
$
160,286 $
67,592 $
106,146
6,063 $
6,122 $
3,806
2,821 $
(14,647 ) $
13,864
45,464 $
(17,755 ) $
4,979
354,631 $
(25,507)
(28,835)
300,289 $
31,920 $
(2,273)
(477)
29,170 $
128,190
(29,587)
(8,132)
90,471
58
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(cid:3)
GARMIN LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share information)
December 28, 2019 and December 29, 2018
1. Description of the Business
Garmin Ltd. and subsidiaries (together, the “Company”) design, develop, manufacture, market, and
distribute a diverse family of hand-held, wrist-based, portable, and fixed-mount Global Positioning System (GPS)-
enabled products and other navigation, communications, information and sensor-based products. Garmin
Corporation (GC) is primarily responsible for the manufacturing and distribution of the Company’s products to the
Company’s subsidiaries and, to a lesser extent, new product development and sales and marketing of the
Company’s products in Asia and the Far East. Garmin International, Inc. (GII) is primarily responsible for sales and
marketing of the Company’s products in the Americas region and for most of the Company’s research and new
product development. GII also manufactures most of the Company’s products in the aviation segment. Garmin
(Europe) Ltd. (GEL) is responsible for sales and marketing of the Company’s products in Europe, the Middle East
and Africa (EMEA). Many of GEL’s sales are to other Company-owned distributors in the EMEA region.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The accompanying consolidated financial statements reflect
the accounts of Garmin Ltd. and its wholly-owned subsidiaries. All significant inter-company balances and
transactions have been eliminated. Certain prior period amounts have been reclassified to conform to current period
presentation.
As previously announced and discussed below within the “Recently Adopted Accounting Standards” section
of this footnote, effective beginning in the 2018 fiscal year, we adopted the requirements of Accounting Standards
Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the full retrospective
method. All amounts and disclosures set forth in this Form 10-K reflect these changes. Further, as a result of the
adoption of certain other accounting standards described below, effective beginning in the 2018 fiscal year, certain
amounts in prior periods have been reclassified to conform to the current period presentation.
Fiscal Year
The Company’s fiscal year is based on a 52-53-week period ending on the last Saturday of the calendar
year. Due to the fact that there are not exactly 52 weeks in a calendar year, and there is slightly more than one
additional day per year (not including the effects of leap year) in each calendar year as compared to a 52-week
fiscal year, the Company will have a fiscal year comprising 53 weeks in certain fiscal years, as determined by when
the last Saturday of the calendar year occurs.
In those resulting fiscal years that have 53 weeks, the Company will record an extra week of sales, costs,
and related financial activity. Therefore, the financial results of those 53-week fiscal years, and the associated 14-
week fourth quarters, will not be entirely comparable to the prior and subsequent 52-week fiscal years and the
associated 13-week quarters. Fiscal years 2019, 2018, and 2017 each included 52 weeks.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual results could differ from those
estimates.
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Foreign Currency
Many Garmin Ltd. subsidiaries utilize currencies other than the United States Dollar (USD) as their
functional currency. As required by the Foreign Currency Matters topic of the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC), the financial statements of these subsidiaries for all periods
presented have been translated into USD, the functional currency of Garmin Ltd., and the reporting currency herein,
for purposes of consolidation at rates prevailing during the year for sales, costs, and expenses and at end-of-year
rates for all assets and liabilities. The effect of this translation is recorded in a separate component of stockholders’
equity. Cumulative currency translation adjustments of $55,289 and $47,327 as of December 28, 2019 and
December 29, 2018, respectively, have been included in accumulated other comprehensive income in the
accompanying consolidated balance sheets.
Transactions in foreign currencies are recorded at the approximate rate of exchange at the transaction date.
Assets and liabilities resulting from these transactions are translated at the rate of exchange in effect at the balance
sheet date. 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. Net foreign currency losses recorded in results of operations were $16,799, $7,616,
and $22,579, for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.
The loss in fiscal 2019 was primarily due to the USD strengthening against the Euro and weakening against the
Taiwan Dollar, which was partially offset by the USD weakening against the British Pound Sterling. The loss in fiscal
2018 was due primarily to the USD strengthening against the Euro and British Pound Sterling, offset by the USD
strengthening against the Taiwan Dollar. The loss in fiscal 2017 was due primarily to the USD weakening against
the Taiwan Dollar, which was partially offset by the USD weakening against the Euro and British Pound Sterling.
Earnings Per Share
Basic earnings per share amounts are computed based on the weighted-average number of common
shares outstanding. For purposes of diluted earnings per share, the number of shares that would be issued from
the exercise of dilutive share-based compensation awards has been reduced by the number of shares which could
have been purchased from the proceeds of the exercise or release at the average market price of the Company’s
stock during the period the awards were outstanding. See Note 10 of the Notes to Consolidated Financial
Statements.
Cash, Cash Equivalents, and Restricted Cash
Cash and cash equivalents include cash on hand, operating accounts, money market funds, deposits
readily convertible to known amounts of cash, and securities with maturities of three months or less when purchased.
The carrying amount of cash and cash equivalents approximates fair value, given the short maturity of those
instruments. Restricted cash is reported separately from cash and cash equivalents on the consolidated balance
sheets. See Note 4 of the Notes to Consolidated Financial Statements for additional information on restricted cash.
The total of cash and cash equivalents and restricted cash balances presented on the Consolidated
Balance Sheet reconciles to the total cash, cash equivalents, and restricted cash shown in the Consolidated
Statements of Cash Flows.
Trade Accounts Receivable
The Company sells its products to retailers, wholesalers, and other customers and extends credit based on
its evaluation of the customer’s financial condition. Potential losses on receivables are dependent on each
individual customer’s financial condition. The Company carries its trade accounts receivable at net realizable value.
Typically, its accounts receivable are collected within 80 days and do not bear interest. The Company monitors its
exposure to losses on receivables and maintains allowances for potential losses or adjustments. The Company
determines these allowances by (1) evaluating the aging of its receivables and (2) reviewing its high-risk customers.
Past due receivable balances are written off when internal collection efforts have been unsuccessful in collecting
the amount due. The Company maintains trade credit insurance to provide security against large losses.
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Concentration of Credit Risk
The Company grants credit to certain customers who meet the Company’s pre-established credit
requirements. Generally, the Company does not require security when trade credit is granted to customers.
Credit losses are provided for in the Company’s consolidated financial statements and typically have been within
management’s expectations. Certain customers are allowed extended terms consistent with normal industry
practice. Most of these extended terms can be classified as either relating to seasonal sales variations or to the
timing of new product releases by the Company.
The Company’s top ten customers have contributed between 21% and 24% of net sales annually since
2017. None of the Company’s customers accounted for more than or equal to 10% of consolidated net sales in
the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.
Inventories
Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out (FIFO) basis.
The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the
difference between the cost of inventory and the estimated net realizable value based upon assumptions about
future demand and market conditions. If actual market conditions are less favorable than those projected by
management, additional inventory write-downs may be required. Inventories consisted of the following:
Raw materials
Work-in-process
Finished goods
Inventories
Property and Equipment
December(cid:3)28,
2019
December(cid:3)29,
2018
$
$
260,070
133,157
359,681
752,908
$
$
205,696
96,564
259,580
561,840
Property and equipment are recorded at cost and typically depreciated using the straight-line method over
the following estimated useful lives:
Buildings and improvements
Office furniture and equipment
Manufacturing and engineering equipment
Vehicles
39-50
3-5
5-10
5
As required by the Property, Plant and Equipment topic of the FASB ASC (ASC Topic 360), the Company
reviews property and equipment assets for impairment whenever events or changes in circumstances indicate the
carrying amount of an asset or asset group may not be fully recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual
disposition of the asset. That assessment is based on the carrying amount of the asset at the date it is tested for
recoverability. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset
exceeds its fair value. The Company did not recognize any material long-lived asset impairment charges in the
fiscal years of 2019, 2018, or 2017.
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Intangible Assets
At December 28, 2019, and December 29, 2018, the Company had patents, customer related intangibles
and other identifiable finite-lived intangible assets recorded at a cost of $432,296 and $330,532, respectively.
Identifiable, finite-lived intangible assets are amortized over their estimated useful lives on a straight-line basis
typically over three to ten years. Accumulated amortization was $239,776 and $214,469 at December 28, 2019
and December 29, 2018, respectively. Amortization expense on these intangible assets was $26,225, $21,796, and
$20,863 for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively. In
the next five years, the amortization expense is estimated to be $25,654, $22,000, $19,290, $18,127, and $16,880,
respectively. The Company also reviews finite-lived intangible assets for impairment in accordance with ASC Topic
360, as described above, whenever events or changes in circumstances indicate the carrying amount of an asset
or asset group may not be fully recoverable.
The Company’s excess purchase cost over fair value of net assets acquired (goodwill) was $467,108 at
December 28, 2019, and $301,017 at December 29, 2018.
December(cid:3)28,
2019
December(cid:3)29,
2018
Goodwill balance at beginning of year
Acquisitions
Finalization of purchase price allocations, impairment charges, and effect of
foreign currency translation
Goodwill balance at end of year
$
$
301,017
171,773
(5,682)
467,108
$
$
286,982
16,768
(2,733)
301,017
The Intangibles – Goodwill and Other topic of the FASB ASC (ASC Topic 350) requires that goodwill and
intangible assets with indefinite useful lives should not be amortized but rather be assessed for impairment at least
annually or sooner whenever events or changes in circumstances indicate that they may be impaired. The Company
performs its annual impairment assessments of goodwill and indefinite-lived intangible assets, if any, in the fourth
quarter of each year, as of the Company’s fiscal year end date. ASC Topic 350 allows management to first perform
a qualitative assessment by assessing the qualitative factors of relevant events and circumstances at the reporting
unit level to determine if it is necessary to perform the quantitative goodwill impairment test. If factors indicate that
it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the quantitative
test will be performed. If the fair value of the reporting unit is less than the carrying amount, then a goodwill
impairment charge will be recognized in the amount by which carrying amount exceeds fair value, limited to the
total amount of goodwill allocated to that reporting unit. See the Recently Adopted Accounting Standards section
below regarding the Company’s early adoption of ASU 2017-04.
Each of the Company’s operating segments (auto PND, auto OEM, aviation, fitness, marine, and outdoor)
represents a distinct reporting unit. The auto PND market has declined in recent years as competing technologies
have emerged and market saturation has occurred. This has resulted in periods of lower revenues and profits for
the Company’s auto PND reporting unit. Considering these qualitative factors, management performed a
quantitative impairment test of the auto PND reporting unit in the fourth quarter of 2019 and determined that the fair
value of the reporting unit was substantially in excess of its carrying amount. However, considering the uncertainty
of future operating results and/or market conditions deteriorating faster or more drastically than the forecasts utilized
in management’s estimation of fair value, management believes some or all of the approximately $80 million of
goodwill associated with the Company’s auto PND reporting unit is at risk of future impairment.
Management also performed a quantitative impairment test of the Auto OEM reporting unit in the fourth
quarter of 2019 and concluded that the fair value of the reporting unit was less than its carrying amount. As a
result, the Company recorded an impairment charge of approximately $3 million, which was the total goodwill
balance associated with the auto OEM reporting unit. The impairment charge was not material to the Company’s
Consolidated Financial Statements.
Management concluded that no other reporting units are currently at risk of impairment, and the Company
did not recognize any material goodwill or intangible asset impairment charges in fiscal years 2019, 2018, or 2017.
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Leases
The Company leases certain real estate properties, vehicles, and equipment in various countries around
the world. Leased properties are typically used for office space, distribution, and retail. The Company’s leases are
classified as operating leases with remaining terms of 1 to 34 years, some of which include an option to extend or
renew. If the exercise of an option to extend or renew is determined to be reasonably certain, the associated right-
of-use asset and lease liability reflects the extended period and payments For newly signed leases, the right-of-use
asset and lease liability is recognized on lease commencement date. Variable lease costs, such as adjustments to
payments based on consumer price indices, are excluded in the recognition of right-of-use assets and lease
liabilities. For all real estate leases, any non-lease components, including common area maintenance, have been
separated from lease components and excluded from the associated right-of-use asset and lease liability
calculations. For all equipment and vehicle leases, an accounting policy election has been made to not separate
lease and non-lease components.
Leases with an initial term of 12 months or less (“short-term leases”) are not recognized on the Company’s
Consolidated Balance Sheets as a right-of-use asset or lease liability.
Dividends
Under Swiss corporate law, dividends must be approved by shareholders at the general meeting of the
Company’s shareholders.
On June 7, 2019, the shareholders approved a dividend of $2.28 per share (of which, $1.14 was paid in the
Company’s 2019 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The
dates determined by the Board were as follows:
Dividend Date
Record Date
$s per share
June 28, 2019
September 30, 2019
December 31, 2019
March 31, 2020
June 17, 2019
September 16, 2019
December 16, 2019
March 16, 2020
$
$
$
$
0.57
0.57
0.57
0.57
The Company paid dividends in 2019 in the amount of $417,264, which included four dividend distributions
in the fiscal year. Both the dividends paid and the remaining dividend payable were reported as a reduction of
retained earnings.
On June 8, 2018, the shareholders approved a dividend of $2.12 per share (of which, $1.06 was paid in the
Company’s 2018 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The
dates determined by the Board were as follows:
Dividend Date
Record Date
$s per share
June 29, 2018
September 28, 2018
December 31, 2018
March 29, 2019
June 18, 2018
September 14,(cid:3)2018
December 14, 2018
March 15, 2019
$
$
$
$
0.53
0.53
0.53
0.53
(cid:3)
The Company paid dividends in 2018 in the amount of $296,148, which included three dividend distributions
in the fiscal year. Both the dividends paid and the remaining dividend payable were reported as a reduction of
retained earnings.
On June 9, 2017, the shareholders approved a dividend of $2.04 per share (of which, $1.53 was paid in the
Company’s 2017 fiscal year) payable in four equal installments on dates determined by the Board of Directors. The
dates determined by the Board were as follows:
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June 30, 2017
September 29, 2017
December 29, 2017
March 30, 2018
Dividend Date
Record Date
$s per share
June 19, 2017
September 15, 2017
December 15, 2017
March 15, 2018
$
$
$
$
0.51
0.51
0.51
0.51
The Company paid dividends in 2017 in the amount of $382,976, which included four dividend distributions
in the fiscal year. Both the dividends paid and the remaining dividend payable were reported as a reduction of
retained earnings.
Approximately $61,129 of retained earnings was indefinitely restricted from distribution to stockholders
pursuant to the laws of Taiwan as of December 28, 2019 and December 29, 2018.
Marketable Securities
Management determines the appropriate classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date.
All of the Company’s marketable securities were considered available-for-sale at December 28, 2019.
Available-for-sale securities are stated at fair value, with the unrealized gains and losses, net of tax, reported in
Accumulated other comprehensive income on the Company’s Consolidated Balance Sheets. At December 28,
2019, cumulative unrealized gains of $585 were reported in accumulated other comprehensive income, net of
related taxes. At December 29, 2018, cumulative unrealized net losses of $38,897 were reported in accumulated
other comprehensive income, net of related taxes.
Investments are reviewed periodically to determine if they have suffered an impairment of value that is
considered other-than-temporary. The Company recognizes the credit component of other-than-temporary
impairments of debt securities within Other income (expense) on the Company’s Consolidated Statements of
Income and the noncredit component within Accumulated other comprehensive income on the Company’s
Consolidated Balance Sheets.
Testing for impairment of investments requires significant management judgment. The identification of
potentially impaired investments, the determination of their fair value, and the assessment of whether any decline
in value is other than temporary are the key judgment elements. The discovery of new information and the passage
of time can significantly change these judgments. Revisions of impairment judgments are made when new
information becomes known, and any resulting impairment adjustments are made at that time. The economic
environment and volatility of securities markets increase the difficulty of determining fair value and assessing
investment impairment.
The amortized cost of debt securities classified as available-for-sale is adjusted for amortization of
premiums and accretion of discounts to maturity, or in the case of mortgage-backed securities, over the estimated
life of the security. Such amortization and realized gains/losses are recorded within Interest income and Other
income (expense), respectively, on the Company’s Consolidated Statements of Income. The cost of securities sold
is based on the specific identification method.
Investments are discussed in detail in Note 3 of the Notes to Consolidated Financial Statements.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with the FASB ASC 740
topic Income Taxes. The liability method provides that deferred tax assets and liabilities are recorded based on the
difference between the tax bases of assets and liabilities and their carrying amount for financial reporting purposes
as measured based on the enacted tax rates and laws that will be in effect when the differences are expected to
reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.
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The Company accounts for uncertainty in income taxes in accordance with the FASB ASC 740 topic Income
Taxes. The Company recognizes liabilities based on our estimate of whether, and the extent to which, additional
taxes will be due. If payment of these amounts ultimately proves not to be required, the reversal of the liabilities
results in tax benefits being recognized in the period when the Company determines the liabilities are no longer
necessary. If the Company’s estimate of tax liabilities proves to be less than the ultimate assessment, a further
charge to expense would result.
Income taxes are discussed in detail in Note 6 of the Notes to Consolidated Financial Statements.
Revenue Recognition
The Company recognizes revenue upon the transfer of control of promised products or services to the
customer in an amount that depicts the consideration the Company expects to be entitled to for the related products
or services. For the large majority of the Company’s sales, transfer of control occurs once product has shipped
and title and risk of loss have transferred to the customer. The Company offers certain tangible products with
ongoing services promised over a period of time, typically the useful life of the related tangible product. When such
services have been identified as both capable of being distinct and separately identifiable from the related tangible
product, the associated revenue allocated to such services is recognized over time. The Company generally does
not offer specified or unspecified upgrade rights to its customers in connection with software sales.
The Company allocates revenue to all performance obligations associated with tangible products containing
separately identifiable ongoing services based on the respective performance obligations’ relative standalone
selling prices (“SSP”), with the amounts allocated to ongoing services deferred and recognized over a period of
time. These ongoing services primarily consist of the Company’s contractual promises to provide personal
navigation device (PND) users with map updates and server-based traffic services. In addition, we provide map
update services (map care) over a contractual period in certain hardware and software contracts with original
equipment manufacturers (OEMs). The Company has determined that directly observable prices do not exist for
map updates, map care, or server-based traffic, as stand-alone and unbundled unit sales do not occur on more
than a limited basis. Therefore, the Company uses the expected cost plus a margin as the primary indicator to
calculate relative SSP of map updates, map care, and traffic performance obligations. The revenue and associated
costs allocated to map updates, map care, and/or the server-based traffic service are deferred and recognized
ratably over the estimated life of the products of approximately 3 years for PNDs, or the estimated map care period
in OEM contracts of 3-10 years as we believe our efforts related to providing these services are spread evenly
throughout the performance period. In addition to the products listed above, the Company has offered certain other
products with ongoing performance obligations including mobile applications, incremental navigation and
communication service subscriptions, aviation database subscriptions, and extended warranties that are recognized
over the contractual service period (typically 1-3 years).
The Company records revenue net of sales tax and variable consideration such as trade discounts and
customer returns. Payment is due typically within 90 days or less of shipment of product, or upon the grant of a
given software license (as applicable). The Company records estimated reductions to revenue in the form of variable
consideration for customer sales programs, returns, and incentive offerings including rebates, price protection
(product discounts offered to retailers to assist in clearing older products from their inventories in advance of new
product releases), promotions, and other volume-based incentives. Cooperative advertising incentives payable to
dealers and distributors are recorded as reductions of revenue unless we obtain proof of a distinct advertising
service, in which case we record the incentive as advertising expense. The reductions to revenue are based on
estimates and judgments using historical experience and expectation of future conditions. Changes in these
estimates could negatively affect the Company’s operating results. These incentives are reviewed periodically and,
with the exceptions of price protection and certain other promotions, typically accrued for on a percentage of sales
basis.
Deferred Revenues and Costs
At December 28, 2019 and December 29, 2018, the Company had deferred revenues totaling $161,891
and $172,938, respectively, and related deferred costs totaling $48,598 and $57,935, respectively.
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Deferred revenue consists primarily of the transaction price allocated to performance obligations that are
recognized over a period of time basis as discussed in the Revenue Recognition portion of this footnote. Billings
associated with such items are typically completed upon the transfer of control of promised products or services to
the customer and recorded to accounts receivable until payment is received. Deferred costs primarily refer to the
royalties incurred by the Company associated with the aforementioned unsatisfied performance obligations, which
are amortized over the same period as the revenue is recognized. The Company typically pays the associated
royalties either monthly or quarterly in arrears, on a per item shipped or installed basis.
The Company applies a practical expedient, as permitted within ASC 340, to expense as incurred the
incremental costs to obtain a contract when the amortization period of the asset that would have otherwise been
recognized is one year or less.
Shipping and Handling Costs
Shipping and handling activities are typically performed before the customer obtains control of the good,
and the related costs are therefore expensed as incurred. Shipping and handling costs are included in cost of goods
sold in the accompanying consolidated financial statements.
Product Warranty
The Company accrues for estimated future warranty costs at the time products are sold. The Company’s
standard warranty obligation to retail partners generally provides for a right of return of any product for a full refund
in the event that such product is not merchantable, is damaged, or is defective. The Company’s historical
experience is that these types of warranty obligations are generally fulfilled within 5 months from time of sale. The
Company’s standard warranty obligation to its end-users provides for a period of one to two years from date of
shipment while certain aviation, marine, and auto 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. To the extent the Company
experiences increased warranty claim activity or increased costs associated with servicing those claims, its warranty
accrual will increase, which may result in decreased gross profit. The following reconciliation provides an
illustration of changes in the aggregate warranty accrual:
Balance - beginning of period
Accrual for products sold (1)(cid:3)
Expenditures
Balance - end of period
December(cid:3)28,
2019(cid:3)
Fiscal Year Ended
December(cid:3)29,
2018(cid:3)
December(cid:3)30,
2017(cid:3)
$
$
38,276
58,092
(56,610)
39,758
$
$
36,827
59,374
(57,925)
38,276
$
$
37,233
56,360
(56,766)
36,827
(1) Changes in cost estimates related to pre-existing warranties were not material and aggregated with accruals for new
warranty contracts in the (cid:858)accrual for products sold during the period(cid:859) line.(cid:3)
(cid:3)
Advertising Costs
The Company expenses advertising costs as incurred. Advertising expense amounted to approximately
$164,456, $155,394, and $164,693 for the years ended December 28, 2019, December 29, 2018, and December
30, 2017, respectively.
Research and Development
A majority of the Company’s research and development is performed in the United States. Research and
development costs, which are typically expensed as incurred, amounted to approximately $605,366, $567,805, and
$511,634 for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.
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Preproduction Costs Related to Long-Term Supply Arrangements
Preproduction design and development costs related to long-term supply arrangements are expensed as
incurred, and classified as Research and development, unless the customer has provided a contractual guarantee
for reimbursement of such costs. Contractually reimbursable costs are capitalized as incurred in the Consolidated
Balance Sheets within Prepaid expenses and other current assets if reimbursement is expected to be received
within one year, or within Other assets if expected to be received beyond one year. Such capitalized costs were
approximately $24,267 as of December 28, 2019, and there were no such capitalized costs as of December 29,
2018.
Customer Service and Technical Support
Customer service and technical support costs are included as selling, general and administrative expenses
in the accompanying Consolidated Statements of Income. Customer service and technical support costs include
costs associated with performing order processing, answering customer inquiries by telephone and through
websites, e-mail and other electronic means, and providing free technical support assistance to customers. The
technical support is typically provided within one year after the associated revenue is recognized. The related cost
of providing this free support is not material.
Software Development Costs
The FASB ASC topic entitled Software requires companies to expense software development costs as they
incur them until technological feasibility has been established, at which time those costs are capitalized until the
product is available for general release to customers. The Company’s capitalized software development costs are
not significant, as the time elapsed from working model to release is typically short. As required by the Research
and Development topic of the FASB ASC, costs incurred to enhance our existing products or after the general
release of the service using the product are expensed in the period they are incurred and included in research and
development costs in the accompanying consolidated statements of income.
Accounting for Stock-Based Compensation
The Company currently sponsors four stock-based employee compensation plans. The FASB ASC topic
entitled Compensation – Stock Compensation requires the measurement and recognition of compensation
expenses for all share-based payment awards made to employees and directors, including employee stock options
and restricted stock, based on estimated fair values.
Accounting guidance requires companies to estimate the fair value of share-based payment awards on the
date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest
is recognized as stock-based compensation expense over the requisite service period in the Company’s
consolidated financial statements.
As stock-based compensation expenses recognized in the accompanying consolidated statements of
income are based on awards ultimately expected to vest, they have been reduced for estimated forfeitures.
Accounting guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in
subsequent periods if actual forfeitures differ from those estimates. Forfeitures were estimated based on historical
experience and management’s estimates.
Excess tax benefits or deficiencies from stock-based compensation are recognized in the income tax
provision and are not estimated in the effective tax rate, rather, are recorded as discrete tax items in the period they
occur. Excess income tax benefits from stock-based compensation arrangements are classified as a cash flow from
operations.
Stock compensation plans are discussed in detail in Note 9 of the Notes to Consolidated Financial
Statements.
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Recently Adopted Accounting Standards
Leases
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU
2016-02”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for
both lessees and lessors. The FASB subsequently issued Accounting Standards Update No. 2018-10 and
Accounting Standards Update No. 2018-11 in July 2018, which provide clarifications and improvements to ASU
2016-02 (collectively, the “new lease standard”). Accounting Standards Update No. 2018-11 also provides the
optional transition method which allows companies to apply the new lease standard at the adoption date instead of
at the earliest comparative period presented. The new lease standard requires lessees to present a right-of-use
asset and a corresponding lease liability on the balance sheet.
The Company adopted the new lease standard as of the beginning of the 2019 fiscal year using the optional
transition method. The Company did not have a cumulative effect adjustment to retained earnings as a result of
adopting the new lease standard and does not expect the new lease standard to have a material impact on the
Company’s Consolidated Statements of Income or Consolidated Statements of Cash Flows in future periods. The
Company elected the package of transitional practical expedients upon adoption which, among other provisions,
allowed the Company to carry forward historical lease classification. See Note 14 – Leases for additional information
regarding leases.
Intangible – Goodwill and Other
In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangible – Goodwill and
Other (Topic 350): Simplify the Test for Goodwill Impairment (“ASU 2017-04”) which simplifies the accounting for
goodwill impairment. ASU 2017-04 removes “step two” of the goodwill impairment test, such that a goodwill
impairment charge will now be the amount by which a reporting unit’s carrying value exceeds its fair value. ASU
2017-04 should be applied prospectively and is effective for fiscal years, or any goodwill impairment tests in fiscal
years beginning after December 15, 2019. Early adoption is permitted for any impairment tests performed after
January 1, 2017. The Company early adopted ASU 2017-04 in the fourth quarter of the year ended December 28,
2019. The adoption did not have a material impact on the Company’s Consolidated Financial Statements.
Revenue from Contracts with Customers
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606)
(“ASU 2014-09”), which supersedes previous revenue recognition guidance. The FASB issued several updates
amending or relating to ASU 2014-09 (collectively, the “new revenue standard”). The Company adopted the new
revenue standard in the 2018 fiscal year using the full retrospective method, which requires the Company to restate
each prior reporting period presented in future financial statement issuances. The impacts of adopting the new
revenue standard relate to our accounting for certain arrangements within the auto segment.
A portion of the Company’s auto segment contracts had historically been accounted for under Accounting
Standards Codification (ASC) Topic 985-605 Software-Revenue Recognition (Topic 985-605). Under Topic 985-
605, the Company deferred revenue and associated costs of all elements of multiple-element software
arrangements if vendor-specific objective evidence of fair value (VSOE) could not be established for an undelivered
element (e.g. map updates). In applying the new revenue standard to certain contracts that include both software
licenses and map updates, we now recognize the portion of revenue and costs related to the software license at
the time of delivery rather than ratably over the map update period.
Additionally, for certain multiple-element arrangements within the Company’s auto segment, the Company’s
policy had been to allocate consideration to traffic services and recognize the revenue and associated cost of
royalties ratably over the estimated life of the underlying product. Under the new revenue standard, we recognize
revenue and associated costs of royalties related to certain broadcast traffic services at the time of hardware and/or
software delivery. Specifically, the new revenue standard emphasizes the timing of the Company’s performance,
and upon delivery of the navigation device and/or software, the Company has fully performed its obligation with
respect to the design and production of the product to receive and interpret the broadcast traffic signal for the benefit
of the end user.
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The changes in accounting policy described above collectively result in reductions to deferred costs (asset)
and deferred revenue (liability) balances, and accelerate the recognition of revenue and deferred costs in the auto
segment going forward.
Summarized financial information depicting the impact of the new revenue standard is presented below.
The Company’s historical net cash flows provided by or used in operating, investing, and financing activities were
not impacted by adoption of the new revenue standard.
December 30, 2017
December 31, 2016
As reported Restated (1)
Impact
As reported Restated (1)
Impact
Current assets:
Deferred costs
Total current assets
Deferred income taxes
Noncurrent deferred costs
Total assets
Current liabilities:
Deferred revenue
Total current liabilities
Deferred income taxes
Non-current deferred revenue
Retained earnings
Accumulated other
comprehensive income
Total stockholders’ equity
Total liabilities and
$
48,312 $
30,525 $ (17,787) $
34,665 $ (12,730)
(12,730)
(2,638)
(25,217)
$ 5,010,260 $ 4,948,289 $ (61,971) $ 4,525,133 $ 4,484,549 $ (40,584)
2,250,286
107,655
30,934
2,346,138
195,981
33,029
2,363,925
199,343
73,851
2,263,016
110,293
56,151
(17,787)
(3,362)
(40,822)
47,395 $
139,681
828,656
75,215
163,840
2,368,874
103,140
792,115
76,612
87,060
2,418,444
(36,541)
(36,541)
1,397
(76,780)
49,570
146,564
782,735
61,220
140,407
2,056,702
118,496
754,667
62,617
91,238
2,092,221
(28,068)
(28,068)
1,397
(49,169)
35,519
56,045
3,802,466
56,428
3,852,419
383
49,953
(36,761)
3,418,003
(37,024)
3,453,259
(263)
35,256
stockholders’ equity
$ 5,010,260 $ 4,948,289 $ (61,971) $ 4,525,133 $ 4,484,549 $ (40,584)
52-Weeks Ended December 30, 2017 53-Weeks Ended December 31, 2016
As reported Restated (1)
$ 3,087,004 $ 3,121,560 $
As reported Restated (1)
Impact
Impact
Net sales
Gross profit
Operating income
Income tax (benefit) provision
Net income
Diluted net income per share
1,783,164
668,860
(12,661)
694,955 $
3.68 $
1,797,941
683,637
(11,936)
709,007 $
3.76 $
$
$
34,556 $ 3,018,665 $ 3,045,797 $
14,777
14,777
725
14,052 $
0.08 $
1,688,525
632,864
120,901
517,724 $
2.73 $
1,679,570
623,909
118,856
510,814 $
2.70 $
27,132
8,955
8,955
2,045
6,910
0.03
(1)
The Restated results above were presented in our fiscal year 2018 Annual Report on Form 10-K filed with the
SEC on February 20, 2019, in connection with the Company’s adoption of ASC Topic 606 in fiscal year 2018
using the full retrospective method.
Financial Instruments – Recognition, Measurement, Presentation, and Disclosure
In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—
Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-
01”). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial
instruments. The Company has adopted the new standard effective beginning in the 2018 fiscal year. The adoption
did not have a material impact on the Company’s financial position or results of operations.
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Statement of Cash Flows
In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows
(Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which adds or clarifies
guidance on the classification of certain cash receipts and payments in the statement of cash flows. The standard
addresses eight specific cash flow issues with the objective of reducing diversity in practice. In November 2016, the
FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash
(“ASU 2016-18”), which requires restricted cash and restricted cash equivalents to be included with cash and cash
equivalents when reconciling changes in the total amounts within the statement of cash flows. The Company has
adopted the new standards effective beginning in the 2018 fiscal year. The adoption of ASU 2016-15 did not have
a material impact to the Company’s statements of cash flows. The amendments of ASU 2016-18 were applied using
a retrospective transition method, resulting in immaterial changes to the presentation of the Company’s statements
of cash flows.
Income Taxes
In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740):
Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”), which requires recognition of the income tax
consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The Company
has adopted the new standard effective beginning in the 2018 fiscal year, which resulted in a reclassification of
approximately $1,700 of certain prepaid tax balances in a cumulative effect to retained earnings as of the date of
adoption.
Income Statement – Reporting Comprehensive Income
In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement –
Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other
Comprehensive Income (“ASU 2018-02”), which allows for stranded tax effects in accumulated other
comprehensive income resulting from the U.S. Tax Cuts and Jobs Act to be reclassified to retained earnings. The
Company has elected to early adopt the new standard effective beginning in the 2018 fiscal year, resulting in
reclassification of approximately $452 from accumulated other comprehensive income into retained earnings. The
tax effects that were reclassified only relate to amounts resulting from the U.S. Tax Cuts and Jobs Act.
3. 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
Level 2
Unadjusted quoted prices in active markets for identical assets or liability
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.
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The method described above may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods
are appropriate and consistent with other market participants, the use of different methodologies or assumptions to
determine the fair value of certain financial instruments could result in a different fair value measurement at the
reporting date.
Available-for-sale securities measured at fair value on a recurring basis are summarized below:
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
Fair Value Measurements as
of December 28, 2019
Level 2
Level 1
Level 3
$
$
15,179
— $
64,675
—
254,022
—
985,650
—
164,755
—
—
97,657
— $ 1,581,938
Fair Value Measurements as
of December 29, 2018
Level 2
Level 1
$
$
22,128
— $
59,116
—
135,865
—
980,524
—
173,137
—
—
142,342
— $ 1,513,112
$
$
$
$
—
—
—
—
—
—
—
Level 3
—
—
—
—
—
—
—
Total
$
15,179
64,675
254,022
985,650
164,755
97,657
$ 1,581,938
Total
$
22,128
59,116
135,865
980,524
173,137
142,342
$ 1,513,112
Marketable securities classified as available-for-sale securities are summarized below:
Available-For-Sale(cid:3)Securities
as(cid:3)of(cid:3)December(cid:3)28,(cid:3)2019
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
$
15,204 $
64,582
256,417
980,590
163,898
98,246
$ 1,578,937
$
5 $
120
90
8,806
1,092
111
10,224 $
Fair Value
15,179
64,675
254,022
985,650
164,755
97,657
(7,223) $ 1,581,938
(30) $
(27)
(2,485)
(3,746)
(235)
(700)
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(cid:3)
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
Available-For-Sale Securities
as(cid:3)of(cid:3)December(cid:3)29,(cid:3)2018
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
$
22,485 $
60,088
142,176
1,010,590
175,630
144,606
$ 1,555,575
$
— $
28
1
33
73
0
135 $
(357) $
Fair Value
22,128
59,116
135,865
980,524
173,137
142,342
(42,598) $ 1,513,112
(1,000)
(6,312)
(30,099)
(2,566)
(2,264)
The Company’s investment policy targets low risk investments with the objective of minimizing the potential
risk of principal loss. The fair value of our securities varies from period to period due to changes in interest rates, in
the performance of the underlying collateral and in the credit performance of the underlying issuer, among other
factors. The Company does not intend to sell the securities that have an unrealized loss shown in the table above,
and it is not more likely than not that the Company will be required to sell a security before recovery of its amortized
cost basis, which may be maturity.
The Company recognizes the credit component of other-than-temporary impairments of debt securities
within Other income (expense) on the Company’s Consolidated Statements of Income and the noncredit component
within Accumulated other comprehensive income on the Company’s Consolidated Balance Sheets. During 2019
and 2018, the Company did not record any material impairment charges on its outstanding securities.
The amortized cost and fair value of the securities at an unrealized loss position at December 28, 2019
were $611,732 and $604,509 respectively. Approximately 42% of securities in our portfolio were at an unrealized
loss position at December 28, 2019. We have the ability to hold these securities until maturity or their value is
recovered. We do not consider these unrealized losses to be other than temporary credit losses because there has
been no material deterioration in credit quality and no change in the cash flows of the underlying securities. We do
not intend to sell the securities and it is not more likely than not that we will be required to sell the securities;
therefore, no material impairment has been recorded in the accompanying consolidated statement of income.
The cost of securities sold is based on the specific identification method.
The following tables display additional information regarding gross unrealized losses and fair value by major
security type for available-for-sale securities in an unrealized loss position as of December 28, 2019 and December
29, 2018.
As of December 28, 2019
Less than 12 Consecutive Months 12 Consecutive Months or Longer
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
Fair Value
$
$
(cid:886) $
(16)
(745)
(1,585)
(218)
(410)
(2,974)
$
(cid:886) $
20,808
79,007
183,691
34,165
34,540
352,211 $
(30)
(11)
(1,740)
(2,161)
(17)
(290)
(4,249)
$
$
13,087
20,812
86,392
100,926
9,522
21,559
252,298
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
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As of December 29, 2018
Less than 12 Consecutive Months 12 Consecutive Months or Longer
Gross
Unrealized
Losses
Fair Value
Gross
Unrealized
Losses
$
$
(3)
(5)
(1)
(4,028)
(454)
(102)
(4,593)
$
$
3,975 $
4,656
361
323,633
38,371
8,015
379,011 $
(354)
(995)
(6,311)
(26,071)
(2,112)
(2,162)
(38,005)
$
$
Fair Value
18,153
40,508
135,323
640,439
118,362
114,120
1,066,905
U.S. Treasury securities
Agency securities
Mortgage-backed securities
Corporate securities
Municipal securities
Other
Total
The amortized cost and fair value of marketable securities at December 28, 2019, by contractual maturity,
are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities
may have the right to prepay obligations without prepayment penalties.
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
4. Commitments and Contingencies
Commitments
Amortized
Cost
$
$
376,222
1,043,626
155,415
3,674
1,578,937
$
$
Fair Value
376,463
1,047,849
154,045
3,581
1,581,938
The Company is party to certain commitments, which include purchases of raw materials, capital
expenditures, advertising, and other indirect purchases in connection with conducting our business. The
aggregate amount of purchase orders and other commitments open as of December 28, 2019 was approximately
$586,300. We cannot determine the aggregate amount of such purchase orders that represent contractual
obligations because purchase orders may represent authorizations to purchase rather than binding agreements.
Our purchase orders are generally based on our current needs and typically fulfilled by our suppliers, contract
manufacturers, and logistics providers within short periods of time.
Certain cash balances are held as collateral in relation to bank guarantees. The total amount of restricted
cash was $71 and $73 on December 28, 2019 and December 29, 2018, respectively.
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.
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If an outcome unfavorable to the Company is determined to be probable, but the amount of loss cannot be
reasonably estimated or is determined to be reasonably possible, but not probable, we disclose the nature of the
contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be
made. The Company’s aggregate range of reasonably possible losses includes (1) matters where a liability has
been accrued and there is a reasonably possible loss in excess of the amount accrued for that liability, and (2)
matters where a loss is believed to be reasonably possible, but not probable, and a liability therefore has not been
accrued. This aggregate range only represents the Company’s estimate of reasonably possible losses and does
not represent the Company’s maximum loss exposure. The assessment regarding whether a loss is probable or
reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex
judgments about future events. In assessing the probability of an outcome in a lawsuit, claim or assessment that
could be unfavorable to the Company, we consider the following factors, among others: a) the nature of the litigation,
claim, or assessment; b) the progress of the case; c) the opinions or views of legal counsel and other advisers; d)
our experience in similar cases; e) the experience of other entities in similar cases; and f) how we intend to respond
to the lawsuit, claim, or assessment. Costs incurred in defending lawsuits, claims or assessments are expensed
as incurred.
Management of the Company currently does not believe it is reasonably possible that the Company may
have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies
in the aggregate, for the fiscal year ended December 28, 2019. The results of legal proceedings, investigations and
claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess
of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which
a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses
from such matters would have a material adverse effect on the Company’s business or its consolidated financial
position, results of operations or cash flows.
The Company settled or resolved certain legal matters during the fiscal years ended December 28, 2019,
December 29, 2018, and December 30, 2017 that did not individually or in the aggregate have a material impact on
the Company’s business or its consolidated financial position, results of operations or cash flows.
5. Employee Benefit Plans
GII and the Company’s other U.S.-based subsidiaries sponsor a defined contribution employee retirement
plan under which their employees may contribute up to 50% of their annual compensation subject to Internal
Revenue Code maximum limitations and to which the subsidiaries contribute a specified percentage of each
participant’s annual compensation up to certain limits as defined in the retirement plan. During the years ended
December 28, 2019, December 29, 2018, and December 30, 2017, expense related to this and other defined
contribution plans of $55,456, $52,232, and $43,826, respectively, was recorded within the Company’s
Consolidated Statements of Income.
Certain of the Company’s non-U.S. subsidiaries sponsor or participate in local defined benefit pension plans
for which contributions are calculated by formulas that consider final pensionable salaries. The obligations,
contributions, and associated expense of such plans for the years ended December 28, 2019, December 29, 2018,
and December 30, 2017 were not material.
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6. Income Taxes
The Company’s income tax provision (benefit) consists of the following:
December(cid:3)28,
2019
Fiscal Year Ended
December(cid:3)29,
2018
December(cid:3)30,
2017
Federal:
Current
Deferred
State:
Current
Deferred
Foreign:
Current
Deferred
Total
$
$
$
$
$
$
$
32,874 $
20,388
53,262 $
12,605 $
831
13,436 $
26,784 $
13,249
40,033 $
13,015 $
(1,599)
11,416 $
31,343
50,724
82,067
4,203
11,684
15,887
77,594 $
(109,556)
(31,962) $
34,736 $
53,625 $
24,093
77,718 $
129,167 $
43,688
(153,578)
(109,890)
(11,936)
The income tax provision differs from the amount computed by applying the U.S. statutory federal income
tax rate to income before taxes. The sources and tax effects of the differences, including the impact of establishing
tax contingency accruals, are as follows:
(cid:3)
Federal income tax expense at U.S. statutory rate
State income tax expense, net of federal tax effect
Foreign-Derived Intangible Income Deduction
Foreign tax rate differential
Other foreign taxes less incentives and credits
Withholding Tax
Net Change in Uncertain Tax Positions
Federal Domestic Production Activities Deduction
Federal Research and Development Credit
Share Based Compensation
Switzerland Corporate Tax Election
Switzerland Deferred Tax Assets
Other, net
Income tax expense (benefit)
December(cid:3)28,
2019
Fiscal Year Ended
December(cid:3)29,
2018
December(cid:3)30,
2017
$
$
207,317 $
7,827
(4,966)
(57,302)
6,360
32,162
(17,259)
(cid:886)
(19,338)
(6,169)
(cid:886)
(117,989)
4,093
34,736 $
172,882 $
5,339
(4,666)
(38,563 )
(12,841 )
33,306
(13,728 )
(cid:886)
(16,562 )
(2,747)
(cid:886)
(cid:886)
6,747
129,167 $
243,975
5,977
(cid:886)
(106,763)
(4,646)
14,632
5,363
(3,895)
(10,851)
19,916
(180,034)
(cid:886)
4,390
(11,936)
The Company recorded income tax expense of $34,736 in the year ended December 28, 2019, which
included an income tax benefit of $117,989 related to the revaluation and step-up of certain Switzerland tax assets
as a result of the October 2019 enactment of Switzerland federal and Schaffhausen cantonal tax reform and related
transitional measures. The Company recorded an income tax benefit of $11,936 in the year ended December 30,
2017, which included an income tax benefit of $180,034 primarily related to the revaluation of certain Switzerland
deferred tax assets resulting from the Company’s election in the first quarter of 2017 to align certain Switzerland
corporate tax positions with international tax initiatives.
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The Company’s statutory federal income tax rate in Switzerland, the Company's place of incorporation since
the Redomestication, is 7.83%. If the Company reconciled taxes at the Swiss holding company federal statutory tax
rate to the reported income tax expense for 2019 as presented above, the amounts related to tax at the statutory
rate would be approximately $130,000 lower, or $77,000, and the foreign tax rate differential would be adjusted by
a similar amount to approximately $73,000. For 2018, the amounts related to tax at the statutory rate would be
approximately $108,000 lower, or $65,000, and the foreign tax rate differential would be adjusted by a similar
amount to approximately $65,000. For 2017, the amount related to tax at the statutory rate would be approximately
$186,000 lower, or $53,600, and the foreign tax differential would be reduced by a similar amount to approximately
$77,000. All other amounts would remain substantially unchanged.
The Company’s income before income taxes attributable to non-U.S. operations was $606,711, $532,657,
and $461,436, for the years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively.
Income taxes of $35,982, $36,800, and $45,534 at December 28, 2019, December 29, 2018, and
December 30, 2017, respectively, have not been accrued by the Company for the unremitted earnings of several
of its foreign subsidiaries because such earnings are intended to be reinvested in the subsidiaries indefinitely.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company’s deferred tax assets and liabilities are as follows:
Deferred tax assets:
(cid:3)
Product warranty accruals
Allowance for doubtful accounts
Inventory reserves
Sales program allowances
Reserve for sales returns
Accrued vacation
Other accruals
Share based compensation
Tax credit carryforwards
Intangible assets
Net operating losses
Benefit related to uncertain tax positions
Operating leases
Other
Valuation allowance related to loss carryforward and tax credits
Deferred tax liabilities:
Fixed assets
Operating leases
Prepaid expenses
Book basis in excess of tax basis for acquired entities
Withholding tax
Other
Net deferred tax assets
December(cid:3)28,
2019(cid:3)
December(cid:3)29,
2018(cid:3)
$
$
$
2,652
3,981
7,187
1,185
1,732
9,079
4,320
7,501
11,164
250,313
1,981
6,095
12,711
1,755
(4,562)
317,094
33,754
12,473
1,849
22,488
91,966
800
163,330
153,764
$
$
$
2,468
3,964
6,023
1,657
1,368
8,179
3,083
6,744
9,697
147,674
3,580
5,852
253
4,543
(4,568)
200,517
17,543
(cid:886)
2,257
14,068
79,660
2,974
116,502
84,015
Deferred tax assets related to intangible assets increased as of December 28, 2019 as compared to
December 29, 2018 by $102,639 primarily related to the revaluation and step-up of certain Switzerland tax assets
as a result of the enactment of Switzerland federal and Schaffhausen cantonal tax reform and related transitional
measures.
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At December 28, 2019, the Company had $11,164 of tax credit carryover compared to $9,697 at December
29, 2018. At December 28, 2019, the Company had a deferred tax asset of $1,981 related to the future tax benefit
of net operating loss (NOL) carryforwards of $7,895. Included in the NOL carryforwards is $880 that relates to
Finland and expires in varying amounts between 2025 and 2028, $607 that relates to the Netherlands and expires
in 2026, and $6,408 that relates to various other jurisdictions and has no expiration date. The Company has
recorded a valuation allowance for a portion of its deferred tax asset relating to various tax attributes that it does
not believe are more likely than not to be realized. In the future, if the Company determines, based on existence
of sufficient evidence, that it should realize more or less of its deferred tax assets, an adjustment to the valuation
allowance will be made in the period such a determination is made.
The total amount of gross unrecognized tax benefits, primarily related to transfer pricing, as of December
28, 2019 was $101,251. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits
for years ended December 28, 2019, December 29, 2018, and December 30, 2017 is as follows:
Balance beginning of year
(cid:3)
Additions based on tax positions related to prior years
Reductions based on tax positions related to prior years
Additions based on tax positions related to current period
Reductions related to settlements with tax authorities
Expiration of statute of limitations
Balance at end of year
December(cid:3)28,
2019
December(cid:3)29,
2018
December(cid:3)30,
2017
$
$
118,287 $
398
(6,556)
13,806
(218)
(24,466)
101,251 $
130,798 $
1,138
(5,340)
19,368
(527)
(27,150)
118,287 $
115,090
8,564
(983)
26,295
(cid:886)
(18,168)
130,798
Accounting guidance requires unrecognized tax benefits to be classified as noncurrent liabilities, except for
the portion that is expected to be paid within one year of the balance sheet date. The balance of net unrecognized
benefits of $92,056, $114,682, and $127,306 are required to be classified as noncurrent at December 28, 2019,
December 29, 2018, and December 30, 2017, respectively. The balance of net unrecognized tax benefits of
$5,816 is classified as a current liability at December 28, 2019. None of the unrecognized tax benefits were
classified as current liabilities for the years ending December 29, 2018 or December 30, 2017. The net unrecognized
tax benefits, if recognized, would reduce the effective tax rate. None of the unrecognized tax benefits are due to
uncertainty in the timing of deductibility.
Interest and penalties, if any, accrued on the unrecognized tax benefits are reflected in income tax expense.
At December 28, 2019, December 29, 2018, and December 30, 2017, the Company had accrued approximately
$7,636, $6,613, and $5,605, respectively, for interest. The interest component of the reserve increased income
tax expense for the years ending December 28, 2019, December 29, 2018, and December 30, 2017, by $1,023,
$1,008, and $1,704, respectively. The Company did not have material amounts accrued for penalties for the years
ending December 28, 2019, December 29, 2018, and December 30, 2017.
The Company files income tax returns in Switzerland, U.S. federal jurisdiction, as well as various states,
local, and foreign jurisdictions. In its major tax jurisdictions, Switzerland, Taiwan, United Kingdom, and U.S. federal
and various states, the Company is no longer subject to income tax examinations by tax authorities, with few
exceptions, for years prior to 2015, 2014, 2017, and 2016, respectively.
The Company recognized a reduction of income tax expense of $26,158, $27,106, and $17,918 in fiscal
years ended December 28, 2019, December 29, 2018, and December 30, 2017, respectively, to reflect the
expiration of statutes of limitations and releases due to audit settlement in various jurisdictions.
The Company believes that it is reasonably possible that approximately $25,000 to $40,000 of its reserves
for certain unrecognized tax benefits will decrease within the next 12 months as the result of the expiration of
statutes of limitations. This potential decrease in unrecognized tax benefits would impact the Company’s effective
tax rate within the next 12 months.
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7. Fair Value of Financial Instruments
As required by the Financial Instruments topic of the FASB ASC, the following summarizes required
information about the fair value of certain financial instruments for which it is currently practicable to estimate such
value. None of the financial instruments are held or issued for trading purposes. The carrying amounts and fair
values of the Company’s financial instruments are as follows:
Cash and cash equivalents
Restricted cash
Marketable securities
December 28, 2019
Fair
Value
$ 1,027,567
$
71
$ 1,581,938
Carrying
Amount
$ 1,027,567
$
71
$ 1,581,938
December 29, 2018
Fair
Value
$ 1,201,732
$
73
$ 1,513,112
Carrying
Amount
$ 1,201,732
$
73
$ 1,513,112
For certain of the Company’s financial instruments, including accounts receivable, loan receivable,
accounts payable and other accrued liabilities, the carrying amounts approximate fair value due to their short
maturities.
8. Segment Information
The Company has identified five reportable segments – auto, aviation, fitness, marine, and outdoor. There
are two operating segments (auto PND and auto OEM) that are not reported separately but aggregated within the
auto reportable segment. Each operating segment is individually reviewed and evaluated by the Chief Operating
Decision Maker (CODM), who allocates resources and assesses performance of each segment individually.
The products of the Company’s reportable segments are sold through the Company’s network of
independent dealers and distributors as well as through OEMs. However, the nature of products and types of
customers for the five reportable segments vary. All of the Company’s segments include portable global positioning
system (GPS) receivers and accessories sold to retail outlets. These products are produced primarily by the
Company’s subsidiary in Taiwan. The Company’s aviation products include portable and panel mount avionics for
Visual Flight Rules and Instrument Flight Rules navigation and are sold primarily to aviation dealers and certain
aircraft manufacturers.
The Company’s Chief Executive Officer, who has been identified as the 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.
The accounting policies of the reportable segments are the same as those described in the summary of significant
accounting policies. There are no inter-segment sales or transfers.
The Company’s reportable segments share many common resources, infrastructures and assets in the
normal course of business. Thus, the Company does not report accounts receivable, inventories, property and
equipment, intangible assets, or capital expenditures by segment to the CODM.
In the first quarter of fiscal 2019, the methodology used to allocate certain selling, general, and
administrative expenses to the segments was refined, endeavoring to provide the Company’s CODM with a more
meaningful representation of segment profit or loss in light of the evolution of its segments. The Company’s
composition of operating segments and reportable segments did not change. Prior year amounts are presented
here as they were originally reported, as it is not practicable to accurately restate prior period activity in accordance
with the refined allocation methodology. For comparative purposes, we estimate operating income for the 52-weeks
ended December 29, 2018 would have been approximately $18 million less for the aviation segment, approximately
$11 million more for the marine segment, approximately $7 million more for the outdoor segment, and not
significantly different for the auto and fitness segments. We estimate operating income for the 52-weeks ended
December 30, 2017 would have been approximately $14 million less for the aviation segment, approximately $8
million less for the fitness segment, approximately $8 million more for the marine segment, and approximately $7
million more for each of the outdoor and auto segments.
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Net sales (“revenue”), gross profit, and operating income for each of the Company’s reportable segments
are presented below.
Fitness
Outdoor
Reportable Segments
Aviation
Auto
Marine
Total
52-Weeks Ended December 28, 2019
Net sales
Gross profit
Operating income
$1,047,527 $ 917,567 $ 735,458 $ 548,103 $ 508,850 $3,757,505
2,233,976
945,586
256,595
56,868
543,385
252,943
302,949
109,876
532,604
191,858
598,443
334,041
52-Weeks Ended December 29, 2018
Net sales
Gross profit
Operating income
$ 858,329 $ 809,883 $ 603,459 $ 634,213 $ 441,560 $3,347,444
1,979,719
778,343
258,756
63,344
270,793
37,998
450,152
204,746
528,254
290,510
471,764
181,745
52-Weeks Ended December 30, 2017
Net sales
Gross profit
Operating income
$ 762,194 $ 698,867 $ 501,359 $ 785,139 $ 374,001 $3,121,560
1,797,941
683,637
212,592
50,328
342,698
82,744
422,636
146,765
371,605
153,933
448,410
249,867
Net sales, property and equipment, and net assets by geographic area are as shown below for the years
ended December 28, 2019, December 29, 2018, and December 30, 2017. Note that APAC includes Asia Pacific
and Australian Continent, and EMEA includes Europe, the Middle East and Africa.
Americas
EMEA
APAC
Total
December 28, 2019
Net sales to external customers (1)(cid:3)
Property and equipment, net
Net assets (2)(cid:3)
December 29, 2018
Net sales to external customers (1)(cid:3)
Property and equipment, net
Net assets (2)(cid:3)
December 30, 2017
Net sales to external customers (1)(cid:3)
Property and equipment, net
Net assets (2)(cid:3)
$
$
$
$
$
$
1,817,770
435,503
3,074,155
1,596,716
408,992
2,726,196
1,504,194
381,974
2,375,522
$
$
$
1,350,533
65,323
714,602
1,204,969
45,571
441,506
1,172,538
40,318
493,999
$
$
$
589,202
228,095
1,004,739
545,759
208,964
995,272
444,828
173,392
982,898
(1) The U.S. is the only country which constitutes greater than 10% of net sales to external customers.(cid:3)
(2) Americas and APAC net assets are primarily held in the United States and Taiwan, respectively.(cid:3)
3,757,505
728,921
4,793,496
3,347,444
663,527
4,162,974
3,121,560
595,684
3,852,419
(cid:3)
(cid:3)
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9. Stock Compensation Plans
Accounting for Stock-Based Compensation
The various Company stock compensation plans are summarized below. For all stock compensation plans,
the Company’s policy is to issue treasury shares for option/stock appreciation right (SAR) exercises, restricted stock
unit (RSU) releases and employee stock purchase plan (ESPP) purchases.
2011 Non-employee Directors’ Equity Incentive Plan
In June 2011, the stockholders adopted an equity incentive plan for non-employee directors (the “2011
Directors Plan”) providing for grants of stock options, SARs, RSUs and/or performance shares, pursuant to which
up to 122,592 shares were available for issuance. The term of each award cannot exceed ten years. Awards are
subject to a minimum one-year vesting period. In 2019, 2018, and 2017, 8,016, 10,376, and 10,432 RSUs were
granted under this plan.
2005 Equity Incentive Plan
In June 2005, the shareholders adopted an equity incentive plan (the “2005 Plan”) providing for grants of
incentive and nonqualified stock options, SARs, RSUs and/or performance shares to employees of the Company
and its subsidiaries, pursuant to which up to 10,000,000 common shares were available for issuance. In 2013, the
shareholders approved an additional 3,000,000 shares to the plan, making the total shares authorized under the
plan 13,000,000. Option and SAR grants vest evenly over a period of five years or as otherwise determined by
the Board of Directors or the Compensation Committee and generally expire ten years from the date of grant, if not
exercised. RSUs granted prior to December 10, 2012 vested evenly over a period of five years, while RSUs
granted on and after that date vested or are vesting evenly over a period of three years. In addition to time-based
vesting requirements, the vesting of certain RSU grants is also contingent upon the Company’s achievement of
certain financial performance goals. During 2019, 2018, and 2017, 786,346, 1,040,001, and 1,044,045 RSUs were
granted under the 2005 Plan. No SARs were granted under the 2005 Plan in 2019, 2018, or 2017.
2000 Equity Incentive Plan
In October 2000, the shareholders adopted an equity incentive plan (the “2000 Plan”) providing for grants
of incentive and nonqualified stock options, SARs, RSUs and/or performance shares to employees of the Company
and its subsidiaries, pursuant to which up to 7,000,000 common shares were available for issuance. The stock
options and SARs vest evenly over a period of five years or as otherwise determined by the Board of Directors or
the Compensation Committee and generally expire ten years from the date of grant, if not exercised. The Company
did not grant any stock awards from the 2000 Plan in 2019, 2018, or 2017.
2000 Non-employee Directors’ Option Plan
In October 2000, the stockholders adopted a stock option plan for non-employee directors (the “2000
Directors Plan”) providing for grants of options for up to 100,000 common shares. In 2009, the stockholders
approved an additional 150,000 shares to the plan, making the total shares authorized under the plan 250,000.
The term of each award is ten years. All awards vest evenly over a three-year period. Following the June 2011
approval of the 2011 Directors Plan, the Company will no longer issue options to purchase shares under this plan.
Stock-Based Compensation Activity
A summary of the Company’s stock-based compensation activity and related information under the 2011
Directors Plan, the 2005 Plan, the 2000 Plan and the 2000 Directors Plan for the years ended December 28, 2019,
December 29, 2018, and December 30, 2017 is provided below:
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Outstanding at December 31, 2016
Granted
Exercised
Forfeited/Expired
Outstanding at December 30, 2017
Granted
Exercised
Forfeited/Expired
Outstanding at December 29, 2018
Granted
Exercised
Forfeited/Expired
Outstanding at December 28, 2019
Exercisable at December 28, 2019
Expected to vest after December 28, 2019
Stock Options and SARs
Weighted-Average
Exercise Price
Number of Shares
(In Thousands)
$
$
$
$
$
$
$
$
$
$
74.48
50.15
84.57
48.94
48.16
83.01
50.92
49.07
51.46
51.46
2,737
—
(397)
(1,948)
392
—
(304)
(2)
86
—
(20)
(cid:886)
66
66
(cid:886)
Stock Options and SARs as of December 28, 2019
Remaining Life (Years)
Awards Outstanding
(In Thousands)
Awards Exercisable
(In Thousands)
Exercise Price
$18.00 - $40.00
$40.01 - $60.00
$60.01 - $80.00
$80.01 - $100.00
$100.01 - $120.00
$120.01 - $140.00
Outstanding at December 31, 2016
Granted
Released/Vested
Cancelled
Outstanding at December 30, 2017
Granted
Released/Vested
Cancelled
Outstanding at December 29, 2018
Granted
Released/Vested
Cancelled
Outstanding at December 28, 2019
—
66
—
—
—
—
66
—
4.67
—
—
—
—
4.67
—
66
—
—
—
—
66
Restricted Stock Units
Weighted-Average
Grant Date Fair
Value
Number of Shares
(In Thousands)
$
$
$
$
$
$
$
$
$
$
$
$
$
38.94
51.71
39.31
40.40
45.30
58.66
42.55
47.91
53.17
85.93
50.02
58.62
69.47
1,824
1,055
(763)
(54)
2,062
1,050
(961)
(52)
2,099
794
(1,053)
(61)
1,779
The weighted-average remaining contract life for stock options and SARs outstanding and exercisable at
December 28, 2019 were 4.67 years. The weighted-average remaining contract life of restricted stock units at
December 28, 2019 was 1.19 years.
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The total fair value of awards vested during 2019, 2018, and 2017, was $52,780, $41,092, and $30,280,
respectively. The aggregate intrinsic values of options and SARs outstanding and exercisable at December 28,
2019 were $3,122. The aggregate intrinsic values of options and SARs exercised during 2019, 2018, and 2017
were $952, $4,452, and $3,742, respectively. The aggregate intrinsic value of RSUs outstanding at December 28,
2019 was $175,269. The aggregate intrinsic values of RSUs released during 2019, 2018, and 2017 were $103,702,
$60,361, and $45,424, respectively. Aggregate intrinsic value of options and SARs represents the applicable
number of awards multiplied by the positive difference between the exercise price and the Company’s closing stock
price on the last trading day of the relevant fiscal period. Aggregate intrinsic value of RSUs represents the
applicable number of awards multiplied by the Company’s closing stock price on the last trading day of the relevant
fiscal period. The Company’s closing stock price was $98.52 on December 28, 2019 (based on the closing stock
price on December 27, 2019). As of December 28, 2019, there was $80,613 of total unrecognized compensation
cost related to unvested share-based compensation awards granted to employees under the stock compensation
plans. That cost is expected to be recognized over the weighted average remaining vesting period.
Employee Stock Purchase Plan
The shareholders have adopted an ESPP. Up to 8,000,000 shares of common stock have been reserved
for the ESPP. Shares will be offered to employees at a price equal to the lesser of 85% of the fair market value of
the stock on the date of purchase or 85% of the fair market value on the first day of the ESPP period. The ESPP is
intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. During
2019, 2018, and 2017, 451,625, 463,066, and 489,267 shares, respectively, were purchased under the plan for a
total purchase price of $27,048, $23,709, and $20,996, respectively. During 2019, 2018, and 2017, the purchases
were issued from treasury shares. At December 28, 2019, approximately 2,055,655 shares were available for
future issuance.
10. Earnings Per Share
The following table sets forth the computation of basic and diluted net income per share:
December(cid:3)28,
2019
Fiscal Year Ended
December(cid:3)29,
2018
December(cid:3)30,
2017
Numerator:
Numerator for basic and diluted net income per share - net
income
$
952,486 $
694,080 $
709,007
Denominator:
Denominator for basic net income per share (cid:884) weighted-
average common shares
189,931
188,635
187,828
Effect of dilutive securities (cid:884) employee stock options and
stock appreciation rights
968
1,099
904
Denominator for diluted net income per share (cid:884) adjusted
weighted-average common shares
190,899
189,734
188,732
Basic net income per share
Diluted net income per share
$
$
5.01 $
3.68 $
4.99 $
3.66 $
3.77
3.76
There were 297,995 and 1,175,728 outstanding stock options, stock appreciation rights, and restricted
stock units (collectively “equity awards”) excluded from the computation of diluted earnings per share for the 2019
and 2017 fiscal years, respectively, because the effect would have been anti-dilutive. There were no equity awards
excluded from the computation of diluted earnings per share for the 2018 fiscal year because the effect would have
been anti-dilutive.
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11. Share Repurchase Plan
On February 13, 2015, the Board of Directors approved a share repurchase program authorizing the
Company to purchase up to $300,000 of its common shares through December 31, 2016. In December 2016, the
Board of Directors authorized an extension through December 31, 2017 to purchase remaining common
shares. Under the plan, the Company repurchased 0 shares in fiscal 2019 and fiscal 2018, and repurchased
1,474,092 shares using cash of $74,523 in fiscal 2017.
12. Accumulated Other Comprehensive Income
The following provides required disclosure of changes in accumulated other comprehensive income (AOCI)
balances by component for the year ended December 28, 2019:
Balance - beginning of period
Other comprehensive income before
reclassification, net of income tax expense of
$5,982
Amounts reclassified from accumulated other
comprehensive income
Net current-period other comprehensive income
Balance - end of period
$
$
Foreign
Currency
Translation
Adjustment(cid:3)
Net(cid:3)unrealized
gains (losses)
on available-for-
sale securities
Total
47,327
$
(38,897) $
8,430
7,962
(cid:886)
7,962
55,289
$
40,228
(746)
39,482
585
$
48,190
(746)
47,444
55,874
The following provides required disclosure of reporting reclassifications out of AOCI for the year ended
December 28, 2019:
Details about Accumulated Other Comprehensive
Income Components
Unrealized gains (losses) on available-for-sale securities
Amount Reclassified
from Accumulated(cid:3)
Other(cid:3)Comprehensive(cid:3)
Income(cid:3)
Affected Line Item
in the Statement(cid:3)
Where Net Income(cid:3)
is Presented(cid:3)
$
$
799 Other income (expense)
(53) Income(cid:3)tax(cid:3)benefit(cid:3)(provision)
746 Net of tax
13. 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 8 –
Segment Information. The Company has identified six major product categories – auto PND, and auto OEM,
aviation, fitness, marine, and outdoor. Note 8 also contains disaggregated revenue information of the aviation,
fitness, marine, and outdoor major product categories. Auto segment revenue presented in Note 8 is comprised of
the auto PND and auto OEM major product categories as depicted below.
Auto Revenue by Major Product Category
Fiscal Year Ended
December(cid:3)29,
2018
December(cid:3)30,
2017
December(cid:3)28,
2019
Auto PND
Auto OEM
67%
33%
67%
33%
69%
31%
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A large majority of the Company’s sales are recognized on a point in time basis, usually once the product
is shipped and title and risk of loss have transferred to the customer. Sales recognized over a period of time are
primarily within the auto segment and relate to performance obligations that are satisfied over the life of the product
or contractual service period. Revenue disaggregated by the timing of transfer of the goods or services is presented
in the table below:
Point in time
Over time
Net sales
December(cid:3)28,
2019
3,577,715 $
179,790
3,757,505 $
Fiscal Year Ended
December(cid:3)29,
2018
3,176,949 $
170,495
3,347,444 $
$
$
December(cid:3)30,
2017
2,954,945
166,615
3,121,560
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 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 52-week periods ending December 28, 2019 and December 29, 2018, are
presented below:
Fiscal Year Ended
December 28,
2019(cid:3)
December 29,
2018(cid:3)
Balance, beginning of period
Deferrals in period
Recognition of deferrals in period
Balance, end of period
Deferred(cid:3)
Revenue(cid:3)(1)(cid:3)(cid:3)
$
172,938 $
168,743
(179,790)
161,891 $
$
Deferred(cid:3)
Costs(cid:3)(2)(cid:3)
(cid:3)
Deferred(cid:3)
Revenue(cid:3)(1)(cid:3)(cid:3)
57,935 $
25,751
(35,088)
48,598 $
190,200 $
153,233
(170,495)
172,938 $
(cid:3)
Deferred(cid:3)
Costs(cid:3)(2)(cid:3)
63,554
36,297
(41,916)
57,935
(1) Deferred revenue is comprised of both Deferred revenue and Noncurrent deferred revenue per the
Consolidated Balance Sheets(cid:3)
(2) Deferred costs are comprised of both Deferred costs and Noncurrent deferred costs per the Consolidated
Balance Sheets(cid:3)
(cid:3)
(cid:3)
Of the $179,790 of deferred revenue recognized in the 52-weeks ended December 28, 2019, $95,009 was
deferred as of the beginning of the period. Of the $170,495 of deferred revenue recognized in the 52-weeks ended
December 29, 2018, $105,924 was deferred as of the beginning of the period.
Of the $161,891 and $172,938 of deferred revenue at the end of the periods, December 28, 2019 and
December 29, 2018, respectively, approximately two-thirds is recognized ratably over a period of three years or
less.
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14. Leases
The following table represents lease costs recognized in the Company’s Consolidated Statements of
Income for the 52-weeks ended December 28, 2019. Lease costs are included in Selling, general and administrative
expense and Research and development expense on the Company’s Condensed Consolidated Statements of
Income.
Operating lease cost (1)(cid:3)
Fiscal Year Ended
December 28,
2019
$
25,238
(1) Operating lease cost includes short-term lease costs and variable lease costs, which were not material in the period
presented.(cid:3)
(cid:3)
Prior to the adoption of the new lease standard, lease expense for the years ended December 29, 2018
and December 30, 2017 were $21,096 and $18,915, respectively.
The following table represents the components of leases that are recognized on the Company’s
Consolidated Balance Sheets as of December 28, 2019.
Operating lease right-of-use assets
Other accrued expenses
Noncurrent operating lease liabilities
Total lease liabilities
Weighted average remaining lease term
Weighted average discount rate
The following table represents the maturity of lease liabilities.
Year
2020
2021
2022
2023
2024
Thereafter
Total
Less: imputed interest
Present value of lease liabilities
December 28,
2019
$
$
$
Amount
$
63,589
14,762
49,238
64,000
5.7 years
4.1%
17,626
14,565
10,683
9,768
7,258
13,264
73,164
(9,164)
64,000
As of December 28, 2019, the Company has entered into leases that have not yet commenced with future
lease payments of $23,966, the majority of which relates to a manufacturing facility lease in Poland. These leases
will commence in fiscal year 2020 with lease terms ranging from 5 to 10 years.
As of December 29, 2018, prior to the Company’s adoption of Topic 842, future minimum lease payments
were as follows:
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Year
2019
2020
2021
2022
2023
Thereafter
Total
$
$
Amount
17,170
13,961
10,559
7,290
6,947
13,910
69,837
The following table presents supplemental cash flow and noncash information related to leases.
Fiscal Year Ended
December 28,
2019
Cash paid for amounts included in the measurement of operating lease liabilities(2)(cid:3)
Right-of-use assets obtained in exchange for new operating lease liabilities
$
$
(2) Included in Net cash provided by operating activities on the Company's Statements of Cash Flows(cid:3)
18,636
18,248
(cid:3)
15. Selected Quarterly Information (Unaudited)
52-Weeks Ended December 28, 2019
Quarter Ending
Net sales
Gross profit
Net income
Basic net income per share
Diluted net income per share
Net sales
Gross profit
Net income
Basic net income per share
Diluted net income per share
March 30
$ 766,050 $ 954,840 $
June 29 September(cid:3)28 December(cid:3)28
1,102,233
639,456
360,792
1.90
1.89
934,383 $
567,458
227,866
575,365
223,656
1.20 $
1.19 $
1.18 $
1.17 $
451,698
140,173
$
$
0.74 $
0.74 $
52-Weeks Ended December 29, 2018
Quarter Ending
March 31
$ 710,872 $ 894,452 $
June 30 September(cid:3)29 December(cid:3)29
932,108
549,166
190,150
1.01
1.00
810,011 $
480,747
184,214
523,270
190,342
0.98 $
0.97 $
1.01 $
1.00 $
426,535
129,374
$
$
0.69 $
0.68 $
The above quarterly financial data is unaudited, but in the opinion of management, all adjustments
necessary for a fair presentation of the selected data for these interim periods presented have been included. These
results are not necessarily indicative of future quarterly results, and the table may not foot due to rounding.
16. Recently Issued Accounting Pronouncements
Financial Instruments - Credit Losses
In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments – Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13
provides new guidance on assessment of expected credit losses of certain financial instruments. ASU 2016-13 is
effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption
is permitted. The Company does not expect the new standard to have a material impact on its Consolidated
Financial Statements.
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Receivables – Nonrefundable Fees and Other Costs
In March 2017, the FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable
Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities (“ASU 2017-
08”), which shortens the amortization period for certain callable debt securities held at a premium, requiring the
premium to be amortized to the earliest call date. Callable debt securities held at a discount continue to be amortized
to maturity. ASU 2017-08 is effective for fiscal years, and interim periods within those years, beginning after
December 15, 2019. Early adoption is permitted. The Company does not expect the new standard to have a
material impact on its Consolidated Financial Statements.
17. Subsequent Events
In February 2020, the Company initiated a transaction,
including a multi-year intercompany license
agreement, between wholly-owned subsidiaries to migrate ownership of certain intellectual property from
Switzerland to the United States. The expected impact of this subsequent event was considered when determining
the carrying value associated with the revaluation and step-up of certain Switzerland tax assets, which was recorded
by the Company in fiscal 2019 as a result of the enactment of Switzerland federal and Schaffhausen cantonal tax
reform.
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Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
(a) Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer
and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report.
Based on the evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these
disclosure controls and procedures are effective.
(b) Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. The Company’s internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management of the Company assessed the effectiveness of the Company’s internal control over financial
reporting as of December 28, 2019. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control-Integrated
Framework” (2013 framework).
Based on such assessment and those criteria, management believes that the Company maintained
effective internal control over financial reporting as of December 28, 2019.
We acquired Tacx on April 1, 2019, and excluded it from our assessment of the effectiveness of internal
control over financial reporting as of December 28, 2019. Total assets, excluding the net identifiable intangible
assets and goodwill, and Net sales of Tacx represent 1.3% and 1.7%, respectively, of the related consolidated
financial statement amounts as of and for the year ended December 28, 2019.Ernst & Young LLP, the independent
registered public accounting firm that audited the Company’s consolidated financial statements, issued an
attestation report on management’s effectiveness of the Company’s internal control over financial reporting as of
December 28, 2019, as stated in their report which is included herein. That attestation report appears below.
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(c) Attestation Report of the Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Garmin Ltd. and Subsidiaries
Opinion on Internal Control over Financial Reporting
We have audited Garmin Ltd. and Subsidiaries’ internal control over financial reporting as of December 28, 2019,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, Garmin Ltd. and
Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as
of December 28, 2019, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting,
management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did
not include the internal controls of Tacx, which was acquired on April 1, 2019 and is included in the 2019
consolidated financial statements of the Company and constituted 1.3% of total assets, excluding net identifiable
intangible assets and goodwill, as of December 28, 2019 and 1.7% of revenues, for the year then ended. Our audit
of internal control over financial reporting of the Company also did not include an evaluation of the internal control
over financial reporting of Tacx.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 28, 2019 and December 29,
2018, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows
for each of the three years in the period ended December 28, 2019, and the related notes and financial statement
schedule listed in the Index at Item 15(a) and our report dated February 19, 2020 expressed an unqualified opinion
thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Kansas City, Missouri
February 19, 2020
(d) Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December
28, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Garmin has incorporated by reference certain information in response or partial response to the Items under
this Part III of this Annual Report on Form 10-K pursuant to General Instruction G(3) of this Form 10-K and Rule
12b-23 under the Exchange Act. Garmin’s definitive proxy statement in connection with its annual meeting of
shareholders scheduled for June 5, 2020 (the “Proxy Statement”) will be filed with the Securities and Exchange
Commission no later than 120 days after December 28, 2019.
(a) Directors of the Company
The information set forth in response to Item 401 of Regulation S-K under the headings “Proposal 5 – Re-
election of six directors” in the Proxy Statement is hereby incorporated herein by reference in partial response to
this Item 10.
(b) Executive Officers of the Company
The information set forth in response to Item 401 of Regulation S-K under the heading “Information about
our Executive Officers” in Part I of this Form 10-K is incorporated herein by reference in partial response to this Item
10.
(c) Delinquent Section 16(a) Reports
The information set forth in response to Item 405 of Regulation S-K under the heading “Delinquent Section
16(a) Reports” in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item
10.
(d) Audit Committee and Audit Committee Financial Expert
The information set forth in response to Item 402 of Regulation S-K under the heading “Board Meetings
and Standing Committee Meetings - Audit Committee” in the Proxy Statement is hereby incorporated herein by
reference in partial response to this Item 10.
The Audit Committee consists of Joseph J. Hartnett, Charles W. Peffer and Catherine A. Lewis. Mr. Peffer
serves as the Chairman of the Audit Committee. All members of the Audit Committee are “independent” within the
meaning of the rules of the SEC and the Nasdaq Marketplace Rules. Garmin’s Board of Directors has determined
that Mr. Hartnett, Ms. Lewis, and Mr. Peffer are “audit committee financial experts” as defined by the SEC
regulations implementing Section 407 of the Sarbanes-Oxley Act of 2002.
(e) Code of Ethics
Garmin’s Board of Directors has adopted the Code of Conduct of Garmin Ltd. and Subsidiaries (the “Code”).
The Code is applicable to all Garmin employees including the President and Chief Executive Officer, the Chief
Financial Officer, the Controller and other officers. A copy of the Code is available on Garmin’s website at:
https://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct.pdf. If any amendments to the
Code are made, or any waivers with respect to the Code are granted to the President and Chief Executive Officer,
the Chief Financial Officer or Controller, or any person performing a similar function, such amendment or waiver
will
at:
https://www8.garmin.com/aboutGarmin/invRelations/documents/Code_of_Conduct.pdf.
disclosed
Garmin’s
website
on
be
Item 11. Executive Compensation
The information set forth in response to Item 402 of Regulation S-K under the headings “Executive
Compensation Matters” and “Proposal 5 - Re-election of six directors – Non-Management Director Compensation”
in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 11.
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The information set forth in response to Item 407(e)(4) of Regulation S-K under the heading “Proposal 5 -
Re-election of six directors – Compensation Committee Interlocks and Insider Participation; Certain Relationships”
in the Proxy Statement is hereby incorporated herein by reference in partial response to this Item 11.
The information set forth in response to Item 407(e)(5) of Regulation S-K under the heading “Executive
Compensation Matters – Compensation Committee Report” in the Proxy Statement is hereby incorporated herein
by reference in partial response to this Item 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information set forth in response to Item 403 of Regulation S-K under the heading “Stock Ownership
of Certain Beneficial Owners and Management” in the Proxy Statement is hereby incorporated herein by reference
in partial response to this Item 12.
Equity Compensation Plan Information
The following table gives information as of December 28, 2019 about the Garmin common shares that may
be issued under all of the Company’s existing equity compensation plans, as adjusted for stock splits.
A
B
Number of
securities to be
issued upon
outstanding
options, exercise of
warrants and rights
Weighted-
average exercise
price of outstanding
options, warrants
and rights
C
Number of
securities remaining
available for future
issuance under
equity compensation
plans (excluding
securities reflected in
column A)
1,845,357 $
—
1,845,357 $
51.46
—
51.46
5,644,343
—
5,644,343
Plan Category
Equity compensation plans approved by
shareholders
Equity compensation plans not approved by
shareholders
Total
Table consists of the Garmin Ltd. 2005 Equity Incentive Plan (as Amended and Restated Effective June 5,
2010), the Garmin Ltd. 2000 Equity Incentive Plan, the Garmin Ltd. Amended and Restated 2000 Non-Employee
Directors’ Option Plan, effective June 5, 2010, the Garmin Ltd. Amended and Restated Employee Stock Purchase
Plan, effective January 1, 2010 and the Garmin Ltd. 2011 Non-Employee Directors Equity Incentive Plan, effective
June 3, 2011. The weighted-average exercise price does not reflect the shares that will be issued upon the payment
of outstanding awards of RSUs.
The Company has no knowledge of any arrangement, the operation of which may at a subsequent date
result in a change in control of the Company.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information set forth in response to Item 404 of Regulation S-K under the heading “Proposal 5 – Re-
election of six directors - Compensation Committee Interlocks and Insider Participation; Certain Relationships” in
the Proxy Statement is incorporated herein by reference in partial response to this Item 13.
The information set forth in response to Item 407(a) of Regulation S-K under the headings “Proposal 5 –
Re-election of six directors” in the Proxy Statement is hereby incorporated herein by reference in partial response
to this Item 13.
Item 14. Principal Accounting Fees and Services
The information set forth under the headings “Audit Matters -- Independent Registered Public Accounting
Firm Fees” and “Pre-Approval of Services Provided by the Independent Auditor” in the Proxy Statement is hereby
incorporated by reference in response to this Item 14.
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PART IV
Item 15. Exhibits, and Financial Statement Schedules
(a)
List of Documents filed as part of this Report
(1) Consolidated Financial Statements
The consolidated financial statements and related notes, together with the reports of Ernst & Young LLP,
appear in Part II, Item 8 “Financial Statements and Supplementary Data” of this Form 10-K.
(2) Schedule II Valuation and Qualifying Accounts
All other schedules have been omitted because they are not applicable, are insignificant or the required
information is shown in the consolidated financial statements or notes thereto.
(3) Exhibits -- The following exhibits are filed as part of, or incorporated by reference into, this Annual
Report on Form 10-K:
EXHIBIT
NUMBER DESCRIPTION
3.1
Articles of Association of Garmin Ltd., as amended and restated on June 8, 2018. (incorporated by
reference to Exhibit 3.1 of the Registrant’s Annual Report on Form 10-K filed on February 20, 2019).
3.2
(cid:3)
4.1
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
Organizational Regulations of Garmin Ltd., as amended on October 25, 2019 (incorporated by
reference to Exhibit 3.2 of the Registrant’s Amendment No.1 to Current Report on Form 8-K/A filed on
November 21, 2019).
Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934
Garmin Ltd. 2000 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s
Registration Statement on Form S-1 filed December 6, 2000 (Commission File No. 333-45514)).
Form of Stock Option Agreement pursuant
to the Garmin Ltd. 2000 Equity Incentive Plan for
Employees of Garmin International, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s
Current Report on Form 8-K filed on September 7, 2004).
to the Garmin Ltd. 2000 Equity Incentive Plan for
Form of Stock Option Agreement pursuant
Employees of Garmin Corporation (incorporated by reference to Exhibit 10.3 of the Registrant’s
Current Report on Form 8-K filed on September 7, 2004).
Form of Stock Option Agreement pursuant to the Garmin Ltd. 2000 Equity Incentive Plan for UK-
Approved Stock Options for Employees of Garmin (Europe) Ltd. (incorporated by reference to Exhibit
10.4 of the Registrant’s Current Report on Form 8-K filed on September 7, 2004).
Form of Stock Option Agreement pursuant to the Garmin Ltd. 2000 Equity Incentive Plan for Non UK-
Approved Stock Options for Employees of Garmin (Europe) Ltd. (incorporated by reference to Exhibit
10.5 of the Registrant’s Current Report on Form 8-K filed on September 7, 2004).
Garmin Ltd. 2000 Non-Employee Directors’ Option Plan (incorporated by reference to Exhibit 10.2 of
the Registrant’s Registration Statement on Form S-1 filed December 6, 2000 (Commission File No.
333-45514)).
Form of Stock Option Agreement pursuant to the Garmin Ltd. Non-Employee Directors’ Option Plan
for Non-Employee Directors of Garmin Ltd. (incorporated by reference to Exhibit 10.2 of the
Registrant’s Current Report on Form 8-K filed on September 7, 2004).
Garmin Ltd. Amended and Restated Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed August 9, 2006).
First Amendment to Garmin Ltd. Employee Stock Purchase Plan (incorporated by reference to Exhibit
10.4 of the Registrant’s Annual Report on Form 10-K filed on March 27, 2002).
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10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
Second Amendment to Garmin Ltd. Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed on August 13, 2003).
Garmin Ltd. 2005 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s
Current Report on Form 8-K filed on June 7, 2005).
Form of Stock Option Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan (incorporated
by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on June 7, 2005).
Form of Stock Appreciation Rights Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed on
May 8, 2007).
Form of Stock Appreciation Rights Agreement pursuant to the Garmin Ltd.2000 Equity Incentive Plan
(incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed on June
7, 2005).
Amended and Restated Garmin Ltd. Employee Stock Purchase Plan effective January 1, 2008
(incorporated by reference to Exhibit 10.15 of the Registrant’s Annual Report on Form 10-K filed on
February 26, 2008).
Form of Time Vested Restricted Stock Unit Award Agreement under the Garmin Ltd. 2005 Equity
Incentive Plan (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form
8-K filed on December 17, 2008).
Form of Performance Shares Award Agreement under the Garmin Ltd. 2005 Equity Incentive Plan
(incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on
December 17, 2008).
Garmin Ltd. 2009 Cash Incentive Bonus Plan (incorporated by reference to Exhibit 10.18 of the
Registrant’s Annual Report on Form 10-K filed on February 25, 2009).
Amended and Restated Garmin Ltd. Employee Stock Purchase Plan, effective January 1, 2010
(incorporated by reference to Exhibit 10.22 of the Registrant’s Annual Report on Form 10-K filed on
February 24, 2010).
Form of Time Vested Restricted Stock Unit Award Agreement under the Garmin Ltd. 2005 Equity
Incentive Plan, as revised by the Registrant’s Board of Directors on December 11, 2009 (incorporated
by reference to Exhibit 10.23 of the Registrant’s Annual Report on Form 10-K filed on February 24,
2010).
Form of Performance Shares Award Agreement under the Garmin Ltd. 2005 Equity Incentive Plan, as
revised by the Registrant’s Board of Directors on December 11, 2009 (incorporated by reference to
Exhibit 10.24 of the Registrant’s Annual Report on Form 10-K filed on February 24, 2010).
Garmin Ltd. 2005 Equity Incentive Plan (as Amended and Restated Effective June 5, 2009)
(incorporated by reference to Schedule 1 of the Registrant’s Proxy Statement on Schedule 14A filed
on April 21, 2009).
Garmin Ltd. Amended and Restated 2000 Non-Employee Directors’ Option Plan, Effective June 5,
2009 (incorporated by reference to Schedule 2 of the Registrant’s Proxy Statement on Schedule 14A
filed on April 21, 2009).
Garmin Ltd. Amended and Restated 2000 Equity Incentive Plan (incorporated by reference to Exhibit
10.2 of the Registrant’s Current Report on Form 8-K filed on June 28, 2010).
Garmin Ltd. Amended and Restated 2000 Non-Employee Directors’ Option Plan (incorporated by
reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed on June 28, 2010).
Garmin Ltd. Amended and Restated Employee Stock Purchase Plan (incorporated by reference to
Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed on June 28, 2010).
Garmin Ltd. Amended and Restated 2005 Equity Incentive Plan (incorporated by reference to Exhibit
10.5 of the Registrant’s Current Report on Form 8-K filed on June 28, 2010).
94
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(cid:3)
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
Form of Stock Option Agreement pursuant to the Garmin Ltd. Amended and Restated 2000 Non-
Employee Directors’ Option Plan (incorporated by reference to Exhibit 10.6 of the Registrant’s Current
Report on Form 8-K filed on June 28, 2010).
Form of Performance Shares Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan (incorporated by reference to Exhibit 10.7 of the Registrant’s Current Report on Form 8-K filed
on June 28, 2010).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for Swiss residents (incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report
on Form 8-K filed on June 28, 2010).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for non-Swiss residents (incorporated by reference to Exhibit 10.9 of the Registrant’s Current
Report on Form 8-K filed on June 28, 2010).
Transaction Agreement between Garmin Ltd., a Cayman Islands company, and the Registrant, dated
as of May 21, 2010 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on
Form 8-K filed on June 28, 2010).
Form of Non-Qualified Stock Option Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, as amended and restated on June 27, 2010 (incorporated by reference to Exhibit 10.1 of the
Registrant’s Current Report on Form 8-K filed on December 29, 2011).
Garmin Ltd. 2011 Non-Employee Directors’ Equity Incentive Plan (incorporated by reference to
Schedule 1 of the Registrant’s Definitive Proxy Statement on Form 14A filed on April 21, 2011).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2011 Non-Employee
Directors’ Equity Incentive Plan (incorporated by reference to Exhibit 10.2 of the Registrant’s Current
Report on Form 8-K filed on June 6, 2011).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for Swiss grantees (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report
on Form 8-K filed on December 10, 2012).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for Canadian grantees (incorporated by reference to Exhibit 10.2 of the Registrant’s Current
Report on Form 8-K filed on December 10, 2012).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for non-Swiss and non-Canadian grantees (incorporated by reference to Exhibit 10.3 of the
Registrant’s Current Report on Form 8-K filed on December 10, 2012).
Memorandum of Agreement dated March 14, 2013 between Garmin International, Inc. and
Bombardier, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on
Form 10-Q filed on May 8, 2013).
Amendment dated December 6, 2013 to Memorandum of Agreement between Garmin International,
Inc. and Bombardier, Inc. (incorporated by reference to Exhibit 10.40 of the Registrant’s Annual Report
on Form 10-K filed on February 19, 2014).
Garmin Ltd. 2005 Equity Incentive Plan (as Amended and Restated Effective June 7, 2013)
(incorporated by reference to Schedule 1 of the Registrant’s Proxy Statement on Schedule 14A filed
on April 22, 2013).
Form of Director and Officer Indemnification Agreement entered into between Garmin Ltd. and each
of its Directors and Executive Officers (incorporated by reference to Exhibit 10.1 of the Registrant’s
Current Report on Form 8-K filed on August 8, 2014).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to
grantees who are executive officers (incorporated by reference to Exhibit 10.1 of the Registrant’s
Current Report on Form 8-K filed on February 17, 2015).
95
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(cid:3)
10.44
10.45
10.47
10.48
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
10.59
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to
grantees who are not executive officers (incorporated by reference to Exhibit 10.2 of the Registrant’s
Current Report on Form 8-K filed on February 17, 2015).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2011 Non-Employee
Directors’ Equity Incentive Plan (incorporated by reference to Exhibit 10.3 of the Registrant’s Current
Report on Form 8-K filed on February 17, 2015).
Garmin Ltd. Employee Stock Purchase Plan, as amended and restated on June 5, 2015 (incorporated
by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on June 8, 2015).
Garmin Ltd. Employee Stock Purchase Plan, as amended and restated on October 21, 2016
(incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed on
October 26, 2016).
Garmin Ltd. 2005 Equity Incentive Plan, as amended and restated on October 21, 2016 (incorporated
by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed on October 26,
2016).
Garmin Ltd. 2011 Non-Employee Directors’ Equity Incentive Plan, as amended and restated on
October 21, 2016 (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on
Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2011 Non-Employee
Directors’ Equity Incentive Plan (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly
Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for Swiss grantees (incorporated by reference to Exhibit 10.5 of the Registrant’s Quarterly Report
on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for Canadian grantees (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly
Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for non-Swiss and non-Canadian grantees (incorporated by reference to Exhibit 10.7 of the
Registrant’s Quarterly Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to Swiss
grantees who are executive officers (incorporated by reference to Exhibit 10.8 of the Registrant’s
Quarterly Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to Swiss
grantees who are not executive officers (incorporated by reference to Exhibit 10.9 of the Registrant’s
Quarterly Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to
Canadian grantees who are not executive officers (incorporated by reference to Exhibit 10.10 of the
Registrant’s Quarterly Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-
Swiss and non-Canadian grantees who are executive officers (incorporated by reference to Exhibit
10.11 of the Registrant’s Quarterly Report on Form 10-Q filed on October 26, 2016).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-
Swiss and non-Canadian grantee grantees who are not executive officers (incorporated by reference
to Exhibit 10.12 of the Registrant’s Quarterly Report on Form 10-Q filed on October 26, 2016).
96
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(cid:3)
10.60
10.61
10.62
10.63
10.64
10.65
10.66
21.1
23.1
24.1
31.1
31.2
32.1
32.2
Exhibit
101.INS
Exhibit
101.SCH
Exhibit
101.CAL
Exhibit
101.LAB
Exhibit
101.PRE
Exhibit
101.DEF
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for non-Swiss and non-Canadian grantees (incorporated by reference to Exhibit 10.60 of the
Registrant’s Annual Report on Form 10-K filed on February 21, 2018).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-
Swiss and non-Canadian grantees who are executive officers (incorporated by reference to Exhibit
10.61 of the Registrant’s Annual Report on Form 10-K filed on February 21, 2018).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2005 Equity Incentive
Plan, for awards of performance-based and time-based vesting restricted stock unit awards to non-
Swiss and non-Canadian grantee grantees who are not executive officers (incorporated by reference
to Exhibit 10.62 of the Registrant’s Annual Report on Form 10-K filed on February 21, 2018).
Garmin Ltd. 2011 Non-Employee Directors’ Equity Incentive Plan, as amended and restated on
February 15, 2019 (incorporated by reference to Exhibit 10.63 of the Registrant’s Annual Report on
Form 10-K filed on February 20, 2019).
Form of Restricted Stock Unit Award Agreement pursuant to the Garmin Ltd. 2011 Non-Employee
Directors’ Equity Incentive Plan, as amended and restated on February 15, 2019 (incorporated by
reference to Exhibit 10.64 of the Registrant’s Annual Report on Form 10-K filed on February 20, 2019).
Garmin Ltd. 2005 Equity Incentive Plan, as amended and restated on June 7, 2019 (incorporated by
reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on June 10, 2019).(cid:3)
Garmin Ltd. Employee Stock Purchase Plan, as amended and restated on June 7, 2019 (incorporated
by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on June 10, 2019).
List of subsidiaries
Consent of Ernst & Young LLP
Power of Attorney (included in signature page)
Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Chief Executive Officer’s Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Chief Financial Officer’s Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline 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
Inline XBRL Taxonomy Extension Schema
Inline XBRL Taxonomy Extension Calculation Linkbase
Inline XBRL Taxonomy Extension Label Linkbase
Inline XBRL Taxonomy Extension Presentation Linkbase
Inline XBRL Taxonomy Extension Definition Linkbase
Exhibit 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(b)
Exhibits
The exhibits listed on the accompanying Exhibit Index in Item 15(a)(3) are filed as part of, or are
incorporated by reference into, this Annual Report on Form 10-K.
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(cid:3)
(c)
Financial Statement Schedules
Reference is made to Item 15(a)(2) above.
Item 16. Form 10-K Summary
None.
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(cid:3)
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Garmin Ltd. and Subsidiaries
(In thousands)
Description
Year Ended December 28, 2019:
Deducted from asset accounts
Allowance for doubtful accounts
Valuation allowance - Deferred
Tax Asset
Total
Year Ended December 29, 2018:
Deducted from asset accounts
Allowance for doubtful accounts
Valuation allowance - Deferred
Tax Asset
Total
Additions
Balance(cid:3)at
Beginning(cid:3)of
Period
Charged(cid:3)to
Costs(cid:3)and
Expenses
Charged(cid:3)to
Other(cid:3)Accounts Deductions
Balance(cid:3)at
End(cid:3)of(cid:3)Period
$
$
$
$
5,487 $
2,029 $
4,568
10,055 $
1,556
3,585 $
4,168 $
2,123 $
7,267
11,435 $
1,186
3,309 $
(cid:886) $
(cid:886)
(cid:886) $
(cid:886) $
(cid:886)
(cid:886) $
(762) $
6,754
(1,562)
(2,324) $
4,562
11,316
(804) $
5,487
(3,885)
(4,689) $
4,568
10,055
Year Ended December 30, 2017:
Deducted from asset accounts
Allowance for(cid:3)doubtful(cid:3)accounts(cid:3)(1)(cid:3)$
Valuation allowance - Deferred
Tax Asset
Total
$
14,669 $
1,021 $
(cid:886) $
(11,522 ) $
4,168
4,622
19,291 $
3,077
4,098 $
(cid:886)
(cid:886) $
(432)
(11,954 ) $
7,267
11,435
(1) The $11.5 million deduction from the allowance for doubtful accounts during the fiscal year ended December
30, 2017 was a result of the write-off of uncollectable accounts that had previously been fully reserved.(cid:3)
(cid:3)
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(cid:3)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GARMIN LTD.
By
/s/ Clifton A. Pemble
Clifton A. Pemble
President and Chief Executive Officer
Dated: February 19, 2020
POWER OF ATTORNEY
Know all persons by these presents, that each person whose signature appears below constitutes and
appoints Clifton A. Pemble and Douglas G. Boessen and Andrew R. Etkind, and each of them, as his attorney-in-
fact, with the power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report
on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his substitute
or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been
signed below by the following persons on behalf of the registrant and in the capacities indicated on February 19,
2020.
/s/ Clifton A. Pemble
Clifton A Pemble
Director, President and Chief Executive Officer
(Principal Executive Officer)
/s/ Douglas G. Boessen
Douglas G. Boessen
Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
/s/ Min H. Kao
Min H. Kao
Executive Chairman
/s/ Joseph J. Hartnett
Joseph J. Hartnett
Director
/s/ Charles W. Peffer
Charles W. Peffer
Director
/s/ Jonathan C. Burrell
Jonathan C. Burrell
Director
/s/ Catherine A. Lewis
Catherine A. Lewis
Director
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(cid:3)
S T A T U T O R Y F I N A N C I A L S T A T E M E N T S
Garmin Ltd. (Switzerland)
Years Ended December 28, 2019 and December 29, 2018
(cid:94)(cid:882)(cid:1005)
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(cid:3)
To the General Meeting of
Garmin Ltd., Schaffhausen
Zurich, February 19, 2020
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the accompanying financial statements of Garmin Ltd.
(the Company), which comprise the balance sheet, statement of income and notes, for the
period from December 30, 2018 to December 28, 2019.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in
accordance with the requirements of Swiss law and the Company’s articles of association.
This responsibility includes designing, implementing and maintaining an internal control
system relevant to the preparation of financial statements that are free from material
misstatement, whether due to fraud or error. The Board of Directors is further responsible for
selecting and applying appropriate accounting policies and making accounting estimates
that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers the internal control system relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control system. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of accounting estimates made, as well as evaluating
the overall presentation of the financial statements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements for the period from December 30, 2018 to December
28, 2019 comply with Swiss law and the Company’s articles of association.
(cid:94)(cid:882)(cid:1006)
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(cid:3)
Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight
Authority
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the financial statements of the current period. We have
determined that there are no key audit matters to communicate in our report.
Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor
Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there
are no circumstances incompatible with our independence.
In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we
confirm that an internal control system exists, which has been designed for the preparation of
financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss
law and the Company’s articles of association. We recommend that the financial statements
submitted to you be approved.
Ernst & Young Ltd
Rico Fehr
Licensed audit expert
(Auditor in charge)
Christian Schibler
Licensed audit expert
Enclosures
(cid:102) Financial statements (balance sheet, statement of income and notes)
(cid:102) Proposal regarding the appropriation of available earnings
(cid:94)(cid:882)(cid:1007)
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(cid:3)
Garmin Ltd.
Balance Sheet
(CHF in thousands)
Assets
- Cash and cash equivalents
- Accounts receivable - affiliates
- Other receivables - third party
- Prepaid expenses
Total current assets
- Loans receivable - affiliates
- Investment in affiliated companies
Total non-current assets
Total assets
Liabilities and shareholders' equity
- Accounts payable
- Accounts payable - affiliates
- Provision for unrealized translation gains
- Dividend payable from capital contribution reserve
Total current liabilities
- Accrued expenses
Total non-current liabilities
Total liabilities
Share capital
Legal capital reserves
- Reserve from capital contribution
- Reserve for treasury shares from capital contribution
- Other capital reserves
Voluntary retained earnings
- Dividend reserve from capital contribution
- Available earnings
- Balance brought forward
- Net earnings (loss) for the year
December 28,
2019
December 29,
2018
108,358
838
19
179
109,394
180,950
6,228,741
6,409,691
6,519,085
886
27,293
32,472
212,018
272,669
295
295
272,964
100,619
423
21
228
101,291
277,024
6,567,262
6,844,286
6,945,577
563
23,419
38,397
197,155
259,534
531
531
260,065
19,808
19,808
5,649,552
336,527
68
6,044,208
385,431
68
175,565
158,677
77,320
(12,719)
95,470
(18,150)
Total shareholders' equity
6,246,121
6,685,512
Total liabilities and shareholders' equity
6,519,085
6,945,577
(cid:94)(cid:882)(cid:1008)
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(cid:3)
Garmin Ltd.
Statement of Income
(CHF in thousands)
Dividend income - affiliates
- General and administrative expenses
- General and administrative expenses - affiliates
Operating expenses
Fiscal Year Ended
December 28,
2019
Fiscal Year Ended
December 29,
2018
493,333
890,167
(13,006)
(7,772)
(20,778)
(12,148)
(12,064)
(24,212)
Impairment on investment in affiliated companies
(492,744)
(889,796)
Financial result
- Interest income - affiliates
- Interest expense - affiliates
- Foreign currency gains (losses)
Total financial result
9,323
(3,492)
1,639
7,470
9,590
(1,861)
(2,038)
5,691
Net earnings (loss)
(12,719)
(18,150)
(cid:3)
(cid:3)
(cid:94)(cid:882)(cid:1009)
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(cid:3)
(cid:3)
Garmin Ltd.
Notes to Statutory Financial Statements
December 28, 2019 and December 29, 2018
(CHF in thousands, except share and per share information and where otherwise indicated)(cid:3)
1. Summary of significant accounting policies
General aspects
Garmin Ltd. (the “Company”) is the parent company of the Garmin Group and has its registered
office at Mühlentalstrasse 2, 8200 Schaffhausen, Switzerland. The Company did not have any
employees at December 28, 2019 and December 29, 2018.
Basis of presentation
These unconsolidated statutory financial statements of Garmin Ltd. have been prepared in
accordance with the general accepted accounting principles as set out in the Swiss Code of
Obligations (“SCO”) Art. 957 to 963b.
The consolidated financial statements of the Garmin Group include 100 percent of the assets,
liabilities, revenues, expenses, income and cash flows of Garmin Ltd. and subsidiaries in which
the Company has a controlling interest, as if the Company and its subsidiaries were a single
company.
The Company has adopted a 52-53 week period ending on the last Saturday of the calendar year.
Due to the fact that there are not exactly 52 weeks in a calendar year and there is slightly more
than one additional day per year (not including the effects of a leap year) in each calendar year as
compared to a 52-week fiscal year, the Company will have a fiscal year comprising 53 weeks in
certain fiscal years, as determined by when the last Saturday of the calendar year occurs. The
fiscal year ended December 28, 2019 included 52 weeks and December 29, 2018 included 52
weeks. Certain comparatives were reclassified to ensure consistency in presentation.
Affiliates
The term “Affiliates”, as referred to in these financial statements, is defined as directly and
indirectly held subsidiaries.
(cid:94)(cid:882)(cid:1010)
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(cid:3)
Exchange rate differences
The Company keeps its accounting records in U.S. Dollars (USD) and translates them into Swiss
Francs (CHF) for statutory reporting purposes. Assets and liabilities denominated in foreign
currencies are translated into CHF using the year-end rates of exchange, except investment in
affiliated companies and the Company’s equity, which are translated at historical rates. Income
statement transactions are translated into Swiss francs at the average rate of the year, except for
individually significant transactions during the year in which case the applicable daily exchange
rate is used. Exchange differences arising from business transactions are recorded in the income
statement, except for net unrealized gains, which are deferred and recorded in current liabilities.
Unrealized losses arising from the translation of the financial statements in USD to CHF are
recorded in the statement of income, and unrealized gains are deferred and recorded in “provision
for unrealized translation gains”.
Investment in affiliated companies
Investment in affiliated companies are recorded at historical cost less adjustment for impairment
of value.
Dividend payable from capital contribution
The dividend payable from capital contribution includes the outstanding quarterly dividend
installments, approved by the annual general meeting but not yet paid.
Reserve from capital contribution
The reserve from capital contribution includes the premium from the capital increase in the year
2010, plus
(cid:120)
amounts from share capital reallocated to the reserve from capital contribution following
par value reductions and share cancellations,
less
(cid:120)
(cid:120)
(cid:120)
(cid:120)
the dividends from capital contribution distributed to date
amounts expected to be distributed (dividend payable from capital contribution)
amounts reallocated to the reserve for treasury shares from capital contribution and
the dividend reserve from capital contribution.
Dividend reserve from capital contribution
The dividend reserve from capital contribution includes the amount of reserve from capital
contribution reallocated to voluntary retained earnings through the last shareholder resolution,
including the margin for unfavorable currency fluctuation and new share issuances that may occur
between the time that the dividend has been approved by shareholders and when the last
installment payment is made, reduced by quarterly dividend installments actually paid and
expected quarterly dividend installments included in “dividend payable from capital contribution”.
(cid:94)(cid:882)(cid:1011)
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Treasury shares
Treasury shares are recognized at acquisition cost and deducted from shareholders’ equity at the
time of acquisition. In case of resale, the gain or loss is recognized through the statement of income
as financial income or financial expense. For treasury shares held at Affiliates, the Company builds
a treasury shares reserve in equity at the respective acquisition costs.
Personnel expense
Personnel expense for the years ended December 28, 2019 and December 29, 2018 amounted to
CHF 4,125 and CHF 4,737, respectively, and is related to personnel expense allocated from the
Company’s Affiliates, related to the performance of certain general and administrative services
including executive administration, procurement and payables, treasury and cash management,
payroll, and accounting, as well as the Board of Directors of the Company.
The Company uses treasury shares for share-based payment programs for Board members. Any
difference between the acquisition cost and any consideration paid by the Board members at grant
date is recognized as personnel expense.
2. Investment in directly and material indirectly held affiliated companies
Company Name
Garmin Luxembourg Holdings S.(cid:259) r.l.
Garmin Luxembourg S.à r.l.
Garmin Switzerland GmbH
Garmin International, Inc.
Garmin Corporation
Garmin (Europe) Ltd.
Garmin Australasia Pty. Ltd.
Garmin Deutschland GmbH
Garmin Switzerland Distribution GmbH
Domicile
Luxembourg
Luxembourg
Switzerland
United States
Taiwan
United Kingdom
Australia
Germany
Switzerland
Ownership Interest
Voting Interest
Direct
100%
100%
100%
Indirect
100%
100%
100%
100%
100%
Direct
100%
100%
100%
Indirect
100%
100%
100%
100%
100%
100%
100%
The investment in directly and material indirectly held affiliated companies is the same for the
years ended December 28, 2019 and December 29, 2018.
(cid:94)(cid:882)(cid:1012)
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3. Shareholders’ equity
CHF in thousands
Balance as of December 30, 2017
Share capital
19,808
Balance brought forward
Release of amounts to dividend payable from
reserve from capital contribution (2016 dividend)
Release of dividend reserve from capital
contribution (2017 dividend)
Net movement in reserve for treasury shares
from capital contribution
Release to dividend reserve from capital
contribution (2017 dividend)
Dividend payments (2017 dividend)
Dividend payable at year-end (2017 dividend)
Net earnings (loss) for the year
Balance as of December 29, 2018
Balance brought forward
Release of amounts to dividend payable from
reserve from capital contribution (2017 dividend)
Release of dividend reserve from capital
contribution (2018 dividend)
Net movement in reserve for treasury shares
from capital contribution
Release to dividend reserve from capital
contribution (2018 dividend)
Dividend payments (2018 dividend)
Dividend payable at year-end (2018 dividend)
Net earnings (loss) for the year
Balance as of December 28, 2019
Reserve for
treasury
shares from
capital
contribution
448,427
Reserve
from capital
contribution
6,349,717
1,294
183,096
62,996
(62,996)
(552,895)
Legal capital reserves
Voluntary retained earnings
Available earnings
Other
capital
reserves
68
Dividend
reserve
from capital
contribution
183,096
Balance
brought
forward
117,912
Net
earnings
(loss) for
the year
(22,442)
Total
7,096,586
(22,442)
22,442
-
(183,096)
552,895
(197,063)
(197,155)
1,294
-
-
-
(197,063)
(197,155)
(18,150)
6,685,512
19,808
6,044,208
385,431
68
158,677
95,470
(18,150)
(18,150)
(18,150)
18,150
-
(1,639)
158,677
48,904
(48,904)
(600,598)
(158,677)
600,598
(213,015)
(212,018)
19,808
5,649,552
336,527
68
175,565
77,320
(12,719)
(12,719)
(1,639)
-
-
-
(213,015)
(212,018)
(12,719)
6,246,121
(cid:94)(cid:882)(cid:1013)
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The summary of the components of authorized shares at December 28, 2019, December 29, 2018, and December 30, 2017
and changes during those years are as follows:
December 30, 2017
Treasury shares purchased
Treasury shares issued for stock based compensation
Additional shares authorized
December 29, 2018
Treasury shares purchased
Treasury shares issued for stock based compensation
Additional shares authorized
December 28, 2019
Outstanding
Shares
188,189,416
(263,997)
1,535,936
Treasury
Shares Held
by Affiliates
9,888,002
263,997
(1,535,936)
189,461,355
(288,022)
1,513,121
8,616,063
288,022
(1,513,121)
Issued
Shares
198,077,418 1
Shares
Authorized but
not Issued3
-
Conditional
Capital 2
99,038,709
198,077,418 1
39,615,483
39,615,483
99,038,709
190,686,454
7,390,964
198,077,418 1
39,615,483
79,230,966
99,038,709
1 Shares at CHF 0.10 par value
2 Up to 99,038,709 conditional shares may be issued through the exercise of option rights which are granted to Garmin
employees and/or members of its Board of Directors.
3 The Shareholders approved at the Annual Meeting an amendment of the Articles of Association of the Company
to authorize the Board of Directors at any time until June 8, 2020 to increase the share capital in an amount not to exceed CHF 3,961,548.30
through the issuance of up to 39,615,483 fully paid-in registered shares with a nominal value of CHF 0.10 each.
4. Treasury Shares
At December 28, 2019 and December 29, 2018, the Company’s Affiliates held 7,390,964 and
8,616,063 treasury shares, respectively. The average cost of all treasury shares held by Affiliates
at December 28, 2019 and December 29, 2018 amounts to CHF 46 and CHF 45, respectively.
Carrying value
(CHF in thousands)
Number of shares
held by affiliates
Average cost
(CHF)
448,427
16,224
(79,220)
385,431
25,529
(74,435)
336,527
9,888,002
263,997
(1,535,936)
8,616,063
288,022
(1,513,121)
7,390,964
45
61
52
45
89
49
46
Balance as of December 30, 2017
Acquired
Treasury stock used for stock based compensation
Balance as of December 29, 2018
Acquired
Treasury stock used for stock based compensation
Balance as of December 28, 2019
5. Contingent Liabilities
The Company has a tax sharing agreement with its Affiliates for certain tax reserves. In addition,
the Company through certain of its Affiliates is involved in various regulatory and legal matters.
The Company’s Affiliates have made certain related accruals. There could be material adverse
outcomes beyond the accrued liabilities. Finally, as part of regular business negotiations, the
Company will also occasionally guarantee certain financial obligations of its Affiliates when doing
(cid:94)(cid:882)(cid:1005)(cid:1004)
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so leads to favorable terms. The total amount of these guarantees at December 28, 2019 and
December 29, 2018 were CHF 26,924 and CHF 15,440 respectively.
6. Significant Shareholders
As of December 28, 2019, and December 29, 2018, the following shareholders held 5 percent or
more of Garmin Ltd.’s total issued shares and voting rights:
Shareholder
Jonathan Burrell
Karuna Resources Ltd.
Min H. Kao, Ph.D.
BlackRock, Inc.
The Vanguard Group
Percentage at
Dec. 28, 2019
Percentage at
Dec. 29, 2018
11.47% 2
- 3
9.56% 5
6.69% 6
7.74% 6
11.47% 1
5.14%
13.71% 4
6.08%
6.44%
1 Includes (a) 2,637,470 shares held by The Judith M. Burrell Revocable Trust, over which shares Jonathan
Burrell shares voting and dispositive power with his mother, Judith M. Burrell, (b) 8,413,050 shares held in
three Charitable Lead Annuity Trusts, over which shares Jonathan Burrell has the sole voting and dispositive
power, and (c) 11,644,600 shares held in several Grantor Retained Annuity Trusts established by Judith M.
Burrell, over which shares Jonathan Burrell has sole voting and dispositive power.
2 Includes (a) 1,701,870 shares held by The Judith M. Burrell Revocable Trust, over which shares Jonathan
Burrell shares voting and dispositive power with his mother, Judith M. Burrell, (b) 8,413,050 shares held in
several Charitable Lead Annuity Trusts, over which shares Jonathan Burrell has the sole voting and
dispositive power, and (c) 12,580,200 shares held in several Grantor Retained Annuity Trusts established
by Judith M. Burrell, over which shares Jonathan Burrell has sole voting and dispositive power.
3 Shares held were less than 5% on December 28, 2019.
4 Includes (a) 20,332,539 shares held by revocable trusts established by Dr. Kao’s children, over which Dr.
Kao has shared voting and dispositive power; (b) 67,869 shares held by the Kao Family Foundation, a
charitable foundation over which Dr. Kao and members of his family may be deemed to have voting and
dispositive power; and (c) 4,962,824 shares held by a revocable trust established by Dr. Kao’s wife, over
which Dr. Kao does not have any voting or dispositive power.
5 Includes (a) 6,454,753 shares held by a revocable trust established by Dr. Kao and his wife, over which
Dr. Kao has shared voting and dispositive power; (b) 12,332,539 shares held by revocable trusts
established by Dr. Kao’s children, over which Dr. Kao has shared voting and dispositive power; and (c)
149,368 shares held by the Kao Family Foundation, a charitable foundation over which Dr. Kao and
members of his family may be deemed to have voting and dispositive power.
6 Ownership percentage is calculated using the most current available filings on Form 13F.
(cid:94)(cid:882)(cid:1005)(cid:1005)
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To the best of the Company’s knowledge, no other shareholder held 5 percent or more of Garmin
Ltd.’s total issued shares and voting rights as registered in accordance with Swiss law on December
28, 2019 or December 29, 2018.
7. Shares for members of the Board of Directors
According to the compensation plan, members of the Board of Directors are partially paid in
shares. Treasury shares are used for such share allocations. The allocation of shares to the Board
of Directors was as follows:
2019
2018
Quantity
8,016
Value in CHF
596,356
Quantity
10,376
Value in CHF
586,820
(cid:94)(cid:882)(cid:1005)(cid:1006)
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8. Share Ownership of Garmin Ltd. by Board Members and Members of Executive
Management
As of December 28, 2019 and December 29, 2018, the members of the Board of Directors held
the following numbers of shares:
Name and Function
Jonathan Burrell, Chair of Nominating and Corporate Governance Committee,
Member of Compensation Committee
Joseph Hartnett, Chair of Compensation Committee, Member of Audit Committee
and Nominating and Corporate Governance Committee
Min H. Kao, Ph.D., Executive Chairman
Catherine A. Lewis, Member of Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee 5
Charles W. Peffer, Chair of Audit Committee, Member of Compensation Committee
and Nominating and Corporate Governance Committee
Clifton A. Pemble, President & Chief Executive Officer
Rebecca R. Tilden, Former Member of Audit Committee, Compensation Committee
and Nominating and Corporate Governance Committee 7
Total
Total number of
shares held at
Dec. 28, 2019
Total number of
shares held at
Dec. 29, 2018
22,725,768 2
22,725,120 1
11,378
18,936,660 4
9,266
27,162,661
-
-
20,978
6
-
-
41,694,784
18,868
-
2,274
49,918,189
3
6
1 Includes (a) 2,637,470 shares held by The Judith M. Burrell Revocable Trust, over which shares Jonathan Burrell shares voting
and dispositive power with his mother, Judith M. Burrell, (b) 8,413,050 shares held in three Charitable Lead Annuity Trusts, over
which shares Jonathan Burrell has the sole voting and dispositive power, and (c) 11,644,600 shares held in several Grantor
Retained Annuity Trusts established by Judith M. Burrell, over which shares Jonathan Burrell has sole voting and dispositive
power.
2 Includes (a) 1,701,870 shares held by The Judith M. Burrell Revocable Trust, over which shares Jonathan Burrell shares voting
and dispositive power with his mother, Judith M. Burrell, (b) 8,413,050 shares held in several Charitable Lead Annuity Trusts,
over which shares Jonathan Burrell has the sole voting and dispositive power, and (c) 12,580,200 shares held in several Grantor
Retained Annuity Trusts established by Judith M. Burrell, over which shares Jonathan Burrell has sole voting and dispositive
power.
3 Includes (a) 20,332,539 shares held by revocable trusts established by Dr. Kao’s children, over which Dr. Kao has shared
voting and dispositive power; (b) 67,869 shares held by the Kao Family Foundation, a charitable foundation over which Dr. Kao
and members of his family may be deemed to have voting and dispositive power; and (c) 4,962,824 shares held by a revocable
trust established by Dr. Kao’s wife, over which Dr. Kao does not have any voting or dispositive power.
4 Includes (a) 6,454,753 shares held by a revocable trust established by Dr. Kao and his wife, over which Dr. Kao has shared
voting and dispositive power; (b) 12,332,539 shares held by revocable trusts established by Dr. Kao’s children, over which Dr.
Kao has shared voting and dispositive power; and (c) 149,368 shares held by the Kao Family Foundation, a charitable foundation
over which Dr. Kao and members of his family may be deemed to have voting and dispositive power.
5 Ms. Lewis was elected as a Director at the Annual General Meeting of Garmin Ltd. shareholders on June 7, 2019.
6 Shares held by Mr. Pemble are shown in the Executive Management disclosure below.
7 Ms. Tilden ceased being a Director when her term expired on June 7, 2019.
(cid:94)(cid:882)(cid:1005)(cid:1007)
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As of December 28, 2019 and December 29, 2018, the members of Executive Management held
the following numbers of shares:
Name and Principal Position 1
Douglas G. Boessen, Chief Financial Officer & Treasurer
Clifton A. Pemble, President & Chief Executive Officer
Total
Total number of
shares held at
Dec. 28, 2019
Total number of
shares held at
Dec. 29, 2018
20,807
14,874
96,797
83,837
117,604
98,711
1 On February 14, 2014, the Company's Board of Directors determined that with effective date of January 1, 2014, the
Company's Executive Management consists of its President & Chief Executive Officer and its Chief Financial Officer &
Treasurer.
The members of our Board of Directors and Executive Management owned 21.11 and 25.25
percent of the Company’s total shares issued as of December 28, 2019 and December 29, 2018,
respectively.
The following tables provide information for each non-employee member of the Board of
Directors regarding outstanding equity awards held by them as of December 28, 2019 and
December 29, 2018, respectively.
(cid:94)(cid:882)(cid:1005)(cid:1008)
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Outstanding Equity Awards at December 28, 2019
Name and Function
Stock Awards 1
Jonathan Burrell
Member of the Board and Compensation Committee, Chair of
Nominating and Corporate Governance Committee
Joseph Hartnett
Member of the Board, Audit Committee and Nominating and
Corporate Governance Committee, Chair of Compensation
Committee
Catherine Lewis 2
Member of the Board, Audit Committee, Compensation
Committee and Nominating and Corporate Governance
Committee
Charles Peffer
Member of the Board, Compensation Committee and Nominating
and Corporate Governance Committee, Chair of Audit Committee
Total
1 Represents restricted stock units.
2 Ms. Lewis was elected as a Director on June 7, 2019.
3,733
4,602
2,004
4,602
14,941
(cid:94)(cid:882)(cid:1005)(cid:1009)
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Outstanding Equity Awards at December 29, 2018
Name and Function
S tock Awards 1
Jonathan Burrell 2
M ember of the Board and Compensation Committee, Chair of
Nominating and Corporate Governance Committee
Joseph Hartnett
M ember of the Board, Audit Committee and Nominating and
Corporate Governance Committee, Chair of Compensation
Committee
Charles Peffer
M ember of the Board, Compensation Committee and
Nominating and Corporate Governance Committee, Chair of
Audit Committee
Rebecca Tilden
M ember of the Board, Audit Committee, Compensation
Committee and Nominating and Corporate Governance
Committee
Total
2,594
5,414
5,414
5,414
18,836
1 Represents restricted stock units.
2 M r. Burrell was elected as a Director on June 8, 2018, and became Chair of the Nominating
and Corporate Governance Committee on October 26, 2018.
(cid:94)(cid:882)(cid:1005)(cid:1010)
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The following tables provide information for each member of Executive Management regarding
outstanding equity awards held by them as of December 28, 2019 and December 29, 2018,
respectively. Amounts in these tables are presented in CHF.
Outstanding Equity Awards at December 28, 2019
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
34,415
19,246
(1)
(1)
53,661
12,680
(1)
12,680
66,341
-
-
-
-
-
-
Name
Clifton A. Pemble
President & Chief Executive
Officer
Douglas G. Boessen
Chief Financial Officer
& Treasurer
Total
Option /
SAR
Exercise
Price (CHF)
Option /
SAR
Expiration
Date
51.20
47.91
12/15/24
12/10/23
51.20
12/15/24
Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units or
Other Rights That
Have Not Vested (#)
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(CHF) 4
530,226
1,049,487
1,240,915
490,209
1,139,140
1,210,036
117,839
236,062
284,256
130,729
341,684
393,341
(2)
(2)
(2)
(3)
(3)
(3)
(2)
(2)
(2)
(3)
(3)
(3)
5,512
10,910
12,900
5,096
11,842
12,579
58,839
1,225
2,454
2,955
1,359
3,552
4,089
15,634
74,473
1 Represents stock appreciation rights.
2 Represents restricted stock units.
3 Represents time-based and performance-based vesting restricted stock units.
4 Determined by multiplying the number of unearned shares by CHF 96.19, which was the closing price of Garmin shares on The Nasdaq Stock Market on December 27,
2019.
(cid:94)(cid:882)(cid:1005)(cid:1011)
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(cid:3)
Name
Clifton A. Pemble
President & Chief Executive
Officer
Douglas G. Boessen
Chief Financial Officer
& Treasurer
Outstanding Equity Awards at December 29, 2018
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Option /
SAR
Exercise
Price (CHF)
Option /
SAR
Expiration
Date
Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units or
Other Rights That
Have Not Vested (#)
Equity Incentive Plan
Awards: Market or
Payout Value of
Unearned Shares,
Units or Other Rights
That Have Not Vested
(CHF) 4
27,532
38,492
(1)
(1)
6,883
-
51.66
48.34
12/15/24
12/10/23
66,024
6,883
10,144
(1)
2,536
51.66
12/15/24
339,743
682,209
1,012,731
369,262
630,722
1,099,245
90,598
151,616
227,795
119,250
168,201
329,718
(2)
(2)
(2)
(3)
(3)
(3)
(2)
(2)
(2)
(3)
(3)
(3)
5,490
11,024
16,365
5,967
10,192
17,763
66,801
1,464
2,450
3,681
1,927
2,718
5,328
17,568
84,369
Total
10,144
76,168
2,536
9,419
1 Represents stock appreciation rights.
2 Represents restricted stock units.
3 Represents time-based and performance-based vesting restricted stock units.
4 Determined by multiplying the number of unearned shares by CHF 61.88, which was the closing price of Garmin shares on The Nasdaq Stock Market on December 28,
2018.
Other than as disclosed, no party related to any member of the Board of Directors or Executive
Management held any shares of Garmin Ltd. or equity awards in Garmin Ltd. shares as of
December 28, 2019 or December 29, 2018.
(cid:3)
9. Dividend income and impairment loss on investment in Affiliates
During 2019, Garmin Ltd. received a dividend of CHF 492,744 from its Affiliates resulting in a
reduction in the value of the investment in the Affiliates by the same amount. Consequently, the
Company has recognized an impairment of CHF 492,744 in the value of its investment in the
affiliated companies. During 2018, Garmin Ltd. received a dividend of CHF 889,796 from its
Affiliates resulting in a reduction in the value of the investment in the Affiliates by the same
amount. Consequently, the Company recognized an impairment of CHF 889,796 in the value of
its investment in affiliated companies.
(cid:94)(cid:882)(cid:1005)(cid:1012)
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(cid:3)
10. Subsequent events
No significant events occurred subsequent to the balance sheet date but prior to February 19,
2020 that would have a material impact on the financial statements.(cid:3)
(cid:94)(cid:882)(cid:1005)(cid:1013)
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Proposed Appropriation of Available Earnings
Balance brought forward from previous years
Net loss for the period (on a stand-alone unconsolidated basis)
Total available to the general meeting
Proposal of the Board of Directors for the appropriation
of available earnings to the general meeting:
Balance to be carried forward
77,320
(12,719)
64,601
64,601
64,601
Balance as of December 28, 2019
5,649,552
336,527
175,565
Reserve from capital
contribution
Reserve for treasury
shares from capital
contribution1
Dividend reserve
from capital
contribution
Proposed release of reserve from capital contribution to
dividend reserve from capital contribution
Balance to be carried forward
1 T he reserve for treasury shares is blocked from distribution.
(637,069)
5,012,484
336,527
637,069
812,634
The Board of Directors proposes to the Annual Meeting that Garmin Ltd. pay a cash dividend in
the amount of USD 2.441 per outstanding share out of Garmin Ltd.’s reserve from capital
contribution payable in four equal installments at the dates determined by the Board of Directors
in its discretion, the record date and payment date for each such installment to be announced in a
press release2 at least ten calendar days prior to the record date.
The cash dividend shall be made with respect to the outstanding share capital of Garmin Ltd. on
the record date for the applicable installment, which amount will exclude any shares of Garmin
Ltd. held by Garmin Ltd. or any of its direct or indirect subsidiaries.
CHF 637,0693 shall be allocated to dividend reserves from capital contribution (the “Dividend
Reserve”) from the reserve from capital contribution in order to pay such dividend of USD 2.44
per outstanding share with a nominal value of CHF 0.10 each (assuming a total of 198,077,418
shares4 eligible to receive the dividend). If the aggregate dividend payment is lower than the
Dividend Reserve, the relevant difference will be allocated back to the reserve from capital
contribution. To the extent that any installment payment, when converted into Swiss francs, at a
USD/CHF exchange rate prevailing at the relevant payment date for the relevant installment
payment, would exceed the Dividend Reserve then remaining, the USD per share amount of that
installment payment shall be reduced on a pro rata basis, provided, however, that the aggregate
amount of that installment payment shall in no event exceed the then remaining Dividend Reserve.
1 In no event will the dividend payment exceed a total of USD 2.44 per share.
(cid:94)(cid:882)(cid:1006)(cid:1004)
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2 The announcements will not be published in the Swiss Official Gazette of Commerce.
3 Based on the currency conversion rate as at December 28, 2019, with a total of 198,077,418
shares eligible for payout (based on the number of shares issued as at December 28, 2019), the
aggregate Dividend Reserve would be CHF 637,069. The amount of the Dividend Reserve,
calculated on the basis of the Company’s issued shares as at December 28, 2019, includes a 35%
margin to accommodate (i) unfavorable currency fluctuation and (ii) new share issuances (see
footnote 4 below) that may occur between the time that the dividend is approved by shareholders
and when the last installment payment is made. Unused Dividend Reserves will be returned to
the reserve from capital contribution after the last installment payment.
4 This number is based on the registered share capital at December 28, 2019. The number of
shares eligible for dividend payments may change due to the repurchase of shares, the sale of
treasury shares or the issuance of new shares, including (without limitation) from the conditional
share capital reserved for the employee profit sharing program, and utilization of authorized
capital.
(cid:94)(cid:882)(cid:1006)(cid:1005)
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Garmin Ltd.
2019 Form 10-K Annual Report
Exhibit Index
The following exhibits are attached hereto. See Part IV of this Annual Report on Form 10-K for a complete
list of exhibits.
Exhibit
Number
4.1
21.1
23.1
31.1
31.2
32.1
32.2
Document
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities
Exchange Act of 1934
List of subsidiaries
Consent of Ernst & Young LLP
Chief Executive Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Chief Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
Chief Executive Officer’s Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
Chief Financial Officer’s Certification 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.LAB Inline XBRL Taxonomy Extension Label Linkbase
Exhibit 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase
Exhibit 104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(cid:3)
(cid:3)
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EXHIBIT 4.1
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12
OF THE SECURITIES EXCHANGE ACT OF 1934
The following summary describes the registered shares, par value 0.10 Swiss Francs each (“Registered
Shares”), of Garmin Ltd. (the “Company,” “we,” “our,” “us,” and “our”), which are the only securities of the Company
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
The following description of our Registered Shares is a summary and does not purport to be complete. It
is subject to and qualified in its entirety by reference to our Articles of Association (the “Articles of Association”) and
our Organizational Regulations (the "Organizational Regulations"), each of which are incorporated by reference as
an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. We encourage you to read our
Articles of Association, our Organizational Regulations and the applicable provisions of Swiss law, for additional
information.
Issued Share Capital
As of February 18, 2020, the Company has issued 198,077,418 Registered Shares. The 198,077,418
issued Registered Shares are fully paid.
Authorized Share Capital and Conditional Share Capital
The Company further has two types of share capital that provide for the authority of the Company to issue
additional Registered Shares without further shareholder approval: (1) the authorized share capital and (2) the
conditional share capital:
(1)
Authorized Share Capital
Our Articles of Association currently provide for authorized share capital that authorizes the board of
directors to issue up to 39,615,483 new Registered Shares, at any time until June 8, 2020 and thereby increase the
share capital, without obtaining additional shareholder approval. The board of directors is authorized to limit or
withdraw the pre-emptive rights of shareholders with respect to such shares in certain defined circumstances,
including if the shares are to be issued for the acquisition of an enterprise. After June 8, 2020, authorized share
capital will be available to the board of directors for issuance of additional Registered Shares only if such
authorization has been approved again by the shareholders at a shareholders’ meeting. Each such authorization
may last for up to two years. There is no concept under Swiss law of “blank check” preferred shares. Any preferential
rights of individual classes of shares must be specifically approved by shareholders and set forth in the Articles of
Association, rather than determined by the board of directors. Under Swiss law, the board of directors of the
Company may not create shares with increased voting powers without a resolution of the general meeting of
shareholders passed by at least two-thirds of the votes represented at such meeting and an absolute majority of
the par value of the shares represented. The shareholders at a shareholders’ meeting may create preferred shares
with a resolution passed by the majority of the votes cast (excluding unmarked, invalid and non-exercisable votes
(which includes broker non-votes)).
(2)
Conditional Share Capital
The Company has a conditional share capital authorizing the Company to issue up to 99,038,709
Registered Shares.in connection with the exercise of option rights granted to employees and/or members of the
board of directors of the Company or group companies. Preferential subscription rights of existing shareholders are
excluded in connection with the issuance of new Registered Shares out of the conditional share capital. Unlike the
authorized share capital, the conditional share capital is not limited in time.
(cid:3)
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Voting Rights
Each Registered Share carries one vote at a general meeting of shareholders. Voting rights may be
exercised by shareholders registered in the Company's share register (including nominees), by an individually
appointed proxy representing shareholders or nominees, or by the independent voting rights representative elected
by shareholders at the Company's annual general meetings in accordance with the voting instructions given by
shareholders or nominees. Treasury shares, whether owned by the Company or one of its majority-owned
subsidiaries, are not be entitled to vote at general meetings of shareholders (but are, unless otherwise resolved by
our shareholders at a general meeting, entitled to the economic benefits generally associated with the shares).
Pursuant to Swiss law and pursuant to the Articles of Association, the shareholders acting at a
shareholders’ meeting have the exclusive right to determine the following matters:
• adoption and amendment of the Articles of Association, subject to minor formal exceptions;
• determination of the number of members of the board of directors as well as their appointment and
removal;
• election and removal of the chair of the board of directors;
• election and removal of the members of the compensation committee of the board of directors;
• election and removal of the independent voting rights representative;
• appointment and removal of the auditors;
• approval of the annual report of the board of directors and the approval of the annual financial statements
and the group financial statements;
• the allocation of profits or losses shown in the balance sheet, in particular the determination of dividends
and the profit share of the board of directors;
• approval of the maximum aggregate compensation of the board of directors and executive management;
• discharge of the members of the board of directors and the persons entrusted with management;
• approval of Business Combinations (as defined in the Articles of Association) unless such approval is
covered by the inalienable powers of another corporate body; and
• any other resolutions that are submitted to a general meeting of shareholders pursuant to law or the
Articles of Association.
Pursuant to the Articles of Association, the shareholders generally pass resolutions and votes with a
majority of the votes cast (excluding unmarked, invalid and non-exercisable votes (which include broker non-votes))
unless otherwise provided by Swiss law or the Articles of Association.
Swiss law and/or the Articles of Association require the affirmative vote of at least two-thirds of the shares
represented at a general meeting and an absolute majority of the par value of such shares to approve certain key
matters materially impacting shareholders, including the amendment to or the modification of the Company's
purposes, as stated in the Articles of Association, the creation of shares with privileged voting rights and the
restriction on the transferability of Registered Shares, among other things.
Pursuant to the Articles of Association, the presence of shareholders, in person or by proxy, holding at least
a majority of the total number of shares entitled to vote at the meeting, whether such shares are represented at the
meeting or not, is a quorum for the transaction of business.
Dividend Rights
Under Swiss law, dividends may be paid out only if the Company has sufficient distributable profits from
the previous fiscal year or if the Company has freely distributable reserves (including contribution reserves, which
are also referred to as additional paid-in capital), each as will be presented on the audited annual stand-alone
statutory balance sheet of the Company. The shareholders must approve distributions of dividends with a majority
of the votes cast (excluding unmarked, invalid and non-exercisable votes (which includes broker non-votes)). The
(cid:3)
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board of directors may propose to the shareholders at a shareholders’ meeting that a dividend be paid but cannot
itself authorize the dividend.
Payments out of share capital (in other words, the aggregate par value of the registered share capital) in
the form of dividends are not allowed; however, payments out of registered share capital may be made by way of
a par value reduction. Such a par value reduction requires the approval of shareholders holding a majority of the
votes cast at the general meeting of shareholders (not counting abstentions and blank or invalid ballots). A special
audit report must confirm that claims of creditors remain fully covered despite the reduction in the share capital
recorded in the commercial register. Upon approval by the general meeting of shareholders of the capital reduction,
the board of directors must give public notice of the par value reduction resolution in the Swiss Official Gazette of
Commerce three times and notify creditors that they may request, within two months of the third publication,
satisfaction of or security for their claims.
Liquidation Rights
Under Swiss law, unless otherwise provided for in the Articles of Association, any surplus arising out of
liquidation, after the settlement of all claims of all creditors, will be distributed to shareholders in proportion to the
paid-up par value of Registered Shares held, with due regard to the preferential rights of individual classes of
shares, and subject to Swiss withholding tax requirements.
Other Rights and Preferences
Except as noted under “Authorized Share Capital” above, Company shareholders generally will have
preemptive rights to purchase newly issued securities of the Company. The shareholders may, by a resolution
passed by at least two-thirds of the votes represented at a general meeting and the absolute majority of the par
value of the shares represented, withdraw or limit the preemptive rights for valid reasons (such as a merger or
acquisition).
Swiss law limits a company’s ability to hold or repurchase its own shares. The Company may only
repurchase shares if and to the extent that sufficient freely distributable reserves are available, as described above.
Generally, the aggregate par value of all shares held by the Company and its subsidiaries may not exceed 10% of
the registered share capital of the Company. However, the Company may repurchase its own shares beyond the
statutory limit of 10% if the shareholders have passed a resolution at a general meeting of shareholders authorizing
the board of directors to repurchase shares in an amount in excess of 10% and the repurchased shares are
dedicated for cancellation. Any shares repurchased pursuant to such an authorization will then be cancelled at a
general meeting of shareholders upon the approval of shareholders holding a majority of the votes cast at the
general meeting.
The Company does not have a shareholder rights plan. Rights plans generally discriminate in the treatment
of shareholders by imposing restrictions on any shareholder who exceeds a level of ownership interest without the
approval of the board of directors. Anti-takeover measures, such as rights plans that are implemented by the board
of directors, would generally be restricted under Swiss corporate law by the principle of equal treatment of
shareholders and the general rule that new shares may only be issued based on a shareholders’ resolution.
Under Swiss law, each shareholder is entitled to file an action for damage caused to the Company. The
claim of the shareholder is for performance to the Company. If the shareholder, based upon the factual and legal
situation, had sufficient cause to file an action, the judge has discretion to impose on the Company all costs the
plaintiff incurred in prosecuting the action.
Shareholders who suffer a direct loss due to an intentional or grossly negligent breach of a member of the
board of director’s or officer’s duties may sue in their personal capacity for monetary compensation.
Business Combinations
Business combinations and other transactions that are binding on all shareholders are governed by the
Swiss Merger Act. A merger or demerger requires that at least two-thirds of the votes represented at the general
meeting of shareholders and the absolute majority of the par value of shares represented vote in favor of the
(cid:3)
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transaction.
described above, all shareholders would be compelled to participate in the transaction.
If a transaction under the Swiss Merger Act receives the necessary shareholder approvals as
In case of a merger or demerger subject to Swiss law, the Swiss Merger Act provides that if the equity rights
have not been adequately preserved or compensation payments in the transaction are unreasonable, a shareholder
may request a competent court to determine a reasonable amount of compensation. The action for review must be
filed within two months of the date of publication of the shareholders’ approval of the merger or demerger. The
court’s decision will apply to all parties who are in a similar position as the requesting shareholder. The costs of the
proceedings must be assumed by the acquirer.
Swiss law generally does not prohibit business combinations with interested shareholders. However, in
certain circumstances, shareholders and members of the board of directors of Swiss companies, as well as certain
persons associated with them, must refund any payments they receive that are not made on an arm’s length basis
and if the recipient of the payment acted in bad faith.
Limitations on Ability of Shareholders to Act by Written Consent or Call Extraordinary Meeting
Swiss law does not permit shareholders to act by written consent in lieu of a general meeting of
shareholders. An extraordinary general meeting of the Company may be called upon the resolution of the board of
directors or, under certain circumstances, by the auditor. Liquidators and representatives of bond creditors are also
entitled to call a general meeting of the shareholders. In addition, Swiss law provides that the board of directors is
required to convene an extraordinary general meeting of shareholders if so resolved by the general meeting of
shareholders, or if so requested by one or more shareholders holding an aggregate of at least 10% of the share
capital recorded in the commercial register or - according to leading Swiss legal scholars – holding shares of the
company with a par value of at least one million Swiss francs, specifying, among other things, the items for the
agenda and their proposals, or if it appears from the stand-alone annual statutory balance sheet that half of the
company’s share capital and statutory reserves are not covered by the company’s assets.
Advance Notice of Shareholder Proposals
A shareholder of record can request in writing for an item to be put on the agenda for an annual general
meeting, provided that we receive such requests by the date that is 90 calendar days in advance of the anniversary
of the date that we filed our proxy statement for the previous year’s annual general meeting with the SEC.
Listing
The Registered Shares are traded on The Nasdaq Stock Market LLC under the trading symbol “GRMN.”
(cid:3)
(cid:3)
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GARMIN LTD.
List of Subsidiaries of Company
EXHIBIT 21.1
Name of Subsidiary
AeroData, Inc.
Navionics Inc.
Garmin International, Inc.
Garmin North America, Inc.
Garmin USA, Inc.
Garmin Realty, LLC
Garmin Services, Inc.
AeroNavData, Inc.
Garmin AT, Inc.
Garmin Australasia Pty Ltd.
Garmin Austria GmbH
Garmin Austria Holding GmbH
Garmin Belux NV/SA
Garmin Brasil Tecnologias Para Aviação Ltda.
Garmin Canada, Inc.
Garmin Chile Limitada
Garmin China Co., Ltd.
Garmin China Shanghai Co., Ltd.
Garmin China Shanghai RHQ Co., Ltd.
Garmin China ChengDu Co., Ltd.
Garmin China Yangzhou Co., Ltd.
Garmin Hrvatska d.o.o.
Garmin Czech s.r.o
Garmin Nordic Denmark A/S
Garmin Danmark Ejendomme ApS
Garmin (Europe) Ltd.
Garmin Nordic Finland Oy
Garmin Nordic Finland Holding Oy
Garmin France SAS
Garmin Deutschland GmbH
Garmin Deutschland Beteiligungs GmbH
Garmin Würzburg GmbH
Tacx Gemany GmbH
Garmin India Private Ltd.
Navionics Technologies Pvt. Ltd.
Garmin Italia S.r.l.
Navionics S.r.l.
Garmin Japan Ltd.
Garmin Luxembourg S.à r.l.
Garmin Luxembourg Holdings S.à r.l.
Garmin Comercializadora S. de RL de CV
Garmin Navigation Mexico S de RL de CV
Garmin Nederland B.V.
Tacx B.V.
Tacx International B.V.
Tacx Onroerend & Roerend Goed B.V.
Garmin New Zealand Ltd.
Garmin Nordic Norway AS
(cid:3)
Jurisdiction of Incorporation
Arizona
Delaware
Kansas
Kansas
Kansas
Kansas
Kansas
Missouri
Oregon
Australia
Austria
Austria
Belgium
Brazil
Canada (Alberta)
Chile
China
China
China
China
China
Croatia
Czech Republic
Denmark
Denmark
England
Finland
Finland
France
Germany
Germany
Germany
Germany
India
India
Italy
Italy
Japan
Luxembourg
Luxembourg
Mexico
Mexico
Netherlands
Netherlands
Netherlands
Netherlands
New Zealand
Norway
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Garmin Nordic Norway Holding AS
Garmin Polska Sp. z o.o.
Garmin Wroclaw sp. Zo.o
Garmin Cluj SRL
Garmin, trgovina in servis, d.o.o.
Garmap (Pty) Ltd.
Garmin Africa Holdings (Pty) Ltd.
Garmin Southern Africa (Pty) Ltd.
Garmin Korea Ltd.
Garmin Iberia S.A.
Garmin Spain S.L.U.
Garmin Singapore Pte. Ltd
Garmin Nordic Sweden AB
Garmin Sweden Technologies AB
Garmin Switzerland GmbH
Garmin Switzerland Distribution GmbH
Garmin Corporation
Norway
Poland
Poland
Romania
Slovenia
South Africa
South Africa
South Africa
South Korea
Spain
Spain
Singapore
Sweden
Sweden
Switzerland
Switzerland
Taiwan
(cid:3)
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EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No. 333-189178) pertaining to the Garmin Ltd. 2005 Equity Incentive Plan
(2) Registration Statement (Form S-8 No. 333-179801) pertaining to the Garmin Ltd. 2011 Non-Employee
Directors’ Equity Incentive Plan
(3) Registration Statement (Form S-8 No. 333-124818) pertaining to the Garmin International, Inc. 401(k) and
Pension Plan,
(4) Registration Statement (Form S-8 No. 333-125717) pertaining to the Garmin Ltd. Amended and Restated
2005 Equity Incentive Plan,
(5) Registration Statement (Form S-8 No. 333-51470) pertaining to the Garmin Ltd. Amended and Restated
Employee Stock Purchase Plan, Garmin Ltd. Amended and Restated 2000 Equity Incentive Plan, Garmin Ltd.
Amended and Restated 2000 Non-Employee Directors’ Option Plan,
(6) Registration Statement (Form S-8 No. 333-52766) pertaining to the Garmin International, Inc. 401(k) and
Pension Plan,
(7) Registration Statement (Form S-8 No. 333-160297) pertaining to the Garmin Ltd. Amended and Restated
2000 Non-Employee Directors’ Option Plan, and
(8) Registration Statement (Form S-8 No. 333-149450) pertaining to the Garmin International, Inc. 401(k) and
Pension Plan;
(9) Registration Statement (Form S-8 No. 333-205945) pertaining to the Garmin Ltd. Employee Stock Purchase
Plan
(10) Registration Statement (Form S-8 No. 333-232086) pertaining to the Garmin Ltd. Employee Stock Purchase
Plan, as Amended and Restated on June 7, 2019
of our reports dated February 19, 2020, with respect to the consolidated financial statements and schedule of
Garmin Ltd. and Subsidiaries, and the effectiveness of internal control over financial reporting of Garmin Ltd. and
Subsidiaries, included in this Annual Report (Form 10-K) of Garmin Ltd. for the year ended December 28, 2019.
/s/ Ernst & Young LLP
Kansas City, Missouri
February 19, 2020
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I, Clifton A. Pemble, certify that:
1.
I have reviewed this report on Form 10-K of Garmin Ltd.;
CERTIFICATION
EXHIBIT 31.1
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date:February 19, 2020
By/s/ Clifton A. Pemble
Clifton A. Pemble
President and Chief
Executive Officer
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I, Douglas G. Boessen, certify that:
1.
I have reviewed this report on Form 10-K of Garmin Ltd.;
CERTIFICATION
EXHIBIT 31.2
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which
this report is being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant’s internal control over financial reporting.
Date:February 19, 2020
By/s/ Douglas G. Boessen
Douglas G. Boessen
Chief Financial Officer
(cid:3)
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EXHIBIT 32.1
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, United States Code), I, Clifton A. Pemble, President and Chief Executive Officer of Garmin
Ltd. (the “Company”) hereby certify that:
(1)
(2)
The Annual Report on Form 10-K for the year ended December 28, 2019 (the “Form 10-K”) of the
Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: February 19, 2020
/s/ Clifton A. Pemble
Clifton A. Pemble
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
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EXHIBIT 32.2
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, United States Code), I, Douglas G. Boessen, Chief Financial Officer of Garmin Ltd. (the
“Company”) hereby certify that:
(1)
(2)
The Annual Report on Form 10-K for the year ended December 28, 2019 (the “Form 10-K”) of the
Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and
the information contained in the Form 10-K fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Dated: February 19, 2020
/s/ Douglas G. Boessen
Douglas G. Boessen
Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to the Company and
will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.(cid:3)
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BOARD OF DIRECTORS
JONATHAN C. BURRELL
CEO
Burrell Family Office
and Technical Expert
2
3
1
2
JOSEPH J. HARTNETT
Former Interim President and CEO,
Sparton Corp.
Former President and CEO,
Ingenient Technologies and USRobotics
3
DR. MIN H. KAO
Executive Chairman
Garmin Ltd.
1
2
3
Audit Committee
Nominating and Corporate Governance Committee
Compensation Committee
EXECUTIVE OFFICERS
DR. MIN H. KAO
Executive Chairman
CLIFTON A. PEMBLE
President and CEO
INVESTOR RELATIONS
investor.relations@garmin.com
CATHERINE A. LEWIS
Retired Partner
KPMG, LLP
1
2
3
CHARLES W. PEFFER
Retired Partner
KPMG LLP
1
2
3
CLIFTON A. PEMBLE
President and CEO
Garmin Ltd.
DOUGLAS G. BOESSEN
CFO and Treasurer
ANDREW R. ETKIND
Vice President, General Counsel and Secretary
Security analysts, investment professionals and shareholders can find investor relations
information on the company’s website at Garmin.com/investors.
TRANSFER AGENT
Computershare Trust Company, N.A.
250 Royall St.
Canton, MA 02021
United States
INDEPENDENT ACCOUNTANTS
Ernst & Young LLP
MARKET INFORMATION
The shares of Garmin Ltd. are traded on the Nasdaq Stock Market, LLC
under the symbol GRMN. Garmin Ltd. is a component of the S&P 500 Index.
Garmin, the Garmin logo and Tacx are trademarks of Garmin Ltd. or its subsidiaries and are registered in one or more countries, including the U.S.
M00-60336-00 0420