10-Q

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 1, 2023

or

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

For the transition period from to

Commission file number 001-41118

GARMIN LTD.

(Exact name of Company as specified in its charter)

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

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

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

Registered Shares, $0.10 Per Share Par Value	GRMN	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

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

Yes ☑ NO ☐

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

Yes ☑ NO ☐

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

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

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

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

YES ☐ NO ☑

Number of shares outstanding of the registrant’s common shares as of July 28, 2023

Registered Shares, $0.10 par value: 191,451,558 (excluding treasury shares)

Garmin Ltd.

Form 10-Q

Quarter Ended July 1, 2023

Table of Contents

		Page
Part I - Financial Information		1
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Statements of Income for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	1
	Condensed Consolidated Statements of Comprehensive Income for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	2
	Condensed Consolidated Balance Sheets at July 1, 2023 and December 31, 2022 (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	4
	Condensed Consolidated Statements of Stockholders’ Equity for the 13-Weeks and 26-Weeks ended July 1, 2023 and June 25, 2022 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
Part II - Other Information		25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	26
Item 6.	Exhibits	27
Signature Page		28

i

Part I - Financial Information

Item I - Condensed Consolidated Financial Statements

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(In thousands, except per share information)

	13-Weeks Ended					26-Weeks Ended
	July 1, 2023		June 25, 2022			July 1, 2023		June 25, 2022
Net sales	$	1,320,795	$	1,240,833		$	2,468,219	$	2,413,496
Cost of goods sold		561,353		512,007			1,055,983		1,022,190
Gross profit		759,442		728,826			1,412,236		1,391,306
Advertising expense		46,344		43,357			76,691		77,490
Selling, general and administrative expenses		204,349		191,211			408,330		381,995
Research and development expense		224,394		201,518			445,878		410,524
Total operating expense		475,087		436,086			930,899		870,009
Operating income		284,355		292,740			481,337		521,297
Other income (expense):
Interest income		18,760		8,495			34,659		16,048
Foreign currency gains (losses)		10,797		(22,439	)		18,484		(25,946	)
Other income		2,064		170			3,268		3,431
Total other income (expense)		31,621		(13,774	)		56,411		(6,467	)
Income before income taxes		315,976		278,966			537,748		514,830
Income tax provision		28,037		21,093			47,482		45,366
Net income	$	287,939	$	257,873		$	490,266	$	469,464
Net income per share:
Basic	$	1.51	$	1.34		$	2.56	$	2.43
Diluted	$	1.50	$	1.33		$	2.56	$	2.43
Weighted average common shares outstanding:
Basic		191,293		193,074			191,395		192,980
Diluted		191,597		193,450			191,741		193,515

See accompanying notes.

1

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

	13-Weeks Ended						26-Weeks Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Net income	$	287,939		$	257,873		$	490,266		$	469,464
Foreign currency translation adjustment		(25,342	)		(64,895	)		(8,451	)		(121,807	)
Change in fair value of available-for-sale marketable securities, net of deferred taxes		(3,392	)		(16,628	)		7,684			(66,640	)
Comprehensive income	$	259,205		$	176,350		$	489,499		$	281,017

See accompanying notes.

2

Garmin Ltd. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(In thousands)

	July 1, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	1,425,526		$	1,279,194
Marketable securities		253,689			173,288
Accounts receivable, net		716,802			656,847
Inventories		1,402,225			1,515,045
Deferred costs		15,243			14,862
Prepaid expenses and other current assets		297,516			315,915
Total current assets		4,111,001			3,955,151
Property and equipment, net of accumulated depreciation of $960,129 and $904,922		1,180,654			1,147,005
Operating lease right-of-use assets		134,995			138,040
Noncurrent marketable securities		1,100,259			1,208,360
Deferred income tax assets		493,943			441,071
Noncurrent deferred costs		10,451			9,831
Goodwill		572,985			567,994
Other intangible assets, net		165,591			178,461
Other noncurrent assets		101,921			85,257
Total assets	$	7,871,800		$	7,731,170
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	253,803		$	212,417
Salaries and benefits payable		157,774			176,114
Accrued warranty costs		52,352			50,952
Accrued sales program costs		80,708			97,772
Other accrued expenses		191,510			197,376
Deferred revenue		95,618			91,092
Income taxes payable		199,087			246,180
Dividend payable		418,801			139,732
Total current liabilities		1,449,653			1,211,635
Deferred income tax liabilities		116,651			129,965
Noncurrent income taxes payable		34,613			34,627
Noncurrent deferred revenue		35,939			35,702
Noncurrent operating lease liabilities		110,740			114,541
Other noncurrent liabilities		382			360
Stockholders’ equity:
Shares (195,880 and 198,077 shares authorized and issued;     191,470 and 191,623 shares outstanding)		19,588			17,979
Additional paid-in capital		2,077,540			2,042,472
Treasury stock (4,410 and 6,454 shares)		(322,688	)		(475,095	)
Retained earnings		4,464,682			4,733,517
Accumulated other comprehensive income (loss)		(115,300	)		(114,533	)
Total stockholders’ equity		6,123,822			6,204,340
Total liabilities and stockholders’ equity	$	7,871,800		$	7,731,170

See accompanying notes.

3

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	26-Weeks Ended
	July 1, 2023			June 25, 2022
Operating Activities:
Net income	$	490,266		$	469,464
Adjustments to reconcile net income to net cash provided by    operating activities:
Depreciation		64,816			58,986
Amortization		22,788			23,870
Gain on sale or disposal of property and equipment		(124	)		(1,666	)
Unrealized foreign currency (gains) losses		(13,054	)		21,217
Deferred income taxes		(68,859	)		(66,382	)
Stock compensation expense		43,397			39,755
Realized loss on marketable securities		59			773
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts		(62,832	)		122,428
Inventories		111,531			(294,766	)
Other current and noncurrent assets		2,769			775
Accounts payable		45,206			(29,829	)
Other current and noncurrent liabilities		(39,484	)		(74,273	)
Deferred revenue		4,711			(4,246	)
Deferred costs		(990	)		2,920
Income taxes		(47,288	)		(3,550	)
Net cash provided by operating activities		552,912			265,476
Investing activities:
Purchases of property and equipment		(99,346	)		(134,798	)
Proceeds from sale of property and equipment		152			1,672
Purchase of intangible assets		(847	)		(887	)
Purchase of marketable securities		(68,978	)		(873,110	)
Redemption of marketable securities		98,885			620,796
Acquisitions, net of cash acquired		—			(10,828	)
Net cash used in investing activities		(70,134	)		(397,155	)
Financing activities:
Dividends		(279,442	)		(258,249	)
Proceeds from issuance of treasury stock related to equity awards		21,946			41,050
Purchase of treasury stock related to equity awards		(9,397	)		(14,722	)
Purchase of treasury stock under share repurchase plan		(70,181	)		(25,117	)
Net cash used in financing activities		(337,074	)		(257,038	)
Effect of exchange rate changes on cash and cash equivalents		599			(21,999	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		146,303			(410,716	)
Cash, cash equivalents, and restricted cash at beginning of period		1,279,912			1,498,843
Cash, cash equivalents, and restricted cash at end of period	$	1,426,215		$	1,088,127

See accompanying notes.

4

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 13-Weeks Ended July 1, 2023 and June 25, 2022

(In thousands)

	Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at March 26, 2022	$	17,979		$	1,982,561		$	(294,711	)	$	4,532,102		$	10,911		$	6,248,842
Net income		—			—			—			257,873			—			257,873
Translation adjustment		—			—			—			—			(64,895	)		(64,895	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $4,757		—			—			—			—			(16,628	)		(16,628	)
Comprehensive income																	176,350
Dividends		—			—			—			(564,454	)		—			(564,454	)
Issuance of treasury stock related to equity awards		—			11,322			9,582			—			—			20,904
Stock compensation		—			15,048			—			—			—			15,048
Purchase of treasury stock related to equity awards		—			—			(111	)		—			—			(111	)
Purchase of treasury stock under share repurchase plan, including any associated excise tax		—			—			(30,646	)		—			—			(30,646	)
Balance at June 25, 2022	$	17,979		$	2,008,931		$	(315,886	)	$	4,225,521		$	(70,612	)	$	5,865,933
	Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at April 1, 2023	$	17,979		$	2,048,339		$	(510,478	)	$	4,935,730		$	(86,566	)	$	6,405,004
Net income		—			—			—			287,939			—			287,939
Translation adjustment		—			—			—			—			(25,342	)		(25,342	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $974		—			—			—			—			(3,392	)		(3,392	)
Comprehensive income																	259,205
Dividends		—			—			—			(558,398	)		—			(558,398	)
Issuance of treasury stock related to equity awards		—			8,383			13,563			—			—			21,946
Stock compensation		—			22,665			—			—			—			22,665
Purchase of treasury stock related to equity awards		—			—			(228	)		—			—			(228	)
Purchase of treasury stock under share repurchase plan, including any associated excise tax		—			—			(26,372	)		—			—			(26,372	)
Cancellation of treasury stock		(238	)		—			200,827			(200,589	)		—			—
Share capital currency change		1,847			(1,847	)		—			—			—			—
Balance at July 1, 2023	$	19,588		$	2,077,540		$	(322,688	)	$	4,464,682		$	(115,300	)	$	6,123,822

See accompanying notes.

5

Garmin Ltd. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

For the 26-Weeks Ended July 1, 2023 and June 25, 2022

(In thousands)

	Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 25, 2021	$	17,979		$	1,960,722		$	(303,114	)	$	4,320,737		$	117,835		$	6,114,159
Net income		—			—			—			469,464			—			469,464
Translation adjustment		—			—			—			—			(121,807	)		(121,807	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $19,459		—			—			—			—			(66,640	)		(66,640	)
Comprehensive income																	281,017
Dividends		—			—			—			(564,680	)		—			(564,680	)
Issuance of treasury stock related to equity awards		—			8,454			32,596			—			—			41,050
Stock compensation		—			39,755			—			—			—			39,755
Purchase of treasury stock related to equity awards		—			—			(14,722	)		—			—			(14,722	)
Purchase of treasury stock under share repurchase plan, including any associated excise tax		—			—			(30,646	)		—			—			(30,646	)
Balance at June 25, 2022	$	17,979		$	2,008,931		$	(315,886	)	$	4,225,521		$	(70,612	)	$	5,865,933
	Common Stock			Additional Paid-In Capital			Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance at December 31, 2022	$	17,979		$	2,042,472		$	(475,095	)	$	4,733,517		$	(114,533	)	$	6,204,340
Net income		—			—			—			490,266			—			490,266
Translation adjustment		—			—			—			—			(8,451	)		(8,451	)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects of $1,642		—			—			—			—			7,684			7,684
Comprehensive income																	489,499
Dividends		—			—			—			(558,512	)		—			(558,512	)
Issuance of treasury stock related to equity awards		—			(6,482	)		28,428			—			—			21,946
Stock compensation		—			43,397			—			—			—			43,397
Purchase of treasury stock related to equity awards		—			—			(9,397	)		—			—			(9,397	)
Purchase of treasury stock under share repurchase plan, including any associated excise tax		—			—			(67,451	)		—			—			(67,451	)
Cancellation of treasury stock		(238	)		—			200,827			(200,589	)		—			—
Share capital currency change		1,847			(1,847	)		—			—			—			—
Balance at July 1, 2023	$	19,588		$	2,077,540		$	(322,688	)	$	4,464,682		$	(115,300	)	$	6,123,822

See accompanying notes.

6

Garmin Ltd. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

July 1, 2023

(In thousands, except per share information)

1. Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Garmin Ltd. and wholly-owned subsidiaries (collectively, the “Company” or “Garmin”). Intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Additionally, the condensed consolidated financial statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Our operating results are subject to fluctuations associated with seasonal demand for consumer products, the timing of new product introductions, and OEM customer production schedules. Therefore, operating results for the 13-week and 26-week periods ended July 1, 2023 are not necessarily indicative of the results that may be expected for the year ending December 30, 2023.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended July 1, 2023 and June 25, 2022 both contain operating results for 13 weeks.

Changes in Classification and Allocation

Certain prior period amounts have been reclassified or presented to conform to the current period presentation.

The Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast herein to conform to the current period presentation. This change had no effect on the Company’s consolidated results of operations.

Significant Accounting Policies

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no material changes to the Company’s significant accounting policies during the 26-week period ended July 1, 2023.

Recently Issued Accounting Standards and Pronouncements

Recently adopted accounting standards and recently issued accounting pronouncements not yet adopted are not expected to have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.

7

2. 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 (“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 11 – Segment Information and Geographic Data. Note 11 also contains disaggregated revenue information of the five major product categories identified by the Company – fitness, outdoor, aviation, marine, and auto OEM.

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

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Point in time	$	1,251,214	$	1,179,123	$	2,332,283	$	2,293,324
Over time		69,581		61,710		135,936		120,172
Net sales	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

Transaction price and costs associated with the Company’s unsatisfied performance obligations are reflected as deferred revenue and deferred costs, respectively, on the Company’s condensed consolidated balance sheets. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the 26-week period ended July 1, 2023 are presented below:

	26-Weeks Ended July 1, 2023
	Deferred  Revenue (1)			Deferred Costs (2)
Balance, beginning of period	$	126,794		$	24,693
Deferrals in period		140,699			11,673
Recognition of deferrals in period		(135,936	)		(10,672	)
Balance, end of period	$	131,557		$	25,694

(1) Deferred revenue is comprised of both deferred revenue and noncurrent deferred revenue per the condensed consolidated balance sheets

(2) Deferred costs are comprised of both deferred costs and noncurrent deferred costs per the condensed consolidated balance sheets

Of the $135,936 of deferred revenue recognized in the 26-week period ended July 1, 2023, $57,948 was deferred as of the beginning of the period. Of the $131,557 of deferred revenue as of July 1, 2023, the Company expects to recognize approximately eighty percent ratably over a total period of three years or less.

8

3. Earnings Per Share

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

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Numerator:
Numerator for basic and diluted net income per share – net income	$	287,939	$	257,873	$	490,266	$	469,464
Denominator:
Denominator for basic net income per share – weighted-average common shares		191,293		193,074		191,395		192,980
Effect of dilutive equity awards		304		376		346		535
Denominator for diluted net income per share – adjusted weighted-average common shares		191,597		193,450		191,741		193,515
Basic net income per share	$	1.51	$	1.34	$	2.56	$	2.43
Diluted net income per share	$	1.50	$	1.33	$	2.56	$	2.43
Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards		218		757		218		761

4. Marketable Securities

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:

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

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

Level 3 Unobservable inputs for the asset or liability

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

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

9

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

	Available-For-Sale Securities as of July 1, 2023
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	11,002	$	—	$	(765	)	$	10,237
Mortgage-backed securities	Level 2		41,559		—		(5,586	)		35,973
Corporate debt securities	Level 2		1,086,519		158		(72,130	)		1,014,547
Municipal securities	Level 2		312,851		1		(25,429	)		287,423
Other	Level 2		6,629		—		(861	)		5,768
Total		$	1,458,560	$	159	$	(104,771	)	$	1,353,948

	Available-For-Sale Securities as of December 31, 2022
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	7,000	$	—	$	(786	)	$	6,214
Mortgage-backed securities	Level 2		45,373		—		(4,525	)		40,848
Corporate debt securities	Level 2		1,106,688		188		(77,802	)		1,029,074
Municipal securities	Level 2		326,058		3		(28,861	)		297,200
Other	Level 2		10,466		—		(2,154	)		8,312
Total		$	1,495,585	$	191	$	(114,128	)	$	1,381,648

The primary objectives of the Company’s investment policy are to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. The fair value of securities varies from period to period due to changes in interest rates, the performance of the underlying collateral, and the credit performance of the underlying issuer, among other factors.

Accrued interest receivable, which totaled $11,095 as of July 1, 2023, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within prepaid expenses and other current assets on the Company’s condensed consolidated balance sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. No accrued interest was written off during the 26-week period ended July 1, 2023.

The Company recognizes impairments relating to credit losses of available-for-sale securities through an allowance for credit losses and other income (expense) on the Company’s condensed consolidated statements of income. Impairment not relating to credit losses is recorded in accumulated other comprehensive income (loss) on the Company’s condensed consolidated balance sheets. The cost of securities sold is based on the specific identification method. Approximately 99% of securities in the Company’s portfolio were at an unrealized loss position as of July 1, 2023.

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 July 1, 2023 and December 31, 2022.

	As of July 1, 2023
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	(16	)	$	3,987	$	(749	)	$	6,250	$	(765	)	$	10,237
Mortgage-backed securities		(15	)		176		(5,571	)		35,797		(5,586	)		35,973
Corporate debt securities		(5,114	)		152,214		(67,016	)		844,933		(72,130	)		997,147
Municipal securities		(155	)		8,817		(25,274	)		276,105		(25,429	)		284,922
Other		—			—		(861	)		5,768		(861	)		5,768
Total	$	(5,300	)	$	165,194	$	(99,471	)	$	1,168,853	$	(104,771	)	$	1,334,047

10

	As of December 31, 2022
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	—		$	—	$	(786	)	$	6,214	$	(786	)	$	6,214
Mortgage-backed securities		(1,900	)		23,229		(2,625	)		17,619		(4,525	)		40,848
Corporate debt securities		(26,680	)		508,956		(51,122	)		498,834		(77,802	)		1,007,790
Municipal securities		(2,136	)		69,017		(26,725	)		225,679		(28,861	)		294,696
Other		—			—		(2,154	)		8,067		(2,154	)		8,067
Total	$	(30,716	)	$	601,202	$	(83,412	)	$	756,413	$	(114,128	)	$	1,357,615

As of July 1, 2023 and December 31, 2022, the Company had not recognized an allowance for credit losses on any securities in an unrealized loss position.

The Company has not recorded an allowance for credit losses and charge to other income (expense) for the unrealized losses on agency, mortgage-backed, corporate debt, municipal, and other securities presented above because we do not consider the declines in fair value to have resulted from credit losses. We have not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. Management does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity.

The amortized cost and fair value of marketable securities at July 1, 2023, by maturity, are shown below.

	Amortized Cost		Fair Value
Due in one year or less	$	259,584	$	253,689
Due after one year through five years		1,172,343		1,076,583
Due after five years through ten years		17,908		16,363
Due after ten years		8,725		7,313
Total	$	1,458,560	$	1,353,948

5. Income Taxes

The Company recorded income tax expense of $28,037 in the 13-week period ended July 1, 2023, compared to income tax expense of $21,093 in the 13-week period ended June 25, 2022. The effective tax rate was 8.9% in the second quarter of 2023, compared to 7.6% in the second quarter of 2022. The increase was primarily due to a decrease in uncertain tax position reserves released in the second quarter of 2023, compared to the second quarter of 2022.

The Company recorded income tax expense of $47,482 in the 26-week period ended July 1, 2023, compared to income tax expense of $45,366 in the 26-week period ended June 25, 2022. The effective tax rate was 8.8% in both the first half of 2023 and the first half of 2022.

6. Inventories

The components of inventories consist of the following:

	July 1, 2023		December 31, 2022
Raw materials	$	544,655	$	600,858
Work-in-process		172,109		180,873
Finished goods		685,461		733,314
Inventories	$	1,402,225	$	1,515,045

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7. Warranty Reserves

The Company’s standard warranty obligation to its end-users provides for a period of one to two years from the date of shipment, while certain 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, and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

	13-Weeks Ended						26-Weeks Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Balance - beginning of period	$	52,675		$	40,698		$	50,952		$	45,467
Accrual for products sold (1)		18,345			14,154			40,726			25,025
Expenditures		(18,668	)		(14,903	)		(39,326	)		(30,543	)
Balance - end of period	$	52,352		$	39,949		$	52,352		$	39,949

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

8. Commitments and Contingencies

Commitments

The Company is party to certain commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of payments for inventory, capital expenditures, and other indirect purchases in connection with conducting the business. The aggregate amount of purchase orders and other commitments open as of July 1, 2023 that may represent noncancellable unconditional purchase obligations having a remaining term in excess of one year was approximately $376,000.

Certain cash balances are held as collateral in relation to bank guarantees. This restricted cash is reported within other assets on the condensed consolidated balance sheets and totaled $689 and $718 on July 1, 2023 and December 31, 2022, respectively. The total of the cash and cash equivalents balance and the restricted cash reported within other assets in the condensed consolidated balance sheets equals the total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows.

Contingencies

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended July 1, 2023. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

The Company settled or resolved certain matters during the 13-week and 26-week periods ended July 1, 2023 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.

9. Stockholders' Equity

Dividends

Under Swiss corporate law, dividends must be approved by shareholders at the annual general meeting of the Company’s shareholders. Approved dividends are subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting, and payable in four equal installments on dates to be determined by the Board of Directors. A reduction of retained earnings and a corresponding liability are recorded at the time of shareholders' approval and are periodically adjusted based on the number of applicable shares outstanding.

12

Our shareholders approved the following dividends:

Declaration Date	Dividend Date	Record Date	Dividend Per Share
Fiscal 2023
June 9, 2023	June 30, 2023	June 20, 2023	$	0.73
June 9, 2023	September 29, 2023	September 15, 2023	$	0.73
June 9, 2023	December 29, 2023	December 15, 2023	$	0.73
June 9, 2023	March 29, 2024	March 15, 2024	$	0.73
Total			$	2.92
Fiscal 2022
June 10, 2022	June 30, 2022	June 20, 2022	$	0.73
June 10, 2022	September 30, 2022	September 15, 2022	$	0.73
June 10, 2022	December 30, 2022	December 15, 2022	$	0.73
June 10, 2022	March 31, 2023	March 15, 2023	$	0.73
Total			$	2.92
Fiscal 2021
June 4, 2021	June 30, 2021	June 15, 2021	$	0.67
June 4, 2021	September 30, 2021	September 15, 2021	$	0.67
June 4, 2021	December 31, 2021	December 15, 2021	$	0.67
June 4, 2021	March 31, 2022	March 15, 2022	$	0.67
Total			$	2.68

Share Repurchase Program

On April 22, 2022, the Board of Directors approved a share repurchase program (the “Program”) authorizing the Company to repurchase up to $300,000 of the common shares of Garmin Ltd., exclusive of the cost of any associated excise tax. The timing and volume of share repurchases are subject to market conditions, business conditions and applicable laws, and are at management’s discretion. Share repurchases may be made from time to time in the open market or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The Program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. The share repurchase authorization expires on December 29, 2023. As of July 1, 2023, the Company had repurchased 2,936 shares for $273,250, leaving approximately $26,750 available to repurchase additional shares under the Program.

Share Capital

In the second quarter of 2023, the share capital currency of the Company was changed from the Swiss Franc (CHF) to the U.S. Dollar (USD), as approved by shareholders at the Company’s 2023 Annual General Meeting. This aligns the share capital currency with the financial statement presentation currency of the Company. The Company’s nominal par value per share of CHF 0.10 was slightly reduced to USD $0.10, the impact of which is reflected in share capital, captioned as shares on the Company’s condensed consolidated balance sheets. Total stockholders’ equity reported for the Company was not affected by this change. Our common shares had a par value of USD $0.10 and CHF 0.10 per share as of July 1, 2023 and December 31, 2022, respectively.

Treasury Stock

In June 2023, our shareholders approved the cancellation of 2,197 shares previously purchased under our share repurchase program. The capital reduction by cancellation of these shares became effective in June 2023. Total stockholders’ equity reported for the Company was not affected.

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10. Accumulated Other Comprehensive Income (Loss)

The following provides required disclosure of changes in accumulated other comprehensive income (loss) balances by component for the 13-week and 26-week periods ended July 1, 2023:

	13-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(9,090	)	$	(77,476	)	$	(86,566	)
Other comprehensive income (loss) before reclassification, net of income tax benefit of $984		(25,342	)		(3,421	)		(28,763	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $10 included in income tax provision		—			29			29
Net current-period other comprehensive income (loss)		(25,342	)		(3,392	)		(28,734	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

	26-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(25,981	)	$	(88,552	)	$	(114,533	)
Other comprehensive income (loss) before reclassification, net of income tax expense of $1,629		(8,451	)		7,638			(813	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $13 included in income tax provision		—			46			46
Net current-period other comprehensive income (loss)		(8,451	)		7,684			(767	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

11. Segment Information and Geographic Data

Garmin is organized in the five operating segments of fitness, outdoor, aviation, marine, and auto OEM. These operating segments represent our reportable segments.

The Company’s Chief Executive Officer, who has been identified as the CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of goods sold and operating expenses. Net sales are directly attributed to each segment. Most costs of goods sold and the majority of operating expenses are also directly attributed to each segment, while certain other costs of goods sold and operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

As indicated in Note 1 to the condensed consolidated financial statements, the Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast below to conform with the current period presentation.

14

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

	Fitness		Outdoor		Aviation		Marine		Auto OEM			Total
13-Weeks Ended July 1, 2023
Net sales	$	334,863	$	448,114	$	217,454	$	215,802	$	104,562		$	1,320,795
Gross profit		173,163		280,078		160,957		120,344		24,900			759,442
Operating income (loss)		54,458		138,255		62,766		46,377		(17,501	)		284,355
13-Weeks Ended June 25, 2022
Net sales	$	272,095	$	462,243	$	204,739	$	242,794	$	58,962		$	1,240,833
Gross profit		134,016		290,508		147,931		137,406		18,965			728,826
Operating income (loss)		23,462		163,371		61,745		68,619		(24,457	)		292,740
26-Weeks Ended July 1, 2023
Net sales	$	579,584	$	776,776	$	431,036	$	494,777	$	186,046		$	2,468,219
Gross profit		294,073		485,026		315,410		269,976		47,751			1,412,236
Operating income (loss)		65,036		214,999		120,460		118,285		(37,443	)		481,337
26-Weeks Ended June 25, 2022
Net sales	$	492,992	$	911,977	$	379,505	$	496,863	$	132,159		$	2,413,496
Gross profit		240,205		568,964		275,474		265,987		40,676			1,391,306
Operating income (loss)		24,043		316,182		101,871		127,501		(48,300	)		521,297

Net sales to external customers by geographic region were as follows for the 13-week and 26-week periods ended July 1, 2023 and June 25, 2022. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Americas	$	641,848	$	646,172	$	1,253,552	$	1,216,807
EMEA		457,550		412,550		813,403		810,027
APAC		221,397		182,111		401,264		386,662
Net sales to external customers	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

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

The discussion set forth below, as well as other portions of this Quarterly Report, contain statements concerning potential future events. Such forward-looking statements are based upon assumptions by management, as of the date of this Quarterly Report, including assumptions about risks and uncertainties faced by the Company. Readers can identify these forward-looking statements by their use of such verbs as expects, anticipates, believes or similar verbs or conjugations of such verbs. If any of the Company’s assumptions prove incorrect or should unanticipated circumstances arise, actual results could materially differ from those anticipated by such forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to, those factors identified in Part II, Item 1A of this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. This report has been filed with the Securities and Exchange Commission (the “SEC” or the “Commission”) in Washington, D.C. and can be obtained by contacting the SEC’s public reference operations or obtaining it through the SEC’s website at http://www.sec.gov. Readers are strongly encouraged to consider those factors when evaluating any forward-looking statement concerning the Company. The Company will not update any forward-looking statements in this Quarterly Report to reflect future events or developments.

The information contained in this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Condensed Consolidated Financial Statements and Notes thereto included in this Form 10-Q and the audited financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. 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, amounts set forth in the discussion below are in thousands.

Company Overview

The Company is a leading worldwide provider of wireless devices, many of which feature Global Positioning System (GPS) navigation, and applications that are designed for people who live an active lifestyle. We are organized in the five operating segments of fitness, outdoor, aviation, marine, and auto OEM. Our products are sold through a variety of indirect distribution channels, including a large worldwide network of independent retailers, dealers, distributors, installation and repair shops, as well as original equipment manufacturers (OEMs). We also sell our products and services directly through our online webshop (garmin.com), subscriptions for connected services, and our own retail stores.

Business Environment Update

A number of headwinds including high inflation and rising interest rates have recently affected the economic environment and consumer behaviors. Additionally, while our global supply chain is routinely subject to component shortages, increased lead times, cost fluctuations, and logistics constraints, certain of these factors have at times been further amplified by the recent business environment. The nature and degree of effects of the business environment over time remain uncertain. Refer to Part II, Item 1A, “Risk Factors” of this Quarterly Report for further discussion of the risks and uncertainties facing our Company.

Results of Operations

As indicated in Note 1 to the condensed consolidated financial statements, the Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast below to conform with the current period presentation. This change had no effect on the Company’s consolidated results of operations.

16

Comparison of 13-Weeks Ended July 1, 2023 and June 25, 2022

Net Sales

Net Sales	13-Weeks Ended July 1, 2023			Year-over-Year Change			13-Weeks Ended June 25, 2022
Fitness	$	334,863			23	%	$	272,095
Percentage of Total Net Sales		25	%					22	%
Outdoor		448,114			(3	%)		462,243
Percentage of Total Net Sales		34	%					37	%
Aviation		217,454			6	%		204,739
Percentage of Total Net Sales		17	%					16	%
Marine		215,802			(11	%)		242,794
Percentage of Total Net Sales		16	%					20	%
Auto OEM		104,562			77	%		58,962
Percentage of Total Net Sales		8	%					5	%
Total	$	1,320,795			6	%	$	1,240,833

Net sales increased 6% for the 13-week period ended July 1, 2023 when compared to the year-ago quarter. Total unit sales in the second quarter of 2023 increased to 4,162 when compared to total unit sales of 3,743 in the second quarter of 2022, which differs from the percent increase in revenue primarily due to shifts in segment and product mix. Outdoor was the largest portion of our revenue mix at 34% in the second quarter of 2023 compared to 37% in the second quarter of 2022.

The increase in fitness revenue was driven by sales growth across all categories, led by strong demand for advanced wearables. Aviation revenue increased due to growth in OEM product categories. Auto OEM revenue increased primarily due to increased shipments of domain controllers. Outdoor revenue declined as growth in adventure watches was more than offset by declines in other categories. The decrease in marine revenue was primarily due to the timing of promotions, which contributed to lower sales of chartplotter products.

Gross Profit

Gross Profit	13-Weeks Ended July 1, 2023			Year-over-Year Change			13-Weeks Ended June 25, 2022
Fitness	$	173,163			29	%	$	134,016
Percentage of Segment Net Sales		52	%					49	%
Outdoor		280,078			(4	%)		290,508
Percentage of Segment Net Sales		63	%					63	%
Aviation		160,957			9	%		147,931
Percentage of Segment Net Sales		74	%					72	%
Marine		120,344			(12	%)		137,406
Percentage of Segment Net Sales		56	%					57	%
Auto OEM		24,900			31	%		18,965
Percentage of Segment Net Sales		24	%					32	%
Total	$	759,442			4	%	$	728,826
Percentage of Total Net Sales		57	%					59	%

Gross profit dollars in the second quarter of 2023 increased 4%, primarily due to the increase in net sales when compared to the year-ago quarter, as described above. Consolidated gross margin decreased 120 basis points when compared to the year-ago quarter primarily due to segment mix.

The fitness gross margin increase of 250 basis points was primarily attributable to favorable freight costs. The aviation gross margin increase of 180 basis points was primarily attributable to lower product costs. The outdoor and marine gross margins were relatively flat when compared to the year-ago quarter. The auto OEM gross margin decrease of 840 basis points was primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense	13-Weeks Ended July 1, 2023			Year-over-Year Change			13-Weeks Ended June 25, 2022
Advertising expense	$	46,344			7	%	$	43,357
Percentage of Total Net Sales		4	%					3	%
Selling, General and administrative expenses		204,349			7	%		191,211
Percentage of Total Net Sales		15	%					15	%
Research and development expense		224,394			11	%		201,518
Percentage of Total Net Sales		17	%					16	%
Total	$	475,087			9	%	$	436,086
Percentage of Total Net Sales		36	%					35	%

17

Total operating expense increased 9% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter.

Advertising expense increased 7% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter. The absolute dollar increase was primarily attributable to increased media spend.

Selling, general and administrative expense increased 7% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter. The absolute dollar expense increase in the second quarter of 2023 was primarily attributable to increased personnel-related expenses and information technology costs.

Research and development expense increased 11% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago quarter. The absolute dollar expense increase was primarily due to higher engineering personnel costs.

Operating Income

Operating Income (Loss)	13-Weeks Ended July 1, 2023			Year-over-Year Change			13-Weeks Ended June 25, 2022
Fitness	$	54,458			132	%	$	23,462
Percentage of Segment Net Sales		16	%					9	%
Outdoor		138,255			(15	%)		163,371
Percentage of Segment Net Sales		31	%					35	%
Aviation		62,766			2	%		61,745
Percentage of Segment Net Sales		29	%					30	%
Marine		46,377			(32	%)		68,619
Percentage of Segment Net Sales		21	%					28	%
Auto OEM		(17,501	)		(28	%)		(24,457	)
Percentage of Segment Net Sales		(17	%)					(41	%)
Total	$	284,355			(3	%)	$	292,740
Percentage of Total Net Sales		22	%					24	%

Total operating income decreased 3% in absolute dollars and 210 basis points as a percent of revenue when compared to the year-ago quarter. The decrease as a percent of revenue was primarily due to higher operating expenses, partially offset by sales growth, as described above. The decrease in outdoor and marine operating income was partially offset by improved performance in fitness, aviation, and auto OEM. Auto OEM experienced an operating loss in the current quarter driven by ongoing investments in auto OEM programs, and we expect the segment to continue to experience operating losses through 2023.

Other Income (Expense)

Other Income (Expense)	13-Weeks Ended July 1, 2023		13-Weeks Ended June 25, 2022
Interest income	$	18,760	$	8,495
Foreign currency gains (losses)		10,797		(22,439	)
Other income		2,064		170
Total	$	31,621	$	(13,774	)

The average interest return on cash and investments during the second quarter of 2023 was 2.7%, compared to 1.2% during the same quarter of 2022.

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

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The $10.8 million currency gain recognized in the second quarter of 2023 was primarily due to the U.S. Dollar weakening against the Polish Zloty, British Pound Sterling, and Euro, and strengthening against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Chinese Yuan, Japanese Yen, and Australian Dollar, within the 13-week period ended July 1, 2023. During this period, the U.S. Dollar weakened 4.7% against the Polish Zloty, 3.0% against the British Pound Sterling, 0.7% against the Euro, and strengthened 2.0% against the Taiwan Dollar, resulting in gains of $9.4 million, $1.4 million, $0.9 million, and $7.1 million, respectively, partially offset by the U.S. Dollar strengthening 5.3% against the Chinese Yuan, 8.0% against the Japanese Yen, and 1.4% against the Australian Dollar, resulting in losses of $3.1 million, $2.1 million, and $0.8 million, respectively. The remaining net currency loss of $2.0 million was related to the impacts of other currencies, each of which was individually immaterial.

The $22.4 million currency loss recognized in the second quarter of 2022 was primarily due to the U.S. Dollar strengthening against the Australian Dollar, Polish Zloty, Euro, Chinese Yuan, British Pound Sterling, and Japanese Yen, partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 13-week period ended June 25, 2022. During this period, the U.S. Dollar strengthened 8.3% against the Australian Dollar, 3.1% against the Polish Zloty, 3.9% against the Euro, 4.9% against the Chinese Yuan, 7.0% against the British Pound Sterling, and 9.7% against the Japanese Yen resulting in losses of $7.2 million, $5.3 million, $3.8 million, $3.0 million, $2.4 million, and $2.3 million, respectively, partially offset by the U.S. Dollar strengthening 3.5% against the Taiwan Dollar, resulting in a gain of $8.9 million. The remaining net currency loss of $7.3 million was related to the impacts of other currencies, each of which was individually immaterial.

Income Tax Provision

The Company recorded income tax expense of $28.0 million in the 13-week period ended July 1, 2023, compared to income tax expense of $21.1 million in the 13-week period ended June 25, 2022. The effective tax rate was 8.9% in the second quarter of 2023, compared to 7.6% in the second quarter of 2022. The increase was primarily due to a decrease in uncertain tax position reserves released in the second quarter of 2023, compared to the second quarter of 2022.

Net Income

As a result of the above, net income for the 13-week period ended July 1, 2023 was $287.9 million compared to $257.9 million for the 13-week period ended June 25, 2022, an increase of $30.0 million.

Comparison of 26-Weeks Ended July 1, 2023 and June 25, 2022

Net Sales

Net Sales	26-Weeks Ended July 1, 2023			Year-over-Year Change			26-Weeks Ended June 25, 2022
Fitness	$	579,584			18	%	$	492,992
Percentage of Total Net Sales		24	%					20	%
Outdoor		776,776			(15	%)		911,977
Percentage of Total Net Sales		31	%					38	%
Aviation		431,036			14	%		379,505
Percentage of Total Net Sales		17	%					16	%
Marine		494,777			0	%		496,863
Percentage of Total Net Sales		20	%					21	%
Auto OEM		186,046			41	%		132,159
Percentage of Total Net Sales		8	%					5	%
Total	$	2,468,219			2	%	$	2,413,496

Net sales increased 2% for the 26-week period ended July 1, 2023 when compared to the year-ago period. Total unit sales in the first half of 2023 increased to 7,372 when compared to total unit sales of 7,182 in the first half of 2022. Outdoor was the largest portion of our revenue mix at 31% in the first half of 2023 compared to 38% in the first half of 2022.

The increase in fitness revenue was primarily driven by strong demand for our advanced wearables. Aviation revenue increased due to growth in both OEM and aftermarket product categories. Auto OEM revenue increased primarily due to increased shipments of domain controllers. Outdoor revenue decreased primarily due to declines in adventure watches. Marine revenue was relatively flat.

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Gross Profit

Gross Profit	26-Weeks Ended July 1, 2023			Year-over-Year Change			26-Weeks Ended June 25, 2022
Fitness	$	294,073			22	%	$	240,205
Percentage of Segment Net Sales		51	%					49	%
Outdoor		485,026			(15	%)		568,964
Percentage of Segment Net Sales		62	%					62	%
Aviation		315,410			14	%		275,474
Percentage of Segment Net Sales		73	%					73	%
Marine		269,976			1	%		265,987
Percentage of Segment Net Sales		55	%					54	%
Auto OEM		47,751			17	%		40,676
Percentage of Segment Net Sales		26	%					31	%
Total	$	1,412,236			2	%	$	1,391,306
Percentage of Total Net Sales		57	%					58	%

Gross profit dollars in the first half of 2023 increased 2%, primarily due to the increase in net sales when compared to the year-ago period, as described above. Consolidated gross margin was relatively flat when compared to the year-ago period.

The fitness and marine gross margin increases of 200 and 100 basis points, respectively, were primarily attributable to favorable freight costs. The outdoor and aviation gross margins were relatively flat when compared to the year-ago period. The auto OEM gross margin decrease of 510 basis points was primarily attributable to unfavorable product mix.

Operating Expense

Operating Expense	26-Weeks Ended July 1, 2023			Year-over-Year Change			26-Weeks Ended June 25, 2022
Advertising expense	$	76,691			(1	%)	$	77,490
Percentage of Total Net Sales		3	%					3	%
Selling, General and administrative expenses		408,330			7	%		381,995
Percentage of Total Net Sales		17	%					16	%
Research and development expense		445,878			9	%		410,524
Percentage of Total Net Sales		18	%					17	%
Total	$	930,899			7	%	$	870,009
Percentage of Total Net Sales		38	%					36	%

Total operating expense increased 7% in absolute dollars and 170 basis points as a percent of revenue when compared to the year-ago period.

Advertising expense decreased 1% in absolute dollars and was relatively flat as a percent of revenue when compared to the year-ago period. The absolute dollar decrease was primarily attributable to decreased cooperative spend.

Selling, general and administrative expense increased 7% in absolute dollars and was relatively flat as a percent of revenue compared to the year-ago period. The absolute dollar expense increase in the first half of 2023 was primarily attributable to increased personnel-related expenses and information technology costs.

Research and development expense increased 9% in absolute dollars and 110 basis points as a percent of revenue when compared to the year-ago period. The absolute dollar expense increase was primarily due to higher engineering personnel costs.

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Operating Income

Operating Income (Loss)	26-Weeks Ended July 1, 2023			Year-over-Year Change			26-Weeks Ended June 25, 2022
Fitness	$	65,036			170	%	$	24,043
Percentage of Segment Net Sales		11	%					5	%
Outdoor		214,999			(32	%)		316,182
Percentage of Segment Net Sales		28	%					35	%
Aviation		120,460			18	%		101,871
Percentage of Segment Net Sales		28	%					27	%
Marine		118,285			(7	%)		127,501
Percentage of Segment Net Sales		24	%					26	%
Auto OEM		(37,443	)		(22	%)		(48,300	)
Percentage of Segment Net Sales		(20	%)					(37	%)
Total	$	481,337			(8	%)	$	521,297
Percentage of Total Net Sales		20	%					22	%

Total operating income decreased 8% in absolute dollars and 210 basis points as a percent of revenue when compared to the year-ago period. The decrease as a percent of revenue was primarily due to higher operating expenses, partially offset by sales growth, as described above. The decrease in outdoor and marine operating income was partially offset by improved performance in fitness, aviation, and auto OEM. Auto OEM experienced an operating loss in the current period driven by ongoing investments in auto OEM programs, and we expect the segment to continue to experience operating losses through 2023.

Other Income (Expense)

Other Income (Expense)	26-Weeks Ended July 1, 2023		26-Weeks Ended June 25, 2022
Interest income	$	34,659	$	16,048
Foreign currency gains (losses)		18,484		(25,946	)
Other Income		3,268		3,431
Total	$	56,411	$	(6,467	)

The average interest returns on cash and investments during the 26-week periods ended July 1, 2023 and June 25, 2022 were 2.5% and 1.1%, respectively.

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

The $18.5 million currency gain recognized in the 26-week period ended July 1, 2023 was primarily due to the U.S. Dollar weakening against the Polish Zloty, British Pound Sterling, and Euro, and strengthening against the Taiwan Dollar, partially offset by the U.S. Dollar strengthening against the Chinese Yuan, Japanese Yen, and Australian Dollar, within the 26-week period ended July 1, 2023. During this period, the U.S. Dollar weakened 7.5% against the Polish Zloty, 5.0% against the British Pound Sterling, 1.9% against the Euro, and strengthened 1.6% against the Taiwan Dollar, resulting in gains of $13.9 million, $2.7 million, $1.4 million, and $5.9 million, respectively, partially offset by the U.S. Dollar strengthening 4.0% against the Chinese Yuan, 9.1% against the Japanese Yen, and 2.4% against the Australian Dollar, resulting in losses of $2.4 million, $2.0 million, and $0.5 million, respectively. The remaining net currency loss of $0.5 million was related to the impacts of other currencies, each of which was individually immaterial.

The $25.9 million currency loss recognized in the 26-week period ended June 25, 2022 was primarily due to the U.S. Dollar strengthening against the Australian Dollar, Polish Zloty, Euro, Chinese Yuan, British Pound Sterling, and Japanese Yen partially offset by the U.S. Dollar strengthening against the Taiwan Dollar, within the 26-week period ended June 25, 2022. During this period, the U.S. Dollar strengthened 4.9% against the Australian Dollar, 8.6% against the Polish Zloty, 6.7% against the Euro, 4.9% against the Chinese Yuan, 8.4% against the British Pound Sterling, and 15.4% against the Japanese Yen resulting in losses of $6.6 million, $11.3 million, $8.9 million, $3.0 million, $2.5 million, and $3.9 million, respectively, partially offset by the U.S. Dollar strengthening 6.8% against the Taiwan Dollar, resulting in a gain of $17.1 million. The remaining net currency loss of $6.8 million was related to the impacts of other currencies, each of which was individually immaterial.

21

Income Tax Provision

The Company recorded income tax expense of $47.5 million in the first half of 2023, compared to income tax expense of $45.4 million in the first half of 2022. The effective tax rate was 8.8% in both the first half of 2023 and the first half of 2022.

Net Income

As a result of the above, net income for the 26-week period ended July 1, 2023 was $490.3 million compared to $469.5 million for the 26-week period ended June 25, 2022, an increase of $20.8 million.

Liquidity and Capital Resources

We primarily use cash flow from operations, and expect that future cash requirements may be used, to fund our capital expenditures, support our working capital requirements, pay dividends, fund share repurchases, 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.

Cash, Cash Equivalents, and Marketable Securities

As of July 1, 2023, we had approximately $2.8 billion of cash, cash equivalents and marketable securities. Management invests idle or surplus cash in accordance with the investment policy, which has been approved by the Company’s Board of Directors. The investment policy’s primary objectives are to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. Garmin’s average interest returns on cash and investments during the first halves of 2023 and 2022 were 2.5% and 1.1%, 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 4 for additional information regarding marketable securities.

Cash Flows

Cash provided by operating activities totaled $552.9 million for the first half of 2023, compared to $265.5 million for the first half of 2022. The increase was primarily due to a lower use of cash on purchases of inventory compared to the year-ago quarter, partially offset by a decrease in collections of accounts receivable in the first half of 2023 compared to the first half of 2022.

Cash used in investing activities totaled $70.1 million for the first half of 2023, compared to $397.2 million for the first half of 2022. The decrease was primarily due to net redemptions of marketable securities in the first half of 2023, compared to the net purchases of marketable securities in the first half of 2022, as well as a decrease in purchases of property and equipment.

Cash used in financing activities totaled $337.1 million for the first half of 2023, compared to $257.0 million for the first half of 2022. This increase was primarily due to higher purchases of treasury stock under the share repurchase plan, and higher cash dividend payments in the first half of 2023, as the first half of 2022 included two dividend payments of $0.67 per share, while the first half of 2023 included two dividend payments of $0.73 per share.

Use of Cash

Operating Leases

The Company has lease arrangements for certain real estate properties, vehicles, and equipment. Leased properties are typically used for office space, distribution, and retail. As of July 1, 2023, the Company had fixed lease payment obligations of $158.4 million, with $31.7 million payable within 12 months.

Inventory Purchase Obligations

The Company obtains various raw materials and components for its products from a variety of third party suppliers. The Company’s inventory purchase obligations are primarily noncancelable. As of July 1, 2023, the Company had inventory purchase obligations of $702.5 million, with $496.1 million payable within 12 months.

22

Other Purchase Obligations

The Company’s other purchase obligations primarily consist of noncancelable commitments for capital expenditures and other indirect purchases in connection with conducting our business. As of July 1, 2023, the Company had other purchase obligations of $366.5 million, with $143.5 million payable within 12 months.

Critical Accounting Policies and Estimates

General

Our discussion and analysis of financial condition and results of operations are based upon the Company’s condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The presentation of these financial statements requires 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.

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no significant changes to the Company’s critical accounting policies and estimates in the 13-week and 26-week periods ended July 1, 2023.

23

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There are numerous market risks that can affect our future business, financial condition and results of operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes during the 13-week and 26-week periods ended July 1, 2023 in the risks described in our Annual Report on Form 10-K related to market sensitivity, inflation, foreign currency exchange rate risk and interest rate risk.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. The Company maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information, which is required to be timely disclosed, is accumulated and communicated to management in a timely fashion. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of July 1, 2023, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded as of July 1, 2023 that our disclosure controls and procedures were effective such that the information relating to the Company, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting. There has been no change in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended July 1, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II - Other Information

Item 1. Legal Proceedings

In the normal course of business, the Company and its subsidiaries are parties to various legal claims, actions, and complaints, including matters involving patent infringement, other intellectual property, product liability, customer claims and various other risks. It is not possible to predict with certainty whether or not the Company and its subsidiaries will ultimately be successful in any of these legal matters, or if not, what the impact might be. However, the Company’s management does not expect that the results in any of these legal proceedings will have a material adverse effect on the Company’s results of operations, financial position or cash flows. For additional information, see Note 8 – Commitments and Contingencies in the above Condensed Consolidated Financial Statements and Part I, Item 3, “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Item 1A. Risk Factors

There are many risks and uncertainties that can affect our future business, financial performance or share price. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes during the 26-week period ended July 1, 2023 in the risks described in our Annual Report on Form 10-K. These risks, however, are not the only risks facing our Company. Additional risks and uncertainties, including those not currently known to us or that we currently deem to be immaterial, also may materially adversely affect our business, financial condition and/or operating results.

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

Issuer Purchases of Equity Securities

Share repurchase activity during the 13-week period ended July 1, 2023, summarized on a trade-date basis, was as follows (in thousands, except per share amounts):

Period	Total Number of Shares Purchased (1)		Average Price Paid Per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
April 2, 2023 - April 29, 2023		160	$	98.58		160	$	37,129
April 30, 2023 - May 27, 2023		49	$	101.46		49	$	32,147
May 28, 2023 - July 1, 2023		52	$	103.79		52	$	26,750
Total		261				261

(1) The Board of Directors approved a share repurchase program on April 22, 2022 (the "Program"), authorizing the Company to purchase up to $300 million of its common shares, exclusive of the cost of any associated excise tax. Share repurchases may be made in the open market or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and volume of share repurchases are subject to market conditions, business conditions and applicable laws, and are at management’s discretion. The Program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. The share repurchase authorization expires on December 29, 2023. See Note 9 in Part I, Item 1 of this Quarterly Report for additional information related to share repurchases.

(2) Average price paid per share includes costs associated with the repurchases, except for the cost of any associated excise tax.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

(c) Trading Plans

During the 13-week period ended July 1, 2023, no director or officer (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of the Company adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

Exhibit 3.1	Garmin Ltd. Articles of Association, as amended and restated on June 9, 2023 (incorporated by reference to Exhibit 10.3 to the Company’s Form 8-K filed on June 12, 2023).
Exhibit 10.1	Garmin Ltd. 2005 Equity Incentive Plan, as amended and restated on June 9, 2023.
Exhibit 10.2	Garmin Ltd. Employee Stock Purchase Plan, as amended and restated on June 9, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on June 12, 2023).
Exhibit 10.3	Garmin Ltd. 2011 Non-Employee Directors’ Equity Incentive Plan, as amended and restated on June 9, 2023 (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed on June 12, 2023).
Exhibit 31.1	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
Exhibit 31.2	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a).
Exhibit 32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101.INS	XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH	Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
Exhibit 101.LAB	Inline XBRL Taxonomy Extension Label Linkbase
Exhibit 101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

27

SIGNATURES

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

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

Dated: August 2, 2023

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EX-10.1

EXHIBIT 10.1

GARMIN LTD.
2005 Equity Incentive Plan

as amended and restated on June 9, 2023

Article 1. Establishment, Objectives and Duration

1.1Establishment and Amendment of the Plan. The Board of Directors (the “Board”) of Garmin Ltd., a Swiss company (the “Company”), hereby establishes the incentive compensation plan to be known as the Garmin Ltd. 2005 Equity Incentive Plan (the “Plan”). The Plan was adopted by the Board of Directors of Garmin Ltd., a Cayman Islands company (“Garmin Cayman”), on March 1, 2005 and was approved by the shareholders of Garmin Cayman on June 3, 2005. The Plan is effective as of June 3, 2005 (the “Effective Date”). In 2006, Garmin Cayman effected a two-for-one stock split of its common Shares (the “Stock Split”). Subject to approval of the shareholders of Garmin Cayman, the Board of Directors of Garmin Cayman adopted an amended and restated plan effective June 5, 2009 with certain amendments reflecting the Stock Split, updated changes in the law and an expanded type of performance-based awards eligible to be granted under the Plan. The Plan was amended and restated on June 27, 2010 following the redomestication transaction on June 27, 2010 pursuant to which the shares of Garmin Cayman were exchanged for shares of the Company and the Company became the public holding company of Garmin Cayman and its subsidiaries. The Plan was amended and restated again on June 7, 2013, on October 21, 2016, on June 7, 2019, on April 22, 2022 and on June 10, 2022.

1.2Objectives of the Plan. The Plan is intended to allow employees of the Company and its Subsidiaries to acquire or increase equity ownership in the Company, or to be compensated under the Plan based on growth in the Company’s equity value, thereby strengthening their commitment to the success of the Company and stimulating their efforts on behalf of the Company, and to assist the Company and its Subsidiaries in attracting new employees and retaining existing employees. The Plan is also intended to optimize the profitability and growth of the Company through incentives which are consistent with the Company’s goals; to provide incentives for excellence in individual performance; and to promote teamwork.

1.3Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Article 13 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan’s provisions.

Article 2. Definitions

Whenever used in the Plan, the following terms shall have the meanings set forth below:

2.1 “Article” means an Article of the Plan.

2.2 “Award” means Options, Restricted Shares, Bonus Shares, SARs, Restricted Stock Units, Performance Units or Performance Shares granted under the Plan.

2.3 “Award Agreement” means a written agreement by which an Award is evidenced.

2.4 “Beneficial Owner” has the meaning specified in Rule 13d-3 of the SEC under the Exchange Act.

2.5 “Board” means the Board of Directors of the Company.

2.6 “Bonus Shares” means Shares that are awarded to a Grantee without cost and without restrictions in recognition of past performance (whether determined by reference to another employee benefit plan of the Company or otherwise) or as an incentive to become an employee of the Company or a Subsidiary.

2.7 “Cause” means, unless otherwise defined in an Award Agreement,

(a) a Grantee’s conviction of, plea of guilty to, or plea of nolo contendere to a felony or other crime that involves fraud, dishonesty or moral turpitude,

(b) any willful action or omission by a Grantee which would constitute grounds for immediate dismissal under the employment policies of the Company or the Subsidiary by which Grantee is employed, including but not limited to intoxication with alcohol or illegal drugs while on the premises of the Company or any Subsidiary, or violation of sexual harassment laws or the internal sexual harassment policy of the Company or the Subsidiary by which Grantee is employed, irrespective of whether the applicable law would allow an immediate dismissal in these cases,

(c) a Grantee’s habitual neglect of duties, including but not limited to repeated absences from work without reasonable excuse, or

(d) a Grantee’s willful and intentional material misconduct in the performance of his duties that results in financial detriment to the Company or any Subsidiary;

provided, however, that for purposes of clauses (b), (c) and (d), Cause shall not include any one or more of the following: bad judgment, negligence or any act or omission believed by the Grantee in good faith to have been in or not opposed to the interest of the Company (without intent of the Grantee to gain, directly or indirectly, a profit to which the Grantee was not legally entitled). A Grantee who agrees to resign from his affiliation with the Company or a Subsidiary in lieu of being terminated for Cause may be deemed to have been terminated for Cause for purposes of the Plan.

2.8 “Change of Control” means, unless otherwise defined in an Award Agreement, any one or more of the following:

(a) any Person other than (i) a Subsidiary, (ii) any employee benefit plan (or any related trust) of the Company or any of its Subsidiaries or (iii) any Excluded Person, becomes the Beneficial Owner of 35% or more of the shares of the Company representing 35% or more of the combined voting power of the Company (such a person or group, a “35% Owner”), except that (i) no Change of Control shall be deemed to have occurred solely by reason of such beneficial ownership by a corporation with respect to which both more than 60% of the common shares of such corporation and Voting Securities representing more than 60% of the aggregate voting power of such corporation are then owned, directly or indirectly, by the persons who were the direct or indirect owners of the shares of the Company immediately before such acquisition in substantially the same proportions as their ownership, immediately before such acquisition, of the shares of the Company, as the case may be and (ii) such corporation shall not be deemed a 35% Owner; or

(b) the Incumbent Directors (determined using the Effective Date as the baseline date) cease for any reason to constitute at least a majority of the directors of the Company then serving; or

(c) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of a merger, reorganization, consolidation, or similar transaction, or the sale or other disposition of all or substantially all (at least 40%) of the consolidated assets of the Company or a resolution of dissolution of the Company (any of the foregoing transactions, a “Reorganization Transaction”) which is not an Exempt Reorganization Transaction.

The definition of “Change of Control” may be amended at any time prior to the occurrence of a Change of Control, and such amended definition shall be applied to all Awards granted under the Plan whether or not outstanding at the time such definition is amended, without requiring the consent of any Grantee. Notwithstanding the occurrence of any of the foregoing events, (a) a Change of Control shall be deemed not to have occurred with respect to any Section 16 Person if such Section 16 Person is, by agreement (written or otherwise), a participant on such Section 16 Person’s own behalf in a transaction which causes the Change of Control to occur and (b) a Change of Control shall not occur with respect to a Grantee if, in advance of such event, the Grantee agrees in writing that such event shall not constitute a Change of Control.

2.9 “Change of Control Period” has the meaning set forth in Section 5.6(c).

2.10 “Change of Control Value” means the Fair Market Value of a Share on the date of a Change of Control.

2.11 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and regulations and rulings thereunder. References to a particular section of the Code include references to successor provisions of the Code or any successor statute.

2.12 “Company” has the meaning set forth in Section 1.1.

2.13 “Disabled” or “Disability” means an individual (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than 3 months under a Company-sponsored accident and health plan. Notwithstanding the foregoing, with respect to an Incentive Stock Option, “Disability” means a permanent and total disability, within the meaning of Code Section 22(e)(3), as determined by the Board in good faith, upon receipt of medical advice from one or more individuals, selected by the Board, who are qualified to give professional medical advice.

2.14 “Effective Date” has the meaning set forth in Section 1.1.

2.15 “Eligible Person” means any employee (including any officer) of the Company or any Subsidiary, including any such employee who is on an approved leave of absence or has been subject to a disability which does not qualify as a Disability.

2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended. References to a particular section of the Exchange Act include references to successor provisions.

2.17 “Excluded Person” means any Person who, along with such Person’s Affiliates and Associates (as such terms are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act) is the Beneficial Owner of 15% or more of the Shares outstanding as of the Effective Date.

2.18 “Exempt Reorganization Transaction” means a Reorganization Transaction which (i) results in the Persons who were the direct or indirect owners of the outstanding shares of the Company immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect owners of both more than 60% of the then-outstanding common shares of the Surviving Corporation and Voting Securities representing more than 60% of the aggregate voting power of the Surviving Corporation, in substantially the same respective proportions as such Persons’ ownership of the shares of the Company immediately before such Reorganization Transaction, or (ii) after such transaction, more than 50% of the members of the board of directors of the Surviving Corporation were Incumbent Directors at the time of the Board’s approval of the agreement providing for the Reorganization Transaction or other action of the Board approving the transaction (or whose election or nomination was approved by a vote of at least two-thirds of the members who were members of the Board at that time).

2.19 “Fair Market Value” means, unless otherwise determined or provided by the Board in the circumstances, (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Board, and (B) with respect to Shares, (i) the last sale price (also referred to as the closing price) of a Share on such U.S. securities exchange as the Shares are then traded, for the applicable date, (ii) if such U.S. securities exchange is closed for trading on such date, or if the Shares do not trade on such date, then the last sales price used shall be the one on the date the Shares last traded on such U.S. securities exchange, or (iii) in the event that there shall be no public market for the Shares, the fair market value of the Shares as determined in good faith by the Board using a method consistently applied. Notwithstanding the above, for all Options, SARs and Deferred Shares (RSUs) granted before June 5, 2009, Fair Market Value for purposes of establishing Option Prices, Exercise Prices or values of Shares, respectively, was established based on the average of the high and low trading prices on the New York Stock Exchange (or, if no sale of Shares was reported for such date, on the next preceding date on which a sale of Shares was reported).

2.20 “Freestanding SAR” means any SAR that is granted independently of any Option.

2.21 “Good Reason” means any action by the Company or the Subsidiary employing a Grantee which results in any of the following without the Grantee’s consent: (a) a material diminution or other material adverse change in the Grantee’s position, authority or duties, (b) requiring the Grantee to be based at any office or location more than 50 miles from the location where he or she was previously based; (c) a material diminution in the Grantee’s compensation in the aggregate, other than a diminution applicable to all similarly situated employees. A Grantee shall not have Good Reason to terminate his or her position unless, (1) within 60 days following the event or circumstance set forth above in (a), (b) or (c), the Grantee notifies the Company of such event or circumstance, (2) the Grantee gives the Company 30 days to correct the event or circumstance, and (3) the Company does not correct, in all material respects, such event or circumstance.

2.22 “Grant Date” has the meaning set forth in Section 5.2.

2.23 “Grantee” means an individual who has been granted an Award.

2.24 “Including” or “includes” mean “including, without limitation,” or “includes, without limitation”, respectively.

2.25 “Incumbent Directors” means, as of any specified baseline date, individuals then serving as members of the Board who were members of the Board as of the date immediately preceding such baseline date; provided that any subsequently-appointed or elected member of the Board whose election, or nomination for election by shareholders of the Company or the Surviving Corporation, as applicable, was approved by a vote or written consent of a majority of the directors then comprising the Incumbent Directors shall also thereafter be considered an Incumbent Director, unless the initial assumption of office of such subsequently-elected or appointed director was in connection with (i) an actual or threatened election contest, including a consent solicitation, relating to the election or removal of one or more members of the Board, (ii) a “tender offer” (as such term is used in Section 14(d) of the Exchange Act), or (iii) a proposed Reorganization Transaction.

2.26 “Option” means an option granted under Article 6 of the Plan, including an incentive stock option.

2.27 “Option Price” means the price at which a Share may be purchased by a Grantee pursuant to an Option.

2.28 “Option Term” means the period beginning on the Grant Date of an Option and ending on the expiration date of such Option, as specified in the Award Agreement for such Option and as may, consistent with the provisions of the Plan, be extended from time to time by the Board prior to the expiration date of such Option then in effect.

2.29 “Performance Period” has the meaning set forth in Section 10.2.

2.30 “Performance Share” or “Performance Unit” has the meaning set forth in Article 10.

2.31 “Period of Restriction” means the period during which the transfer of Restricted Shares is limited in some way (based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Board) or the Shares are subject to a substantial risk of forfeiture, as provided in Article 8.

2.32 “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

2.33 “Plan” has the meaning set forth in Section 1.1.

2.34 “Plan Committee” has the meaning set forth in Section 3.1.

2.35 “Reorganization Transaction” has the meaning set forth in Section 2.9(c).

2.36 “Restricted Shares” means Shares that are issued as an Award under the Plan that is subject to Restrictions.

2.37 “Restricted Stock Units” (f/k/a “Deferred Shares”) means units awarded to Grantees pursuant to Article 9 hereof, which are convertible into Shares at such time as such units are no longer subject to Restrictions as established by the Board. Restricted Stock Units are the same as “Deferred Shares” previously referred to and granted under the Plan prior to this Amended and Restated Plan becoming effective.

2.38 “Restriction” means any restriction on a Grantee’s free enjoyment of the Shares or other rights underlying Awards, including (a) that the Grantee or other holder may not sell, transfer, pledge, or assign a Share or right, and (b) such other restrictions as the Board may impose in the Award Agreement that are permissible under Swiss law. Restrictions may be based on the passage of time or the satisfaction of performance criteria or the occurrence of one or more events or conditions, and shall lapse separately or in combination upon such conditions and at such time or times, in installments or otherwise, as the Board shall specify. Awards subject to a Restriction shall be forfeited if the Restriction does not lapse prior to such date or the occurrence of such event or the satisfaction of such other criteria as the Board shall determine.

2.39 “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, together with any successor rule, as in effect from time to time.

2.40 “SAR” means a stock appreciation right and includes both Tandem SARs and Freestanding SARs.

2.41 “SAR Term” means the period beginning on the Grant Date of a SAR and ending on the expiration date of such SAR, as specified in the Award Agreement for such SAR and as may, consistent with the provisions of the Plan, be extended from time to time by the Board prior to the expiration date of such SAR then in effect.

2.42 “SEC” means the United States Securities and Exchange Commission, or any successor thereto.

2.43 “Section” means, unless the context otherwise requires, a Section of the Plan.

2.44 “Section 16 Person” means a person who is subject to obligations under Section 16 of the Exchange Act with respect to transactions involving equity securities of the Company.

2.45 “Share” means a registered share, USD $0.10 par value, of the Company.

2.46 “Subsidiary” means with respect to any Person (a) any corporation of which more than 50% of the Voting Securities are at the time, directly or indirectly, owned by such Person, and (b) any partnership or limited liability company in which such Person has a direct or indirect interest (whether in the form of voting power or participation in profits or capital contribution) of more than 50%. Solely with respect to a grant of an incentive stock option under the requirements of Section 422 of the Code, “Subsidiary” means a “subsidiary corporation” as defined in Section 424(f) of the Code.

2.47 “Substitute Option” has the meaning set forth in Section 6.3.

2.48 “Surviving Corporation” means the corporation resulting from a Reorganization Transaction or, if Voting Securities representing at least 50% of the aggregate voting power of such resulting corporation are directly or indirectly owned by another corporation, such other corporation.

2.49 “Tandem SAR” means a SAR that is granted in connection with, or related to, an Option, and which requires forfeiture of the right to purchase an equal number of Shares under the related Option upon the exercise of such SAR; or alternatively, which requires the cancellation of an equal amount of SARs upon the purchase of the Shares subject to the Option.

2.50 “Tax Withholding” has the meaning set forth in Section 14.1(a).

2.51 “Termination of Affiliation” occurs on the first day on which an individual is for any reason no longer providing services to the Company or any Subsidiary in the capacity of an employee, or with respect to an individual who is an employee of a Subsidiary, the first day on which such Subsidiary ceases to be a Subsidiary. A Termination of Affiliation shall have the same meaning as a “separation from service” under Code Section 409A(2)(A)(i).

2.52 “Voting Securities” of a corporation means securities of such corporation that are entitled to vote generally in the election of directors, but not including any other class of securities of such corporation that may have voting power by reason of the occurrence of a contingency.

Article 3. Administration

3.1Board and Plan Committee. Subject to Article 13, and to Section 3.2, the Plan shall be administered by the Board, or a committee of the Board appointed by the Board to administer the Plan (“Plan Committee”). To the extent the Board considers it desirable for transactions relating to Awards to be eligible to qualify for an exemption under Rule 16b-3, the Plan Committee shall consist of two or more directors of the Company, all of whom qualify as “non-employee directors” within the meaning of Rule 16b-3.

Any references herein to “Board” are, except as the context requires otherwise, references to the Board or the Plan Committee, as applicable.

3.2Powers of the Board. Subject to the express provisions of the Plan, the Board has full and final authority and sole discretion as follows:

(a) taking into consideration the reasonable recommendations of management, to determine when, to whom and in what types and amounts Awards should be granted and the terms and conditions applicable to each Award, including the Option Price, the Option Term, the Restrictions, the benefit payable under any SAR, Performance Unit or Performance Share and whether or not specific Awards shall be granted in connection with other specific Awards, and if so whether they shall be exercisable cumulatively with, or alternatively to, such other specific Awards;

(b) to determine the amount, if any, that a Grantee shall pay for Restricted Shares, whether and on what terms to permit or require the payment of cash dividends thereon to be deferred, when Restrictions on Restricted Shares (including Restricted Shares acquired upon the exercise of an Option) shall lapse and whether such shares shall be held in escrow;

(c) to construe and interpret the Plan and to make all determinations necessary or advisable for the administration of the Plan;

(d) to make, amend, and rescind rules relating to the Plan, including rules with respect to the exercisability and nonforfeitability of Awards and lapse of Restrictions upon the Termination of Affiliation of a Grantee;

(e) to determine the terms and conditions of all Award Agreements (which need not be identical) and, with the consent of the Grantee, to amend any such Award Agreement at any time, among other things, to permit transfers of such Awards to the extent permitted by the Plan; provided that the consent of the Grantee shall not be required for any amendment which (A) does not adversely affect the rights of the Grantee, or (B) is necessary or advisable (as determined by the Board) to carry out the purpose of the Award as a result of any new or change in existing applicable law;

(f) to cancel, with the consent of the Grantee, outstanding Awards and to grant new Awards in substitution therefor; provided that any replacement grant that would be considered a repricing shall be subject to shareholder approval;

(g) to accelerate the exercisability (including exercisability within a period of less than six months after the Grant Date) of, and to accelerate or waive any or all of the terms conditions or Restrictions applicable to, any Award or any group of Awards for any reason and at any time, including in connection with a Termination of Affiliation;

(h) subject to Section 5.3, to extend the time during which any Award or group of Awards may be exercised;

(i) to make such adjustments or modifications to Awards to Grantees who are working outside the United States as are advisable to fulfill the purposes of the Plan or to comply with applicable local law, and to authorize foreign Subsidiaries to adopt plans as provided in Article 15;

(j) to delegate to any member of the Board or committee of Board members such of its powers as it deems appropriate, including the power to subdelegate, except that only a member of the Board of Directors of the Company (or a committee thereof) may grant Awards from time to time to specified categories of Eligible Persons in amounts and on terms to be specified by the Board; provided that no such grants shall be made other than by the Board or the Plan Committee to individuals who are then Section 16 Persons;

(k) to delegate to officers, employees or independent contractors of the Company matters involving the routine administration of the Plan and which are not specifically required by any provision of the Plan to be performed by the Board of Directors of the Company;

(l) to delegate its duties and responsibilities under the Plan with respect to foreign Subsidiary plans, except its duties and responsibilities with respect to Section 16 Persons, and (A) the acts of such delegates shall be treated hereunder as acts of the Board and (B) such delegates shall report to the Board regarding the delegated duties and responsibilities;

(m) to correct any defect or supply any omission or reconcile any inconsistency, and construe and interpret the Plan, the rules and regulations, any Award Agreement or any other instrument entered into or relating to an Award under the Plan, and to make all determinations, including factual determinations, necessary or advisable for the administration of the Plan;

(n) to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Board may, before or concurrently with the grant thereof, deem appropriate, including limiting the percentage of Awards which may from time to time be exercised by a Grantee; and

(o) to take any other action with respect to any matters relating to the Plan for which it is responsible.

All determinations on any matter relating to the Plan or any Award Agreement may be made in the sole and absolute discretion of the Board, and to the fullest extent permitted by the applicable law all such determinations of the Board shall be final, conclusive and binding on all Persons. To the fullest extent permitted by the applicable law no member of the Board shall be liable for any action or determination made with respect to the Plan or any Award.

Article 4. Shares Subject to the Plan

4.1Number of Shares Available.

(a)Plan Limit. Subject to adjustment as provided in Section 4.2, the number of Shares hereby reserved for delivery under the Plan is thirteen million (13,000,000) Shares. The maximum number of Shares that may be delivered pursuant to the exercise of Options (including incentive stock options under Code Section 422) or SARs is ten million (10,000,000) Shares. The maximum number of Shares that may be delivered as Restricted Shares or pursuant to Performance Units or Restricted Stock Units is twelve million (12,000,000) Shares. The maximum number of Bonus Shares that may be awarded is one million (1,000,000) Shares. If any Shares subject to an Award granted hereunder are forfeited or an Award or any portion thereof otherwise terminates or is settled without the issuance of Shares, the Shares subject to such Award, to the extent of any such forfeiture, termination or settlement, shall again be available for grant under the Plan. The Board may from time to time determine the appropriate methodology for calculating the number of Shares issued pursuant to the Plan.

(b)Individual Limit. No individual Grantee may be granted Options, SARs, Restricted Shares, Restricted Stock Units, Bonus Shares, Performance Units or Performance Shares in Shares, or in any combination thereof, relating to an aggregate number of Shares under the Plan that exceeds two million (2,000,000) Shares in any 5-year period. If a previously granted Option, SAR, Restricted Stock Unit, Performance Unit, or Performance Share is forfeited, canceled or repriced, such forfeited, canceled or repriced Award as the case may be, shall continue to be counted against the maximum number of Shares subject to Awards that may be delivered to any Grantee under this Section 4.1(b).

4.2Adjustments in Shares.

(a)Adjustment Principle. In the event that the Board determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, share split, reverse share split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Shares or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that any adjustment is determined by the Board to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Board shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property of the Company or any Person that is a party to a Reorganization Transaction with the Company) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property of the Company or any Person that is a party to a Reorganization Transaction with the Company) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award or the substitution of other property for Shares subject to an outstanding Award; provided, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.

(b)Example. By way of illustration, and not by way of limitation, the following illustrates how the foregoing adjustment principles would apply in the context of a stock split: Assume a Grantee holds an Option to purchase 1,000 shares of Company stock at an Option Price of $50 per share. Assume further that the Company completes a two-for-one share split such that every shareholder on the requisite record date receives two Shares for every one Share held on the record date. Pursuant to the adjustment principles set forth above in Section 4.2(a), the Grantee’s Option would be adjusted such that, after such adjustment, the Grantee would hold an Option to purchase 2,000 Shares at an Option Price of $25 per Share. All other terms and conditions of the Option would remain the same. Similar adjustment principles would apply to SARs, Performance Shares, Performance Units, Bonus Shares and Deferred Shares. This Section 4.2(b) is for illustrative purposes only, assumes hypothetical facts, and shall not, under any event or circumstance, be interpreted as the adjustment outcome with respect to specific factual situations.

Article 5. Eligibility and General Conditions of Awards

5.1Eligibility. The Board may grant Awards to any Eligible Person, whether or not he or she has previously received an Award.

5.2Grant Date. The Grant Date of an Award shall be the date on which the Board grants the Award or such later date as specified by the Board (i) in the Board’s resolutions or minutes addressing the Award grants or (ii) in the Award Agreement.

5.3Maximum Term. Subject to the following proviso, the Option Term or other period during which an Award may be outstanding shall not extend more than 10 years after the Grant Date, and shall be subject to earlier termination as herein specified.

5.4Award Agreement. To the extent not set forth in the Plan, the terms and conditions of each Award (which need not be the same for each grant or for each Grantee) shall be set forth in an Award Agreement.

5.5Restrictions on Share Transferability. The Board may include in the Award Agreement such restrictions on any Shares acquired pursuant to the exercise or vesting of an Award as it may deem advisable, including restrictions under applicable federal securities laws.

5.6Termination of Affiliation. Except as otherwise provided in an Award Agreement (including an Award Agreement as amended by the Board pursuant to Section 3.2), and subject to the provisions of Section 13.1, the extent to which the Grantee shall have the right to exercise, vest in, or receive payment in respect of an Award following Termination of Affiliation shall be determined in accordance with the following provisions of this Section 5.6.

(a)For Cause. If a Grantee has a Termination of Affiliation for Cause:

(i) the Grantee’s Restricted Shares that are forfeitable immediately before such Termination of Affiliation shall automatically be forfeited on such date, subject in the case of Restricted Shares to the provisions of Section 8.5 regarding repayment of certain amounts to the Grantee;

(ii) the Grantee’s Restricted Stock Units shall automatically be forfeited; and

(iii) any unexercised Option or SAR, and any Performance Share or Performance Unit with respect to which the Performance Period has not ended immediately before such Termination of Affiliation, shall terminate effective immediately upon such Termination of Affiliation.

(b)On Account of Death or Disability. If a Grantee has a Termination of Affiliation on account of death or Disability:

(i) the Grantee’s Restricted Shares that were forfeitable immediately before such Termination of Affiliation shall thereupon become nonforfeitable;

(ii) the Grantee’s Restricted Stock Units shall immediately be settled in accordance with Section 9.4;

(iii) any unexercised Option or SAR, whether or not exercisable immediately before such Termination of Affiliation, shall be fully exercisable and may be exercised, in whole or in part, at any time up to one year after such Termination of Affiliation (but only during the Option Term or SAR Term, respectively) by the Grantee or, after his or her death, by (A) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee’s beneficiary designated in accordance with Article 11; and

(iv) the benefit payable with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended immediately before such Termination of Affiliation on account of death or Disability shall be equal to the product of the Fair Market Value of a Share as of the date of such Termination of Affiliation or the value of the Performance Unit specified in the Award Agreement (determined as of the date of such Termination of Affiliation), as applicable, multiplied successively by each of the following:

(A) a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of such Performance Period until the date of such Termination of Affiliation and the denominator of which is the number of months (including as a whole month any partial month) in the Performance Period; and

(B) a percentage determined by the Plan Committee that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period, or, if the Board elects to compute the benefit after the end of the Performance Period, the Performance percentage, as determined by the Board, attained during the Performance Period.

(c)Change of Control Period. If a Grantee has a Termination of Affiliation during the period (“Change of Control Period”) commencing on a Change of Control and ending on the first anniversary of the Change of Control, which Termination of Affiliation is initiated by the Company or a Subsidiary other than for Cause, or initiated by the Grantee for Good Reason, then

(i) the Grantee’s Restricted Shares that were forfeitable shall thereupon become nonforfeitable;

(ii) the Grantee’s Restricted Stock Units shall immediately be settled in accordance with Section 9.4;

(iii) any unexercised Option or SAR, whether or not exercisable on the date of such Termination of Affiliation, shall thereupon be fully exercisable and may be exercised, in whole or in part for ninety (90) days following such Termination of Affiliation (but only during the Option Term or SAR Term, respectively); and

(iv) the Company shall immediately pay to the Grantee, with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation, a cash payment equal to the product of (A) in the case of a Performance Share, the Change of Control Value or (B) in the case of a Performance Unit, the value of the Performance Unit specified in the Award Agreement, as applicable, multiplied successively by each of the following:

(A) a fraction, the numerator of which is the number of whole and partial months that have elapsed between the beginning of such Performance Period and the date of such Termination of Affiliation and the denominator of which is the number of whole and partial months in the Performance Period; and

(B) a percentage equal to a greater of (x) the target percentage, if any, specified in the applicable Award Agreement or (y) the maximum percentage, if any, that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period.

(d)Any Other Reason. If a Grantee has a Termination of Affiliation for any reason other than for Cause, death or Disability, and other than under the circumstances described in Section 5.6(c), then:

(i) the Grantee’s Restricted Shares, to the extent forfeitable immediately before such Termination of Affiliation, shall thereupon automatically be forfeited, subject in the case of Restricted Shares to the provisions of Section 8.5 regarding repayment of certain amounts to the Grantee;

(ii) the Grantee’s Restricted Stock Units shall automatically be forfeited;

(iii) any unexercised Option or SAR, to the extent exercisable immediately before such Termination of Affiliation, shall remain exercisable in whole or in part for ninety (90) days after such Termination of Affiliation (but only during the Option Term or SAR Term, respectively) by the Grantee or, after his or her death, by (A) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee’s beneficiary designated in accordance with Article 11; and

(iv) any Performance Shares or Performance Units with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation shall terminate immediately upon such Termination of Affiliation.

5.7Nontransferability of Awards.

(a) Except as provided in Section 5.7(c) below, each Award, and each right under any Award, shall be exercisable only by the Grantee during the Grantee’s lifetime, or, if permissible under applicable law, by the Grantee’s guardian or legal representative.

(b) Except as provided in Section 5.7(c) below, no Award (prior to the time, if applicable, Shares are issued in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws

of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

(c) To the extent and in the manner permitted by the Board, and subject to such terms and conditions as may be prescribed by the Board, a Grantee may transfer an Award to (a) a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the Grantee, (including adoptive relationships), (b) any person sharing the Grantee’s household (other than a tenant or employee), (c) a trust in which persons described in (a) or (b) have more than 50% of the beneficial interest, (d) a foundation in which persons described in (a) or (b) or the Grantee own more than 50% of the voting interests; provided such transfer is not for value. The following shall not be considered transfers for value: (i) a transfer under a domestic relations order in settlement of marital property rights; and (ii) a transfer to an entity in which more than 50% of the voting interests are owned by persons described in (a) or (b) above or the Grantee, in exchange for an interest in that entity.

Article 6. Stock Options

6.1Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Board. Without limiting the generality of the foregoing, the Board may grant to any Eligible Person, or permit any Eligible Person to elect to receive, an Option in lieu of or in substitution for any other compensation (whether payable currently or on a deferred basis, and whether payable under the Plan or otherwise) which such Eligible Person may be eligible to receive from the Company or a Subsidiary, which Option may have a value (as determined by the Board under Black-Scholes or any other option valuation method) that is equal to or greater than the amount of such other compensation.

6.2Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the Option Term, the number of shares to which the Option pertains, the time or times at which such Option shall be exercisable and such other provisions as the Board shall determine.

6.3Option Price. The Option Price of an Option under the Plan shall be determined by the Board, and shall be the higher of 100% of the Fair Market Value of a Share on the Grant Date or 100% of the par value of a Share; provided, however, that any Option (“Substitute Option”) that is (x) granted to a Grantee in connection with the acquisition (“Acquisition”), however effected, by the Company of another corporation or entity (“Acquired Entity”) or the assets thereof, (y) associated with an option to purchase shares of stock or other equity interest of the Acquired Entity or an affiliate thereof (“Acquired Entity Option”) held by such Grantee immediately prior to such Acquisition, and (z) intended to preserve for the Grantee the economic value of all or a portion of such Acquired Entity Option, shall be granted such that such option substitution is completed in conformity with the rules set forth in Section 424(a) of the Code.

6.4Grant of Incentive Stock Options.

(a) At the time of the grant of any Option to an Eligible Person who is an employee of the Company or a Subsidiary, the Board may designate that such option shall be made subject to additional restrictions to permit it to qualify as an “incentive stock option” under the requirements of Section 422 of the Code. Any option designated as an incentive stock option:

(i) shall not be granted to a person who owns shares (including shares treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of shares of the Company;

(ii) shall be for a term of not more than 10 years from the Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement;

(iii) shall not have an aggregate Fair Market Value (determined for each incentive stock option at its Grant Date) of Shares with respect to which incentive stock options are exercisable for the first time by such Grantee during any calendar year (under the Plan and any other employee stock option plan of the Grantee’s employer or any parent or Subsidiary thereof (“Other Plans”)), determined in accordance with the provisions of Section 422 of the Code, which exceeds $100,000 (the “$100,000 Limit”);

(iv) shall, if the aggregate Fair Market Value of a Share (determined on the Grant Date) with respect to the portion of such grant which is exercisable for the first time during any calendar year (“Current Grant”) and all incentive stock options previously granted under the Plan and any Other Plans which are exercisable for the first time during a calendar year (“Prior Grants”) would exceed the $100,000 Limit, be exercisable as follows:

(A) the portion of the Current Grant which would, when added to any Prior Grants, be exercisable with respect to Shares which would have an aggregate Fair Market Value (determined as of the respective Grant Date for such options) in excess of the $100,000 Limit shall, notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in the first subsequent calendar year or years in which it could be exercisable for the first time by the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and

(B) if, viewed as of the date of the Current Grant, any portion of a Current Grant could not be exercised under the preceding provisions of this Subsection (iv) during any calendar year commencing with the calendar year in which it is first exercisable through and including the last calendar year in which it may by its terms be exercised, such portion of the Current Grant shall not be an incentive stock option, but shall be exercisable as a separate Option at such date or dates as are provided in the Current Grant;

(v) shall be granted within 10 years from the earlier of the date the Plan is adopted or the date the Plan is approved by the shareholders of the Company;

(vi) shall require the Grantee to notify the Board of any disposition of any Shares issued pursuant to the exercise of the incentive stock option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition; and

(vii) shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee’s lifetime, only by the Grantee; provided, however, that the Grantee may, to the extent provided in the Plan in any manner specified by the Board, designate in writing a beneficiary to exercise such incentive stock option after the Grantee’s death.

Notwithstanding the foregoing, the Board may, without the consent of the Grantee, at any time before the exercise of an option (whether or not an incentive stock option), take any action necessary to prevent such option from being treated as an incentive stock option.

6.5Exercise of Options. Options shall be exercised by the delivery of a written notice of exercise to the Company or its designee, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares as instructed by the Board or, subject to the approval of the Board pursuant to procedures approved by the Board,

(a) through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise,

(b) through simultaneous sale through a broker of Shares acquired on exercise, as permitted under Regulation T of the Federal Reserve Board,

(c) by transfer to the Company of the number of Shares then owned by the Grantee, the Fair Market Value of which equals the purchase price of the Shares purchased in connection with the Option exercise, properly endorsed for transfer to the Company; provided however, that Shares used for this purpose must have been held by the Grantee for such minimum period of time as may be established from time to time by the Board; and provided further that the Fair Market Value of any Shares delivered in payment of the purchase price upon exercise of the Options shall be the Fair Market Value as of the exercise date, which shall be the date of delivery of the certificates for the Stock used as payment of the exercise price. For purposes of this Section 6.5(c), in lieu of actually transferring to the Company the number of Shares then owned by the Grantee, the Board may, in its discretion permit the Grantee to submit to the Company a statement affirming ownership by the Grantee of such number of Shares and request that such Shares, although not actually transferred, be deemed to have been transferred by the Grantee as payment of the exercise price, or

(d) by a “net exercise” arrangement pursuant to which the Company will not require a payment of the Option Price but will reduce the number of Shares upon the exercise by the largest number of whole shares that has a Fair Market Value on the date of exercise that does not exceed the aggregate Option Price. With respect to any remaining balance of the aggregate option price, the Company will accept a cash payment from the Grantee. Notwithstanding the foregoing, a “net exercise” arrangement will not be an eligible exercise method for incentive stock options unless and until the Company and its advisors conclude that such method of exercise may be utilized without resulting in a disqualification of the incentive stock option.

Article 7. Stock Appreciation Rights

7.1Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to any Eligible Person at any time and from time to time as shall be determined by the Board in its sole discretion. The Board may grant Freestanding SARs or Tandem SARs, or any combination thereof.

(a)Number of Shares. The Board shall have complete discretion to determine the number of SARs granted to any Grantee, subject to the limitations imposed in the Plan and by applicable law.

(b)Exercise Price and Other Terms. All SARs shall be granted with an exercise price no less than the Fair Market Value of the underlying Shares on the SARs’ Grant Date. The Board, subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan. The exercise price per Share of Tandem SARs shall equal the exercise price per Share of the related Option.

7.2SAR Award Agreement. Each SAR granted under the Plan shall be evidenced by a written SAR Award Agreement which shall be entered into by the Company and the Grantee to whom the SAR is granted and which shall specify the exercise price per share, the SAR Term, the conditions of exercise, and such other terms and conditions as the Board in its sole discretion shall determine.

7.3Exercise of SARs. SARs shall be exercised by the delivery of a written notice of exercise to the Company or its designee, setting forth the number of Shares over which the SAR is to be exercised. Tandem SARs (a) may be exercised with respect to all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option; (b) may be exercised only with respect to the Shares for which its related Option is then exercisable; and (c) may be exercised only when the Fair Market Value of the Shares subject to the Option exceeds the Option Price of the Option. The value of the payment with respect to the Tandem SAR may be no more than 100% of the difference between the Option Price of the underlying Option and the Fair Market Value of the Shares subject to the underlying Option at the time the Tandem SAR is exercised.

7.4Expiration of SARs. A SAR granted under the Plan shall expire on the date set forth in the SAR Award Agreement, which date shall be determined by the Board in its sole discretion. Unless otherwise specifically provided for in the SAR Award agreement, a Tandem SAR granted under the Plan shall be exercisable at such time or times and only to the extent that the related Option is exercisable. The Tandem SAR shall terminate and no longer be exercisable upon the termination or exercise of the related Options, except that Tandem SARs granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of Shares not covered by the SARs.

7.5Payment of SAR Amount. Upon exercise of a SAR, a Grantee shall be entitled to receive payment from the Company in an amount determined by multiplying (i) the positive difference between the Fair Market Value of a Share on the date of exercise over the exercise price per Share by (ii) the number of Shares with respect to which the SAR is exercised. The payment upon a SAR exercise shall be solely in whole Shares of equivalent value. Fractional Shares shall be rounded down to the nearest whole Share with no cash consideration being paid upon exercise.

Article 8. Restricted Shares and Bonus Shares

8.1Grant of Restricted Shares. Subject to the terms and provisions of the Plan, the Board, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Board shall determine.

8.2Bonus Shares. Subject to the terms of the Plan, the Board may grant Bonus Shares to any Eligible Person, in such amount and upon such terms and at any time and from time to time as shall be determined by the Board. Bonus Shares shall be Shares issued without any Restriction.

8.3Award Agreement. Each grant of Restricted Shares shall be evidenced by an Award Agreement, which shall specify the Restrictions and the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Board shall determine. The Board may impose such Restrictions on any Restricted Shares as it may deem advisable, including Restrictions based upon the achievement of specific performance goals (Company-wide, divisional, Subsidiary or individual), time-based Restrictions on vesting or Restrictions under applicable securities laws; provided that in all cases, the Restricted Shares shall be subject to a minimum two-year graduated vesting schedule (50% each year), except, if as provided in the Award Agreement, in the event of death, disability, Change of Control, Termination of Affiliation with Good Reason, or Termination of Affiliation by the Employer other than for Cause.

8.4Consideration. The Board shall determine the amount, if any, that a Grantee shall pay for Restricted Shares or Bonus Shares. Such payment shall be made in full by the Grantee before the delivery of the shares and in any event no later than 10 business days after the Grant Date for such shares.

8.5Effect of Forfeiture. If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or acquired such Restricted Shares upon the exercise of an Option, the Grantee shall resell such Restricted Shares to the Company at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market Value of a Share on the date of such forfeiture. The Company shall pay to the Grantee the required amount as soon as is administratively practical.

8.6Escrow. The Board may provide that any Restricted Shares or Bonus Shares shall be represented by, at the option of the Board, either book entry registration or by a stock certificate or certificates. If the shares of Restricted Shares are represented by a certificate or certificates, such shares shall be held (together with an assignment or endorsement executed in blank by the Grantee) in escrow by an escrow agent until such Restricted Shares become nonforfeitable or are forfeited.

Article 9. Restricted Stock Units (f/k/a “Deferred Shares”)

9.1Grant of Restricted Stock Units. Subject to and consistent with the provisions of the Plan and Code Sections 409A(a)(2), (3) and (4), the Board, at any time and from time to time, may grant Restricted Stock Units to any Eligible Person, in such amount and upon such terms as the Board shall determine. A Grantee shall have no voting rights in Restricted Stock Units.

9.2Award Agreement. Each grant of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify the Restrictions, the number of Shares subject to the Restricted Stock Units granted, and such other provisions as the Plan Committee shall determine in accordance with the Plan and Code Section 409A. The Plan Committee may impose such Restrictions on Restricted Stock Units, including time-based Restrictions, Restrictions based on the achievement of specific performance goals, time-based Restrictions following the achievement of specific performance goals, Restrictions based on the occurrence of a specified event, and/or restrictions under applicable securities laws; provided that in all cases the Restricted Stock Units shall be subject to a minimum two-year graduated vesting schedule (50% each year), except, if as provided in the Award Agreement, in the event of death, Disability, Change of Control, Termination of Affiliation with Good Reason, or Termination of Affiliation by the Employer other than for Cause.

9.3Crediting Restricted Stock Units. The Company shall establish an account (“RSU Account”) on its books for each Eligible Person who receives a grant of Restricted Stock Units. Restricted Stock Units shall be credited to the Grantee’s RSU Account as of the Grant Date of such Restricted Stock Units. RSU Accounts shall be maintained for recordkeeping purposes only and the Company shall not be obligated to segregate or set aside assets representing securities or other amounts credited to RSU Accounts. The obligation to make distributions of securities or other amounts credited to RSU Accounts shall be an unfunded, unsecured obligation of the Company.

9.4Settlement of RSU Accounts. The Company shall settle an RSU Account by delivering to the holder thereof (which may be the Grantee or his or her Beneficiary, as applicable) a number of Shares equal to the whole number of Shares underlying the Restricted Stock Units then credited to the Grantee’s RSU Account (or a specified portion in the event of any partial settlement); provided that any fractional Shares underlying Restricted Stock Units remaining in the RSU Account on the Settlement Date shall be distributed in cash in an amount equal to the Fair Market Value of a Share as of the Settlement Date multiplied by the remaining fractional Restricted Share Unit. The “Settlement Date” for all Restricted Stock Units credited to a Grantee’s RSU Account shall be the date when Restrictions applicable to an Award of Restricted Stock Units have lapsed.

Article 10. Performance Units and Performance Shares

10.1Grant of Performance Units and Performance Shares. Subject to the terms of the Plan, Performance Units or Performance Shares may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as the Board shall determine. Each grant of Performance Units or Performance Shares shall be evidenced by an Award Agreement which shall specify the terms and conditions applicable to the Performance Units or Performance Shares, as the Board determines.

10.2Value/Performance Goals. Each Performance Unit shall have an initial value that is established by the Board at the time of grant, that is equal to the Fair Market Value of a Share on the Grant Date. The Board shall set the business criteria which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares that will be paid to the Grantee. For purposes of this Article 10, the time period during which the performance goals must be met shall be called a “Performance Period.” The Board shall have complete discretion to establish the performance goals.

10.3Payment of Performance Units and Performance Shares. Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive a payment based on the number and value of Performance Units or Performance Shares earned by the Grantee over the Performance Period, determined as a function of the extent to which the corresponding performance goals have been achieved.

If a Grantee is promoted, demoted or transferred to a different business unit of the Company during a Performance Period, then, to the extent the Board determines appropriate, the Board may adjust, change or eliminate the performance goals or the applicable Performance Period as it deems appropriate in order to make them appropriate and comparable to the initial performance goals or Performance Period.

10.4Form and Timing of Payment of Performance Units and Performance Shares. Payment of earned Performance Units or Performance Shares shall be made in a lump sum following the close of the applicable Performance Period. The Board may cause earned Performance Units or Performance Shares to be paid in cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Board. The form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

As determined by the Board, a Grantee may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units or Performance Shares but not yet distributed to the Grantee. In addition, a Grantee may, as determined by the Board, be entitled to exercise his or her voting rights with respect to such Shares.

Article 11. Beneficiary Designation

Each Grantee under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Grantee’s death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Company, and will be effective only when filed by the Grantee in writing with the Company during the Grantee’s lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee’s death shall be paid to the Grantee’s estate.

Article 12. Rights of Employees

12.1 Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Grantee’s employment at any time, nor confer upon any Grantee the right to continue in the employ of the Company.

12.2 Participation. No employee shall have the right to be selected to receive an Award, or, having been so selected, to be selected to receive a future Award.

Article 13. Amendment, Modification, and Termination

13.1Amendment, Modification, and Termination. Subject to the terms of the Plan, the Board of Directors of the Company may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part without the approval of the Company’s shareholders, except to the extent the Board of Directors of the Company determines it is desirable to obtain approval of the Company’s shareholders, to have available the ability for Options to qualify as ISOs, to comply with the requirements for listing on any exchange where the Company’s Shares are listed, or for any other purpose the Board of Directors of the Company deems appropriate.

13.2Adjustments Upon Certain Unusual or Nonrecurring Events. The Board may make adjustments in the terms and conditions of Awards in recognition of unusual or nonrecurring events (including the events described in Section 4.2) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

13.3Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary (but subject to Section 2.8 and Section 13.2), no termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award. Any adjustment, modification, extension or renewal of an Option shall be effected such that the Option is either exempt from, or is compliant with, Code section 409A.

13.4Adjustments in Connection with Change of Control. In the event the Company undergoes a Change of Control or in the event of a separation, spin-off, sale of a material portion of the Company’s assets or any “going private” transaction under Rule 13e-3 promulgated pursuant to the Exchange Act and in which a Change of Control does not occur, the Board, or the board of directors of any corporation assuming the obligations of the Company, shall have the full power and discretion to prescribe and amend the terms and conditions for the exercise, or modification, of any outstanding Awards granted hereunder in the manner as agreed to by the Board as set forth in the definitive agreement relating to the transaction. Without limitation, the Board or Plan Committee may:

(a) remove restrictions on Restricted Shares and Restricted Stock Units;

(b) modify the performance requirements for any other Awards;

(c) provide that Options or other Awards granted hereunder must be exercised in connection with the closing of such transactions, and that if not so exercised such Awards will expire;

(d) provide for the purchase by the Company of any such Award, upon the Grantee’s request, for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Grantee’s rights had such Award been currently exercisable or payable;

(e) make such adjustment to any such Award then outstanding as the Board deems appropriate to reflect such Change of Control;

(f) cause any such Award then outstanding to be assumed, or new rights substituted therefore, by the acquiring or surviving corporation after such Change of Control. Any such determinations by the Board may be made generally with respect to all Participants, or may be made on a case-by-case basis with respect to particular Participants.

Notwithstanding the foregoing, any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s Shares, such transaction shall not constitute a merger, consolidation, major acquisition of property for stock, separation, reorganization, liquidation, or Change of Control.

13.5Prohibition on Repricings. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Awards may not be amended to reduce the exercise price of outstanding Options or SARs or cancel outstanding Options or SARs in exchange for cash, other Awards or Options or SARs with an exercise price that is less than the exercise price of the original Options or SARs without stockholder approval.

Article 14. Withholding

14.1.Mandatory Tax Withholding.

(a) Whenever under the Plan, Shares are to be delivered upon exercise or payment of an Award, or upon the lapse of Restrictions on an Award, or any other event with respect to rights and benefits hereunder (the exercise date, date such Restrictions lapse or such payment of any other benefit or right occurs hereinafter referred to as the “Tax Date”), the Company shall be entitled to require and may accommodate the Grantee’s request if so requested, to satisfy all federal, state, local and foreign tax withholding requirements, including Social Security and Medicare (“FICA”) taxes related thereto (“Tax Withholding”), by one or a combination of the following methods:

(i) Payment of an amount in cash equal to the amount to be withheld;

(ii) Requesting the Company to withhold from those Shares that would otherwise be received upon exercise of the Option or the SAR payable in Shares, upon the lapse of Restrictions on an Award, a number of Shares having a Fair Market Value on the Tax Date equal to the amount to be withheld; or

(iii) withholding from compensation otherwise due to the Grantee.

The Board in its sole discretion may provide that the maximum amount of tax withholding to be satisfied by withholding Shares pursuant to clause (ii) above shall not exceed the minimum amount of taxes, including FICA taxes, required to be withheld under federal, state and local law. An election by Grantee under this subsection is irrevocable. Any fractional share amount and any additional withholding not paid by the withholding or surrender of Shares must be paid in cash. If no timely election is made, the Grantee must deliver cash to satisfy all tax withholding requirements.

(b) Any Grantee who makes a disqualifying disposition of an incentive stock option granted under the Plan or who makes an election under Section 83(b) of the Code shall remit to the Company an amount sufficient to satisfy all resulting Tax Withholding; provided that, in lieu of or in addition to the foregoing, the Company shall have the right to withhold such Tax Withholding from compensation otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan.

14.2Notification under Code Section 83(b). If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee’s gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Company of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. The Board may, in connection with the grant of an Award or at any time thereafter prior to such an election being made, prohibit a Grantee from making the election described above.

Article 15. Equity Incentive Plans of Foreign Subsidiaries

The Board may authorize any foreign Subsidiary to adopt a plan for granting Awards (“Foreign Equity Incentive Plan”). All awards granted under such Foreign Equity Incentive Plans shall be treated as grants under the Plan. Such Foreign Equity Incentive Plans shall have such terms and provisions as the Board permits not inconsistent with the provisions of the Plan and which may be more restrictive than those contained in the Plan. Awards granted under such Foreign Equity Incentive Plans shall be governed by the terms of the Plan except to the extent that the provisions of the Foreign Equity Incentive Plans are more restrictive than the terms of the Plan, in which case such terms of the Foreign Equity Incentive Plans shall control.

Article 16. Additional Provisions

16.1Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business or assets of the Company.

16.2Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

16.3Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.

16.4Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or stock exchanges as may be required. Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Company shall not be obligated to deliver any Shares or other benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Company of any applicable law or regulation.

16.5Securities Law Compliance.

(a) If the Board deems it necessary to comply with any applicable securities law, or the requirements of any stock exchange upon which Shares may be listed, the Board may impose any restriction on Shares acquired pursuant to Awards under the Plan as it may deem advisable. All Shares transferred under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which Shares are then listed, any applicable securities law. If so requested by the Company, the Grantee shall represent to the Company in writing that he or she will not sell or offer to sell any Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act of 1933 or unless he or she shall have furnished to the Company evidence satisfactory to the Company that such registration is not required.

(b) If the Board determines that the exercise of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any stock exchange upon which any of the Company’s equity securities are then listed, then the Board may postpone any such exercise or delivery, as applicable, but the Company shall use all reasonable efforts to cause such exercise or delivery to comply with all such provisions at the earliest practicable date.

16.6No Rights as a Shareholder. A Grantee shall not have any rights as a shareholder with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such shares have been delivered to him or her. Restricted Shares, whether held by a Grantee or in escrow by the escrow agent, shall confer on the Grantee all rights of a shareholder of the Company, except as otherwise provided in the Plan or Award Agreement. Unless otherwise determined by the Board at the time of a grant of Restricted Shares, any cash dividends that become payable on Restricted Shares shall be deferred and, if the Board so determines, reinvested in additional Restricted Shares. Except as otherwise provided in an Award Agreement, any share dividends and deferred cash dividends issued with respect to Restricted Shares shall be subject to the same restrictions and other terms as apply to the Restricted Shares with respect to which such dividends are issued. The Board may provide for payment of interest on deferred cash dividends.

16.7Nature of Payments. Awards shall be special incentive payments to the Grantee and shall not be taken into account in computing the amount of salary or compensation of the Grantee for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit-sharing, bonus, insurance or other employee benefit plan of the Company or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary and (ii) the Grantee, except as such plan or agreement shall otherwise expressly provide.

16.8Military Service. Awards shall be administered in accordance with Section 414(u) of the Code and the Uniformed Services Employment and Reemployment Rights Act of 1994.

16.9Data Protection. The Board, the Plan Committee and any other person or entity empowered by the Board or the Plan Committee to administer the Plan may process, store, transfer or disclose personal data of the Grantees to the extent required for the implementation and administration of the Plan. The Board, the Plan Committee and any other person or entity empowered by the Board or the Plan Committee to administer the Plan shall comply with any applicable data protection laws.

16.10Governing Law. The Plan and the rights of any Grantee receiving an Award thereunder shall be construed and interpreted in accordance with and governed by the laws of the State of Kansas without giving effect to the principles of the conflict of laws to the contrary.

Annex to the Plan for Swiss based Grantees and Grantees subject to Swiss inheritance law

1. Section 5.6(a)(i) shall be replaced with the following:

(i) to the extent permitted by the applicable Swiss law the Grantee’s Restricted Shares that are forfeitable immediately before such Termination of Affiliation shall automatically be forfeited on such date, subject in the case of Restricted Shares to the provisions of Section 0 regarding repayment of certain amounts to the Grantee;

2. Section 5.6(a)(ii) shall be replaced with the following:

(ii) to the extent permitted by the applicable Swiss law the Grantee’s Restricted Stock Units shall automatically be forfeited;

3. Section 5.6(a)(iii) shall be replaced with the following:

(iii) to the extent permitted by the applicable Swiss law any unexercised Option or SAR, and any Performance Share or Performance Unit with respect to which the Performance Period has not ended immediately before such Termination of Affiliation, shall terminate effective immediately upon such Termination of Affiliation.

4. Section 5.6(d)(i) shall be replaced with the following:

(i) to the extent permitted by the applicable Swiss law the Grantee’s Restricted Shares and Deferred Shares, to the extent forfeitable immediately before such Termination of Affiliation, shall thereupon automatically be forfeited, subject in the case of Restricted Shares to the provisions of Section 8.4 regarding repayment of certain amounts to the Grantee;

5. Section 5.6(d)(ii) shall be replaced with the following:

(ii) to the extent permitted by the applicable Swiss law the Grantee’s Restricted Stock Units shall automatically be forfeited;

6. Section 5.6(d)(iv) shall be replaced with the following:

(iv) to the extent permitted by the applicable Swiss law any Performance Shares or Performance Units with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation shall terminate immediately upon such Termination of Affiliation.

7. Section 6.1 shall be replaced with the following:

Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Board. Without limiting the generality of the foregoing and to the extent permitted by the applicable Swiss law, the Board may grant to any Eligible Person, or permit any Eligible Person to elect to receive, an Option in lieu of or in substitution for any other compensation (whether payable currently or on a deferred basis, and whether payable under the Plan or otherwise) which such Eligible Person may be eligible to receive from the Company or a Subsidiary, which Option may have a value (as determined by the Board under Black-Scholes or any other option valuation method) that is equal to or greater than the amount of such other compensation.

8. Article 11 shall be replaced with the following:

Each Grantee under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Grantee’s death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form and procedure prescribed by the applicable Swiss inheritance law. Irrespective of any such designation, benefits remaining unpaid at the Grantee’s death shall be paid to the Grantee’s estate

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Clifton A. Pemble, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Garmin Ltd.;

2. Based on my knowledge, this quarterly 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 quarterly 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 we 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 quarterly 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;

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 function):

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: August 2, 2023	By	/s/ Clifton A. Pemble
		Clifton A. Pemble
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Douglas G. Boessen, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Garmin Ltd.;

2. Based on my knowledge, this quarterly 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 quarterly 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 we 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 quarterly 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;

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 function):

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: August 2, 2023	By	/s/ Douglas G. Boessen
		Douglas G. Boessen
		Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Garmin Ltd. (the “Company”) on Form 10-Q for the period ending July 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clifton A. Pemble, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 2, 2023	By	/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-Q 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.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Garmin Ltd. (the “Company”) on Form 10-Q for the period ending July 1, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas G. Boessen, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 2, 2023	By	/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-Q 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.

XML

Document And Entity Information - shares	6 Months Ended
	Jul. 01, 2023	Jul. 28, 2023
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jul. 01, 2023
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Current Fiscal Year End Date	--12-30
Entity File Number	001-41118
Entity Registrant Name	GARMIN LTD
Entity Central Index Key	0001121788
Entity Tax Identification Number	98-0229227
Entity Incorporation, State or Country Code	V8
Entity Address, Address Line1	Mühlentalstrasse 2
Entity Address, City or Town	Schaffhausen
Entity Address, Country	CH
Entity Address, Postal Zip Code	8200
City Area Code	41 52
Local Phone Number	630 1600
Title of 12(b) Security	Registered Shares, $0.10 Per Share Par Value
Trading Symbol	GRMN
Security Exchange Name	NYSE
Entity's Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		191,451,558

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Income Statement [Abstract]
Net sales	$ 1,320,795	$ 1,240,833	$ 2,468,219	$ 2,413,496
Cost of goods sold	561,353	512,007	1,055,983	1,022,190
Gross profit	759,442	728,826	1,412,236	1,391,306
Advertising expense	46,344	43,357	76,691	77,490
Selling, general and administrative expenses	204,349	191,211	408,330	381,995
Research and development expense	224,394	201,518	445,878	410,524
Total operating expense	475,087	436,086	930,899	870,009
Operating income	284,355	292,740	481,337	521,297
Other income (expense):
Interest income	18,760	8,495	34,659	16,048
Foreign currency gains (losses)	10,797	(22,439)	18,484	(25,946)
Other income	2,064	170	3,268	3,431
Total other income (expense)	31,621	(13,774)	56,411	(6,467)
Income before income taxes	315,976	278,966	537,748	514,830
Income tax provision	28,037	21,093	47,482	45,366
Net income	$ 287,939	$ 257,873	$ 490,266	$ 469,464
Net income per share:
Basic	$ 1.51	$ 1.34	$ 2.56	$ 2.43
Diluted	$ 1.5	$ 1.33	$ 2.56	$ 2.43
Weighted average common shares outstanding:
Basic	191,293	193,074	191,395	192,980
Diluted	191,597	193,450	191,741	193,515

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Statement of Comprehensive Income [Abstract]
Net Income (Loss)	$ 287,939	$ 257,873	$ 490,266	$ 469,464
Foreign currency translation adjustment	(25,342)	(64,895)	(8,451)	(121,807)
Change in fair value of available-for-sale marketable securities, net of deferred taxes	(3,392)	(16,628)	7,684	(66,640)
Comprehensive income	$ 259,205	$ 176,350	$ 489,499	$ 281,017

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 1,425,526	$ 1,279,194
Marketable securities	253,689	173,288
Accounts receivable, net	716,802	656,847
Inventories	1,402,225	1,515,045
Deferred costs	15,243	14,862
Prepaid expenses and other current assets	297,516	315,915
Total current assets	4,111,001	3,955,151
Property and equipment, net of accumulated depreciation of $960,129 and $904,922	1,180,654	1,147,005
Operating lease right-of-use assets	134,995	138,040
Noncurrent marketable securities	1,100,259	1,208,360
Deferred income tax assets	493,943	441,071
Noncurrent deferred costs	10,451	9,831
Goodwill	572,985	567,994
Other intangible assets, net	165,591	178,461
Other noncurrent assets	101,921	85,257
Total assets	7,871,800	7,731,170
Current liabilities:
Accounts payable	253,803	212,417
Salaries and benefits payable	157,774	176,114
Accrued warranty costs	52,352	50,952
Accrued sales program costs	80,708	97,772
Other accrued expenses	191,510	197,376
Deferred revenue	95,618	91,092
Income taxes payable	199,087	246,180
Dividend payable	418,801	139,732
Total current liabilities	1,449,653	1,211,635
Deferred income tax liabilities	116,651	129,965
Noncurrent income taxes payable	34,613	34,627
Noncurrent deferred revenue	35,939	35,702
Noncurrent operating lease liabilities	110,740	114,541
Other noncurrent liabilities	382	360
Stockholders’ equity:
Shares (195,880 and 198,077 shares authorized and issued 191,470 and 191,623 shares outstanding)	19,588	17,979
Additional paid-in capital	2,077,540	2,042,472
Treasury stock (4,410 and 6,454 shares)	(322,688)	(475,095)
Retained earnings	4,464,682	4,733,517
Accumulated other comprehensive income (loss)	(115,300)	(114,533)
Total stockholders’ equity	6,123,822	6,204,340
Total liabilities and stockholders’ equity	$ 7,871,800	$ 7,731,170

XML

Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Accumualted depreciation	$ 960,129	$ 904,922
Common shares, authorized	195,880	198,077
Common shares, issued	195,880	198,077
Common shares, outstanding	191,470	191,623
Treasury Stock, Common, Shares	4,410	6,454

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022
Operating Activities:
Net income	$ 490,266	$ 469,464
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	64,816	58,986
Amortization	22,788	23,870
Gain on sale or disposal of property and equipment	(124)	(1,666)
Unrealized foreign currency (gains) losses	(13,054)	21,217
Deferred income taxes	(68,859)	(66,382)
Stock compensation expense	43,397	39,755
Realized loss on marketable securities	59	773
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net of allowance for doubtful accounts	(62,832)	122,428
Inventories	111,531	(294,766)
Other current and non-current assets	2,769	775
Accounts payable	45,206	(29,829)
Other current and non-current liabilities	(39,484)	(74,273)
Deferred revenue	4,711	(4,246)
Deferred costs	(990)	2,920
Income Taxes	(47,288)	(3,550)
Net cash provided by operating activities	552,912	265,476
Investing activities:
Purchases of property and equipment	(99,346)	(134,798)
Proceeds from sale of property and equipment	152	1,672
Purchase of intangible assets	(847)	(887)
Purchase of marketable securities	(68,978)	(873,110)
Redemption of marketable securities	98,885	620,796
Acquisitions, net of cash acquired		(10,828)
Net cash used in investing activities	(70,134)	(397,155)
Financing activities:
Dividends	(279,442)	(258,249)
Proceeds from issuance of treasury stock related to equity awards	21,946	41,050
Purchase of treasury stock related to equity awards	(9,397)	(14,722)
Purchase of treasury stock under share repurchase plan	(70,181)	(25,117)
Net cash used in financing activities	(337,074)	(257,038)
Effect of exchange rate changes on cash and cash equivalents	599	(21,999)
Net increase (decrease) in cash, cash equivalents, and restricted cash	146,303	(410,716)
Cash, cash equivalents, and restricted cash at beginning of period	1,279,912	1,498,843
Cash, cash equivalents, and restricted cash at end of period	$ 1,426,215	$ 1,088,127

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock, Common [Member]	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance, value at Dec. 25, 2021	$ 6,114,159	$ 17,979	$ 1,960,722	$ (303,114)	$ 4,320,737	$ 117,835
Net Income (Loss)	469,464				469,464
Translation adjustment	(121,807)					(121,807)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects	(66,640)					(66,640)
Comprehensive income	281,017
Dividends	(564,680)				(564,680)
Issuance of treasury stock related to equity awards	41,050		8,454	32,596
Stock compensation	39,755		39,755
Purchase of treasury stock related to equity awards	(14,722)			(14,722)
Purchase of treasury stock under share repurchase plan, including any associated excise tax	(30,646)			(30,646)
Ending balance, value at Jun. 25, 2022	5,865,933	17,979	2,008,931	(315,886)	4,225,521	(70,612)
Beginning balance, value at Mar. 26, 2022	6,248,842	17,979	1,982,561	(294,711)	4,532,102	10,911
Net Income (Loss)	257,873				257,873
Translation adjustment	(64,895)					(64,895)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects	(16,628)					(16,628)
Comprehensive income	176,350
Dividends	(564,454)				(564,454)
Issuance of treasury stock related to equity awards	20,904		11,322	9,582
Stock compensation	15,048		15,048
Purchase of treasury stock related to equity awards	(111)			(111)
Purchase of treasury stock under share repurchase plan, including any associated excise tax	(30,646)			(30,646)
Ending balance, value at Jun. 25, 2022	5,865,933	17,979	2,008,931	(315,886)	4,225,521	(70,612)
Beginning balance, value at Dec. 31, 2022	6,204,340	17,979	2,042,472	(475,095)	4,733,517	(114,533)
Net Income (Loss)	490,266				490,266
Translation adjustment	(8,451)					(8,451)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects	7,684					7,684
Comprehensive income	489,499
Dividends	(558,512)				(558,512)
Issuance of treasury stock related to equity awards	21,946		6,482	28,428
Stock compensation	43,397		43,397
Purchase of treasury stock related to equity awards	(9,397)			(9,397)
Purchase of treasury stock under share repurchase plan, including any associated excise tax	(67,451)			(67,451)
Cancellation of treasury stock		(238)		200,827	(200,589)
Share capital currency change		1,847	(1,847)
Ending balance, value at Jul. 01, 2023	6,123,822	19,588	2,077,540	(322,688)	4,464,682	(115,300)
Beginning balance, value at Apr. 01, 2023	6,405,004	17,979	2,048,339	(510,478)	4,935,730	(86,566)
Net Income (Loss)	287,939				287,939
Translation adjustment	(25,342)					(25,342)
Adjustment related to unrealized gains (losses) on available-for-sale securities net of income tax effects	(3,392)					(3,392)
Comprehensive income	259,205
Dividends	(558,398)				(558,398)
Issuance of treasury stock related to equity awards	21,946		8,383	13,563
Stock compensation	22,665		22,665
Purchase of treasury stock related to equity awards	(228)			(228)
Purchase of treasury stock under share repurchase plan, including any associated excise tax	(26,372)			(26,372)
Cancellation of treasury stock		(238)		200,827	(200,589)
Share capital currency change		1,847	(1,847)
Ending balance, value at Jul. 01, 2023	$ 6,123,822	$ 19,588	$ 2,077,540	$ (322,688)	$ 4,464,682	$ (115,300)

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Statement of Stockholders' Equity [Abstract]
Adjustment related to unrealized gains (losses) on available-for-sale securities income tax effects	$ 974	$ 4,757	$ 1,642	$ 19,459

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ 287,939	$ 257,873	$ 490,266	$ 469,464

XML

Insider Trading Arrangements	3 Months Ended
	Jul. 01, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

Accounting Policies

6 Months Ended

Jul. 01, 2023

Accounting Policies [Abstract]

Accounting Policies

1. Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Garmin Ltd. and wholly-owned subsidiaries (collectively, the “Company” or “Garmin”). Intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Additionally, the condensed consolidated financial statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Our operating results are subject to fluctuations associated with seasonal demand for consumer products, the timing of new product introductions, and OEM customer production schedules. Therefore, operating results for the 13-week and 26-week periods ended July 1, 2023 are not necessarily indicative of the results that may be expected for the year ending December 30, 2023.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended July 1, 2023 and June 25, 2022 both contain operating results for 13 weeks.

Changes in Classification and Allocation

Certain prior period amounts have been reclassified or presented to conform to the current period presentation.

The Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast herein to conform to the current period presentation. This change had no effect on the Company’s consolidated results of operations.

Significant Accounting Policies

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no material changes to the Company’s significant accounting policies during the 26-week period ended July 1, 2023.

Recently Issued Accounting Standards and Pronouncements

Recently adopted accounting standards and recently issued accounting pronouncements not yet adopted are not expected to have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.

XML

Revenue

6 Months Ended

Jul. 01, 2023

Revenue from Contract with Customer [Abstract]

Revenue

2. 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 (“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 11 – Segment Information and Geographic Data. Note 11 also contains disaggregated revenue information of the five major product categories identified by the Company – fitness, outdoor, aviation, marine, and auto OEM.

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

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Point in time	$	1,251,214	$	1,179,123	$	2,332,283	$	2,293,324
Over time		69,581		61,710		135,936		120,172
Net sales	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

Transaction price and costs associated with the Company’s unsatisfied performance obligations are reflected as deferred revenue and deferred costs, respectively, on the Company’s condensed consolidated balance sheets. Such amounts are recognized ratably over the applicable service period or estimated useful life. Changes in deferred revenue and costs during the 26-week period ended July 1, 2023 are presented below:

	26-Weeks Ended July 1, 2023
	Deferred  Revenue (1)			Deferred Costs (2)
Balance, beginning of period	$	126,794		$	24,693
Deferrals in period		140,699			11,673
Recognition of deferrals in period		(135,936	)		(10,672	)
Balance, end of period	$	131,557		$	25,694

(1) Deferred revenue is comprised of both deferred revenue and noncurrent deferred revenue per the condensed consolidated balance sheets

(2) Deferred costs are comprised of both deferred costs and noncurrent deferred costs per the condensed consolidated balance sheets

Of the $135,936 of deferred revenue recognized in the 26-week period ended July 1, 2023, $57,948 was deferred as of the beginning of the period. Of the $131,557 of deferred revenue as of July 1, 2023, the Company expects to recognize approximately eighty percent ratably over a total period of three years or less.

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Earnings Per Share

6 Months Ended

Jul. 01, 2023

Earnings Per Share [Abstract]

Earnings Per Share

3. Earnings Per Share

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

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Numerator:
Numerator for basic and diluted net income per share – net income	$	287,939	$	257,873	$	490,266	$	469,464
Denominator:
Denominator for basic net income per share – weighted-average common shares		191,293		193,074		191,395		192,980
Effect of dilutive equity awards		304		376		346		535
Denominator for diluted net income per share – adjusted weighted-average common shares		191,597		193,450		191,741		193,515
Basic net income per share	$	1.51	$	1.34	$	2.56	$	2.43
Diluted net income per share	$	1.50	$	1.33	$	2.56	$	2.43
Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards		218		757		218		761

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Marketable Securities

6 Months Ended

Jul. 01, 2023

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

4. Marketable Securities

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The accounting guidance classifies the inputs used to measure fair value into the following hierarchy:

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

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

Level 3 Unobservable inputs for the asset or liability

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

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

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

	Available-For-Sale Securities as of July 1, 2023
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	11,002	$	—	$	(765	)	$	10,237
Mortgage-backed securities	Level 2		41,559		—		(5,586	)		35,973
Corporate debt securities	Level 2		1,086,519		158		(72,130	)		1,014,547
Municipal securities	Level 2		312,851		1		(25,429	)		287,423
Other	Level 2		6,629		—		(861	)		5,768
Total		$	1,458,560	$	159	$	(104,771	)	$	1,353,948

	Available-For-Sale Securities as of December 31, 2022
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	7,000	$	—	$	(786	)	$	6,214
Mortgage-backed securities	Level 2		45,373		—		(4,525	)		40,848
Corporate debt securities	Level 2		1,106,688		188		(77,802	)		1,029,074
Municipal securities	Level 2		326,058		3		(28,861	)		297,200
Other	Level 2		10,466		—		(2,154	)		8,312
Total		$	1,495,585	$	191	$	(114,128	)	$	1,381,648

The primary objectives of the Company’s investment policy are to preserve capital, maintain an acceptable degree of liquidity, and maximize yield within the constraint of low credit risk. The fair value of securities varies from period to period due to changes in interest rates, the performance of the underlying collateral, and the credit performance of the underlying issuer, among other factors.

Accrued interest receivable, which totaled $11,095 as of July 1, 2023, is excluded from both the fair value and amortized cost basis of available-for-sale securities and is included within prepaid expenses and other current assets on the Company’s condensed consolidated balance sheets. The Company writes off impaired accrued interest on a timely basis, generally within 30 days of the due date, by reversing interest income. No accrued interest was written off during the 26-week period ended July 1, 2023.

The Company recognizes impairments relating to credit losses of available-for-sale securities through an allowance for credit losses and other income (expense) on the Company’s condensed consolidated statements of income. Impairment not relating to credit losses is recorded in accumulated other comprehensive income (loss) on the Company’s condensed consolidated balance sheets. The cost of securities sold is based on the specific identification method. Approximately 99% of securities in the Company’s portfolio were at an unrealized loss position as of July 1, 2023.

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 July 1, 2023 and December 31, 2022.

	As of July 1, 2023
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	(16	)	$	3,987	$	(749	)	$	6,250	$	(765	)	$	10,237
Mortgage-backed securities		(15	)		176		(5,571	)		35,797		(5,586	)		35,973
Corporate debt securities		(5,114	)		152,214		(67,016	)		844,933		(72,130	)		997,147
Municipal securities		(155	)		8,817		(25,274	)		276,105		(25,429	)		284,922
Other		—			—		(861	)		5,768		(861	)		5,768
Total	$	(5,300	)	$	165,194	$	(99,471	)	$	1,168,853	$	(104,771	)	$	1,334,047

	As of December 31, 2022
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	—		$	—	$	(786	)	$	6,214	$	(786	)	$	6,214
Mortgage-backed securities		(1,900	)		23,229		(2,625	)		17,619		(4,525	)		40,848
Corporate debt securities		(26,680	)		508,956		(51,122	)		498,834		(77,802	)		1,007,790
Municipal securities		(2,136	)		69,017		(26,725	)		225,679		(28,861	)		294,696
Other		—			—		(2,154	)		8,067		(2,154	)		8,067
Total	$	(30,716	)	$	601,202	$	(83,412	)	$	756,413	$	(114,128	)	$	1,357,615

As of July 1, 2023 and December 31, 2022, the Company had not recognized an allowance for credit losses on any securities in an unrealized loss position.

The Company has not recorded an allowance for credit losses and charge to other income (expense) for the unrealized losses on agency, mortgage-backed, corporate debt, municipal, and other securities presented above because we do not consider the declines in fair value to have resulted from credit losses. We have not observed a significant deterioration in credit quality of these securities, which are highly rated with moderate to low credit risk. Declines in value are largely attributable to current global economic conditions. The securities continue to make timely principal and interest payments, and the fair values are expected to recover as they approach maturity. Management does not intend to sell the securities, and it is not more likely than not that the Company will be required to sell the securities, before the respective recoveries of their amortized cost bases, which may be maturity.

The amortized cost and fair value of marketable securities at July 1, 2023, by maturity, are shown below.

	Amortized Cost		Fair Value
Due in one year or less	$	259,584	$	253,689
Due after one year through five years		1,172,343		1,076,583
Due after five years through ten years		17,908		16,363
Due after ten years		8,725		7,313
Total	$	1,458,560	$	1,353,948

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Income Taxes

6 Months Ended

Jul. 01, 2023

Income Tax Disclosure [Abstract]

Income Taxes

5. Income Taxes

The Company recorded income tax expense of $28,037 in the 13-week period ended July 1, 2023, compared to income tax expense of $21,093 in the 13-week period ended June 25, 2022. The effective tax rate was 8.9% in the second quarter of 2023, compared to 7.6% in the second quarter of 2022. The increase was primarily due to a decrease in uncertain tax position reserves released in the second quarter of 2023, compared to the second quarter of 2022.

The Company recorded income tax expense of $47,482 in the 26-week period ended July 1, 2023, compared to income tax expense of $45,366 in the 26-week period ended June 25, 2022. The effective tax rate was 8.8% in both the first half of 2023 and the first half of 2022.

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Inventories

6 Months Ended

Jul. 01, 2023

Inventory Disclosure [Abstract]

Inventories

6. Inventories

The components of inventories consist of the following:

	July 1, 2023		December 31, 2022
Raw materials	$	544,655	$	600,858
Work-in-process		172,109		180,873
Finished goods		685,461		733,314
Inventories	$	1,402,225	$	1,515,045

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Warranty Reserves

6 Months Ended

Jul. 01, 2023

Product Warranties Disclosures [Abstract]

Warranty Reserves

7. Warranty Reserves

The Company’s standard warranty obligation to its end-users provides for a period of one to two years from the date of shipment, while certain 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, and are recorded as a liability on the balance sheet. The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

	13-Weeks Ended						26-Weeks Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Balance - beginning of period	$	52,675		$	40,698		$	50,952		$	45,467
Accrual for products sold (1)		18,345			14,154			40,726			25,025
Expenditures		(18,668	)		(14,903	)		(39,326	)		(30,543	)
Balance - end of period	$	52,352		$	39,949		$	52,352		$	39,949

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

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Commitments and Contingencies

6 Months Ended

Jul. 01, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

8. Commitments and Contingencies

Commitments

The Company is party to certain commitments that require the future purchase of goods or services (“unconditional purchase obligations”). The Company’s unconditional purchase obligations primarily consist of payments for inventory, capital expenditures, and other indirect purchases in connection with conducting the business. The aggregate amount of purchase orders and other commitments open as of July 1, 2023 that may represent noncancellable unconditional purchase obligations having a remaining term in excess of one year was approximately $376,000.

Certain cash balances are held as collateral in relation to bank guarantees. This restricted cash is reported within other assets on the condensed consolidated balance sheets and totaled $689 and $718 on July 1, 2023 and December 31, 2022, respectively. The total of the cash and cash equivalents balance and the restricted cash reported within other assets in the condensed consolidated balance sheets equals the total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows.

Contingencies

Management of the Company currently does not believe it is reasonably possible that the Company may have incurred a material loss, or a material loss in excess of recorded accruals, with respect to loss contingencies in the aggregate, for the fiscal quarter ended July 1, 2023. The results of legal proceedings, investigations and claims, however, cannot be predicted with certainty. An adverse resolution of one or more of such matters in excess of management’s expectations could have a material adverse effect in the particular quarter or fiscal year in which a loss is recorded, but based on information currently known, the Company does not believe it is likely that losses from such matters would have a material adverse effect on the Company’s business or its consolidated financial position, results of operations or cash flows.

The Company settled or resolved certain matters during the 13-week and 26-week periods ended July 1, 2023 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.

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Stockholders' Equity

6 Months Ended

Jul. 01, 2023

Stockholders' Equity Note [Abstract]

Stockholders' Equity

9. Stockholders' Equity

Dividends

Under Swiss corporate law, dividends must be approved by shareholders at the annual general meeting of the Company’s shareholders. Approved dividends are subject to possible adjustment based on the total amount of the dividend in Swiss Francs as approved at the annual meeting, and payable in four equal installments on dates to be determined by the Board of Directors. A reduction of retained earnings and a corresponding liability are recorded at the time of shareholders' approval and are periodically adjusted based on the number of applicable shares outstanding.

Our shareholders approved the following dividends:

Declaration Date	Dividend Date	Record Date	Dividend Per Share
Fiscal 2023
June 9, 2023	June 30, 2023	June 20, 2023	$	0.73
June 9, 2023	September 29, 2023	September 15, 2023	$	0.73
June 9, 2023	December 29, 2023	December 15, 2023	$	0.73
June 9, 2023	March 29, 2024	March 15, 2024	$	0.73
Total			$	2.92
Fiscal 2022
June 10, 2022	June 30, 2022	June 20, 2022	$	0.73
June 10, 2022	September 30, 2022	September 15, 2022	$	0.73
June 10, 2022	December 30, 2022	December 15, 2022	$	0.73
June 10, 2022	March 31, 2023	March 15, 2023	$	0.73
Total			$	2.92
Fiscal 2021
June 4, 2021	June 30, 2021	June 15, 2021	$	0.67
June 4, 2021	September 30, 2021	September 15, 2021	$	0.67
June 4, 2021	December 31, 2021	December 15, 2021	$	0.67
June 4, 2021	March 31, 2022	March 15, 2022	$	0.67
Total			$	2.68

Share Repurchase Program

On April 22, 2022, the Board of Directors approved a share repurchase program (the “Program”) authorizing the Company to repurchase up to $300,000 of the common shares of Garmin Ltd., exclusive of the cost of any associated excise tax. The timing and volume of share repurchases are subject to market conditions, business conditions and applicable laws, and are at management’s discretion. Share repurchases may be made from time to time in the open market or in privately negotiated transactions, including under plans complying with the provisions of Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The Program does not require the purchase of any minimum number of shares and may be suspended or discontinued at any time. The share repurchase authorization expires on December 29, 2023. As of July 1, 2023, the Company had repurchased 2,936 shares for $273,250, leaving approximately $26,750 available to repurchase additional shares under the Program.

Share Capital

In the second quarter of 2023, the share capital currency of the Company was changed from the Swiss Franc (CHF) to the U.S. Dollar (USD), as approved by shareholders at the Company’s 2023 Annual General Meeting. This aligns the share capital currency with the financial statement presentation currency of the Company. The Company’s nominal par value per share of CHF 0.10 was slightly reduced to USD $0.10, the impact of which is reflected in share capital, captioned as shares on the Company’s condensed consolidated balance sheets. Total stockholders’ equity reported for the Company was not affected by this change. Our common shares had a par value of USD $0.10 and CHF 0.10 per share as of July 1, 2023 and December 31, 2022, respectively.

Treasury Stock

In June 2023, our shareholders approved the cancellation of 2,197 shares previously purchased under our share repurchase program. The capital reduction by cancellation of these shares became effective in June 2023. Total stockholders’ equity reported for the Company was not affected.

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Accumulated Other Comprehensive Income

6 Months Ended

Jul. 01, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income

10. Accumulated Other Comprehensive Income (Loss)

The following provides required disclosure of changes in accumulated other comprehensive income (loss) balances by component for the 13-week and 26-week periods ended July 1, 2023:

	13-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(9,090	)	$	(77,476	)	$	(86,566	)
Other comprehensive income (loss) before reclassification, net of income tax benefit of $984		(25,342	)		(3,421	)		(28,763	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $10 included in income tax provision		—			29			29
Net current-period other comprehensive income (loss)		(25,342	)		(3,392	)		(28,734	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

	26-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(25,981	)	$	(88,552	)	$	(114,533	)
Other comprehensive income (loss) before reclassification, net of income tax expense of $1,629		(8,451	)		7,638			(813	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $13 included in income tax provision		—			46			46
Net current-period other comprehensive income (loss)		(8,451	)		7,684			(767	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

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Segment Information and Geographic Data

6 Months Ended

Jul. 01, 2023

Segment Reporting [Abstract]

Segment Information and Geographic Data

11. Segment Information and Geographic Data

Garmin is organized in the five operating segments of fitness, outdoor, aviation, marine, and auto OEM. These operating segments represent our reportable segments.

The Company’s Chief Executive Officer, who has been identified as the CODM, primarily uses operating income as the measure of profit or loss to assess segment performance and allocate resources. Operating income represents net sales less costs of goods sold and operating expenses. Net sales are directly attributed to each segment. Most costs of goods sold and the majority of operating expenses are also directly attributed to each segment, while certain other costs of goods sold and operating expenses are allocated to the segments in a reasonable manner considering the specific facts and circumstances of the expenses being allocated.

As indicated in Note 1 to the condensed consolidated financial statements, the Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast below to conform with the current period presentation.

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

	Fitness		Outdoor		Aviation		Marine		Auto OEM			Total
13-Weeks Ended July 1, 2023
Net sales	$	334,863	$	448,114	$	217,454	$	215,802	$	104,562		$	1,320,795
Gross profit		173,163		280,078		160,957		120,344		24,900			759,442
Operating income (loss)		54,458		138,255		62,766		46,377		(17,501	)		284,355
13-Weeks Ended June 25, 2022
Net sales	$	272,095	$	462,243	$	204,739	$	242,794	$	58,962		$	1,240,833
Gross profit		134,016		290,508		147,931		137,406		18,965			728,826
Operating income (loss)		23,462		163,371		61,745		68,619		(24,457	)		292,740
26-Weeks Ended July 1, 2023
Net sales	$	579,584	$	776,776	$	431,036	$	494,777	$	186,046		$	2,468,219
Gross profit		294,073		485,026		315,410		269,976		47,751			1,412,236
Operating income (loss)		65,036		214,999		120,460		118,285		(37,443	)		481,337
26-Weeks Ended June 25, 2022
Net sales	$	492,992	$	911,977	$	379,505	$	496,863	$	132,159		$	2,413,496
Gross profit		240,205		568,964		275,474		265,987		40,676			1,391,306
Operating income (loss)		24,043		316,182		101,871		127,501		(48,300	)		521,297

Net sales to external customers by geographic region were as follows for the 13-week and 26-week periods ended July 1, 2023 and June 25, 2022. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Americas	$	641,848	$	646,172	$	1,253,552	$	1,216,807
EMEA		457,550		412,550		813,403		810,027
APAC		221,397		182,111		401,264		386,662
Net sales to external customers	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

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Accounting Policies (Policies)

6 Months Ended

Jul. 01, 2023

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Garmin Ltd. and wholly-owned subsidiaries (collectively, the “Company” or “Garmin”). Intercompany balances and transactions have been eliminated.

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Additionally, the condensed consolidated financial statements should be read in conjunction with Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q, and the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Our operating results are subject to fluctuations associated with seasonal demand for consumer products, the timing of new product introductions, and OEM customer production schedules. Therefore, operating results for the 13-week and 26-week periods ended July 1, 2023 are not necessarily indicative of the results that may be expected for the year ending December 30, 2023.

The Company’s fiscal year is based on a 52- or 53-week period ending on the last Saturday of the calendar year. Therefore, the financial results of certain 53-week fiscal years, and the associated 14-week quarters, will not be exactly comparable to the prior and subsequent 52-week fiscal years and the associated 13-week quarters. The quarters ended July 1, 2023 and June 25, 2022 both contain operating results for 13 weeks.

Changes in Classification and Allocation

Changes in Classification and Allocation

Certain prior period amounts have been reclassified or presented to conform to the current period presentation.

The Company announced an organization realignment in January 2023, which combined the consumer auto operating segment with the outdoor operating segment. As a result, the Company’s operating segments, which also represent our reportable segments, are fitness, outdoor, aviation, marine, and auto OEM. Results for the 13-week and 26-week periods ended June 25, 2022 have been recast herein to conform to the current period presentation. This change had no effect on the Company’s consolidated results of operations.

Significant Accounting Policies

Significant Accounting Policies

For a description of the significant accounting policies and methods used in the preparation of the Company’s condensed consolidated financial statements, refer to Note 1, “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There were no material changes to the Company’s significant accounting policies during the 26-week period ended July 1, 2023.

Recently Issued Accounting Standards and Pronouncements

Recently Issued Accounting Standards and Pronouncements

Recently adopted accounting standards and recently issued accounting pronouncements not yet adopted are not expected to have a material impact on the Company’s consolidated financial statements, accounting policies, processes, or systems.

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Revenue (Tables)

6 Months Ended

Jul. 01, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Revenue Disaggregated

Revenue disaggregated by the timing of transfer of the goods or services is presented in the table below:

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Point in time	$	1,251,214	$	1,179,123	$	2,332,283	$	2,293,324
Over time		69,581		61,710		135,936		120,172
Net sales	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

Schedule of Deferred Revenue and Costs

Changes in deferred revenue and costs during the 26-week period ended July 1, 2023 are presented below:

	26-Weeks Ended July 1, 2023
	Deferred  Revenue (1)			Deferred Costs (2)
Balance, beginning of period	$	126,794		$	24,693
Deferrals in period		140,699			11,673
Recognition of deferrals in period		(135,936	)		(10,672	)
Balance, end of period	$	131,557		$	25,694

(1) Deferred revenue is comprised of both deferred revenue and noncurrent deferred revenue per the condensed consolidated balance sheets

(2) Deferred costs are comprised of both deferred costs and noncurrent deferred costs per the condensed consolidated balance sheets

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Earnings Per Share (Tables)

6 Months Ended

Jul. 01, 2023

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Income Per Share

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

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Numerator:
Numerator for basic and diluted net income per share – net income	$	287,939	$	257,873	$	490,266	$	469,464
Denominator:
Denominator for basic net income per share – weighted-average common shares		191,293		193,074		191,395		192,980
Effect of dilutive equity awards		304		376		346		535
Denominator for diluted net income per share – adjusted weighted-average common shares		191,597		193,450		191,741		193,515
Basic net income per share	$	1.51	$	1.34	$	2.56	$	2.43
Diluted net income per share	$	1.50	$	1.33	$	2.56	$	2.43
Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards		218		757		218		761

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Marketable Securities (Tables)

6 Months Ended

Jul. 01, 2023

Investments, Debt and Equity Securities [Abstract]

Schedule of Marketable Securities Classified as Available-for-sale Securities

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

	Available-For-Sale Securities as of July 1, 2023
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	11,002	$	—	$	(765	)	$	10,237
Mortgage-backed securities	Level 2		41,559		—		(5,586	)		35,973
Corporate debt securities	Level 2		1,086,519		158		(72,130	)		1,014,547
Municipal securities	Level 2		312,851		1		(25,429	)		287,423
Other	Level 2		6,629		—		(861	)		5,768
Total		$	1,458,560	$	159	$	(104,771	)	$	1,353,948

	Available-For-Sale Securities as of December 31, 2022
	Fair Value Level	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Agency securities	Level 2	$	7,000	$	—	$	(786	)	$	6,214
Mortgage-backed securities	Level 2		45,373		—		(4,525	)		40,848
Corporate debt securities	Level 2		1,106,688		188		(77,802	)		1,029,074
Municipal securities	Level 2		326,058		3		(28,861	)		297,200
Other	Level 2		10,466		—		(2,154	)		8,312
Total		$	1,495,585	$	191	$	(114,128	)	$	1,381,648

Schedule of Gross Unrealized Losses and Fair Value by Major Security Type

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 July 1, 2023 and December 31, 2022.

	As of July 1, 2023
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	(16	)	$	3,987	$	(749	)	$	6,250	$	(765	)	$	10,237
Mortgage-backed securities		(15	)		176		(5,571	)		35,797		(5,586	)		35,973
Corporate debt securities		(5,114	)		152,214		(67,016	)		844,933		(72,130	)		997,147
Municipal securities		(155	)		8,817		(25,274	)		276,105		(25,429	)		284,922
Other		—			—		(861	)		5,768		(861	)		5,768
Total	$	(5,300	)	$	165,194	$	(99,471	)	$	1,168,853	$	(104,771	)	$	1,334,047

	As of December 31, 2022
	Less than 12 Consecutive Months					12 Consecutive Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
Agency securities	$	—		$	—	$	(786	)	$	6,214	$	(786	)	$	6,214
Mortgage-backed securities		(1,900	)		23,229		(2,625	)		17,619		(4,525	)		40,848
Corporate debt securities		(26,680	)		508,956		(51,122	)		498,834		(77,802	)		1,007,790
Municipal securities		(2,136	)		69,017		(26,725	)		225,679		(28,861	)		294,696
Other		—			—		(2,154	)		8,067		(2,154	)		8,067
Total	$	(30,716	)	$	601,202	$	(83,412	)	$	756,413	$	(114,128	)	$	1,357,615

Schedule of Amortized Cost and Estimated Fair Value of Marketable Securities by Maturity

The amortized cost and fair value of marketable securities at July 1, 2023, by maturity, are shown below.

	Amortized Cost		Fair Value
Due in one year or less	$	259,584	$	253,689
Due after one year through five years		1,172,343		1,076,583
Due after five years through ten years		17,908		16,363
Due after ten years		8,725		7,313
Total	$	1,458,560	$	1,353,948

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Inventories (Tables)

6 Months Ended

Jul. 01, 2023

Inventory Disclosure [Abstract]

Schedule of inventories

The components of inventories consist of the following:

	July 1, 2023		December 31, 2022
Raw materials	$	544,655	$	600,858
Work-in-process		172,109		180,873
Finished goods		685,461		733,314
Inventories	$	1,402,225	$	1,515,045

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Warranty Reserves (Tables)

6 Months Ended

Jul. 01, 2023

Product Warranties Disclosures [Abstract]

Schedule of Changes in the Aggregate Warranty Reserve

The following reconciliation provides an illustration of changes in the aggregate warranty reserve.

	13-Weeks Ended						26-Weeks Ended
	July 1, 2023			June 25, 2022			July 1, 2023			June 25, 2022
Balance - beginning of period	$	52,675		$	40,698		$	50,952		$	45,467
Accrual for products sold (1)		18,345			14,154			40,726			25,025
Expenditures		(18,668	)		(14,903	)		(39,326	)		(30,543	)
Balance - end of period	$	52,352		$	39,949		$	52,352		$	39,949

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

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Stockholders' Equity (Tables)

6 Months Ended

Jul. 01, 2023

Stockholders' Equity Note [Abstract]

Schedule of Dividends Declared

Our shareholders approved the following dividends:

Declaration Date	Dividend Date	Record Date	Dividend Per Share
Fiscal 2023
June 9, 2023	June 30, 2023	June 20, 2023	$	0.73
June 9, 2023	September 29, 2023	September 15, 2023	$	0.73
June 9, 2023	December 29, 2023	December 15, 2023	$	0.73
June 9, 2023	March 29, 2024	March 15, 2024	$	0.73
Total			$	2.92
Fiscal 2022
June 10, 2022	June 30, 2022	June 20, 2022	$	0.73
June 10, 2022	September 30, 2022	September 15, 2022	$	0.73
June 10, 2022	December 30, 2022	December 15, 2022	$	0.73
June 10, 2022	March 31, 2023	March 15, 2023	$	0.73
Total			$	2.92
Fiscal 2021
June 4, 2021	June 30, 2021	June 15, 2021	$	0.67
June 4, 2021	September 30, 2021	September 15, 2021	$	0.67
June 4, 2021	December 31, 2021	December 15, 2021	$	0.67
June 4, 2021	March 31, 2022	March 15, 2022	$	0.67
Total			$	2.68

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jul. 01, 2023

Equity [Abstract]

Schedule of Changes in Accumulated Other Comprehensive Income (AOCI)

The following provides required disclosure of changes in accumulated other comprehensive income (loss) balances by component for the 13-week and 26-week periods ended July 1, 2023:

	13-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(9,090	)	$	(77,476	)	$	(86,566	)
Other comprehensive income (loss) before reclassification, net of income tax benefit of $984		(25,342	)		(3,421	)		(28,763	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $10 included in income tax provision		—			29			29
Net current-period other comprehensive income (loss)		(25,342	)		(3,392	)		(28,734	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

	26-Weeks Ended July 1, 2023
	Foreign currency translation adjustment			Net gains (losses) on available-for-sale securities			Total
Balance - beginning of period	$	(25,981	)	$	(88,552	)	$	(114,533	)
Other comprehensive income (loss) before reclassification, net of income tax expense of $1,629		(8,451	)		7,638			(813	)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit of $13 included in income tax provision		—			46			46
Net current-period other comprehensive income (loss)		(8,451	)		7,684			(767	)
Balance - end of period	$	(34,432	)	$	(80,868	)	$	(115,300	)

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Segment Information and Geographic Data (Tables)

6 Months Ended

Jul. 01, 2023

Segment Reporting [Abstract]

Schedule of Net Sales (Revenue), Gross Profit, and Operating Income

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

	Fitness		Outdoor		Aviation		Marine		Auto OEM			Total
13-Weeks Ended July 1, 2023
Net sales	$	334,863	$	448,114	$	217,454	$	215,802	$	104,562		$	1,320,795
Gross profit		173,163		280,078		160,957		120,344		24,900			759,442
Operating income (loss)		54,458		138,255		62,766		46,377		(17,501	)		284,355
13-Weeks Ended June 25, 2022
Net sales	$	272,095	$	462,243	$	204,739	$	242,794	$	58,962		$	1,240,833
Gross profit		134,016		290,508		147,931		137,406		18,965			728,826
Operating income (loss)		23,462		163,371		61,745		68,619		(24,457	)		292,740
26-Weeks Ended July 1, 2023
Net sales	$	579,584	$	776,776	$	431,036	$	494,777	$	186,046		$	2,468,219
Gross profit		294,073		485,026		315,410		269,976		47,751			1,412,236
Operating income (loss)		65,036		214,999		120,460		118,285		(37,443	)		481,337
26-Weeks Ended June 25, 2022
Net sales	$	492,992	$	911,977	$	379,505	$	496,863	$	132,159		$	2,413,496
Gross profit		240,205		568,964		275,474		265,987		40,676			1,391,306
Operating income (loss)		24,043		316,182		101,871		127,501		(48,300	)		521,297

Schedule of Net Sales to External Customers by Geographic Region

Net sales to external customers by geographic region were as follows for the 13-week and 26-week periods ended July 1, 2023 and June 25, 2022. Note that APAC includes Asia Pacific and Australian Continent and EMEA includes Europe, the Middle East and Africa:

	13-Weeks Ended				26-Weeks Ended
	July 1, 2023		June 25, 2022		July 1, 2023		June 25, 2022
Americas	$	641,848	$	646,172	$	1,253,552	$	1,216,807
EMEA		457,550		412,550		813,403		810,027
APAC		221,397		182,111		401,264		386,662
Net sales to external customers	$	1,320,795	$	1,240,833	$	2,468,219	$	2,413,496

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Revenue - Schedule of Revenue Disaggregated (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Disaggregation of Revenue [Line Items]
Net sales	$ 1,320,795	$ 1,240,833	$ 2,468,219	$ 2,413,496
Point in time [Member]
Disaggregation of Revenue [Line Items]
Net sales	1,251,214	1,179,123	2,332,283	2,293,324
Over time [Member]
Disaggregation of Revenue [Line Items]
Net sales	$ 69,581	$ 61,710	$ 135,936	$ 120,172

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Revenue - Schedule of Deferred Revenue and Costs (Details) $ in Thousands	6 Months Ended
	Jul. 01, 2023 USD ($)
Revenue from Contract with Customer [Abstract]
Deferred Revenue, Balance, beginning of period	$ 126,794	[1]
Deferred Revenue, Deferrals in period	140,699	[1]
Deferred Revenue, Recognition of deferrals in period	(135,936)	[1]
Deferred Revenue, Balance, end of period	131,557	[1]
Deferred costs, Balance, beginning of period	24,693	[2]
Deferred Costs, Deferrals in period	11,673	[2]
Deferred Costs, Recognition of deferrals in period	(10,672)	[2]
Deferred Costs, Balance, end of period	$ 25,694	[2]

[1] Deferred revenue is comprised of both deferred revenue and noncurrent deferred revenue per the condensed consolidated balance sheets

[2] Deferred costs are comprised of both deferred costs and noncurrent deferred costs per the condensed consolidated balance sheets

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Revenue - Additional Information (Details) - USD ($) $ in Thousands		6 Months Ended
		Jul. 01, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Recognition of deferrals in period	[1]	$ 135,936
Amount of Deferred revenue recognized in the period that was deferred as of the beginning of the period		$ 57,948
Amount of Deferred revenue that is recognized ratably over a period of three years or less		$131,557 of deferred revenue as of July 1, 2023, the Company expects to recognize approximately eighty percent ratably over a total period of three years or less.
Deferred revenue	[1]	$ 131,557	$ 126,794

[1] Deferred revenue is comprised of both deferred revenue and noncurrent deferred revenue per the condensed consolidated balance sheets

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Earnings Per Share - Schedule of Computation of Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Numerator:
Numerator for basic and diluted net income per share - net income	$ 287,939	$ 257,873	$ 490,266	$ 469,464
Denominator for basic net income per share – weighted-average common shares	191,293	193,074	191,395	192,980
Effect of dilutive equity awards	304	376	346	535
Denominator for diluted net income per share – adjusted weighted-average common shares	191,597	193,450	191,741	193,515
Basic net income per share	$ 1.51	$ 1.34	$ 2.56	$ 2.43
Diluted net income per share	$ 1.5	$ 1.33	$ 2.56	$ 2.43
Shares excluded from diluted net income per share calculation:
Anti-dilutive equity awards	218	757	218	761

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Marketable Securities - Schedule of Marketable Securities Classified as Available-for-sale Securities (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Amortized Cost, Total	$ 1,458,560	$ 1,495,585
Gross Unrealized Gains	159	191
Gross Unrealized Losses	(104,771)	(114,128)
Fair Value	1,353,948	1,381,648
Agency securities [Member] | Fair Value, Level 2 [Member]
Marketable Securities [Line Items]
Amortized Cost, Total	11,002	7,000
Gross Unrealized Gains
Gross Unrealized Losses	(765)	(786)
Fair Value	10,237	6,214
Mortgage-backed securities [Member] | Fair Value, Level 2 [Member]
Marketable Securities [Line Items]
Amortized Cost, Total	41,559	45,373
Gross Unrealized Gains
Gross Unrealized Losses	(5,586)	(4,525)
Fair Value	35,973	40,848
Corporate Debt Securities [Member] | Fair Value, Level 2 [Member]
Marketable Securities [Line Items]
Amortized Cost, Total	1,086,519	1,106,688
Gross Unrealized Gains	158	188
Gross Unrealized Losses	(72,130)	(77,802)
Fair Value	1,014,547	1,029,074
Municipal securities [Member] | Fair Value, Level 2 [Member]
Marketable Securities [Line Items]
Amortized Cost, Total	312,851	326,058
Gross Unrealized Gains	1	3
Gross Unrealized Losses	(25,429)	(28,861)
Fair Value	287,423	297,200
Other [Member] | Fair Value, Level 2 [Member]
Marketable Securities [Line Items]
Amortized Cost, Total	6,629	10,466
Gross Unrealized Gains
Gross Unrealized Losses	(861)	(2,154)
Fair Value	$ 5,768	$ 8,312

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Marketable Securities - Additional Information (Details) - USD ($)	6 Months Ended
	Jul. 01, 2023	Dec. 31, 2022
Schedule Of Available For Sale Securities [Line Items]
Accrued interest written off	$ 0
Percentage of available-for-sale securities in unrealized loss positions	99.00%
Allowance For Credit Losses On Available For Sale Debt Securities In Unrealized Loss Position	$ 0	$ 0
Allowance for credit losses and charge to other income	0
Prepaid Expenses and Other Current Assets [Member]
Schedule Of Available For Sale Securities [Line Items]
Accrued interest receivable	$ 11,095,000

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Marketable Securities - Schedule of Gross Unrealized Losses and Fair Value by Major Security Type (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months	$ (5,300)	$ (30,716)
Fair Value Less than 12 Consecutive Months	165,194	601,202
Gross Unrealized Losses 12 Consecutive Months or Longer	(99,471)	(83,412)
Fair Value 12 Consecutive Months or Longer	1,168,853	756,413
Gross Unrealized Losses, Total	(104,771)	(114,128)
Fair Value, Total	1,334,047	1,357,615
Agency securities [Member]
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months	(16)
Fair Value Less than 12 Consecutive Months	3,987
Gross Unrealized Losses 12 Consecutive Months or Longer	(749)	(786)
Fair Value 12 Consecutive Months or Longer	6,250	6,214
Gross Unrealized Losses, Total	(765)	(786)
Fair Value, Total	10,237	6,214
Mortgage-backed securities [Member]
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months	(15)	(1,900)
Fair Value Less than 12 Consecutive Months	176	23,229
Gross Unrealized Losses 12 Consecutive Months or Longer	(5,571)	(2,625)
Fair Value 12 Consecutive Months or Longer	35,797	17,619
Gross Unrealized Losses, Total	(5,586)	(4,525)
Fair Value, Total	35,973	40,848
Corporate debt securities [Member]
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months	(5,114)	(26,680)
Fair Value Less than 12 Consecutive Months	152,214	508,956
Gross Unrealized Losses 12 Consecutive Months or Longer	(67,016)	(51,122)
Fair Value 12 Consecutive Months or Longer	844,933	498,834
Gross Unrealized Losses, Total	(72,130)	(77,802)
Fair Value, Total	997,147	1,007,790
Municipal securities [Member]
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months	(155)	(2,136)
Fair Value Less than 12 Consecutive Months	8,817	69,017
Gross Unrealized Losses 12 Consecutive Months or Longer	(25,274)	(26,725)
Fair Value 12 Consecutive Months or Longer	276,105	225,679
Gross Unrealized Losses, Total	(25,429)	(28,861)
Fair Value, Total	284,922	294,696
Other [Member]
Marketable Securities [Line Items]
Gross Unrealized Losses Less than 12 Consecutive Months
Fair Value Less than 12 Consecutive Months
Gross Unrealized Losses 12 Consecutive Months or Longer	(861)	(2,154)
Fair Value 12 Consecutive Months or Longer	5,768	8,067
Gross Unrealized Losses, Total	(861)	(2,154)
Fair Value, Total	$ 5,768	$ 8,067

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Marketable Securities - Schedule of Amortized Cost and Estimated Fair Value of Marketable Securities by Maturity (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Amortized Cost, Due in one year or less	$ 259,584
Amortized Cost, Due after one year through five years	1,172,343
Amortized Cost, Due after five years through ten years	17,908
Amortized Cost, Due after ten years	8,725
Amortized Cost, Total	1,458,560	$ 1,495,585
Fair Value, Due in one year or less	253,689
Fair Value, Due after one year through five years	1,076,583
Fair Value, Due after five years through ten years	16,363
Fair Value, Due after ten years	7,313
Fair Value, Total	$ 1,353,948	$ 1,381,648

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Income Tax Disclosure [Abstract]
Income tax expense (benefit)	$ 28,037	$ 21,093	$ 47,482	$ 45,366
Effective income tax rate	8.90%	7.60%	8.80%	8.80%

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Inventories (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Raw materials	$ 544,655	$ 600,858
Work-in-process	172,109	180,873
Finished goods	685,461	733,314
Inventories	$ 1,402,225	$ 1,515,045

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Warranty Reserves - Additional Information (Details)	6 Months Ended
	Jul. 01, 2023
Minimum [Member] | Standard Warranty on Products [Member]
Product Warranty Liability [Line Items]
Product warranty term	1 year
Minimum [Member] | Certain Aviation, Marine and Auto OEM products [Member]
Product Warranty Liability [Line Items]
Product warranty term	2 years
Maximum [Member] | Standard Warranty on Products [Member]
Product Warranty Liability [Line Items]
Product warranty term	2 years

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Warranty Reserves - Schedule of Changes in the Aggregate Warranty Reserve (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Product Warranties Disclosures [Abstract]
Balance - beginning of period		$ 52,675	$ 40,698	$ 50,952	$ 45,467
Accrual for products sold	[1]	18,345	14,154	40,726	25,025
Expenditures		(18,668)	(14,903)	(39,326)	(30,543)
Balance - end of period		$ 52,352	$ 39,949	$ 52,352	$ 39,949

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

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Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands	Jul. 01, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Noncancellable unconditional purchase obligations	$ 376,000
Restricted cash balances	$ 689	$ 718

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Stockholders' Equity - Schedule of Dividends Declared (Details) - $ / shares	Jun. 09, 2023	Jun. 10, 2022	Jun. 04, 2021
Dividends Declared [Line Items]
Dividend Declaration Date	Jun. 09, 2023	Jun. 10, 2022	Jun. 04, 2021
Dividends declared per share	$ 2.92	$ 2.92	$ 2.68
Dividend Declared1 [Member]
Dividends Declared [Line Items]
Dividend Date	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2021
Record Date	Jun. 20, 2023	Jun. 20, 2022	Jun. 15, 2021
Dividends declared per share	$ 0.73	$ 0.73	$ 0.67
Dividend Declared2 [Member]
Dividends Declared [Line Items]
Dividend Date	Sep. 29, 2023	Sep. 30, 2022	Sep. 30, 2021
Record Date	Sep. 15, 2023	Sep. 15, 2022	Sep. 15, 2021
Dividends declared per share	$ 0.73	$ 0.73	$ 0.67
Dividend Declared3 [Member]
Dividends Declared [Line Items]
Dividend Date	Dec. 29, 2023	Dec. 30, 2022	Dec. 31, 2021
Record Date	Dec. 15, 2023	Dec. 15, 2022	Dec. 15, 2021
Dividends declared per share	$ 0.73	$ 0.73	$ 0.67
Dividend Declared4 [Member]
Dividends Declared [Line Items]
Dividend Date	Mar. 29, 2024	Mar. 31, 2023	Mar. 31, 2022
Record Date	Mar. 15, 2024	Mar. 15, 2023	Mar. 15, 2022
Dividends declared per share	$ 0.73	$ 0.73	$ 0.67

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Stockholders' Equity - Additional Information (Details) $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Jul. 01, 2023 USD ($) shares	Jun. 25, 2022 USD ($)	Jul. 01, 2023 SFr / shares	Jul. 01, 2023 $ / shares	Dec. 31, 2022 SFr / shares	Apr. 22, 2022 USD ($) shares
Dividend paid	$ 279,442	$ 258,249
Share Repurchase Program, Authorized Amount						$ 300,000
Share repurchase authorization expires	Dec. 29, 2023
Repurchased common stock shares | shares						2,936
Repurchased common stock shares, amount						$ 273,250
Repurchase additional shares authorization						$ 26,750
Treasury Stock [Member]
Treasury stock, shares retired | shares	2,197
Share Capital [Member]
Common stock, nominal par value | (per share)			SFr 0.1	$ 0.1	SFr 0.1

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Accumulated Other Comprehensive Income - Schedule of Changes in Accumulated Other Comprehensive Income (AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 01, 2023	Jul. 01, 2023
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance, value	$ 6,405,004	$ 6,204,340
Ending balance, value	6,123,822	6,123,822
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance, value	(9,090)	(25,981)
Other comprehensive income (loss) before reclassification, net of income tax benefit	(25,342)	(8,451)
Net current-period other comprehensive income (loss)	(25,342)	(8,451)
Ending balance, value	(34,432)	(34,432)
Net Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance, value	(77,476)	(88,552)
Other comprehensive income (loss) before reclassification, net of income tax benefit	(3,421)	7,638
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit	29	46
Net current-period other comprehensive income (loss)	(3,392)	7,684
Ending balance, value	(80,868)	(80,868)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Beginning balance, value	(86,566)	(114,533)
Other comprehensive income (loss) before reclassification, net of income tax benefit	(28,763)	(813)
Amounts reclassified from accumulated other comprehensive income (loss) to other income, net of income tax benefit	29	46
Net current-period other comprehensive income (loss)	(28,734)	(767)
Ending balance, value	$ (115,300)	$ (115,300)

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Accumulated Other Comprehensive Income - Schedule of Changes in Accumulated Other Comprehensive Income (AOCI) (Parenthetical) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jul. 01, 2023	Jul. 01, 2023
Equity [Abstract]
Net of income tax expense	$ 984	$ 1,629
Net of income tax benefit	$ 10	$ 13

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Segment Information and Geographic Data - Schedule of Net Sales (Revenue), Gross Profit, and Operating Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Segment Reporting Information [Line Items]
Net sales	$ 1,320,795	$ 1,240,833	$ 2,468,219	$ 2,413,496
Gross profit	759,442	728,826	1,412,236	1,391,306
Operating income (loss)	284,355	292,740	481,337	521,297
Fitness Segment [Member]
Segment Reporting Information [Line Items]
Net sales	334,863	272,095	579,584	492,992
Gross profit	173,163	134,016	294,073	240,205
Operating income (loss)	54,458	23,462	65,036	24,043
Outdoor Segment [Member]
Segment Reporting Information [Line Items]
Net sales	448,114	462,243	776,776	911,977
Gross profit	280,078	290,508	485,026	568,964
Operating income (loss)	138,255	163,371	214,999	316,182
Aviation Segment [Member]
Segment Reporting Information [Line Items]
Net sales	217,454	204,739	431,036	379,505
Gross profit	160,957	147,931	315,410	275,474
Operating income (loss)	62,766	61,745	120,460	101,871
Marine Segment [Member]
Segment Reporting Information [Line Items]
Net sales	215,802	242,794	494,777	496,863
Gross profit	120,344	137,406	269,976	265,987
Operating income (loss)	46,377	68,619	118,285	127,501
Auto OEM Segment [Member]
Segment Reporting Information [Line Items]
Net sales	104,562	58,962	186,046	132,159
Gross profit	24,900	18,965	47,751	40,676
Operating income (loss)	$ (17,501)	$ (24,457)	$ (37,443)	$ (48,300)

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Segment Information and Geographic Data - Schedule of Net Sales to External Customers by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 01, 2023	Jun. 25, 2022	Jul. 01, 2023	Jun. 25, 2022
Revenues from External Customers [Line Items]
Net sales to external customers	$ 1,320,795	$ 1,240,833	$ 2,468,219	$ 2,413,496
Americas [Member]
Revenues from External Customers [Line Items]
Net sales to external customers	641,848	646,172	1,253,552	1,216,807
EMEA [Member]
Revenues from External Customers [Line Items]
Net sales to external customers	457,550	412,550	813,403	810,027
APAC [Member]
Revenues from External Customers [Line Items]
Net sales to external customers	$ 221,397	$ 182,111	$ 401,264	$ 386,662